UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
SUPERIOR GALLERIES, INC.
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(Name of Issuer)
Common Stock, par value $0.001
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(Title of Class of Securities)
868165 10 1
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(CUSIP Number)
DGSE Companies, Inc. Andreas Pour, Esq.
2817 Forest Lane Sheppard, Mullin, Richter &Hampton LLP
Dallas, Texas 75234 12275 El Camino Real, Suite 200
(972) 484-3662 San Diego, CA 92130
(858) 720-8900
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
January 6, 2007
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(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), (f) or (g), check the following box [ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedules including all exhibits. See Rule 13d-7 for other parties
to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP No. 868165101 13D Page___ of __ Pages
________________________________________________________________________________
1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
DGSE Companies, Inc.
88-0097334
________________________________________________________________________________
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [_]
(b) [_]
________________________________________________________________________________
3 SEC USE ONLY
________________________________________________________________________________
4 SOURCE OF FUNDS*
SC
________________________________________________________________________________
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) OR 2(e) [_]
________________________________________________________________________________
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Nevada
________________________________________________________________________________
7 SOLE VOTING POWER
NUMBER OF
355,000
SHARES _________________________________________________________________
8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 6,533,070 (including 30,000 shares underlying exercisable
options)
_________________________________________________________________
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
0
PERSON _________________________________________________________________
10 SHARED DISPOSITIVE POWER
WITH
6,888,070 (including 30,000 shares underlying exercisable
options)
________________________________________________________________________________
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,888,070 (including 30,000 shares underlying exercisable options)
________________________________________________________________________________
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[_]
________________________________________________________________________________
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
80.0%
________________________________________________________________________________
14 TYPE OF REPORTING PERSON*
CO
________________________________________________________________________________
*SEE INSTRUCTIONS BEFORE FILLING OUT!
CUSIP No. 868165101 13D Page___ of __ Pages
Item 1. Security and Issuer.
This Schedule 13D (this "Schedule") relates to the shares of common stock, par
value $0.001 per share, of Superior Galleries, Inc., a Delaware corporation
("SPGR"). The address of the principal executive offices of SPGR is 9478 West
Olympic Boulevard, Beverly Hills, California 90212.
Item 2. Identity and Background.
(a)-(c) and (f). This Schedule is being filed by DGSE Companies, Inc., a Nevada
corporation ("DGSE"), with its principal executive offices located at 2817
Forest Lane, Dallas, Texas 75234. DGSE sells jewelry, bullion products and rare
coins to both retail and wholesale customers.
The (a) name, (b) business address, (c) present principal occupation or
employment, and (f) citizenship of each controlling person, director and
executive officer of DGSE are set forth in Schedule I hereto and incorporated
herein by reference.
(d)-(e). During the last five years, neither DGSE, nor, to DGSE's knowledge, any
of the persons listed on Schedule I hereto has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or was a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
Item 3. Source and Amount of Funds and Other Consideration.
As an inducement for DGSE to enter into the Amended and Restated Agreement and
Plan of Merger and Reorganization, made and entered into as of January 6, 2007
(the "Merger Agreement"), by and among DGSE, DGSE Merger Corp., a Delaware
corporation ("Merger Sub"), SPGR and the stockholder agent, certain stockholders
of SPGR (the "SPGR Stockholders"), who are identified on Schedule II hereto,
entered into a Support Agreement as of January 6, 2007 (the "Support
Agreement"), by and among DGSE, SPGR, and the SPGR Stockholders. DGSE did not
provide any consideration, other than its agreement to enter into the Merger
Agreement, to the SPGR Stockholders in connection with the execution and
delivery of the Support Agreement.
As a further inducement for DGSE to enter into the Merger Agreement, Silvano
DiGenova, the former chairman, chief executive officer, president and interim
chief financial officer of SPGR, entered into a Securities Exchange Agreement as
of January 6, 2007 (the "Securities Exchange Agreement"), by and between DGSE
and Mr. DiGenova. Pursuant to the Securities Exchange Agreement, DGSE issued Mr.
DiGenova a warrant to acquire 96,951 shares of DGSE common stock upon
consummation of the merger contemplated by the Merger Agreement for an exercise
price of $0.01 per share, in exchange for 355,000 shares of Superior common
stock, which reflects the same exchange ratio being used in the merger.
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CUSIP No. 868165101 13D Page___ of __ Pages
References to, and descriptions of, the Merger Agreement, the Support Agreement
and the Securities Exchange Agreement as set forth above in this Item 3 are
qualified in their entirety by reference to the copies of such agreements
included as Exhibits 1, 2 and 3, respectively, to this Schedule, and are
incorporated in this Item 3 by reference in their entirety.
Item 4. Purpose of Transaction.
As stated above, the Support Agreement and Securities Exchange Agreement were
entered into as an inducement for, and in consideration of, DGSE entering into
the Merger Agreement. Pursuant to the Merger Agreement, DGSE proposes to acquire
SPGR in a merger transaction by which SPGR will become a wholly-owned subsidiary
of DGSE (the "Merger"). Pursuant to the terms of the Merger Agreement and
subject to the conditions thereof, each issued and outstanding share of SPGR's
common stock, other than shares owned by any stockholders who are entitled to
and who properly exercise appraisal rights under the General Corporation Law of
the State of Delaware, will be cancelled and converted automatically into the
right to receive 0.2731 shares of DGSE common stock. In addition, each option to
acquire shares of SPGR common stock will be converted into an option to receive
a number of shares of DGSE common stock equal to the number of shares subject to
the SPGR option multiplied by the exchange ratio, at an exercise price equal to
the exercise price of the SPGR option divided by the exchange ratio. The
consummation of the merger is subject to the approval of the DGSE and SPGR
stockholders and other closing conditions set forth in the Merger Agreement.
Pursuant to the Support Agreement, the SPGR Stockholders who collectively own
6,533,070 shares (including 30,000 immediately exercisable options to acquire
shares) of the common stock of SPGR (the "Subject Shares") as set forth in
Schedule II (approximately 75.9% of the common stock of SPGR deemed to be
outstanding pursuant to Rule 13d-3(d)(1) as of January 6, 2007), have agreed to
vote or consent (or cause to be voted or consented) the Subject Shares (1) in
favor of the approval of the Merger and the Merger Agreement and any related
transaction and related agreement, or any matter that could reasonably be
expected to facilitate the Merger, (2) against any proposal or action that could
reasonably be expected to delay, impede or interfere with the approval of the
Merger or any related transaction, (3) against any action or agreement that
could reasonably be expected to result in a breach of any covenant,
representation or warranty or any other obligation of SPGR under the Merger
Agreement or any related agreement, and (4) in favor of any other matter
relating to the execution and delivery of the related agreements and the proper
and prompt consummation of the related transactions. Any additional shares of
SPGR common stock acquired by any SPGR Stockholder during the term of the
Support Agreement will also become subject to the Support Agreement. Each SPGR
Stockholder has also agreed to remain the beneficial owner of the Subject
Shares, to hold the Subject Shares free and clear of any liens and, absent the
prior written consent of DGSE, to not sell, transfer, pledge, assign or
otherwise dispose of any interest in the Subject Shares, including any voting
rights, until the termination of the Support Agreement. Each SPGR Stockholder
has granted DGSE a limited irrevocable proxy (collectively, the "Proxies") to
vote the stockholder's shares as described above.
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CUSIP No. 868165101 13D Page___ of __ Pages
The Support Agreement terminates on the earliest to occur of (i) the effective
time of the Merger, (ii) the valid termination of the Merger Agreement by its
terms, and (iii) the mutual agreement of the parties to the Support Agreement.
Pursuant to the Merger Agreement, upon the effectiveness thereof, all but two
"independent" directors of the SPGR board of directors resigned, and the two
remaining directors, Mitchell Stolz and David Rector, elected William H. Oyster,
DGSE's chief operating officer, Scott Williamson, DGSE's executive
vice-president, and John Benson, DGSE's chief financial officer, to the SPGR
board to fill the vacancies.
On January 6, 2007, in connection with and as an inducement for DGSE entering
into the Merger Agreement, DGSE Merger Corp., a wholly-owned subsidiary of DGSE
which will merge into SPGR as part of the Merger, entered into a Management
Agreement with SPGR (the "Management Agreement"). Under the Management
Agreement, DGSE Merger Corp. will provide the senior management to SPGR on a
part-time basis until the consummation of the Merger or the earlier termination
of the Merger Agreement. Pursuant to the Management Agreement, the SPGR board,
prior to the resignations and elections described in the preceding paragraph,
appointed Mr. Oyster as interim chief executive officer of SPGR, Mr. Williamson
as interim chief operating officer of SPGR and Mr. Benson as vice president,
finance and interim chief financial officer of SPGR.
Pursuant to the Securities Exchange Agreement, DGSE acquired 355,000 shares of
Superior common stock (approximately 4.1% of the common stock of SPGR deemed to
be outstanding pursuant to Rule 13d-3(d)(1) as of January 6, 2007) from Mr.
DiGenova (the "DiGenova Shares"). DGSE has agreed in the Securities Exchange
Agreement not to transfer or encumber the DiGenova Shares prior to the exercise
or termination of the warrant issued to Mr. DiGenova and, if the warrant
terminates, to transfer the DiGenova Shares to Mr. DiGenova's designee specified
in the Securities Exchange Agreement.
If the Merger is consummated, SPGR's shares of common stock will be delisted
from the OTC Bulletin Board and will become eligible for termination of
registration pursuant to Section 12(g)(4) of the Securities Exchange Act of
1934.
Except as set forth in this Item 4 and Item 6, neither DGSE nor, to DGSE's
knowledge, any of the controlling persons, directors or executive officers of
DGSE, has any current plans or proposals which relate to or would result in any
of the actions specified in clauses (a) through (j) of Item 4 of Schedule 13D,
although DGSE and such other persons do not rule out the possibility of
effecting or seeking to effect any such actions in the future.
References to, and descriptions of, the Merger Agreement, the Support Agreement,
the Securities Exchange Agreement and the Management Agreement as set forth
above in this Item 4 are qualified in their entirety by reference to the copies
of such agreements included as Exhibits 1, 2, 3 and 4, respectively, to this
Schedule, and are incorporated in this Item 4 by reference in their entirety.
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CUSIP No. 868165101 13D Page___ of __ Pages
Item 5. Interest in Securities of the Issuer.
(a)-(b) The number of shares of SPGR common stock covered by the Support
Agreement is 6,533,070 (including 30,000 immediately exercisable options to
acquire shares), which, in the aggregate, represents 75.9% of the common stock
of SPGR outstanding as of January 6, 2007. DGSE has shared power to vote or
direct the vote, and shared power to dispose or direct the disposition, of these
shares. The number of shares of SPGR common stock held by DGSE but subject to
the Securities Exchange Agreement is 355,000, which, in the aggregate,
represents 4.1% of the common stock of SPGR outstanding as of January 6, 2007.
DGSE has sole power to vote or direct the vote, and, until the consummation of
the merger or the termination of the Merger Agreement, no power to dispose or
direct the disposition, of these shares.
(c) Except as set forth in this Schedule or incorporated in this Schedule,
neither DGSE nor, to DGSE's knowledge, any of the individuals referred to in
Schedule I hereto or Mr. DiGenova has effected any transaction in SPGR common
stock during the past sixty (60) days.
(d)-(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer.
Other than the Merger Agreement, the Management Agreement, the Support
Agreement, the Proxies and the Securities Exchange Agreement, to the knowledge
of DGSE, there is no contract, arrangement, understanding or relationship, legal
or otherwise, among the persons named in Item 2 and Schedule I or between such
persons and any other person with respect to the securities of SPGR, including,
but not limited to, transfer or voting of any of the securities, finder's fees,
joint ventures, loan or option arrangements, puts or calls, guarantees of
profits, division of profits or loss, or the giving or withholding of proxies.
Item 7. Material to be filed as Exhibits.
(1) Amended and Restated Agreement and Plan of Merger and Reorganization,
made and entered into as of January 6, 2007, by and among DGSE Companies, Inc.,
DGSE Merger Corp., Superior Galleries, Inc. and the stockholder agent.
(2) Support Agreement, including form of Proxies, made and entered into as
of January 6, 2007, by and among DGSE Companies, Inc., Superior Galleries, Inc.
and the Superior Galleries, Inc. stockholders listed on Schedule II hereto
(3) Securities Exchange Agreement, made and entered into as of January 6,
2007, by and between DGSE Companies, Inc. and Silvano DiGenova
(4) Management Agreement, made and entered into as of January 6, 2007, by
and between DGSE Companies, Inc. and Superior Galleries, Inc.
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CUSIP No. 868165101 13D Page___ of __ Pages
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: January 16, 2007
--------------------------------
(Signature)
Dr. L.S. Smith
Chairman and CEO
--------------------------------
(Name/Title)
Attention: Intentional misstatements or omissions of fact constitute Federal
criminal violations (See 18 U.S.C. 1001)
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SCHEDULE 13D
SCHEDULE I
CONTROLLING PERSONS, DIRECTORS, AND EXECUTIVE OFFICERS
Set forth below are the controlling persons, directors and executive officers of
DGSE Companies, Inc. with their present principal occupation. Except as
indicated below, the business address for each of these individuals is 2817
Forest Lane, Dallas, Texas 75234. Each individual named below is a United States
citizen.
Directors
Name Present Principal Occupation
-------------------- -----------------------------------------------------
Dr. L.S. Smith, Ph.D. Chairman, Chief Executive Officer and Secretary, DGSE
Companies, Inc.; also a controlling person of DGSE
Companies, Inc.
William H. Oyster President and Chief Operating Officer, DGSE
Companies, Inc.
William P. Cordeiro Management Professor, School of Business and
Economics, California State University, and partner,
Bartik, Cordeiro & Associates, Inc.
Paul Hagen President, Premier Marketing, Inc.
Craig Alan-Lee Senior loan consultant, Castle Funding, Inc.
Executive Officers (who are not directors)(1)
Name Present Principal Occupation
-------------------- -----------------------------------------------------
John Benson Chief Financial Officer
Scott Williamson Executive Vice President, Consumer Finance
--------------------
SCHEDULE 13D
SCHEDULE II
SUPERIOR GALLERIES, INC. STOCKHOLDERS PARTY TO SUPPORT AGREEMENT
The Superior Galleries, Inc. (SPGR) stockholders who are parties to the Support
Agreement are identified below, along with the SPGR common stock held by each
and covered by this Schedule 13D:
Party to Support Agreement Shares Option Shares Total Shares
-------------------------------- --------- ------------- ------------
Silvano DiGenova 1,552,264 30,000 1,582,264
Stanford International Bank Ltd. 4,350,806 - 4,350,806
William R. Fusselmann 150,000 - 150,000
Daniel T. Bogar 150,000 - 150,000
Ronald M. Stein 150,000 - 150,000
Osvaldo Pi 150,000 - 150,000
--------- --------- ---------
Total: 6,503,070 30,000 6,533,070
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