GLOBAL DIGITAL SOLTN (OTCMKTS:GDSI) suffered from a deep correction after the recent sharp rally and finished the last trading session with a major loss of 21.28%. The volume of the day at 41 million was almost the same with the recently increased the daily average of 40 million, reflecting the intense activity seen for the last few days. The stock has been trying to form a bottom in the last 2 months and the expanded volatility is a normal result of that process. The price action around $0.003 will determine the short term trend.
In last trading session, the shares of GLOBAL DIGITAL SOLTN (OTCMKTS:GDSI) declined more than 21% and closed the week at $0.00370. The stock had been witnessing a rollercoaster ride since last few trading sessions. Prior to this decline, the company registered some strong sessions which brought the stock to a close around $0.0050. It should be noted that at the start of last week, the stock was trading around $0.0014 indicating that despite the loss recorded in last trading session, the stock is still sitting at hefty gains.
The buzz
The reason for the abrupt burst in both support from investors and interest by the market was the reported acquisition deal of the private Brazilian entity the Rontan Group. The agreement was first disclosed in a Form 8-K filing on October 19, 2015 followed by an official Press Release on October 21, 2015.
As per the terms of the acquisition agreement, GLOBAL DIGITAL are going to compensate $26 million in cash to be paid in forty-eight equal monthly installments, and $26 million compensated in stock valued at $1 a share. Even after registering the massive gains in last week, the stock is still trading in the double-zero land.
The highlights
As of now, it is not clear what GLOBAL DIGITAL would be gaining from the announced deal. Well, until an official release revealing the financials of acquired entity is submitted, no one knows the clear picture. For 2014, the company recorded revenue of nearly $128 million. Here, it is important to note that GLOBAL DIGITAL financial state raises many concerns.
The company ended the second quarter of 2015 with $147,000 in cash, $769,000 in total current assets and $1.6 million in total current liabilities. Clearly, the current liabilities figure raises some grave concerns. Also, the revenue in 2Q was $379,000 and net income stood at $672,000.
