GVI in search of funding
CARROLLTON, Texas--While GVI Security Solutions published very real concerns for its continuance as a going 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, resulted 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. "We're funding a lot of inventory," said Restivo. "You have to bring it here across the ocean, warehouse it, etc., and there's a flow time that's significant. That's why working capital is so important."
Samsung's "goals are very high," said Walin, "and they're looking to us to get them there. They realize it will take some help from them in order to get us there." Walin also expects investment from private and institutional investors.
He also expects confidence in the company to rise. He said to look for news of significant business coming from Latin America and an increase in sales coverage for the United States, "as we invest in more and higher quality sales people, all of whom come from the industry and have strong track records." With a track record of hisown developed with positions as president of the Security Technologies Group, senior vice president at Siemens, and president of GE Security Enterprise Solutions, Walin's industry contacts should be robust.
"On the back half of this calendar year," Walin promised, "you'll see a lot more news published on GVI."