DGSE Companies, Inc. Announces Record Revenues for Both the First Six Months and Second Quarter of Fiscal 2006; Net Income Per Share for Six Months Up 80 Percent to $.09; For the Three Months Up 150 Percent to $.05 Per Share.

DALLAS -- DGSE Companies, Inc. (Nasdaq:DGSE), which wholesales, retails and auctions fine watches, jewelry, diamonds and precious metal and rare coin products via traditional and Internet channels, today announced operating results for the second quarter and first half of fiscal 2006.

Earnings

--Basic and diluted net income per share for the fiscal second quarter was $.05 versus $.02 in the equivalent period in fiscal 2005. Net Income increased 241 percent to $270,771 from $79,328 for the equivalent 2005 quarter;

--Basic net income per share for the six months was $.09 versus $.05 in the equivalent period in fiscal 2005 (fully diluted $.08 versus $.05). This represents an increase of 80 percent. Net income increased 82 percent to $419,251 from $229,893 for the equivalent 2005 period.

Revenues

--Total Revenues for the Fiscal Second Quarter of 2006 were $12,546,053. Revenues for the equivalent quarter of 2005 were $6,800,410. This represents an 84 percent increase.

--Total Revenues for the Six-Months ended June 30, 2006 were $22,267,050. Revenues for the equivalent period in 2005 were $13,518,222. This represents an increase of 65 percent.

Performance Metrics & Liquidity

--EBITDA (earnings before interest, taxes, depreciation and amortization) was $523,949 in second quarter of 2006 or $.11 per share versus $241,466 or $.05 per share in the equivalent period of 2005. For the six-month period EBITDA was $864,825 or $.18 per share versus $583,356 or $.12 for the equivalent period of 2005. Trailing 12 months EBITDA was $1,472,284 or $.30 per share versus $1,013,550 or $.21 per share for the equivalent period in 2005.

--Shareholders' equity at the end of the second quarter of 2006 was $6,497,400 or $1.32 per share. This represents an increase of 11.6 percent versus $5,820,480 or $1.19 per share as of June 30, 2005.

"The fiscal second quarter marked the acceleration of performance in the core businesses for DGSE," noted William H. Oyster, President and Chief Operating Officer of DGSE Companies, Inc. Mr. Oyster continued, "Our precious metals and rare coin businesses continue to experience robust activity and drive customers to our other business activities. Revenues from the internet exceeded $2,000,000 in the first six-months of 2006 up from $450,000 in the first six-months of 2005. Our jewelry and watch sales continue to make DGSE one of the largest wholesalers and retailers in the United States. We expect the balance of 2006 to see expansion of our revenues and earnings in all segments of our business and further growth in our higher margin business components. As we move toward the successful closing of our previously announced acquisition of Superior Galleries (SPGR-OB) we are enthusiastic about the future."

DGSE Companies, Inc. wholesales and retails jewelry, diamonds, fine watches and precious metal bullion products and rare coins to domestic and international customers through its Dallas Gold and Silver Exchange and Charleston Gold and Diamond Exchange subsidiaries and well as through the internet. DGSE also owns Fairchild International, Inc., one of the largest vintage watch wholesalers in the country. In addition to its retail facilities, the Company operates live Internet auctions which can be accessed at www.dgse.com. Real-time price quotations and real-time order execution in precious metals are provided on another DGSE web site at www.USBullionExchange.com. Wholesale customers can access our full vintage watch inventory through the restricted site at www.FairchildWatches.com.

The Company is headquartered in Dallas, Texas and its common stock trades on The Nasdaq Stock Market(R) under the symbol "DGSE".

This press release includes statements which may constitute 'forward-looking" statements, usually containing the words "believe," "estimate," "project," "expect" or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to, continued acceptance of the Company's products and services in the marketplace, competitive factors, dependence upon third-party vendors, and other risks detailed in the Company's periodic report filings with the Securities and Exchange Commission. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release. In addition to the results presented in accordance with Generally Accepted Accounting Principles throughout this press release, DGSE has presented non-GAAP financial measures such as EBITDA. The Company believes that these non-GAAP measures, viewed in addition to and not in lieu of the Company's reported GAAP results, provide useful information to investors because they are an integral part of the Company's internal evaluation of operating performance. In addition, they are measures that DGSE uses to evaluate management's effectiveness. DGSE's non-GAAP financial measures may not be comparable to similarly titled measures presented by other companies.

DGSE Companies, Inc.
                        Summary of Operations
                        Periods ended June 30,


                          Three Months               Six Months
                    ------------------------ -------------------------

                        2006         2005        2006         2005
                    ------------ ----------- ------------ ------------


Revenue             $12,546,053  $6,800,410  $22,267,050  $13,518,222


Net Income             $270,771     $79,328     $419,251     $229,893



Earnings per common
 share:

Basic                      $.05        $.02         $.09         $.05
Diluted                    $.05        $.02         $.08         $.05