Throughout the early Revolutionary War period there were several of these "Liberty Tree" flags used by the colonists.  Preble recounts the story of this famous tree in his book, Our Flag:

The old liberty tree in Boston was the largest of a grove of beautiful elms that stood in Hanover square at the corner of Orange . . . and Essex streets . . . It received the name of liberty tree, from the association called the Sons of Liberty holding their meetings under it during the summer of 1765.  The ground under it was called Liberty Hall.  A pole fastened to its trunk rose far above its branching top, and when a red flag was thrown to the breezethe signal was understood by the people.  Here the Sons of Liberty held many notable meetings, and pacards and banners were often suspended from the limbs or affixed to the tree (135).

After some time, meetings were held at this tree and following the repeal of the Stamp Act and the Boston Tea Party, the British cut down the tree.  Thus, it became a symbol for the colonists.

In October of 1775, some colonists proposed this first flag to be used as the ensign for colonist ships.  the suggestion was not carried out immediately, but by January 1776, the flag was used, along with uniforms of shipmen in matching green and white colors (Preble 141-42).
 
 

This Pine Tree Flag may very possibly be a mockery, or reinterpreted version of the British Red Ensign.  The various Pine Tree flags were used after the Red Ensign was adopted by colonists as a sign of liberty.  After the Battle of Bunker Hill, tradition has it that a red flag was raised over the gournds by the Americans that said "Come if your dare."  This flag, though may have been the one and not the other more simple red flag with the motto.  According to Preble, "Trumbull in his celebrated picture of the battle now in the rotunda of the Capitol at Washington has represented a red flag having a white canton bearing a green pine tree" (138).