GTSI threatened with delisting

Troubles on Wall Street continue for GTSI Corp., which yesterday announced that it received a letter from Nasdaq stating it could be delisted from the stock exchange for not filing its report for the quarter ended Sept. 30.

The Nasdaq letter comes less than three weeks after the Nasdaq Listing Qualifications Panel granted the company an extension to Nov. 30 to file its second quarter Form 10-Q and other statements of financial results.

The company said it will ask the panel to stop the delisting process in light of the earlier extensions.

GTSI plans to file by Nov. 30 its third quarter report and restate its results for the quarter ended March 31. It also is restating annual results for 2003, 2004 and 2005. The restatements are due in part to changes in the accounting of lease sales agreements. GTSI said it often leases IT products and services to government agencies and then sells those leases to third parties. The company can repurchase the leases under some circumstances.

Leasing of products and services has been a growing line of business for GTSI as it tries to remake itself from a traditional reseller to more of a services provider.

GTSI's troubles date back at least to 2005 when it saw its revenue drop from $1.1 billion in 2004 to $886.3 million in 2005. Net income also fell from a profit of $10.3 million in 2004 to a $16 million loss in 2005.

The company restructured in early 2006 with James Leto taking over as CEO from Dendy Young, who remains the company's chairman. GTSI also went through a round of layoffs.

In a statement, Leto said that company's financial team and outside auditors are making progress and will make the filings with the Securities and Exchange Commission as soon as possible.

The news apparently didn't have a negative impact on GTSI's stock, which closed up 28 cents yesterday, trading at $9.50. That is near the stock's 52-week high of $10. 22.

GTSI ranks No. 27 on Washington Technology's 2006 Top 100 list the largest federal IT contractors.