TREES Corp (Colorado) 10-Q for FY2021 Q1

TREES Corp (Colorado) (CANN)

10-Q 2021-05-17 For: 2021-03-31

Added on April 06, 2026

About this 10-Q

TREES Corp (Colorado) filed this 10-Q on May 17, 2021, covering the quarter ended March 31, 2021 (FY2021 Q1).

Headline figures

Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.65M; down 1.0% from $1.66M a year earlier
Net loss: $2.36M; compared with a net loss of $2.01M a year earlier

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →


Colorado		90-1072649
(State of incorporation)		(IRS Employer Identification No.)

6565 East Evans Avenue Denver, CO 80224
(Address of principal executive offices) (Zip Code)

(303) 759-1300
(Registrant’s Telephone Number, Including Area Code)


Title of each class	Name of each exchange on which registered	Ticker symbol
N/A	N/A	N/A


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☑	Smaller reporting company	☑
		Emerging growth company	☐

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	3
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	22
Item 4.	Controls and Procedures	22

PART II. OTHER INFORMATION		23

Item 1.	Legal Proceedings	23
Item 1A.	Risk Factors	23
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3.	Defaults Upon Senior Securities	24
Item 4.	Mine Safety Disclosures	24
Item 5.	Other Information	24
Item 6.	Exhibits	25
	Signatures	26



	March 31, 2021
	(Unaudited)		December 31, 2020
Assets
Current assets
Cash and cash equivalents	$	840,092	$	750,218
Accounts receivable, net of allowance of $54,000 and $27,000 as of March 31, 2021 and December 31, 2020, respectively		299,884		327,790
Notes receivable, net of allowance of $41,608 and $125,000 as of March 31, 2021 and December 31, 2020, respectively		260,000		350,000
Inventories, net		419,825		371,799
Prepaid expenses and other current assets		376,910		744,396
Assets of discontinued operations		5,401		5,551
Total current assets		2,202,112		2,549,754

Right-of-use operating lease asset		1,826,523		1,836,455
Property and equipment, net		666,306		455,222
Investment, held for sale		—		208,761
Intangible assets, net		912,500		984,375
Goodwill		2,484,200		2,484,200
Total assets	$	8,091,641	$	8,518,767

Liabilities and Stockholders' Equity

Current liabilities
Accounts payable and accrued expenses	$	733,065	$	1,513,761
Interest payable		106,141		16,790
Customer deposits		75,906		517,931
Operating lease liability, current		373,581		370,800
Accrued stock payable		60,900		94,861
Warrant derivative liability		236,995		561,368
Liabilities of discontinued operations		53,128		54,641
Total current liabilities		1,639,716		3,130,152

Operating lease liability, non-current		1,497,316		1,499,280
Long-term notes payable		3,276,285		2,598,965
Related party long-term notes payable (net of discount)		293,750		289,579
Total liabilities		6,707,067		7,517,976
Commitments and contingencies (Note 9)		—		—

Stockholders’ equity
Preferred stock, no par value; 5,000,000 shares authorized; no shares issued and outstanding as of March 31, 2021 and December 31, 2020		—		—
Common stock, $0.001 par value; 200,000,000 and 100,000,000 shares authorized; 62,146,515 shares and 60,813,673 shares issued and outstanding on March 31, 2021 and December 31, 2020, respectively		62,144		60,813
Additional paid-in capital		78,632,934		75,891,414
Accumulated deficit		(77,310,504)		(74,951,436)
Total stockholders’ equity		1,384,574		1,000,791
Total liabilities & stockholders’ equity	$	8,091,641	$	8,518,767


	Three months ended March 31,
	2021		2020
Revenue
Service	$	423,749	$	308,386
Cultivation sales		649,333		—
Product sales		560,436		1,339,073
Interest		14,472		16,729
Total revenue		1,647,990		1,664,188

Costs and expenses
Cost of sales		1,396,097		1,423,980
Selling, general and administrative		750,577		1,039,934
Stock-based compensation expense		103,932		572,574
Professional fees		262,914		597,036
Depreciation and amortization		121,941		31,913
Total costs and expenses		2,635,461		3,665,437

Operating loss		(987,471)		(2,001,249)

Other expenses (income)
Amortization of debt discount and equity issuance costs		68,330		66,321
Interest expense		103,056		171,048
Loss on extinguishment of debt		—		1,137,428
Loss (gain) on derivative liability		1,198,744		(1,375,620)
Other expense (income), net		1,467		(139,105)
Total other expenses, net		1,371,597		(139,928)

Net loss from continuing operations before income taxes		(2,359,068)		(1,861,321)

Loss from discontinued operations		—		(152,858)
Loss from operations before income taxes		(2,359,068)		(2,014,179)

Provision for income taxes		—		—
Net loss	$	(2,359,068)	$	(2,014,179)



Per share data - basic and diluted
Net loss from continuing operations per share	$	(0.04)	$	(0.05)
Net loss from discontinued operations per share	$	—	$	—
Net loss attributable to common stockholders per share	$	(0.04)	$	(0.05)
Weighted average number of common shares outstanding		61,563,379		39,694,890


	Common Stock			Additional		Accumulated
	Shares	Amount		Paid-in Capital		Deficit		Total
January 1, 2021	60,813,673	$	60,813	$	75,891,414	$	(74,951,436)	$	1,000,791
Common stock issued to a consultant	112,359		112		99,888		—		100,000
Common stock issued upon exercise of stock options	213,860		214		134,788		—		135,002
Warrants issued with 10% Notes	—		—		429,300		—		429,300
Beneficial conversion feature	—		—		417,539		—		417,539
Cashless exercise of warrants	1,006,623		1,005		1,556,073		—		1,557,078
Stock options granted to employees and consultants	—		—		103,932		—		103,932
Net loss	—		—		—		(2,359,068)		(2,359,068)
March 31, 2021	62,146,515	$	62,144	$	78,632,934	$	(77,310,504)	$	1,384,574

	Common Stock			Additional		Accumulated
	Shares	Amount		Paid-in Capital		Deficit		Total
January 1, 2020	39,497,480	$	39,498	$	61,468,034	$	(67,271,744)	$	(5,764,212)
Warrants issued with the 15% Notes	—		—		835,499		—		835,499
Common stock issued upon exercise of warrants	200,000		200		172,041		—		172,241
Common stock issued to an employee for services	42,735		43		99,957		—		100,000
Common stock issued upon conversion of debt	541,666		541		249,459		—		250,000
Expense in relation to beneficial conversion feature	—		—		233,500		—		233,500
Stock options granted to employees and consultants	—		—		492,331		—		492,331
Net loss	—		—		—		(2,014,179)		(2,014,179)
March 31, 2020	40,281,881	$	40,282	$	63,550,821	$	(69,285,923)	$	(5,694,820)


Inventories	$	185,261
Fixed assets		89,490
Customer relationships		50,000
Tradename		1,000,000
Goodwill		2,484,200
	$	3,808,951


	Three months ended
	March 31,
	2021		2020
Total revenues	$	1,647,990	$	2,312,231
Net loss attributable to common stockholders	$	(2,359,068)	$	(1,814,318)
Net loss per common share:	$	(0.04)	$	(0.04)
Weighted average number of basic and diluted common shares outstanding		61,563,379		48,554,007


	Amount
Balance as of December 31, 2020	$	517,931
Additional deposits received		321,772
Less: Deposits recognized as revenue		(763,797)
Balance as of March 31, 2021	$	75,906


	March 31,		December 31,
	2021		2020
Work-in-progress and finished goods		419,825		371,799
Less: Inventory reserves		—		—
Total inventories	$	419,825	$	371,799

Year ending December 31,	Amount
2021 (remaining nine months)	$	278,100
2022		381,924
2023		387,653
2024		393,468
2025		399,370
Thereafter		4,048,779
Total		5,889,294
Less: Present value adjustment		(4,018,397)
Operating lease liability	$	1,870,897


			Number of
	Amount		Shares
Balance as of December 31, 2020	$	94,861		359,415
Stock issued		(33,961)		(259,415)
Balance as of March 31, 2021	$	60,900		100,000


Current stock price	$	0.53
Exercise price	$	0.56
Risk-free interest rate		0.38 %
Expected dividend yield		—
Expected term (in years)		5.0
Expected volatility		115%


Current stock price	$	1.12
Exercise price	$	0.56
Risk-free interest rate		0.48 %
Expected dividend yield		—
Expected term (in years)		5.0
Expected volatility		118%


	May 31,			December 31,			March 31,
	2019			2020			2021
Number of shares underlying the warrants		3,000,000			1,645,807			322,807
Fair market value of stock	$	0.95		$	0.48		$	0.92
Exercise price	$	1.30		$	0.40		$	0.40
Volatility		133	%		108	%		110	%
Risk-free interest rate		1.93	%		0.36	%		0.92	%
Warrant life (years)		5.00			3.41			3.16


				Weighted-
		Weighted-		Average
		Average		Remaining
	Number of	Exercise Price		Contractual	Aggregate
	Shares	per Share		Term (in years)	Intrinsic Value
Outstanding as of December 31, 2020	7,266,420	$	1.03	5.5	$	167,000
Granted	895,500		0.94
Exercised	(213,860)		0.63
Forfeited or expired	(31,000)		3.95
Outstanding as of March 31, 2021	7,917,060	$	1.02	5.3	$	1,614,000

Exercisable as of March 31, 2021	5,340,940	$	1.20	5.6	$	868,000


2021	Operations		Cultivation		Eliminations		Total
Revenues	$	1,296,229	$	649,333	$	(312,044)	$	1,633,518
Costs and expenses		(1,266,727)		(797,708)		279,866		(1,784,569)
Segment operating income (loss)	$	29,502	$	(148,375)	$	(32,178)		(151,051)
Corporate expenses								(2,208,017)
Net loss from continuing operations							$	(2,359,068)


	March 31,		December 31,
Total assets	2021		2020
Operations	$	462,526	$	750,156
Cultivation		6,452,010		6,208,223
Corporate		1,209,283		1,567,021
Total assets - segments		8,123,819		8,525,400
Intercompany eliminations		(32,178)		(12,183)
Total assets - consolidated	$	8,091,641	$	8,513,217


Current stock price	$	0.45 - 0.67
Exercise price	$	0.45
Risk-free interest rate		0.68 - 1.62 %
Expected dividend yield		—
Expected term (in years)		0.83 - 3.06
Expected volatility		112 - 119 %


	Three months ended March 31,						Percent
	2021		2020		Change		Change
Revenues	$	1,647,990	$	1,664,188	$	(16,198)	(1)	%
Costs and expenses		(2,635,461)		(3,665,437)		1,029,976	(28)	%
Other expense (income)		(1,371,597)		139,928		(1,511,525)	(1,080)	%
Net loss from continuing operations		(2,359,068)		(1,861,321)		(497,747)	27	%
Loss from discontinued operations		—		(152,858)		152,858	(100)	%
Net loss	$	(2,359,068)	$	(2,014,179)	$	(344,889)	17	%

Exhibits

10.1	Agreement and Plan of Reorganization and Liquidation dated April 18, 2021 (Colorado) (incorporated by reference to Exhibit 10.1 of our Form 8-K filed on April 21, 2021)
10.2	Agreement and Plan of Reorganization and Liquidation dated April 18, 2021 (Oregon) (incorporated by reference to Exhibit 10.2 of our Form 8-K filed on April 21, 2021)
31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

	GENERAL CANNABIS CORP

Date: May 17, 2021		/s/ Adam Hershey
		Adam Hershey, Interim Chief Executive Officer
		Principal Executive Officer

		/s/ Diane Jones
		Diane Jones, Chief Financial Officer
		Principal Financial and Accounting Officer