Executive Summary

Q1 2019 revenue increased 47% year over year to $1.39M, marking the fourth straight quarter above $1M; net loss was $4.51M as higher SG&A and debt-discount amortization offset growth .
Operations (Next Big Crop) drove growth, up 155% YoY to $0.78M with a positive segment contribution, while Consumer Goods declined 65% and widened losses .
Management highlighted Colorado’s “PubCo Bill” as a potential catalyst to acquire/own licenses and flagged an ERP rollout to support scaling; no quantitative guidance was issued .
No S&P Global consensus figures were available at time of writing; estimate comparisons are omitted (coverage appears limited).

What Went Well and What Went Wrong

What Went Well
- Sustained top-line momentum: “We have surpassed $1 million in revenue for the fourth consecutive quarter, with a 47% increase in quarterly revenue in 2019 compared to 2018.” — CFO Brian Andrews .
- Operations segment inflection: Operations revenue rose 155% YoY to $780K and delivered a positive contribution ($102.7K) on product sales strength and application success fees .
- Strategic positioning: Management sees Colorado’s PubCo Bill enabling ownership of cultivation/retail licenses and initiated an acquisition assessment; ERP platform implemented to integrate e‑commerce, inventory, POS .
What Went Wrong
- Consumer Goods underperformance: Segment revenue fell 65% YoY to $29.8K with a deeper segment loss on lack of custom design projects and higher personnel costs .
- Cost structure and leverage: Total costs/expenses rose 12% YoY; amortization of debt discount jumped to $1.17M, reflecting 2018 note issuance; net loss stayed elevated at $4.51M .
- Concentration and going-concern risk: 76% of NBC revenue came from one customer (≈42% of consolidated revenue); substantial doubt exists about going concern absent profitability or additional financing .

Financial Results

Overall P&L (YoY and key components)

Metric	Q1 2018	Q1 2019
Revenues ($)	$942,482	$1,389,289
Total Costs & Expenses ($)	$4,108,964	$4,619,945
Operating Loss ($)	$(3,166,482)	$(3,230,656)
Other Expense, net ($)	$(1,299,905)	$(1,283,039)
Net Loss ($)	$(4,466,387)	$(4,513,695)
Diluted EPS ($)	$(0.14)	$(0.12)
Net Income Margin %	(473.8%)	(324.9%)

Sequential revenue

Metric	Q2 2018	Q3 2018	Q4 2018 (derived)	Q1 2019
Revenue ($)	$1,114,541	$1,097,047	$1,464,930 (FY18 $4,619,000 − 9M18 $3,154,070)	$1,389,289

Notes: Q4 2018 revenue is derived from FY 2018 preliminary revenues less nine-month 2018 revenues using company-reported figures .

Segment revenue and contribution

Segment	Q1 2018 Revenue ($)	Q1 2019 Revenue ($)	Q1 2018 Segment Result ($)	Q1 2019 Segment Result ($)
Security	551,977	564,592	(206,512)	(114,414)
Operations (NBC)	306,014	780,101	(114,461)	102,720
Consumer Goods	84,491	29,775	(114,383)	(231,279)
Investments	—	14,821	(853,329)	(25,254)
Corporate	—	—	(3,177,702)	(4,245,468)
Net Loss	—	—	(4,466,387)	(4,513,695)

KPIs and balance sheet/cash flow

KPI	Q1 2018	Q1 2019
Cash & Equivalents ($)	$4,640,799	$5,588,243
Total Assets ($)	$7,603,926 (Dec-17)	$9,307,750
Total Liabilities ($)	$4,097,929 (Dec-17)	$7,799,115
Stockholders’ Equity ($)	$3,505,997 (Dec-17)	$1,508,635
Notes Payable (8.5% Notes, net) ($)	—	$6,445,462
Operating Cash Flow ($)	$(1,267,877)	$(1,723,717)
Adjusted EBITDA ($)	$(1,374,970)	$(1,695,225)
Weighted Avg Shares	32,034,298	36,222,752

Guidance Changes

No quantitative guidance was provided. Management outlined qualitative priorities by segment (Operations expansion, California growth in Security, STOA Wellness launch, and investments pipeline) but did not issue revenue, margin, or EPS targets .

Metric	Period	Previous Guidance	Current Guidance	Change
Consolidated revenue/EPS/margins	FY 2019	None	None; qualitative “Outlook” only	Maintained (no guidance)

Earnings Call Themes & Trends

No earnings call transcript was available in our source set for Q1 2019.

Topic	Previous Mentions (Q3 2018, FY18 prelim)	Current Period (Q1 2019)	Trend
Regulatory/legal	Emphasis on evolving state frameworks; new markets (MI, UT, MO)	Colorado “PubCo Bill” could enable ownership of licenses; company initiating assessments/acquisitions	Increasingly opportunistic in CO
Security segment	CA expansion; pricing discipline and hiring/retention programs	Expect CA customer growth; building camera installation/monitoring capability	Pivot to higher-margin CA, add services
Operations (NBC)	License apps, equipment sales, online platform buildout	Strong product sales and consulting; expansion to AR, MO, OK; concentration risk (76% with one customer)	Growth with elevated concentration
Consumer Goods/CBD	Apparel national relationships	STOA Wellness CBD retail opening (NY) and e‑commerce; scale back Chiefton retail, focus DTC and B2B	Repositioning toward CBD/DTC
Capital & liquidity	$7.5M notes issued in 2018	Substantial doubt about going concern; partial payoff and short extension in May 2019	Liquidity tightening, near-term maturities
Technology/ERP	—	ERP implemented integrating utilization, e‑commerce, inventory, POS	Infrastructure maturation

Management Commentary

“Our Operations segment continues a strong product sales trend, coupled with sustained revenue from consulting services. Our Security segment remains consistent and expects further growth as California and other markets mature.” — Brian Andrews, CFO .
“The Colorado legislature recently passed the ‘PubCo Bill’… We have begun a significant initiative to assess and acquire companies and/or cannabis licenses in Colorado.” — Michael Feinsod, CEO/Chairman .
“We now have a comprehensive enterprise resource planning platform… These initiatives position us for continued organic growth and expansion through acquisition.” — Brian Andrews, CFO .
Segment priorities: Expand NBC (CO and new states), shift Security to CA and add camera/monitoring, launch STOA Wellness and scale DTC/B2B for Chiefton, continue selective debt/equity investments .

Q&A Highlights

No public Q&A or transcript available for Q1 2019 in our document set.

Estimates Context

We attempted to retrieve S&P Global (Capital IQ) consensus for Q1 2019 EPS and revenue; data were unavailable at time of writing. As a result, estimate comparisons are omitted.

Key Takeaways for Investors

Top-line growth is real and broadening beyond Security, with Operations showing a positive contribution; sustaining mix toward product sales and application fees will be key to margin stabilization .
Consumer Goods remains a drag; the pivot to STOA Wellness/DTC and lower overhead at Chiefton is necessary—execution on CBD retail ramp will determine whether the segment turns from loss to contribution in 2H19 .
Balance sheet and maturities are the near-term overhang: significant debt discount amortization, going-concern language, and short-dated note extensions focus attention on cash generation and refinancing options in Q2–Q3 .
The Colorado PubCo Bill creates an M&A/licensing optionality; any accretive deal for cultivation/retail in CO could be a stock catalyst, but raises underwriting/financing risk if pursued aggressively .
Customer concentration at NBC (76% with one customer) elevates revenue volatility risk; diversification of the Operations pipeline is a watch item into upcoming quarters .
No formal guidance and limited Street coverage create an “under-the-radar” setup; qualitative milestones (STOA opening, CA Security wins, debt refinancing) are likely to drive narrative and price action near-term .

TREES Corp (Colorado) (CANN)·Q1 2019 Earnings Summary