SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-K

                             ----------------------

                Annual Report Pursuant to Section 13 or 15(d) of
                       the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2002          Commission File No. 0-19394

                                   GTSI Corp.
             (Exact name of registrant as specified in its charter)

           Delaware                                             54-1248422
(State or other jurisdiction of                              (I.R.S. Employer
incorporation or organization)                            Identification Number)

            3901 Stonecroft Boulevard, Chantilly, Virginia 20151-1010
            (Address of principal executive offices)       (Zip Code)

       Registrant's telephone number, including area code: (703) 502-2000

        Securities registered pursuant to Section 12(b) of the Act: None

           Securities registered pursuant to Section 12(g) of the Act:

                         Common Stock, $0.005 par value
                                (Title of class)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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.

                                 YES |X| NO |_|

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.

     Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 126-2 of the Act). |X|

     The aggregate market value of the voting stock held by non-affiliates of
the registrant, based upon the closing price of the Common Stock on June 30,
2002, as reported on The Nasdaq Stock Market, was $65,486,113.

     The number of shares outstanding of the registrant's Common Stock on March
21, 2003, was 8,416,538.

                       DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the registrant's definitive Proxy Statement to be delivered to
stockholders in connection with their Annual Meeting of Stockholders scheduled
to be held on May 14, 2003 are incorporated by reference into Part III of this
Form 10-K.

<PAGE>

                                     PART I

Item 1.  BUSINESS.

Company Overview

     GTSI Corp., a Delaware Corporation ("GTSI" or the "Company"), is a
recognized information technology solutions leader, providing products and
services to U.S. Federal ("Government"), state and local government customers
worldwide. Founded in 1983, GTSI has 20 years of government-focused experience,
making it one of the most experienced, stable information technology ("IT")
solutions providers to federal, state and local agencies. GTSI's complete
product and solution offering, technical expertise, logistics strengths,
extensive contracts portfolio, sales knowledge, customer relationships, and
proven performance record make GTSI equally valuable to government customers and
technology partners.

     GTSI offers its customers a convenient and cost-effective centralized
source for computer, workstation, software, networking and other IT solutions
through GTSI's broad selection of popular products and services at competitive
prices. The Company specializes in understanding both the various IT needs and
the procurement processes of government customers. GTSI sells to most
departments and agencies of the Government, state and local governments and
systems integrators and prime contractors selling to the government market. In
2002, GTSI's sales directly to Government agencies, to prime contractors for
resale to Government agencies and to state and local government agencies
accounted for 76%, 21% and 3% of sales, respectively.

     GTSI currently offers access to approximately 350,000 IT products from
approximately 3,400 vendors, including HP (Hewlett-Packard), Microsoft,
Panasonic, Sun Microsystems, and Cisco Systems. The Company believes it provides
its vendor partners with a low-cost marketing and distribution channel to the
many end-users constituting the government market, while substantially
insulating these partners from the complex government procurement rules and
regulations.

     GTSI fulfills most customer orders from its state-of-the-art 200,000
square-foot distribution center located in Chantilly, Virginia. In addition to
the normal distribution functions, activities at the center include stocking of
popular items for fast delivery, customizing equipment through the integration
of various hardware and software components, and providing specialized services
such as source acceptance inspections and documentation. The Company's
distribution and integration operations are ISO 9002 certified.

     "GTSI" is a registered service mark of GTSI Corp. All other trademarks and
service marks are proprietary to their respective owners.

Business Strategy

     GTSI is committed to, and focused on, the government customer. The
Company's business strategy is to continue to grow GTSI's higher-end enterprise
solutions and to broaden its product offerings, while remaining a low-cost,
reliable provider of commodity products. The Company's strategy is to increase
revenue and market share, while improving operating and net margin percentage.
Federal Government IT spending has grown at a 14% compounded annual rate since
2000, and the Company believes that government IT spending will continue to be
robust in the foreseeable future. The Company plans to increase its work force
and broaden its product and service offering to take advantage of this growing
market. GTSI has undertaken a number of initiatives consistent with this revenue
and earnings growth strategy.


                                       2
<PAGE>

     Focus on the Growing Government IT Market. Because of its historical focus
on the government market, GTSI has developed the expertise and established the
partner and customer relationships necessary to be a leader in this market. As a
result, GTSI's marketing and sales force is effective at reaching and servicing
the government market, which consists of procurement and contracting officers,
information resource managers, CIOs (Chief Information Officer) and government
IT executives, systems integrators, value-added resellers, prime contractors and
a wide array of end-users. The Company continues to increase its sales
organization to widen customer coverage and broaden our product, solutions and
services offerings. In addition, by concentrating on the government market, the
Company has avoided the higher credit risk of commercial customers.

     Execute New Government Contracts and Utilize Flexible Contract Vehicles.
GTSI pursues Government contracts ranging in size from as small as a few hundred
dollars to as large as hundreds of millions of dollars in sales. The Company
holds a wide range of Government contracts, including multimillion dollar,
multiyear contracts with the Department of Defense ("DoD") and certain civilian
agencies, as well as several multiple award schedules and blanket purchasing
agreements with a variety of DoD and civilian agencies. GTSI also serves as a
subcontractor providing products and services to companies holding Government
contracts. The Company intends to continue to identify and pursue those contract
vehicles that best leverage GTSI's broad product selection, services,
distribution capabilities and partner relationships.

     Provide a High-Quality Centralized Source for Procuring IT Products and
Services. In addition to offering a full line of computer hardware, software and
peripheral products, GTSI offers its customers pre- and post-sale technical
support and assistance in the selection, configuration, installation and
maintenance of the products and systems that GTSI sells. Furthermore, by
offering a wide range of IT products through a variety of procurement
mechanisms, GTSI offers its customers the convenience, flexibility and cost
savings of purchasing from a centralized source. GTSI believes that its
convenient "one-stop shop" is an important factor in its success in the
government market. In its interaction with its many customers, GTSI employees
focus on providing high quality customer service associated with the order,
delivery, installation and repair of its products and services.

     Establish and Maintain Strong Partner Relationships. To provide a
centralized source of products and solutions for its customers, GTSI maintains
strong relationships with leading hardware, software and service partners. GTSI
offers its partners a wide range of marketing and sales services, which provide
them with access to the millions of end-users constituting the government
market. In addition, the Company insulates its partners from the procurement
regulatory complexities, costs and complicated billing requirements associated
with the government market.

     Improve Internal Efficiencies. GTSI has undertaken a variety of activities
aimed at improving financial performance. The Company believes that improved
product pricing, supply chain management, quality and expense control will lead
to improved operating and net margins. In addition, efforts to increase employee
productivity, including training and improved technology, should improve
profitability.

Customers

     The Company's customers are primarily federal, state and local government
agencies and prime contractors to the Government, including systems integrators.
In 2002, the Company sold products or services to most agencies and major
departments of the Government, to many state governments and to hundreds of
prime contractors. In 2002, the Company had sales to a single system integrator
which was a prime contractor to the Government in excess of 9% of the Company's
net sales for 2002. In addition, aggregate 2002 sales to the Government's
Departments of the Army, Navy and Air Force were 16.3%, 7.1% and 10.6%,
respectively, of GTSI's 2002 sales.


                                       3
<PAGE>

     The Company's sales are highly dependent on the Government's demand for IT
products. Although the Company does not believe that the loss of any single
customer would have a materially adverse effect on it, a material decline in its
overall sales to the Government as a whole or to certain key agencies thereof
could have such an effect. Furthermore, changes in the structure, composition or
buying patterns of the Government could affect the Company's future operating
results.

The Government Procurement Process

     The Company achieves its sales primarily through contracts with the
Government and through open market sales. Company contracts with the government
include a General Services Administration ("GSA") Schedule contract, indefinite
delivery/indefinite quantity contracts ("IDIQ"), Blanket Purchase Agreements
("BPAs"), state and local contracts and open market procurements

     GTSI pursues formal Government bids for IDIQ contracts and for BPAs.
Substantially all of these bids are awarded on a "best value" to the Government
basis (which, depending on the bid, can be a combination of price, technical
expertise, past performance on other Government contracts and other factors).
GTSI seeks to use its partner contacts, purchasing power, distribution strength
and procurement expertise to compete successfully for the business. These major
procurements may equal millions of dollars in total revenues, span many years,
and provide a purchasing vehicle for many agencies. In some cases, various
government agencies levy a fee on purchases made by departments outside of the
agency that awarded the contract. These fees are collected by the Company and,
as under the GSA Schedule contract, remitted to the respective agency on a
contract specified payment schedule.

     GSA Schedule Contracts

     In 2002, GTSI held a GSA designated Schedule 70 contract for the sale of IT
products and services. Schedule 70 contracts are multi-award schedule contracts
managed by the GSA IT Acquisition Center. In March 2002, the Government formally
exercised its first of three five-year options to extend GTSI's GSA Schedule 70
contract through 2007. GSA Schedule contracts provide all Government agencies,
certain international organizations and authorized prime contractors with an
efficient and cost-effective means for buying commercial products. GSA Schedule
Purchasers may place unlimited orders for products under GSA Schedule contracts.

     Products offered under the Schedule 70 contract include workstations,
desktops, laptops, notebooks, servers, laser printers, color printers, scanners,
monitors, modems, hard drives, memory, networking products, facsimile products,
internet and extranet products, video teleconferencing, maintenance, training
and services. Products may be added to the Schedule 70 contract during the term
under certain circumstances. GSA Schedule contracts include a GSA administrative
fee calculated on the product price. This fee is collected by the Company and is
remitted on a quarterly basis.

     GTSI's GSA Schedule 70 contract contains price reduction clauses requiring
that GTSI pass on to Government customers certain reduced prices GTSI may
receive from its partners during a contract's term, but prohibits GTSI from
passing on partner price increases for a period of one year. To mitigate the
potential adverse impact of any such price increase, the Company requires
substantially all partners acting as suppliers to GTSI under its GSA Schedule
contracts to provide GTSI with supply and price protection.

     IDIQ Contracts

     In 2002, GTSI held six IDIQ contracts. IDIQ contracts offer greater
flexibility than GSA Schedule contracts as they allow products to be added
expeditiously and allow contractors more pricing flexibility. IDIQ contracts are
pre-competed; therefore, orders placed under these contracts are not subject to
protest unless the order is beyond the scope of the contract. There are three
types of IDIQ contracts, government-


                                       4
<PAGE>

wide acquisition contracts ("GWACs"), multi-agency contracts ("MAC"), and single
agency contracts. A GWAC is a task-order or delivery-order contract for
information technology established by a single federal agency for
Government-wide use upon approval by OMB (Office of Management and Budget),
while MACs are task-order or delivery-order contracts that accept orders from
other agencies under the authority of the Economy Act.

     Four of GTSI's six IDIQ contracts are GWACs. They include GTSI's three
contracts with the National Air and Space Administration called Scientific
Engineering Workstation Procurement (SEWP) III contracts. Each of GTSI's SEWP
III contracts relates to a specific category of IT products (e.g., Mechanical
CAD, High End Network Devices and Mass Storage Devices). GTSI also holds a
contract with the National Institute of Health called the Electronic Computer
Superstore (ECS) III contract. GWACs allow all federal agencies to utilize the
contracts. GTSI's Maxi-Minis and Databases contract ("MMAD") with the Army is a
MAC, and GTSI's Procurement of Computer Hardware and Software-2 contract
("PCHS-2") with the Veterans Administration ("VA") is a single agency contract
that is limited to the VA.

     GTSI's SEWP III contracts expire on July 30, 2006. The ECS III contract
expires on November 26, 2012. The MMAD contract expires on May 25, 2003 and has
three one-year extension options. The PCHS-2 contract expires on April 2, 2003
and has four one-year extension options.

     Products offered under these contracts include workstations, desktops,
laptops, notebooks, servers, printers, scanners, monitors, modems, hard drives,
memory, networking products, facsimile products, internet and intranet products,
video teleconferencing, maintenance, training and services. Products may be
added to the contracts under certain circumstances. The Products are sold under
the contracts at a fixed price; however, the government typically negotiates a
lower price for large quantity or high value orders. In addition, these
contracts include an administrative fee calculated on the product price. The
Company collects this fee and remits it on a quarterly basis to the contract's
administering agency.

     Blanket Purchase Agreements

     Individual GSA ordering agencies may enter into GSA-authorized BPAs with
GSA Schedule contract holders. BPAs are similar to second-tier contracts under a
contractor's GSA Schedule contract. BPAs enable agencies to obtain better
pricing based on volume ordering and they decrease an agency's administrative
costs by streamlining the ordering process.

     GTSI maintains several Federal Schedule Supply BPAs that are authorized
under our GSA Schedule 70 contract. GSA authorized BPAs incorporate many terms
and conditions of the GSA Schedule contracts and incorporate many products
offered on GSA Schedule contracts, often at lower prices than available on the
GSA Schedules. GTSI normally enters into separate agreements with partners to
offer reduced BPA prices to the Government. GTSI's BPAs are agency specific and
allow GTSI to focus specific partner relationships on specific customers.

     GTSI maintains BPAs with several Government agencies including the Federal
Railroad Administration, State Department, Treasury Department, Environmental
Protection Agency, U.S. Courts, Army, Navy, Marine Corps and Air Force.

     State and Local Contracts

     Most purchases in the state and local government market are made through
individual competitive procurements, although many state and local governments
issue invitations for bid for statewide computer term contracts. State and local
procurements typically require formal responses from a prospective bidder. Each
state maintains a separate code of procurement regulations that must be
understood and complied


                                       5
<PAGE>

with to market and sell successfully to that state. GTSI currently maintains
several state and local IT contracts, regularly submits oral and written bids to
state and local governments and is on a number of state and local government bid
lists.

     A recent trend in state and local procurement is the emergence of
multi-state contracts. Multi-state contracts enable individual states to utilize
the buying power of multiple states, which results in lowers costs based upon
volume purchasing. In addition, GSA is expected to allow state and local
government agencies to utilize GSA Schedules by the end of March 2003.

     Open Market

     GTSI also sells many IT products through open market procurements. These
procurements are separate and apart from GSA Schedules, IDIQs and BPAs. Open
Market procurements include simplified acquisition procedures, requests for
quotes, invitations for bids and requests for proposals. The Company is on most
Government bid lists relevant to its product offerings and responds with
proposals to hundreds of such bid solicitations each year. The Company also
sells to Government prime contractors, including systems integrators, through
open market procurements.

     Government Market Considerations

     A substantial portion of the Company's contracts are fixed-price and IDIQ.
The uncertainties related to future contract performance costs, product life
cycles, quantities to be shipped and delivery dates, among other factors, make
it difficult to predict the future sales and profits, if any that may result
from such contracts.

     GTSI qualified as a "small business" under several of the GWACs and BPAs it
held in 2002 based upon GTSI's size status at the time of the contracts'
original award. As a small business, GTSI enjoyed a number of benefits,
including being able to compete for small business set-aside contracts,
qualifying as a small business subcontractor, bidding pursuant to small purchase
procedures directed to non-manufacturer small business, and offering Government
Agencies an avenue to meet their internal small business purchase goals.

     A company's size status under a contract is based on the North American
Industry Classification System ("NAICS") Code referenced in the subject
contract's solicitation. Dependent on the NAICS Code referenced in a
solicitation, GTSI may or may not qualify as a small business for new contract
awards. Under a Federal Acquisition Regulation (FAR) Deviation issued by GSA on
October 10, 2002, GTSI will be required to recertify its size status on its GSA
Schedule Contract no later than 2007. At such time, GTSI may not qualify as a
small business for new contract awards under the GSA Schedule. Further,
legislative or regulatory action may occur that will require GTSI to recertify
its size status on its GSA Schedule sooner than 2007. GTSI cannot predict
whether it would continue to qualify as a small business at the time of
recertification. To mitigate any potential adverse impact, GTSI has developed
strategic relationships with small minority-owned businesses that benefit from
the small business benefits described above. GTSI acts as both a supplier and
prime contractor to these small minority-owned businesses.

     Noncompliance with Government procurement regulations or contract
provisions could result in termination of Government contracts, substantial
monetary fines or damages, suspension or debarment from doing business with the
Government and civil or criminal liability. During the term of any suspension or
debarment by any Government agency, the contractor could be prohibited from
competing for or being awarded any contract by any Government agency. In
addition, substantially all of the Company's Government contracts are terminable
at any time at the Government's convenience or upon default. Upon termination of
a Government contract for default, the Government may also seek to recover from
the defaulting contractor the increased costs of procuring the specified goods
and services from a different


                                       6
<PAGE>

contractor. The effect of any of these possible Government actions or the
adoption of new or modified procurement regulations or practices could adversely
affect the Company.

     The Company has historically experienced and expects to continue to
experience significant seasonal fluctuations in its operations as a result of
Government buying and funding patterns. Although these patterns have
historically led to sales being concentrated in the Company's third and fourth
quarters, the seasonality and the unpredictability of the factors affecting such
seasonality make GTSI's quarterly and yearly financial results difficult to
predict and subject to significant fluctuation. While government sales are
weaker in the first and second quarter and stronger in the third and fourth
quarter, GTSI's operating expenses are more level throughout the year. As such,
first and second quarter earnings are typically well below those of the third
and fourth quarters.

Products, Solutions and Services

     GTSI is the leading, dedicated Business-to-Government provider of IT
solutions. The Company continuously monitors sales of existing and emerging
technologies to ensure that it offers its customers state-of-the-art technology
products and solutions. A pioneer in government-focused electronic commerce,
GTSI also offers simplified buying through its website, www.gtsi.com.

     Hardware. GTSI has strong strategic relationships with established global
market leaders, including HP, Panasonic, IBM, EMC, Xerox, SONY, Sun
Microsystems, Apple and Cisco. In addition to reselling platform solutions,
peripherals resold by the Company include disk drives, CD-ROM and DVD drives,
printers, monitors, modems and related products. GTSI's networking products,
including LANs, WANs, MANs (metropolitan area network) and PANs (personal area
network), are supplemented by the Company's services, which include assisting
customers in selecting, configuring, installing and maintaining networks.

     Software. The Company remarkets computer software solutions from
substantially every leading Windows-based software publisher, as well as leading
UNIX, Linux and Apple products. The Company's software partners include
Microsoft, Symantec, IBM/Lotus, Art Technology Group, Veritas, MicroStrategy,
Adobe and Citrix.

     Solutions. The Company has 11 technology and solutions teams, each
including technical, business development and management professionals dedicated
to selling and supporting systems and solutions in a specific technology area
(such as enterprise storage, mobile and wireless, and web portal and internet
technology) or for a particular partner product line (such as Sun Microsystems,
HP and Microsoft).

     Services. GTSI provides professional management of the creation and
delivery of services to our customers. GTSI's Services Solutions capitalize on
core business capabilities through managed fulfillment and support services,
implementation of technical product services, and technology consulting
services, either through our own business processes or through partners. To this
end, GTSI has identified four quadrants where it will focus its development
efforts: Support Services, Implementation Services, Consulting Services and
Managed Services.

Partner Relationships

     To offer its customers a centralized source for their IT needs, the Company
establishes and maintains relationships with key partners and offers them a
number of advantages, including:

     o    Access to the government market through a significant number of
          diverse contract vehicles and a large and experienced sales
          organization;


                                       7
<PAGE>

     o    Lower costs to comply with procurement regulations involved in selling
          directly to the government market;

     o    Lower operating costs related to reduction or elimination of selling,
          marketing and various administrative programs; and

     o    Participation in value-added services, including numerous
          government-specific marketing programs and end-user technical support.

     The terms of the Company's agreements with its partners vary widely, but
typically permit the Company to purchase product for resale to at least the
government market. Virtually none of the Company's partner agreements requires
the Company to purchase any specified quantities of product. The Company
typically requires partners acting as suppliers to GTSI under its term
Government contracts to provide GTSI with supply and price protection for the
duration of such contracts. Other than supply agreements under term Government
contracts, the Company's partner agreements are typically terminable by the
partner on short notice, at will or immediately upon default by GTSI and may
contain limitations on partner liability. These partner agreements also
generally permit GTSI to return previous product purchases at no charge within
certain time limits for a restocking fee or in exchange for other products of
such partner. The Company also purchases some products from independent
distributors.

     Partners provide the Company with various forms of marketing and sales
assistance, including sales incentives and market development funds. Partners
provide sell-through and other sales incentives in connection with certain
product promotions. Additionally, key partners participate with the Company in
cooperative advertising and sales events and typically provide funding which
partially offsets the costs of such efforts.

     The Company needs to continue to obtain products at competitive prices from
leading partners to provide a centralized source of price-competitive products
for its customers and to be awarded government contracts. GTSI believes its
relationships with its key partners to be good. The Company, however, could be
adversely affected if one or more key partners determined to sell directly to
the Government, to sell their products to GTSI's competitors on more favorable
terms than to GTSI, to allow additional resellers to represent their products,
or to restrict or terminate GTSI's rights to sell their products.

Marketing and Sales

     The Company's marketing personnel develop and manage the Company's
marketing, branding and positioning activities on a worldwide basis. These
activities communicate the Company's capabilities and value proposition in an
effort to acquire new customers and improve retention of existing customers.
Most marketing activities are funded by the Company's partners. Each marketing
activity is integrated to provide comprehensive awareness, brand consistency and
maximize return on investment.

     The Company's marketing activities include sponsorship of major trade shows
and customer events, advertising in government-focused publications and
broadcast media, direct marketing of catalogs and brochures, management of a
commerce web site located at gtsi.com, e-mail marketing, outbound telemarketing,
field sales campaigns and various sales-related incentive programs.

     GTSI recognizes that the size and diversity of the government market make
it imperative for GTSI to identify and understand the needs of customers.
Through years of intensive effort, GTSI has compiled and continuously updates
one of the most comprehensive databases of federal, state and local government
IT decision-makers. The Company conducts frequent customer surveys to assess the
opinions and interests of our customer base. The Company maintains a database
that contains an extensive list of agency procurement and contracting officers,
information resource managers, senior policy makers,


                                       8
<PAGE>

technology influencers, end-users, systems integrators, VARs and prime
contractors. GTSI uses this database, among other things, for targeting its
marketing efforts and data mining for various market research purposes.

     The Company's sales organization is focused on expanding sales coverage by
increasing the number of customer accounts and by offering additional products
and services to existing accounts. The customer sales teams work closely with
the Company's technology teams to best meet the needs of the government
customer.

Service and Warranty

     For certain products that it sells, GTSI provides post-sale field service
through subcontractors and, to a limited extent, through the Company's in-house
technical staff. The Company typically warrants products sold to the Government
and certain other customers for the same term as the manufacturer's warranty
period although many IDIQ contracts include provisions for warranties that
extend beyond those offered by the manufacturer. The Company also sells extended
warranties on many of its government contracts. Product repaired while under the
manufacturer's warranty is at the manufacturer's expense; product repaired after
expiration of the manufacturer's and GTSI's warranty, if longer, is at the
customer's expense. GTSI outsources to third parties a significant portion of
its extended warranty obligations.

Competition

     The government IT market is competitive and subject to rapid change. GTSI
competes with certain leading hardware manufacturers, which sell to the
government market directly and through representatives other than the Company,
and with a number of systems integrators, government and commercial resellers
and commercial computer retail chains, distributors and other resellers
(including companies qualifying as minority-owned, disadvantaged or small
businesses under applicable Government regulations). A number of GTSI's existing
and potential competitors have greater financial, sales, marketing and
technological resources than the Company.

     The Company believes that the principal competitive factors in the
government IT market are price, expertise in the applicable government
procurement processes, breadth of product line, customer and partner
relationships, the technical and other skills of marketing and sales personnel,
distribution capability, available inventory and customer service and support.
The Company believes that it competes favorably on each of these factors. GTSI
also believes that it has a competitive advantage over certain of its
competitors because of its procurement expertise and its ability to offer a
centralized source for purchases of a wide variety of leading computer products
from numerous manufacturers.

Employees

     At March 4, 2003, the Company had 693 employees, including 461 in sales,
marketing and contract management; 125 in operations; and 107 in executive,
finance, information technology, human resources and legal. None of the
Company's employees is represented by a labor union, and the Company has
experienced no material labor-related work stoppages.


                                       9
<PAGE>

Item 2.  PROPERTIES.

     The Company's executive offices are located in an approximately 100,500
square-foot facility in Chantilly, Virginia under a lease expiring in November
2008, with one five-year option. In December 2002, GTSI expanded its office
space by leasing approximately 34,000 square feet of office space in Chantilly,
Virginia under a lease expiring in November 2005, with one two-year option and
one one-year option. GTSI's warehousing and distribution operations are also
located in Chantilly, Virginia in a separate 200,000 square-foot facility under
a lease expiring in December 2006. The Company also has a branch sales office
occupying 139 square meters in Mannheim, Germany. The Company also subleases a
10,000 square-foot distribution center in Chattanooga, Tennessee under a
sublease which expires on March 31, 2003, with a one-year option.

Item 3.  LEGAL PROCEDURES.

     The Company is occasionally a defendant in litigation incidental to its
business. The Company believes that the litigation currently pending will not
individually or in the aggregate have a material adverse effect on the Company's
financial condition or results of operations.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     No matters were submitted to a vote of stockholders during the fourth
quarter of 2002.


                                       10
<PAGE>

                                     PART II

Item 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     Stock Data. The Company's common stock trades on The Nasdaq Stock Market
under the symbol "GTSI." As of December 31, 2002, there were 274 record holders
of the Company's common stock. As of March 21, 2003, there were 303 record
holders and approximately 3,600 beneficial holders of the Company's common
stock. The following table sets forth, for the periods indicated, the high and
low closing prices for the Company's common stock based on information updated
by the Nasdaq Stock Market.

                             --------------------------
                                  2002          2001
                ---------------------------------------
                Quarter       High    Low   High    Low
                ---------------------------------------
                First         9.49   6.90   6.25   3.34
                ---------------------------------------
                Second        9.47   7.65   7.06   5.09
                ---------------------------------------
                Third        11.55   7.75   7.10   5.70
                ---------------------------------------
                Fourth       14.89   8.52   9.47   6.00
                ---------------------------------------

     The Company has never paid cash dividends and the Company does not
anticipate paying cash dividends on its common stock in the foreseeable future.
Furthermore, financial covenants in the Company's bank credit agreement restrict
the Company's ability to pay cash dividends.

     Additional Investor Relations Information. All of the Company's current
required filings with the Securities and Exchange Commission, as well as press
releases and other investor relations' information, may be found at
http://www.gtsi.com on the internet's world wide web. Such information may also
be obtained by request to the Company addressed to: Investor Relations, GTSI
Corp., 3901 Stonecroft Boulevard, Chantilly, Virginia 20151-1010.

     Transfer Agent. The Company's transfer agent is Wachovia Bank, N.A.,
Shareholder Services Group, 1525 West W.T. Harris Blvd., 3C3, Charlotte, NC
28262-1153; telephone 1-800-829-8432.

     Annual Meeting. The Annual Meeting of Stockholders is scheduled to be held
at 9:00 a.m. on Wednesday, May 14, 2003, at the Company's headquarters located
at 3901 Stonecroft Boulevard in Chantilly, Virginia.

Item 6.  SELECTED FINANCIAL DATA.

     The selected financial data for the three years ended December 31, 2002,
2001, and 2000 are derived from, and are qualified in their entirety by
reference to, the Company's audited Consolidated Financial Statements and Notes
thereto included elsewhere in this Form 10-K. The December 31, 2002 Consolidated
Financial Statements of the Company have been audited by Ernst & Young LLP,
independent auditors, as indicated in their report, which is also included
elsewhere in this Form 10-K. The December 31, 2001, 2000, 1999 and 1998
Consolidated Financial Statements of the Company have been audited by Arthur
Andersen LLP, independent accountants. The selected financial data for all other
periods are


                                       11
<PAGE>

derived from the Company's audited consolidated financial statements, which are
not included in this Form 10-K.

<TABLE>
<CAPTION>
(In thousands, except per share amounts)                Twelve months ended December 31,
                                            2002         2001         2000         1999         1998
                                         ---------    ---------    ---------    ---------    ---------
<S>                                      <C>          <C>          <C>          <C>          <C>
Income Statement Data:
Sales                                    $ 934,730    $ 783,496    $ 677,754    $ 660,570    $ 593,571
Cost of sales                              857,105      718,370      617,621      610,463      541,934
                                         ---------    ---------    ---------    ---------    ---------
Gross margin                                77,625       65,126       60,133       50,107       51,637
                                         ---------    ---------    ---------    ---------    ---------
Operating expense:
   Selling, general and administrative      62,956       57,002       49,382       44,931       44,660
   Depreciation and amortization             3,543        4,407        3,934        3,584        3,661
                                         ---------    ---------    ---------    ---------    ---------
Total operating expenses                    66,499       61,409       53,316       48,515       48,321
                                         ---------    ---------    ---------    ---------    ---------
Income from operations                      11,126        3,717        6,817        1,592        3,316
Interest (income) expense, net              (4,520)      (3,707)      (2,259)      (1,090)         977
                                         ---------    ---------    ---------    ---------    ---------
Income before taxes                         15,646        7,424        9,076        2,682        2,339
Income tax provision (benefit)               6,113        2,938       (2,008)          --           --
                                         ---------    ---------    ---------    ---------    ---------
Net income before cumulative effect of
SAB No. 101 adoption                         9,533        4,486       11,084        2,682        2,339
Cumulative effect of SAB 101 adoption           --           --          467           --           --
                                         ---------    ---------    ---------    ---------    ---------
Net income                               $   9,533    $   4,486    $  10,617    $   2,682    $   2,339
                                         =========    =========    =========    =========    =========
Net income per common share
   Basic:
      Basic net income per share
      before cumulative effect of
      SAB No. 101 adoption               $    1.15    $    0.55    $    1.23    $    0.29    $    0.27
      Cumulative effect per share of
      SAB No. 101 adoption                      --           --        (0.05)          --           --
                                         ---------    ---------    ---------    ---------    ---------
      Basic net income per share         $    1.15    $    0.55    $    1.18    $    0.29    $    0.27
                                         =========    =========    =========    =========    =========
   Diluted:
      Diluted net income per share
      before cumulative effect of
      SAB No. 101 adoption               $    1.04    $    0.50    $    1.20    $    0.29    $    0.26
      Cumulative effect per share of
      SAB No. 101 adoption                      --           --        (0.05)          --           --
                                         ---------    ---------    ---------    ---------    ---------
      Diluted net income per share       $    1.04    $    0.50    $    1.15    $    0.29    $    0.26
                                         =========    =========    =========    =========    =========
Weighted average common shares
outstanding
  Basic                                      8,302        8,144        9,021        9,271        8,700
                                         =========    =========    =========    =========    =========
  Diluted                                    9,156        9,049        9,225        9,314        8,909
                                         =========    =========    =========    =========    =========

<CAPTION>
(In thousands)                                                   December 31,
                                            2002         2001         2000         1999         1998
                                         ---------    ---------    ---------    ---------    ---------
<S>                                      <C>          <C>          <C>          <C>          <C>
Balance Sheet Data:
Working capital                          $  62,836    $  34,968    $  43,659    $  44,350    $  42,206
Total assets                               224,918      252,452      227,065      186,333      161,090
Notes payable to banks                       7,539       20,186       11,925        9,479       14,889
Total liabilities                          149,427      189,387      168,586      133,137      105,766
Stockholders' equity                        75,491       63,065       58,480       53,196       55,324
</TABLE>


                                       12
<PAGE>

Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

     The following discussion and analysis is provided to increase the
understanding of, and should be read in conjunction with, the Consolidated
Financial Statements and Notes. Historical results and percentage relationships
among any amounts in the Consolidated Financial Statements are not necessarily
indicative of trends in operating results for any future period.

Overview

     GTSI is a recognized information technology (IT) solutions leader,
providing products and services to federal, state and local government customers
worldwide. For two decades GTSI has served the public sector by teaming up with
global IT leaders such as HP, Panasonic, Microsoft, Sun and Cisco. GTSI seeks to
deliver maximum value through its broad range of products, extensive contract
portfolio and ISO 9000-registered logistics. Through its Technology Teams, GTSI
delivers "best of breed" products and services to help its customers realize
strong value for their IT investments. The Technology Teams consist of technical
experts that analyze, design, install and support a wide range of integrated IT
solutions in such areas as high performance computing, advanced networking,
mobile and wireless solutions, web portals, high availability storage and
information assurance. GTSI continues to broaden its leadership in electronic
commerce and procurement through its federally focused website, gtsi.com, that
provides customized shopping zones to meet customers' personalized needs. GTSI
is headquartered in Chantilly, Virginia.

     Changes in sales throughout the Company's history have been attributable to
increased or decreased unit sales, to expansion of the Company's product
offerings (e.g., peripherals, networking, Unix servers/workstation and internet
products), to the addition/removal of vendors (e.g., the addition of Cisco, EMC,
Tachyon, RIM, and the removal of Nexar and Everex), and to the addition or
expiration of sales contract vehicles (e.g., the addition of the SEWP III, ADMC,
IT2 and the MMAD Contracts, and the expiration of the SEWP II, PC-3, SII PC/LAN,
and Portables 3 Contracts). The Company's financial results have fluctuated
seasonally, and may continue to do so in the future, because of the Government's
buying patterns which have historically favorably affected the last two calendar
quarters and adversely affected the first two calendar quarters.

     The Company's business strategy is to continue to focus on higher-end
product-based solutions, to broaden its product offering, and to remain a
low-cost, and high-reliability provider of commodity products. The Company also
focuses on bringing new technologies to government customers.


                                       13
<PAGE>

            Results of Operations

            The following table sets forth, for the years indicated, the
percentages that selected items within the income statement bear to sales and
the annual percentage changes in the dollar amounts of such items.

<TABLE>
<CAPTION>
                                                            Percentage of Sales          Percentage Change
                                                          ------------------------   ---------------------------
                                                          Years Ended December 31,    Years Ended December 31,
                                                          ------------------------   ---------------------------
                                                           2002     2001     2000    2001 to 2002   2000 to 2001
                                                          ------   ------   ------   ------------   ------------
Income Statement Data:
<S>                                                       <C>      <C>      <C>             <C>            <C>
Sales                                                     100.0%   100.0%   100.0%          19.3%          15.6%
Cost of sales                                              91.7%    91.7%    91.1%          19.3%          16.3%
                                                          ------   ------   -----
Gross margin                                                8.3%     8.3%     8.9%          19.2%           8.3%
Operating expense:
   Selling, general and administrative                      6.7%     7.2%     7.3%          10.4%          15.4%
   Depreciation and amortization                            0.4%     0.6%     0.6%         -19.6%          12.0%
                                                          ------   ------   -----
Total operating expenses                                    7.1%     7.8%     7.9%           8.3%          15.2%
                                                          ------   ------   -----
Income from operations                                      1.2%     0.5%     1.0%         199.3%         -45.5%
Interest (income) expense, net                             -0.5%    -0.5%    -0.3%          21.9%          64.1%
                                                          ------   ------   -----
Income before taxes                                         1.7%     1.0%     1.3%         110.7%         -18.2%
Income tax provision (benefit)                              0.7%     0.4%    -0.3%         108.1%        -246.3%
                                                          ------   ------   -----
Net income before cumulative effect of SAB 101 adoption     1.0%     0.6%     1.6%         112.5%         -59.5%
Cumulative effect of SAB 101 adoption                       0.0%     0.0%     0.0%           0.0%        -100.0%
                                                          ------   ------   -----
Net income                                                  1.0%     0.6%     1.6%         112.5%         -57.7%
                                                          ======   ======   =====
</TABLE>

     The following tables set forth, for the periods indicated, the approximate
sales by product, by contract vehicle and by vendor, along with related
percentages of total sales.

Product Category
                             ---------------   ---------------   ---------------
(Dollars in millions)             2002              2001              2000
                             ---------------   ---------------   ---------------
Hardware                     $673.7    72.1%   $570.3    72.8%   $507.0    74.8%
Software                      196.4    21.0%    158.3    20.2%    131.5    19.4%
Services                       64.6     6.9%     54.9     7.0%     39.3     5.8%
                             ------    ----    ------    ----    ------    ----
Total                        $934.7     100%   $783.5     100%   $677.8     100%
                             ======    ====    ======    ====    ======    ====
Contract Vehicles
                             ---------------   ---------------   ---------------
(Dollars in millions)             2002              2001              2000
                             ---------------   ---------------   ---------------
GSA Schedules                $276.0    30.4%   $238.4    30.4%   $230.6    34.0%
IDIQ Contracts                388.7    45.4%    355.5    45.4%    327.1    48.2%
Open Market                   107.0    17.0%    133.3    17.0%     79.7    11.8%
Subcontracts and
      Other Contracts         163.0     7.2%     56.3     7.2%     40.4     6.0%
                             ------    ----    ------    ----    ------    ----
Total                        $934.7     100%   $783.5     100%   $677.8     100%
                             ======    ====    ======    ====    ======    ====


                                       14
<PAGE>

Top 5 Vendors
                             ---------------   ---------------   ---------------
(Dollars in millions)             2002              2001              2000
                             ---------------   ---------------   ---------------
HP                           $167.7    17.9%   $188.5    24.1%   $201.3    29.7%
Panasonic                     123.5    13.2%     92.4    11.8%     93.3    13.7%
Cisco                         114.9    12.3%     80.4    10.3%     37.2     5.5%
Sun                           110.6    11.8%     63.0     8.0%     53.4     7.9%
Microsoft                      95.6    10.2%     88.0    11.2%     63.7     9.4%
Other                         322.4    34.6%    271.2    34.6%    228.9    33.8%
                             ------    ----    ------    ----    ------    ----
Total                        $934.7     100%   $783.5     100%   $677.8     100%
                             ======    ====    ======    ====    ======    ====

During 2002 HP and Compaq finalized their merger. Thus, in the vendor tables
above we have combined HP and Compaq in all periods shown for comparison
purposes.

2002 Compared with 2001

     Sales. Sales consist of revenues from products delivered and services
rendered, net of allowances for customer returns and credits. Net sales in 2002
increased $151.2 million, or 19.3% over 2001. Sales increased in most product
and contract categories. The largest increase was an approximately $106.7
million increase in sales made under the Subcontracts and Other Contracts
category. This increase is primarily due to increase in volume on subcontracts
with prime contractors, specifically on the FBI's Trilogy contract. Increased
sales under a distribution agreement with a major vendor also contributed to the
increase in Subcontracts and Other Contracts category. The $33.2 million
increase in sales in the IDIQ Contracts category is primarily related to
increased sales under established contract vehicles. IDIQ Contracts sales were
also helped by sales from a new contract awarded to the Company in 2002. The GSA
Schedule category increased $37.6 million due primarily to the Government
converting some of the Company's legacy IDIQ contracts to BPA contracts at
contract renewal. This caused a shift in sales from the IDIQ category to the BPA
Contracts category during 2002. The Company was also awarded several new BPA
contracts during 2002 that also contributed to the increase in BPA Contract
sales. Open Market sales decreased $26.3 million primarily due to the Company's
customers taking advantage of the Company's expanding and mature contract
portfolio.

     Backlog. The Company recognizes an order in its backlog at the time it
receives and accepts a written customer purchase order. The Company's Total
Backlog includes orders that have not shipped ("Unshipped Backlog") as well as
orders that have shipped but cannot be recognized as revenue at the period end.
Total Backlog at December 31, 2002, was approximately $91.3 million compared to
$76.6 million at December 31, 2001. Unshipped Backlog at December 31, 2002, was
approximately $82.6 million compared to $67.3 million at December 31, 2001.
Backlogs fluctuate significantly from quarter to quarter because of the
seasonality of Government ordering patterns and fluctuations in inventory
availability of various products.

     Gross Margin. Gross margin increased $12.5 million, or 19.2%, to $77.6
million from $65.1 million in 2001 due primarily to the 19.3% increase in sales
for the year. Gross margin as a percentage of sales remained flat at 8.3% in
2002 and 2001.

     Operating Expenses. Net operating expenses for the year ended December 31,
2002 increased $5.1 million to $66.5 million for 2002 as compared to $61.4
million for 2001. The increase in operating expenses is due primarily to an
increase in commission expense as a result of increased sales; an increase in
other performance based incentives; and an increase in sales and technology team
personnel expense. Expressed as a percentage of total sales, net operating
expenses decreased to 7.1% from 7.8% in


                                       15
<PAGE>

the previous year. Operating expenses reflect the favorable impact of vendor
sales support funds. Before the application of these funds, operating expenses
were $79.2 million, or 8.5% of sales, as compared to $70.0 million, or 8.9% of
sales, for 2001.

     During the fourth quarter of 2002, the Company determined that it was
remote that certain accrued obligations would need to be paid. Accordingly, the
associated obligation of $1.4 million has been reversed and as a result
operating expenses have been reduced.

     Interest and Other Income, Net. Net interest and other income is the amount
of interest income, prompt payment discounts, and other income partially offset
by interest expense on borrowings. Net interest and other income increased by
approximately $813,000, from $3.7 million to $4.5 million, or 21.9%, in 2002
compared to 2001. Interest income increased by $316,000 and interest expense
decreased $116,000 over 2001. The increase in interest income is primarily due
to a $1.4 million increase in prompt payment discounts partially offset by a
$749,000 decrease in interest income from lease receivables. Other income
increased $381,000 due primarily to a $500,000 gain on the sale of equipment
leases in the first quarter of 2002.

     Income Taxes. The Company's effective tax rate in 2002 was 39.1% resulting
in a tax provision of $6.1 million in 2002. The Company anticipates that its
ongoing effective tax rate to remain approximately 39%.

2001 Compared with 2000

     Sales. Sales consist of revenues from products delivered and services
rendered, net of allowances for customer returns and credits. Net sales in 2001
increased $105.7 million, or 15.6% over 2000. Sales increased in all product
categories and contract vehicles. The largest increase was an approximately
$53.6 million, or 67.3%, increase in sales sold under open market conditions.
Indefinite delivery/indefinite quantity ("IDIQ") contracts increased $28.4
million, or 8.7%. The Other Contract sales category showed an increase of $15.9
million, or 39.4% and sales under the Company's GSA schedules increased $7.8
million, or 3.4%.

     Sales sold under Open Market contracts were up $53.6 million due to several
large orders with Civilian and State and Local customers and prime contractors
and the wider product breadth offered under open market conditions.

     IDIQ contract sales were up $28.7 million led by increased sales on the
Scientific and Engineering Workstation Procurement ("SEWP") contract due to the
wide product offering and the ability of all Government agencies to purchase
under this contract. Sales on the Army PC-3 and Portable 3 vehicles were down
$46.1 million combined year over year due to the expiration of the Portable 3
vehicle and the Army switching its buying patterns to the new Army Desktop and
Mobile Commuting ("ADMC") vehicle which the Company treats as a GSA schedule
type contract.

     Sales on Other Contracts were up $15.9 million led by strong sales to new
prime contractor of $29.7 million offset by decreased sales in the Company's
Panasonic distribution business of $11.0 million.

     The increase of $7.7 million in the Company's GSA schedules is due to sales
on the newly awarded Army ADMC BPA and Federal Reserve Bank BPAs. Net sales
directly off the GSA Schedule fell $17.6 million due to less reliance on the GSA
schedule as a result of a broader contract base which gave the Company and its
customers greater flexibility.

     Backlog. The Company recognizes an order in its backlog at the time it
receives and accepts a written customer purchase order. The Company's Total
Backlog includes orders that have not shipped


                                       16
<PAGE>

("Unshipped Backlog") as well as orders that have shipped but cannot be
recognized as revenue at the period end. Total Backlog at December 31, 2001, was
approximately $76.6 million compared to $71.0 million at December 31, 2000.
Unshipped Backlog at December 31, 2001, was approximately $67.3 million compared
to $62.7 million at December 31, 2000. Backlogs fluctuate significantly from
quarter to quarter because of the seasonality of Government ordering patterns
and fluctuations in inventory availability of various products.

     Gross Margin. Gross margin increased $5.0 million, or 8.3%, to $65.1
million from $60.1 million in 2000. Gross margin as a percentage of sales
decreased to 8.3% in 2001, as compared to a gross margin of 8.9% in 2000. Gross
margin as a percentage of sales was lower in 2001 versus 2000 due to a shift
from higher margin customer-specific IDIQ contracts to lower margin GSA contract
vehicles, government-wide acquisition contracts ("GWACs"), and other lower
margin contracts. Margins were also affected by a shift in contract vehicles
from sole-source and dual award IDIQ vehicles to vehicles where multiple vendors
are on contract, increasing competition. Warranty administration, inventory
management, and freight costs as a percentage of sales were substantially
unchanged for the year ending December 31, 2001, compared with the previous
year.

     Operating Expenses. Total operating expenses for 2001 increased $8.1
million, or 15.2%, to $61.4 million from $53.3 million in 2000, however they
decreased as a percentage of sales to 7.8% from 7.9%. This increase in operating
expense primarily reflects the Company's implementation of its plan to hire
additional sales personnel intended to achieve increased sales in 2001 and
beyond.

     Interest and Other Income, Net. Net interest income is the amount of
interest income and prompt payment discounts partially offset by interest
expense on borrowings. Net interest income increased by $1.4 million, from $2.3
million to $3.7 million, or 64.1%, in 2001 compared to 2000. Interest income
increased by $1.3 million and interest expense decreased $153,000 over 2000. The
increase in interest income is primarily due to a $1.6 million increase in
interest income from lease receivables partially offset by a $280,000 decrease
in other interest income.

     Income Taxes. The Company's effective tax rate in 2001 was 39.6% resulting
in a tax provision of $2.9 million in 2001. The Company anticipates that its
ongoing effective tax rate will be approximately 40%.

Critical Accounting Policies

     We have included below our policies that are both important to our
financial condition and operating results, and require management's most
subjective and complex judgments in determining the underlying estimates and
assumptions. These estimates and assumptions affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the consolidated financial statements and the reported amounts of
revenue and expenses during the reporting period. Actual results could differ
from those estimates, as they require assumptions that are inherently uncertain.

     Cash and Cash Equivalents. The Company considers all investments with
maturity of three months or less on their acquisition date to be cash
equivalents.

     Revenue Recognition. We recognize revenue from hardware product sales when
the title to the products sold passes to the customer, with provisions
established for estimated product returns. Based on our standard shipping terms,
title generally passes upon the customer's receipt of the products. We recognize
revenues under sales type lease arrangements in accordance with the provisions
of Statement of Financial Accounting Standards "SFAS" No. 13, "Accounting for
Leases." We recognize revenue from software products in accordance with the
provisions of American Institute of Certified Public Accountants Statement of
Position 97-2, "Software Revenue Recognition." Revenue from software product
sales is recognized when persuasive evidence of an arrangement exists, the
software has been delivered,


                                       17
<PAGE>

the fee is fixed or determinable and collection is probable. We recognize net
revenues from sales of third party software maintenance contracts at the time of
the sale.

     Allowance for Doubtful Accounts. We continuously monitor collections and
payments from our customers and maintain an allowance for doubtful accounts
based upon our historical experiences and any specific customer collection
issues that we have identified. While such losses have historically been within
our expectations and the provisions established, we cannot guarantee that we
will continue to experience the same loss rates that we have in the past.

     Sales of Lease Receivables. We periodically sell lease receivables to
unrelated financing companies. We account for our sales of lease receivables in
accordance with SFAS No. 140 "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities - a Replacement of FASB
Statement No. 125."

     Inventories. We value our inventory at the lower of average cost or market
value of the inventory. Whenever possible, we order inventory only as needed.
However, we do maintain inventory related to certain products or vendors. We
regularly review inventory quantities on hand and record a provision for excess
and obsolete inventory based on assumptions about future demand and market
conditions. Our estimates of future product demand may prove to be inaccurate,
in which case we may have understated or overstated the provision required for
excess or obsolete inventory. In the future, if our inventory is determined to
be overvalued, we will be required to recognize such costs in our cost of goods
sold at the time of such determination. Therefore, although we make every effort
to ensure the accuracy of our forecasts of future product demand, any
significant unanticipated changes in demand or technological developments could
have a significant impact on the value of our inventory and our reported
operating results.

     Long-Lived Assets. Long-lived assets, consisting primarily of property and
equipment and capitalized software, are currently reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
should be addressed pursuant to Statement of Financial Accounting Standards No.
144, "Accounting for the Impairment or disposal of Long-Lived Assets." We
determine impairment by comparing the carrying value of these long-lived assets
to a probability weighted estimated undiscounted future cash flows expected to
result from the use of these assets and their eventual disposition. The cash
flow projections used to make this assessment is consistent with the cash flow
projections we use internally to assist us in making key decisions. If we
determine that an impairment exists, a loss would be recognized based on the
amount by which the carrying value exceeds the fair value of the assets, which
is generally determined by using quoted market prices or valuation techniques
such as the discounted present value of expected future cash flows, appraisals,
or other pricing models as appropriate.

     Warranties. We offer warranties on sales under certain products specific to
the terms of the customer agreements. Our standard warranties require us to
repair or replace defective products reported to us during such warranty period
at no cost to the customer. We record an estimate for warranty related costs at
the time of sale based on our actual historical return rates and repair costs at
the time of sale. While our warranty costs have historically been within our
expectations and the provisions established, we cannot guarantee that we will
continue to experience the same warranty return rates or repair costs that we
have in the past. A significant increase in product return rates, or a
significant increase in the costs to repair products sold, could have a material
adverse impact on our operating results for the period or periods in which such
events occur.


                                       18
<PAGE>

New Accounting Pronouncements

     In June 2001, the Financial Accounting Standards Board (FASB) approved SFAS
No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other
Intangible Assets." SFAS No. 141 prospectively prohibits the pooling of interest
method of accounting for business combinations initiated after June 30, 2001.
SFAS No. 142 requires companies to cease amortizing goodwill that existed at
June 30, 2001. The amortization of existing goodwill will cease on December 31,
2001. Any goodwill resulting from acquisitions completed after June 30, 2001
will not be amortized. SFAS No. 142 also establishes a new method of testing
goodwill and certain intangibles for impairment on an annual basis or on an
interim basis if an event occurs or circumstances change that would reduce the
fair value of a reporting unit below its carrying value. The adoption of these
standards did not have a material effect on the company's consolidated financial
statements or its results of operations.

     In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." This Statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. The purpose of this Statement
is to develop consistent accounting for asset retirement obligations and related
costs in the financial statements and provide more information about future cash
outflows, leverage and liquidity regarding retirement obligations and the gross
investment in long-lived assets. This Statement is effective for financial
statements issued for fiscal years beginning after June 15, 2002. The Company
will be required to implement SFAS No. 143 on January 1, 2003. The Company does
not believe that adoption of this standard will have a material effect on its
consolidated financial statements or its results of operations.

     In July of 2002, the FASB issued SFAS No., 146 "Accounting for Costs
Associated with Exit or Disposal Activities." This Statement addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies EITF Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)." The principal difference between Statement
No. 146 and Issue 94-3 relates to Statement 146's requirements for recognition
of a liability for a cost associated with an exit or disposal activity.
Statement No. 146 requires that a liability for a cost associated with an exit
or disposal activity be recognized when the liability is incurred. Under Issue
94-3, a liability for an exit cost as generally defined in Issue 94-3 was
recognized at the date of an entity's commitment to an exit plan. A fundamental
conclusion in this Statement is that an entity's commitment to a plan, by
itself, does not create an obligation that meets the definition of a liability.
Therefore, this Statement eliminates the definition and requirements for
recognition of exit costs in Issue 94-3. This Statement also establishes that
fair value is the objective for initial measurement of the liability. The
provisions of this Statement are effective for exit or disposal activities that
are initiated after December 31, 2002. The adoption of this standard is not
expected to have a material impact on the consolidated financial statements of
the Company.

     In November 2002, the Financial Accounting Standards Board issued
Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others" (FIN 45).
FIN 45 elaborates on the disclosure to be made by a guarantor in its interim and
annual financial statements about its obligations under certain guarantees that
it has issued. It also clarifies that a guarantor is required to recognize, at
the inception of a guarantee, a liability for the fair value of the obligation
undertaken in issuing the guarantee. The initial recognition and initial
measurement provisions of FIN 45 are applicable on a prospective basis to
guarantees issued or modified after December 31, 2002. The disclosure
requirements of FIN 45 are effective for financial statements of interim or
annual periods ending after December 31, 2002. The Company does not expect
adoption of FIN 45 to have a material effect on its financial condition, results
of operations of liquidity.

     In January 2003, the Financial Accounting Standards Board issued
Interpretation No. 46, "Consolidation of Variable Interest Entities (FIN 46).
FIN 46 clarifies the application of Accounting


                                       19
<PAGE>

Research Bulletin No. 51, "Consolidated Financial Statements, to certain
entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial
support from the other parties. FIN 46 applies immediately to variable interest
entities created after January 31, 2003. The Company is currently in the process
of evaluating what impact, if any, FIN 46 will have on its financial condition,
results of operations or liquidity.

Effect of Inflation

     The Company believes that inflation has not had a material effect on its
operations. If, however, inflation increases in the future it could temporarily
adversely affect the profitability of GTSI's sales under its Government
fixed-price contracts, which generally preclude the Company from passing on
inflation-related or other increases in product costs to Government customers
during the term of a pre-existing contract. The Company mitigates this risk in
part by often obtaining agreements from certain of its suppliers prohibiting
them from increasing their prices to GTSI during the term of fixed-price
contracts.

Seasonal Fluctuations and Other Risk Factors

     The Company has historically experienced and expects to continue to
experience significant seasonal fluctuations in its operations as a result of
Government buying and funding patterns, which also affect the buying patterns of
GTSI's prime contractor customers. These buying and funding patterns
historically have had a significant positive effect on GTSI's bookings in the
third quarter ending September 30 each year (the Government's fiscal year end),
and consequently on sales and net income in the third and fourth quarters of
each year. Quarterly financial results are also affected by the timing of the
award and shipments of products under government contracts, price competition in
the industry, the addition of personnel or other expenses in anticipation of
sales growth, product line changes and expansions, and the timing and costs of
changes in customer and product mix. In addition, customer order deferrals in
anticipation of new product releases by leading manufacturers, delays in vendor
shipments of new or existing products, a shift in sales mix to more complex
requirements contracts with more complex service costs, and vendor delays in the
processing of incentives and credits due GTSI, have occurred (all of which are
also likely to occur in the future) and have adversely affected the Company's
operating performance in particular periods. The seasonality and the
unpredictability of the factors affecting such seasonality make GTSI's quarterly
and yearly financial results difficult to predict and subject to significant
fluctuation. The Company's stock price could be adversely affected if any such
financial results fail to meet the financial community's expectations.

     Additionally, legislation is periodically introduced in Congress that may
change the Government's procurement practices. GTSI cannot predict whether any
legislative or any regulatory proposals will be adopted or, if adopted, the
impact upon its operating results. Changes in the structure, composition and/or
buying patterns of the Government, either alone or in combination with
competitive conditions or other factors, could adversely affect future results.

     In December 1999, the Company purchased $1.7 million of business
intelligence software. Contractually, the Company has the right to sell this
business intelligence software to various Government agencies through June 30,
2003. Through December 31, 2002, the Company had sold approximately $300,000 of
this product. Based on its sales history and the continued challenges with
selling this product, the Company's management believes that the remaining $1.4
million of the business intelligence software inventory was impaired and as a
result wrote off the remaining unsold balance in 2002.


                                       20
<PAGE>

Liquidity and Capital Resources

     During 2002, the Company's operating activities provided approximately
$13.5 million of cash, compared to $3.2 million used by operations in 2001.
Sources of cash provided by operating activities in 2002 include a reduction in
lease receivables of $28.9 million and merchandise inventories of $5.4 million,
and an increase in accrued liabilities and warranty liabilities of $2.4 million
offset by reductions in accounts payable of $28.9 million and an increase in
other assets of $5.9 million. Accounts receivable are substantially unchanged
year-over-year, however trade accounts receivable increased $5.7 million due to
increased sales. The increase in trade accounts receivable was partially offset
by a decrease of $4.5 in various receivables due from vendors. The cash
generated from lease receivables resulted from the sale of equipment leases
during the first quarter of 2002. The increase in other assets was primarily due
to a strategic prepaid inventory arrangement for $5.9 million at December 31,
2002. The decrease in accounts payable was primarily due to management taking
advantage of strategic inventory pre-buys and prompt payment discounts during
2002.

     Investing activities used cash of approximately $3.9 million in 2002
primarily for the Company's investment in software for a new fulfillment system,
designed to improve efficiency throughout the Company. The Company is internally
developing software to replace its current fulfillment system. As of December
31, 2002, the Company has capitalized approximately $4.6 million dollars under
this project.

     The Company's financing activities used approximately $9.8 million of cash
during 2002 due to payments under its line-of-credit of $12.6 million and
$797,000 used to repurchase the common stock of the Company partially offset by
$3.7 million in proceeds from stock options exercised.

     The Company has a revolving line of credit (the "Revolver") with a group of
banks, which allows for borrowings up to $50.0 million during its highest
seasonal period. Additionally, the Company has a separate facility with a bank
for inventory financing of vendor products (the "Wholesale Financing Facility"),
which allows for borrowings up to $60.0 million during its highest seasonal
period. Combined the Revolver and the Wholesale Financing Facility (the "Credit
Facilities") allow the Company to borrow from $55.0 million to $110.0 million
depending on the seasonal period. The seasonal structure of the Credit
Facilities coincides with the seasonality of the Company's business and allows
the Company to minimize banking fees. The interest rate under the Credit
Facilities is a rate indexed to the London Interbank Offered Rate (LIBOR).

     As of December 31, 2002, 2001, and 2000, the Company's interest rate on the
Revolver was 3.13%, 3.68%, and 8.40%, respectively. Amounts due to the banks of
$7.5 million as of December 31, 2002 are classified as current liabilities down
from $20.2 million as of December 31, 2001. The available portion of the Credit
Facility was approximately $42.5 million at December 31, 2002, up from $29.8
million at December 31, 2001.

     Borrowing is limited to 85% of eligible accounts receivable. The Credit
Facility is secured by substantially all of the Company's operating assets.
Current obligations are first funded and then all cash receipts are
automatically applied to reduce outstanding borrowings. The Credit Facility also
contains certain covenants that include restrictions on the payment of dividends
and the purchase of the Company's Common Stock, as well as provisions specifying
compliance with certain quarterly and annual financial ratios. At December 31,
2002, the Company was in compliance with all financial covenants set forth in
the credit facility.


                                       21
<PAGE>

Item 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     The Company has a $50.0 million Credit Facility indexed at LIBOR plus
1.75%. This variable rate Credit Facility subjects the Company to potential cash
flow exposure resulting from changes in interest rates. For example, a one
percent increase in interest rates would increase annual interest expense by
approximately $75,000, based on debt levels at December 31, 2002.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of
1995

     Except for historical information, all of the statements, expectations and
assumptions contained in the foregoing material are "forward-looking statements"
(within the meaning of the Private Securities Litigation Reform Act of 1995, as
amended) that involve a number of risks and uncertainties. All such
forward-looking statements are intended to be subject to the safe harbor
protection provided by the Private Securities Reform Act of 1995, as amended,
and by other applicable securities laws. It is possible that the assumptions
made by management - including, but not limited to, those relating to favorable
gross margins, a favorable mix of contracts, benefits of a more efficient
operation, future contract awards, returns on new product programs,
profitability, and increased control of operating costs - may not materialize.
Actual results may differ materially from those projected or implied in any
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which reflect management's analysis only as of
the date hereof. The Company undertakes no obligation to revise publicly the
forward-looking statements to reflect events or circumstances that arise after
the date hereof. Readers should carefully review the risk factors described in
other documents the Company files from time to time with the Securities and
Exchange Commission, including the Quarterly Reports on the Form 10-Q to be
filed by the Company subsequent to this Annual Report on Form 10-K and any
Current Reports on Form 8-K filed by the Company.


                                       22
<PAGE>

Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     The Consolidated Financial Statements and Schedule of GTSI Corp. and
Subsidiary are filed as part of this Form 10-K. Supplemental unaudited quarterly
financial data is included in Note 11 of Notes to Consolidated Financial
Statements.

<TABLE>
<CAPTION>
Index to Financial Statements and Schedule                                                     Page
<S>                                                                                           <C>
Financial Statements:

   Report of Independent Public Accountants                                                   24-25

   Consolidated Balance Sheets as of December 31, 2002 and 2001                                  26

   Consolidated Statements of Operations for the years ended December 31, 2002,
   2001 and 2000                                                                                 27

   Consolidated Statements of Changes in Stockholders' Equity for the years ended                28
   December 31, 2002, 2001 and 2000

   Consolidated Statements of Cash Flows for the years ended December 31, 2002,                  29
   2001 and 2000

   Notes to Consolidated Financial Statements                                                 30-46

Schedule:

   Schedule II - Valuation and Qualifying Accounts                                               46
</TABLE>

Schedules not listed above have been omitted because they are not applicable or
the information required to be set forth therein is included in the financial
statements or notes thereto.


                                       23
<PAGE>

                         Report of Independent Auditors

To the Board of Directors and Stockholders of GTSI Corp.:

     We have audited the accompanying consolidated balance sheet of GTSI Corp.
and subsidiary as of December 31, 2002 and the related consolidated statements
of operations, stockholders' equity and cash flows for the year then ended. Our
audit also included the financial statement schedule listed in the Index at Item
8. These financial statements and the schedule are the responsibility of the
company's management. Our responsibility is to express an opinion on these
financial statements and the schedule based on our audit. The consolidated
financial statements and schedule of GTSI Corp. and subsidiary as of December
31, 2001 and for each of the two years in the period ended December 31, 2001
were audited by auditors who have ceased operations and whose report dated
February 14, 2002 expressed an unqualified opinion on those statements.

     We conducted our audit in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.

     In our opinion, the 2002 consolidated financial statements referred to
above present fairly, in all material respects, the financial position of GTSI
Corp. and subsidiary as of December 31, 2002 and the results of their operations
and their cash flows for the year then ended in conformity with accounting
principles generally accepted in the United States. Also, in our opinion, the
related financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects
the information set forth therein.

                                               /s/ Ernst & Young LLP

McLean, Virginia
January 30, 2003


                                       24
<PAGE>

                    Report of Independent Public Accountants

To GTSI Corp.:

     We have audited the accompanying consolidated balance sheet of GTSI Corp.
and subsidiary (GTSI Corp., formerly Government Technology Services, Inc., a
Delaware corporation) as of December 31, 2001, and the related consolidated
statements of operations, changes in stockholders' equity and cash flows for the
years ending December 31, 2001 and 2000. These financial statements are the
responsibility of GTSI Corp.'s management. Our responsibility is to express an
opinion on these financial statements based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of GTSI Corp. and subsidiary as
of December 31, 2001 and 2000, and the results of their operations and their
cash flows for the years ending December 31, 2001 and 2000, in conformity with
accounting principles generally accepted in the United States.

     Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index of
financial statements is presented for purposes of complying with the Securities
and Exchange Commission's rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.

                                                /S/ ARTHUR ANDERSEN LLP

Vienna, Virginia
February 14, 2002

     This is a copy of the audit report previously issued by Arthur Andersen LLP
in connection with the GTSI Corp. filing on Form 10-K for the year ended
December 31, 2001. Arthur Andersen LLP has not reissued this audit report in
connection with this filing on Form 10-K. (See Exhibit 23.2 for further
discussion).


                                       25
<PAGE>

                            GTSI CORP. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                         December 31,
(In thousands, except share amounts)                                                  2002         2001
                                                                                   ---------    ---------
<S>                                                                                <C>          <C>
ASSETS

Current assets:
   Cash                                                                            $      32    $     114
   Accounts receivable, net                                                          139,164      138,385
   Leases receivable, current, net                                                       308       11,781
   Merchandise inventories                                                            56,039       61,434
   Other current assets                                                               15,080       10,238
                                                                                   ---------    ---------
         Total current assets                                                        210,623      221,952

Property and equipment, net                                                           11,707       11,974
Leases receivable, net of current portion, net                                            --       17,378
Other assets                                                                           2,588        1,148
                                                                                   ---------    ---------
         Total assets                                                              $ 224,918    $ 252,452
                                                                                   =========    =========
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Notes payable to banks                                                          $   7,539    $  20,186
   Accounts payable                                                                  122,432      151,379
   Accrued liabilities                                                                13,412        8,977
   Accrued warranty liabilities                                                        4,404        6,442
                                                                                   ---------    ---------
         Total current liabilities                                                   147,787      186,984

Other liabilities                                                                      1,640        2,403
                                                                                   ---------    ---------
         Total liabilities                                                           149,427      189,387
                                                                                   ---------    ---------
Commitments and contingencies
Stockholders' equity
   Preferred stock -  $0.25 par value, 680,850 shares authorized;
   none issued or outstanding
                                                                                          --           --
   Common stock - $0.005 par value 20,000,000 shares authorized,
   9,806,084 issued and 8,609,938 outstanding at December 31, 2002; and
   20,000,000 shares authorized, 9,806,084 issued and 8,162,612
   outstanding at December 31, 2001
                                                                                          49           49
   Capital in excess of par value                                                     44,439       43,434
   Retained earnings                                                                  36,952       27,419
   Treasury stock, 1,196,146 shares at December 31, 2002 and 1,643,472 shares at
   December 31, 2001, at cost                                                         (5,949)      (7,837)
                                                                                   ---------    ---------
         Total stockholders' equity                                                   75,491       63,065
                                                                                   ---------    ---------
         Total liabilities and stockholders' equity                                $ 224,918    $ 252,452
                                                                                   =========    =========
</TABLE>

        The accompanying notes are an integral part of these consolidated
                                balance sheets.


                                       26
<PAGE>

                            GTSI CORP. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                        For the years ended December 31,
(In thousands, except per share amounts)                                                 2002         2001         2000
                                                                                      ---------    ---------    ---------
<S>                                                                                   <C>          <C>          <C>
Sales                                                                                 $ 934,730    $ 783,496    $ 677,754

Cost of sales                                                                           857,105      718,370      617,621
                                                                                      ---------    ---------    ---------

Gross margin                                                                             77,625       65,126       60,133

Operating expenses                                                                       66,499       61,409       53,316
                                                                                      ---------    ---------    ---------

Income from operations                                                                   11,126        3,717        6,817

   Interest and other income                                                              5,198        4,501        3,206
   Interest expense                                                                        (678)        (794)        (947)
                                                                                      ---------    ---------    ---------
Interest and other income, net                                                            4,520        3,707        2,259
                                                                                      ---------    ---------    ---------

Income before income taxes                                                               15,646        7,424        9,076

Income tax provision (benefit)                                                            6,113        2,938       (2,008)
                                                                                      ---------    ---------    ---------

Net income before cumulative effect of SAB No. 101 adoption                               9,533        4,486       11,084

Cumulative effect of SAB No. 101 adoption                                                    --           --         (467)
                                                                                      ---------    ---------    ---------

Net income                                                                            $   9,533    $   4,486    $  10,617
                                                                                      =========    =========    =========

Net income per common share
   Basic
      Basic net income per share before cumulative effect of SAB No. 101 adoption     $    1.15    $    0.55    $    1.23
      Cumulative effect per share of SAB No. 101 adoption                                    --           --        (0.05)
                                                                                      ---------    ---------    ---------
      Basic net income per share                                                      $    1.15    $    0.55    $    1.18
                                                                                      =========    =========    =========
   Diluted
      Diluted net income per share before cumulative effect of SAB No. 101 adoption   $    1.04    $    0.50    $    1.20
      Cumulative effect per share of SAB No. 101 adoption                                    --           --        (0.05)
                                                                                      ---------    ---------    ---------
      Diluted net income per share                                                    $    1.04    $    0.50    $    1.15
                                                                                      =========    =========    =========

Weighted average common shares outstanding
   Basic                                                                                  8,302        8,144        9,021
                                                                                      =========    =========    =========
   Diluted                                                                                9,156        9,049        9,225
                                                                                      =========    =========    =========
</TABLE>

        The accompanying notes are an integral part of these consolidated
                             financial statements.


                                       27
<PAGE>

                            GTSI CORP. AND SUBSIDIARY
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                   For the years ended December 31, 2002, 2001, and 2000
                               ------------------------------------------------------------------------------------
                               Preferred Stock    Common Stock
                               ---------------------------------   Capital in                            Total
                               Shares            Shares            Excess of    Earnings   Treasury   Stockholders'
(In thousands)                 Issued   Amount   Issued   Amount       Par      Retained     Stock       Equity
                               ------------------------------------------------------------------------------------
<S>                              <C>    <C>       <C>     <C>      <C>          <C>        <C>          <C>
Balance, December 31, 1999       --     $   --    9,806   $   49   $   43,687   $ 12,316   $ (2,856)    $ 53,196

Stock options exercised          --         --       --       --          (81)        --        616          535

Employee stock purchase plan     --         --       --       --         (122)        --        300          178

Common stock repurchase          --         --       --       --           --         --     (6,046)      (6,046)

Net income                       --         --       --       --           --     10,617         --       10,617
                               ------------------------------------------------------------------------------------

Balance, December 31, 2000       --     $   --    9,806   $   49   $   43,484   $ 22,933   $ (7,986)    $ 58,480
                               ====================================================================================

Stock options exercised          --         --       --       --           49         --      2,425        2,474

Employee stock purchase plan     --         --       --       --          (99)        --        571          472

Common stock repurchase          --         --       --       --           --         --     (2,847)      (2,847)

Net income                       --         --       --       --           --      4,486         --        4,486
                               ------------------------------------------------------------------------------------

Balance, December 31, 2001       --     $   --    9,806   $   49   $   43,434   $ 27,419   $ (7,837)    $ 63,065
                               ====================================================================================

Stock options exercised          --         --       --       --          885         --      2,298        3,183

Employee stock purchase plan     --         --       --       --          120         --        387          507

Common stock repurchase          --         --       --       --           --         --       (797)        (797)

Net income                       --         --       --       --           --      9,533         --        9,533
                               ------------------------------------------------------------------------------------

Balance, December 31, 2002       --     $   --    9,806   $   49   $   44,439   $ 36,952   $ (5,949)    $ 75,491
                               ====================================================================================
</TABLE>

        The accompanying notes are an integral part of these consolidated
                             financial statements.


                                       28
<PAGE>

                            GTSI CORP. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                       For the years ended December 31,
(In thousands)                                           2002        2001        2000
                                                       --------    --------    --------
<S>                                                    <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                             $  9,533    $  4,486    $ 10,617
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
   Cumulative effect of SAB No. 101 adoption                 --          --         467
   Depreciation and amortization                          3,543       4,407       3,934
   Loss on disposal of property and equipment               593          26         134
   Deferred taxes                                          (421)      1,573      (4,334)
   (Decrease) increase in cash due to changes in
   assets and liabilities:
      Accounts receivable                                  (779)     (6,605)    (12,404)
      Leases receivable                                  28,851     (20,391)     (8,768)
      Merchandise inventories                             5,395      (7,864)     (6,751)
      Other assets                                       (5,860)      7,079      (8,809)
      Accounts payable                                  (28,946)     17,308      30,200
      Accrued liabilities and warranty liabilities        2,397      (3,525)      4,276
      Other liabilities                                    (763)        258        (974)
                                                       --------    --------    --------
Net cash provided by (used in) operating activities:     13,543      (3,248)      7,588
                                                       --------    --------    --------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchase of property and equipment                    (3,871)     (3,577)     (4,271)
                                                       --------    --------    --------
Net cash used in investing activities:                   (3,871)     (3,577)     (4,271)
                                                       --------    --------    --------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from (payment of) bank notes, net           (12,647)      8,261       2,446
   Payment of notes payable                                  --      (1,500)       (500)
   Purchase of treasury stock                              (797)     (2,847)     (6,046)
   Proceeds from employee stock purchase plan               507         472         178
   Proceeds from exercises of stock options               3,183       2,474         535
                                                       --------    --------    --------
Net cash (used in) provided by financing activities:     (9,754)      6,860      (3,387)
                                                       --------    --------    --------
Net increase (decrease) in cash                             (82)         35         (70)
Cash at beginning of year                                   114          79         149
                                                       --------    --------    --------
Cash at end of year                                    $     32    $    114    $     79
                                                       ========    ========    ========
Supplemental disclosures of cash flow information:
   Cash paid during the year for:
      Interest                                         $    770    $    907    $  1,429
      Income taxes                                     $  4,347    $  2,509    $     --
</TABLE>

        The accompanying notes are an integral part of these consolidated
                             financial statements.


                                       29
<PAGE>

                            GTSI CORP. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     GTSI Corp. ("GTSI", or the "Company", formerly named Government Technology
Services, Inc.) operates in a single business segment and resells hardware,
software and peripherals to agencies of federal, state and local governments
(the "Government"). Business activities also include sales to systems
integrators, prime contractors and other companies reselling information
technology to various government agencies. In August 1994, GTSI acquired all of
the outstanding shares of common stock of Falcon Microsystems, Inc. ("Falcon").
GTSI and Falcon are hereinafter referred to as the "Company."

     On February 12, 1998, the Company entered into and closed on an Asset
Purchase Agreement with BTG, Inc., and two of its subsidiaries (collectively,
"BTG") under which the Company acquired substantially all of the assets of the
BTG division that resells computer hardware, software and integrated systems to
the Government (the "BTG Division"). The acquisition was financed by the payment
of cash of approximately $9.7 million and the issuance of 15,375 shares of
Series C 8% Cumulative Redeemable Preferred Stock ("Series C Preferred Stock"),
having a liquidation preference of $15.4 million. On May 12, 1998, the Company's
stockholders approved a proposal to convert the Series C Preferred Stock into
3,000,000 shares of Common Stock valued at $5.125 per share. The acquisition of
the BTG Division was accounted for using the purchase method of accounting. The
financial statements include the results of operations of the BTG Division since
the acquisition date.

     On February 10, 1999, the Company entered into subsequent agreements with
BTG related to the reacquisition of a portion of GTSI common stock from BTG, the
terms of certain contracts and the relationship of the parties going forward.
Pursuant to the agreements, GTSI reacquired 600,000 shares of its common stock
of which 200,000 were tendered to GTSI at no cost and 400,000 were purchased by
GTSI for $5.00 per share, in exchange for a three-year, 8% interest bearing note
from BTG with the principal due in three annual installments of $500,000,
$500,000 and $1,000,000, respectively. The final payment under this note was
made on July 16, 2001. Additionally, on October 23, 2000, the Company purchased
the remaining 1.3 million shares of GTSI stock held by BTG for $4.25 a share or
$5.53 million.

1.   Summary of Significant Accounting Policies

     Consolidation. The consolidated financial statements include the accounts
of GTSI and its wholly owned subsidiary, Falcon. All significant intercompany
accounts and transactions are eliminated in consolidation.

     Accounting Estimates. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the dates of
the financial statements, and the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those estimates.
The most significant estimates include the allowance for doubtful accounts,
reserves for excess or obsolete inventory, reserves for asset impairment, and
reserves for future costs to be incurred under the Company's warranty programs.

     Revenue Recognition. Revenue from hardware product sales is generally
recognized when title to the products sold passes to the customer, with
provisions established for estimated product returns. Based upon the Company's
standard shipping terms, title generally passes upon the customer's receipt of
the products. The Company also recognizes revenue under sales-type lease
arrangements in accordance with the provisions of Statements of Financial
Accounting Standards ("SFAS") No. 13, "Accounting for Leases." Revenue from
software product sales is recognized in accordance with the provisions of
American Institute of Certified Public Accountants Statement of Position 97-2,
"Software Revenue Recognition." Revenue from the sale of software products is
recognized when persuasive evidence of an arrangement exists, the software has
been delivered, the fee is fixed or determinable and collection is


                                       30
<PAGE>

probable. Net revenues from sales of third party software maintenance contracts
are recognized at the time of sale.

     In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial
Statements." SAB No. 101 provides guidance on the application of generally
accepted accounting principles to revenue recognition issues in financial
statements. SAB No. 101 clarifies the appropriate timing of revenue recognition
when products are shipped to customers. The impact to the Company of the
adoption of SAB No. 101 was to generally defer the recognition of revenue from
two to seven days as compared to the Company's previous method. During the
fourth quarter of 2000, the Company adopted the provisions of SAB No. 101
retroactive to January 1, 2000. The Company implemented the guidance set forth
in SAB No. 101 by recording a charge to income of $467,000, representing the
cumulative effect of adopting SAB No. 101 on January 1, 2000.

     The Emerging Issues Task Force ("EITF") has issued EITF Issue No. 99-19,
"Reporting Revenue Gross as a Principal versus Net as an Agent." Consistent with
the requirements under SAB No. 101, EITF No. 99-19 provides guidance regarding
the income statement presentation of revenue based on either (a) the gross
amount billed to a customer because it has earned revenue from the sale of the
goods or services or (b) the net amount retained (that is, the amount billed to
a customer less the amount paid to a supplier) because it has earned a
commission or fee. Beginning with the fourth quarter of 2000, and on a
retroactive basis for all periods presented, the accompanying financial
statements have been reclassified to reflect the provisions of EITF No. 99-19.
Adoption of EITF No. 99-19 had no impact on our reported gross margin or net
income, but merely resulted in the reduction of previously reported sales and
cost of sales for our resold software maintenance agreements of approximately
$13.4 million for 2000.

     Fair Value of Financial Instruments. At December 31, 2002 and 2001, the
recorded values of financial instruments such as accounts receivable and payable
and notes payable to banks approximated their fair values, based on the
short-term maturities of these instruments. As of December 31, 2002 and 2001,
the Company believes the carrying amount of its current and long-term lease
receivables approximates its fair value since the lease receivables are
discounted at an interest rate that approximates market.

     Accounts Receivable. Accounts receivable principally represents amounts
collectible from the Government and prime contractors to the Government. Other
accounts receivable result from items billed to suppliers under various
agreements involving the sale of their products. The Company performs ongoing
credit evaluations of its non-governmental customers but generally does not
require collateral to support any outstanding obligation owed to GTSI.
Allowances for potential uncollectible amounts are estimated and deducted from
total accounts receivable.

     Sales of Lease Receivables. The Company sells products to certain customers
under sales-type lease arrangements. The Company accounts for its sales-type
leases according to the provisions of SFAS No. 13, "Accounting for Leases," and
accordingly, recognizes current and long-term lease receivables, net of unearned
finance income on the accompanying balance sheets. The Company periodically
sells lease receivables to various unrelated financing companies. The Company
accounts for its sales of lease receivables in accordance with SFAS No. 140,
"Accounting for Transfers and Serving of Financial Assets and Extinguishments of
Liabilities - a Replacement of FASB Statement No. 125." In accordance with the
criteria set forth in SFAS No. 140, lease receivables amounting to $49.0 million
and $39.8 million, in 2002 and 2001 respectively, were accounted for as sales
and, as a result, the related receivables have been excluded from the
accompanying balance sheets.

     A $500,000 gain on the sales of certain of the Company's lease receivables
is included in interest and other income in the accompanying statements of
operations for the year ended December 31, 2002.


                                       31
<PAGE>

     Merchandise Inventories. Merchandise inventories are valued at the lower of
cost or market. Cost is determined using a weighted average method.

     Property and Equipment. Property and equipment are stated at cost less
accumulated depreciation. Depreciation and amortization are calculated using the
straight-line method over estimated useful lives ranging from three to ten
years. Leasehold improvements are amortized using the straight-line method over
the terms of the leases or their estimated useful lives, whichever is shorter.

     Impairment of Long-Lived Assets. Long-lived assets, consisting primarily of
property and equipment and capitalized software, are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
should be addressed pursuant to Statement of Financial Accounting Standards No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets." The
Company determines impairment by comparing the carrying value of these
long-lived assets to a probability weighted estimated undiscounted future cash
flows expected to result from the use of these assets and their eventual
disposition. In the event the Company determines that an impairment exists, a
loss would be recognized based on the amount by which the carrying value exceeds
the fair value of the assets, which is generally determined by using quoted
market prices or valuation techniques such as the discounted present value of
expected future cash flows, appraisals, or other pricing models as appropriate.

     Accrued Warranty Liabilities. The Company offers warranties on sales under
certain products specific to the terms of the customer agreements. Standard
warranties require repair or replacement of defective products reported during
the warranty period at no cost to the customer. The Company records an estimate
for warranty expenses related to costs based on its actual historical return
rates and repair costs at the time of sale.

     Income Taxes. The Company accounts for income taxes in accordance with SFAS
No. 109, "Accounting for Income Taxes." Under SFAS No. 109, deferred tax assets
and liabilities are computed based on the estimated future tax effects of
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes. SFAS
No. 109 requires that a valuation allowance be established when necessary to
reduce deferred tax assets to amounts expected to be realized.

     Earnings Per Share. In accordance with SFAS No. 128, "Earnings Per Share,"
the Company presents basic and diluted earnings per share on the face of the
statements of operations for all periods presented. Basic earnings per share
excludes dilution and is computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding for the
period. Diluted earnings per share reflects the potential dilution that could
occur if securities or other contracts to issue common stock were exercised or
converted into common stock or resulted in the issuance of common stock that
then shared in the earnings of the entity. For the years ended December 31,
2002, 2001 and 2000, diluted weighted average common shares outstanding includes
the dilutive effect of options if exercised of 854,000, 905,000 and 204,000
shares, respectively.

     Interest and Other Income, Net. For the years ended December 31, 2002,
2001, and 2000, interest and financing income includes $3.6 million, $2.2
million, and $2.1 million, respectively, of financing income earned on prompt
payment of vendor invoices and $1.4 million, $1.7 million, and $ 0.1 million,
respectively, of interest income from lease receivables.

     A $500,000 gain on the sales of certain of the Company's lease receivables
is included in interest and other income in the accompanying balance sheets.

     Marketing Development and Cooperative Advertising Funds. Certain vendors
provide the Company with sales incentive programs. Generally, the funds received
under these programs are


                                       32
<PAGE>

determined based on the Company's purchases and/or sales of the vendor's
product. The funds are earned upon performance of specific promotional programs
or upon completion of predetermined objectives dictated by the vendor. Once
earned, the funds reduce associated expenses of promotional programs.

     Concentration of Credit Risk. The Company's customers are primarily
federal, state and local government agencies and prime contractors to the
Government, including systems integrators. In 2002, the Company sold products or
services to thousands of different customers, including to most agencies and
major departments of the Government, to many state governments and to hundreds
of prime contractors. In 2002, the Company had sales to a single system
integrator, which is a prime contractor to the Government in excess of 9% of the
Company's net sales for 2002. In addition, aggregate 2002 sales to the
Government's Departments of the Army, Navy and Air Force were 16.3%, 7.1% and
10.6%, respectively, of GTSI's 2002 sales.

     Outstanding Checks. Included in accounts payable at December 31, 2002 and
2001, are approximately $6.9 million and $11.9 million, respectively, which
represent checks that have been issued but have yet to clear the bank.

     New Accounting Pronouncements. In June 2001 the Financial Accounting
Standards Board (FASB) approved SFAS No. 141, "Business Combinations," and SFAS
No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 prospectively
prohibits the pooling of interest method of accounting for business combinations
initiated after June 30, 2001. SFAS No. 142 requires companies to cease
amortizing goodwill that existed at June 30, 2001. The amortization of existing
goodwill will cease on December 31, 2001. Any goodwill resulting from
acquisitions completed after June 30, 2001 will not be amortized. SFAS No. 142
also establishes a new method of testing goodwill and certain intangibles for
impairment on an annual basis or on an interim basis if an event occurs or
circumstances change that would reduce the fair value of a reporting unit below
its carrying value. The Company's adoption of these standards did not have a
material effect on its consolidated financial statements or its results of
operations.

     In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset
Retirement Obligations." This Statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. The purpose of this Statement
is to develop consistent accounting for asset retirement obligations and related
costs in the financial statements and provide more information about future cash
outflows, leverage and liquidity regarding retirement obligations and the gross
investment in long-lived assets. This Statement is effective for financial
statements issued for fiscal years beginning after June 15, 2002. The Company
will be required to implement SFAS No. 143 on January 1, 2003. The Company does
not believe that adoption of this standard will have a material effect on its
consolidated financial statements or its results of operations.

     In July 2002, the FASB issued SFAS No., 146 "Accounting for Costs
Associated with Exit or Disposal Activities". This Statement addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies EITF Issue No. 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)." The principal difference between Statement
No. 146 and Issue 94-3 relates to Statement 146's requirements for recognition
of a liability for a cost associated with an exit or disposal activity.
Statement No. 146 requires that a liability for a cost associated with an exit
or disposal activity be recognized when the liability is incurred. Under Issue
94-3, a liability for an exit cost as generally defined in Issue 94-3 was
recognized at the date of an entity's commitment to an exit plan. A fundamental
conclusion in this Statement is that an entity's commitment to a plan, by
itself, does not create an obligation that meets the definition of a liability.
Therefore, this Statement eliminates the definition and requirements for
recognition of exit costs in Issue 94-3. This Statement also establishes that
fair value is the objective for initial measurement of the liability. The
provisions of this Statement are effective for exit or disposal


                                       33
<PAGE>

activities that are initiated after December 31, 2002. The adoption of this
standard is not expected to have a material impact on the consolidated financial
statements of the Company.

     In November 2002, the Financial Accounting Standards Board issued
Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements for
Guarantees, Including Indirect Guarantees of Indebtedness of Others" (FIN 45).
FIN 45 elaborates on the disclosure to be made by a guarantor in its interim and
annual financial statements about its obligations under certain guarantees that
it has issued. It also clarifies that a guarantor is required to recognize, at
the inception of a guarantee, a liability for the fair value of the obligation
undertaken in issuing the guarantee. The initial recognition and initial
measurement provisions of FIN 45 are applicable on a prospective basis to
guarantees issued or modified after December 31, 2002. The disclosure
requirements of FIN 45 are effective for financial statements of interim or
annual periods ending after December 31, 2002. The Company does not expect
adoption of FIN 45 to have a material effect on its financial condition, results
of operations of liquidity.

     In January 2003, the Financial Accounting Standards Board issued
Interpretation No. 46, "Consolidation of Variable Interest Entities (FIN 46).
FIN 46 clarifies the application of Accounting Research Bulletin No. 51,
"Consolidated Financial Statements, to certain entities in which equity
investors do not have the characteristics of a controlling financial interest or
do not have sufficient equity at risk for the entity to finance its activities
without additional subordinated financial support from the other parties. FIN 46
applies immediately to variable interest entities created after January 31,
2003. The Company is currently in the process of evaluating what impact, if any,
FIN 46 will have on its financial condition, results of operations or liquidity.

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation - Transition and Disclosure - an amendment of SFAS 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 both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. The Company has chosen to
continue to account for stock-based compensation using the intrinsic value
method prescribed in APB Opinion No. 25 and related interpretations.
Accordingly, compensation expense for stock options is measured as the excess,
if any, of the fair market value of the Company's stock at the date of the grant
over the exercise price of the related option. The Company has adopted the
annual disclosure provisions of SFAS No. 148 in its financial report for the
year ended December 31, 2002 and will adopt the interim disclosure provisions
for its financial reports for the quarter ended March 31, 2003.


                                       34
<PAGE>

     Had compensation costs for the Company's stock options been determined
based on SFAS No. 123, "Accounting for Stock-Based Compensation," the Company's
net income and earnings per share would have been as follows (in thousands,
except per share amounts):

                                                      2002      2001      2000
                                                     ------   -------   -------
Net income - as reported                             $9,533   $ 4,486   $10,617

Add: Total stock-based employee
compensation expense as reported under
intrinsic value method (APB No. 25) for all
awards, net of related tax effects                       --        --        --

Deduct: Total stock-based employee
compensation expense determined under fair
value based method (SFAS No. 123) for all
awards, net of related tax effects                     (978)   (1,061)     (920)

Net income - pro forma                               $8,555   $ 3,425   $ 9,697
Net income per share - as reported (basic)             1.15      0.55      1.18
Net income per share - as reported (diluted)           1.04      0.50      1.15
Net income per share - pro forma (basic)               1.03      0.42      1.08
Net income per share - pro forma (diluted)             0.93      0.38      1.05

     The fair value of each option is estimated on the date of grant using the
Black-Scholes option-pricing model with the following assumptions:

                                                  2002        2001        2000
                                               ---------   ---------   ---------
Average expected life                          4.0 years   4.4 years   5.0 years
Risk free interest rate                            2.53%       4.50%       4.95%
Volatility                                        77.95%       75.9%       75.9%
Dividend yield                                        --         --           --

2.   Accounts Receivable

     The composition of accounts receivable as of December 31, 2002 and 2001, is
as follows (in thousands):

                                                            2002         2001
                                                         ---------    ---------
Trade accounts receivable                                $ 122,765    $ 117,815
Vendor and other receivables                                17,233       21,983
                                                         ---------    ---------
                                                           139,998      139,798
          Less: Allowance for uncollectible accounts     $    (834)   $  (1,413)
                                                         ---------    ---------
Accounts receivable, net                                 $ 139,164    $ 138,385
                                                         =========    =========


                                       35
<PAGE>

3.   Lease Receivables

     The Company sold products to certain customers under sales-type lease
arrangements. Leasing arrangements were for two to three years and carry market
interest rates ranging from 7.83 to 10.20 percent. Total future minimum lease
payments and unearned finance income due under the sales-type leases are as
follows (in thousands):

                                                        Unearned
                                          Total Lease    Finance   Net Principle
                                         Payments Due    Income         Due
                                         ------------   --------   -------------
2003                                          $347        $ 39         $308
                                              ----        ----         ----
Total lease receivables                       $347        $ 39         $308
                                              ====        ====         ====

4.   Property and Equipment

     The composition of property and equipment as of December 31, 2002 and 2001,
is as follows (in thousands):

                                                           2002          2001
                                                           ----          ----
Office furniture and equipment                           $ 11,885      $ 11,066
Computer software                                          15,938        15,289
Leasehold improvements                                      4,960         4,832
                                                         ----------------------
                                                           32,783        31,187
Less accumulated depreciation and amortization            (21,076)      (19,213)
                                                         ----------------------
Property and equipment, net                              $ 11,707      $ 11,974
                                                         ======================
Depreciation and amortization expense                    $  3,543      $  4,407
                                                         ======================

     Depreciation and amortization expense on property and equipment and
leasehold improvements was $3.5 million, $4.4 million, and $3.9 million, in
2002, 2001, and 2000, respectively. During 2002 the Company replaced its website
and disposed of the old website. The remaining book value of the old website of
approximately $580,000 was written off during the second quarter of 2002.

5.   Internal Software

     The Company is internally developing software to replace its current
fulfillment system. As of December 31, 2002 the Company has capitalized
approximately $4.6 million dollars under this project.

     The Company policy capitalizes qualifying computer software costs incurred
for software developed for internal use during the application development stage
in accordance with Statement of Position 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use". Costs incurred during
the application development stage include designing software configuration and
interfaces, coding, installing software, and testing. These costs include both
external direct costs and internal costs. Costs incurred outside of the
application development stage are expensed as incurred.


                                       36
<PAGE>

6.   Notes Payable to Banks

     The Company has a revolving line of credit (the "Revolver") with a group of
banks, which allows for borrowings up to $50.0 million during its highest
seasonal period. Additionally, the Company has a separate facility with a bank
for inventory financing of vendor products (the "Wholesale Financing Facility"),
which allows for borrowings up to $60.0 million during its highest seasonal
period. Combined, the Revolver and the Wholesale Financing Facility (the "Credit
Facilities") allow the Company to borrow from $55.0 million to $110.0 million
depending on the seasonal period. The seasonal structure of the Credit
Facilities coincides with the seasonality of the Company's business and allows
the Company to minimize banking fees. The interest rate under the Credit
Facilities is a rate indexed to the London Interbank Offered Rate (LIBOR).

     As of December 31, 2002, 2001, and 2000, respectively, the Company's
interest rate on the Revolver was 3.13%, 3.68%, and 8.40%, respectively. Amounts
due to the banks of $7.5 million as of December 31, 2002 are classified as
current liabilities down from $20.2 million as of December 31, 2001. The
available portion of the Credit Facility was approximately $42.5 million at
December 31, 2002, up from $29.8 million at December 31, 2001.

     Borrowing is limited to 85% of eligible accounts receivable. The Credit
Facility is secured by substantially all of the Company's operating assets.
Current obligations are first funded and then all cash receipts are
automatically applied to reduce outstanding borrowings. The Credit Facility also
contains certain covenants that include restrictions on the payment of dividends
and the purchase of the Company's Common Stock, as well as provisions specifying
compliance with certain quarterly and annual financial ratios. At December 31,
2002, the Company was in compliance with all financial covenants set forth in
the credit facility. The following information pertains to the notes payable to
banks for the years ended December 31, 2002, 2001, and 2000 (dollars in
thousands):

                                                              2002   2001   2000
                                                              ----   ----   ----

     Weighted average interest rate........................   3.5%   5.7%   8.2%

7.   Income Taxes

     The components of the provision (benefit) for income taxes for the years
ended December 31, 2002, 2001, and 2000 are as follows (in thousands):

                                            2002           2001           2000
                                          -------        -------        -------
Current taxes :
   Federal                                $ 5,769        $ 1,079        $ 1,923
   State                                      765            287            403
                                          -------        -------        -------

                                            6,534          1,366          2,326
Deferred taxes:
   Federal                                   (372)         1,398         (4,063)
   State                                      (49)           174           (271)
                                          -------        -------        -------
                                             (421)         1,572         (4,334)
                                          -------        -------        -------
Income tax (benefit)                      $ 6,113        $ 2,938        $(2,008)
                                          =======        =======        =======

     Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities and the amounts recorded
for income tax purposes. As of December


                                       37
<PAGE>

31, 1999, the Company had a valuation allowance of $5.0 million against its net
deferred tax assets. In the fourth quarter of 2000, the Company, after its third
consecutive year of positive earnings, concluded that a valuation allowance
against its net deferred tax assets was no longer necessary as the future
realizability of these assets was now more likely than not. Accordingly, the
valuation allowance was eliminated. Significant components of the Company's
deferred taxes as of December 31, 2002 and 2001 were as follows (in thousands):

                                                                 December 31,
                                                            --------------------
                                                              2002         2001
                                                            --------------------
Deferred tax assets:
   Accounts receivable and inventory allowances             $   322      $   546
   Intangible assets                                          1,339        1,512
   Accrued warranty                                           1,701        2,460
   Bid and proposal costs                                       552          502
   Vacation accrual                                             431          388
   Depreciation                                                 674          368
   Rent abatement                                                96           97
   Other reserves                                               711          526
   Prepaid revenue                                              839           --
                                                            --------------------
         Total deferred tax assets                            6,665        6,399
                                                            --------------------
Deferred tax liabilities:
    Web site development costs                                1,302        1,457
                                                            --------------------
         Total deferred tax assets                            1,302        1,457
                                                            --------------------
Net deferred tax assets reported                            $ 5,363      $ 4,942
                                                            ====================

            The Company's effective tax rate for the years ended December 31,
2002, 2001, and 2000 differs from the statutory rate for federal income taxes as
a result of the following factors:

                                                        2002     2001     2000
                                                        ----     ----     ----
Statutory rate                                          34.0%    34.0%    34.0%
State income taxes, net of Federal tax benefit           4.6%     4.6%     4.5%
Valuation allowance                                      0.0%     0.0%    -59.3%
Other                                                    0.5%     1.0%    -1.3%
                                                        ----     ----     ----
                                                        39.1%    39.6%    -22.1%
                                                        ====     ====     ====

8.   Stockholders' Equity

     Stock Options and Warrants. The Company has two combination incentive and
non-statutory stock option plans, the "1996 Plan" and the "1994 Plan," that
provide for the granting of options to employees (both plans) and non-employee
directors (only under the 1996 Plan) to purchase up to 2,500,000 and 300,000
shares, respectively, of the Company's common stock. In addition, in May 1997
the Company's Board of Directors adopted the 1997 Non-Officer Stock Option Plan
(the "1997 Plan"). The 1997 Plan provides for the granting of non-statutory
stock options only to employees other than officers and directors to purchase up
to 300,000 shares of the Company's common stock. Until its expiration on March
15, 1996, the Company had another combination incentive and non-statutory stock


                                       38
<PAGE>

option plan, the "1986 Plan," that provided for the granting of options to
employees to purchase up to 1,100,000 shares of the Company's common stock.
Under the 1997, 1996, 1994 and 1986 Plans, options have a term of up to ten
years, generally vest over four years and option prices are required to be at
not less than 100% of the fair market value of the Company's common stock at the
date of grant and, except in the case of non-employee directors, must be
approved by the Board of Directors or its Compensation Committee. Options under
the 1997, 1996, 1994 and 1986 Plans were as follows:

<TABLE>
<CAPTION>
                                                                                    Weighted      Weighted
                                                                                    Average        Average
                                         Number of Option   Exercise Price Per   Exercise Price   Remaining
                                               Shares              Share            Per Share        Life
-----------------------------------------------------------------------------------------------------------
<S>                                               <C>               <C>                  <C>            <C>
1997 Plan:
   Outstanding at December 31, 1999               275,925           $2.88-5.38           $ 4.52
      Granted                                      57,000           $3.25-5.22           $ 3.60
      Forfeited or canceled                       (49,625)          $3.31-5.31           $ 4.70
      Exercised                                    (3,333)               $2.88           $ 2.88
   Outstanding at December 31, 2000               279,967           $2.88-5.38           $ 4.23
      Granted
      Forfeited or canceled                       (13,792)          $2.88-4.88           $ 3.41
      Exercised                                  (112,917)          $2.88-5.38           $ 4.42
   Outstanding at December 31, 2001               153,258           $2.88-5.25           $ 4.16
      Granted                                      33,000          $7.93-11.06           $ 9.15
      Forfeited or canceled                        (6,750)          $3.13-4.50           $ 3.49
      Exercised                                   (93,583)          $2.88-5.25           $ 4.37
   Outstanding at December 31, 2002                85,925          $2.88-11.06           $ 5.90         5.0
-----------------------------------------------------------------------------------------------------------
1996 Plan:
   Outstanding at December 31, 1999             1,254,000           $2.88-5.44           $ 4.22
      Granted                                     463,000           $2.81-3.31           $ 3.21
      Forfeited or canceled                      (254,000)          $2.88-5.25           $ 4.24
      Exercised                                   (10,750)          $3.13-3.75           $ 3.62
   Outstanding at December 31, 2000             1,452,250           $2.81-5.44           $ 3.91
      Granted                                     233,000           $4.00-6.40           $ 6.03
      Forfeited or canceled                       (55,916)          $2.88-4.00           $ 3.46
      Exercised                                  (252,084)          $2.88-5.25           $ 3.82
   Outstanding at December 31, 2001             1,377,250           $2.81-6.40           $ 4.30
      Granted                                     265,000          $8.00-13.67           $10.00
      Forfeited or canceled                       (43,000)          $3.25-6.40           $ 3.77
      Exercised                                  (262,233)          $2.88-6.40           $ 3.95
   Outstanding at December 31, 2002             1,337,017          $2.81-13.67           $ 5.52         4.9
-----------------------------------------------------------------------------------------------------------
1994 Plan:
   Outstanding at December 31, 1999               281,500          $2.88-13.44           $ 6.13
      Granted                                      35,000                $3.31           $ 3.31
      Forfeited or canceled                       (60,500)         $4.81-13.44           $ 7.71
      Exercised                                    (6,500)               $2.88           $ 2.88
   Outstanding at December 31, 2000               249,500          $2.88-12.88           $ 5.70
      Granted                                          --                   --           $ 0.00
      Forfeited or canceled                            --                   --           $ 0.00
      Exercised                                   (34,500)          $2.88-3.50           $ 3.24
   Outstanding at December 31, 2001               215,000          $2.88-12.88           $ 6.10
      Granted                                      98,000          $7.81-11.06           $ 9.29
</TABLE>


                                       39
<PAGE>

<TABLE>
<CAPTION>
<S>                                               <C>              <C>                   <C>            <C>
      Forfeited or canceled                       (72,417)         $2.88-12.50           $ 5.42
      Exercised                                   (95,166)          $2.88-7.31           $ 4.56
   Outstanding at December 31, 2002               145,417          $2.88-12.88           $ 7.25         6.4
-----------------------------------------------------------------------------------------------------------
1986 Plan:
   Outstanding at December 31, 1999                57,000          $3.50-10.25           $ 4.33
      Granted                                          --                   --               --
      Forfeited or canceled                       (50,000)               $3.50           $ 3.50
      Exercised                                        --                   --               --
   Outstanding at December 31, 2000                 7,000               $10.25           $10.25
      Granted                                          --                   --               --
      Forfeited or canceled                        (7,000)              $10.25           $10.25
      Exercised                                        --                   --               --
   Outstanding at December 31, 2001                    --                   --               --
      Granted                                          --                   --               --
      Forfeited or canceled                            --                   --               --
      Exercised                                        --                   --               --
   Outstanding at December 31, 2002                    --                   --               --          --
-----------------------------------------------------------------------------------------------------------
Nonstatutory Stock Options:
   Outstanding at December 31, 1999             1,145,000          $3.13-10.50           $ 4.42
      Granted                                          --                   --               --
      Forfeited or canceled                       (50,000)         $3.13-10.50           $ 4.41
      Exercised                                  (100,000)               $3.75           $ 3.75
   Outstanding at December 31, 2000               995,000          $3.13-10.50           $ 4.47
      Granted                                     400,000           $3.81-6.76           $ 4.73
      Forfeited or canceled                       (87,500)          $3.81-5.25           $ 4.34
      Exercised                                  (147,500)          $3.75-5.25           $ 4.21
   Outstanding at December 31, 2001             1,160,000          $3.13-10.50           $ 4.60
      Granted                                     176,000          $7.81-11.06           $ 8.94
      Forfeited or canceled                        (9,000)               $7.81           $ 7.81
      Exercised                                        --                   --               --
   Outstanding at December 31, 2002             1,327,000          $3.13-11.06           $ 5.16         3.9
-----------------------------------------------------------------------------------------------------------
FOR ALL PLANS:
   Outstanding at December 31, 2002             2,895,359          $2.81-13.67           $ 5.45         4.7
</TABLE>


                                       40
<PAGE>

       Outstanding and Exercisable by Price Range as of December 31, 2002

<TABLE>
<CAPTION>
                  Options Outstanding                            Options Exercisable
-----------------------------------------------------------   -------------------------
                                      Weighted
                                       Average     Weighted                    Weighted
                        Number        Remaining    Average        Number        Average
Range of Exercise   Outstanding at   Contractual   Exercise   Exercisable at   Exercise
      Prices           12/31/02      Life-Years     Price        12/31/02        Price
-----------------   --------------   -----------   --------   --------------   --------
        <S>                 <C>           <C>       <C>             <C>         <C>
        2.81-2.85           75,000        4.4       $ 2.81          75,000      $  2.81
        2.85-4.28        1,521,684        3.8         3.64       1,246,434         3.68
        4.28-5.70          309,675        4.4         5.07         298,425         5.07
        5.70-7.13          333,000        5.5         6.27         153,000         6.25
        7.13-8.55          223,000        6.7         8.12          47,996         8.43
        8.55-9.98           85,000        8.2         8.75              --           --
       9.98-11.40          340,000        5.6        10.90         104,000        10.52
      12.83-13.67            8,000        4.9        13.37           3,000        12.88
-----------------        ---------   -----------    ------       ---------      -------
       2.81-14.25        2,895,359        4.7       $ 5.45       1,927,855      $  4.57
=================        =========   ===========    ======       =========      =======
</TABLE>

     At December 31, 2002, in the 1997 Plan, options for 28,675 shares were
exercisable and 4,242 options were available for grant; in the 1996 Plan,
options for 884,263 shares were exercisable and 637,916 options were available
for grant; in the 1994 Plan, options for 45,917 shares were exercisable and 717
options were available for grant; and in the 1986 Plan, no options for shares
were exercisable.

     Stock Purchase Plan. The Company has established an Employee Stock Purchase
Plan ("ESPP"). Eligible employees may elect to set aside, through payroll
deduction, up to 15% of their compensation to purchase common stock of the
Company. The maximum number of shares that an eligible employee may purchase
during any offering period is equal to 5% of such employee's compensation for
the 12 calendar-month period prior to the commencement of an offering period
divided by 85% of the fair market value of a share of common stock on the first
day of the offering period. The ESPP is implemented through one offering during
each six-month period beginning January 1 and July 1. The ESPP purchase price is
85% of the lower of the fair market value of a share of common stock on the
first day or the last day of the offering period. In the offering periods ended
June 30, 2002 and December 31, 2002, employees purchased 63,269 and 77,858
shares, respectively, at prices of $6.67 and $6.67, respectively. In the
offering periods ended June 30, 2001 and December 31, 2001, employees purchased
68,465 and 57,563 shares, respectively, at prices of $2.68 and $5.02,
respectively. In the offering periods ended June 30, 2000 and December 31, 2000,
employees purchased 27,221 and 43,007, respectively, at prices of $2.34 and
$2.66, respectively. The weighted average fair market value of shares under the
ESPP was $6.67, $3.75, and $2.53 in 2002, 2001, and 2000, respectively. The
Company has reserved 750,000 shares of common stock for the ESPP, of which
203,293 were available for future issuance as of December 31, 2002.

9.   Commitments and Contingencies

     The Company is occasionally a defendant in litigation incidental to its
business. The Company believes that none of such litigation currently pending,
individually or in the aggregate, will have a material adverse effect on the
Company's financial condition or results of operations.

     In December 1999 the Company purchased $1.7 million of business
intelligence software. Contractually, the Company has the right to sell this
business intelligence software to various Government agencies through June 30,
2003. Through December 31, 2002, the Company has sold approximately


                                       41
<PAGE>

$300,000 of this product. Based on its sales history and the continued
challenges with selling this product, the Company's management believes that the
remaining $1.4 million of the business intelligence software inventory was
impaired and as a result wrote off the remaining unsold balance in 2002.

     During the fourth quarter of 2002, the Company determined that it was
remote that certain accrued obligations would need to be paid. Accordingly, the
associated obligation of $1.4 million has been reversed and as a result
operating expenses have been reduced.

     The Company leases office and warehouse space and various equipment under
noncancelable operating leases.

     In October 1997, the Company executed a ten-year lease for an
administrative facility consisting of approximately 100,500 square feet of new
office space in Chantilly, Virginia. The agreement has one five-year option
period and commenced on December 1, 1998. The Company is obligated under the
lease agreement to provide to the landlord a letter of credit in the amount of
$2.0 million as a security deposit for all tenant requested improvements
associated with the lease. This deposit will be reduced by 10% per year, over
the life of the lease. The Company recorded leasehold improvements in the amount
of $2.0 million, as well as a liability for deferred rent of $2.0 million in
conjunction with the build-out improvements. The asset and liability are being
amortized over the life of the lease. The Company leases a warehouse and
distribution facility in Chantilly, Virginia, in a separate 200,000 square-foot
facility under a lease expiring in December 2006. In December 2002, GTSI
expanded its office space by leasing approximately 34,000 square feet of office
space in Chantilly, Virginia under a lease expiring in November 2005, with one
two-year option and one one-year option. The Company also entered into a lease
agreement on April 1, 1999 for a 20,000 square-foot distribution center in
Chattanooga, Tennessee. The Company has exercised its one-year lease renewal
option for the Chattanooga facilities effective April 1, 2002. Rent expense for
the years ended December 31, 2002, 2001, and 2000 was approximately $2.0
million, $2.1 million, and $2.0 million, respectively. The Company also
maintains a sales office in Germany and had entered into a lease agreement as of
January 1, 1999 for a term of two years ending on December 31, 2000. The Company
renewed this lease commitment as of January 1, 2002 and 2003 for one-year terms
ending on December 31, 2002 and 2003, respectively.

     Collective future minimum lease payments as of December 31, 2002, are as
follows (in thousands):

                                                       Operating
               Year ending December 31,                  Leases
               ------------------------                ---------
                       2003                             $ 2,440
                       2004                               2,656
                       2005                               2,655
                       2006                               2,081
                       2007                               1,295
                       Thereafter                         1,221
                                                        -------

               Total minimum lease payments             $12,348
                                                        =======


                                       42
<PAGE>

10.  401(k) Plan

     Effective April 1991, the Company adopted the Employees' 401(k) Investment
Plan (the "Plan"), a savings and investment plan intended to be qualified under
Section 401 of the Internal Revenue Code of 1986, as amended (the "Code"). All
employees of the Company who are at least 21 years of age and have completed at
least six months of employment with the Company are eligible to participate. The
Plan is voluntary and allows participating employees to make pretax
contributions, subject to limitations under the Code, of a percentage (not to
exceed 15%) of their total compensation. Employee contributions are fully vested
at all times. The Company, in its sole discretion, may make contributions in
amounts, if any, as may be determined by the Board of Directors for the benefit
of all participants. In 2002, 2001, and 2000 the Company contributed a total of
$887,322, $799,847, and $662,164 to the Plan, respectively.

11.  Segment Reporting

     In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information," which
requires certain information about operating segments to be presented in the
financial statements and in condensed financial statements of interim periods.
The Company has determined that through December 31, 2002, it operated as one
business segment as defined by SFAS No. 131. In addition, the Company aggregates
and reports revenues from products that have similar economic characteristics in
their nature, production, and distribution process. The primary customer of the
Company is the Federal Government, which under SFAS No. 131 is considered a
single customer.


                                       43
<PAGE>

12.  Quarterly Financial Data (unaudited)

     The following tables set forth selected unaudited quarterly financial data
and the percentages such items represent of sales. The quarterly financial data
reflect, in the opinion of the Company, all normal and recurring adjustments
necessary to present fairly the results of operations for such periods. Results
of any one or more quarters are not necessarily indicative of annual results or
continuing trends.

<TABLE>
<CAPTION>
                                                                               2002 Quarters Ended
                                                ----------------------------------------------------------------------------------
                                                     March 31,              June 30,          September 30,        December 31,
                                                ------------------    ------------------    -----------------    -----------------
(In thousands, except per share data)
<S>                                             <C>         <C>       <C>         <C>       <C>        <C>       <C>        <C>
Sales                                           $ 176,743   100.0%    $ 200,992   100.0%    $ 276,846  100.0%    $ 280,149  100.0%
Cost of sales                                     162,232    91.8%      185,883    92.5%      254,485   91.9%      254,505   90.8%
Gross margin                                       14,511     8.2%       15,109     7.5%       22,361    8.1%       25,644    9.2%
Operating expenses                                 15,386     8.7%       14,427     7.2%       18,414    6.7%       18,272    6.5%
(Loss) income from operations                        (875)   -0.5%          682     0.3%        3,947    1.4%        7,372    2.6%
Interest income, net                               (1,770)   -1.0%         (611)   -0.3%       (1,288)  -0.5%         (851)  -0.3%
Income before income taxes                            895     0.5%        1,293     0.6%        5,235    1.9%        8,223    2.9%
Income tax provision                                  354     0.2%          521     0.3%        2,094    0.8%        3,144    1.1%
Net income                                            541     0.3%          772     0.4%        3,141    1.1%        5,079    1.8%

Net income per common share
    Basic:
          Basic net (loss) income per share     $    0.07             $    0.09             $    0.38            $    0.60
    Diluted:
          Diluted net (loss) income per share   $    0.06             $    0.08             $    0.32            $    0.54

Weighted average common shares
outstanding
     Basic                                          8,184                 8,265                 8,316                8,439
                                                =========             =========             =========            =========
     Diluted                                        9,518                 9,582                 9,723                9,402
                                                =========             =========             =========            =========

<CAPTION>
Contract Vehicles                                                               2002 Quarter Ended
                                                ----------------------------------------------------------------------------------
(Dollars in millions)                                March 31,              June 30,          September 30,        December 31,
                                                ------------------    ------------------    -----------------    -----------------
<S>                                                <C>       <C>         <C>       <C>         <C>      <C>         <C>      <C>
GSA Schedules                                      $ 35.0    19.8%       $ 64.1    31.9%       $ 97.5   35.2%       $ 79.4   28.3%
IDIQ Contracts                                       62.2    35.2%         80.5    40.0%        113.8   41.1%        132.1   47.1%
Open Market                                          19.1    10.8%         16.8     8.4%         33.4   12.1%         37.8   13.5%
Subcontracts and
      Other Contracts                                60.4    34.2%         39.6    19.7%         32.1   11.6%         30.9   11.1%
                                                ------------------    ------------------    -----------------    -----------------
Total                                              $176.7     100%       $201.0     100%       $276.8    100%       $280.2    100%
                                                ==================    ==================    =================    =================
</TABLE>


                                       44
<PAGE>

<TABLE>
<CAPTION>
Top 5 Vendors                                                                   2002 Quarter Ended
                                                ----------------------------------------------------------------------------------
(Dollars in millions)                                March 31,              June 30,          September 30,        December 31,
                                                ------------------    ------------------    -----------------    -----------------
<S>                                                <C>       <C>         <C>       <C>         <C>      <C>         <C>      <C>
Panasonic                                          $ 28.0    15.9%       $ 25.9    12.9%       $ 37.0   13.4%       $ 32.6   11.6%
Cisco                                                36.8    20.8%         15.5     7.7%         33.2   12.0%         29.4   10.5%
Sun                                                  10.9     6.2%         24.8    12.3%         46.8   16.9%         28.1   10.0%
Hewlett-Packard                                      17.5     9.9%         18.4     9.2%         32.9   11.9%         31.6   11.3%
Microsoft                                             9.1     5.1%         34.8    17.3%         32.3   11.7%         19.4    6.9%
Other                                                74.4    42.1%         81.6    40.6%         94.6   34.1%        139.1   49.7%
                                                ------------------    ------------------    -----------------    -----------------
Total                                              $176.7     100%       $201.0     100%       $276.8    100%       $280.2    100%
                                                ==================    ==================    =================    =================

<CAPTION>
                                                                                2001 Quarters Ended
                                                ----------------------------------------------------------------------------------
                                                     March 31,              June 30,          September 30,        December 31,
                                                ------------------    ------------------    -----------------    -----------------
(In thousands, except per share data)

<S>                                             <C>         <C>       <C>         <C>       <C>        <C>       <C>        <C>
Sales                                           $ 149,288   100.0%    $ 151,090   100.0%    $ 203,077  100.0%    $ 280,041  100.0%
Cost of sales                                     136,523    91.4%      138,250    91.5%      186,899   92.0%      256,698   91.7%
Gross margin                                       12,765     8.6%       12,840     8.5%       16,178    8.0%       23,343    8.3%
Operating expenses                                 15,358    10.3%       15,698    10.4%       14,853    7.3%       15,501    5.5%
(Loss) income from operations                      (2,593)   -1.7%       (2,858)   -1.9%        1,325    0.7%        7,842    2.8%
Interest income, net                                 (655)   -0.4%         (679)   -0.4%       (1,945)  -1.0%         (428)  -0.2%
(Loss) income before income taxes                  (1,938)   -1.3%       (2,179)   -1.4%        3,270    1.6%        8,270    3.0%
Income tax (benefit) provision                       (747)   -0.5%         (840)   -0.6%        1,260    0.6%        3,264    1.2%
Net (loss) income                                  (1,191)   -0.8%       (1,339)   -0.9%        2,010    1.0%        5,006    1.8%

Net income per common share
    Basic:
          Basic net (loss) income per share     $   (0.15)            $   (0.16)            $    0.24            $    0.62
    Diluted:
          Diluted net (loss) income per share   $   (0.15)            $   (0.16)            $    0.22            $    0.54

Weighted average common shares
outstanding

     Basic                                          8,042                 8,157                 8,256                8,119
                                                =========             =========             =========            =========
     Diluted                                        8,042                 8,157                 9,225                9,258
                                                =========             =========             =========            =========

<CAPTION>
Contract Vehicles                                                               2001 Quarter Ended
                                                ----------------------------------------------------------------------------------
(Dollars in millions)                                March 31,              June 30,          September 30,        December 31,
                                                ------------------    ------------------    -----------------    -----------------
<S>                                                <C>       <C>         <C>       <C>         <C>      <C>         <C>      <C>
GSA Schedules                                      $ 26.4    17.7%       $ 35.4    23.4%       $ 76.4   37.7%       $100.2   35.8%
IDIQ Contracts                                       91.9    61.6%         79.3    52.5%         80.3   39.5%        103.9   37.1%
Open Market                                          23.9    16.1%         23.7    15.7%         30.3   14.9%         55.5   19.8%
Subcontracts and
      Other Contracts                                 7.1     4.8%         12.7     8.4%         16.1    7.9%         20.4    7.3%
                                                    --------------- ---------------------  ------------------- --------------------
Total                                              $149.3     100%       $151.1     100%       $203.1    100%       $280.0    100%
                                                    =============== =====================  =================== ====================


                                       45
<PAGE>

Top 5 Vendors                                                              2001 Quarter Ended
                                             -------------------------------------------------------------------------------
(Dollars in millions)                             March 31,             June 30,         September 30,       December 31,
                                             ------------------   ------------------   -----------------   -----------------

Hewlett-Packard                                 $ 29.8    20.0%       $ 28.3   18.7%      $ 34.7   17.1%      $ 42.3   15.1%
Panasonic                                         27.5    18.4%         18.4   12.2%        23.4   11.5%        23.2    8.3%
Microsoft                                         11.1     7.4%         16.2   10.7%        27.3   13.4%        33.4   11.9%
Cisco                                             12.8     8.6%         15.1   10.0%        21.8   10.7%        30.7   11.0%
Sun                                                7.3     4.9%         16.2   10.7%        19.6    9.7%        19.9    7.1%
Other                                             60.8    40.7%         56.9   37.7%        76.3   37.6%       130.5   46.6%
                                             ------------------   ------------------   -----------------   -----------------
Total                                           $149.3     100%       $151.1    100%      $203.1    100%      $280.0    100%
                                             ==================   ==================   =================   =================
</TABLE>

                            GTSI CORP. AND SUBSIDIARY

                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
(In thousands)                      Balance at  Charged to                     Balance
                                    Beginning    Costs and                      at end
          Description               of Period    Expenses    Deductions (1)   of Period
---------------------------------   ---------   ----------   --------------   ---------
<S>                                  <C>          <C>            <C>            <C>
Year ended December 31, 2002:
          Allowance for bad debts    $ 1,413      $  218         $ (797)        $  834

Year ended December 31, 2001:
          Allowance for bad debts    $ 1,709      $  171         $ (467)        $1,413

Year ended December 31, 2000:
          Allowance for bad debts    $ 2,556      $  (10)        $ (837)        $1,709
</TABLE>

(1)  Adjustments and amounts written off during the period.


Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

     GTSI Corp. engaged the services of Ernst & Young LLP as independent
auditors to replace Arthur Andersen LLP, effective July 11, 2002. For additional
information, see GTSI Corp.'s current report on Form 8-K dated July 16, 2002.


                                       46
<PAGE>

                                    PART III

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

     The information required by this Item is incorporated by reference to the
sections of the Registrant's definitive Proxy Statement for the Annual Meeting
of Stockholders scheduled to be held on May 14, 2003 entitled "Election of
Directors," "Executive Officers" and "Common Stock Ownership of Principal
Stockholders and Management - Section 16(a) Beneficial Ownership Reporting
Compliance," to be filed with the Commission.

Item 11.  EXECUTIVE COMPENSATION.

     The information required by this Item is incorporated by reference to the
sections of the Registrant's definitive Proxy Statement for the Annual Meeting
of Stockholders scheduled to be held on May 14, 2003 entitled "Election of
Directors - Compensation of Directors" and "Executive Compensation and Other
Information," to be filed with the Commission.

Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The information required by this Item is incorporated by reference to the
section of the Registrant's definitive Proxy Statement for the Annual Meeting of
Stockholders scheduled to be held on May 14, 2003 entitled "Common Stock
Ownership of Principal Stockholders and Management," to be filed with the
Commission.

Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     The information required by this Item is incorporated by reference to the
sections of the Registrant's definitive Proxy Statement for the Annual Meeting
of Stockholders scheduled to be held on May 14, 2003 entitled "Election of
Directors - Class 3 Nominees" and "Compensation of Directors" and "Executive
Compensation and Other Information-Employment Agreements and Termination of
Employment and Change of Control Arrangements," to be filed with the Commission.

Item 14.  controls and procedures.

     (a) Evaluation of disclosure controls and procedures

     Our chief executive officer and our chief financial officer, after
evaluating the effectiveness of our "disclosure controls and procedures" (as
defined in the Securities Exchange Act of 1934 Rules 13a - 14(c) and 15d -
14(c)) as of a date ("the Evaluation Date") within 90 days before the filing of
this annual report, have concluded that, as of the Evaluation Date, our
disclosure controls and procedures were adequate and designed to ensure that the
information required to be filed or submitted by us under the Securities
Exchange Act of 1934 is recorded, processed, summarized and reported within the
requisite time periods.

     (b) Changes in internal controls

     There were no significant changes in our internal controls or in other
factors that could significantly affect our internal controls subsequent to the
Evaluation Date.


                                       48
<PAGE>

Item 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

3.1    Restated Certificate of Incorporation (23)

3.2    Bylaws, as amended (12)

10.1   Amended and Restated 1986 Stock Option Plan, (3), including forms of
       Stock Option Agreements and Stock Purchase Agreement (1)(2)

10.2   Employee Stock Purchase Plan, as amended to date (1)(5)

10.3   Officer Severance Plan, as amended to date (14)

10.4   GTSI Employees' 401(k) Investment Plan (2); and Amendment No. 1 (4);
       Amendment No. 2 and Amendment No. 3 thereto (14)

10.5   Lease dated August 11, 1995 between the Registrant and Security Capital
       Industrial Trust covering new distribution center facility (14)

10.7   1994 Stock Option Plan, as amended to date (1)

10.8   1996 Stock Option Plan, as amended to date (1)

10.9   1997 Non-Officer Stock Option Plan, as amended to date (1)

10.10  Lease dated December 10, 1997 between the Registrant and Petula
       Associates, Ltd. covering new headquarters facility (excluding
       attachments and exhibits) (17)

10.11  Second Amended and Restated Business Credit and Security Agreement, dated
       as of July 28, 1997, among the Registrant, certain lenders named in such
       agreement, and Deutsche Financial Services Corporation, as a Lender and
       as Agent (excluding attachments and exhibits) (17)

10.12  Amendment, dated as of July 2, 1998, to Second Amended and Restated
       Business Credit and Security Agreement, dated as of July 28, 1997, among
       the Registrant, certain lenders named in such agreement, and Deutsche
       Financial Services Corporation, as a Lender and as Agent (21)

10.13  Amendment, dated as of July 2, 1998, to Agreement for Wholesale Financing
       dated as of June 27, 1996, among the Registrant and Deutsche Financial
       Services Corporation (21)

10.14  Amendment, dated as of November 24, 1999 to Second Amended and Restated
       Business Credit and Security Agreement, dated July 28, 1997, among the
       Registrant, certain lenders named in such agreement and Deutsche
       Financial Services Corporation, as a Lender and as Agent (22)

10.15  Addendum, dated as of November 23, 1999 to Agreement for Wholesale
       Financing dated June 27, 1996, among the Registrant and Deutsche
       Financial Services Corporation (22)

10.16  Amendment, dated as of November 17, 2000 to Second Amended and Restated
       Business Credit and Security Agreement, dated July 28, 1997, among the
       Registrant, certain lenders


                                       49
<PAGE>

       named in such agreement and Deutsche Financial Services Corporation, as a
       Lender and as Agent (23)

10.17  Amendment, dated as of February 28, 2001 to Second Amended and Restated
       Business Credit and Security Agreement, dated as of July 28, 1997, among
       the Registrant, certain lenders named in such agreement, and Deutsche
       Financial Services Corporation, as a Lender and as Agent

10.18  Amendment, dated as of March 13, 2001, to Agreement for Wholesale
       Financing dated as of June 27, 1996, among the Registrant and Deutsche
       Financial Services Corporation

10.19  Amendment, dated as of February 26, 2002 to Second Amended and Restated
       Business Credit and Security Agreement, dated as of July 28, 1997, among
       the Registrant, certain lenders named in such agreement, and Deutsche
       Financial Services Corporation, as a Lender and as Agent

10.20  Amendment, dated as of February 26, 2002, to Agreement for Wholesale
       Financing dated as of June 27, 1996, among the Registrant and Deutsche
       Financial Services Corporation

10.21  Amendment, dated as of March 27, 2002, to Agreement for Wholesale
       Financing dated as of June 27, 1996, among the Registrant and Deutsche
       Financial Services Corporation

10.22  Amendment, dated as of August 7, 2002, to Agreement for Wholesale
       Financing dated as of June 27, 1996, among the Registrant and Deutsche
       Financial Services Corporation

10.23  Amendment, dated as of January 3, 2003 to Second Amended and Restated
       Business Credit and Security Agreement, dated as of July 28, 1997, among
       the Registrant, certain lenders named in such agreement, and Deutsche
       Financial Services Corporation, as a Lender and as Agent

10.24  Offer Letter dated November 29, 2000 between the Registrant and John T.
       Spotila (1)(23)

10.25  Employment Agreement dated January 1, 2001 between the Registrant and M.
       Dendy Young (1)(23)

10.26  Non-Qualified Stock Option Agreement effective January 2, 2001 between
       the Registrant and John T. Spotila (1)

10.27  Offer Letter dated June 28, 2001 between Registrant and Terri Allen
       (1)(24)

10.28  Non-Qualified Stock Option Agreement effective July 31, 2001 between the
       Registrant and Terri Allen (1)

10.29  Retirement Agreement effective March 12, 2002 between the Registrant and
       Robert D. Russell (1)(25)

10.30  Offer Letter dated May 21, 2002 between the Registrant and Dr. Jack
       Littley III (1)

10.31  Retirement Agreement effective November 8, 2002 between the Registrant
       and William E. Johnson, Jr. (1)

10.32  Offer Letter dated December 31, 2002 between the Registrant and Thomas
       Mutryn (1)


                                       50
<PAGE>

10.33  Memorandum Regarding Promotion to Senior Vice President dated February
       20, 2003 between the Registrant and Dr. Jack Littley III (1)

10.34  Non-Qualified Stock Option Agreement effective January 28, 2003 between
       the Registrant and Thomas Mutryn (1)

23.1   Consent of Ernst & Young LLP

23.2   Information Regarding Consent of Arthur Andersen LLP

99.1   Section 906 Certification of M. Dendy Young, Chief Executive Officer

99.2   Section 906 Certification of Thomas Mutryn, Chief Financial Officer


                                       51
<PAGE>

(1)   Constitutes a management contract or compensatory plan or arrangement
      required to be filed as an exhibit to this Form 10-K.

(2)   Incorporated by reference to the Registrant's Registration Statement on
      Form S-1 (Registration No. 33-41351) filed with the Commission on June 21,
      1991.

(3)   Incorporated by reference to Pre-effective Amendment No. 3 to the
      Registrant's Registration Statement on Form S-1 (Registration No.
      33-41351) filed with the Commission on September 20, 1991.

(4)   Incorporated by reference to the Registrant's Registration Statement on
      Form S-8 (Registration No. 33-55090) filed with the Commission on November
      25, 1992.

(5)   Incorporated by reference to the Registrant's Annual Report on Form 10-K
      (File No. 0-19394) for the year ended December 31, 1992.

(6)   Incorporated by reference to the Registrant's Quarterly Report on Form
      10-Q (File No. 0-19394) for the quarter ended March 31, 1993.

(7)   Incorporated by reference to the Registrant's Quarterly Report on Form
      10-Q (File No. 0-19394) for the quarter ended September 30, 1993.

(8)   Incorporated by reference to the Registrant's Annual Report on Form 10-K
      (File No. 0-19394) for the year ended December 31, 1993.

(9)   Incorporated by reference to the Registrant's Quarterly Report on Form
      10-Q (File No. 0-19394) for the quarter ended March 31, 1994.

(10)  Incorporated by reference to the Registrant's Current Report on Form 8-K
      filed with the Commission on August 31, 1994, as amended by Form 8-K/A No.
      1 filed with the Commission on October 31, 1994.

(11)  Incorporated by reference to the Registrant's Annual Report on Form 10-Q
      (File No. 0-19394) for the year ended December 31, 1994.

(12)  Incorporated by reference to the Registrant's Annual Report on Form 10-K
      (File No. 0-19394) for the year ended December 31, 1996.

(13)  Incorporated by reference to the Registrant's Current Report on Form 8-K
      filed with the Commission on January 17, 1995.

(14)  Incorporated by reference to the Registrant's Quarterly Report on Form
      10-Q (File No. 0-19394) for the quarter ended June 30, 1995.

(15)  Incorporated by reference to the Registrant's Annual Report on Form 10-K
      (File No. 0-19394) for the year ended December 31, 1995.

(16)  Incorporated by reference to the Registrant's Quarterly Report on Form
      10-Q (File No. 0-19394) for the quarter ended March 31, 1996.

(17)  Incorporated by reference to the Registrant's Annual Report on Form 10-K
      (File No. 0-19394) for the year ended December 31, 1997.

(18)  Incorporated by reference to the Registrant's Current Report on Form 8-K
      filed with the Commission on May 18, 1998.


                                       52
<PAGE>

(19)  Incorporated by reference to the Registrant's Current Report on Form 8-K
      filed with the Commission on May 21, 1998.

(20)  Incorporated by reference to the Registrant's Current Report on Form 8-K
      filed with the Commission on August 5, 1998.

(21)  Incorporated by reference to the Registrant's Quarterly Report on Form
      10-Q (File No. 0-19394) for the quarter ended June 30, 1998.

(22)  Incorporated by reference to the Registrant's Annual Report on Form 10-K
      (File No. 0-19394) for the year ended December 31, 1999.

(23)  Incorporated by reference to the Registrant's Annual Report on Form 10-K
      (File No. 0-19394) for the year ended December 31, 2000.

(24)  Incorporated by reference to the Registrant's Annual Report on Form 10-K
      (File No. 0-19394) for the year ended December 31, 2002.

(25)  Incorporated by reference to the Registrant's Quarterly Report on Form
      10-Q (File No. 0-19394) for the quarter ended April 30, 2001.

(b)  Reports on Form 8-K

     No reports on Form 8-K have been filed by the Registrant during the last
     quarter of the period covered by this Form 10-K.

(c)  Exhibits

     See the list of Exhibits in Item 14(a)(3) beginning on Pages 47 of this
     Form 10-K.

(d)  Financial Statement Schedules

     See the Index included in Item 8 on Page 25 of this Form 10-K.


                                       53
<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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, in the City of
Chantilly, Commonwealth of Virginia.

                                       GTSI CORP.

Dated:  March 28, 2003                  By:      /S/ M. DENDY YOUNG
                                            ------------------------------
                                            M. Dendy Young
                                            Chairman and Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

         Signature                          Title                     Date
         ---------                          -----                     ----

   /S/ M. DENDY YOUNG             Chairman and                   March 28, 2003
-----------------------------     Chief Executive Officer
   M. Dendy Young                 (Principal Executive Officer)
                                  and a Director

   /S/ THOMAS A. MUTRYN           Senior Vice President and      March 28, 2003
-----------------------------     Chief Financial Officer
   Thomas A. Mutryn               (Principal Financial and
                                  Accounting Officer)

   /S/ LEE JOHNSON                Director                       March 28, 2003
-----------------------------
   Lee Johnson

   /S/ STEVEN KELMAN              Director                       March 28, 2003
-----------------------------
   Steven Kelman, Ph.D.

   /S/ JAMES J. LETO              Director                       March 28, 2003
-----------------------------
   James J. Leto

   /S/ LAWRENCE J. SCHOENBERG     Chairman Emeritus              March 28, 2003
-----------------------------
   Lawrence J. Schoenberg

   /S/ JOHN M. TOUPS              Director                       March 28, 2003
-----------------------------
   John M. Toups

   /S/ DANIEL R. YOUNG            Director                       March 28, 2003
-----------------------------
   Daniel R. Young


                                       54
<PAGE>

Written Certifications Of Chief Executive Officer

I, Dendy Young, certify that:

1. I have reviewed this annual report on Form 10-K of GTSI Corp.;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date: March 28, 2003

GTSI Corp.

By:  /s/ M. Dendy Young
    ----------------------------------------
     M. Dendy Young
     Chairman and Chief Executive Officer


                                       55
<PAGE>

Written Certifications Of Chief Financial Officer

I, Thomas Mutryn, certify that:

1. I have reviewed this annual report on Form 10-K of GTSI Corp.;

2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this annual
report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others within those entities, particularly during the
period in which this annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and
procedures as of a date within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrant's ability to record, process,
summarize and report financial data and have identified for the registrant's
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual report whether or not there were significant changes in internal controls
or in other factors that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

Date:   March 28,  2003

GTSI Corp.

By:  /s/ Thomas A. Mutryn
    ----------------------------------
     Thomas A. Mutryn
     Chief Financial Officer


                                       56