Executive Summary

Revenue reached $1.4788M, up 35% year over year; net loss improved 47% YoY to $(2.254)M and EPS improved to $(0.06) versus $(0.12) in Q3 2018 .
Sequentially, EPS improved from $(0.11) in Q2 to $(0.06) in Q3, while operating loss narrowed to $(2.217)M from $(2.486)M in Q2, supported by strength in Operations consulting and products .
Operations segment revenue rose 142% YoY; management highlighted new consulting wins, higher equipment/product sales, and application success fees; Consumer Goods was restructured with ~$400K annualized overhead cuts and the STOA CBD store opened in July .
Liquidity remains tight: cash was $0.632M at quarter-end; debt refinanced into 12% notes ($1.506M) and an SBI 10% note ($0.855M); management disclosed substantial doubt about going concern absent capital raises or profitability .
Strategic catalyst: Colorado HB‑1090 enables public ownership of licensed operations; company signed multiple LOIs/term sheets (cultivation, processing, dispensaries) and expects acquisitions beginning early 2020, positioning for an owned Colorado footprint .

What Went Well and What Went Wrong

What Went Well

Operations segment revenue +142% YoY in Q3; management cited rising equipment/product sales, licensing consulting, and new management/design contracts. “We have surpassed $1 million in revenue for the sixth consecutive quarter…” (CFO) .
Consumer strategy reset: ~“$400,000” annualized overhead eliminated in Consumer Goods; STOA CBD retail store opened in July and is showing steady, moderate growth (CEO) .
Pipeline for Colorado M&A under HB‑1090: non-binding term sheets covering ~45,000 sq ft cultivation, a processing facility, and multiple adult-use dispensaries; integration plan emphasizes keeping local management teams in place .

What Went Wrong

Security segment revenue fell 24% YoY; Colorado pricing pressure and guard availability drove revenue declines and higher costs; California expansion is slower than expected .
Consumer Goods profitability remained challenged with higher product-mix costs and nonrecurring expenses from STOA opening, despite overhead cuts; nine-month segment loss widened versus 2018 .
Liquidity/headroom: cash declined to $0.632M with current liabilities of $5.68M and notes all current; management disclosed substantial doubt about going concern absent financing or profitability improvements .

Financial Results

Consolidated results (sequential and YoY)

Metric	Q1 2019	Q2 2019	Q3 2019
Revenue ($USD)	$1,389,289	$1,356,865	$1,478,764
Operating Loss ($USD)	$(3,230,656)	$(2,486,387)	$(2,216,588)
Net Loss ($USD)	$(4,513,695)	$(2,894,802)	$(2,254,322)
EPS (Basic & Diluted) ($)	$(0.12)	$(0.11)	$(0.06)

Metric	Q3 2018	Q3 2019
Revenue ($USD)	$1,097,047	$1,478,764
Net Loss ($USD)	$(4,214,202)	$(2,254,322)
EPS (Basic & Diluted) ($)	$(0.12)	$(0.06)

Operating loss margin (% of revenue)

Metric	Q1 2019	Q2 2019	Q3 2019
Operating Loss Margin (%)	(232.6%)	(183.3%)	(150.0%)

(Computed from reported operating loss and revenue; citations reference the source figures.)

Segment revenue breakdown

Segment Revenue ($USD)	Q3 2018	Q3 2019
Security	$689,930	$524,525
Operations	$345,205	$834,334
Consumer Goods	$45,054	$91,308
Investments	$16,858	$28,597
Total	$1,097,047	$1,478,764

Adjusted EBITDA (non‑GAAP)

Metric	Q3 2018	Q1 2019	Q2 2019	Q3 2019
Adjusted EBITDA ($USD)	$(1,128,722)	$(1,695,225)	$(2,869,572)	$(1,400,973)
Adjusted EBITDA per share ($)	$(0.03)	$(0.05)	$(0.08)	$(0.04)

KPIs and balance items

KPI ($USD)	Q1 2019	Q2 2019	Q3 2019
Cash and Equivalents	$5,588,243	$792,907	$631,891
Deferred Revenue & Customer Deposits	$330,812	$457,199	$756,549
Notes Payable (Current)	$6,445,462	$1,106,000	$2,250,594
Warrant Derivative Liability	—	$2,014,560	$1,593,720

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY/Quarter	No formal guidance	No formal guidance	Maintained (no guidance)
Margins (GAAP)	FY/Quarter	No formal guidance	No formal guidance	Maintained (no guidance)
OpEx	FY/Quarter	No formal guidance	Cost reductions underway (corporate $600K annualized; Consumer ~$400K)	Strategic cost actions (qualitative)
Capital/Acquisitions	FY/Quarter	N/A	Expect to begin closing CO acquisitions in early 2020 under HB‑1090	New qualitative outlook
Tax rate, OI&E, dividends	FY/Quarter	No guidance	No guidance (no dividends anticipated)	Maintained (no guidance)

Earnings Call Themes & Trends

(No Q3 2019 earnings call transcript found; themes synthesized from 10‑Q MD&A and press releases.)

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
Regulatory/legal (HB‑1090)	Not a factor in Q1; Q2 focused on operations;	Emphasis on PubCo strategy under HB‑1090; LOIs/term sheets across retail/cultivation/processing	Improving strategic optionality
Operations consulting/products	Q1: product sales + success fees; Q2: continued product growth and applications	Q3: Operations revenue +142% YoY; applications completed; higher-margin work noted	Strengthening
Security services	Q1: modest rate-driven improvement; Q2: client losses and lower revenue	Q3: ‑24% YoY; CO pricing pressure and guard availability constraints	Deteriorating in CO; re‑focus on LA
Consumer Goods	Q1/Q2: revenue declines; higher costs from product mix	Q3: ~$400K overhead cut; STOA CBD store opened with moderate growth	Restructuring
Liquidity/capital	Q1: 8.5% notes outstanding; Q2: $3M equity raise, SBI note	Q3: 12% notes ($1.506M), SBI maturity extended; cash $0.632M; going-concern risk disclosed	Constrained
M&A pipeline	Q2: Denver retailer term sheet announced	Q3: multiple LOIs; plan to close in early 2020; integration playbook described	Advancing

Management Commentary

“We have surpassed $1 million in revenue for the sixth consecutive quarter… Both efforts have resulted in significant increases in Operations revenue compared to the prior year… We have been able to grow our revenue, while also managing costs, which has resulted in a net profit for our Operations division in the current year.” — Brian Andrews, CFO .
“During the third quarter we opened our new CBD store and e‑commerce website, STOA Wellness… We trust these factors will generate growing Consumer Goods revenue through the remainder of the year.” — Michael Feinsod, CEO/Chairman .
“We are excited to embark on potential acquisitions… entered into non‑binding term sheets for approximately 45,000 square feet of cultivation space, a processing facility and several adult use dispensaries… structured to keep existing management teams in place.” — Hunter Garth, VP Business Development .

Q&A Highlights

No Q3 2019 earnings call transcript was available in company filings or our document catalog; clarifications below draw from MD&A and press releases:

Colorado HB‑1090 execution: PubCo strategy expects initial CO acquisitions early 2020; integration resources (HR, accounting, reporting, IT) positioned to on‑board targets .
Segment outlook: Operations momentum from applications and product sales; Security to explore camera monitoring/installation and transport to diversify revenue .
Cost actions: Corporate overhead reductions (~~$600K annualized; further $200–$400K identified) alongside Consumer Goods restructuring (~~$400K) .

Estimates Context

Wall Street consensus (S&P Global) estimates for Q3 2019 EPS and revenue were unavailable at time of analysis due to data access limits. We cannot assess beats/misses versus consensus; investors should rely on reported YoY and sequential trends highlighted above.

Key Takeaways for Investors

Operations is the growth engine: +142% YoY revenue with application wins and rising product sales; this is the core driver of consolidated improvement and the path to margin normalization as mix shifts to higher‑margin services .
Security headwinds persist in Colorado: pricing pressure and labor constraints weighed on revenue and costs; near‑term improvements hinge on service mix expansion (monitoring/transport) and LA market focus .
Liquidity risk is real: $0.632M cash, all notes current, and going‑concern language; near‑term financing and disciplined OpEx are critical to bridge to any M&A closings and operational inflection .
Consumer Goods restructuring is necessary but early: STOA opening and overhead cuts help, yet segment profitability depends on sustained store growth and lower-cost customer acquisition .
HB‑1090 is a strategic catalyst: signed LOIs/term sheets and an announced Denver retailer deal outline a path to an owned Colorado footprint; execution (closing, integration, licensing) will be key stock drivers in early 2020 .
Non‑GAAP trajectory improved: Adjusted EBITDA loss narrowed sequentially in Q3; continued mix shift to services and cost controls can further shrink losses .
Customer concentration risk: NBC’s revenue is concentrated (82% with three customers in Q3); any churn could impact Operations momentum; diversify pipeline to stabilize growth .

TREES Corp (Colorado) (CANN)·Q3 2019 Earnings Summary