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For the past several sessions the stock of Global Digital Solutions, Inc. (OTCMKTS:GDSI<\/a>) has been extremely volatile. Any positive day has been followed by a comparable drop. Yesterday the ticker crashed by more than 17% and closed at $0.0038 per share.<\/p>\n GDSI<\/a> <\/strong>captured the attention of the market last week when it announced the acquisition of Grupo Rontan Electro Metalurgica, S.A, a Brazilian company “engaged in the manufacture and distribution of specialty vehicles and acoustic\/visual signaling equipment”. According to the PR published by GDSI<\/a> <\/strong>for 2014 Rontan generated revenues of approximately $128 million. A staggering amount when you take into consideration Global Digital Solutions’ own financial results. For the quarter ended June 30 they reported:<\/p>\n • $147 thousand cash It should be noted that the net income was a result of changes in the fair value of derivatives. For the first half of 2015 GDSI<\/a> <\/strong>have accumulated a net loss of over 2 million. Having in mind the limited resources of the company some might start to wonder how are GDSI<\/a> <\/strong>going to pay for the announced acquisition. Especially when you consider that under the terms of the agreement they will have to pay $26 million in cash spread over 48 equal monthly installments, $26 million paid in stock valued at $1 per share, and an earn-out amount. In addition, although the PR makes it sound like the acquisition has been already completed the 8-K form for the deal states that the closing should occur within ten days of the publishing of Rontan’s financial statement.<\/p>\n Meanwhile the long term shareholders of GDSI<\/a> <\/strong>have been simply drowned in dilution. The outstanding common shares of the company have increased from 112 million as of August 4 to nearly 287 million shares as of October 7. At the end of June GDSI<\/a> <\/strong>had nearly $500 thousand in outstanding convertible notes that could be turned into shares at a 40% discount to the market price.<\/p>\n
• $769 thousand total current assets
• $1.6 million total current liabilities
• $379 thousand revenues
• $672 thousand net income<\/p>\n