Hello and thank you for joining the Helix TCS Earnings Call for Quarter Two, 2019. At this time all participants are in a listen-only mode. [Operator Instructions] It is now my pleasure to turn today’s conference over to CEO, Zachary Venegas. Please go ahead. .

Thank you and good afternoon. Thank you, everyone for joining us and taking the time to attend the earnings call.

I'm here with Scott Ogur, my partner as you all know for many years and CFO of the firm and I am going to turn it over to him for a moment to do the necessary disclaimers and I just want to remind everyone though that there won’t be live Q&A, we have some question lines that have already come in or will come in as we go along but there won’t be any live Q&A.

So with that I will turn it over to you Scott. .

Thanks, Zack. This presentation may contain Forward Looking Statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934.

Forward-looking statements describe future expectations, plans, results, or strategies and are generally preceded by words such as "may," "future,” "plan" or "planned,” "will" or "should "expected,” "anticipates,” "draft,” "eventually" or "projected.” You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risk that actual results may differ materially from those projected in the forward looking statements as a result of various factors, risks that we may not realize the anticipated benefits of acquisitions we may make or plan to make, and other risks identified in the Company’s 10-K for the fiscal year ended December 31, 2018 and other filings made by the Company with the Securities and Exchange Commission.

Zack, I’ll turn it back over to you now. .

So, if everyone is provided that. We can talk a little about the quarter and the first half of the year from a qualitative perspective, I’ll turn it over to Scott later on to talk a bit more about numbers, but this portion will be relatively brief as for the call, generally because, frankly I really think that the numbers speak for themselves.

Scott will get into that in more detail but we posted what I think is a very strong quarter and a very strong first half. In my mind, if anyone does their homework they will see there by far its the strongest of any company in our space and by any measure, whether that’s revenue growth, operational improvements.

So 142% revenue growth in the first half, and we improved cash flow from operations by 39%. Again as we talk about before, we’re not just focused on fundraising model for success. We’re very focused on operating business that generates cash and creates real value for investors.

So those numbers are critically important as the proof to all the investors in the market that we are in fact working our strategic plan on time, on budget, and very closely to the line to make sure we get where we said we would be every quarter. So that's really the -- that speaks for itself so I want to belabor that too much.

Everyone can read the extensive press release that just went out and I think that also contains a lot of the answers to questions if you might have about how we did.

So with that there’s a few things I do want to talk about in terms of qualitative success which is to say, all the operating improvements and financial improvements that we want to make over the quarter were made, evidenced again by our increasing cash flow from operations and that part is particularly important because that's going to give us the operating leverage that we need to get to where we need to be.

And that again is something that other competitors are not focused on, we happen to be, because we feel like it's critical for us to be able to generate cash at some point to be able to not always have to go to the market for cash from operations in order to gain market share or any other thing that you would try and do in the market.

There’s a lot of hype and publicity around this -- there is a big fixation on market share that I'm not exactly sure is really the be all end all, but again, what is really about is building a value-added company that has [indiscernible] session, operations and we are well on our way there.

So we also had a lot of successes over the quarter with traceability milestones, extensions in Delaware, Hawaii and New Hampshire contract and the main contract. There was some drama associated with that. If you like to look deeper you can go at the press releases surrounding it.

And so that's largely focused on our government operations program, which again very strong half, very strong quarter, we’re very pleased with that.

On the software side, the real number to look at it that we added nearly 500 new licenses, that’s critical again, not just from market share but because we focus on software as a service being a value-added service that we charge for. We are not trying to just give it away for market share that’s meaningful to the firm.

Again many competitors just give their software away or virtually give it away, so added clients doesn't necessarily mean anything to the, bottom-line but in our case it does. So that was very important. We finished our acquisition of Tan’s security -- Tan's International.

This is the security firm in California, which again allows us to expand our California operations more rapidly. And again, from another press release, we expanded our international footprint via the United Kingdom, this is another very interesting opportunity for us in Europe.

And then the last thing I want to talk about qualitatively was again, there's been third-party research to show that we are the largest by market share in the software space for compliance and we managed to maintain an in actuality increase that lead a bit once the methodology is more closely drilled into.

And again, that's important, given the fact that competition in that space has greatly increased. On security operations, in logistics and transport, there’s less to report except -- only in so far as we've been in such a dominant position for so long that's changed.

We will be looking at our competitive peer group across the landscape that are pure play, logistics, security operators most had no meaningful revenue growth at all, we had strong growth at the same time, a few more of them went out of business so there is not much to even really talk about there.

And so with that, I'll turn it over to Scott for the quantitative highlights. .

Thank you, Zach. In the second quarter of 2019, we generated revenues of $3.9 million as compared with $1.87 million in the prior year for an increase of 108%. Gross profit for the quarter was $1.9 million versus 314,000 in 2018's second quarter. Gross margin, this most recent quarter was 49% as compared with 17% in the prior year.

We reported a loss from operations of $2.47 million compared with $2.56 million in the prior year second quarter. Cash flows from operations were negative 714,000 in Q2, 2019 versus negative 1.175 million in Q1 of 2019 for -- in excess of $450,000 improvement quarter-on-quarter.

Looking at the first half of the year, we generated revenues of $7.27 million as compared with $3 million in the first half of 2018, an increase of 142%. Gross margin for the first half of the year was $3.35 million or 46% gross margin percentage.

On the segment basis, the two primary business segments are software and security guarding and monitoring. In the first quarter of 2019, software or the BioTrack business generated revenues of $2.3 million as compared with $2.14 million in the first quarter of 2019 or 11% sequential growth.

We didn't own the business for two-thirds of the second quarter of 2018, but looking back in that period BioTrack generated $1.65 million of revenues in Q2 of 2018, so year-over-year growth was 44%.

Looking at the gross profit line for software, it was $1.52 million in Q2 2019, up 16% from the $1.31 million gross profit in Q1 and a 46% from the $1.04 million BioTrack generated in Q2 2018.The BioTrack business line continues to see strong growth as Zach mentioned, as we added hundreds of new license customers across the U.S.

and into the United Kingdom. The security guarding and monitoring business had revenues of $1.52 million in the second quarter of 2019, up 17% from $1.3 million in Q2 2018. Gross margin in Q2 for this business unit was 25%. Sequentially, Q2 2019 revenues grew 23% from Q1 2019.

In the first half of 2019, security guarding and monitoring generated revenues of $2.75 million with a gross margin of 19%, up from $2.43 million of revenues and a 9% gross margin in the first half of 2018.

Within the first three months of operating in California, through the new Tan's International Security subsidiary, we added a new client and have a solid pipeline of prospects for the rest of the year. Zach, I’ll kick it back to you to address the questions that have come in through the IR email address. .

Thank you, Scott. So a few things we want to address right upfront from the questions. Here’s an interesting one that came in and in regard to Hemp. Obviously, there’s been a lot of discussions around Hemp, and so every once in a while we’re going to do [indiscernible].

We can really say in regard to that is that we’re obviously addressing the opportunities that are coming to us from that sector and there’ll be more announcements to come in that regard but we're clearly not ignoring it, not that -- I am sure no one thought we were, but just in case we are certainly not.

So I'm going down, some of the questions we can’t address because they are about forward-looking statements. Forward looking, forward looking, so I think that’s the only one we’re going to address now. So I think that will end the live portion of the Investor call. .

This does conclude today's program. Thank you for your participation. You may now disconnect. .

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End of Q&A:.