GVI Security Solutions Reports Second Quarter 2005 Results

Revenues down for quarter as company posts net loss


CARROLLTON, Texas -- GVI Security Solutions, Inc. (OTCBB:GVIS), a provider of integrated Homeland Security Enterprise solutions for government agencies and the private sector, reported financial results for the second quarter ended June 30, 2005.

Revenue for the three months ended June 30, 2005 was approximately $10.4 million, a decrease of $4.5 million, or 30.2%, compared to revenues of approximately $14.9 million for the same three month period in the prior year. The net loss for the three months ended June 30, 2005 was approximately $2.9 million or $(.06) per share, compared to a net loss of approximately $1.4 million or $(.05) per share for the same three month period in the prior year.

Revenue for the six month period ended June 30, 2005 was approximately $34.3 million, an increase of $4.3 million, or 14.3%, compared to revenues of approximately $30 million for the six months ended June 30, 2004. The increase was primarily the result of increases in sales of the Company's professional products and sales by its Enterprise Solutions Group. The net loss for the six months ended June 30, 2005 was approximately $3.4 million or $(.07) per share, compared to a net loss of approximately $1.6 million or $(.06) per share for the same six month period in the prior year.

The reduction in revenue for the three month period was primarily due to a decrease in sales of the Company's retail products during the period. This decrease was due in large part to the Company's transition to an exclusive retail distribution arrangement, under which the distributor purchased excess inventory in the first quarter of 2005. Overall, retail sales for the six months ending June 30, 2005 were up 2.5% compared to the prior year. Management expects sales of the Company's retail products to improve over the remaining six-months of the current year as compared to sales of those products during the three month period ended June 30, 2005.

Sales of the Company's professional products and sales by its Enterprise Solutions Group, which include its homeland security solutions, were up 9.7% in the second quarter of 2005 as compared to the prior year, as the Company continued its focus on providing end-to-end enterprise security solutions and directed its sales efforts to increase the market penetration of its line of access control products, including its RAPOR Rapid Access Portals, and intelligent video surveillance products.

"The continuing worldwide terrorist activities, including the mass transit attacks in London, have brought the necessity for intelligent video solutions to the forefront in securing critical corporate, mass transit, government and infrastructure facilities around the world," said Nazz Paciotti, the Company's CEO. "We believe that as an established provider of end-to-end security solutions, including in mass transit applications in North and South America, and with a broad array of our integrated access control, digital video, IP cameras and threat detection products in use in high profile port, military, retail, corporate and government facilities, we will be able to compete effectively as a provider of homeland security solutions to both the private and government sectors."

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