Helix Technologies Inc. (fka HLIX)

[GreenGenie]

Semi-Annual Results



Helix released its second quarter and semi-annual results as shown in the following link:

http://www.otcmarkets.com/stock/HLIX/filings

My interpretation follows:

This is an aggressive expansion, and it's pretty for a startup under these circumstances.


First off, Helix is growing its sales each quarter significantly. You have good operating leverage potential here, but it's not real clear to me how much so. They have this huge variable cost in payroll, which is only going to increase with sales. But I'm confident it has to be a top heavy number, and it's the only number that's keeping them away from profitability. Plus they have "professional fees" in there which, backing those out, gets them real close to profitability. I'm guessing those are closing fees for the aquisition, lawyers fees, and/or consulting fees and things of that sort to get them to the next level. So they have to ramp up those sales, and my target of $5M should get them on to the path of profitability.

What the newly purchased Cannabase will do to that could be huge. Cannabase was purchased for approximately $400,000 (rounding up and including the "$50,000 investment from the quarter prior) in cash plus 2,320,000 shares (valued at $0.20 per share). That is a total valuation of about $800,000. Total share count remained the same. No dilution took place, so I'm liking the share issuance better as more things come into focus. That puts Jennifer and her husband (owners and founders of Cannabase) in a good alignment of interests. It also means this valuation bodes well for what they can contribute to sales when the fog clears.

Helix is definitely the bigger company. They probably are not bringing in more in sales than Helix, but they will be a significant addition to our sales. Cannabase derives its income from data aggregation, and this is a fixed cost. I see no supporting evidence that they would have to increase personnel in relation to its scalability like that of Helix. This purchase could definitely end our fiscal year with over $2 million in sales.

What this does for Helix is gives Helix a huge customer base as Cannabase controls about 71% of the Colorado market. It probably comes with some cannibalization to some extent, but surely has to be a huge net positive. This appears to be a monopolistic base of sorts. This might be a moat to my understanding, a huge barrier to entry. Cannabase is incorporated as an LLC under the title "Revolutionary Software LLC." It appears they own the code, platform, and programmed Cannabase from ground up. Helix can expand Cannabase's role and vice versa.

The two new partners, BioTrack and MJ, are two force multipliers. These are like hammers. They are industry leaders and have both been vetted by private capital to the tune of over $5M each, which is a great litmust test to their validity. They are leverage. They are going to contribute to a revenue stream of Cannabase, but they are not a cost. And that's the beauty of it. How much so is a mystery to me. However, it improves margins, and thus Helix's operating leverage. And that is key to profitability, and that is why this is beautiful. It's also a stepping stone for both Helix and Cannabase into the other states where Biotrack and MJ already have a strong foothold. All 4 need each other, and all 4 are more powerful together than alone. The group is stronger than the individual.

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We actually have a book value way down there at 1 cent per share. But to have positive shareholder equity is a good thing. For a penny stock especially. It could be very volatile at this stage because any capital infusion can dramatically change that number at its current size. Our working capital is in good shape. Zac, our CEO, ended the quarter with $150,000 in working capital, but at a high ratio after making that acquisition. To me, that's impressive and the company is in a strong position here.

They have a cash burn about the same as it was before, backing out the acquisition. There should be no fear here for a strong Series B candidate coming on board. Zach owns 78.1% of the company which is a signal to me that he may intend a secondary offering down the road with the ability to relinquish lots of control without losing control. He is already proving that his investments are accretive and not dilutive, and add great strategic value.

They have this APIC entry of almost $400,000 on the balance sheet which is additional paid in capital. That's what investors have put in for a share price over its par value to my understanding, and that to me is confidence in the prospects of this stock. That convertible note also expires at the end of 2017, as mentioned before, and that's a great time table. I can imagine seeing $5M in sales here easily by that time.

Overall, this is really good stuff. It needs a strong captain at the helm to pull this off, but I think we have that here. It's not going to coast on cruise control.

Cannabase may also prove to bring in some more force multipliers in the near future. That would just be icing on the cake. We shall see. Much more clarity won't be available until April of 2017, but the 3rd quarter will be more revealing and interesting. Right now, I'm sure they are busy with integration. For Helix, Cannabase doesn't look difficult to absorb into its fold. The work of integration seems heavily focused on a lot of programming and data entry at this point.

I would love any participants to bring their eyes and experience to the table, especially anyone with a strong background in finance.

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Prior Groundwork Laid for Stock Issuance:


Financial Statements for Helix TCS (Formerly Jubilee4 Gold) for 9 months ended September 30, 2015:

https://www.otciq.com/otciq/ajax/showFinancialReportById.pdf?id=148321

-- Clean shell with no liabilities.
-- A month later, In October of 2015, Helix TCS was issued restricted shares for majority control.

Letter from Michael Littman to Shareholders, one of only two large shareholders of restricted shares:

http://www.otcmarkets.com/financialReportViewer?symbol=HLIX&id=148571

-- 327 shareholders of record. -- Updated to 75 shareholders in 5-3-16 filing.

Officer/Director Disclosure form for Zachary Venegas:

http://www.otcmarkets.com/financialReportViewer?symbol=HLIX&id=148467

-- Zachary Venegas (CEO of Helix TCS) owns 88% of this holding shell -- Updated to 78.1% in 8-12-16 Filing

Investor Conference Call for early Investors (Made in October 2015):

-- At 35 minutes, Helix states it intends to go public after growing their base.
-- At 40 minutes, the interviewer suggests that the company plans to go public as an "exit strategy" for early investors.