The stock price of GLOBAL DIGITAL SOLTN (OTCMKTS:GDSI) jumped more than 185% on October 20, 2015m after the company reported about acquisition of Rontan. Even yesterday, the stock extended its gains and closed with gains of over 11% at $0.00470.

The buzz

GLOBAL DIGITAL purchased 100% of the shares in Rontan from Jose Carlos Bolzan and Joao Alberto Bolzan. As per the Form 8-K, the acquisition will cost company a total of $26 million, which will be compensated over a period of next three years. Evidently investors considered it as exciting news, and the stock soared.

Acquisitions do not always turn out to be a reason for excitement for OTC stocks investors. Unfortunately, there is no accurate way to assess the full extent to the properties that GLOBAL DIGITAL has acquired and the opportunities that exists until a transparent report giving details on the matter comes on the web.

Until then, market participants know little about the acquired entity, except that massive funds will be compensated to get the ownership. Also, the company will have to presume its debts, which as per the filing, include bank credit lines of nearly $52 million.

The performance

As per the latest quarterly report, GLOBAL DIGITAL SOLTN (OTCMKTS:GDSI) posted cash and cash equivalents of $147,000. The total current assets and total current liabilities came at $769,000 and $1.5 million, respectively. GLOBAL DIGITAL reported total liabilities of $2.1 million, revenue of $379,000 and net loss of $672,000.

And mediocre performance is not the only red flag in the financial report in question. Its outstanding notes segment is rife with terrifying toxic debt, a grave part of which converts into company’s shares at a fixed discount of massive 40% from the lowest price in the last twenty days prior to debt conversion. Moreover, these notes are owned by toxic financiers including LG Capital Funding.