Metrospaces Inc (OTCMKTS:MSPC) Is Moving In The Right Direction

The share price of Metrospaces Inc (OTCMKTS:MSPC) has been on the rise over the last two weeks; rising by more than 1,000%. During this period, its traded volumes have also risen to more than 1.5 billion some days as shown in the chart below: YTD chart for MSPCWith such incredible stock gains, we researched the company believing that our readers would be interested in whether the upward trend will continue or not.BusinessMetrospaces Inc., founded in 2007, is headquartered in Miami, Florida. The company engages itself in real estate new investment as well as investment in operating companies with a strong real estate component. Currently, Metrospaces owns 51% stake in Etelix, a Miami-based data hosting service provider. Additionally, the company is sourcing new construction projects in luxury residential and hotels in the US.On the top of it, the company also holds an interest in projects in Buenos Aires, Argentina, and Caracas, Venezuela. Also, it is considering projects in Peru, and Colombia. The following is the list of companies controlled in Latino America. Bodega IKAL, S.A. and Bodega Silva Valent S.A., which are winery businesses and are planning to develop a hotel and timeshare villas; Inversora Caribe Mar, C.A. which also projects to build hotels in Latin America. Furthermore, MSPC also holds 26% interest in GBS Real Estate Fund I, LLC, which is constructing a condominium building in Venezuela, called "Los Naranjos 320 Project."Recent DevelopmentsWhile the stock commenced ticking higher in February 2018, the stockholders should have predicted the price movement after reading the letter issued by the company in December 2017. We had a close look at it and found out that MSPC had a turnaround plan since the beginning of 2017, under which the management was updating its financial filings. While the company did not fully comply with this goal at the time the letter was issued, the projects of the company were already providing continuous revenue and EBITDA growth. Etelix was said to finish 2017 with $8 million in revenue, beating the company's long-held expectation of $7.5 million. In addition, the company revealed that it is almost ready to acquire 2 sites in the city of Brooklyn for new construction residential condo developments. The most interesting is that both projects have operating margins of over 40%. Finally, the Ikal Lodge and Wine business continued to be a stable source of cash flow and were expected to provide $330,000 for 2017 and $110,000 in EBITDA. The market could confirm the financial figures brought by majority-owned sub Etelix in January 2017, when it was noted that it grew revenue at almost 100% year-over-year from 2016. This is what the market should keep in mind:"Etelix had a very strong year, outperforming our most aggressive year-estimate of $7.5M by a margin of almost 3%. Etelix Management out proved itself by setting a very high bar for year-end increase in revenue of almost 100% and still outperforming. 2016 Year End revenue was $4,067,807 so actual increased in revenue from 2016 to 2017 was a very strong 89%." SourceThere was more information about Etelix in 2018. On January 26, 2018, the company released the filling of Etelix acquisition 8K and adjusted-end revenue of $7,802,340. The management and shareholders should be quite satisfied with the new company acquired. The most interesting, in our view, is that year-end revenue growth was approximately 95%; 65% higher than estimated at the beginning of 2017. In addition, it is remarkable that the growth is expected to continue:

"Certainly, Etelix is an acquisition that has created a lot of shareholder value; however, we estimate that we are only at the very beginning stages of its growth.” Source

On the top of it, the first quarter of 2018 was also remarkable for Etelix. In January 2018, the company reported revenue of $642,548, which represents 10% growth over the same month in 2017. Furthermore, thanks to the opening of offices in Spain, the company expects to receive more growth in 2018:

"We are projecting to reach a level of $1,000,000 in monthly revenue by the second half of this year, allowing us to reach a base-case projected $10.2M-12M in revenue for 2018. This would represent a 30-40% YOY revenue growth." Source

For those who don't know, Etelix.com is a Miami-based, FCC-licensed voice, SMS and data/hosting operator. It was founded in 2007 and has always been profitable. In our opinion, it is a very good reason to follow MSPC. If the good margins continue and this company keeps growing, we should see MSPC ticking higher on the stock chart.Shareholders need to follow the lawsuit from CF3 Enterprises, LLCWhile, overall, the company seems to make brilliant business decisions, the shareholders should also pay attention to the lawsuit started by CF3 Enterprises, LLC. The company is claiming that MSPC should pay for promissory notes and breach of contracts, which amounts to $1,037,238.88.In December, the market received a Settlement Agreement, under which the company would issue shares to pay CF3 Enterprises. However, on February 27, 2018, the company noted that it had hired a specialty top NYC-Based Legal Firm for unwinding the settlement since the shares had not been issued. The market did not react to the announcement, as everybody is waiting for the end of the story. From here, anything can happen, thus be very alert.The cancellation of common stock and addition of a new director - Both great news The most interesting catalyst for this name is the recent cancellation of 1.6 billion common shares held by management. As a result, the total share count is now equal to 3,789,941,887 shares. The announcement was made on March 5, 2018, which created a large spike in both the price and the trading volume.Additionally, on the same date, the company decided to promote Mr. Oscar Brito to the position of President and interim CFO. We appreciate that he brings a lot of expertise in M&A and investment activity in operating companies with real estate or infrastructure components, such as Etelix. In our view, this new addition positions the company very well to enhance shareholder value in the future via new transactions.The company did not wait to reveal the type of new companies to be acquired:

"This company will seek to make acquisitions and investments in legal medical cannabis-related companies and ventures, in particular on the real estate part of the industry." Source

ConclusionCurrently trading with a market cap of $5.9 million, MSPC is an interesting story among small caps. With the asset/liability ratio under one, in our opinion, the market is waiting for a new recapitalization transaction. Capital raising would help finance new acquisitions in the legal medical cannabis-related sector. With the amount of debt reduced recently, shareholders would accept the issue of new shares if the transaction can help the company sustain growth.To sum up, this is a good name to follow closely.Disclosure: We have no position in MSPC and have not been compensated for this article.Image courtesy of Chris Potter via Flickr.