Unassociated Document

As confidentially submitted to the Securities and Exchange Commission on August 5, 2014

This draft registration statement has not been publicly filed with the Securities and Exchange Commission and all information herein remains strictly confidential.

Registration No. 333-

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form S-1

Registration Statement

UNDER THE SECURITIES ACT OF 1933

GLOBAL DIGITAL SOLUTIONS, INC.

(Exact name of registrant as specified in its charter)

New Jersey		2844			22-3392051
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)			(I.R.S. Employer Identification Number)

777 South Flagler Drive, Suite 800 West Tower

West Palm Beach, Florida 33401

Telephone: (561) 515-6163

(Address, including zip code, and telephone number, including area

code, of registrant’s principal executive offices)

David A. Loppert

Chief Financial Officer

777 South Flagler Drive, Suite 800 West Tower

West Palm Beach, Florida 33401

Telephone: (561) 515-6163

(Name, address, including zip code, and telephone number,

including area code, of agent for service)

Copies to:

Owen Naccarato

Naccarato & Associates

1100 Quail Street, Suite 100

Newport Beach, CA 92660

Office: 949-851-9261

Fax: 949-851-9262

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. þ

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 of 1933 registration statement number of the earlier effective registration statement for the same offering. o

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. o

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. o

Indicate by a check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):

Large Accelerated Filer o		Accelerated Filer o
Non-Accelerated Filer o (Do not check if a smaller reporting company)		Smaller Reporting Company þ

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Amount to be Registered (1)		Proposed Maximum Offering Price per Share		Proposed Maximum Aggregate Offering Price	Amount of Registration Fee
Common stock, par value $.001 per share		25,197,096	$	(2)	$	$
Common stock, par value $.001 per share, upon exercise of warrants issued		4,250,000	$	(2)	$	$
Total		29,447,096	$		$	$

(1)

Pursuant to Rule 416 under the Securities Act, the shares of common stock offered hereby also include an indeterminate number of additional shares of common stock as may from time to time become issuable by reason of anti-dilution provisions, stock splits, stock dividends, recapitalizations or other similar transactions.

(2)

With respect to the shares of common stock offered by the selling stockholders named herein, estimated at $____ per share, the average of the high and low prices of the common stock as reported on the Over The Counter Market (“OTCQB”) on ________, 2014, for the purpose of calculating the registration fee in accordance with Rule 457(c) under the Securities Act.

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.

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED _______, 2014

PRELIMINARY PROSPECTUS

Global Digital Solutions, Inc.

This prospectus relates to the sale by the selling stockholders identified in this prospectus of up to 29,447,096 shares of our common stock consisting of:

(i) 8,387,096 shares of our common stock issued or issuable in connection with our acquisition of North American Custom Specialty Vehicles, Inc.;

(ii) 5,634,000 shares of our common stock issued to investors in various private placements;

(iii) 4,250,000 shares of our common stock issued and 4,250,000 share issuable upon the conversion of warrants issued in connection with convertible debt, for services, and for investment banking fees;

(iv) 2,676,000 shares of our common stock issued to certain acquisition, investor relations professionals and consultants for acquisition, investor relations and marketing services; and

(v) 4,250,000 shares of our common stock issued for conversion of debt and debt guarantees.

All of these shares of our common stock are being offered for resale by the selling stockholders.

The prices at which the selling stockholders may sell shares will be determined by the prevailing market price for the shares or in negotiated transactions. We will not receive any proceeds from the sale of these shares by the selling stockholders.

We will bear all costs relating to the registration of these shares of our common stock, other than any selling stockholders’ legal or accounting costs or commissions.

Our common stock is quoted on the regulated quotation service of the Over The Counter Market (“OTCQB”) under the symbol “GDSI”. The last reported sale price of our common stock as reported by the OTCQB on _____, 2014, was $____ per share.

We are an “emerging growth company” under applicable Securities and Exchange Commission rules and will be subject to reduced public company reporting requirements for this prospectus and future filings. See “Prospectus Summary—Implications of Being an Emerging Growth Company.”

Investing in our common stock is highly speculative and involves a high degree of risk. You should carefully consider the risks and uncertainties described under the heading “Risk Factors” beginning on page 11 of this prospectus before making a decision to purchase our common stock.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is _________, 2014

TABLE OF CONTENTS

You should rely only on the information contained in this prospectus. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell these securities in any jurisdiction where an offer or sale is not permitted. The information contained in this prospectus is current only as of its date. This prospectus will be updated as required by law.

PROSPECTUS SUMMARY

The following summary highlights information contained elsewhere in this prospectus. This summary may not contain all of the information that may be important to you. You should read this entire prospectus carefully, including the sections entitled “Risk Factors” beginning on page 11 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our historical financial statements and related notes included elsewhere in this prospectus. In this prospectus, unless the context provides otherwise, the terms “the Company,” “GDSI,” “we,” “us,” and “our” refer to Global Digital Solutions, Inc., a New Jersey corporation, and where appropriate, its wholly-owned subsidiaries.

Overview

We were incorporated in New Jersey as Creative Beauty Supply, Inc. (“Creative”) in August 1995. In March 2004, Creative acquired Global Digital Solutions, Inc., a Delaware corporation ("Global”). The merger was treated as a recapitalization of Global, and Creative changed its name to Global Digital Solutions, Inc., Global provided structured cabling design, installation and maintenance for leading information technology companies, federal, state and local government, major businesses, educational institutions, and telecommunication companies. Our mission was to target the United States government contract marketplace for audio and video services. Due to capital constraints our operations team focused mainly in Northern California. On May 1, 2012, we made the decision to wind down our operations in the telecommunications area and to refocus our efforts in the area of cyber arms technology and complementary security and technology solutions. We completed the wind down our telecommunications operations in June 2014. As discussed below, from August 2012 through November 2013 we were actively involved in managing Airtronic USA, Inc., and in June 2014 we acquired North American Custom Specialty Vehicles, LLC (“NACSV”).

Our Strategy

	·	Identify, target, and acquire profitable businesses with proven and established track records of serving Government, Law Enforcement Agencies, and related Corporate Customers.
	·	Aggregate and integrate Product, Service and Technology providers serving this defined customer base.
	·	Integrate the significant customer relationships developed from each business to cross sell products and services and expand the GDSI presence within the Industry.
	·	Become a Facilitator in the “Analog to Digital” shift in the Defense and Intelligence Marketplace over the balance of this decade.

There is doubt about our ability to continue as a going concern

Our independent registered public accounting firm has issued an opinion on our December 31, 2013, financial statements that states that the financial statements were prepared assuming we will continue as a going concern. As discussed in Note 1 to the financial statements, we had a net loss of $9,297,253 for the year ended December 31, 2013, and used net cash of $983,345 for operating activities. Additionally, at December 31, 2013, we had an accumulated deficit of $16,858,375. These matters raise substantial doubt about our ability to continue as a going concern. Our plan in regards to these matters is also described in Note 1 to our financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Transactions with Airtronic USA, Inc.

On October 22, 2012, we entered into an Agreement of Merger and Plan of Reorganization (“Merger Agreement”) to acquire 70% of Airtronic USA, Inc. (“Airtronic”), a debtor in possession under chapter 11 of the Bankruptcy Code in a case pending in the US Bankruptcy Court for the Northern District of Illinois, Eastern Division (the “Court”) once Airtronic successfully reorganized and emerged from bankruptcy (the “Merger”). Contemporaneously, on October 22, 2012, we entered into a Debtor In Possession Note Purchase Agreement (“Bridge Loans”) with Airtronic in which we agreed to lend them initially up to $750,000, and which was subsequently modified twice to provide for additional loans totaling $500,000 and $200,000. From October 2012 through November 2013 we were actively involved I managing and supervising Airtronic’s operations as we funded their business and planned for its reorganization and successful emergence from bankruptcy. Airtronic’s Plan of Reorganization which approved their Merger with us, was confirmed by the Court on October 2, 2013 and we intended to close the Merger with Airtronic by December 2, 2013; however Airtronic refused to close the Merger and the transaction fell through. Subsequently, in April 2014, Airtronic had a Plan of Reorganization confirmed, and in May 2014 repaid all loans due to the Company under the Bridge Loans. During the period from August 2012 through November 2013 we were actively involved in the management of Airtronic.

Acquisition of North American Custom Specialty Vehicles, LLC

On June 16, 2014, we and our wholly owned subsidiary, GDSI Acquisition Corporation, a Delaware corporation (“Buyer”), entered into an Equity Purchase Agreement (“EPA”) with Brian A. Dekle and John Ramsey (collectively, “Sellers”) and North American Custom Specialty Vehicles, LLC, an Alabama limited liability company (“NACSV”), pursuant to which Buyer purchased all of Sellers’ membership interests in NACSV for total consideration of up to $3.6 million (the “Acquisition”) with (a) $1.2 million payable at closing as follows: (i) a cash payment of $1.0 million and (ii) 645,161 shares of GDSI’s restricted common stock valued at $0.31 per share, or $200,000 in the aggregate, (b) up to $2.4 million of additional post-closing contingent consideration as certain milestones are met as set forth in the EPA through December 31, 2017, and (c) a post closing date purchase price adjustment of the excess, if any, of the total value of closing date audited assets of NACSV over $1.2 million. NACSV specializes in building mobile command/communications and specialty vehicles for emergency management, first responders, national security and law enforcement operations.

Increase in Authorized Share Capital

On July 7, 2014, we filed a Certificate of Amendment to Certificate of Incorporation to increase the number of our authorized shares of capital stock from 185,000,000 shares to 485,000,000 shares, divided into two classes: 450,000,000 shares of common stock, par value $0.001 per share (the “common stock”), and 35,000,000 shares of preferred stock, par value $0.001 per share (the “Preferred Stock”).

Implications of Being an Emerging Growth Company

We qualify as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, as amended, or the JOBS Act. As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include:

	·	Reduced disclosure about our executive compensation arrangements;
	·	No non-binding shareholder advisory votes on executive compensation or golden parachute arrangements;
	·	Exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting; and
	·	Reduced disclosure of financial information in this prospectus, including two years of audited financial information and two years of selected financial information.

We may take advantage of these exemptions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if we have more than $1.0 billion in annual revenues as of the end of a fiscal year, if we are deemed to be a large-accelerated filer under the rules of the Securities and Exchange Commission, or if we issue more than $1.0 billion of non-convertible debt over a three-year-period.

The JOBS Act permits an emerging growth company to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have irrevocably chosen to "opt out" of the exemption for the delayed adoption of certain accounting standards and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

Selected Risk Factors

Our business is subject to numerous risks, as discussed more fully in the section entitled “Risk Factors” beginning on page 11 of this prospectus. In particular, the following considerations, among others, may offset our competitive strengths or have a negative effect on our growth strategy, which could cause a decline in the price of our common stock and result in a loss of all or a portion of your investment:

	·	There is doubt about our ability to continue as a going concern.
	·	We have a limited operating history, no revenue and may continue to incur losses.
	·	We will need additional financing to fully implement our business plan, and we cannot assure you that we will be successful in obtaining such financing or in continuing our operations.

We expect that we will need to raise, through equity or debt financings up to $70 million over the next 24 months to implement our strategy and complete strategic acquisitions.

Where You Can Find Us

Our principal executive office is located at 777 South Flagler Drive, Suite 800 West, West Palm Beach, Florida 33401 and our telephone number is (561) 515-6163. Our website address is www.gdsi.co. We do not incorporate the information on or accessible through our website into this prospectus, and you should not consider any information on, or that can be accessed through, our website a part of this prospectus.

THE OFFERING

Common stock offered by selling stockholders		This prospectus relates to the sale by certain selling stockholders of 29,447,096 shares of our common stock consisting of:
		(i) 8,387,096 shares of our common stock issued or issuable in connection with our acquisition of North American Custom Specialty Vehicles, Inc.;
		(ii) 5,634,000 shares of our common stock issued to investors in various private placements;
		(iii) 4,250,000 shares of our common stock issued and 4,250,000 share issuable upon the conversion of warrants issued in connection with convertible debt, for services, and for investment banking fees;
		(iv) 2,676,000 shares of our common stock issued to certain acquisition advisors, investor relations professionals and consultants for acquisition, investor relations and marketing services; and
		(v) 4,250,000 shares of our common stock issued for conversion of debt and debt guarantees.

Offering price		Market price or privately negotiated prices.

Common stock outstanding before the offering		100,669,278 shares (1)

Common stock outstanding after the offering		113,631,213 shares (2)

Use of proceeds		We will not receive any proceeds from the sale of the common stock by the selling stockholders. However, we will receive the proceeds from the exercise of the warrants by the selling stockholders. We expect to use such proceeds, if any, for general working capital purposes.

OTC Markets (OTCQB) Symbol		GDSI.

Risk Factors		You should carefully consider the information set forth in this prospectus and, in particular, the specific factors set forth in the “Risk Factors” section beginning on page 11 of this prospectus before deciding whether or not to invest in our common stock.

(1)

Represents the number of shares of our common stock outstanding as of July 25, 2014. Excludes (i) 4,250,000 shares of our common stock issuable upon exercise of outstanding warrants, (ii) 2,500,000 shares of our common stock issuable upon the issuance of restricted shares of common stock, (iii) 7,741,935 shares issuable in the future for additional consideration in connection with the acquisition of NACSV, (iv) 1,300,000 shares issuable in the future for services rendered in connection with our acquisition of NACSV, and (v) 5,500,000 shares of our common stock issuable upon exercise of options granted or reserved under the 2014 Equity Incentive Plan.

(2)

Includes (i) 4,250,000 shares of our common stock issuable upon the exercise of outstanding warrants, which shares are offered for sale in this prospectus, (ii) 7,741,935 shares issuable in the future for additional consideration in connection with the acquisition of NACSV, and (iii) 1,300,000 shares issuable in the future for services rendered in connection with our acquisition of NACSV. Excludes (i) 2,500,000 shares of our restricted common stock issuable under restricted stock grants, and (ii) 5,500,000 shares of our common stock issuable upon exercise of options granted or reserved under the 2014 Equity Incentive Plan.

SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS

This prospectus contains forward-looking statements that are subject to risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different than the results, performance or achievements expressed or implied by the forward-looking statements. Such statements include statements regarding our expectations, hopes, beliefs or intentions regarding the future, including but not limited to statements regarding our market, strategy, competition, development plans (including acquisitions and expansion), financing, revenues, operations, and compliance with applicable laws. Forward-looking statements involve certain risks and uncertainties, and actual results may differ materially from those discussed in any such statement. Factors that could cause actual results to differ materially from such forward-looking statements include the risks described in greater detail in the following paragraphs. All forward-looking statements in this document are made as of the date hereof, based on information available to us as of the date hereof, and we assume no obligation to update any forward-looking statement. Market data used throughout this prospectus is based on published third party reports or the good faith estimates of management, which estimates are based upon their review of internal surveys, independent industry publications and other publicly available information. Although we believe that such sources are reliable, we do not guarantee the accuracy or completeness of this information, and we have not independently verified such information.

Investing in our common stock involves a high degree of risk. Prospective investors should carefully consider the risks described below, together with all of the other information included or referred to in this prospectus, before purchasing shares of our common stock. There are numerous and varied risks, known and unknown, that may prevent us from achieving our goals. If any of these risks actually occur, our business, financial condition or results of operations may be materially adversely affected. In such case, the trading price of our common stock could decline and investors could lose all or part of their investment.

Risks Relating to Our Business

There is doubt about our ability to continue as a going concern.

Our future is dependent on our ability to meet our financing requirements, and complete other identified and unidentified acquisitions. If we fail for any reason, we might not be able to continue as a going concern.

We have a limited operating history, no revenue and may continue to incur losses.

There can be no assurance that our business will be profitable in the future. We may continue to incur losses and negative cash flows from operations. This would have a material adverse affect on our financial condition.

We will need additional financing to fully implement our business plan, and we cannot assure you that we will be successful in obtaining such financing or in continuing our operations.

We previously focused our efforts on developing our business in the communications sector. We are now focusing our efforts on developing our business in the areas of small arms manufacturing and distribution, knowledge-based and culturally attuned social consulting and security-related solutions in unsettled areas. We have entered into non-binding Letters of Intent (“LOI”) with two private companies in this area of business, but there can be no assurance that we will successfully close either of these transactions, or that additional public or private financing, including debt or equity financing, will be available as needed, or, if available, on terms favorable to us to close the transactions. Any additional equity financing may be dilutive to our stockholders and holders of such additional equity securities may have rights, preferences or privileges that are senior to those of our existing common or preferred stock. Furthermore, debt financing, if available, will require payment of interest and may involve restrictive covenants that could impose limitations on our operating flexibility. Our failure to successfully obtain additional future funding may jeopardize our ability to continue our business and operations.

While part of our strategy is to pursue strategic acquisitions, we may not be able to identify businesses that we can acquire on acceptable terms, we may not be able to obtain necessary financing or may face risks due to additional indebtedness, and our acquisition strategy may incur significant costs or expose us to substantial risks inherent in the acquired business’s operations.

Our strategy of pursuing strategic acquisitions may be negatively impacted by several risks, including the following:

·	We may not successfully identify companies that have complementary product lines or technological competencies or that can diversify our revenue or enhance our ability to implement our business strategy.
·	We may not successfully acquire companies if we fail to obtain financing, or to negotiate the acquisition on acceptable terms, or for other related reasons.
·	We may incur additional expenses due to acquisition due diligence, including legal, accounting, consulting and other professional fees and disbursements. Such additional expenses may be material, will likely not be reimbursed and would increase the aggregate cost of any acquisition.
·	Any acquired business will expose us to the acquired company’s liabilities and to risks inherent to its industry. We may not be able to ascertain or assess all of the significant risks.
·	We may require additional financing in connection with any future acquisition. Such financing may adversely impact, or be restricted by, our capital structure.
·	Achieving the anticipated potential benefits of a strategic acquisition will depend in part on the successful integration of the operations, administrative infrastructures and personnel of the acquired company or companies in a timely and efficient manner. Some of the challenges involved in such an integration include:
	·	demonstrating to the customers of the acquired company that the consolidation will not result in adverse changes in quality, customer service standards or business focus;
	·	preserving important relationships of the acquired company;
	·	coordinating sales and marketing efforts to effectively communicate the expanded capabilities of the combined company; and
	·	coordinating the supply chains.

Any integration is expected to be complex, time-consuming and expensive and may harm the newly-consolidated company’s business, financial condition and results of operations.

New federal and state laws and regulations may restrict our ability in the future to sell the products that potential acquisition targets currently sell into the domestic commercial market, which could materially adversely affect our future revenues.

Since December 2012, there has been an extremely sharp increase in political and public support for new “gun control” laws and regulations in the United States. Some proposed legislation, including legislation that has been introduced and is under active consideration in Congress and in state legislatures, would ban and/or restrict the sale of military and law enforcement firearms, in their current configurations, into the commercial market, either throughout the United States or in particular states. It is also possible that the President of the United States could issue Executive Orders that would adversely affect our ability to sell, or customers’ ability to purchase, our products. The political environment for enactment of new “gun control” measures at the federal, state and local level is evolving rapidly and additional significant change in the domestic legal and regulatory environment during 2014 is likely.

In light of the uncertain and evolving political, legal and regulatory environment, it is not clear what measures might be necessary in order to redesign products to comply with applicable law, nor whether it will even be possible in every instance to do so. To the extent that redesigns of products are possible, we may need to spend significant amounts of capital in order to effectuate such redesigns and may incur associated sales, marketing, legal and administrative costs in connection with the introduction of new models. Furthermore, there is no assurance that customers will accept redesigned product.

A substantial decline in the domestic commercial market for any of these reasons would have a material adverse effect on the businesses we acquire.

We depend upon our senior management and our business may be adversely affected if we cannot retain them.

Our success depends upon our ability to attract and retain experienced senior management with specialized industry and technical knowledge and/or industry relationships. On August 12, 2013, Richard J. Sullivan was appointed Chairman and CEO of the Company and David A. Loppert was appointed CFO. Mr. Sullivan and Mr. Loppert have significant experience as CEO and CFO, respectively, of public companies. Once the acquisition of one or more of the companies with whom we have entered into LOI’s is completed, we expect that Jennifer Carroll will be appointed COO. Ms. Carroll was until recently the Lt. Governor of the State of Florida, has served in the military, and has significant managerial experience. We might not be able to find or replace qualified individuals to fill the slots of senior management that we anticipate if their services do not become available to us or are no longer available to us; accordingly the inability to fill, or the loss of critical members of our anticipated senior management team could have a material adverse effect on our ability to effectively pursue our business and acquisition strategy. We do not have key-man life insurance policies covering any of our employees at this time.

If we are unable to manage future growth, our business may be negatively affected.

We are continuing to pursue a strategy of rapid growth, and plan to expand significantly our capability and devote substantial resources to our marketing, sales, administrative, operational, financial and other systems and resources. Such expansion will place significant demands on our marketing, sales, administrative, operational, financial and management information systems, controls and procedures. Accordingly, our performance and profitability will depend on the ability of our officers and key employees to:

	●	manage our business and our subsidiaries as a cohesive enterprise;
	●	manage expansion through the timely implementation and maintenance of appropriate administrative, operational, financial and management information systems, controls and procedures;
	●	add internal capacity, facilities and third-party sourcing arrangements as and when needed;
	●	maintain service quality controls; and
	●	attract, train, retain, motivate and manage effectively our employees.

There can be no assurance that we will integrate and manage successfully new systems, controls and procedures for our business, or that our systems, controls, procedures, facilities and personnel, even if successfully integrated, will be adequate to support our projected future operations. Any failure to implement and maintain such systems, controls and procedures, add internal capacity, facilities and third-party sourcing arrangements or attract, train, retain, motivate and manage effectively our employees could have a material adverse effect on our business, financial condition and results of operations. In addition, we may incur substantial expenses identifying, investigating and developing appropriate products and services in the small arms business markets. There can be no assurance that any expenditures incurred in identifying, investigating and developing such products and services will ever be recouped.

We will need additional capital to fund ongoing operations, future acquisitions, and to respond to business opportunities, challenges, acquisitions or unforeseen circumstances. If such capital is not available to us, our business, operating results and financial condition may be harmed.

At December 31, 2013, we had $509,224 cash on hand. Our limited operating history makes it difficult to accurately forecast revenues and expenses, and in conjunction with other Risk Factors, raises substantial doubt about our ability to continue as a going concern. Since January 1, 2013, we have closed on a loan, various private placements and warrant exercises and have received gross proceeds of $3,186,100. We will continue to seek equity financing to provide funding for operations but there is no assurance that we will be successful in these efforts. If we are not successful in raising additional equity capital or generate sufficient cash flows to meet our obligations as they come due, we may not be able to complete the acquisition of Airtronic, and/or fully fund our ambitious growth plans. We may then be required to reduce our overhead expenses by the reduction of headcount and other available measures.

We may face strong competition from larger, established companies.

We likely will face intense competition from other companies that provide the same or similar small arms manufacturing and distribution services, knowledge-based and culturally attuned social consulting and security-related solutions we expect to provide, virtually all of whom can be expected to have longer operating histories, greater name recognition, larger installed customer bases and significantly more financial resources, R&D facilities and manufacturing and marketing experience than we have. There can be no assurance that developments by our potential competitors will not render our existing and future products or services obsolete. In addition, we expect to face competition from new entrants into the arms business, knowledge-based and culturally attuned social consulting business, and security-related solutions business. As the demand for products and services grows and new markets are exploited, we expect that competition will become more intense, as current and future competitors begin to offer an increasing number of diversified products and services. We may not have sufficient resources to maintain our research and development, marketing, sales and customer support efforts on a competitive basis. Additionally, we may not be able to make the technological advances necessary to maintain a competitive advantage with respect to our products and services. Increased competition could result in price reductions, fewer product orders, obsolete technology and reduced operating margins, any of which could materially and adversely affect our business, financial condition and results of operations.

If we are unable to keep up with technological developments, our business could be negatively affected.

If we are successful in acquiring the companies we have entered into LOI’s with, the markets for our anticipated products and services are expected to be characterized by rapid technological change and be highly competitive with respect to timely innovations. Accordingly, we believe that our ability to succeed in the sale of our products and services will depend significantly upon the technological quality of our products and services relative to those of our competitors, and our ability to continue to develop and introduce new and enhanced products and services at competitive prices and in a timely and cost-effective manner. In order to develop such new products and services, we will depend upon close relationships with those companies, existing customers and our ability to continue to develop and introduce new and enhanced products and services at competitive prices and in a timely and cost-effective manner. There can be no assurance that we will be able to develop and market our new products and services successfully or respond effectively to technological changes or new product and service offerings of our potential competitors in the arms business. We may not be able to develop the required technologies, products and services on a cost-effective and timely basis, and any inability to do so could have a material adverse effect on our business, financial condition and results of operations.

We may not be able to protect intellectual property that we expect to acquire, which could adversely affect our business.

The companies that we expect to acquire rely on patent, trademark, trade secret and copyright protection to protect their technology. We believe that technological leadership can be achieved through additional factors such as the technological and creative skills of our personnel, new product developments, frequent product enhancements, name recognition and reliable product maintenance. Nevertheless, our ability to compete effectively depends in part on our ability to develop and maintain proprietary aspects of our technology, such as patents. We may not secure future patents; and patents that we may secure may become invalid or may not provide meaningful protection for our product innovations. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as the United States. Furthermore, there can be no assurance that competitors will not independently develop similar products, "reverse engineer" our products, or, if patents are issued to us, design around such patents. We also expect to rely upon a combination of copyright, trademark, trade secret and other intellectual property laws to protect our proprietary rights by entering into confidentiality agreements with our employees, consultants and vendors, and by controlling access to and distribution of our technology, documentation and other proprietary information. There can be no assurance, however, that the steps to be taken by us will not be challenged, invalidated or circumvented, or that the rights granted thereunder will provide a competitive advantage to us. Any such circumstance could have a material adverse effect on our business, financial condition and results of operations. While we are not currently engaged in any intellectual property litigation or proceedings, there can be no assurance that we will not become so involved in the future or that our products do not infringe any intellectual property or other proprietary right of any third party. Such litigation could result in substantial costs, the diversion of resources and personnel, and subject us to significant liabilities to third parties, any of which could have a material adverse effect on our business.

We may not be able to protect our trade names and domain names.

We may not be able to protect our trade names and domain names against all infringers, which could decrease the value of our brand name and proprietary rights. We currently hold the Internet domain name "www.gdsi.co" and we use GDSI as a trade name. Domain names generally are regulated by Internet regulatory bodies and are subject to change and may be superseded, in some cases, by laws, rules and regulations governing the registration of trade names and trademarks with the United States Patent and Trademark Office and certain other common law rights. If the domain registrars are changed, new ones are created or we are deemed to be infringing upon another's trade name or trademark, we could be unable to prevent third parties from acquiring or using, as the case may be, our domain name, trade names or trademarks, which could adversely affect our brand name and other proprietary rights.

The effects of the sequester may adversely impact our business, operating results or financial condition.

The sequester and its associated cutbacks in the military and support services has resulted in furloughs and delays in processing and approving of foreign orders that are approved by the United States Department of Defense. This, coupled with continuing changes in economic conditions, including declining consumer confidence, concerns about inflation or deflation, the threat of a continuing recession, increases in the rates of default and bankruptcy and extreme volatility in the credit and equity markets, may lead our customers to cease doing business with us or to reduce or delay that business or their payments to us, and our results of operations and financial condition could be adversely affected by these actions. These challenging economic conditions also may result in:

	●	increased competition for less spending;
	●	pricing pressure that may adversely affect revenue;
	●	difficulty forecasting, budgeting and planning due to limited visibility into the spending plans of current or prospective customers; or
	●	customer financial difficulty and increased risk of doubtful accounts receivable.

We are unable to predict the duration and severity of the sequester and its adverse economic impact on conditions in the U.S. and other countries.

We expect a number of factors to cause our operating results to fluctuate on a quarterly and annual basis, which may make it difficult to predict our future performance.

Our revenues and operating results could vary significantly from quarter to quarter and year-to-year because of a variety of factors, many of which are outside of our control. As a result, comparing our operating results on a period-to-period basis may not be meaningful. In addition to other risk factors discussed in this section, factors that may contribute to the variability of our quarterly and annual results include:

	●	our ability to accurately forecast revenues and appropriately plan our expenses;
	●	the impact of worldwide economic conditions, including the resulting effect on consumer spending;
	●	our ability to maintain an adequate rate of growth;
	●	our ability to effectively manage our growth;
	●	our ability to attract new customers;
	●	our ability to successfully enter new markets and manage our expansion;
	●	the effects of increased competition in our business;
	●	our ability to keep pace with changes in technology and our competitors;
	●	our ability to successfully manage any future acquisitions of businesses, solutions or technologies;
	●	the success of our marketing efforts;
	●	changes in consumer behavior and any related impact on the advertising industry;
	●	interruptions in service and any related impact on our reputation;
	●	the attraction and retention of qualified employees and key personnel;
	●	our ability to protect our intellectual property;
	●	costs associated with defending intellectual property infringement and other claims;
	●	the effects of natural or man-made catastrophic events;
	●	the effectiveness of our internal controls; and
	●	changes in government regulation affecting our business.

As a result of these and other factors, the results of any prior quarterly or annual periods should not be relied upon as indications of our future operating performance, and any unfavorable changes in these or other factors could have a material adverse effect on our business, financial condition and results of operation.

Growth may place significant demands on our management and our infrastructure.

We plan for substantial growth in our business, and this growth would place significant demands on our management and our operational and financial infrastructure. If our operations grow in size, scope and complexity, we will need to improve and upgrade our systems and infrastructure to meet customer demand. The expansion of our systems and infrastructure will require us to commit substantial financial, operational and technical resources in advance of an increase in the volume of business, with no assurance that the volume of business will increase. Continued growth could also strain our ability to maintain reliable service levels for our customers and meet their expected delivery schedules, develop and improve our operational, financial and management controls, enhance our reporting systems and procedures and recruit, train and retain highly skilled personnel.

Managing our growth will require significant expenditures and allocation of valuable management resources. If we fail to achieve the necessary level of efficiency in our organization as it grows, our business, operating results and financial condition would be harmed.

Confidentiality agreements with employees and others may not adequately prevent disclosure of trade secrets and other proprietary information.

In order to protect our proprietary technology and processes, we will rely in part on confidentiality agreements with our employees, customers, potential customers, independent contractors and other advisors. These agreements may not effectively prevent disclosure of confidential information and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information. In addition, others may independently discover trade secrets and proprietary information, and in such cases we could not assert any trade secret rights against such parties. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection could adversely affect our competitive business position.

We will continue to incur increased costs as a result of being a public reporting company and our management expects to devote substantial time to public reporting company compliance programs.

As a public reporting company, we will incur significant legal, insurance, accounting and other expenses that we would not incur as a non-reporting public company. We expect to invest resources to comply with evolving laws, regulations and standards, and this investment will result in increased general and administrative expenses and may divert management's time and attention from product development activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate legal proceedings against us and our business may be harmed. We maintain directors' and officers' insurance coverage, which increases our insurance cost. In the future, it may be more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.

In addition, in order to comply with the requirements of being a public reporting company, we may need to undertake various actions, including implementing new internal controls and procedures and hiring new accounting or internal audit staff. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal control over financial reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file with the Securities and Exchange Commission, is recorded, processed, summarized and reported within the time periods specified in the Commission's rules and forms, and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers. Any failure to develop or maintain effective controls could adversely affect the results of periodic management evaluations. In the event that we are not able to demonstrate compliance with the Sarbanes-Oxley Act, that our internal control over financial reporting is perceived as inadequate, or that we are unable to produce timely or accurate financial statements, investors may lose confidence in our operating results and the price of our ordinary shares could decline.

As discussed below, because we are an emerging growth company, we are exempt from the auditor attestation requirement of Section 404 of the Sarbanes-Oxley Act of 2002, but that does not preclude us from complying with certain of these rules, which require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of our internal control over financial reporting commencing with our second annual report. This assessment will need to include the disclosure of any material weaknesses in our internal control over financial reporting identified by our management or our independent registered public accounting firm. We have begun the costly and challenging process of implementing the system and processing documentation needed to comply with such requirements.

We may not be able to complete our evaluation, testing and any required remediation in a timely fashion.

Our independent registered public accounting firm will not be required to formally attest to effectiveness of our internal control over financial reporting until the later of our second annual report or the first annual report required to be filed with the Commission following the date we are no longer an "emerging growth company" as defined in the JOBS Act. We cannot assure you that there will not be material weaknesses or significant deficiencies in our internal controls in the future.

Risks Related to our Common and Preferred Stock

We are eligible to be treated as an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

We are an "emerging growth company", as defined in the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including (1) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley, (2) reduced disclosure obligations regarding executive compensation in this Form 10-K and our other periodic reports, and registration and proxy statements and (3) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. In addition, as an emerging growth company, we are only required to provide two years of audited financial statements. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our common stock held by non-affiliates exceeds $700.0 million as of any June 30 before that time (i.e., we become a large accelerated filer) or if we have total annual gross revenue of $1.0 billion or more during any fiscal year before that time, in which cases we would no longer be an emerging growth company as of the following December 31 or, if we issue more than $1.0 billion in non-convertible debt during any three-year period before that time, we would cease to be an emerging growth company immediately. Even after we no longer qualify as an emerging growth company, we may still qualify as a "smaller reporting company" which would allow us to take advantage of many of the same exemptions from disclosure requirements, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this extended transition period and, as a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required for other public companies that are not emerging growth companies.

We may be unable to register for resale all of the shares of common stock sold in private placements, in which case purchasers in the private placements will need to rely on an exemption from the registration requirements in order to sell such shares.

In connection with our various private placements, we are obligated to include all such common stock sold in our next “resale” registration statement with the SEC. Nevertheless, it is possible that the SEC may not permit us to register all of such shares of common stock for resale. In certain circumstances, the SEC may take the view that the private placements require us to register the resale of the securities as a primary offering. Investors should be aware of the existence of risks that interpretive positions taken with respect to Rule 415, or similar rules or regulations including those that may be adopted subsequent to the date of this report, that could impede the manner in which the common stock may be registered or our ability to register the common stock for resale at all or the trading in our securities. If we are unable to register some or all of the common stock, or if shares previously registered are not deemed to be freely tradable, such shares would only be able to be sold pursuant to an exemption from registration under the Securities Act, such as Rule 144.

We have not paid dividends in the past and do not expect to pay dividends in the foreseeable future. Any return on investment may be limited to the value of our common stock.

We have never paid cash dividends on our common stock and do not anticipate doing so in the foreseeable future. The payment of dividends on our common stock will depend on earnings, financial condition and other business and economic factors affecting us at such time as our board of directors may consider relevant. If we do not pay dividends, our common stock may be less valuable because a return on your investment will only occur if our stock price appreciates.

There is currently a limited liquid trading market for our common stock and we cannot ensure that one will ever develop or be sustained.

To date there has been a nominal liquid trading market for our common stock. We cannot predict how liquid the market for our common stock might become. Our common stock is quoted for trading on the OTCQB Marketplace (“OTCQB”). As soon as is practicable, we anticipate applying for listing of our common stock on either the American Stock Exchange, The Nasdaq Capital Market or other national securities exchange, assuming that we can satisfy the initial listing standards for such exchange. We currently do not satisfy the initial listing standards, and cannot ensure that we will be able to satisfy such listing standards or that our common stock will be accepted for listing on any such exchange. Should we fail to satisfy the initial listing standards of such exchanges, or our common stock is otherwise rejected for listing and remains listed on the OTCQB or suspended from the OTCQB, the trading price of our common stock could suffer and the trading market for our common stock may be less liquid and our common stock price may be subject to increased volatility.

Furthermore, for companies whose securities are traded in the OTCQB, it is more difficult (1) to obtain accurate quotations, (2) to obtain coverage for significant news events because major wire services generally do not publish press releases about such companies, and (3) to obtain needed capital.

Our common stock may be deemed a "penny stock," which would make it more difficult for our investors to sell their shares.

Our common stock may be subject to the "penny stock" rules adopted under Section 15(g) of the Exchange Act. The penny stock rules generally apply to companies whose common stock is not listed on The Nasdaq Stock Market or other national securities exchange and trades at less than $4.00 per share, other than companies that have had average revenue of at least $6,000,000 for the last three years or that have tangible net worth of at least $5,000,000 ($2,000,000 if the company has been operating for three or more years). These rules require, among other things, that brokers who trade penny stock to persons other than "established customers" complete certain documentation, make suitability inquiries of investors and provide investors with certain information concerning trading in the security, including a risk disclosure document and quote information under certain circumstances. Many brokers have decided not to trade penny stocks because of the requirements of the penny stock rules and, as a result, the number of broker-dealers willing to act as market makers in such securities is limited. If we remain subject to the penny stock rules for any significant period, it could have an adverse effect on the market, if any, for our securities. If our securities are subject to the penny stock rules, investors will find it more difficult to dispose of our securities.

Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

If our stockholders sell substantial amounts of our common stock in the public market, including shares issued in our private placements upon the effectiveness of the registration statement we expect to file, or upon the expiration of any statutory holding period, under Rule 144, or issued upon the exercise of outstanding options or warrants, it could create a circumstance commonly referred to as an "overhang" and in anticipation of which the market price of our common stock could fall. The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate. The shares of common stock sold in our private placements will be freely tradable upon the earlier of: (i) effectiveness of a registration statement covering such shares, or (ii) the date on which such shares may be sold without registration pursuant to Rule 144 (or other applicable exemption) under the Securities Act.

Investor Relations Activities, Nominal “Float” and Supply and Demand Factors May Affect the Price of our Stock.

We expect to utilize various techniques such as non-deal road shows and investor relations campaigns in order to create investor awareness for the Company. These campaigns may include personal, video and telephone conferences with investors and prospective investors in which our business practices are described. We have and we will continue to provide compensation to investor relations firms and pay for newsletters, websites, mailings and email campaigns that are produced by third-parties based upon publicly-available information concerning the Company. We will not be responsible for the content of analyst reports and other writings and communications by investor relations firms not authored by the Company or from publicly available information. We do not intend to review or approve the content of such analysts’ reports or other materials based upon analysts’ own research or methods. Investor relations firms should generally disclose when they are compensated for their efforts, but whether such disclosure is made or complete is not under our control.

The SEC and the Financial Industry Regulatory Authority, Inc. (“FINRA”) enforce various statutes and regulations intended to prevent manipulative or deceptive devices in connection with the purchase or sale of any security and carefully scrutinize trading patterns and company news and other communications for false or misleading information, particularly in cases where the hallmarks of “pump and dump” activities may exist, such as rapid share price increases or decreases. The Company and its shareholders may be subjected to enhanced regulatory scrutiny due to the relatively small number of holders who own the registered shares of the Company’s common stock publicly available for resale, and the limited trading markets in which such shares may be offered or sold which have often been associated with improper activities concerning penny-stocks, such as the OTCQB Marketplace. Until such time as the common stock sold in the private placements are registered and until such time as the restricted shares of the Company are registered or available for resale under Rule 144, there will continue to be a large percentage of shares held by a relatively small number of investors, many of whom acquired such shares in privately negotiated purchase and sale transactions, that will constitute the entire available trading market. The Supreme Court has stated that manipulative action is a term of art connoting intentional or willful conduct designed to deceive or defraud investors by controlling or artificially affecting the price of securities. Often times, manipulation is associated by regulators with forces that upset the supply and demand factors that would normally determine trading prices. The supply of Company common stock for sale has been and may continue to be limited for an indeterminate amount of time, which could result in higher bids, asks or sales prices than would otherwise exist. Securities regulators have often cited thinly-traded markets, small numbers of holders, and awareness campaigns as components of their claims of price manipulation and other violations of law when combined with manipulative trading, such as wash sales, matched orders or other manipulative trading timed to coincide with false or touting press releases. There can be no assurance that the Company’s or third-parties’ activities, or the small number of potential sellers or small percentage of stock in the “float,” or determinations by purchasers or holders as to when or under what circumstances or at what prices they may be willing to buy or sell stock will not artificially impact (or would be claimed by regulators to have affected) the normal supply and demand factors that determine the price of the stock.

We may apply the proceeds of private placements to uses that ultimately do not improve our operating results or increase the value of your investment.

We have used and intend to use the net proceeds from private placements for general working capital purposes. Our management has and will have broad discretion in how we use these proceeds. These proceeds could be applied in ways that do not ultimately improve our operating results or otherwise increase the value of the investment in shares of our common stock sold.

Because our current directors and executive officers are among our largest stockholders, they can exert significant control over our business and affairs and have actual or potential interests that may depart from those of subscribers in our private placements.

Our current directors and executive officers own or control approximately 40% of our issued and outstanding shares of common stock. Additionally, the holdings of our directors and executive officers may increase in the future upon vesting or other maturation of exercise rights under any of the restricted stock grants, options or warrants they may hold or in the future be granted or if they otherwise acquire additional shares of our common stock. The interests of such persons may differ from the interests of our other stockholders. As a result, in addition to their board seats and offices, such persons may have significant influence over and may control corporate actions requiring stockholder approval, irrespective of how the Company's other stockholders may vote, including the following actions:

	●	to elect or defeat the election of our directors;
	●	to amend or prevent amendment of our Certificate of Incorporation or By-laws;

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	●	to effect or prevent a transaction, sale of assets or other corporate transaction; and
	●	to control the outcome of any other matter submitted to our stockholders for vote.

Such persons' stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of the Company, which in turn could reduce our stock price or prevent our stockholders from realizing a premium over our stock price.

Exercise of options and warrants may have a dilutive effect on our common stock.

If the price per share of our common stock at the time of exercise of any options, or any other convertible securities is in excess of the various exercise or conversion prices of such convertible securities, exercise or conversion of such convertible securities would have a dilutive effect on our common stock. As of June 30, 2014, we had outstanding options to acquire 5,500,000 shares of our common stock at an exercise price of $0.64 per share and warrants to acquire 4,250,000 shares of our common stock at exercise prices ranging from $0.10 to $1.00. Further, any additional financing that we secure may require the granting of rights, preferences or privileges senior to those of our common stock and which result in additional dilution of the existing ownership interests of our common stockholders

Our certificate of incorporation allows for our board to create new series of preferred stock without further approval by our stockholders, which could adversely affect the rights of the holders of our common stock.

Our board of directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our board of directors also has the authority to issue preferred stock without further stockholder approval. As a result, our board of directors could authorize the issuance of a series of preferred stock that would grant to holders a preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of common stock and the right to the redemption of the shares, together with a premium, prior to the redemption of our common stock. In addition, our board of directors could authorize the issuance of a series of preferred stock that has greater voting power than our common stock or that is convertible into our common stock, which could decrease the relative voting power of our common stock or result in dilution to our existing stockholders.

The selling stockholders will receive all of the proceeds from the sale of the shares offered by them under this prospectus. We will not receive any proceeds from the sale of the shares by the selling stockholders covered by this prospectus.

MARKET FOR OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS

Our common stock is quoted on the OTCQB Marketplace (“OTCQB”) or pink sheets maintained by the OTC Markets Group under the symbol “GDSI”. As of ______, 2014, there were ______ holders of record of our common stock. The transfer agent for our common stock is Issuer Direct Corporation.

The following table sets forth the high and low bid prices for our common stock for the periods indicated, as reported by the OTCQB. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.

Period	High		Low
January 1, 2011 through March 31, 2011	$	0.002	$	0.002
April 1, 2011 through June 30, 2011	$	0.002	$	0.002
July 1, 2011 through September 30, 2011	$	0.040	$	0.002
October 1, 2011 through December 31, 2011	$	0.023	$	0.008
January 1, 2012 through March 31, 2012	$	0.31	$	0.055
April 1, 2012 through June 30, 2012	$	0.12	$	0.04
July 1, 2012 through September 30, 2012	$	0.095	$	0.01
October 1, 2012 through December 31, 2012	$	0.17	$	0.02
January 1, 2013 through March 31, 2013	$	0.14	$	0.07
April 1, 2013 through June 30, 2013	$	1.39	$	0.09
July 1, 2013 through September 30, 2013	$	1.11	$	0.70
October 1, 2013 through December 31, 2013	$	0.87	$	0.26
January 1, 2014 through March 31, 2014	$	0.98	$	0.41
April 1, 2014 through June 30, 2014	$	0.80	$	0.27

The last reported sales price of our common stock on the OTCQB on ____, 2014 was $____ per share.

We have not declared nor paid any cash dividend on our common stock, and we currently intend to retain future earnings, if any, to finance the expansion of our business, and we do not expect to pay any cash dividends in the foreseeable future. The decision whether to pay cash dividends on our common stock will be made by our board of directors, in their discretion, and will depend on our financial condition, results of operations, capital requirements and other factors that our board of directors considers significant.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes appearing elsewhere in this prospectus. In addition to historical information, this discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including but not limited to those set forth under “Risk Factors”. The various sections of this discussion contain a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this Report as well as other matters over which we have no control. See “Forward-Looking Statements.” Our actual results may differ materially.

Results of Operations

The following table sets forth our results of operations for the years ended December 31, 2013 and 2012.

	For the Years Ended
	December 31,
	2013			2012
Revenue	$	-		$	-
Cost of revenue		-			300
Gross profit (loss)		-			(300	)
Operating expenses
Selling, general and administrative expenses		8,384,247			301,284
Other (income)/expense
Gain on extinguishment of debt		(31,712	)		-
Interest income		(59,701	)		-
Interest expense		733,198			10,000
Other income		-			(600	)
Total costs and expenses		9,026,032			310,684
Loss from continuing operations before provision for income taxes		(9,026,032	)		(310,984	)
Provision for income taxes		-			-
Loss from continuing operations		(9,026,032	)		(310,984	)
Loss from discontinued operations		(271,221	)		(208,922	)
Net loss		(9,297,253	)		(519,906	)
Loss attributable to the noncontrolling interest					(28,815	)
Net loss attributable to Global Digital Solutions, Inc.	$	(9,297,253	)	$	(491,091	)
Loss per common share attributable to Global Digital Solutions, Inc.
common stockholders - basic and diluted:
Loss from continuing operations	$	(0.12	)	$	(0.01	)
Loss from discontinued operations		-			-
Loss attributable to the noncontrolling interest		-			-
Net loss	$	(0.12	)	$	(0.01	)
Shares used in computing net loss per share:
Basic and diluted		74,484,164			45,302,055

We had focused our efforts on developing our business in the communications sector. We are now focusing our efforts on developing our business in the areas of small arms manufacturing and distribution, knowledge-based and culturally attuned social consulting and security-related solutions in unsettled areas. See “Other Acquisitions” in Item 1 above.

Year ended December 31, 2013 and 2012

We had no revenue from continuing operations in either 2013 or 2102. Cost of revenue from continuing operations was $0 in 2013 compared to $300 in 2012. Selling, general and administrative expenses (“S,G & A”) were $8,384,247 in 2013 compared to $301,284 in 2012, a $8,082,963 increase, or 2682.8%. S,G & A was comprised of:

	2013		2012		Increase/ (decrease)		% Change
Communications	$	5,016	$	1,226	$	3,790		309.1	%
Compensation and benefits		5,443,707		200,000		5,243,707		2,621.9	%
Debt issuance costs		1,385,000		-		1,385,000		100.0	%
Facility expense		13,275		-		13,275		100.0	%
Investment expense		514,808		-		514,808		100.0	%
Investor relations and marketing		380,944		81,125		299,819		369.6	%
Office supply and support		55,231		3,205		52,026		1,623.3	%
Professional and filing fees		554,408		11,075		543,333		4,905.9	%
Travel and entertainment		31,858		4,653		27,205		584.7	%
	$	8,384,247	$	301,284	$	8,082,963		2,682.8	%

Compensation and benefits increased by $5,243,707, or 2,621.9%. In 2013 we granted restricted stock awards to our senior officers and advisors and amortized the fair market value - $5,158,207 - over the vesting period. We had no such expense in 2012. Salaries and consulting fees to officers were $285,500 in 2013 compared to $200,000 in 2012.

Debt issuance costs increased by $1,385,000. We had no such expense in 2012. In connection with the issuance of notes payable and convertible notes payable, we issued warrants and restricted stock to the lender and certain consultants who facilitated the loan. The fair value of the warrants and restricted stock was determined using the Black-Scholes valuation model and the expense was amortized over the life of the debt.

Investment expense in 2013 includes (i) $400,000 of amortization of the fair market value of a warrant issued to an investment bank for services to be rendered, (ii) and placement fees of $43,200 settled in shares of our common stock. We had no such expense in 2012.

Investor relations and marketing expense increased by $299,819 or 369.6%, and were primarily for services rendered paid in shares of our common stock.

Professional and filing fees increased by $543,333, or 4,905.9% to $554,408 in 2013 compared to $11,075 in 2012. In the year ended December 31, 2012 they consisted primarily of legal fees, Edgar filing and OTC filing fees. In the year ended December 31, 2013, such fees consisted of:

	●	Accounting and & auditing fees of $99,802;
	●	Consulting fees of $92,369;
	●	Legal fees of $353,978;
	●	Public company/SEC related fees and expenses of $6,325; and
	●	Transfer agent fees of $1,934.

Gain on extinguishment of debt was $31,712 in 2013 and was in connection with the conversion of convertible notes payable into shares of our common stock.

Interest income was $59,701 in 2013 and is the interest on the bridge loans we made to Airtronic. We had no such interest income in 2012.

Interest expense was $733,198 in 2013 and is comprised as follows:

●

Interest on notes payable and convertible notes payable of $56,712; and

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●

The beneficial conversion feature of convertible notes payable of $676,486.

We had no such interest expense in 2012.

There is no income tax benefit for the losses for the years ended December 31, 2013 and 2012, since we determined that the realization of the net deferred tax asset is not more likely than not to be realized and we created a valuation allowance for the entire amount of such benefit.

Loss from discontinued operations in the years ended December 31, 2013 and 2012 was comprised as follows, and related to the operations of Bronco:

Net sales	$	-		$	144,337
Cost of goods sold		-			114,071
Gross profit		-			30,266
Selling, general and administrative expenses		25,477			236,564
Loss on sale of assets of discontinued operations		245,744			-
Interest expense		-			7,000
Other income		-			(4,376	)
Loss before provision for income taxes		(271,722	)		(208,922	)
Provision for income taxes		-			-
Loss from discontinued operations	$	(271,722	)	$	(208,922	)

Our results of operations for the years ended December 31, 2013 and 2012 did not contain any unusual gains or losses from transactions not in our ordinary course of business.

Liquidity and Capital Resources

As of December 31, 2013, we had cash and cash equivalents totaling $509,224 and working capital of $1,211,052. For the year ended December 31, 2013, we incurred a net loss of $9,297,253, and at December 31, 2013, we had an accumulated deficit of $16,858,375 and total stockholders’ equity of $1,211,250. There is no guarantee that we will ultimately be able to generate sufficient revenue or reduce our costs in the anticipated time frame to achieve and maintain profitability and have sustainable cash flows.

As of December 31, 2013, we did not have any material commitments for capital expenditures during the next twelve months, except for the potential acquisitions described in Part I, Item 1, “Other Acquisitions”. Any required expenditure will be completed through internally generated funding or from proceeds from the sale of common or preferred stock, or borrowings.

Cash used in operating activities

Net cash used in operating activities totaled $983,345 for the year ended December 31, 2013, compared to $215,627 for the year ended December 31, 2012.

In the year ended December 31, 2013, cash was used to fund a net loss of $9,297,253, reduced by non-cash stock-based compensation of $5,158,208, common stock issued for a debt guaranty of $660,000, common stock based payments for services of $1,080,230, amortization of debt discount and warrant expenses of $1,126,487, changes in operating assets and liabilities of $43,238 and cash provided by discontinued operations of $245,745.

In the year ended December 31, 2012, cash was used to fund a net loss of $519,906, reduced by non-cash common stock based payments for services of $66,500, amortization of debt discount of $10,000, changes in operating assets and liabilities totaling $114,485 and cash provided by discontinued operations of $113,294.

Cash used in investing activities

Net cash used in investing activities for the year ended December 31, 2013, totaled $1,446,874 and comprised $1,465,874 of advances to Airtronic under a bridge loan and $198 for deposits. We had no investing activities in the year ended December 31, 2012.

Cash from financing activities

Net cash provided by financing activities totaled $2,573,500 for the year ended December 31, 2013, compared to $60,100 for the year ended December 31, 2012. In the year ended December 31, 2013, we received proceeds from the sale of common stock of $1,966,100, $300,000 of proceeds from the exercise of warrants and $374,900 of proceeds from the issuance of short-term debt, reduced by repayments of short-term debt of $67,500. In the year ended December 31, 2012, we received proceeds of $150,000 from the sale of common stock, and $572,600 of proceeds from the issuance of short-term debt, reduced by repayments of short-term debt of $122,500.

As of December 31, 2013, we had cash and cash equivalents totaling $509,224, working capital of $1,211,052 and stockholders equity of $1,211,250. We do not have a line of credit facility and have relied on short-term borrowings and the sale of common stock to provide cash to finance our operations. We believe that we will need to raise additional capital in 2014 to sustain our operations. We plan to seek additional equity and debt financing to provide funding for operations.

In May 2014 Airtronic repaid our Bridge Loans to them. In June 2014 we acquired all of the membership interest in North American Custom Specialty Vehicles, LLC (“NACSV”) for $1,000,000 in cash at closing, $200,00 in shares of our common tock and additional consideration of up to $2.4 million payable either in cash or in shares of our common stock in the future as described in the Equity Purchase Agreement attached hereto as Exhibit 2.5. Established in 1997, NACSV initially provided off-the-shelf RV vehicles with Satellite phone installations for Insurance Companies’ use for post disaster administration for mobile claim centers. In 2002, in response to a FEMA request, NACSV began to develop the first Mobile Command Centers. As a result, NACSV has developed a strong reputation not only for quality units but also for quality service. NACSV’s CEO was a co-author of the National Incident Management System (NIMS) Standards for all Mobile Communications Vehicles purchased using Federal Grant monies. NIMS standards range from Type I through Type IV. The Company specializes in Type I & II, however provides additional Emergency Response Vehicles for HazMat, Chemical, Biological, Radiological, Nuclear and Enhanced Conventional Weapons as well as other vehicles designed for specific medical uses.

Our business plan is to acquire between 5 and six companies by the end of December 2015. We are in the process of identifying companies that provide services and equipment to law enforcement and federal agencies, engineering services and OEM design that will enable us to simulate and analyze prospective inventions and designs prior to making a commitment to license or acquire technology, interoperable communications businesses which combine radio, phones, computers, VoIP and video assets within one interface for local, state and federal agencies, and a satellite network communications company. We expect that to complete the acquisitions we will need to raise or borrow, through a combination of equity and or debt offerings approximately $70 million to complete these targeted acquisitions. There can be no assurance however, that management will be successful in identifying and closing these acquisitions, or that the Company will be successful in raising the capital it needs to complete the acquisitions.

Off-Balance Sheet Arrangements

Since our inception, except for standard operating leases, we have not engaged in any off-balance sheet arrangements, including the use of structured finance, special purpose entities or variable interest entities.

Unless the context provides otherwise, when we refer to the “Company,” “we,” “our,” or “us” in this Prospectus, we are referring to Global Digital Solutions, Inc., a New Jersey corporation and, where applicable, its wholly-owned subsidiaries.

Overview

We were incorporated in New Jersey as Creative Beauty Supply, Inc. (“Creative”) in August 1995. In March 2004, Creative acquired Global Digital Solutions, Inc., a Delaware corporation ("Global”). The merger was treated as a recapitalization of Global, and Creative changed its name to Global Digital Solutions, Inc., Global provided structured cabling design, installation and maintenance for leading information technology companies, federal, state and local government, major businesses, educational institutions, and telecommunication companies. Our mission was to target the United States government contract marketplace for audio and video services.. Due to capital constraints, our operations team focused mainly in Northern California. On May 1, 2012, we made the decision to wind down our operations in the telecommunications area and to refocus our efforts in the area of cyber arms technology and complementary security and technology solutions. We completed the wind down our telecommunications operations in June 2014. As discussed below, from August 2012 through November 2013 we were actively involved in managing Airtronic USA, Inc., and in June 2014 we acquired North American Custom Specialty Vehicles, LLC (“NACSV”).

Implications of Being an Emerging Growth Company

	·	Reduced disclosure about our executive compensation arrangements;
	·	No non-binding shareholder advisory votes on executive compensation or golden parachute arrangements;
	·	Exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting; and
	·	Reduced disclosure of financial information in this prospectus, including two years of audited financial information.

Our Strategy

We believe that technological convergence is the future in the cyber/smart arms arena and we’re eager to leverage our management’s history by helping companies that combine with us navigate the transition from analog to digital. Our management has a history of building fast-growing companies through acquisitions and internal growth. The GDSI management team previously executed a private-to-public company roll-up at Applied Digital Solutions, Inc. totaling some 42 acquisitions and growing annual revenue from $1 million to over $350 million over eight years.

Our growth plan is a unique combination of experience, technological innovation and global reach. To implement it we will:

Identify, target, and acquire profitable businesses with proven and established track records of serving Government, Law Enforcement Agencies, and related Corporate Customers.

Aggregate and integrate Product, Service and Technology providers serving this defined customer base.

Integrate the significant customer relationships developed from each business to cross sell products and services and expand the GDSI presence within the Industry.

Become a Facilitator in the “Analog to Digital” shift in the Defense and Intelligence Marketplace over the balance of this decade.

Cool Sound Industries

In August 2013 we announced that we had entered into a letter of intent to acquire Cool Sound Industries, Inc. with the intent of developing their technology for use in both commercial and defense related projects. After exhaustive studies both internally and by external consultants, we concluded, in the first quarter of 2014, that the technology would not accomplish what we had envisioned.

Proprietary Technology - Gatekeeper

While at Applied Digital Solutions, Inc., Richard J. Sullivan, our Chairman and CEO, oversaw the production and development of an operational combination of bio-sensor technology and Web-enabled wireless telecommunications linked to GPS location-tracking systems. GDSI will continue application of this technology and expand it to build more secure and safer weapons by applying modern Radio Frequency Identification (RFID) technology, wireless and satellite technology to improve the reliability of weapons and ammunition available in the battlefield. We call this Gatekeeper. GDSI’s Gatekeeper is a suite of technology-enhanced services that when fully developed will offer digital, web-based, small arms safety and security solutions for commercial and military-related markets. Gatekeeper’s encrypted digital locking device, secure online tracking feature and cloud-enabled databases will address growing needs of customers in a multibillion-dollar, global marketplace.

Gatekeeper will provide commercial and military customers with three essential safety and security benefits:

	●	Secure, real-time online tracking via encrypted, cloud-enabled databases
	●	Encrypted, password-protected, digital, trigger-locking capability
	●	Gatekeeper is a reverse-engineered aftermarket option intended to be purchased at gun and outfitter dealers worldwide.

Acquisition and Disposition of Bronco Communications, LLC

On January 1, 2012, we acquired a 51% stake in Bronco Communications, LLC, (“Bronco”) a Nevada-California regional telecommunications subcontractor located in Folsom, CA in consideration for 4,289,029 shares of our restricted common stock valued at $0.035 per share, or $150,116, the fair market value of our common stock on the date the agreement was made. One of our directors and executive officer owns a 10% membership interest in Bronco. On October 15, 2012, we entered into an Amendment to the Purchase Agreement, in which we agreed to relinquish control of Bronco to its minority shareholders effective as of January 1, 2013, in consideration for the assumption of Bronco’s liabilities. Thus, as of January 1, 2013, we no longer held any interest in Bronco. The foregoing description of the acquisition and disposition of Bronco does not purport to be complete and is qualified in its entirety by reference to the complete text of the (i) Purchase Agreement, which is filed as Exhibit 2.1 hereto, and (ii) the Amendment to Purchase Agreement, which is filed as Exhibit 2.2 hereto, each of which is incorporated herein by reference.

Formation of subsidiaries

In December 2012 we incorporated GDSI Florida LLC, and in January 2013 we incorporated Global Digital Solutions, LLC, both Florida limited liability companies. In November 2013, we incorporated GDSI Acquisition Corporation, a Delaware corporation. We pay administrative expense for our Florida office through GDSI Florida LLC; it has no other business operations. On June 16, 2014, we and GDSI Acquisition Corporation acquired NACSV. In July 2014, we announced the formation of GDSI International and are in the process of changing the name of Global Digital Solutions, LLC to GDSI International which, under the leadership of Stephen L. Norris, its newly appointed CEO, will spearhead our efforts overseas.

Acquisition of North American Custom Specialty Vehicles, LLC.

Contemporaneously, on October 22, 2012, we entered into a Debtor In Possession Note Purchase Agreement (“Bridge Loan”) with Airtronic. We agreed to lend Airtronic a maximum of $2,000,000, with an initial advance of $750,000 evidenced by an 8¼% Secured Promissory Note made by Airtronic in favor of the Company (the “Original Note”) and a Security Agreement pledging all of Airtronic’s assets. As of December 31, 2012 we had not advanced any funds to Airtronic under the Bridge Loan and Original Note. The Original Note bears interest at 8¼% per annum, and, unless an event of default shall have previously occurred and be continuing, the full amount of principal and accrued interest under the note shall be due and payable on the consummation of Airtronic’s plan of reorganization. In March 2013, the Company and Airtronic amended the Bridge Loan to provide for a maximum advance of up to $700,000 in accordance with draws submitted by Airtronic and approved by the Company in accordance with the budget set forth in the amendment. On June 26, 2013, we agreed to a second modification of the Bridge Loan agreement with Airtronic, and agreed to loan Airtronic up to an additional $550,000 under the Bridge Loan. On August 5, 2013, we entered into the Second Bridge Loan Modification and Ratification Agreement, received a new 8¼% secured promissory note in principal amount of $550,000 (the “Second Note”), and entered into a Security Agreement with the CEO of Airtronic, which granted a security interest in certain intellectual property for patent-pending applications and trademarks that were registered in the CEO’s name. On October 10, 2013, we entered into a third modification of the Bridge Loan Agreement, and agreed to loan Airtronic up to an additional $200,000. On October 10, 2013, we entered into the Third Bridge Loan Modification and Ratification Agreement, and received a new 8¼% secured promissory note for $200,000 (the “Third Note”).

On October 2, 2013, Airtronic’s amended plan of reorganization (the “Plan”) was confirmed by the Court, but the Plan was never substantially consummated and has now been terminated. Under the terms of the Plan, Airtronic needed to close the Merger with the Company within 60 days following the confirmation date, i.e., on or before December 2, 2013, to obtain the funds necessary to pay its creditors in accordance with the Plan. Nevertheless, Airtronic refused to close the Merger with the Company on or before December 2, 2013, and as a result the Plan terminated and the reorganized Airtronic re-vested in the bankruptcy estate of Airtronic as debtor in possession.

On March 31, 2014, Airtronic filed a First Amended Modified Plan of Reorganization (“First Modified Plan”) which was confirmed on April 28, 2014. On May 14, 2014 Airtronic repaid the Original Note, the Second Note and the Third Note together with all accrued interest thereon.

GDSI is still involved in a dispute with Airtronic over the recovery of its “Lenders Expenses” as set forth in the Bridge Loan. At the time the First Modified Plan was confirmed, Airtronic was required to set aside the sum of $451,332.74 in a separate Escrow account pending the hearing of GDSI’s motion for allowance and payment of these claims. GDSI filed an Amended Motion on June 2, 2014 consolidating its claims, in a revised amount of $567,806.27. Airtronic filed their objection on June 30, 2014, and GDSI filed its response thereto on July 22, 2014. A hearing is scheduled for July 29, 2014.

Convertible Note Payable

In December 2012, we entered into a Promissory Note Purchase Agreement, under which Gabriel a De Los Reyes (the “Lender”) agree to lend us $750,000 evidenced by a secured promissory note (the “Note”) and a Security Agreement. The Note bears interest at 8¼%, is secured by all of our assets and had a maturity date of May 1, 2013. In connection with the loan, we issued to the Lender a warrant to acquire 3,000,000 shares of our common stock at an exercise price of $0.15, exercisable for a period of three years (the “Warrant”).

On May 6, 2013, the Company and the Lender entered into an amendment (the “Amendment”) which:

(1)	Extended the Note’s maturity date to July 1, 2013;
(2)	Provided that on or before the maturity date, we may elect to convert the Note into 3,000,000 shares of our common stock at a conversion price of $0.25; and
(3)	Reduced the exercise price of the Warrant from $0.15 to $0.10.

On July 1, 2013, the Lender converted the Note into 3,000,000 shares of our restricted common stock. On December 18, 2013, the Lender partially exercised the Warrant and we issued 1,250,000 shares of our restricted common stock in consideration for $125,000.

Increase in Authorized Share Capital

On July 7, 2014, we filed a Certificate of Amendment to Certificate of Incorporation, a copy of which is attached hereto as Exhibit 3.5, to increase the number of our authorized shares of capital stock from 185,000,000 shares to 485,000,000 shares, divided into two classes: 450,000,000 shares of common stock, par value $0.001 per share (the “Common stock”), and 35,000,000 shares of preferred stock, par value $0.001 per share (the “Preferred Stock”).

Placement Agent Agreement

On October 16, 2013 we entered into a six-month exclusive placement agent agreement with Midtown Partners & Co LLC (“Midtown”), in connection with the private placement of the Company’s securities. On April 16, 2014, we agreed to extend the term through October 16, 2014. We agreed to pay Midtown the following fees for services to be rendered:

(a) A non-refundable retainer fee of twenty-five thousand dollars ($25,000.00) and a three year warrant to purchase one million (1,000,000) shares of the Company's restricted common stock at $1.00.

(b) a placement fee equal to eight percent (8%) of the gross purchase price paid for the Securities, payable in full, in cash, at a Closing for the sale of any of the Securities.

(c) at each Closing, the Company shall issue to Midtown, or its permitted assigns, warrants (the “PA Warrants”) to purchase that number of shares of common stock of the Company equal to eight percent (8%) of the sum of (i) the number of shares of common stock of the Company issued at each such Closing or in the event of a convertible or equity linked security, the number of shares of common stock issuable by the Company upon exercise or conversion of any and all convertible or equity linked securities issued at each such Closing (including, but not limited to, all convertible promissory notes, convertible preferred stock and all series of warrants). The PA Warrants shall be transferable by Midtown to its representatives and agents at Closing, and have the same terms and conditions of the warrants issued to the Investors.

The foregoing description of the placement agent agreement with Midtown does not purport to be complete and is qualified in its entirety by reference to the complete text of the placement agent agreement and the addendum, copies of which are filed as Exhibit 10.17 and 10.18 hereto and which are incorporated herein by reference.

Our executive officers are located at 777 South Flagler Drive, Suite 800 West, West Palm Beach, FL 33410 and our telephone number is 561-515-6163. Our executive office is a virtual office which means that our executives each work from their home offices, but utilize this facility for meetings and conferences, and telephone and message support. A copy of the Online Virtual Office Agreement is attached hereto as Exhibit 10.

Patents, Trademarks, and Licenses

We do not own any patents or trademarks and we have not entered into any license agreements.

Environmental Laws and Regulation

In the future we expect that we will be subject to various federal, state, local, provincial and foreign laws and regulations governing the protection of human health and the environment. In 2013, we did not make any significant capital expenditures for equipment required by environmental laws and regulations.

Available Information

The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), are filed with the U.S. Securities and Exchange Commission (the “SEC”). Such reports and other information filed by the Company with the SEC are available free of charge on the Company’s website at www.gdsi.co when such reports are available on the SEC website. The public may read and copy any materials filed by the Company with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Room 1580, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. The contents of these websites are not incorporated into this filing or any registration statement that incorporates this Form 10-K by reference. Further, the Company’s references to the URLs for these websites are intended to be inactive textual references only.

As of December 31, 2013, we employed four full-time employees. We also use professionals on an as-needed basis. We have no collective bargaining agreements and believe our relations with our employees are good.

Our Officers and Directors are as follows:

Name		Title
Richard J. Sullivan		Director, Chairman, President, Chief Executive Officer and Assistant Secretary
Stephen L. Norris		Director, Vice Chairman, CEO GDSI International
Arthur F. Noterman		Director
Stephanie S. Sullivan		Director
William J. Delgado		Director, Executive Vice President
David A. Loppert		Executive Vice President, Chief Financial Officer, Treasurer and Secretary
Gary A. Gray		Vice President, Chief Technology Officer

Richard J. Sullivan (age 74) was elected a director and appointed Chairman, CEO, President and assistant secretary on August 12, 2013. Prior thereto, from May 2012 through August 2013 Mr. Sullivan served as a consultant to the Company. Mr. Sullivan is responsible for the Company’s strategy, leadership and day-to-day operational activities. Mr. Sullivan founded and since 1993 has served as Chairman and CEO of Solutions, Inc. and World Capital Markets, Inc., a both private investment banking companies that specializes in advising corporations on acquiring other business entities and assisting owners and management who are considering selling all or part of their business. Mr. Sullivan founded and from 1993 to 2003 served as Chairman and Chief Executive Officer of Applied Digital Solutions, Inc., a Nasdaq listed technology company that spawned two other listed companies of which he was Chairman of the Board: Digital Angel Corporation (AMEX) and VeriChip Corporation (Nasdaq). Mr. Sullivan is an “Entrepreneur in Residence” with Accretive Exit Partners, LLC whose business is taking positions in mid-stage private companies, replacing financing partners who wish to divest themselves of their equity share of those businesses. He is also co-founder of Vox Equity Partners, LLC, a specialized private equity fund manager that has been purchasing bank private equity portfolio investments since 2006. Management believes that Mr. Sullivan’s many years as Chairman and CEO of public companies qualifies him for his positions with the Company.

Stephen L. Norris (age 64) was elected a director and CEO of GDSI International on July 2, 2014 and appointed Vice Chairman on July 7, 2014. Currently serving as Chairman of Stephen Norris Capital Partners, LLC, Mr. Norris has substantial expertise in structuring, negotiating and implementing leveraged buy-outs, cash-flow-based investments and financing strategies in the public and private capital markets. Mr. Norris is one of five co-founders of the Carlyle Group, a major merchant bank based in Washington, D.C. From 1988-1997, Mr. Norris served as Carlyle's President. He was a principal participant and key advisor in Carlyle's numerous investments in various public and private companies. While at Carlyle, Mr. Norris, along with other senior members of the Carlyle team, participated in the acquisition, disposition, strategic focusing and financing (in public and private markets) of numerous companies involving several billion dollars of equity capital. Carlyle invested in leveraged buyouts (LBOs), venture capital (particularly telecommunications and wireless companies in the pre-Internet days), and real estate. Today, Carlyle is one of the largest and most successful private equity firms in the world. Prior to co-founding Carlyle, Mr. Norris was a Corporate Vice President of Marriott Corporation in Washington, D.C. He was a principal strategist and advisor for Marriott's substantial public and private financings, limited partnerships, acquisitions and divestitures from 1981 to mid-1987. In 1992, Mr. Norris was appointed by President George Bush, and confirmed by the U.S. Senate, as one of the five board members of the approximately (at the time) $68 billion Federal Retirement Thrift Investment Board. During his tenure (1992-1995), Mr. Norris successfully advocated for the right of Federal employees to allocate a greater portion of their savings into public equities. Until late 1996, Mr. Norris served on the Advisory Committee of SEAG, Inc. which advises the Saudi Government on economic development and diversification within the Kingdom of Saudi Arabia. Mr. Norris was a Fellow at Yale Law School (1977) and received a B.S. and J.D. (1972, 1975) with honors from the University of Alabama, and an L.L.M. from New York University (1976). Management believes that Mr. Norris’ past experience qualifies him for his positions with the Company.

Arthur F. Noterman (age 71) was appointed to our Board on August 12, 2014. Mr. Noterman is a Chartered Life Underwriter. Mr. Noterman has owned an investment and insurance business for over 40 years located in Massachusetts and is a registered FINRA Broker affiliated with a Cincinnati, Ohio Broker/ Dealer. Mr. Noterman served on the Board of Directors of Applied Digital Solutions Inc. from 1997 to 2003, serving on the Audit and Compensation Committees. Mr. Noterman attended Northeastern University, Boston, MA from 1965-1975 and obtained the Chartered Life Underwriter Professional Designation in 1979 from The American College, Bryn Mawr, Pennsylvania. Management believes that Mr. Noterman’s many years as a director of public companies, his financial background, and his many years serving on audit and compensation committees uniquely qualifies him for his position as a director of the Company.

Stephanie C. Sullivan (age 25) was appointed to our Board on August 12, 2014. Ms. Sullivan is a business entrepreneur and has served, since May 2011, as financial manager at Alexis Miami, a privately held upscale women’s fashion designer and manufacturer. Ms. Sullivan graduated from the University of Miami in May 2011 with a Bachelor of Arts in Business Administration. Management believes that Ms. Sullivan’s marketing and financial background bring a new and young approach that the Board will benefit from.

William J. Delgado (age 54) has served as our President, Chief Executive Officer and Chief Financial Officer from August 2004 to August 2013. Effective August 12, 2013, Mr. Delgado assumed the position of Executive Vice President, and is responsible, along with Mr. Sullivan, for business development. Mr. Delgado has over 33 years of management experience including strategic planning, feasibility studies, economic analysis, design engineering, network planning, construction and maintenance. He began his career with Pacific Telephone in the Outside Plant Construction. He moved to the network engineering group and concluded his career at Pacific Bell as the Chief Budget Analyst for the Northern California region. Mr. Delgado founded All Star Telecom in late 1991, specializing in OSP construction and engineering and systems cabling. All Star Telecom was sold to International FiberCom in April of 1999. After leaving International FiberCom in 2002, Mr. Delgado became President/CEO of Pacific Comtel in San Diego, California. After the Company acquired Pacific Comtel in 2004, Mr. Delgado became Director, President, CEO and CFO of the Company. Management believes that Mr. Delgado’s many years of business experience uniquely qualifies him for his positions with the Company.

David A. Loppert (age 59) was appointed Executive Vice President, CFO, Treasurer and Secretary on August 12, 2013. From October 2012 through August 2013 Mr. Loppert served as a consultant to the Company. Mr. Loppert is responsible for the Company’s finance and administrative functions. He is a financial executive with over 30 years experience. He previously served as chief financial officer, secretary and treasurer of rVue Holdings, Inc. (OTCQB: RVUE), from May 2010 until June 2012. Prior thereto he served as Argo Digital Solutions, Inc.’s senior vice president from March 2009 through January 2010, and from March 2010 through May 2010. He was formerly a director, executive vice president and chief financial officer of Surgical Outcome Support, Inc. from August 2006 through March 2009. From October 2003 through July 2006 he was an independent financial consultant to public and private companies. From June 2001 until September 2003, he was a vice president and director of QSGI Inc. (OTCBB: QSGI). From February 1997 through December 2000, he was vice president, chief financial officer and assistant secretary of Applied Digital Solutions, Inc. (NASDAQ: DIGA) and also served as chief executive officer of SysComm International Corporation, (NASDAQ: SYCM) a network and systems integrator, and an affiliate of Applied Digital. Mr. Loppert began his financial career with Price Waterhouse, an international accounting firm, in 1978 in Johannesburg, South Africa, before moving to its Los Angeles Office in 1980 where over time he became a senior manager. Mr. Loppert earned bachelor's degrees in commerce in 1978 and in accounting in 1980, and a higher diploma in accounting in 1980, all from the University of the Witwatersrand, Johannesburg, South Africa, and was designated a Chartered Accountant (South Africa) in 1980.

Edwin J. Wang	Chairman, Advisory Board
Jennifer S. Carroll	Advisor
Matthew K. Kelley	Advisor
Richard J. Feldman	Advisor
Thomas W. Janes	Advisor

Name	Date of Grant	Number of Shares	Vest from	Vest To

Edwin J. Wang	4/17/13	1,250,000	4/30/13	3/31/14
	4/17/13	1,250,000	2/28/14	1/31/15
	2/4/14	1,500,000	2/4/14	1/31/15

Jennifer S. Carroll	4/17/13	1,250,000	4/30/13	3/31/14
	4/17/13	1,250,000	2/28/14	1/31/15

Mathew Kelley	4/17/13	1,250,000	4/30/13	3/31/14
	4/17/13	1,250,000	2/28/14	1/31/15

Richard J. Feldman	4/30/14	500,000	4/30/14	3/30/15
		500,000	4/30/15	3/30/16

Thomas W. Janes	5/7/14	500,000	5/7/14	4/30/14
		500,000	5/30/15	4/30/16

Name and Principal Position	Year	Salary ($)		Bonus ($)		Stock awards ($) (5)		All other compensation ($) (6)		Total ($)
(a)	(b)	(c)		(d)		(e)		(i)		(j)
Richard J. Sullivan (1),	2013	$	-	$	-	$	2,635,000	$	157,000	$	2,792,000
Chairman, CEO, President and Assistant Secretary	2012	$	-	$	-					$	-

David A. Loppert (2),	2013	$	-	$	-	$	1,282,500	$	78,500	$	1,361,000
Executive Vice President, CFO, Treasurer and Secretary	2012	$	-	$	-	$	-	$	-	$	-

William J. Delgado (3),	2013	$	50,000	$	-	$	227,500	$	-	$	277,500
Director, Former President, Chief Executive Officer & Chief Financial Officer, currently Executive Vice President	2012	$	199,990	$	-	$	-	$	-	$	199,990

Gary A. Gray (4)	2013	$	-	$	-	$	227,500	$	24,500	$	252,000
Vice President, CTO	2012	$	-	$	-					$	-

(1)	Mr. Sullivan was appointed Chairman, CEO, President and Assistant Secretary on August 12, 2013. Mr. Sullivan acted as a to the Company consultant from May 2012 to August 2013.
(2)	Mr. Loppert was appointed Executive Vice President, CFO, Treasurer and Secretary on August 12, 2013. Mr. Loppert acted as a consultant to the Company from October 2012 to August 2013.
(3)	Mr. Delgado was appointed Executive Vice President on August 12, 2013. Prior thereto he served as our CEO, President and CFO.
(4)	Mr. Gray was appointed Vice President, CTO on August 12, 2013. Mr. Gray acted as a consultant to the Company from May 2012 to August 2013.
(5)	The amounts in this column represent the fair value of the award as of the grant date as computed in accordance with FASB ASC Topic 718. These amounts represent restricted stock awards granted to the named executive officers, and do not reflect the actual amounts that may be realized by those officers.
(6)	Paid as consulting fees.

Name and Address of Beneficial Owner	Number of shares of Common Stock Beneficially Owned (1)		Percent of Class (%)
Officers and Directors:
Richard J. Sullivan (2)		27,240,000		27.0	%
Stephen L. Norris (3)		0		0.0	%
David A. Loppert		8,000,000		7.9	%
William J. Delgado (4)		3,483,996		5.3	%
Arthur F. Noterman		0		0.0	%
Stephanie C. Sullivan		500,000		*
Gary A. Gray		1,000,000		1.0	%
All Directors and Officers		41,130,029		40.3	%

5% or Greater Shareholders:
Gabriel De Los Reyes/ Maria Lourdes De Los Reyes (5)		7,250,000		7.2	%
17795 SW 158th Street
Miami, FL 33187

Name	Number of Shares or Units of Stock That Have Not Vested (#)(1)		Market Value of Shares of Stock That Have Not Vested ($)(2)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($)

Richard J. Sullivan		13,000,000	$	5,850,000		-	$

David A. Loppert		8,000,000	$	3,600,000		-	$

William J. Delgado		1,000,000	$	450,000		-	$

Gary A. Gray		1,000,000	$	450,000		-	$

*	Less than 1%.
(1) -	Applicable percentages are based on 100,669,278 shares outstanding as of ____, 2014. Beneficial ownership is determined under the rules of the SEC and generally includes voting or investment power with respect to securities. A person is deemed to be the beneficial owner of securities that can be acquired by such person within 60 days whether upon the exercise of options or otherwise. Shares of Common Stock subject to options and warrants currently exercisable, or exercisable within 60 days after the date of this report, are deemed outstanding for computing the percentage of the person holding such securities but are not deemed outstanding for computing the percentage of any other person. Unless otherwise indicated in the footnotes to this table, the Company believes that each of the shareholders named in the table has sole voting power.
(2) -	Includes (a) 3,000,000 shares owned by Bay Acquisition Corp., an entity controlled by Mr. Sullivan, and (b) 530,000 shares owned by Mr. Sullivan's minor son.
(3) -	Excludes 1, 200 restricted stock units to be granted to Mr. Norris in conjunction with his appointment to the Board and in his capacity as CEO of GDSI International which RSU’s will be convertible into up to 12 million shares of our common stock.
(4) -	Includes (a) 3,382,996 shares owned by Bronco Communications, LLC, an entity which Mr. Delgado controls and (b) 101,000 shares owned by Mr. Delgado's minor daughter.
(5) -	Includes 1,750,000 currently exercisable warrants.

	Ownership Before Offering						After Offering (1)
Selling Stockholder	Number of Shares of Common Stock Beneficially Owned		Number of Shares Offered				Number of Shares of Common Stock Beneficially Owned		Percentage of Common Stock Beneficially Owned
David Aurbach		100,000		100,000	(2	)		-		0.00	%
Eli Aramooni		270,000		20,000	(2	)		250,000		0.25	%
Jeff Brenner		50,000		15,000	(2	)		35,000		0.03	%
Nolan Carroll II		20,000		20,000	(2	)		-		0.00	%
Jay Cohen		40,000		40,000	(2	)		-		0.00	%
Brian A. Dekle		6,290,322		6,290,322	(17	)		-		0.00	%
John Ramsay		2,096,774		2,096,774	(18	)		-		0.00	%
Ken Dalsgaard		100,000		100,000	(2	)		-		0.00	%
Tara S. Delgado		1,536,000		636,000	(2)/(19)			900,000		0.89	%
Sean Downes		400,000		400,000	(2	)		-		0.00	%
Rodger Fauber		150,000		75,000	(2	)		75,000		0.07	%
Fine Spotted Partners, LLC		100,000		100,000	(3	)		-		0.00	%
E. Eldredge Floyd		1,046,000		231,000	(2	)		815,000		0.81	%
Lou Forte		50,000		50,000	(2	)		-		0.00	%
Philip Forte		40,000		40,000	(2	)		-		0.00	%
Kevin J. Heneghan		775,000		775,000	(2	)		-		0.00	%
Lookout Dove Partners, LLP		325,000		325,000	(4	)		-		0.00	%
Franklin L. Johnson Trustee, Franklin Johnson Revocable Trust		516,667		100,000	(2	)		416,667		0.41	%
JBA Enterprises, LLC		1,000,000		1,000,000	(5	)		-		0.00	%
Gregg Kaminsky		40,000		40,000	(2	)		-		0.00	%
Brain Kopelowitz		80,000		80,000	(2	)		-		0.00	%
Jeff Kelley		126,000		126,000	(6	)		-		0.00	%
Philip Land		312,000		187,000	(2	)		125,000		0.12	%
Carmine Latanza		60,000		60,000	(2	)		-		0.00	%
Michael G. Lee		20,000		20,000	(2	)		-		0.00	%
Logan's Run, Inc.		20,000		20,000	(7	)		-		0.00	%
Midtown Partners & Co, LLC		1,000,000		1,000,000	(8	)		-		0.00	%
Charles G. Masters, Jr.		900,000		900,000	(14	)		-		0.00	%
Tonya Phillips		720,000		720,000	(15			-		0.00	%
Robert M. Snibbe, Jr.		180,000		180,000	(16	)		-		0.00	%
Kimberly Minter		50,000		50,000	(2	)		-		0.00	%
Joan O'Leary		100,000		100,000	(2	)		-		0.00	%
Peter Rega		40,000		40,000	(2	)		-		0.00	%
Gabriel A. De Los Reyes/Maria Lourdes De Los Reyes		7,250,000		7,250,000	(9	)		-		0.00	%
Artemios Roussos		140,000		100,000	(2	)		40,000		0.04	%
Rok Global Solutions, LLC		3,020,000		3,020,000	(10	)		-		0.00	%
Michael Singer		20,000		20,000	(2	)		-		0.00	%
Evan Sullivan		530,000		530,000	(2	)		-		0.00	%
K. Brett Thackston		1,750,000		1,250,000	(11	)		500,000		0.50	%
Scott Weiselberg		1,000,000		1,000,000	(12	)		-		0.00	%
Family Trust of Eva A Ware, Eva A. Ware Trustee		670,000		170,000	(2	)		500,000		0.50	%
David E. Ware		10,000		10,000	(2	)		-		0.00	%
Aaron David Ware		20,000		20,000	(2	)		-		0.00	%
Jordan Tyler Ware		20,000		20,000	(2	)		-		0.00	%
Zoom Cash Advances		120,000		120,000	(13	)		-		0.00	%
Total		33,103,763		29,447,096				3,656,667

(1)	Represents the amount of shares that will be held by the selling stockholders after completion of this offering based on the assumptions that (a) all shares registered for sale by the registration statement of which this prospectus is part will be sold and (b) no other shares of our common stock are acquired or sold by the selling stockholders prior to completion of this offering. However, the selling stockholders may sell all, some or none of the shares offered pursuant to this prospectus and may sell other shares of our common stock that they may own pursuant to another registration statement under the Securities Act or sell some or all of their shares pursuant to an exemption from the registration provisions of the Securities Act, including under Rule 144. To our knowledge there are currently no agreements, arrangements or understanding with respect to the sale of any of the shares that may be held by the selling stockholders after completion of this offering or otherwise.
(2)	Represents shares issued in a private placement.
(3)	Represents shares issued in a private placement. Michael Monier may be deemed to have voting and dispositive power over the securities owned by this stockholder.
(4)	Represents shares issued in a private placement. Kevin J. Heneghan may be deemed to have voting and dispositive power over the securities owned by this stockholder.
(5)	Represents shares underlying a warrant that was exercised on August 19, 2013. Scott Weiselberg may be deemed to have voting and dispositive power over the securities owned by this stockholder.
(6)	Represents shares issued for investor relations services in connection with private placements.
(7)	Represents shares issued in a private placement. Andres Verbal may be deemed to have voting and dispositive power over the securities owned by this stockholder.
(8)	Represents shares underlying a warrant that may be exercised through October 15, 2016. John Clarke and Victor Greene may be deemed to have voting and dispositive power over the securities owned by this stockholder.

(9)	Represents (1) 3,000,000 shares issued on the conversion of debt, (ii) 1,250,000 shares issued upon the exercise of a warrant, (iii) 1,750,000 shares underlying a warrant that may be exercised through December 31, 2015, and (iv) 1,250,000 shares assigned to this stockholder by Richard J. Sullivan as an inducement to this stockholder to exercise the warrant granted to him.
(10)	Represents (i) 1,020,000 shares issued in a private placement, and (ii) 2,000,000 shares underlying a warrant that was exercised on August 19, 2013. Robert Moskowitz may be deemed to have voting and dispositive power over the securities owned by this stockholder.
(11)	Incudes (i) 500,000 shares underlying a warrant exercisable through June 30, 2018, and (ii) 750,000 shares issued for investor relations services in connection with private placements.
(12)	Represents shares underlying a warrant that may be exercised through May 6, 2018.
(13)	Represents shares issued in a private placement. Charles Bressman may be deemed to have voting and dispositive power over the securities owned by this stockholder.
(14)	Includes (i) 250,000 shares issued and (ii) 650,000 shares issuable in connection with acquisition services rendered in connection with our acquisition of NACSV.
(15)	Includes (i) 200,000 shares issued and (ii) 520,000 shares issuable in connection with acquisition services rendered in connection with our acquisition of NACSV.
(16)	Includes (i) 50,000 shares issued and (ii) 130,000 shares issuable in connection with acquisition services rendered in connection with our acquisition of NACSV.
(17)	Includes (i) 483,871 shares issued and (ii) 5,806,451 shares issuable to this shareholder for future consideration in connection with our purchase from this shareholder of his 75% interest in NACSV.
(18)	Includes (i) 161,290 shares issued and (ii) 1,935,484 shares issuable to this shareholder for future consideration in connection with our purchase from this shareholder of his 75% interest in NACSV.
(19)	Tara S. Delgado is the daughter of William J. Delgado, an officer and director of the Company. Ms. Delgado is not a minor child and William J. Delgado disclaims any beneficial ownership of these securities.

	●	100,669,278 shares of common stock;
	●	No shares of preferred stock;
	●	Warrants to purchase 4,2500,000 shares of common stock at an exercise price of $0.15 - $1.00 per share; and
	●	Options to acquire 5,500,000 shares of our common stock at an exercise price of $0.64 per share.

Plan	Number Authorized		Number Remaining

2014 Equity Incentive Plan		20,000,000		14,500,000

	●	ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
	●	block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
	●	purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
	●	conducting business in places where business practices and customs are unfamiliar and unknown;
	●	an exchange distribution in accordance with the rules of the applicable exchange;
	●	privately negotiated transactions;
	●	settlement of short sales entered into after the date of this prospectus;
	●	broker-dealers may agree with the selling stockholders to sell a specified number of the shares at a stipulated price per share;
	●	through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
	●	a combination of any of these methods of sale; or
	●	any other method permitted pursuant to applicable law.

	●	it intends to take possession of the registered securities or to facilitate the transfer of the certificates;
	●	the complete details of how the selling shareholders shares are and will be held, including location of the particular accounts;
	●	whether the member firm or any direct or indirect affiliates thereof have entered into, will facilitate or otherwise participate in any type of payment transaction with the selling shareholders, including details regarding these transactions; and
	●	in the event any of the securities offered by the selling shareholders are sold, transferred, assigned or hypothecated by any selling shareholder in a transaction that directly or indirectly involves a member firm of FINRA or any affiliates thereof, that prior to or at the time of said transaction the member firm will timely file for review with the Corporate Finance Department of FINRA all relevant documents with respect to these transactions.

	Page
For the Years Ended December 31, 2013 and 2012
Report of PMB Helin Donovan LLP, Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2013 and 2012	F-3
Consolidated Statements of Operations for the years ended December 31, 2013 and 2012	F-4
Consolidated Statements of Stockholders’ Equity (Deficit) for the years ended December 31, 2013 and 2012	F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2013 and 2012	F-6
Notes to Consolidated Financial Statements	F-7 - F-18

GLOBAL DIGITAL SOLUTIONS, INC.
CONSOLIDATED BALANCE SHEETS

	December 31,
	2013			2012
Assets
Current Assets
Cash and cash equivalents	$	509,224		$	385,141
Notes receivable		1,465,874			-
Prepaid expenses		122,056			-
Total current assets		2,097,154			385,141

Assets of discontinued operations		-			395,133
Deposits		198			-
Total assets	$	2,097,352		$	780,274

Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable	$	166,256		$	155
Accrued expenses		165,537			191,344
Convertible notes payable		529,309			504,309
Notes payable		25,000			117,600
Total current liabilities		886,102			813,408
Liabilities of discontinued operations		-			33,974
Total Liabilities		886,102			847,382

Commitments and Contingencies

Stockholders’ equity
Preferred stock, $0.001 par value, 10,000,000 shares authorized, none issued and outstanding		-			-
Common stock, $0.001 par value, 175,000,000 shares authorized, 93,024,117 and 52,263,451 shares issued and outstanding		93,025			52,264
Additional paid-in capital		17,976,600			7,326,336
Accumulated deficit		(16,858,375	)		(7,561,122	)
Total Global Digital Solutions, Inc. stockholders' equity (deficit)		1,211,250			(182,522	)
Noncontrolling interest		-			115,414
Total stockholders’ equity (deficit)		1,211,250			(67,108	)

Total liabilities and stockholders' equity	$	2,097,352		$	780,274

GLOBAL DIGITAL SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

	For the Years Ended
	December 31,
	2013			2012

Revenue	$	-		$	-

Cost of revenue		-			300

Gross profit (loss)		-			(300	)

Operating expenses
Selling, general and administrative expenses		8,384,247			301,284
Other (income)/expense
Gain on extinguishment of debt		(31,712	)		-
Interest income		(59,701	)		-
Interest expense		733,198			10,000
Other income		-			(600	)
Total costs and expenses		9,026,032			310,684

Loss from continuing operations before provision for income taxes		(9,026,032	)		(310,984	)

Provision for income taxes		-			-

Loss from continuing operations		(9,026,032	)		(310,984	)

Loss from discontinued operations		(271,221	)		(208,922	)

Net loss		(9,297,253	)		(519,906	)

Loss attributable to the noncontrolling interest		-			(28,815	)

Net loss attributable to Global Digital Solutions, Inc.	$	(9,297,253	)	$	(491,091	)

Loss per common share attributable to Global Digital Solutions, Inc. common stockholders - basic and diluted:
Loss from continuing operations	$	(0.12	)	$	(0.01	)
Loss from discontinued operations		-			-
Loss attributable to the noncontrolling interest		-			-
Net loss	$	(0.12	)	$	(0.01	)

Shares used in computing net loss per share:
Basic and diluted		74,484,164			45,302,055

GLOBAL DIGITAL SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2013

											Additional
	Preferred Stock						Common Stock				Paid-In			Accumulated			Noncontrolling
	Shares			Amount			Shares		Amount		Capital			Deficit			Interest			Total

Balance, December 31, 2011		1,000,000		$	1,000			33,111,054	$	33,111	$	5,045,429		$	(7,100,022	)	$	-		$	(2,020,482	)
Shares issued for Bronco acquisition		-			-			4,289,029		4,289		145,827			-			-			150,116
Assumption of Bronco's assets		-			-			-		-		1,009,657			(685,321	)		-			324,336
Assumption of Bronco's equity		-			-			-		-		(859,541	)		715,312			144,229			-
Private placements of common stock		-			-			1,666,667		1,667		148,333			-			-			150,000
Common stock issued for conversion of debt		-			-			11,546,701		11,547		1,410,781			-			-			1,422,328
Common stock issued for rent		-			-			150,000		150		13,350			-			-			13,500
Common stock issued for services		-			-			1,000,000		1,000		52,000			-			-			53,000
Warrants issued		-			-							360,000			-			-			360,000
Conversion of preferred stock to common stock		(1,000,000	)		(1,000	)		500,000		500		500			-			-			-
Net loss		-			-			-		-		-			(491,091	)		(28,815	)		(519,906	)
Balance, December 31, 2012		-			-			52,263,451		52,264		7,326,336			(7,561,122	)		115,414			(67,108	)
Loss on disposal of discontinued operations		-			-			-		-		-			-			(115,414	)		(115,414	)
Stock-based compensation expense		-			-			26,000,000		26,000		5,792,208			-			-			5,818,208
Shares or warrants issued for services		-			-			1,876,666		1,877		1,078,353			-			-			1,080,230
Sale of common stock		-			-			5,634,000		5,634		1,960,466			-			-			1,966,100
Issuance of warrant included in the convertible debt		-			-			-		-		776,487			-			-			776,487
Common stock issued upon conversion of debt		-			-			3,000,000		3,000		747,000			-			-			750,000
Common stock issued upon exercise of warrants		-			-			4,250,000		4,250		420,750			-			-			425,000
Stock subscription receivable		-			-			-		-		(125,000	)		-			-			(125,000	)
Net loss		-			-			-		-					(9,297,253	)		-			(9,297,253	)
Balance, December 31, 2013		-		$	-			93,024,117	$	93,025	$	17,976,600		$	(16,858,375	)	$	-		$	1,211,250

GLOBAL DIGITAL SOLUTIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Years Ended
	December 31,
	2013			2012
Operating Activities
Net loss	$	(9,297,253	)	$	(519,906	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock- based compensation expense		5,158,208
Debt guaranty settled by issuing common stock		660,000
Common stock and warrants issued in payment of services		1,080,230			66,500
Amortization of debt discount warrant expense		1,126,487			10,000
Changes in operating assets and liabilities:
Prepaid expenses		(122,056	)
Accounts payable		166,101			(26,858	)
Accrued expenses		(807	)		141,343
Cash provided by discontinued operations		245,745			113,294
Net cash used in operating activities		(983,345	)		(215,627	)

Investing Activities
Loans to Airtronic USA, Inc.		(1,465,874	)		-
Deposits		(198	)		-
Net cash used in investing activities		(1,466,072	)		-

Financing Activities
Proceeds from the sale of common stock		1,966,100			150,000
Proceeds from the exercise of warrants		300,000			-
Proceeds from short-term debt		374,900			572,600
Payments on short-term debt		(67,500	)		(122,500	)
Net cash provided by financing activities		2,573,500			600,100

Net increase in cash and cash equivalents		124,083			384,473
Cash and cash equivalents at beginning of year		385,141			668

Cash and cash equivalents at end of period	$	509,224		$	385,141
		-			-
Supplementary disclosure of cash flow information
Cash paid during the year for:
Interest	$	-		$	-
Taxes	$	-		$	-
Supplementary disclosure of non-cash investing and financing activities
Purchase of Bronco with common shares	$	-		$	150,116
Debt settled with shares of common stock	$	750,000		$	1,422,328

	2013		2012
Cash in bank	$	509,224	$	385,141
Cash and cash equivalents	$	509,224	$	385,141

Type		Collateral (If any)		Interest Rate				Monthly Payment			Maturity		2013				2012
Laurus Master Fund		None			5.00	%		$	-		May-13		$	529,309			$	504,309

Type	Collateral (if any)	Interest Rate			Monthly Payments		Matur-ity	2013		2012
Private	Assets		8.25	%	$	-	May-13	$	-	$	375,100
Private	None		10.00	%	$	-	May-13		20,000		50,000
Private	None		10.00	%	$	-	Dec -13		-		37,500
Private	None		5.00	%	$	-	Demand		5,000		5,000
									25,000		467,600
Less: Unamortized debt discount									-		(350,000	)
Notes payable								$	25,000	$	117,600

In Consideration For	Date of Issue	Number of Shares		Issue Price			Value
2012
Bronco Acquisition	01/01/12		4,289,029	$	0.035		$	150,116
Debt Conversion	04/28/12		3,300,000	$	0.002		$	6,600
Debt Conversion	05/21/12		6,043,801	$	0.052		$	314,278
Debt Conversion	09/10/12		2,202,900	$	0.500		$	1,101,450
Private Placement for Working Capital	01/16/12		416,667	$	0.060		$	25,000
Private Placement for Working Capital	05/18/12		250,000	$	0.100		$	25,000
Private Placement for Working Capital	05/21/12		250,000	$	0.100		$	25,000
Private Placement for Working Capital	10/15/12		750,000	$	0.100		$	50,000
Preferred Stock Conversion	10/15/12		500,000	$	0.002		$	1,000
Rent	12/31/12		150,000	$	0.090		$	13,500
Services	05/21/12		250,000	$	0.052		$	13,000
Services	10/15/12		500,000	$	0.050		$	25,000
Services	10/15/12		250,000	$	0.052		$	13,000

2013
Services	01/01/13		1,000,666	$	0.100		$	99,700
Stock-based compensation	01/10/13		11,000,000	$	0.120	*	$	11,000
Services	04/15/13		500,000	$	0.100		$	50,000
Private placement	04/15/13		250,000	$	0.100		$	25,000
Private placement	05/31/13		200,000	$	0.250		$	50,000
Private placement	06/06/13		2,150,000	$	0.250		$	537,500
Services	06/25/13		310,000	$	0.500		$	155,000
Stock based compensation	06/25/13		15,000,000	$	0.260	*	$	15,000
Private placement	06/25/13		408,000	$	0.450		$	183,600
Private placement	06/30/13		260,000	$	0.500		$	130,000
Note conversion	07/01/13		3,000,000	$	0.250		$	750,000
Warrant exercise	08/19/13		3,000,000	$	0.100		$	300,000
Private Placement	09/20/13		1,100,000	$	0.450		$	495,000
Private Placement	09/25/13		1,100,000	$	0.450		$	495,000
Services	09/25/13		66,000	$	0.450		$	29,700
Private Placement	11/11/13		100,000	$	0.050		$	50,000
Services	12/11/13		66,000	$	0.001		$	66
Warrant Exercise	12/18/13		1,250,000	$	0.010		$	125,000

Warrant	Fair Value		Dividend Yield			Volatility			Contractual Lives (Yrs.)		Risk-Free Rate
A-1	$	1,050,000		0.00	%		593.00	%		2.0		1.58	%
A-2	$	300,000		0.00	%		593.00	%		5.0		0.84	%
A-3	$	250,000		0.00	%		598.12	%		5.0		1.20	%
A-4	$	800,000		0.00	%		647.97	%		3.0		0.64	%

		Outstanding					Exercisable
	Range of Exercise Prices	Weighted Average Number Outstanding at 12/31/13	Outstanding Remaining Contractual Life (in yrs.)		Weighted Average Exercise Price		Number Exercisable at 12/31/13	Weighted Average Exercise Price
$	0.10	1,750,000		2.00	$	0.10	1,750,000	$	0.10
$	0.15	1,000,000		4.50	$	0.15	-		-
$	0.50	500,000		4.75	$	0.50	-		-
$	1.00	1,000,000		4.50	$	1.00	1,000,000	$	1.00
$	0.37	4,250,000		3.90	$	0.37	2,750,000	$	0.43

	2013			2012
Deferred tax assets:
Net operating loss	$	1,781,765		$	103,368
Stock compensation		2,075,853			21,112
Accrued expenses		65,941			96,377
Accrued interest receivable		(23,782	)		-
Gross deferred tax assets		3,899,777			220,857
Less: Valuation Allowance		(3,899,777	)		(220,857	)
Net deferred tax assets	$	-		$	-

	2013			2012
Federal statutory rate		34.0	%		34.0	%
State income taxes, net of federal benefit		5.8	%		5.8	%
Decrease in income taxes resulting from:
Change in valuation allowance		-39.8	%		-39.8	%
Effective tax rate		0.0	%		0.0	%

	2013			2012
Numerator:
Loss from continuing operations	$	(9,026,032	)	$	(310,984	)
Loss from discontinued operations		(271,221	)		(208,922	)
Loss attributable to the noncontrolling interest		-			(28,815	)
Net loss	$	(9,297,253	)	$	(519,906	)

Denominator:
Weighted-average shares outstanding		74,484,164			45,302,055
Effect of dilutive securities (1)		-			-
Weighted-average diluted shares		74,484,164			45,302,055

Loss per common share – basic and diluted:
Continuing operations	$	(0.12	)	$	(0.01	)
Discontinued operations		(0.00	)		(0.00	)
Attributable to the noncontrolling interest		(0.00	)		(0.00	)
Total – basic and diluted	$	(0.12	)	$	(0.01	)

	2013		2012
Warrants		4,250,000		3,000,000
Preferred stock		-		-
Total common stock equivalents		3,000,000		3,000,000

Cash and cash equivalents	$	5,325
Accounts receivable		53,342
Property and equipment		63,792
Total Assets	$	122,459
Accounts payable and accrued expenses	$	79,536
Notes payable		71,498
Total Liabilities	$	151,034
Goodwill	$	351,653
Net Assets Acquired	$	323,078

Fair value of common stock issued	$	150,116
Fair value of non-controlling interest	$	172,962
Fair value of net assets acquired	$	323,078

	Years Ended December 31,
	2013			2012
Net sales	$	-		$	144,337
Cost of goods sold		-			114,071
Gross profit		-			30,266
Selling, general and administrative expenses		25,477			236,564
Loss on sale of assets of discontinued operations		245,744			-
Interest expense		-			7,000
Other income		-			(4,376	)
Loss before provision for income taxes		(271,722	)		(208,922	)
Provision for income taxes		-			-
Loss from discontinued operations	$	(271,722	)	$	(208,922	)

	December 31, 2012
Assets
Cash and cash equivalents	$	96
Property and equipment, net		43,384
Goodwill		351,653
Assets of discontinued operations	$	395,133

Liabilities
Accounts payable and accrued expenses	$	33,974
Liabilities of discontinued operations	$	33,974

SEC registration fee		$
Legal fees and expenses		$
Accounting fees and expenses		$
Miscellaneous		$
TOTAL		$

	GLOBAL DIGITAL SOLUTIONS, INC. (Registrant)
	By:
		Name: Richard J. Sullivan
		Title: President and Chief Executive Officer
		(Principal Executive Officer)

Name	Title	Date

	Chief Executive Officer and Chairman of the Board (Principal Executive Officer)	____, 2014
Richard J. Sullivan


	Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	____, 2014
David A. Loppert


	Director	____, 2014
Stephen L. Norris

	Director	____, 2014
William J. Delgado

	Director	____, 2014
Arthur F. Noterman

	Director	____, 2014
Stephanie S. Sullivan