QPAGOS (OTCMKTS:QPAG) Looks Attractive At Its Current Price

In the US and Europe, the shift to mobile payment systems is moving fast. SAMSUNG ELECTRONIC KRW5000 (OTCMKTS:SSNLF), Apple Inc.(NASDAQ:AAPL) and Alphabet Inc (NASDAQ:GOOGL) are all working on their own incarnations of the technology. In developing economies, however, the trend is totally different. The vast majority of individuals in countries like Mexico, India and south east Asia don't have bank accounts, and this makes paying for things like utilities, cell phone bills etc. difficult. One company is working on a solution, and it's gaining traction fast.The company is QPAGOS (OTCMKTS:QPAG). With an initial focus on Mexico, but with the intention to spread its operations to other developing economies near term, QPAGOS is installing hundreds of remote terminals that allow individuals to pay for goods and services that would normally require a bank account, in cash.How?Think of it as a sort of ATM machine, but instead of pulling cash out, you put it in. Once in, QPAGOS sends the cash to the intended service provider, be it a phone company, a gas company, whatever. There are more than 150 companies signed up and payable through QPAGOS' terminals, and this number is growing fast.The company is young, but revenues during the first quarter amounted to $887K, for a gross profit of $13K. It's a growth phase, so Sell/Gen/Ad is high, recorded at $2.69 million for the quarter. Net loss came in at $2.67 million. As the company expands its rollout, and establishes its units across Mexico and beyond, however, it should be able to narrow this loss.Cash isn’t bad for a company of its size, recorded at $252K at March 31, 2016, up from just $1.5K at the end of January. Debt comes in just a little higher than cash, reported at $268K at March end, but its current, and there's no long term debt on the balance sheet.So what are the risks? Well, as ever, dilution is a risk. Yes, the company has a pretty healthy cash position, and its revenues are growing fast, but there's no way it can maintain its current rate of expansion without a capital raise. There are about 10.5 million dilutive shares exercisable as things stand (March 31) and this will probably increase going forward.

"To date, we have raised an aggregate of $6,190,187 from the sale of debt and equity securities. We estimate that we will need approximately $3,000,000 in order to implement our current business plan. If we do not generate such revenue from operations, we may be forced to limit our expansion. Furthermore, if we issue equity or debt securities to raise additional funds, our existing stockholders, may experience dilution"

This is pretty standard operating procedure in a growth tech, however, so while it’s a risk, the assumption is that the capital raised will be put to work in a way that claws back the per share value loss of the dilutive issue, and more.The bottom line is, cash payments are a necessity in certain parts of the world, but the companies that need paying are advancing as part of a developed-economy-driven technical revolution. There's an ever increasing unmet need to bridge the gap between developing and developed economy transactability, and QPAGOS is working on filling that gap. Countries like Mexico, in which the majority of individuals don’t have a bank account, need options, and this company looks set to provide what amounts to the best available option right now. Given current socio-economic trends, it doesn’t look like this necessity is going to negate anytime soon.We believe there's plenty of upside for QPAGOS on its current market capitalization, and that if it can avoid overly toxic terms on its future financing, it's an attractive allocation at its current price.We will be updating Insider Financial as soon as we know more. For the latest updates on QPAG, sign up for our free newsletter today!Disclosure: We have no position in QPAG and have not been compensated for this article.