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 June 30, 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)

       2801 Trade Center Dr #120
           Carrollton, Texas                            75007
(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 August 16, 2004 there were 29,603,879 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 6.  Exhibits and Report on Form 8-K................................. 16

<PAGE>

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

                          GVI SECURITY SOLUTIONS, INC.
                           CONSOLIDATED BALANCE SHEET

                                 (In thousands)

       ASSETS                                                June 30, 2004
                                                               -------
Current Assets

   Cash                                                        $ 2,210
   Accounts Receivable, Net                                     12,529
   Inventory                                                    10,055
   Other Receivables                                               625
   Prepaid Expenses And Other Current Assets                       618
   Deferred Income Taxes                                           251
   Refundable Income Taxes                                         451
                                                               -------
      Total Current Assets                                     $26,739

Property And Equipment, Net                                      1,826

Other Assets
   Deposits                                                        103
   Loan Origination Fees, Net                                    1,739
   Investment In Bio Access ID                                     250
                                                               -------
Total Assets                                                   $30,657
                                                               =======
       LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities
   Accounts Payable                                            $13,289
   Accrued Expenses                                              1,412
   Debt, Current Portion                                           927
                                                               -------
      Total Current Liabilities                                $15,628

Debt, Net Of Current Portion                                    14,268
Deferred Income Taxes                                               39
                                                               -------
       Total Liabilities                                       $29,935

Commitments And Contingencies

Stockholders' Equity

   Preferred Stock, Series B, $.001 Par Value, 200 Shares
     Authorized, 200 Shares Issued And Outstanding
   Preferred Stock, Undesignated, $.001 Par Value, 2,999,800
     Shares Authorized, None Issued Or Outstanding
   Common Stock, $.001 Par Value, 75,000,000 Shares
     Authorized; 29,603,879 Shares Issued And Outstanding           12
   Additional Paid-In Capital                                      436
   Retained Earnings                                               274
                                                               -------
      Total Stockholders' Equity                                   722
                                                               -------
      Total Liabilities And Stockholders' Equity               $30,657
                                                               =======

                     SEE NOTES TO THE FINANCIAL STATEMENTS


<PAGE>

                          GVI SECURITY SOLUTIONS, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                   Three Months Ended           Six Months Ended
                                                                        June 30,                   June 30,
                                                               -----------------------       -----------------------
                                                                 2004           2003           2004            2003
                                                               --------       --------       --------       --------
                                                                             Predecessor                   Predecessor
                                                                              Business                      Business
                                                               --------       --------       --------       --------
<S>                                                            <C>            <C>            <C>            <C>
Revenues                                                       $ 14,936       $ 12,782       $ 30,023       $ 22,799

Cost of Revenues                                                 12,771         10,766         25,338         18,988
                                                               --------       --------       --------       --------
Gross Profit                                                      2,165          2,016          4,685          3,811

Selling, General And Administrative Expenses                      3,947          1,531          6,754          2,973
                                                               --------       --------       --------       --------
Operating Income (Loss)                                          (1,782)           485         (2,069)           838

Interest Expense                                                   (116)           (51)          (204)          (109)
                                                               --------       --------       --------       --------
Income (Loss) Before Taxes                                       (1,898)           434         (2,273)           729

Income Tax Expense (Benefit)                                       (527)           (48)          (633)           (48)
                                                               --------       --------       --------       --------
Net Income (Loss)                                              $ (1,371)      $    482       $ (1,640)      $    777
                                                               ========       ========       ========       ========
Income (Loss) Per Share

     Basic                                                     $  (0.05)      $   0.02       $  (0.06)      $   0.03
                                                               ========       ========       ========       ========
     Diluted                                                   $  (0.05)      $   0.02       $  (0.06)      $   0.03
                                                               ========       ========       ========       ========

Shares Used In Calculation Of Net Income (Loss) Per Share

     Basic                                                       29,604         28,372         29,604         28,372
                                                               ========       ========       ========       ========
     Diluted                                                     29,604         28,383         29,604         28,383
                                                               ========       ========       ========       ========
</TABLE>

                     SEE NOTES TO THE FINANCIAL STATEMENTS

<PAGE>

                          GVI SECURITY SOLUTIONS, INC.

                            STATEMENTS OF CASH FLOWS

(In thousands)

<TABLE>
<CAPTION>
                                                                    Six Months Ended
                                                                         June 30,
                                                                 -------------------------
                                                                   2004           2003
                                                                 --------       --------
                                                                               Predecessor
                                                                                Business
                                                                                --------
<S>                                                              <C>            <C>
Cash Flows From Operating Activities
     Net Income (Loss)                                           $ (1,640)      $    777
     Adjustments To Reconcile Net Income (Loss) To Net Cash
       Used In Operating Activities
         Depreciation                                                 130             12
         Amortization Of Deferred Loan Origination Fees                51              8
         Deferred Tax Liability                                         0            (99)

     Changes In Assets And Liabilities

       Accounts Receivable                                           (235)          (114)
       Inventory                                                   (2,159)           301
       Other Receivables                                              877           (926)
       Prepaid And Other Current Assets                              (416)           (59)
       Accounts Payable                                             2,072           (708)
       Accrued Expenses                                               690             58
       Deposits                                                       (89)            36
       Federal Income Tax Payable/Refundable Income Tax              (907)            51
                                                                 --------       --------
       Net Cash Used In Operating Activities                       (1,626)          (663)
                                                                 --------       --------
Cash Flows From Investing Activities

     Purchase Of Property And Equipment                              (715)           (96)
     Purchase Of Investment In Bio Access ID                         (250)            --
                                                                 --------       --------
       Net Cash Used In Investing Activities                         (965)           (96)

Cash Flows From Financing Activities

     Proceeds From Subordinated Notes Payable                         159              0
     Repayment Of Subordinated Notes Payable                         (159)             0
     Proceeds Of Loan/Lines Of Credit                              15,000              0
     Proceeds/Repayments Of Prior Lines Of Credit                  (8,650)         1,291
     Repayment Of Capital Lease                                        (9)             0
     Stockholder Distribution                                           0           (215)
     Loan Origination Fee                                          (1,609)            (7)
                                                                 --------       --------
       Net Cash Provided By Financing Activities                    4,732          1,069
                                                                 --------       --------
Net Increase In Cash                                                2,141            310

Cash, Beginning Of Period                                              69            198
                                                                 --------       --------
Cash, End Of Period                                              $  2,210       $    508
                                                                 ========       ========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING
ACTIVITIES

Liabilities Assumed in Acquisition                               $  1,819       $     --
Preferred Stock Conversions into Common Stock                    $      2       $     --
Capital Lease Equipment Acquisition                              $    204       $     --
Conversion of Related Party Note and Loan Payable and
Accrued Interest                                                 $  1,517       $     --
Loan origination fee compensation cost for warrant issued        $    175       $
</TABLE>

                     SEE NOTES TO THE FINANCIAL STATEMENTS


<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 1,187,983 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 28,214,587 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.

<PAGE>

In order to present comparative Earnings Per Share information for the three and
six month periods ended June 30,2003, 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 six month periods ended June 30, 2004 and 2003,
would have been as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                 2004        2003
                                                                              ----------- -----------
<S>                                                                           <C>         <C>
 Net Income (Loss), As Reported                                               $  (1,640)  $     777
 Stock-Based Employee Compensation Expense, Net Of Related Tax Effects            ( 963)         --
                                                                              ---------   ---------

   Net Income (Loss), Pro Forma                                               $  (2,603)  $     777
                                                                              =========   =========
</TABLE>

      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                                 --%            --  %

<PAGE>

NOTE 3 ~ DEBT

Laurus Debt/Lines of Credit

On May 27, 2004, we closed a $15 million convertible debt financing with Laurus
Master Fund, Ltd. under which we were provided with a $5 million term loan and a
$10 million accounts receivable loan facility. At closing, we borrowed $5
million under the term loan and $10 million under the receivable facility, and
used $10,016,000 of the proceeds to repay in full the indebtedness outstanding
under our subsidiary's revolving credit agreement with Comerica Bank. Additional
proceeds of the financing were used to increase working capital, pay closing
fees to Laurus in the aggregate amount of $617,500, and pay a finder's fee in
the amount of $800,000. As part of the transaction, Laurus was also issued a
seven-year warrant to purchase 940,000 shares of our Common Stock at a price of
$3.50 per share. We agreed to issue a similar warrant to purchase 94,000 shares
of Common Stock to the finder. Borrowings under the Laurus financing are secured
by all of our assets.

The term loan is evidenced by a Secured Convertible Term Note and, subject to
monthly adjustments as set forth below, bears interest at an initial rate per
annum equal to the prime rate (as reported in the Wall Street Journal), plus two
percent, subject to a floor of six percent. Interest on the term loan is payable
monthly commencing June 1, 2004, and amortizing payments of principal on the
term loan are payable monthly on the first day of each month commencing
September 1, 2004, with a final payment due on May 27, 2007 as set forth in the
table below.

                  Period                              Principal Amount

September 2004 through December 2004                  $75,000 per month

January 2005 through May 2005                         $75,000 per month

June 2005 through May 2006                           $150,000 per month

June 2006 through April 2007                         $190,000 per month

May 2007                                             $435,000

The interest rate under the Term Note is subject to downward adjustment at the
end of each month as follows. If at the end of the applicable month we have
registered the shares of Common Stock underlying the Term Note with the SEC,
interest payable on the term loan will be adjusted downward by 200 basis points
(two percent) for each incremental 25 percent increase in the market price of
our Common Stock, at the end of the month, in excess of the conversion price
under the Term Note. The interest rate will be adjusted downward by only 100
basis point (one percent) for each incremental 25 percent increase in the market
price of our Common Stock in excess of the conversion price under the Term Note
in the event we have not registered the shares of Common Stock underlying the
Term Note at such time.

<PAGE>

Amounts outstanding under the Term Note is convertible into Common Stock at
Laurus's option at a conversion price initially equal to $2.70 per share. In
addition, subject to (i) having an effective registration statement with respect
to the shares of Common Stock underlying the Term Note, and (ii) limitations
based on trading volume of the Common Stock, scheduled principal and interest
payments under the Term Note will be made in shares of Common Stock valued at
the conversion price. Prepayments under the Term Note are subject to a premium
in the amount of 20% of the principal being prepaid.

Subject to monthly adjustments as set forth below, borrowings under the
receivable facility bear interest at an initial rate per annum equal to the
prime rate minus two percent. The interest rate under the receivable facility is
subject to downward adjustment at the end of each month in the same manner as
provided for under the Term Note. In addition, on and after November 26, 2004,
if the market price of our Common Stock is below the fixed conversion price at
the end of a month, the interest rate under the receivable facility will be
reset to equal the prime rate plus two percent. The receivable facility
terminates, and borrowings thereunder become due, on May 27, 2007.

Amounts outstanding under the receivable facility are convertible to Common
Stock at Laurus's option at a conversion price initially equal to $3.38 per
share. To the extent we repay loans outstanding under the receivable facility
and/or Laurus converts loans under the receivable facility into Common Stock, we
may reborrow or make additional borrowings under the receivable facility,
provided that aggregate loans outstanding under the receivable facility at any
time may not exceed the lesser of $10 million or a borrowing base equal to the
sum of 90% of "eligible accounts" plus 60% of "eligible inventory" (with
borrowings based on eligible inventory limited to $2 million).

<PAGE>

Loan Origination Fees

The loan origination and finders fees of $1.8 million for the above loan/line of
credit were capitalized and will be amortized over three years. Included in loan
origination fees is compensation of $175,000 relating to the issuance of a
warrant to purchase 94,000 shares of the company's common stock.

Capitalized Lease

There is a capital lease of $204,000 for a trade show booth that was converted
from a purchase to a capital lease. This lease will be paid over a term of
twenty-four months.

Amortization Table: (000's)

                                    2004             2005              2006
                                    ----             ----              ----
Capital Lease                       $ 60            $ 102             $  42

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 were convertible into the
common stock of the Company at $5.10 per share (post-reverse split). These notes
were paid in full with accumulated interest on June 29, 2004.

<PAGE>

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 six-month
periods ended June 30, 2004 and 2003, the Company sold security products of
approximately $10,000 and $87,000 respectively, to this company. At June 30,
2004 and 2003, amounts due from this company, which are included in accounts
receivable, were $210,000 and $214,000 respectively.

In the normal course of business, the Company pays sales commissions to a
shareholder of the Company. During the six-month periods ended June 30, 2004 and
2003, the Company paid sales commissions to the shareholder of $167,000 and
$157,000 respectively.

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 4,030,638 shares of common stock at an aggregate
exercise price of $3,285.70 (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 5,939,913 shares of its common stock. In addition, in February, the
Company granted options for common stock exercisable under the plan of 2,675,000
at $2.60 per share and at $0.3185 per share.

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.

<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 and
six-month periods ended June 30, 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.

<PAGE>


                          GVI SECURITY SOLUTIONS, INC.

              UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
                      SIX MONTH PERIOD ENDED JUNE 30, 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                                  $           --      $       30,023       $           --      $       30,023

Cost Of Goods Sold                                    --              25,338                   --              25,388
                                          --------------      --------------       --------------      --------------

Gross Profit                                          --               4,685                   --               4,685

Selling, General And Administrative                   --               6,754                   --               6,754
                                          --------------      --------------       --------------      --------------
Operating Income / (Loss)                             --              (2,069)                  --              (2,069)

Interest Expense                                      --              (204))                   --                (204)
                                          --------------      --------------       --------------      --------------
Income (Loss) Before Income Taxes                     --              (2,273)                  --              (2,273)

Provision (Benefit) For Income Taxes                  --                (633)                  --                (633)
                                          --------------      --------------       --------------      --------------

Net Income / (Loss)                       $           --      $       (1,640)      $           --      $       (1,640)
                                          ==============      ==============       ==============      ==============
Income / (Loss) Per Share:
      Basic                                                                                            $        (0.06)
                                                                                                        ==============
      Diluted                                                                                          $        (0.06)

Shares Used in Calculation of Net
Income / (Loss) Per Share:
      Basic                                                                                                    29,604
                                                                                                       ==============
      Diluted                                                                                                  29,604
                                                                                                       ==============
</TABLE>


                          GVI SECURITY SOLUTIONS, INC.

              UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
                      SIX MONTH PERIOD ENDED JUNE 30, 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                                  $     --       $ 22,799       $     --      $ 22,799

Cost Of Goods Sold                              --         18,988             --        18,988
                                          --------       --------       --------      --------

Gross Profit                                    --          3,811             --         3,811

Selling, General And Administrative             31          2,973             --         3,004
                                          --------       --------       --------      --------
Operating Income / (Loss)                      (31)           838             --           807

Interest Expense                               (54)          (109)            54          (109)
                                          --------       --------       --------      --------
Income (Loss) Before Income Taxes              (85)           729             54           698

Provision (Benefit) For Income Taxes            --            (48)            --           (48)
                                          --------       --------       --------      --------

Net Income / (Loss)                       $    (85)      $    777       $     54      $    746
                                          ========       ========       ========      ========
Income / (Loss) Per Share:
      Basic                                                                           $   0.03
                                                                                      ========
      Diluted                                                                         $   0.03
                                                                                      ========
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.

<PAGE>

NOTE 10  --SUBSEQUENT EVENTS

Rapor Acquisition

On July 1, 2004, the Company entered into an Agreement and Plan of Merger with
Rapor, Inc., a Florida corporation ("Rapor"), and Rapor Acquisition Corp., a
newly formed wholly-owned subsidiary of the Company ("Acquisition Corp.")

Pursuant to the Merger Agreement, upon closing, Rapor would merge with
Acquisition Corp. and become a wholly-owned subsidiary of the Company, and the
stockholders of Rapor would be issued (i) an aggregate of 2,707,852 shares of
the Company's common stock, par value $.001 per share ("Common Stock"), and (ii)
seven-year warrants to purchase an aggregate of 1,353,925 shares of Common Stock
at an exercise price of $3.04 per share. The Merger Agreement provides for
customary closing conditions.

Joseph Rosetti, a director of the Company, is also a director of Rapor. Mr.
Rosetti is also the direct holder of approximately 12% of Rapor's outstanding
common stock, and a principal partner in a partnership, established for the
benefit of members of his family, that holds approximately 7.5% of Rapor's
outstanding common stock.

Letters Of Credit

The Company issued two letters of credit to a vendor to purchase a new line of
products for sale in the United States and other parts of the world. One letter
of credit for $1.2 million was issued in July 2004, and the other letter of
credit was issued in August 2004 for $.6 million.

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.

<PAGE>

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 JUNE 30, 2004 COMPARED TO THREE MONTHS ENDED JUNE 30, 2003.

REVENUES

Revenues increased 16.9% to approximately $14.9 million in the three months
ended June 30, 2004 from approximately $12.8 million in the three months ended
June 30, 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 Samsung Electronics and the other manufacturers whose products we distribute.

COST OF REVENUES

Cost of revenues increased 18.6% to approximately $12.8 million for the three
months ended June 30, 2004 from approximately $10.8 million for the three months
ended June 30, 2003. The increase was due to the increased revenue volume,
higher costs associated with initial shipments to begin fulfilling an annual
contract with a major retailer, and costs associated with a malfunction of two
specific products which have since been corrected. Additionally, during the
quarter the company incurred higher freight costs.

As a result of the changes described above in revenues and costs of revenues,
gross profit in the three months ended June 30, 2004 increased to approximately
$2.1 million from approximately $2.0 million in the three months ended June 30,
2003, and gross profit as a percentage of revenues decreased to 14.5% for the
three months ended June 30, 2004 compared with 15.8% for the three months ended
June 30, 2003.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses increased 157.8% to approximately
$3.9 million in the three months ended June 30, 2004 from approximately $1.5
million in the three months ended June 30, 2003.

<PAGE>

Sales and Marketing. Sales and marketing expenses increased 78% to approximately
$1.6 million in the three months ended June 30, 2004 from approximately $.9
million in the three months ended June 30, 2003. The increase was primarily due
to increased commissions, salaries related to staffing the new Enterprise
Solutions Group, contract and temporary help, and travel-related expenses.

General and Administrative. General and administrative expenses increased 283%
to approximately $2.3 million in the three months ended June 30, 2004 from
approximately $.6 million in the three months ended June 30, 2003. The increased
general and administrative expense was primarily due to increased salaries and
wages associated with additional hires, increased provision for accounts
receivable allowances, costs associated with the refinancing of our working
capital facility and a $5 million term loan note as well as cost associated with
being a public company amounting to approximately ($.3 million) in the three
months ended June 30, 2004, with no corresponding type charges in the three
months ended June 30, 2003. General and administrative expenses without the
costs associated with the debt refinancing and public company expenses are $2.0
million or an increase of 233% over the three months ended June 30, 2004.

INTEREST EXPENSE

Interest expense in the three months ended June 30, 2004 increased 127.5% to
approximately $116,000 from approximately $51,000 in the three months ended June
30, 2003. The increase was primarily related to higher outstanding borrowings
during the three months ended June 30, 2004 compared with the three months ended
June 30, 2003.

INCOME TAX EXPENSE (BENEFIT)

The provision for federal, state and local income tax benefit was a tax benefit
of approximately $527,000, primarily as a result of an estimated income tax loss
carry back for the second quarter of 2004 compared with a deferred tax benefit
of $48,000 for the three months ended June 30, 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
income for the period from January 1, 2003 until May 2003.

<PAGE>

NET INCOME

As a result of the items discussed above there was a net loss of $1.4 million in
the three months ended June 30, 2004 compared with a net income of $.5 million
in the three months ended June 30, 2003. Excluding one-time costs associated
with the refinancing and being a public company described above the net loss for
the period would have been $1.1 million.

SIX MONTHS ENDED JUNE 30, 2004 COMPARED TO SIX MONTHS ENDED JUNE 30, 2003

REVENUES

Net revenues increased 31.6% to approximately $30.0 million in the six
months ended June 30, 2004 from approximately $22.8 million in the six months
ended June 30, 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.

<PAGE>

COST OF REVENUES

Cost of revenues increased 33.2% to approximately $25.3 million for the six
months ended June 30, 2004 from approximately $19.0 million for the six months
ended June 30, 2003. The increase was due to the increased revenue volume,
higher costs associated with initial shipments to begin fulfilling an annual
contract with a major retailer, and costs associated with a malfunction of two
specific products which have since been corrected. Additionally, during the
six-month period the company incurred higher freight costs and changes in our
product mix. As a result of the changes in sales and costs of revenues, gross
profit in the six months ended June 30, 2004 increased to approximately $4.7
million from approximately $3.8 million in the six months ended June 30, 2003,
and gross profit as a percentage of net sales decreased to 15.6% for the six
months ended June 30, 2004 compared with 16.7% for the six months ended June 30,
2003.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses increased 127.2% to approximately
$6.8 million in the six months ended June 30, 2004 from approximately $3.0
million in the six months ended June 30, 2003.

Sales and Marketing. Sales and marketing expenses increased 87% to approximately
$2.8 million in the six months ended June 30, 2004 from approximately $1.5
million in the six months ended June 30, 2003. The increase was primarily due to
increased commissions, salaries related to staffing the new Enterprise Solutions
Group, contract and temporary help, and travel-related expenses.

General and Administrative. General and administrative expenses increased 167%
to approximately $4.0 million in the six months ended June 30, 2004 from
approximately $1.5 million in the six months ended June 30, 2003. The increased
general and administrative expense was primarily due to increased salaries and
wages associated with additional hires, increased provision for accounts
receivable allowances, cost associated with the refinancing of our working
capital facility and a term loan note, as well as costs associated with being a
public company amounting to approximately $.7 million in the six months ended
June 30, 2004, with no corresponding type charges in the six months ended June
30, 2003. General and administrative expenses without the costs associated with
the debt refinancing and public company expenses are $3.3 million or an increase
of 120% over the six months ended June 30, 2003.

<PAGE>

INTEREST EXPENSE

Interest expense in the six months ended June 30, 2004 increased 87.2% to
approximately $204,000 from interest income of approximately $109,000 in the six
months ended June 30, 2003. The increase was due to outstanding borrowings
during the six months ended June 30, 2004 compared with a net positive cash
position for the six months ended June 30, 2003.

INCOME TAX EXPENSE (BENEFIT)

The provision for federal, state and local income tax benefit was a tax benefit
of approximately $633,000 for the six months ended June 30, 2004 (primarily as a
result of an estimated tax loss carry back) compared with a deferred tax benefit
of $48,000 for the six months ended June 30, 2003. Prior to May 23, 2003, 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 six months ended June 30, 2004
there was a net loss of $1.6 million compared with a net income of $.8 million
in the six months ended June 30, 2003. Excluding one time costs associated with
the refinancing and being a public company described above the net loss for the
period would have been $.9 million.

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.

<PAGE>

On May 27, 2004, we closed a $15 million convertible debt financing with Laurus
Master Fund, Ltd. under which we were provided with a $5 million term loan and a
$10 million accounts receivable loan facility. At closing, we borrowed $5
million under the term loan and $10 million under the receivable facility, and
used $10,016,000 of the proceeds to repay in full the indebtedness outstanding
under our subsidiary's revolving credit agreement with Comerica Bank. Additional
proceeds of the financing were used to increase working capital, pay closing
fees to Laurus in the aggregate amount of $617,500, and pay a finder's fee in
the amount of $800,000. As part of the transaction, Laurus was also issued a
seven-year warrant to purchase 940,000 shares of our Common Stock at a price of
$3.50 per share. We agreed to issue a similar warrant to purchase 94,000 shares
of Common Stock to the finder. Borrowings under the Laurus financing are secured
by all of our assets.

The term loan is evidenced by a Secured Convertible Term Note and, subject to
monthly adjustments as set forth below, bears interest at an initial rate per
annum equal to the prime rate (as reported in the Wall Street Journal), plus two
percent, subject to a floor of six percent. Interest on the term loan is payable
monthly commencing June 1, 2004, and amortizing payments of principal on the
term loan are payable monthly on the first day of each month commencing
September 1, 2004, with a final payment due on May 27, 2007 as set forth in the
table below.

   Period                                             Principal Amount

September 2004 through December 2004                  $75,000 per month

January 2005 through May 2005                         $75,000 per month

June 2005 through May 2006                           $150,000 per month

June 2006 through April 2007                         $190,000 per month

May 2007                                             $435,000

The interest rate under the Term Note is subject to downward adjustment at the
end of each month as follows. If at the end of the applicable month we have
registered the shares of Common Stock underlying the Term Note with the SEC,
interest payable on the term loan will be adjusted downward by 200 basis points
(two percent) for each incremental 25 percent increase in the market price of
our Common Stock, at the end of the month, in excess of the conversion price
under the Term Note. The interest rate will be adjusted downward by only 100
basis point (one percent) for each incremental 25 percent increase in the market
price of our Common Stock in excess of the conversion price under the Term Note
in the event we have not registered the shares of Common Stock underlying the
Term Note at such time.

Amounts outstanding under the Term Note is convertible into Common Stock at
Laurus's option at a conversion price initially equal to $2.70 per share. In
addition, subject to (i) having an effective registration statement with respect
to the shares of Common Stock underlying the Term Note, and (ii) limitations
based on trading volume of the Common Stock, scheduled principal and interest
payments under the Term Note will be made in shares of Common Stock valued at
the conversion price. Prepayments under the Term Note are subject to a premium
in the amount of 20% of the principal being prepaid.

Subject to monthly adjustments as set forth below, borrowings under the
receivable facility bear interest at an initial rate per annum equal to the
prime rate minus two percent. The interest rate under the receivable facility is
subject to downward adjustment at the end of each month in the same manner as
provided for under the Term Note. In addition, on and after November 26, 2004,
if the market price of our Common Stock is below the fixed conversion price at
the end of a month, the interest rate under the receivable facility will be
reset to equal the prime rate plus two percent. The receivable facility
terminates, and borrowings thereunder become due, on May 27, 2007.

<PAGE>

Amounts outstanding under the receivable facility are convertible to Common
Stock at Laurus's option at a conversion price initially equal to $3.38 per
share. To the extent we repay loans outstanding under the receivable facility
and/or Laurus converts loans under the receivable facility into Common Stock, we
may reborrow or make additional borrowings under the receivable facility,
provided that aggregate loans outstanding under the receivable facility at any
time may not exceed the lesser of $10 million or a borrowing base equal to the
sum of 90% of "eligible accounts" plus 60% of "eligible inventory" (with
borrowings based on eligible inventory limited to $2 million).

The conversion prices under the Term Note and the receivable facility are
subject to equitable adjustment for stock splits, stock dividends and similar
events, and "weighted average" adjustment for future stock issuances (other than
stock issuances in specifically excepted transactions).

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. Such loans bore interest at a
rate of 10% per annum and were repaid in full on June 29, 2004.

At June 30, 2004, we had cash and cash equivalents of approximately $2.2
million, working capital of approximately $11.1 million and outstanding loans
from Laurus of approximately $15.0 million, which fully utilized the
availability under the line. The Company had cash on hand of approximately $.5
million, working capital of approximately $6.0 million and outstanding revolving
loans of approximately $4.7 million, with approximately $.3 million of
additional availability under a Credit Agreement with GVI's prior lender, Fleet
Bank, at June 30, 2003.

Management believes that it will require additional financing within the next
three months to satisfy cash requirements necessary to sustain the current rate
of growth for the remainder of 2004. The Company's cash needs result from the
expansion of its sales of consumer products to additional retail sellers
resulting in the Company carrying larger receivables and inventory. This
expansion in the retail sales area has also resulted in the need to maintain a
larger sales force and increase the general and admisitrative cost of the
Company. Sales to additional retail sellers will enable the Company to diversify
its distribution channels and reduce its reliance on a primary retail customer.
We are currently in discussions with several potential funding sources. However,
there can be no assurance that we will be able to consummate any required
financing transaction or on terms and conditions favorable to us. Any such
transaction may result in dilution to existing stockholders. Management believes
that if it is not able to secure the necessary funding its will be able to
reduce it cost sufficiently.

<PAGE>

 ITEM 3. CONTROLS AND PROCEDURES.

Nazzareno Paciotti, our Chief Executive and Chief Financial Officer has
concluded, based on his evaluation as of June 30, 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
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 II. OTHER INFORMATION

<PAGE>


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

(a)   Exhibits

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


      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 June
30, 2004.

     On April 20, 2004, we filed a Current Report on Form 8-K, Item 5, relating
     to a press release we issued announcing the change of our name and that we
     had effected a 65-for-one reverse split of our common stock.

     On April 22, 2004, we filed a Current Report on Form 8-K, Items 5 and 7,
     relating to a press release we issued with respect to the financial results
     for GVI Security, Inc. for the fourth quarter and full fiscal year ended
     December 31, 2003. That 8-K also included (i) audited financial statements
     of GVI Security, Inc. as of and for the years ended December 31, 2003 and
     2002, (ii) our unaudited pro forma combined condensed balance sheet as of
     December 31, 2003, and (iii) our unaudited pro forma combined condensed
     statement of operations for the year ended December 31, 2003.

     On June 8, 2004, we filed a Current Report on Form 8-K, Item 5, with
     respect to the $15 million in financing we obtained from Laurus.

<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:  August 23, 2004              By: /s/ Nazzareno E. Paciotti
                                    ------------------------------------
                                    Name:  Nazzareno E. Paciotti
                                    Title:  Chief Financial Officer

<PAGE>

EXHIBIT INDEX
(b)

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


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.