UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                               ___________________

                                   FORM 10-QSB

|X|   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2004
                                       or

|_|   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934

             For the transition period from __________ to __________

                         Commission file number: 0-21295

                          GVI Security Solutions, Inc.
             (Exact name of registrant as specified in its charter)

                Delaware                               77-0436410
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)

     1621 West Crosby - Suite 104,                        75006
           Carrollton, Texas
(Address of principal executive offices)               (Zip code)

                                 (972) 245-7353
              (Registrant's telephone number, including area code)

          (Former Name or Former Address, if Changed Since Last Report)


      Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days.

                                 |X| Yes     |_| No

      As of May 5, 2004 there were 29,603,750 shares of the registrant's  common
stock outstanding.

      Transitional Small Business Disclosure Format:

                                 |_| Yes     |X| No

<PAGE>


                          GVI SECURITY SOLUTIONS, INC.

                                   FORM 10-QSB

                                TABLE OF CONTENTS

PART I.  FINANCIAL INFORMATION

    Item 1.  Financial Statements............................................  3

    Item 2.  Management's Discussion and Analysis or Plan of Operation....... 12

    Item 3.  Controls and Procedures......................................... 14

PART II. OTHER INFORMATION

    Item 4.  Submission of Matters to a Vote of Security Holders............. 15

    Item 6.  Exhibits and Report on Form 8-K................................. 16


                                        2

<PAGE>

PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS.

                          GVI SECURITY SOLUTIONS, INC.
                           CONSOLIDATED BALANCE SHEET
                                 MARCH 31, 2004

<TABLE>
<CAPTION>
(In thousands, except share and per share amounts)

       ASSETS

Current Assets

<S>                                                                    <C>
   Cash                                                                $        960
   Accounts receivable, net                                                  10,477
   Inventory                                                                  9,475
   Other receivables                                                            778
   Prepaid expenses and other current assets                                    616
   Deferred income taxes                                                        302
                                                                       ------------
      Total Current Assets                                                   22,608

Property and Equipment, Net                                                     584

Other Assets
   Deposits                                                                     143
   Investment in Bio Access ID                                                  250
                                                                       ------------
      Total Assets                                                     $     23,585
                                                                       ============
       LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
   Accounts payable                                                    $     12,584
   Accrued expenses                                                             793
   Subordinated Notes Payable                                                   159
   Federal income taxes payable                                                  16
                                                                       ------------
      Total Current Liabilities                                              13,552

Line of Credit                                                                8,025
Deferred Income Taxes                                                            89
                                                                       ------------
      Total Liabilities                                                      21,666
                                                                       ------------
Commitments and Contingencies

Stockholders' Equity

   Preferred stock, Series A, $.001 par value; 3,000,000
     shares authorized, 1,148,799 shares issued and
     outstanding                                                                  1
   Preferred stock, Series B, $.001 par value, 200 shares
     authorized, 200 shares issued and outstanding                               --
   Preferred stock, Series C, $.001 par value, 400,000
     shares authorized, none issued or outstanding                               --
   Preferred stock, Series D, $.001 par value, 10,000 shares
     authorized, 10,000 shares issued and outstanding                            --
   Preferred stock, Series E, $.001 par value, 1,000,000
     shares authorized, 1,000,000 shares issued and
     outstanding                                                                  1
   Common stock, $.001 par value, 20,000,000 shares
     authorized; 10,204,637 shares issued and outstanding                        10
   Additional paid-in capital                                                   261
   Retained earnings                                                          1,646
                                                                       ------------
      Total Stockholders' Equity                                              1,919
                                                                       ------------
      Total Liabilities and Stockholders' Equity                       $     23,585
                                                                       ============
</TABLE>

                     See Notes to the Financial Statements

                                       3
<PAGE>

                          GVI SECURITY SOLUTIONS, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
(In thousands, except per share amounts)                                            Three Months Ended
                                                                                          March 31,
                                                                                 ----------------------------
                                                                                      2004           2003
                                                                                 ------------    ------------
<S>                                                                              <C>             <C>
                                                                                                  Predecessor
                                                                                                    Business
Revenues                                                                         $     14,989    $     10,017

Cost of Revenues                                                                       12,469           8,222
                                                                                 ------------    ------------
Gross Profit                                                                            2,520           1,795

Selling, General and Administrative Expenses                                            2,807           1,442
                                                                                 ------------    ------------
Operating Income (Loss)                                                                  (287)            353

Interest Expense                                                                          (88)            (57)
                                                                                 ------------    ------------
Income (Loss) before taxes                                                               (375)            296

Income Tax Expense (Benefit)                                                             (106)             --
                                                                                 ------------    ------------
Net Income (Loss)                                                                $       (269)   $        296
                                                                                 ============    ============
Income (Loss) Per Share

     Basic                                                                       $      (0.01)   $       0.01
                                                                                 ============    ============
     Diluted                                                                     $      (0.01)   $       0.01
                                                                                 ============    ============

Shares Used in Calculation of Net Income (Loss) Per Share

     Basic                                                                             28,913          28,372
                                                                                 ============    ============
     Diluted                                                                           28,913          28,427
                                                                                 ============    ============
</TABLE>

                     See Notes to the Financial Statements

                                       4
<PAGE>

                          GVI SECURITY SOLUTIONS, INC.
                            STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
(In thousands)                                                                        Three Months Ended
                                                                                           March 31,
                                                                                 ----------------------------
                                                                                    2004            2003
                                                                                 ------------    ------------
<S>                                                                              <C>             <C>
                                                                                                  Predecessor
                                                                                                    Business
Cash Flows From Operating Activities

     Net Income (Loss)                                                           $       (269)   $        296
     Adjustments to Reconcile Net Income (Loss) to Net Cash
       Used In Operating Activities
         Depreciation                                                                      36              25
         Amortization of deferred loan origination fee                                      5               5
     Changes in Assets and Liabilities

       Accounts receivable                                                              1,925             237
       Inventory                                                                       (1,107)            284
       Other receivables                                                                  651            (140)
       Prepaids and other current assets                                                 (160)            243
       Accounts payable                                                                 1,202            (869)
       Accrued expenses                                                                   (38)             39
       Deposits                                                                          (143)             --
       Federal income tax payable                                                        (440)             --
                                                                                 ------------    ------------
       Net Cash Provided by Operating Activities                                        1,662             120
                                                                                 ------------    ------------
Cash Flows From Investing Activities

     Purchase of property and equipment                                                   (55)            (23)
     Purchase of investment in Bio Access ID                                             (250)             --
                                                                                 ------------    ------------
       Net Cash Used in Investing Activities                                             (305)            (23)

Cash Flows From Financing Activities

     Proceeds from subordinated notes payable                                             159              --
     Proceeds/(Repayments) of lines of credit                                            (625)             --
                                                                                 ------------    ------------
       Net Cash Provided (Used) by Financing Activities                                  (466)            124

Net Increase in Cash                                                                      891             221

Cash, Beginning of Period                                                                  69             166
                                                                                 ------------    ------------
Cash, End of Period                                                              $        960    $        387
                                                                                 ============    ============
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND  FINANCING
ACTIVITIES

Liabilities Assumed in Acquisition                                               $      1,819    $         --
Series A Preferred Stock Assumed in Acquisition                                             1              --
Conversion of Related Party Note and Loan Payable and
   Accrued Interest into Preferred Series D Stock                                       1,517              --
Issuance of Preferred Series E Stock in Acquisition                                         1              --
</TABLE>

                     See Notes to the Financial Statements

                                       5
<PAGE>

                          GVI SECURITY SOLUTIONS, INC.
                        NOTES TO THE FINANCIAL STATEMENTS


NOTE 1 - BASIS OF PRESENTATION

   These financial  statements  should be read in conjunction  with a reading of
   the Company's Annual Report on Form 10-KSB for the fiscal year ended December
   31, 2003, and the Form 8-K/A filed on April 22, 2004.

   The  accompanying  unaudited  consolidated  financial  statements  have  been
   prepared  in  accordance  with  generally  accepted   accounting   principles
   applicable to interim financial information and with the requirements of Form
   10-QSB  and  Item  310  of  Regulation  S-B of the  Securities  and  Exchange
   Commission.  Accordingly,  they do not  include  all of the  information  and
   footnotes required by accounting  principles generally accepted in the United
   States of America for complete financial statements.  Interim results are not
   necessarily  indicative  of  results  for a  full  year.  In the  opinion  of
   management,  all adjustments  considered necessary for a fair presentation of
   the financial  position and the results of operations  and cash flows for the
   interim periods have been included.

   On  February  20,  2004,  pursuant  to an  Agreement  and Plan of Merger (the
   "Merger  Agreement") dated as of February 19, 2004, by and among the Company,
   GVI Security,  Inc.  ("GVI"),  and GVI Security  Acquisition  Corp.,  a newly
   formed wholly-owned subsidiary of the Company, GVI merged (the "Merger") with
   GVI  Security   Acquisition  Corp.,   becoming  the  Company's   wholly-owned
   subsidiary,  and the stockholders of GVI became  stockholders of the Company.
   As a result of the Merger, the business of GVI is now the Company's business.
   GVI is the  exclusive  distributor  of  Samsung  Electronics  video  security
   products  in  North,   Central  and  South  America,  and  distributes  video
   surveillance  and other  security  products  to  wholesale  distributors  and
   consumers. GVI's security products include both proprietary GVI solutions and
   Samsung Electronics components.

   For  accounting  purposes,  because GVI Security  Solutions,  Inc.  (formerly
   Thinking Tools, Inc.) had become a shell company, the Merger was treated as a
   recapitalization  of GVI Security,  Inc. As such,  the  historical  financial
   information prior to the merger is that of GVI Security, Inc.

   Immediately prior to the Merger, and as a condition thereto, Europa exchanged
   the  Convertible  Demand  Grid Note  issued by the  Company in the  principal
   amount of $1,000,000,  and all other  indebtedness  of the Company to Europa,
   for 10,000 shares of the Series D Convertible Preferred Stock of the Company,
   which were  convertible  into an  aggregate  of  77,218,860  shares of common
   stock. In the Merger, the Company issued to the former stockholders of GVI an
   aggregate of 1,000,000  shares of the Series E Convertible  Preferred  Stock,
   which were  convertible  into an  aggregate  of  approximately  1,833,948,000
   shares of the  Company's  common stock.

   Pursuant to its obligations  under the Merger  Agreement,  on March 23, 2004,
   the Company filed with the Securities and Exchange  Commission,  a Definitive
   Information   Statement  with  respect  to  the  approval  by  the  Company's
   stockholders of (i) amendments to the Company's  certificate of incorporation
   increasing the authorized  shares of the Company's common stock to 75,000,000
   and  effecting a one-for-65  reverse  stock split of the common stock so that
   the Company would have  sufficient  shares of unissued  common stock so as to
   permit the  conversion  of all of the Series D Stock,  Series E Stock and all
   other convertible  securities of the Company (the "Charter Amendment"),  (ii)
   the Stock  Option  Plan,  and  (iii)  the change of its  name to GVI Security
   Solutions,  Inc.  These actions were approved of by the Board of Directors on
   February  26,  2004.  The Company  filed a  Certificate  of  Amendment to its
   Certificate  of  Incorporation  with the  Secretary  of State of the State of
   Delaware  giving effect to such  amendments in April 2004. In April 2004, all
   outstanding shares of Series A Preferred Stock,  Series D Preferred Stock and
   Series E Preferred Stock automatically converted into shares of the Company's
   common  stock,  and the Company  effected a one-for-65  reverse  common stock
   split.

                                       6
<PAGE>


NOTE 1 ~ BASIS OF PRESENTATION (CONTINUED)

   In order to present comparative  Earnings Per Share information for the three
   month  periods  ended  March  31,  2004  and  2003,  the  shares  used in the
   calculations  of net income  (loss) per share  have been  adjusted  as if the
   preferred stock conversions occurred,  as applicable,  and for the one-for-65
   reverse common stock split.

   Until May,  2003, GVI elected to be taxed under the provisions of Sub-Chapter
   S of the Internal Revenue Code. Under those  provisions,  GVI did not provide
   for or pay Federal and certain  corporate  state  income taxes on its taxable
   income for the period ended March 31, 2003.  Instead,  the stockholders  were
   liable for  individual  Federal and State  income taxes on their share of the
   Company's taxable income.

NOTE 2 ~ STOCK-BASED COMPENSATION

   In December 2002, the Financial  Accounting  Standards  Board Issued SFAS No.
   148,  "Accounting for Stock-Based  Compensation - Transition and Disclosure -
   an  amendment  of  SFAS  No.  123."  this  statement  amends  SFAS  No.  123,
   "Accounting for Stock-Based  Compensation," to provide alternative methods of
   transition  for a  voluntary  change  to  the  fair  value  based  method  of
   accounting for stock-based employee compensation. In addition, this Statement
   amends the  disclosure  requirements  of SFAS No.  123 to  require  prominent
   disclosures  in  financial  statements  about the  method of  accounting  for
   stock-based  employee  compensation  and the  effect  of the  method  used on
   reported  results.  The Company accounts for stock-based  compensation  using
   Accounting Principles Board (APB) Option No. 25, "Accounting for Stock Issued
   to Employees" and has not adopted the recognition provisions of SFAS No. 123,
   as amended by SFAS No. 148. The exercise  price of options  granted under the
   stock option plan is equal to the market price of the underlying stock on the
   date of grant. Therefore, no compensation cost was recorded under APB No. 25.

   If  the  Company  had  determined   compensation  cost  for  the  stock-based
   compensation plan in accordance with the fair value method prescribed by SFAS
   No. 123, proforma net income for the three month periods ended March 31, 2004
   and 2003, would have been as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                       2004        2003
                                                                                    ----------- -----------
<S>                                                                                 <C>         <C>
       Net income (loss), as reported                                               $    (269)  $     296
       Stock-based employee compensation expense, net of related tax effects               91          --
                                                                                    ---------   ---------

         Net Income (loss), pro forma                                               $    (360)  $     296
                                                                                    =========   =========


      The  weighted  average  fair  value of  options  granted  during  2004 was
      $1.62.  The  fair  value  of each  option  on the  date of  grant  was
      estimated using the Black-Scholes  option pricing model with the following
      weighted average assumptions:

         Risk free rate of return                                                        3.02%          --  %
         Option lives in years                                                           5              --
         Annual volatility of stock price                                                74%            --  %
         Dividend yield                                                                  --%            --  %
</TABLE>


NOTE 3 ~ LINE OF CREDIT

The line of credit contains certain financial and other covenants with which the
Company  was  either  in  compliance  at  March  31,  2004  or has  obtained  an
appropriate waiver from the lender.


                                       7
<PAGE>

NOTE 4 ~ SUBORDINATED NOTES PAYABLE

    On March 31, 2004, GVI received a total of $159,000 from the Company's Chief
    Executive   Officer  and  affiliates  of  two  directors  for   subordinated
    convertible  notes  payable,  bearing  interest  at 10% per year,  which are
    convertible  into  the  common  stock of the  Company  at  $5.10  per  share
    (post-reverse  split).  The notes are due at the  earlier  of a closing of a
    public or private  security  offering  of at least  $3,000,000,  a change of
    control, or September 30, 2004.

NOTE 5 ~ RELATED PARTY TRANSACTIONS

   In the normal course of business,  the Company conducts certain  transactions
   with a company owned by William Teitlebaum,  a shareholder.  During the three
   month  periods  ended March 31,  2004 and 2003,  the  Company  sold  security
   products  of  approximately  $10,000  and  $141,000,  respectively,  to  this
   company. At March 31, 2004 and 2003, amounts due from this company, which are
   included in accounts receivable, were $213,000 and $141,000, respectively.

   In the normal  course of business,  the Company pays sales  commissions  to a
   shareholder  of the Company.  During the three month  periods ended March 31,
   2004 and 2003,  the Company  paid sales  commissions  to the  shareholder  of
   $81,000 and $74,000, respectively.

   Europa is managed by a company owned by a shareholder of the Company. Certain
   options and warrants are owned by officers and directors of the Company. The
   Company's  Chief Executive  Officer and affiliates of two directors  advanced
   $159,000 for subordinated convertible notes payable (See Note 4).

NOTE 6 ~ CONTINGENCIES

   A shareholder,  Teitelbaum, claims ownership of a warrant allegedly issued by
   GVI prior to the  Merger,  which  would,  he  claims,  under the terms of the
   Merger,  entitle him to  purchase  261,991,428  shares of common  stock at an
   aggregate  exercise  price of $3,285.70,  before giving effect to the reverse
   split (the "Warrant"). The Company disputes the validity of the Warrant.

   Sales to certain consumers of video  surveillance and other security products
   may be subject to sales tax  requirements and possible audits by state taxing
   authorities.

   The  Company  is also a party to  other  disputes  in the  normal  course  of
   business.  Management  believes the ultimate resolution of such disputes will
   not have a material effect on the financial statements.

NOTE 7 ~ 2004 STOCK INCENTIVE PLAN

   In February 2004, the Company adopted the 2004 Long-Term Stock Incentive Plan
   and reserved  386,094,320  shares of its common stock (prior to giving effect
   to the reverse stock split).  In addition,  in February,  the Company granted
   options for common stock  exercisable  under the plan of 173,875,000 at $0.04
   per share and 183,394,797 at $0.0049 per share (prior to giving effect to the
   reverse stock split).

NOTE 8 ~ INVESTMENT IN Bio-AccessID, LLC

   On January 20, 2004, pursuant to a Membership Purchase Agreement by and among
   John Carter, Ronald DeBerry, GVI Security Solutions,  Inc., and Bio-AccessID,
   LLC  ("Bio-Access"),  the  Company  purchased  a 5%  membership  interest  in
   Bio-Access for $250,000. As part of the agreement,  the Company has the right
   to acquire up to an  additional  16% of Bio-Access  over a three-year  period
   after certain  agreed-upon  purchase  goals have been attained for a purchase
   price of up to an additional $500,000.


                                       8
<PAGE>

NOTE 9 ~ UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS

   The following  unaudited pro forma condensed  statements of operations of the
   Company have been  prepared to indicate how the  financial  statements of the
   Company might have looked if the Merger with GVI and transactions  related to
   that Merger had occurred as of the beginning of the periods presented.

   The pro forma condensed statements of operations have been prepared using the
   historical  financial  statements  of the Company and GVI for the three month
   periods  ended March 31, 2004 and 2003.  The per share  information  has been
   adjusted as if the preferred stock conversions occurred,  as applicable,  and
   for the  one-for-65  reverse  common stock split.  For  accounting  purposes,
   because the Company had become a shell  company,  the Merger was treated as a
   recapitalization of GVI.

   The  pro  forma  condensed   statements  of  operations  should  be  read  in
   conjunction  with a reading of the  historical  financial  statements  of the
   Company  and GVI.  The pro  forma  condensed  statements  of  operations  are
   presented  for  illustrative  purposes  only  and  are  not  intended  to  be
   indicative of actual  financial  condition or results of  operations  had the
   Merger been in effect during the periods presented, or of financial condition
   or results of operations that may be reported in the future.


                                       9
<PAGE>

                          GVI SECURITY SOLUTIONS, INC.

              UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
                     THREE MONTH PERIOD ENDED MARCH 31, 2004

(In Thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                 Historical                        Pro Forma
                                       ------------------------------    -----------------------------
                                       GVI Security
                                         Solutions,          GVI
                                            Inc.        Security, Inc.    Adjustments      Combined
                                       -------------    -------------    -------------   -------------
<S>                                    <C>              <C>              <C>             <C>
Revenues                               $          --    $      14,989    $          --   $      14,989

Cost of Goods Sold                                --           12,469               --          12,469
                                       -------------    -------------    -------------   -------------
Gross Profit                                      --            2,520               --           2,520

Selling, General and Administrative               31            2,807               --           2,838
                                       -------------    -------------    -------------   -------------

Operating Income / (Loss)                        (31)            (287)              --            (318)

Interest Expense                                (110)             (88)             110             (88)
                                       -------------    -------------    -------------   -------------

Income (Loss) Before Income Taxes               (141)            (375)             110            (406)
                                       -------------    -------------    -------------   -------------

Provision (Benefit) for Income Taxes              --             (106)              --            (106)
                                       -------------    -------------    -------------   -------------

Net Income / (Loss)                    $        (141)   $        (269)   $         110   $        (300)
                                       =============    =============    =============   =============

Income / (Loss) Per Share:
      Basic and Diluted                                                                  $       (0.01)
                                                                                         =============

Shares Used in Calculation of Net
   Income / (Loss) Per Share:
      Basic and Diluted                                                                         28,372
                                                                                         =============
</TABLE>

The  adjustments  reflect  the  exchange of the  indebtedness  by the Company to
Europa by  removing  the  related  interest  expense.  Basic  and fully  diluted
earnings per share assume  conversion  of Series A, D, and E Preferred  Stock on
January 1, 2004.


                                       10
<PAGE>

                          GVI SECURITY SOLUTIONS, INC.

              UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
                     THREE MONTH PERIOD ENDED MARCH 31, 2003

(In Thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                 Historical                        Pro Forma
                                       ------------------------------    -----------------------------
                                       GVI Security
                                         Solutions,          GVI
                                            Inc.        Security, Inc.    Adjustments      Combined
                                       -------------    -------------    -------------   -------------
<S>                                    <C>              <C>              <C>             <C>
Revenues                               $          --    $      10,017    $          --   $      10,017

Cost of Goods Sold                                --            8,222               --           8,222
                                       -------------    -------------    -------------   -------------

Gross Profit                                      --            1,795               --           1,795

Selling, General and Administrative                8            1,442               --           1,450
                                       -------------    -------------    -------------   -------------
Operating Income / (Loss)                         (8)             353               --             345

Interest Expense                                 (27)             (57)              27             (57)
                                       -------------    -------------    -------------   -------------
Income (Loss) Before Income Taxes                (35)             296               27             288

Provision (Benefit) for Income Taxes              --               --               --              --
                                       -------------    -------------    -------------   -------------

Net Income / (Loss)                    $         (35)   $         296    $          27   $         288
                                       =============    =============    =============   =============
Income / (Loss) Per Share:
      Basic                                                                              $       (0.01)
                                                                                         =============
      Diluted                                                                            $       (0.01)
                                                                                         =============

Shares Used in Calculation of Net
Income / (Loss) Per Share:
      Basic                                                                                     28,372
                                                                                         =============
      Diluted                                                                                   28,383
                                                                                         =============
</TABLE>

The  adjustments  reflect  the  exchange of the  indebtedness  by the Company to
Europa by  removing  the  related  interest  expense.  Basic  and fully  diluted
earnings per share assume  conversion  of Series A, D, and E Preferred  Stock on
January 1, 2003.  Fully  diluted  earnings per share also assumes  conversion of
exercisable  options and warrants  based on the terms of the  agreements and the
Company's traded market price subsequent to the Merger.

NOTE 10 ~ SUBSEQUENT EVENTS

On April 12, 2004, the Company changed its name to GVI Security Solutions, Inc.,
increased the total shares authorized to 75 million, resulting in the conversion
to common stock of the preferred  stock Series A, D, and E  outstanding  shares,
and effected a one for 65 reverse common stock split.


                                       11
<PAGE>

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

      Statements  contained in this Quarterly Report on Form 10-QSB,  other than
the historical financial information,  constitute  "forward-looking  statements"
within the meaning of the Private Securities  Litigation Reform Act of 1995. All
such forward-looking  statements involve known and unknown risks,  uncertainties
or other factors which may cause actual  results,  performance or achievement of
the Company to be materially  different from any future results,  performance or
achievement  expressed or implied by such  forward-looking  statements.  Primary
risk  factors  include,  but are not limited to:  reliance on primary  supplier;
outstanding  indebtedness;  reliance on a primary retailer for sales through the
retail  channel;  effective  integration  of recently  acquired  operations  and
personnel;  expansion  risks;  effective  internal  processes  and systems;  the
ability to attract and retain  high  quality  employees;  changes in the overall
economy;  rapid change in technology;  the number and size of competitors in its
markets;  law and regulatory policy; the mix of products and services offered in
the  Company's  target  markets;  and other  risks  described  herein and in the
Company's 2003 Annual Report on Form 10-KSB.

PART II. MANAGEMENT'S DISCUSSION AND ANALYSIS OF GVI'S OPERATIONS

The following  discussion of results of  operations  and financial  condition is
based upon, and should be read in conjunction  with, our consolidated  condensed
financial statements and accompanying notes thereto included elsewhere herein.

THREE MONTHS ENDED MARCH 31, 2004 COMPARED TO THREE MONTHS ENDED MARCH 31, 2003

NET REVENUES

Total net  revenues  increased  50% to  approximately  $15  million in the first
quarter of 2004 from approximately $10 million in the first quarter of 2003. The
increase was due to increases in sales across the range of our products together
with the  introduction  of several new  products  manufactured  by both  Samsung
Electronics and the other manufacturers whose products we distribute.

COST OF REVENUES

Total cost of goods sold increased 52% to  approximately  $12.5 million in the
first quarter of 2004 from  approximately $8.2 in the first quarter of 2003. The
increase was due to the increased  revenue  volume in addition to higher inbound
freight  costs and  changes in our  product  mix.  As a result of the changes in
sales and  costs of goods  sold,  gross  profit  in the  first  quarter  of 2004
increased to approximately  $2.5 million from  approximately $1.8 million in the
first quarter of 2003,  and gross profit as a percentage of net sales  decreased
to 16.8% in the first  quarter of 2004  compared with 17.9% in the first quarter
of 2003.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Total  selling,   general  and   administrative   expenses   increased  100%  to
approximately  $2.8 million in the first quarter of 2004 from approximately $1.4
million in the first quarter of 2003.

Sales and Marketing. Sales and marketing expenses increased 97% to approximately
$1,231,000 in the first quarter of 2004 from approximately $624,000 in the first
quarter of 2003.  The  increase  was  primarily  due to  increased  commissions,
salaries, contract and temporary help, and travel-related expenses.

                                       12
<PAGE>

General and Administrative. General and administrative expenses increased 93% to
approximately  $1,576,000  in the  first  quarter  of  2004  from  approximately
$818,000 in the first quarter of 2003. The increased general and  administrative
expense was  primarily  due to  increased  salaries  and wages  associated  with
additional hires,  additional provision for doubtful accounts resulting from our
higher revenues as well as the inclusion of expenses associated with the reverse
merger  completed on February 20, 2004 and costs  associated with being a public
company  amounting to approximately  $300,000 in the first quarter of 2004, with
no corresponding type charges in the first quarter of 2003.

INTEREST EXPENSE

Interest  expense in the first quarter of 2004  increased  54% to  approximately
$88,000 from  approximately  $57,000 in the first quarter of 2003.  The increase
was primarily related to higher outstanding  borrowings during the first quarter
2004 compared with the first quarter of 2003.

INCOME TAX EXPENSE (BENEFIT)

The provision for federal,  state and local income tax benefit was a tax benefit
of  approximately  $106,000 for the first  quarter of 2004  compared with $0 tax
expense for the first quarter of 2003. Prior to May 23, 2003, GVI Security, Inc.
("GVI")  elected  to be taxed  under  the  provisions  of Sub  Chapter  S of the
Internal  Revenue Code. As a Sub Chapter S corporation,  GVI did not provide for
or pay any Federal or certain  corporate  or state  income  taxes on its taxable
income for the period from January 1, 2003 until May 2003.

NET INCOME

As a result of the items  discussed  above in the first quarter 2004 there was a
net loss of $269,000 compared with a net income of $296,000 in the first quarter
2003.

LIQUIDITY AND CAPITAL RESOURCES

Historically,  GVI has funded its  operations  primarily  through cash generated
from operations as well as borrowings under secured revolving credit facilities.
On November 1, 2003,  GVI entered into a Credit  Agreement  with  Comerica  Bank
pursuant to which GVI  obtained a  $10,000,000  revolving  loan credit  facility
which  terminates on November 1, 2005.  Advances under the Credit  Agreement are
limited to a borrowing base consisting of 75% of GVI's Eligible Accounts and 50%
of  GVI's  Eligible  Inventory  (each  as  defined  in  the  Credit  Agreement).
Contemporaneously  with  the  closing  of the  Credit  Agreement,  GVI  borrowed
approximately $4.975 million of revolving loans and used all of such proceeds to
repay in full its  indebtedness  under its prior  credit  agreement.  The Credit
Agreement  also  provides  for the  issuance of up to  $1,000,000  of letters of
credit.  Borrowings  under the  Credit  Agreement  are  secured  by all of GVI's
assets.  GVI pays the  lender a  quarterly  fee  equal to .25% per  annum on the
unused portion of the credit facility.

Interest on the  revolving  loans is due on a monthly  basis.  At GVI's  option,
revolving  loans  currently  bear interest at a rate either tied to the lender's
prime rate or the rate of interest  offered in the interbank  Eurodollar  market
selected by lender.  Depending on GVI's  debt-to-tangible net worth ratio, prime
rate  borrowings  bear interest at a rate equal to the lender's prime rate minus
..50%,  the  lender's  prime  rate,  or the  lender's  prime rate plus .50%,  and
Eurodollar borrowings bear interest at a rate equal to the applicable Eurodollar
rate plus between 2.25% and 3.25%. The Credit Agreement provides for a number of
affirmative  and  negative  covenants,   restrictions,   limitations  and  other
conditions  including among others,  maintenance of minimum  tangible net worth,
maintenance of minimum quarterly earnings,  and compliance with debt to tangible
net worth ratio covenants.

                                       13
<PAGE>

At December 31, 2003,  GVI was not in compliance  with the minimum  tangible net
worth and maximum debt-to-tangible net worth ratio financial covenants contained
in the  Credit  Agreement.  On  February  18,  2004,  the  lender  waived  GVI's
non-compliance  with those  financial  covenants and amended those covenants for
future  periods.  In  connection  with this  waiver  and  amendment,  the lender
increased the interest rate applicable to borrowings  under the Credit Agreement
to those described  above,  and required GVI to pay the lender a fee of $25,000.
At March 31,  2004,  GVI was not in  compliance  with the  amended  (a)  minimum
tangible net worth,  (b) maximum  debt-to-tangible  net worth ratio, and (c) net
income financial covenants  contained in the Credit Agreement.  On May 21, 2004,
the lender waived GVI's non-compliance with those financial covenants.

On March 31, 2004,  our Chief  Executive  Officer and  affiliates  of two of our
directors provided us with an aggregate of $159,000 of subordinated  convertible
loans to fund short-term  capital  requirements.  These loans bear interest at a
rate of 10% per annum,  mature upon the occurrence of certain events, but in any
event, no later than September 30, 2004, and are convertible  into shares of our
Common Stock at a price of $5.10 per share.

At March 31, 2004, we had cash and cash equivalents of  approximately  $960,000,
working capital of approximately $9.0 million and outstanding revolving loans of
approximately  $8.025  million,   with  approximately   $369,000  of  additional
availability  under  the  Credit  Agreement,  compared  to  GVI's  cash and cash
equivalents of approximately  $387,000,  working capital of  approximately  $5.0
million and outstanding  revolving loans of  approximately  $3.47 million,  with
approximately  $1,021,000 of additional  availability  under a Credit  Agreement
with GVI's prior lender at March 31, 2003. Management believes that our existing
cash position and credit facility (or  replacement  financing  discussed  below)
combined with internally  generated cash flow will satisfy our cash requirements
for the remainder of 2004. The approximately  $573,000 increase in cash and cash
equivalents at March 31, 2004 resulted primarily from increased business levels.

We are currently  negotiating  with a financial  institution  to provide us with
loans of approximately $15,000,000,  the proceeds of which would be used in part
to repay in full all of our  outstanding  obligations to Comerica bank under the
Credit  Agreement.  The  proposed  loan  facility  would not  contain  financial
covenants,  and loans  thereunder would be convertible into shares of our Common
Stock.  Although we anticipate  closing this transaction  shortly,  there can be
assurance as to when or whether such transaction will occur.

ITEM 3. CONTROLS AND PROCEDURES.

      Nazzareno  Paciotti,  our Chief Executive and Chief Financial  Officer has
concluded,  based on his  evaluation as of March 31, 2004,  that our  disclosure
controls and procedures are effective to ensure that information  required to be
disclosed by us in the reports we file or submit under the  Securities  Exchange
Act of 1934, as amended, is recorded, processed,  summarized and reported within
the time periods specified in the SEC's rules and forms.

      Our management, including our Chief Executive and Chief Financial Officer,
does not expect that our disclosure  controls and procedures or internal control
over financial reporting will prevent all error and all fraud. A control system,
no matter how well  conceived and  operated,  can provide only  reasonable,  not
absolute,  assurance that the objectives of the system are met and cannot detect
all deviations.  Because of the inherent  limitations in all control systems, no
evaluation of control can provide absolute assurance that all control issues and
instances of fraud or deviations, if any, within the Company have been detected.
While we believe that our  disclosure  controls and  procedures and our internal
control over financial reporting have been effective, in light of the foregoing,
we intend to  continue  to  examine  and  refine  our  disclosure  controls  and

                                       14
<PAGE>

procedures and our internal control over financial  reporting to monitor ongoing
developments in this area.

      There were no significant  changes in our internal  control over financial
reporting  subsequent to our  evaluation of our internal  control over financial
reporting that could  materially  affect or are reasonably  likely to materially
affect our internal control over financial reporting.

PART III. OTHER INFORMATION

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

      On January 25, 2004, the holders of a majority of our voting capital stock
acted by written consent in lieu of a special meeting of stockholders to approve
amendments to the Certificate of Designations, Powers, Preferences and Rights of
the  Series  A  Convertible  Preferred  Stock  included  in our  Certificate  of
Incorporation  which  would (i)  eliminate  the right of the holders of Series A
Preferred Stock to receive divided payments thereon, including dividend payments
that had accrued but remained  unpaid,  and dividend  payments that such holders
would  have  otherwise  been  entitled  to  receive as a result of the shares of
Series A Preferred Stock not being converted into Common Stock by March 7, 2001,
and (ii)  reduces the number of shares of Common  Stock into which each share of
Series A Preferred Stock convertible into (the "Conversion Ratio") from ten (10)
shares to two and one-half  (2.5)  shares.  On April 12, 2004, we filed with the
Delaware  Secretary of State an Amended  Certificate  of  Designations,  Powers,
Preferences and Rights of the Series A Convertible Preferred Stock giving effect
to these amendments.  These amendments were approved of by stockholders  holding
677,225  shares of our  Series A  Preferred  Stock,  200  shares of our Series B
Preferred  Stock and 5,131,121  shares of our Common Stock (before giving effect
to our one-for-65 reverse stock split).

      On March 3, 2004,  the holders of a majority of our voting  capital  stock
acted by written  consent in lieu of a special  meeting of  stockholders  (I) to
approve  amendments to our Certificate of  Incorporation  which would (i) change
our name to GVI Security Solutions,  Inc., (ii) increasing our authorized shares
of common stock to 75,000,000,  and (iii) effecting the one-for-65 reverse split
of our Common Stock;  and (II) approving our 2004 Long-Term  Incentive  Plan. On
April 12, 2004, we filed with the Delaware  Secretary of State a Certificate  of
Amendment to our Certificate of Incorporation giving effect to these amendments.
These  amendments  and the 2004  Long-Term  Incentive  Plan were  approved of by
stockholders  holding 200 shares of our Series B Preferred Stock,  10,000 shares
of our Series D Preferred Stock,  521,739 shares of our Series E Preferred Stock
and 5,131,121 shares of our Common Stock (before giving effect to our one-for-65
reverse stock split).

                                       15
<PAGE>

ITEM 6. EXHIBITS AND REPORT ON FORM 8-K.

(a)   Exhibits

      Number                              Description
      ------                              -----------

      3           Certificate of Incorporation and Amendments

      31          Certification of Nazzareno  Paciotti,  Chief Executive Officer
                  and Chief  Financial  Officer of the  Registrant,  pursuant to
                  Rules 13a-14(a) and 15(d)-14(a) of the Securities Exchange Act
                  of 1934, as amended.

      32          Certification of Nazzareno  Paciotti,  Chief Executive Officer
                  and Chief Financial Officer of the Registrant,  pursuant to 18
                  U.S.C. ss.1350.

(a)   The  following  reports on Form 8-K were filed  during the  quarter  ended
      March 31, 2004.

      On  February  17,  2004,  we filed a Current  Report on Form 8-K,  Item 4,
announcing our engagement of Mercadien  P.C. as our  independent  accountants to
audit our financial  statements for the fiscal years ended December 31, 2003 and
2002.

      On February 27, 2004,  we filed a Current  Report on Form 8-K,  Items 1, 2
and 5,  announcing  (1) our change in control as a result of our  consummating a
merger pursuant to which we acquired all of the outstanding capital stock of GVI
Security,  Inc ("GVI"),  (2) our acquisition of the outstanding capital stock of
GVI, (3) the  appointment  of new directors and officers and (4) the approval by
our  Board  of  Directors  of  certain   amendments   to  our   Certificate   of
Incorporation.

                                       16
<PAGE>

                                   SIGNATURES

      Pursuant to the  requirements of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                GVI SECURITY SOLUTIONS, INC.

Date:  May 24, 2004             By: /s/ Nazzareno E. Paciotti
                                    ------------------------------------
                                    Name:  Nazzareno E. Paciotti
                                    Title:  Chief Financial Officer

                                       17
<PAGE>

                                  EXHIBIT INDEX

(b)

      Number                              Description
      ------                              -----------

      3           Certificate of Incorporation and Amendments

      31          Certification of Nazzareno  Paciotti,  Chief Executive Officer
                  and Chief  Financial  Officer of the  Registrant,  pursuant to
                  Rules 13a-14(a) and 15(d)-14(a) of the Securities Exchange Act
                  of 1934, as amended.

      32          Certification of Nazzareno  Paciotti,  Chief Executive Officer
                  and Chief Financial Officer of the Registrant,  pursuant to 18
                  U.S.C. ss.1350.

                                       18