As filed with the Securities and Exchange Commission on August 23, 2005
                                                     Registration No. 333-126472

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                          ----------------------------                          
                                AMENDMENT NO. 1
                                       ON
                                    FORM S-2
                                       TO
                                    FORM S-3
                             REGISTRATION STATEMENT
                                     Under
                           The Securities Act Of 1933
                          ----------------------------

                               GSE SYSTEMS, INC.
             (Exact name of registrant as specified in its charter)
        Delaware                                       52-1868008
    (State or other jurisdiction                    (I.R.S. Employer
   of incorporation or organization)              Identification Number)
                              9189 Red Branch Road
                               Columbia, MD 21045
                                 (410) 772-3500
               (Address, including zip code, and telephone number,
       including area code, of registrant's principal executive offices)

                                 John V. Moran
                            Chief Executive Officer
                               GSE Systems, Inc.
                              9189 Red Branch Road
                               Columbia, MD 21045
                                 (410) 772-3500
                              Fax: (410) 772-3599
              (Name and address, including zip code, and telephone
               number, including area code, of agent for service)

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

                                    Copy to:

                             Robert J. Hasday, Esq.
                                Duane Morris LLP
                              380 Lexington Avenue
                               New York, NY 10168
                                 (212) 692-1000
                              Fax: (212) 692-1020

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

     Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
    
     If any of the securities being registered on this form are to be offered on
a delayed or continuous  basis  pursuant to Rule 415 under the Securities Act of
1933, check the following box. [  ]
    
     If the  registrant  elects to deliver its latest  annual report to security
holders, or a complete and legible facsimile thereof,  pursuant to Item 11(a)(1)
of this Form, check the following box. [  ]
    
     If this form is filed to  register  additional  securities  for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list  the  Securities  Act  registration  statement  number  of the  earlier
effective registration statement for the same offering. [  ]
    
     If this form is a  post-effective  amendment  filed pursuant to Rule 462(c)
under the  Securities  Act,  check the following box and list the Securities Act
registration  statement number of the earlier effective  registration  statement
for the same offering. [  ]
    
     If this form is a  post-effective  amendment  filed pursuant to Rule 462(d)
under the  Securities  Act,  check the following box and list the Securities Act
registration  statement number of the earlier effective  registration  statement
for the same offering. [  ]
    
     If delivery of the  prospectus is expected to be made pursuant to Rule 434,
please check the following box. [  ]
    

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

    
     The Registrant  hereby amends this  Registration  Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further  amendment  which  specifically  states  that  this  Registration
Statement shall  thereafter  become effective in accordance with Section 8(a) of
the  Securities  Act of 1933 or until the  Registration  Statement  shall become
effective on such date as the Commission,  acting pursuant to said Section 8(a),
may determine.

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

                           [GP Strategies Letterhead]
                                                                          , 2005
Dear GP Strategies Stockholder:

     I am pleased to send you the attached  prospectus  concerning  GSE Systems,
Inc. and notify you of the special  distribution of shares of GSE Systems common
stock to the holders of GP Strategies common stock and Class B Capital Stock. On
June 20, 2005, the board of directors of GP Strategies  Corporation approved the
spin-off of GP Strategies'  approximately  57% interest in GSE Systems through a
special  distribution  of the shares of GSE Systems held by GP  Strategies to GP
Strategies stockholders. As a result, GP Strategies stockholders will receive in
the  spin-off  ____  share of GSE  Systems  common  stock  for each  share of GP
Strategies common stock or Class B Capital Stock held.

     GSE Systems provides  simulation  solutions and services to the nuclear and
fossil electric utility industry, the chemical and petrochemical  industries and
to the US  Military  Complex.  It also  provides  plant  monitoring  and  signal
analysis  monitoring and optimization  software primarily to the power industry.
Shares of GSE Systems  common  stock are listed on the American  Stock  Exchange
under the symbol "GVP."

     The enclosed Prospectus describes the distribution of shares of GSE Systems
common  stock and  contains  important  information  about GSE  Systems  and its
business. I suggest that you read it carefully.

     No action is required on your part to receive your GSE Systems shares.  You
will not be required  either to pay  anything for the new shares or to surrender
any  certificates  representing  shares of GP  Strategies  stock.  However,  the
distribution  may be taxable to you as a dividend.  Please read the  information
set forth under the caption  "Material  Federal Income Tax  Consequences  of the
Spin-Off" in the attached  Prospectus  and consult your tax advisor with respect
to the income tax consequences of the distribution to you.

     If you have any questions regarding the distribution,  please contact Lydia
M.  DeSantis at (914)  249-9700,  or GP  Strategies'  stock  transfer  agent and
registrar,  Computershare  Investor  Services LLC, P.O. Box A3504,  Chicago,  IL
60690-3504, Telephone: 312-360-5430.

                                        Very truly yours,


                                        Scott N. Greenberg
                                        Chief Executive Officer
                                        GP Strategies Corporation


The  information in this  prospectus is not complete and may be changed.  We may
not sell  these  securities  until the  resigsration  statement  filed  with the
Securities and Exchange Commission is effective. This prospectus in not an offer
to  sell  these  securities  and it is not  soliciting  an  offer  to buy  these
securities  in any state  where the offer or sale is not  permitted.  Subject to
                       Completion, dated August 23, 2005.
PROSPECTUS

                               GSE SYSTEMS, INC.

                        5,154,052 Shares of Common Stock

     At this time, General Physics Corporation,  a wholly-owned subsidiary of GP
Strategies Corporation, holds an approximately 57% interest in GSE Systems, Inc.
In this  spin-off,  General  Physics  will  distribute  all of the shares of GSE
Systems  to  GP  Strategies  and  immediately   thereafter  GP  Strategies  will
distribute  all of the shares of GSE Systems  common stock received from General
Physics to GP  Strategies  stockholders  on a pro rata basis.  Each of you, as a
holder of GP  Strategies'  common stock or Class B capital  stock,  will receive
____ share of  GSE Systems  common stock for each share of GP Strategies  common
stock or Class B capital stock you owned on the close of business on ___,  2005,
the record  date for the  spin-off.  If as a result of the  foregoing  ratio you
would be entitled to a fraction of a share of GSE Systems common stock, you will
receive cash in lieu of a fractional share interest.
       
     We are sending you this Prospectus to describe the spin-off.  We expect the
spin-off  to  occur  on  or  about           ,   2005.  You  will  receive  your
proportionate  number of shares of GSE Systems common stock through our transfer
agent's book-entry registration system. These shares will not be in certificated
form.  Following the  spin-off,  recipient  stockholders  may request to receive
their shares of our common stock in  certificated  form.  Immediately  after the
spin-off is completed,  neither GP Strategies  nor General  Physics will own any
shares of GSE Systems common stock.  We refer to ourselves in this Prospectus as
"GSE Systems," "GSE," the "Company," or "we" or "us."
       
     No  stockholder  action is  necessary to receive your shares of GSE Systems
common  stock.  This means that you do not need to pay anything to GP Strategies
or to GSE Systems, and you do not need to surrender any shares of GP Strategies'
common  stock or Class B capital  stock to receive  your  shares of GSE  Systems
common stock. In addition,  a stockholder  vote is not required for the spin-off
to  occur.  GP  Strategies  is not  asking  you for a proxy,  and GP  Strategies
requests that you do not send a proxy.
       
     As you review this Prospectus,  you should  carefully  consider the matters
described in "Risk Factors"  beginning on page 3.  Our common stock is listed on
the American Stock Exchange under the symbol "GVP." On _____,  2005, the closing
sale price of  the common stock on the  American  Stock  Exchange  was  $______.

                            -----------------------
       
     These  securities  have not been approved or  disapproved by the Securities
and  Exchange  Commission  or  any  state  securities  commission  nor  has  the
Securities and Exchange  Commission or any state  securities  commission  passed
upon the  accuracy or adequacy of this  Prospectus.  Any  representation  to the
contrary is a criminal offense.

                            -----------------------
       
     This Prospectus does not constitute an offer to sell or the solicitation of
an  offer  to buy any  securities.  Changes  may  occur  after  the date of this
Prospectus and neither GSE Systems nor GP Strategies will update the information
contained  herein  except  in the  normal  course  of  their  respective  public
disclosures.
       
     Stockholders of GP Strategies with inquiries related to the spin-off should
contact Lydia M. DeSantis at (914)  249-9700,  or GP Strategies'  stock transfer
agent and  registrar,  Computershare  Investor  Services  LLC,  P.O.  Box A3504,
Chicago, IL 60690-3504, Telephone: 312-360-5430.
       
                  The date of this Prospectus is ____, 2005.
                               
                               TABLE OF CONTENTS
                                                                            Page
WHERE YOU CAN FIND MORE INFORMATION............................................2
THE COMPANY....................................................................3
RISK FACTORS...................................................................3
THE SPIN-OFF...................................................................7
RELATIONSHIP BETWEEN GP STRATEGIES AND GSE SYSTEMS............................10
LEGAL MATTERS.................................................................11
EXPERTS.......................................................................11

     You should rely only on the  information  contained in this  document or to
which we have  referred you. We have not  authorized  anyone to provide you with
information that is different.  This document may only be used where it is legal
to sell these securities.  The information in this document may only be accurate
on the date of this document.

                Special Note Regarding Forward-Looking Statements

     This prospectus contains  "forward-looking"  statements that have been made
pursuant to the Private  Securities  Litigation Reform Act of 1995 which reflect
our expectations regarding our future growth, results of operations, performance
and business  prospects  and  opportunities.  Wherever  possible,  words such as
"anticipate," "believe," "plan," "expect" and similar expressions have been used
to identify  these  forward-looking  statements.  These  statements  reflect our
current  beliefs  and  are  based  on  information  currently  available  to us.
Accordingly, these statements are subject to risks and uncertainties,  including
those listed under "Risk Factors," which could cause our actual growth, results,
performance  and  business  prospects  and  opportunities  to differ  from those
expressed in, or implied by, these statements.  Except as otherwise  required by
federal  securities  law,  we are  not  obligated  to  update  or  revise  these
forward-looking statements to reflect new events or circumstances.

                       WHERE YOU CAN FIND MORE INFORMATION

  We file annual,  quarterly  and special  reports,  proxy
statements and other  information  with the  Securities and Exchange  Commission
("SEC").  You may read and copy any  document  we file at the  public  reference
facilities of the SEC located at Station Place, 100 F Street,  N.E.,  Washington
D.C.  20549.  You may obtain  information  on the  operation of the SEC's public
reference  facilities by calling the SEC at 1-800-SEC-0330.  You can also access
copies of this material  electronically on the SEC's home page on the World Wide
Web at  http://www.sec.gov.

     This  prospectus  is  part  of a  registration  statement(Registration  No.
333-126472)  we filed  with the  SEC.  The SEC  permits  us to  "incorporate  by
reference" the  information we file with them,  which means that we can disclose
important  information  to  you  by  referring  you  to  those  documents.   The
information  incorporated  by  reference  is  considered  to  be  part  of  this
prospectus.  However, any information contained herein shall modify or supersede
information contained in documents we filed with the SEC before the date of this
prospectus.  We  incorporate by reference our Annual Report on Form 10-K for the
year ended December 31, 2004, filed on March 17, 2005, our Annual Report on Form
10-K/A for the year ended  December 31, 2004,  filed on May 2, 2005,  our Annual
Report on Form 10-K/A for the year ended December 31, 2004,  filed on August 15,
2005,  our  Quarterly  Report on Form 10-Q for the quarter ended March 31, 2005,
filed on May 16, 2005, our Quarterly Report on Form 10-Q/A for the quarter ended
March 31, 2005,  filed on August 16, 2005, our Quarterly Report on Form 10-Q for
the quarter ended June 30, 2005,  filed on August 15, 2005, our Current  Reports
on Form 8-K,  filed on March 18, 2005, May 11, 2005, May 27, 2005 and August 11,
2005,  our  Current  Report on Form  8-K/A,  filed on August 16,  2005,  and the
description of our common stock contained in our registration statement pursuant
to Section 12 of the  Exchange  Act,  and any  amendment or report filed for the
purpose of updating such description, filed by us with the SEC.

     A copy of our Annual  Report on Form 10-K for the year ended  December  31,
2004, as amended,  and our  Quarterly  Report on Form 10-Q for the quarter ended
June 30,  2005,  are  being  delivered  with this  prospectus.  You may write or
telephone  us to  obtain  at no  cost  a copy  of  any  or all of the  documents
incorporated by reference. You should direct written requests to 9189 Red Branch
Road, Columbia,  Maryland 21045, Attn: Secretary.  Our telephone number is (410)
772-3500.  However,  we will not send you  exhibits  to a  document,  unless the
exhibits are specifically incorporated by reference in the document.
                                 
                                  THE COMPANY

     GSE Systems, Inc. is a leader in real-time,  high fidelity simulation.  The
Company  provides  simulation  solutions  and services to the nuclear and fossil
electric utility industry, the chemical and petrochemical  industries and to the
US Military  Complex.  In addition,  the Company  provides plant  monitoring and
signal  analysis  monitoring and  optimization  software  primarily to the power
industry.  Our executive offices are located at 9189 Red Branch Road,  Columbia,
Maryland 21045. Our telephone  number is (410) 772-3500.  We maintain a Web site
at  http://www.gses.com.  Nothing  contained in such Web site should be deemed a
part of this prospectus.
       
                                  RISK FACTORS

     You should  carefully  consider the risks  described below before making an
investment decision. The risks and uncertainties  described below may not be the
only ones we will face.  Additional risks and  uncertainties not presently known
to us or that we  currently  deem not  material  may also  impair  our  business
operations.  If  any  of the  following  risks  actually  occur,  our  business,
financial  condition  or results of  operations  could be  materially  adversely
affected. In such case, the trading price of our common stock could decline, and
you may lose all or part of your investment.
       
     The  Company  has  limited  cash  resources.  If the  Company  is unable to
generate adequate cash flow from operations,  it will need additional capital to
fund its operations.
       
     For the years ended December 31, 2003 and 2002, the Company experienced net
losses  from   continuing   operations   of  $1.9  million  and  $4.3   million,
respectively,  and had only $82,000 of income from continuing operations for the
year ended  December 31,  2004.  The Company also had a net loss of $1.6 million
for the first six months of fiscal 2005.  The  Company's  backlog has  decreased
from $30.4  million at December  31, 2003 to $19.6  million at December 31, 2004
and $14.7  million at June 30, 2005.  The Company has cash  available  through a
credit facility of $1.5 million, of which $725,000 had been utilized at June 30,
2005. In addition,  the Company recently issued and sold to an investor a senior
subordinated  secured  convertible note of the Company and a warrant to purchase
shares  of our  common  stock for an  aggregate  purchase  price of  $2,000,000.
However, if the Company's income from continuing operations does not improve, it
may need additional  capital to fund its  operations.  If adequate funds are not
available, GSE may be required to curtail its operations.
       
     The Company will continue to rely on GP Strategies for certain services.
       
     The Company's business has historically relied on GP Strategies for various
services.
       
     On  January  1,  2004,  the  Company  entered  into a  Management  Services
Agreement  with GP  Strategies  Corporation  in which GP  Strategies  agreed  to
provide corporate support services to GSE, including accounting,  finance, human
resources,  legal,  network  support  and tax.  In  addition,  GSE uses  General
Physics'  financial  system.  In 2004,  GSE was  charged  $685,000  for  General
Physics'  services.  The agreement has been extended  through  December 31, 2005
without an  increase in the fee.  The  agreement  can be renewed for  successive
one-year terms.
       
     In addition,  the Company  does not have an  independent  credit  facility;
instead,  $1.5 million of General  Physics'  available  credit facility has been
carved out for use by the Company.
       
     Although GP Strategies  will no longer have any  ownership  interest in the
Company  following  the  spin-off,  the Company  will  continue to rely on these
services for the foreseeable future.  However, there can be no assurance that GP
Strategies  will  continue to be willing to provide such services to the Company
after the spin-off.
       
     The Company's  expense levels are based upon its  expectations as to future
revenues,  so it may be unable to adjust  spending to  compensate  for a revenue
shortfall.   Accordingly,   any   revenue   shortfall   would   likely   have  a
disproportionate effect on the Company's operating results.
       
     The  Company's  revenues  were $29.5  million and $25.0 million in 2004 and
2003,  respectively,  and $13.0  million for the six months ended June 30, 2005.
The Company's  operating  results have  fluctuated in the past and may fluctuate
significantly  in the  future  as a result of a variety  of  factors,  including
purchasing patterns,  timing of new products and enhancements by the Company and
its  competitors,   and  fluctuating  foreign  economic  conditions.  Since  the
Company's  expense  levels  are based in part on its  expectations  as to future
revenues and includes  certain fixed costs,  the Company may be unable to adjust
spending in a timely  manner to  compensate  for any revenue  shortfall and such
revenue  shortfalls  would  likely  have a  disproportionate  adverse  effect on
operating results.  The Company believes that these factors may cause the market
price for its common stock to fluctuate, perhaps significantly.  In addition, in
recent years the stock market in general, and the shares of technology companies
in particular,  have  experienced  extreme  price  fluctuations.  The  Company's
common stock has also  experienced a relatively  low trading  volume,  making it
further susceptible to extreme price fluctuations.
       
     Risk of International Sales and Operations.
       
     Sales of products and the  provision  of services to end users  outside the
United States accounted for  approximately  65.1% of the Company's  consolidated
revenue in 2004. The Company  anticipates that international  sales and services
will  continue  to  account  for a  significant  portion  of its  revenue in the
foreseeable  future.  As a result,  the Company may be subject to certain risks,
including  risks  associated  with the  application and imposition of protective
legislation and regulations  relating to import or export  (including  export of
high  technology  products) or otherwise  resulting from trade or foreign policy
and risks associated with exchange rate  fluctuations.  Additional risks include
potentially  adverse  tax  consequences,  tariffs,  quotas  and other  barriers,
potential  difficulties involving the Company's strategic alliances and managing
foreign sales agents or representatives  and potential  difficulties in accounts
receivable  collection.  The  Company  currently  sells  products  and  provides
services to customers  in emerging  market  economies  such as Russia,  Ukraine,
Bulgaria,  and the Czech Republic.  Although end users in the Ukraine  accounted
for 20.7%, 28.7%, and 22.8% of the Company's consolidated revenue in 2004, 2003,
and 2002, respectively, GSE's customer for these projects was Battelle's Pacific
Northwest  National  Laboratory,  which  is the  purchasing  agent  for the U.S.
Department of Energy ("DOE").  The DOE provides  funding for various projects in
Eastern  and  Central  Europe.  Accordingly,  the  Company is not subject to the
political and financial risks that are normally faced when doing business in the
Ukraine.  The Company has taken steps  designed to reduce the  additional  risks
associated with doing business in these countries, but the Company believes that
such risks may still exist and include,  among  others,  general  political  and
economic instability,  lack of currency  convertibility,  as well as uncertainty
with  respect to the  efficacy  of  applicable  legal  systems.  There can be no
assurance that these and other factors  will not have a material  adverse effect
on the Company's business, financial condition or results of operations.
       
     The  Company  relies  on one  customer  for a  substantial  portion  of its
revenue. The loss of this customer would have a material adverse effect upon the
Company's revenues and results of operations.
       
     For the years  ended  December  31,  2004,  2003,  and 2002,  one  customer
(Battelle's Pacific Northwest National  Laboratory)  accounted for approximately
24.0%, 28.7%, and 22.8%,  respectively,  of the Company's  consolidated revenue.
The Pacific  Northwest  National  Laboratory is the purchasing agent for the DOE
and the numerous projects the Company performs in Eastern and Central Europe. If
the Company lost this customer,  the Company's revenue and results of operations
would be materially and adversely affected.
       
     The Company's  business is substantially  dependent on sales to the nuclear
power  industry.  Any disruption in this industry would have a material  adverse
effect upon the Company's revenue.
       
     In  2004,  85% of our  revenue  was from  customers  in the  nuclear  power
industry.  The  Company  will  continue to derive a  significant  portion of its
revenue from customers in the nuclear power industry for the foreseeable future.
The  Company's  ability to supply  nuclear  power plant  simulators  and related
products and services is dependent on the  continued  operation of nuclear power
plants and, to a lesser extent, on the construction of new nuclear power plants.
A wide range of factors  affect the  continued  operation  and  construction  of
nuclear power plants,  including the political and regulatory  environment,  the
availability and cost of alternative means of power  generation,  the occurrence
of future nuclear incidents, and general economic conditions.
       
     The Company's available credit facility imposes  significant  operating and
financial  restrictions,  which may  prevent it from  capitalizing  on  business
opportunities.
       
     GSE's  available  credit  facility,  which has been  carved  out of General
Physics'  credit   facility,   imposes   significant   operating  and  financial
restrictions. These restrictions affect, and in certain cases limit, among other
things, the Company's ability to:
       
     * incur additional indebtedness and liens;

     * make capital expenditures;

     * make investments and acquisitions and sell assets; and

     * consolidate,  merge or sell all or  substantially  all of its assets.

     At June 30, 2005,  the Company was not in compliance  with its debt service
coverage ratio.  The Company obtained a letter dated August 4, 2005 in which the
lender has  agreed to  forebear  from  exercising  its  rights  under the credit
agreement  against the Company and other borrowers with respect to this event of
default until the Company has  delivered to the lender the  Company's  financial
statements for the year ending December 31, 2005.  Borrowings  outstanding under
this arrangement are guaranteed by GP Strategies.
       
     There can be no assurance that these restrictions will not adversely affect
the  Company's  ability to finance its future  operations or capital needs or to
engage in other business activities that may be in the interest of stockholders.
       
     The  Company  is   dependent  on  product   innovation   and  research  and
development,  which costs are  incurred  prior to revenues  for new products and
improvements.

     The  Company  believes  that its  success  will depend in large part on its
ability to maintain and enhance its current product line,  develop new products,
maintain  technological  competitiveness and meet an expanding range of customer
needs. The Company's product development activities are aimed at the development
and expansion of its library of software  modeling tools, the improvement of its
display systems and workstation technologies,  and the advancement and upgrading
of its  simulation  technology.  The life cycles for  software  modeling  tools,
graphical user  interfaces,  and simulation  technology are variable and largely
determined  by  competitive  pressures.  Consequently,  the Company will need to
continue to make significant  investments in research and development to enhance
and expand its  capabilities  in these  areas and to  maintain  its  competitive
advantage.  There can be no assurance  that the Company will have the  financial
resources to support such investments.

     The Company relies upon its intellectual property rights for the success of
its  business;  however,  the steps it has  taken to  protect  its  intellectual
property may be inadequate.
       
     Although the Company  believes that factors such as the  technological  and
creative skills of its personnel,  new product  developments,  frequent  product
enhancements and reliable product  maintenance are important to establishing and
maintaining a technological leadership position, the Company's business depends,
in part, on its intellectual  property rights in its proprietary  technology and
information.  The Company relies upon a combination of trade secret,  copyright,
patent and  trademark  law,  contractual  arrangements  and  technical  means to
protect   its   intellectual   property   rights.   The   Company   enters  into
confidentiality  agreements with its employees,  consultants,  joint venture and
alliance partners,  customers and other third parties that are granted access to
its  proprietary  information,  and  limits  access to and  distribution  of its
proprietary  information.  There can be no assurance,  however, that the Company
has  protected  or will  be  able to  protect  its  proprietary  technology  and
information adequately, that the unauthorized disclosure or use of the Company's
proprietary  information  will be  prevented,  that  others have not or will not
develop similar technology or information  independently,  or, to the extent the
Company owns patents,  that others have not or will not be able to design around
those patents. Furthermore, the laws of certain countries in which the Company's
products  are  sold do not  protect  the  Company's  products  and  intellectual
property rights to the same extent as the laws of the United States.
       
     The  industries  in  which  GSE  operates  are  highly  competitive.   This
competition  may prevent the Company from raising prices at the same pace as its
costs increase.
       
     The Company's  businesses operate in highly  competitive  environments with
both domestic and foreign competitors,  many of whom have substantially  greater
financial, marketing and other resources than the Company. The principal factors
affecting competition include price, technological  proficiency,  ease of system
configuration, product reliability, applications expertise, engineering support,
local presence and financial stability. The Company believes that competition in
the  simulation  fields  may  further  intensify  in the  future  as a result of
advances  in  technology,   consolidations   and/or  strategic  alliances  among
competitors,  increased  costs  required  to  develop  new  technology  and  the
increasing  importance  of  software  content in systems  and  products.  As the
Company's  business has a significant  international  component,  changes in the
value of the dollar  could  adversely  affect the  Company's  ability to compete
internationally.
       
     GSE will continue to pursue new acquisitions and joint ventures, and any of
these  transactions  could adversely  affect its operating  results or result in
increased costs or other problems.
       
     The  Company  intends  to  continue  to pursue new  acquisitions  and joint
ventures,  a  pursuit  which  could  consume  substantial  time  and  resources.
Identifying  appropriate acquisition candidates and negotiating and consummating
acquisitions can be a lengthy and costly process. The Company may also encounter
substantial  unanticipated  costs or other problems associated with the acquired
businesses.  The risks inherent in this strategy could have an adverse impact on
the  Company's  results of  operation or  financial  condition.  There can be no
assurance  that the Company  will have the  financial  resources  to fulfill its
strategy.
       
     The nuclear  power  industry,  the Company's  largest  customer  group,  is
associated with a number of hazards which could create  significant  liabilities
for the Company.
       
     The Company's  business  could expose it to third party claims with respect
to product,  environmental and other similar  liabilities.  Although the Company
has sought to protect itself from these potential  liabilities through a variety
of legal and contractual provisions as well as through liability insurance,  the
effectiveness  of such  protections  has not been fully  tested.  Certain of the
Company's products and services are used by the nuclear power industry primarily
in operator  training.  Although the  Company's  contracts for such products and
services  typically  contain  provisions  designed to protect  the Company  from
potential  liabilities  associated with such use, there can be no assurance that
the  Company  would not be  materially  adversely  affected by claims or actions
which may potentially arise.

     The terms of our recent  financing may require us to issue an indeterminate
number of shares of our common  stock which may be dilutive and restrict us from
taking certain actions.
       
     We have  recently  issued  and sold to an  investor  a senior  subordinated
secured  convertible note of the Company and a warrant to purchase shares of our
common stock. The note is convertible,  in part or in whole,  into shares of our
common  stock based on a conversion  price of $1.925.  However,  the  conversion
price,  and thus the number of shares into which the note may be  converted,  is
subject to  adjustment  if we issue or sell  certain  shares of common  stock or
convertible  securities  for a  consideration  per  share  less  than  the  then
effective  conversion  price, in which case the conversion price will be reduced
to an amount  equal to the  consideration  per share in such new  issuance.  The
exercise  price of the  warrant,  but not the  number of shares  for which it is
exercisable, is similarly subject to adjustment.
       
     In  addition,  under  the  terms  of  the  financing,  while  the  note  is
outstanding,  the Company may not,  among other  things,  (i)  acquire,  sell or
otherwise transfer any material assets or rights of the Company or a subsidiary,
or enter into any contract or agreement relating to the sale of assets, which is
not  consummated  pursuant  to an arms length  transaction,  (ii) enter into any
contract,  agreement or transaction with any officer,  director,  stockholder or
affiliate of the Company or a subsidiary other than ordinary course transactions
that are consistent with past practice and pursuant to arms length terms,  (iii)
pay or declare any dividend or make any  distribution  upon,  redeem,  retire or
repurchase or otherwise acquire, any shares of capital stock or other securities
of the Company or a subsidiary,  other than certain dividends  currently owed to
ManTech International,  (iv) materially change the Company's or any subsidiary's
line  of  business  as  currently   conducted,   or  (v)  incur  any  additional
indebtedness  senior to the note.  Furthermore,  the note and the  warrant  each
prevent the Company  from  engaging in any  fundamental  transaction  (such as a
merger, consolidation,  or sale of the Company) while it is outstanding,  unless
the successor  assumes in writing all of the obligations of the Company under it
and the successor is a publicly  traded  company with common stock traded on the
Amex, Nasdaq, or the New York Stock Exchange.
       
                                  THE SPIN-OFF
Background
             
     As of  _____,  2005,  General  Physics,  a  wholly-owned  subsidiary  of GP
Strategies,   held  5,154,052   shares  of  GSE  Systems  common  stock,  or  an
approximately  57%  interest  in GSE  Systems.  The  board  of  directors  of GP
Strategies has determined to separate its interest in GSE Systems from its other
businesses by means of a spin-off.  To accomplish the spin-off,  General Physics
will  distribute  all  of  the  shares  of  GSE  Systems  to GP  Strategies  and
immediately  thereafter,  GP Strategies will distribute all of the shares of GSE
Systems common stock received from General Physics to GP Strategies stockholders
on a pro rata basis. A stockholder  vote is not required or being sought for the
spin-off to occur.

Reasons for the Spin-Off

     The GP Strategies  Board of Directors has determined that the  distribution
of all of its  interest in GSE Systems to owners of GP  Strategies  common stock
and Class B capital  stock will enable the  management  of each of GP Strategies
and GSE Systems to operate and develop those businesses more effectively. The GP
Strategies  Board of Directors  has  concluded  that the spin-off is in the best
interests of GP Strategies and GP Strategies'  stockholders  because it believes
that the spin-off  will allow GP  Strategies'  management to focus solely on its
core business,  General Physics, and will simplify the financial presentation of
GP  Strategies  thereby  improving  the ability of  investors to  understand  GP
Strategies' financial position.

     The GP Strategies Board of Directors  explored various  alternatives to the
spin-off,  including a sale of its shares of GSE stock,  but determined that the
spin-off would be in the best interests of GP Strategies'  stockholders.

Manner of Effecting the Spin-Off

     GP  Strategies  will  effect the  spin-off  as of the close of  business on
____,  2005. At that time, General Physics  will distribute to GP Strategies all
of the shares of GSE Systems common stock it holds.  Immediately thereafter,  GP
Strategies  will  distribute  all of such  shares  of GSE  Systems  stock to the
holders of GP  Strategies  common stock and Class B capital  stock on a pro-rata
basis.  As of  ____  ,  2005, the record date for the  distribution,  there were
______ shares of GP Strategies  common stock outstanding and ______ shares of GP
Strategies  Class B capital stock  outstanding.  Accordingly,  each holder of GP
Strategies  stock on the record  date will  receive  ____   share of GSE Systems
common  stock for each share of GP  Strategies  common  stock or Class B capital
stock held as of the close of business on _____ , 2005.

     GSE Systems  stock will be issued as  uncertificated  shares  registered in
book-entry  form  through  the  direct  registration   system.  No  certificates
representing GSE Systems common stock will be mailed to registered holders of GP
Strategies  common stock in the ordinary  course.  If you are a  stockholder  of
record of GP Strategies  stock on the record date, GSE Systems'  transfer agent,
Continental Stock Transfer & Trust Co., will hold your book-entry  shares. On or
about  ____ ,   2005,   Continental  Stock  Transfer  will  mail  you  a  direct
registration  transaction advice reflecting your ownership interest in shares of
GSE  Systems  common  stock.  When you receive  this  advice,  you will  receive
information  explaining  the direct  registration  system and telling you how to
obtain  physical  certificates  if you  desire  to do so.  You may also  retain,
transfer or sell the  shares,  or  transfer  the shares to a brokerage  account.
Notwithstanding   the  foregoing,   holders  of  legended   stock   certificates
representing  GP common  stock or Class B capital  stock will  receive  legended
physical stock certificates representing their GSE Systems common stock.

     No owner of GP  Strategies  stock will be required to pay any cash or other
consideration for shares of GSE Systems received in the spin-off or to surrender
or exchange any shares of GP Strategies stock to receive shares of GSE Systems.
  
     GP Strategies and General Physics may be deemed  "underwriters" within  the
meaning  of   Section 2(a)(11)  of  the  Securities  Act  as  a  result  of  the
distribution  by General  Physics of GSE Systems stock to GP Strategies  and the
distribution by GP Strategies of such stock to GP Strategies stockholders.

Treatment of Fractional  Shares

     Fractional shares of GSE Systems common stock will not be issued to holders
of GP Strategies  stock as part of the  distribution  nor credited to book-entry
accounts.  Instead, the distribution agent will aggregate fractional shares into
whole  shares  and sell  them in the open  market at  then-prevailing  prices on
behalf of holders who otherwise  would be entitled to receive  fractional  share
interests,  and such  persons will receive a cash payment in the amount of their
pro rata share of the net sale proceeds.  The  distribution  agent,  in its sole
discretion,  without any  influence  from GP  Strategies  or GSE  Systems,  will
determine when, how, through which  broker-dealer and at what price to sell such
whole shares.  Any broker-dealer  used by the distribution  agent will not be an
affiliate of either GP Strategies or GSE Systems.  Sales of fractional shares of
our  common  stock  are  expected  to be made as soon as  practicable  after the
distribution  date,  and checks  representing  proceeds  of these  sales will be
mailed there after.  GP Strategies  will bear the cost of brokerage  commissions
incurred in connection with such sales. None of GP Strategies,  the distribution
agent nor we  guarantee  that you will  receive any minimum  sale price for your
fractional shares of GSE Systems common stock. You will not be paid any interest
on the proceeds of the sale.

Results of Spin-Off

     As  of  the  close  of  business  on  ______  ,  2005,  GP  Strategies  had
approximately  ____      stockholders  of  record.  Except  for  holders  of  GP
Strategies stock who would be entitled to fractional  shares only, each of these
GP  Strategies  stockholders  will become  stockholders  of GSE Systems once the
spin-off is effected.  Immediately  after the spin-off is completed,  neither GP
Strategies nor General  Physics will own any shares of GSE Systems common stock.
The spin-off will not affect the number of  outstanding  shares of GP Strategies
stock or the rights of GP Strategies stockholders.

     Shares of GP Strategies  common stock are currently  listed on the New York
Stock  Exchange  under  the  symbol  "GPX."  Prior  to the  record  date for the
spin-off, GP Strategies stock will trade on a regular basis reflecting the value
of GP Strategies that includes its interest in GSE Systems. GP Strategies common
stock  will  continue  to trade on the New York  Stock  Exchange  following  the
spin-off.

     After the spin-off,  shares of GSE Systems common stock will continue to be
listed on the  American  Stock  Exchange  under the symbol  "GVP." The prices at
which the GSE Systems  common stock will trade  following  the spin-off  will be
determined by the marketplace and may be influenced by the spin-off.

     GSE Systems  common stock  distributed  in the spin-off  generally  will be
freely  transferable under the Securities Act except for securities  received by
persons who may be deemed to be affiliates  of GSE Systems  pursuant to Rule 405
under the  Securities  Act.  Persons who may be deemed to be  affiliates  of GSE
Systems  after the  spin-off  generally  include  individuals  or entities  that
control,  are  controlled  by, or are under  common  control  with GSE  Systems,
including  directors of GSE Systems.  Persons who are  affiliates of GSE Systems
will be permitted to sell their shares of GSE Systems  common stock  received in
the spin-off  only  pursuant to an effective  registration  statement  under the
Securities Act or pursuant to an exemption from the registration requirements of
the  Securities  Act,  such as the  exemption  provided  by Rule 144  under  the
Securities  Act (subject to the conditions set forth in Rule 144, other than its
holding period requirements).

Other Consequences

     The exercise price of  outstanding GP Strategies  options and warrants will
be adjusted based on the relative fair market values of the GP Strategies  stock
before and after the spin-off.

Material Federal Income Tax Consequences of the Spin-Off

     The  following  discussion  is a summary  description  of the material U.S.
federal  income tax  consequences  of the spin-off  applicable  to GP Strategies
stockholders.  This  discussion does not purport to consider all aspects of U.S.
federal  income  taxation that may be relevant to a GP  Strategies  stockholder.
This  discussion is based upon the  provisions  of the Internal  Revenue Code of
1986, as amended (the  "Code"),  existing  regulations  and  administrative  and
judicial  interpretations  of the Code,  all of which are as in effect as of the
date of this  Prospectus  and are subject to change,  possibly with  retroactive
effect.  This  discussion  applies only to GP Strategies  stockholders  who hold
their  shares of GP  Strategies  stock as capital  assets  within the meaning of
Section 1221 of the Code, and does not apply to the following:

     *    stockholders  who  received  their  shares of GP  Strategies  stock as
          compensation;

     *    stockholders  who hold their shares of GP  Strategies  common stock as
          part of a "straddle,"  "hedge," "conversion  transaction,"  "synthetic
          security" or other integrated investment;

     *    stockholders,  including, without limitation,  financial institutions,
          insurance companies,  tax-exempt organizations,  dealers or traders in
          securities and  stockholders  subject to the alternative  minimum tax,
          who may be subject to special rules;

     *    stockholders whose functional currency is not the U.S. dollar; or

     *    stockholders   who,  for  U.S.   federal  income  tax  purposes,   are
          non-resident  alien   individuals,   foreign   corporations,   foreign
          partnerships,  foreign estates or foreign trusts.

     This discussion also does not consider the effect of any foreign,  state or
local laws or any U.S.  federal laws other than those  pertaining  to the income
tax.

     Accordingly,  you should  consult  your tax  advisor to  determine  the tax
effect to you of the spin-off,  including the  application and effect of foreign
or U.S. federal, state, local or other tax laws.

     The distribution of the shares of GSE Systems common stock by GP Strategies
to its stockholders will be a taxable dividend to the stockholders to the extent
that the distribution is made out of current or accumulated earnings and profits
of GP  Strategies.  If  the  amount  of the  distribution  exceeds  current  and
accumulated earnings and profits, the excess amount will be a tax-free return of
capital to the extent of the  stockholder's tax basis in the GP Strategies stock
and then any remaining amount will be taxable gain to the  stockholder.  No loss
will be recognized.  Any gain recognized by a stockholder  will be capital gain.
Capital  gains  are long term if the GP  Strategies  stock is held for more than
twelve  months at the time of the  distribution.  For  individuals,  the maximum
federal income tax rate  applicable to long-term  capital gains and dividends is
generally 15%.

Use of Proceeds

     We will receive no proceeds  from the  distribution  of GSE Systems  common
stock.

               RELATIONSHIP BETWEEN GP STRATEGIES AND GSE SYSTEMS

     As of  ______ ,  2005,  General Physics owned an approximately 57% interest
in GSE Systems.
       
     On  January  1,  2004,  the  Company  entered  into a  Management  Services
Agreement with GP Strategies in which GP Strategies  agreed to provide corporate
support services to GSE, including accounting,  finance, human resources, legal,
network  support and tax.  In  addition,  GSE uses  General  Physics'  financial
system.  In 2004, GSE was charged  $685,000 for General Physics'  services.  The
agreement has been extended through December 31, 2005 without an increase in the
fee. The agreement can be renewed for successive one-year terms.
       
     In addition,  the Company  does not have an  independent  credit  facility;
instead,  $1.5 million of General  Physics'  available  credit facility has been
carved out for use by the Company. While GP Strategies has guaranteed the amount
of such  credit  facility  currently  utilized by GSE  Systems,  there can be no
assurance that the credit  facility  would  continue to be made available  after
such amount was repaid.
       
     GSE Systems and GP  Strategies  believe that these  agreements  are at fair
market value and are on terms  comparable  to those that would have been reached
in arm's-length  negotiations  had the parties been  unaffiliated at the time of
the negotiations.
       
     There can be no assurance that GP Strategies will continue to be willing to
provide such services to the Company after the spin-off.
   
                                 LEGAL MATTERS

     Certain legal matters with respect to the shares of common stock offered by
this  prospectus  have been passed upon by Andrea D. Kantor,  General Counsel of
the Company.

                                    EXPERTS

     The  consolidated  financial  statements of GSE Systems Inc. as of December
31,  2004 and 2003,  and for each of the years in the  three-year  period  ended
December  31,  2004,  have been  incorporated  by  reference  herein  and in the
registration  statement  in  reliance  upon the report of KPMG LLP,  independent
registered  public accounting firm,  incorporated by reference herein,  and upon
the authority of said firm as experts in accounting and auditing.
       
--------------------------------------------------------------------------------

                               GSE SYSTEMS, INC.


                                  COMMON STOCK
                                 
                                   PROSPECTUS
                                   















                                         , 2005



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

                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution.
 
     The  following  table  sets  forth the  expenses  in  connection  with this
offering. All of the amounts (except the SEC registration fee) are estimated.

        SEC registration fee                     $1,013.08
        Legal fees and expenses                   7,000.00
        Accounting fees and expenses              4,000.00
        Miscellaneous                             7,000.00
                                                  --------
                Total                           $19,013.08
                                                ==========

Item 15.  Indemnification of Directors and Officers.
 
     Under Section 145 of the General  Corporation  Law of the State of Delaware
(the "DGCL"), a corporation may indemnify its directors, officers, employees and
agents and its former  directors,  officers,  employees and agents and those who
serve, at the corporation's request, in such capacities with another enterprise,
against expenses  (including  attorney's fees), as well as judgments,  fines and
settlements  in  nonderivative  lawsuits,  actually and  reasonably  incurred in
connection  with the defense of any action,  suit or proceeding in which they or
any of them were or are made  parties or are  threatened  to be made  parties by
reason of their serving or having served in such  capacity.  The DGCL  provides,
however,  that such  person  must have acted in good faith and in a manner he or
she  reasonably  believed to be in (or not opposed to) the best interests of the
corporation and, in the case of a criminal action,  such person must have had no
reasonable  cause to believe his or her conduct was unlawful.  In addition,  the
DGCL does not permit indemnification in an  action or suit by or in the right of
the corporation,  where such person has been adjudged liable to the corporation,
unless,  and only to the extent that, a court determines that such person fairly
and  reasonably  is entitled to  indemnity  for costs the court deems  proper in
light of liability  adjudication.  Indemnity is mandatory to the extent a claim,
issue or matter has been successfully defended.

     The Company's Third Amended and Restated  Certificate of Incorporation (the
"Restated  Certificate")  provides  that the Company  shall  indemnify  and hold
harmless,  to the fullest  extent  permitted by Section 145 of the DGCL,  as the
same may be amended and supplemented, every person who was or is made a party or
is threatened to be made a party or is otherwise involved in any action, suit of
proceeding  by  reason  of the fact that  such  person  is or was  serving  as a
director or officer of the Company or, while serving as a director or officer of
the  Company,  is or was  serving at the  request of the  Company as a director,
trustee, officer, employee or agent of another corporation,  partnership,  joint
venture,  trust or other  enterprise,  against all expense,  liability  and loss
reasonably  incurred or suffered by such person in connection  therewith if such
person  satisfied the  applicable  level of care to permit such  indemnification
under  the  DGCL.  The  Restated  Certificate  provides  that,  subject  to  any
requirements   imposed   by  law  or  the  Company's   Bylaws,   the  right   to
indemnification includes the right to be paid expenses incurred in defending any
proceeding  in advance  of its final  disposition.  The  Company's  Amended  and
Restated By-Laws (the "By-Laws")  provide that, if and to the extent required by
the DGCL, such an advance payment will only be made upon delivery to the Company
of an  undertaking,  by or on behalf of the  director or  officer,  to repay all
amounts so advanced if it is  ultimately  determined  that such  director is not
entitled to indemnification.

     Section  102(b)(7)  of the DGCL  permits a  corporation  to  include in its
certificate of  incorporation  a provision  eliminating or limiting the personal
liability  of a director to the  corporation  or its  stockholders  for monetary
damages for breach of fiduciary duty as a director, provided that such provision
shall not  eliminate or limit the  liability of a director (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders,  (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing  violation  of law,  (iii) under  Section 174 of the DGCL  (relating  to
unlawful  payment of dividends and unlawful  stock  purchase and  redemption) or
(iv) for any transaction  from which the director  derived an improper  personal
benefit.
    
     The  Restated  Certificate  also  provides  that a director  shall,  to the
maximum  extent  permitted by Section  102(b)(7)  of the DGCL (or any  successor
provision),  have no personal  liability to the Company or its  stockholders for
monetary damages for breach of fiduciary duty as a director.

Item 16.  Exhibits.

Number                        Description
------                        -----------

3.1     Third  Amended  and  Restated  Certificate   of  Incorporation  of  the
        Company. Previously filed in connection with the GSE Systems, Inc. Form
        8-K  as  filed   with  the  Securities   and   Exchange  Commission  on
        October  24,  2001 and incorporated herein by reference.

3.2     Form of Amended and  Restated  Bylaws of the Company.  Previously  filed
        in connection  with  Amendment  No.  1 to  the  GSE  Systems,  Inc. Form
        S-1  Registration  Statement  as filed with  the Securities and Exchange
        Commission on June 14, 1995 and incorporated herein by reference.

4.1     Specimen  Common  Stock  Certificate  of the Company.  Previously  filed
        in connection  with  Amendment  No.  3 to  the  GSE  Systems,  Inc. Form
        S-1  Registration Statement  as filed  with  the Securities and Exchange
        Commission on July 24, 1995 and incorporated herein by reference.

5.1     Opinion of Andrea D. Kantor.

10.1    Agreement  among  ManTech  International  Corporation,  National  Patent
        Development  Corporation,  GPS  Technologies,   Inc.,   General  Physics
        Corporation, Vattenfall  Engineering AB  and GSE Systems, Inc. (dated as
        of April 13, 1994). Previously filed in connection with the GSE Systems,
        Inc.  Form S-1  Registration  Statement as filed with the Securities and
        Exchange  Commission  on  April  24, 1995  and  incorporated  herein  by
        reference.

10.2    GSE Systems, Inc. 1995 Long-Term Incentive  Plan, amended as of June 16,
        2005.  Previously  filed  in  connection with the GSE Systems, Inc. Form
        DEF 4A as filed with the  Securities and Exchange  Commission on May 31,
        2005 and incorporated herein by reference.

10.3    Form of  Option  Agreement  Under  the GSE Systems, Inc. 1995  Long-Term
        Incentive Plan.  Previously  filed  in connection with the  GSE Systems,
        Inc. Form 10-K as filed with the  Securities and Exchange Commission  on
        March 22, 1996 and incorporated herein by reference.

10.4    Office Lease Agreement  between Sterling  Rutherford  Plaza,  L.L.C. and
        GSE Systems,  Inc. (dated  as of  February 10,  1998).  Previously filed
        in connection  with  the GSE Systems,  Inc.  Form  10-K  as  filed  with
        the  Securities   and   Exchange   Commission  on  March  21,  1998  and
        incorporated herein by reference.

10.5    Office Lease Agreement  between Red Branch Road, L.L.C. and GSE Systems,
        Inc. (dated February 10, 1998). Previously filed in  connection with the
        GSE Systems,  Inc.  Form  10-K   as   filed   with  the  Securities  and
        Exchange  Commission  on  March  21, 1998  and  incorporated  herein  by
        reference.

10.6    Warrant  Agreements  with  GP  Strategies   and   ManTech  International
        Corporation (dated  September 13, 1999). Previously  filed in connection
        with  the  GSE Systems, Inc.  Form 8-K  as filed with the Securities and
        Exchange  Commission  on  August  15, 2001  and incorporated  herein  by
        reference.

10.7    Change of Control Agreements between GSE Systems, Inc. and Jerry Jen and
        Jeffery G. Hough (dated March 10,  2000). Previously filed in connection
        with  the GSE  Systems, Inc. Form 8-K as filed  with the  Securities and
        Exchange  Commission  on  August 1,  2001  and  incorporated  herein  by
        reference.

10.8    $1,000,000  promissory note dated June 25, 2001 to ManTech International
        Corporation.  Previously filed  in connection with the GSE Systems, Inc.
        Form 8-K  as  filed  with  the  Securities  and  Exchange  Commission on
        August 1, 2001 and incorporated herein by reference.

10.9    Preferred Stock Issuance Agreement by and between GSE Systems,  Inc. and
        ManTech International Corporation (dated  December 5, 2001).  Previously
        filed  in connection with the GSE Systems, Inc.  Form 8-K as filed  with
        the  Securities   and  Exchange   Commission  on  December 12, 2001  and
        incorporated herein by reference.

10.10   Asset  Sale  and  Purchase   Agreement  between  GSE  Systems,  Inc. and
        Novatech LLC dated September 25, 2003.  Previously  filed in connection
        with the GSE Systems, Inc.  Form 8-K as filed  with  the  Securities and
        Exchange Commission  on  October 10, 2003  and  incorporated  herein  by
        reference.

10.11   Management  Services  Agreement   between   GSE  Systems, Inc.  and   GP
        Strategies  Corporation  dated  January 1, 2004.   Previously  filed  in
        connection  with  the GSE  Systems,  Inc.  Form  10-K   filed   with the
        Securities  and  Exchange Commission  on April 14, 2004 and incorporated
        herein by reference.

10.12   First  Amendment  dated  March  30,  2004  to the Financing and Security
        Agreement among  General  Physics  Corporation,  Skillright,  Inc.,  GSE
        Systems, Inc.,  GSE Power Systems, Inc.,  and  MSHI, Inc.  and  Wachovia
        Bank,  National Association. Previously filed in connection with the GSE
        Systems,  Inc.  Form  10-K  filed  with  the   Securities  and  Exchange
        Commission on April 14, 2004 and incorporated herein by reference.

10.13   Third  Amendment dated July  30, 2004  to  the  Financing  and  Security
        Agreement  among  General  Physics  Corporation,  Skillright,  Inc., GSE
        Systems, Inc.,  GSE  Power  Systems,  Inc. and  MSHI,  Inc. and Wachovia
        Bank  National  Association. Previously filed in connection with the GSE
        Systems, Form 10-Q filed with the Securities and Exchange  Commission on
        November 14, 2004 and  incorporated  herein  by  reference.

10.14   Forbearance letter dated August 4, 2005. Previously filed  in connection
        with the GSE Systems,  Inc.  Form  10-Q  filed  with the Securities  and
        Exchange Commission on August 15, 2005.

23.1    Consent of KPMG LLP.

23.2    Consent of Andrea D. Kantor (contained in Exhibit 5.1).

24.1    Powers of Attorney.*

99.1    Form   of  Right  of  First  Refusal  Agreement.   Previously  filed  in
        connection  with  Amendment No. 3 to  the  GSE  Systems, Inc.  Form  S-1
        Registration  Statement  as  filed  with  the  Securities  and  Exchange
        Commission on July 24, 1995 and incorporated herein by reference.

* Previously filed

Item 17.  Undertakings. 

Insofar as indemnification  for liabilities  arising under the Securities Act of
1933 may be permitted to  directors,  officers  and  controlling  persons of the
Registrant pursuant to the foregoing  provisions,  or otherwise,  the Registrant
has been advised that in the opinion of the Securities  and Exchange  Commission
such indemnification is against public policy as expressed in the Securities Act
of  1933  and is,  therefore,  unenforceable.  In the  event  that a  claim  for
indemnification  against  such  liabilities  (other  than  the  payment  by  the
Registrant of expenses  incurred or paid by a director,  officer or  controlling
person of the  Registrant  in the  successful  defense  of any  action,  suit or
proceeding)  is  asserted by such  director,  officer or  controlling  person in
connection with the securities being registered,  the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit  to a  court  of  appropriate  jurisdiction  the  question  whether  such
indemnification  by it is against  public policy as expressed in the  Securities
Act and will be governed by the final adjudication of such issue.
    

                                   SIGNATURES

     Pursuant to the  requirements of the Securities Act of 1933, the registrant
certifies  that it has  reasonable  grounds to believe  that it meets all of the
requirements  for filing on Form S-2 and has duly caused this Amendment No. 1 on
Form S-2 to Registration Statement on Form S-3 to be signed on its behalf by the
undersigned,  thereunto duly authorized,  in the City of Columbia,  the State of
Maryland, on the 23rd day of August, 2005.

                                        GSE SYSTEMS, INC.


                                        BY:  /s/ John V. Moran
                                           --------------------------------
                                            Name:  John V. Moran
                                            Title:  Chief Executive Officer


     Pursuant  to  the   requirements  of  the  Securities  Act  of  1933,  this
registration  statement  has  been  signed  by  the  following  persons  in  the
capacities and on the 23rd day of August, 2005.


                                                *
                                        --------------------------
                                        John V. Moran
                                        Chief Executive Officer and Director
                                        (Principal Executive Officer)


                                                *
                                        --------------------------
                                        Jeffery G. Hough
                                        Senior Vice President and Chief
                                        Financial Officer and Director
                                        (Principal Financial and Accounting
                                        Officer)


                                                *
                                        --------------------------
                                        Jerome I. Feldman
                                        Chairman of the Board


                                                *
                                        --------------------------
                                        Dr. Sheldon L. Glashow
                                        Director


                                                *
                                        --------------------------
                                        Scott N. Greenberg
                                        Director


                                                *
                                        --------------------------
                                        Dr. Roger Hagengruber
                                        Director


                                                *     
                                        --------------------------
                                        Chin-our Jerry Jen
                                        Director


                                                *
                                        --------------------------
                                        Andrea Kantor
                                        Director


                                                *
                                        --------------------------
                                        Joseph W. Lewis
                                        Director                              


                                                *
                                        --------------------------
                                        George J. Pedersen
                                        Director                            


                                                *
                                        --------------------------
                                        Douglas Sharp
                                        Director                            


*       By:  /s/ Jeffery G. Hough
           ----------------------------------------
        Jeffery G. Hough, Attorney-in-Fact
        Pursuant to Power of Attorney, dated June 30, 2005


EXHIBIT INDEX

Number              Description
------              -----------    
3.1     Third Amended and Restated Certificate  of Incorporation of the Company.
        Previously filed in connection with the  GSE Systems, Inc.  Form 8-K  as
        filed  with  the Securities  and  Exchange  Commission  on  October  24,
        2001 and incorporated herein by reference.

3.2     Form of Amended and Restated Bylaws of the Company.  Previously filed in
        connection  with  Amendment  No. 1 to the GSE  Systems,  Inc.  Form  S-1
        Registration  Statement  as  filed  with  the  Securities  and  Exchange
        Commission on June 14, 1995 and incorporated herein by reference.

4.1     Specimen  Common  Stock Certificate of the Company.  Previously filed in
        connection with  Amendment No. 3 to  the  GSE  Systems,  Inc.  Form  S-1
        Registration  Statement  as  filed  with  the  Securities  and  Exchange
        Commission on July 24, 1995 and incorporated herein by reference.

5.1     Opinion of Andrea D. Kantor.

10.1    Agreement  among  ManTech   International  Corporation,  National Patent
        Development  Corporation,  GPS  Technologies,   Inc.,   General  Physics
        Corporation, Vattenfall Engineering AB and GSE Systems, Inc. dated as of
        April 13, 1994).  Previously filed in  connection with the  GSE Systems,
        Inc. Form S-1  Registration  Statement as filed with the  Securities and
        Exchange  Commission  on  April 24,  1995  and  incorporated  herein  by
        reference.

10.2    GSE Systems,  Inc. 1995 Long-Term Incentive Plan, amended as of June 16,
        2005. Previously filed in connection with the GSE Systems, Inc. Form DEF
        14A as filed with the Securities and Exchange Commission on May 31, 2005
        and incorporated herein by reference.

10.3    Form of  Option Agreement Under the GSE  Systems,  Inc.  1995  Long-Term
        Incentive Plan. Previously filed  in connection  with  the  GSE Systems,
        Inc. Form 10-K as filed with the  Securities and  Exchange Commission on
        March 22, 1996 and incorporated herein by reference.

10.4    Office Lease Agreement between Sterling Rutherford Plaza, L.L.C. and GSE
        Systems, Inc. (dated  as of February  10,  1998).  Previously  filed  in
        connection with the GSE  Systems, Inc.  Form  10-K  as  filed  with  the
        Securities and  Exchange Commission  on March 21, 1998 and  incorporated
        herein by reference.

10.5    Office Lease Agreement between Red Branch Road, L.L.C.  and GSE Systems,
        Inc. dated February 10, 1998). Previously filed in connection  with  the
        GSE Systems,  Inc.  Form   10-K   as  filed  with   the  Securities  and
        Exchange  Commission  on  March 21, 1998  and  incorporated   herein  by
        reference.

10.6    Warrant  Agreements   with  GP  Strategies   and  ManTech  International
        Corporation (dated  September 13, 1999).  Previously filed in connection
        with the  GSE Systems, Inc.  Form 8-K as filed  with the Securities  and
        Exchange   Commission  on August 15, 2001  and  incorporated  herein  by
        reference.

10.7    Change of Control Agreements between GSE Systems, Inc. and Jerry Jen and
        Jeffery G. Hough (dated March 10, 2000).  Previously filed in connection
        with  the GSE  Systems, Inc. Form 8-K as filed  with the Securities  and
        Exchange  Commission  on  August  1,  2001  and incorporated  herein  by
        reference.

10.8    $1,000,000 promissory  note dated June 25, 2001 to ManTech International
        Corporation. Previously filed in connection with the  GSE  Systems, Inc.
        Form 8-K  as  filed  with  the  Securities  and  Exchange  Commission on
        August 1, 2001 and incorporated herein by reference.

10.9    Preferred Stock Issuance  Agreement by and between GSE Systems, Inc. and
        ManTech International Corporation  (dated December 5, 2001).  Previously
        filed  in  connection  with the GSE Systems, Inc. Form 8-K as filed with
        the  Securities   and  Exchange   Commission  on  December 12, 2001  and
        incorporated herein by reference.

10.10   Asset Sale and Purchase Agreement between GSE Systems, Inc. and Novatech
        LLC dated September 25, 2003. Previously filed in  connection  with  the
        GSE Systems, Inc.  Form 8-K  as  filed  with the Securities and Exchange
        Commission on October 10, 2003 and incorporated herein by reference.

10.11   Management   Services  Agreement  between   GSE Systems,  Inc.  and   GP
        Strategies  Corporation  dated  January 1, 2004.  Previously   filed  in
        connection with  the  GSE  Systems,  Inc.   Form  10-K  filed  with  the
        Securities and Exchange Commission  n  April 14, 2004  and  incorporated
        herein  by reference.

10.12   First  Amendment dated  March  30, 2004  to the Financing  and  Security
        Agreement  among  General  Physics  Corporation,  Skillright,  Inc., GSE
        Systems, Inc., GSE  Power  Systems,  Inc., and  MSHI, Inc. and  Wachovia
        Bank,  National Association. Previously filed in connection with the GSE
        Systems,  Inc.  Form 10-K   filed   with  the  Securities  and  Exchange
        Commission on April 14, 2004 and incorporated herein by reference.

10.13   Third  Amendment  dated  July  30,  2004  to the  Financing and Security
        Agreement  among  General  Physics  Corporation,  Skillright, Inc.,  GSE
        Systems, Inc., GSE Power  Systems, Inc. and MSHI, Inc. and Wachovia Bank
        National Association.  Previously  filed  in  connection  with  the  GSE
        Systems, Form 10-Q filed with the Securities and Exchange  Commission on
        November 14, 2004 and incorporated herein by reference.

10.14   Forbearance letter dated August 4, 2005. Previously  filed in connection
        with the  GSE  Systems, Inc.  Form 10-Q  filed with  the Securities  and
        Exchange Commission on August 9, 2005.

23.1    Consent of KPMG LLP.

23.2    Consent of Andrea D. Kantor (contained in Exhibit 5.1).

24.1    Powers of Attorney.*

99.1    Form of Right of First Refusal Agreement. Previously filed in connection
        with  Amendment  No.  3 to the GSE Systems, Inc.  Form  S-1 Registration
        Statement  as  filed  with  the  Securities and Exchange  Commission  on
        July 24, 1995 and incorporated herein by reference.


* Previously filed