TREES Corp (Colorado) 10-Q

ITEM 1. LEGAL PROCEEDINGS As more fully described in the section titled “Legal” under Note 11 to the Condensed Consolidated Financial Statements in this Form 10-Q, Michael Feinsod recently resigned as our Executive Chairman, claiming that his resignation was for “Good Reason” under the terms of his employment agreement. If it is ultimately determined that his resignation was, in fact, for “Good Reason”, rather than a voluntary act absent “Good Reason”, it could enable certain potential claims for entitlements under his employment agreement, as well as for the vesting of his unvested options and/or for the extension of the term within which he can exercise his options in the future. Having reviewed the matter, however, we do not believe that Mr. Feinsod’s resignation was for “Good Reason”. Accordingly, we believe that Mr. Feinsod’s resignation was voluntary, and that any such potential claims, if asserted, would be without foundation. Although the outcome of legal proceedings is subject to uncertainty, the Company will vigorously defend any future claims made by Mr. Feinsod alleging a “Good Reason” resignation. On August 18, 2020, two investors of certain promissory notes and common stock purchase warrants of General Cannabis Corp. (the “Company”), filed a lawsuit against the Company and its current Board of Directors seeking, principally, rescission rights and the associated return of their outstanding investment of $145,000. Based upon our preliminary evaluation of the matter, we have concluded that the Company remains in compliance with the terms of the notes that are not otherwise due until January 2021, and that the lawsuit has no merit. The Company intends to vigorously defend the matter. Nevertheless, due to the early stage of the proceeding, we are unable to express an opinion as to the likely outcome of the matter.