GTSI Corp. Faces Investor Investigation Over Possible Securities Laws Violations

If you purchased GTSI Corp. (NASDAQ:GTSI) common stock between January 1, 2007 and October 1, 2010, and/or if you have any information relating the investigation including those who are former employees and/or whistleblowers, you have certain options and you should contact the Shareholders Foundation, Inc.

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An investigation for investors of GTSI Corp. (NASDAQ:GTSI) over possible violations of Federal Securities Laws by GTSI Corp was announced.

The investigation by a law firm concerns whether a series of statements regarding GTSI Corp’s business, its prospects and its operations were materially false and misleading at the time they were made.
GTSI Corp’s 12months Total Revenue decreased from $862.98 in 2006 to $761.87million in 2009. Its Net Income on the other hand increased from a Net Loss of $3.01million in 2006 to a Net Income of $5.46million in 2009. But for the first three quarters in 2010 GTSI Corp. reported a combined nine months Total Revenue of only $474.23million and its combined Net Income for the first nine months was a meager $100,000.
Share of GTSI Corp. (Public, NASDAQ:GTSI) increased from under $6 in 2006 to $13.60 per share in 2007. GTSI shares then decreased to as low as $3.40 in March 2009. During the first three quarters in 2010 GTSI shares were able to trade over $5 per share. Then on September 10, 2010,
GTSI shares rose from $5.18 on September 13 to $6.89 on Monday September 13 after Eyak Technology, LLC (EyakTek) announced that it has again made a proposal to the board of directors of GTSI Corp. (Nasdaq: GTSI) to acquire by merger all of the outstanding capital stock of GTSI at a price of $7.00 per share in cash. Eyak Technology, LLC said the proposal represents a premium of 35.1% over GTSI's closing market price on September 10, 2010 of $5.18 and a premium of 34.6% over the average closing price for the preceding 30 trading days.
But on the same day GTSI Corp. (NASDAQ:GTSI) announced that its Board of Directors reviewed and rejected the unsolicited proposal received from Eyak Technology, LLC on September 13, 2010 to acquire GTSI for $7.00 per share in cash. GTSI said the Board unanimously determined that the proposal is grossly inadequate and not in the best interest of the shareholders of GTSI.
On September 14, 2010, GTSI Corp. (NASDAQ: GTSI) announced its Board of Directors has adopted a Shareholder Rights Plan that is designed to encourage the fair and equal treatment of GTSI's shareholders in connection with any initiative to acquire effective control of the Company.
Then on Sept. 30 Eyak Technology, LLC (EyakTek) announced that by letter dated September 27, 2010 that it had increased the price in connection with its outstanding proposal to acquire all of the outstanding capital stock of GTSI Corp. (Nasdaq: GTSI) to $7.50 per share in cash.

Shares of GTSI rose on October 1, 2010 to $7.25 per share but then fell to $4.35 on October 4, 2010 after GTSI Corp announced after the market closed on Oct 1st, that it received a notice from the Small Business Administration SBA indicating that it was temporarily suspending GTSI from any future contract awards from the federal government. That same day, an article published by The Washington Post reported that the SBA letter to GTSI’s chief executive officer indicated that the suspension concerned allegations that “GTSI was an active participant in a scheme that resulted in contracts set-aside for small businesses being awarded to ineligible contractors.”
Specifically, the investigation by the law firm focuses on accusations that GTSI Corp. utilized smaller companies to obtain government contracts not available to it due to GTSI Corp.’s size.
On the same day Eyak Technology LLC said that it has withdrawn is offer to buy GTSI Corp.
In the following GTSI shares fell to as low as $3.55 per share on October 8, 2010.

On October 19, 2010, GTSI announced an agreement with the SBA to lift the temporary suspension, and that the Company agreed to “immediately cease working with small businesses serving as prime contractors.” GTSI also disclosed that effective October 26, 2010, Scott W. Friedlander voluntarily resigned as Chief Executive Officer, President and a Director of GTSI and Charles E. DeLeon voluntarily resigned as a Senior Vice President and General Counsel of GTSI.

Since then GTSI shares recovered to recently $4.70 per share.