850483--3/5/2009--GTSI

related topics

{system, service, information}

{condition, economic, financial}

{product, market, service}

{control, financial, internal}

{debt, indebtedness, cash}

{cost, operation, labor}

{stock, price, operating}

{financial, litigation, operation}

{cost, contract, operation}

{regulation, government, change}

We continue to shift our business model from a reseller of products to a high-end solutions provider and this new model has certain risks, including increased competition, which may impact future results. Any issue that compromises our relationship with agencies of the Federal Government would cause serious harm to our business. Adverse changes in Federal Government fiscal spending could have a negative effect on our sales, gross margin, and cash flow. If we fail to comply with any material provision or covenant of our Credit Facility, we may not be able to continue to operate our business. Our business may be negatively affected by current global economic and credit conditions. Infrastructure failures could have a material adverse effect on our business. Any material weaknesses in our internal control over financial reporting could have a material adverse effect on our business and a negative impact on our stock price. If we fail to align costs with our sales levels, net losses may result in future years. Our quarterly sales, operating results and cash flows are volatile, which makes our future financial results difficult to forecast. Because we sometimes work with third parties, any failure by these third parties to satisfactorily perform their obligations could hurt our reputation, operating results and competitiveness. We may not qualify as a small business for new contract awards.

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850483--3/5/2009--GTSI_CORP