GVI optimistic about funding search
CARROLLTON, Texas--While GVI Security Solutions published very real concerns for its continuance as an ongoing operation in its August 15 10-Q report to the SEC, recently installed chief executive officer Steven Walin looked to tell the story of gains made in sales of professional products, mostly Samsung surveillance products, of which GVI is the master distributor for Latin and North America.
"That business was always and continues to be very strong," said Walin, who took over as CEO at the beginning of March. "We're growing it double digits year to year, the market is very robust, and people like our offering." Net revenues increased nearly 11 percent, to $11.2 million, in the previous quarter.
However, a consumer play, where GVI marketed a pre-packaged surveillance solution through Sam's Club stores, has turned into a $2.3 million loss in discontinued operations in the last quarter. This is coupled with a 56 percent increase in administrative costs ($500,000 in employee termination costs) and a 97 percent decrease (another $500,000) in sales of the company's Rapor integrated enterprise solution, resulting in a net loss of roughly $4.5 million for the three months ended June 30.
This has led to a situation where the company has just $1.8 million in cash and a working capital deficit of $3.6 million. Thus, the report states, "Management believes that the company will need to raise additional capital in the third quarter ending September 30, 2006, to finance operations and sustain our business model."
"SEC statements have to be very conservative," GVI chief financial officer Joe Restivo said of the situation, "but what is correct is that Steve and I have a challenge here, and we are out looking for funding."
Some of that funding could come from Samsung, Restivo and Walin said.