Helix TCS Inc (OTCMKTS:HLIX) Further Upside Likely After Correction

Helix TCS Inc (OTCMKTS: HLIX) has found the going tough after starting the year on a roll and rallying by more than 200%. The stock has come down tumbling in recent months on a major correction.

OTCMKTS HLIX Price Analysis

The plunge comes as a surprise as the Company has delivered impressive financial results supported by improved operational efficiency. A 199% revenue growth is one of the milestones that signal underlying growth.The Company has already touted plans to expand into California’s burgeoning cannabis market as it eyes triple-digit growth with strong margins in 2019. The acquisition of a California based security business marks the initial step as part of the Company’s expansion drive.Amidst the developments, Helix stock has continued to edge lower depicted by a 40% pullback from this year highs. Considering the emerging downtrend, the stock is staring at the $1.50 support level. HLIX Daily ChartA breach of the support level would leave the stock exposed to further drops as bears continue to take the fight to the bulls. Conversely, the stock stabilizing above the critical support level could go a long way in eliciting some buying pressure as a pullback play.

What Does Helix Do?

Helix bills itself as a technology and security solutions company focused on opportunities in the legal cannabis industry. The Company offers solutions to cannabis-focused businesses. It also offers physical security solutions, such as armed and unarmed guards.[embed]https://www.youtube.com/watch?v=xBK9-mrBnS0&t=1s[/embed]

Impressive Q1

Helix is fresh from reporting stellar financial results for Q1, expected to prop the Company’s prospects in the market. Total revenues in the quarter were up 199% to $3.37 million. Revenue growth was mostly driven by strength in the industry-leading seed-to-sale software subsidiary that generated revenues of $2.08 million, representing a 7% sequential increase. Gross profit surged to $1.45 million, supported by gross margins of 43%.In addition to delivering stellar financial results, Helix also achieved significant milestones in the quarter that positions it for accelerated growth throughout the year. For starters, the Company expanded its footprint into Europe. It also agreed to the acquisition of Americana International Exchange.

“Our business strategy is built such that our revenue will continue to grow organically alongside the expansion of the industry, which we look forward to maintaining as 2019 progresses. We are prepared to see the industry begin to realize its true potential within the US and abroad, and we are poised to capitalize on that potential across each of our product and service offerings," said CEO Zachary L. Venegas.

Seed-To-Sell Business Growth

The seed-to-sell business suit has also received a significant boost on being selected for a government contract by the State of Maine. Under the terms of the agreement, the Company’s wholly-owned subsidiary BioTrackTHC is to partner with the State of Maine to provide software for the tracking of medical and adult use marijuana products.

Expansion Drive

The six-year contract will result in the Company holding nine government cannabis-tracking contracts across eight U.S States. The government contract comes at a time when the Company has expanded its footprint into Colombia, Australia United Kingdom, and New Zealand.With the expansion, the Company has essentially diversified its revenues streams over the past three months. The international expansion drive should help Helix establish an early market share in legalized markets while reducing overall geopolitical risk.Helix is currently ranked as the largest provider of cannabis security services in Colorado. The acquisition of Tans International Security has essentially paved the way for the Company to expand its footprint into more cannabis markets all in the effort of providing security solutions.

“Our security vertical became the largest provider of security services to Colorado’s legal cannabis industry in only 3 years through a disciplined focus on customer needs and excellence in operations. We are confident that the acquisition of Tan’s International will support Helix TCS in our continued expansion into California," said Mr. Venegas.

Bottom Line

Recent price action activity does not paint an accurate picture of Helix tremendous potential as a leading provider of critical security infrastructure in the legal cannabis sector. Expansion into six states and six countries affirms the Company’s tremendous potential as the clientele base has expanded to over 2,000 customers.Revenue growth is another development that underscores why the stock looks undervalued after the recent pullback. The stock is likely to bounce back after the steep pullback once investors take note of the Company’s long-term prospects.We will be updating our subscribers as soon as we know more. For the latest updates on HLIX, sign up below!Disclosure: We have no position in HLIX and have not been compensated for this article.