GTSI misses deadline for filing 3Q financials

GTSI Corp., which continues to sort through errors in its annual consolidated statements for the past three years, notified government securities regulators yesterday that it could not meet the deadline for filing its third quarter financial report.

The Chantilly, Va., computer products and services reseller, whose common stock is listed on the Nasdaq stock exchange, filed two separate reports with the Securities and Exchange Commission. The company filed an NT-10Q late filing notice for its third quarter financial report as well as form 8-K to report unscheduled material events or corporate changes.

GTSI has been reviewing records and historical information on the transfers of receivable, overstatements of accounts payable and other accounting estimates and accruals.

The company previously determined that it had to restate its 2004 and 2005 consolidated financial statements to correct errors in the accounting of the transfer of certain lease receivables. It also said that it must restate its 2003 consolidated financial statements because of required changes in accounting treatment. In addition, GTSI must restate it financial report for the first quarter of 2006.

In the NT-10Q form filed yesterday, the company said it found several instances where it overstated the costs of goods sold during prior periods due to systems and process-related errors. Because adjustments to correct the errors would affect the 2006 quarterly statements as of Sept. 30, GTSI said it had to delay the filings of its 10-Q form for the third quarter of September 2006.

GTSI received a notice on Nov. 3 from Nasdaq, giving the company until Nov. 30 to file its quarterly financial reports for the periods ended June 30 and Sept. 2006, as well as all other restatements, to avoid delisting.

In the 8-K document filed by GTSI, the company said that it expects to avoid a delisting from Nasdaq by filing all financial documents and restatements as soon as possible.

Earlier this year, the company received a staff determination letter from Nasdaq because it failed to file its annual report for 2005 on SEC form 10-K, as market rules require.

GTSI's financial problems come at a time when it has shifted its business model from a traditional computer reseller to an IT solutions and services provider to reverse the effects of a nearly 10-year downslide in the classic government reseller business.

Earlier this year, the company restructured its executive offices with Dendy Young dropping his chief executive officer title and James Leto taking over as president and CEO. GTSI also has been coping with high employee turnover and layoffs.

GTSI, which reported a 2005 revenue of $886.3 million and a net loss of $16 million, ranks No. 27 on Washington Technology's 2006 Top 100 list of the largest federal IT contractors.