In last trading session, the stock price of Global Digital Solutions Inc (OTCMKTS:GDSI) declined more than 41% to close the day at $0.00320. The decline came at a massive share volume of 9.78 million compared to average share volume of 5.86 million. To say that last week was a complete disaster for Global Digital stock would be an understatement. The stock opened the week at $0.007 and extended its losses to close the week at $0.00320.
In order to analyze the reason for the sudden decline down the chart it is important to first throw light on the securities purchase and sale deal that was reported by company in last October. As per the announced deal, the company intended to buy Grupo Rontan Electro Metalurgica, S.A. The press release for the agreement stated Rontan as a leading specialty vehicles and visual signaling equipment firm in Latin America with revenues for FY2014 of nearly $128 million.
At the close of December 2014. Global Digital had nearly 108 million outstanding shares, which by the close of September 2015 ballooned to over 286 million shares. The issuance of shares increased in the following months and by the end of October 2015, the company had issued another 200 million shares.
Last week Global Digital submitted a new 8-K form reporting that it believes to have met or otherwise waived the terms & conditions to closing. It necessitated the Rontan securities deal to be completed. The sellers, however, intends to cancel the entire deal. As per the 8-K filing, the company have hired Brazilian and U.S. attorneys and will try to administer their rights. The reported Rontan deal was the main factor behind the stock’s chart up move and in its absence there is apparently nothing to offset the numerous red flags surrounding the company.