The following discussion should be read in conjunction with our unaudited
consolidated financial statements and notes thereto included herein. In
connection with, and because we desire to take advantage of, the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995, we caution
readers regarding certain forward-looking statements in the following discussion
and elsewhere in this report and in any other statement made by, or on our
behalf, whether or not in future filings with the Securities and Exchange
Commission. Forward looking statements are statements not based on historical
information and which relate to future operations, strategies, financial results
or other developments. Forward looking statements are necessarily based upon
estimates and assumptions that are inherently subject to significant business,
economic and competitive uncertainties and contingencies, many of which are
beyond our control and many of which, with respect to future business decisions,
are subject to change. These uncertainties and contingencies can affect actual
results and could cause actual results to differ materially from those expressed
in any forward-looking statements made by, or on our behalf. We disclaim any
obligation to update forward looking statements.
Overview
Rogue One, Inc. ("Rogue One" or the "Company") is a consumer products and
marketing company focused on the high-margin, multi-trillion-dollar alcoholic
beverages sector.
On June 27, 2017, Creative Edge Nutrition, a Nevada corporation ("CEN") and
Rogue One executed an asset purchase agreement whereby the Company purchased the
assets and liabilities of CEN's subsidiary, Giddy Up Energy Products, Inc.
("Giddy"). As consideration, the Company agreed to exchange 47,197,601 shares of
its common stock. On January 24, 2018, the Company completed the distribution of
its common shares to the CEN shareholders in order to consummate the acquisition
of Giddy. On December 7, 2020, the Company and Giddy entered into a Settlement
Agreement, Waiver and Release of Claims whereby each party warranted and
represented that they sought to fully and mutually rescind the purchase
agreement dated June 27, 2017 and, in so doing, for Giddy to acquire the assets
previously sold and, at the same time, for each of the parties to waive and
release all claims, both known and unknown, and to indemnify and hold all other
parties harmless. In addition, the parties agreed to enter into an exclusive
licensing agreement for the Giddy Up brand in the category of alcoholic
beverages.
On September 23, 2020, the Company entered into a Merger Agreement and Plan of
Reorganization with Human Brands International, Inc., a private corporation
organized pursuant to the laws of the State of Nevada ("Human Brands"), pursuant
to which, at the effective time, Human Brands shareholders will exchange 100% of
the equity in Human Brands in exchange for a majority controlling interest in
the Company. On June 30, 2021, the Acquisition Agreement was made effective
pending certain closing conditions. Under the terms of the Acquisition
Agreement, the Company agreed to issue an aggregate of 45 shares of its Series D
preferred stock and an aggregate of 176,771,962 shares of its common stock to
acquire all of the outstanding capital stock of Human Brands.
Human Brands operating divisions currently own and manage over 250,000 agave
plants, several premium spirit brands, and hold exclusive import and export
rights for a variety of spirit brands. Its core foundation is built upon its
bulk tequila production operations. Human Brands currently has supply contracts
with well-known tequila brands, celebrities, and athletes.
On April 7, 2021, the Company effected a 1-for-100 reverse split which as
preceded by a filing of an amendment to its Articles of Incorporation that the
Company completed with the Nevada Secretary of State on February 13, 2021. On
April 7, 2021, the Company also amended its Articles of Incorporation to change
its name to Rogue One, Inc.
Results of Operations for the Three Months Ended June 30, 2021, and 2020
Sales
We did not record any revenues for the three months ended June 30, 2021 and
2020. We are contemplating various opportunities as a means to generate future
sales revenue; however, we can provide no assurance that our efforts will
successfully result in any new revenues.
Gross Profit
Gross profit is calculated by subtracting cost of goods sold from sales. Gross
profit percentage is calculated by dividing gross profit by sales.
We did not record any cost of goods sold for either of the three months ended
June 30, 2021 and 2020. As such, we did not realize any gross profits during
either of the three-month periods ended June 30, 2021, and 2020.
Operating Expenses
Operating expenses totaled $107,742 for the three months ended June 30, 2021,
compared to $40,012 in operating expenses for the three months ended June 30,
2020, or an increase of $67,730.
Our operating expenses are primarily comprised of compensation and benefits,
professional fees and other general and administrative costs. The increase in
operating expenses was due to increased compensation costs related to the
addition of new executive management and stock-based compensation to employees
and service providers. We expect our operating expenses to increase
proportionally to our business activities as we begin to execute upon our
business plan in future periods.
Other Income (Expense)
Net other expense totaled $353,497 for the three months ended June 30, 2021,
compared to $2,876,058 in net other expense for the three months ended June 30,
2020, or a decrease of $2,522,561.
The Company has issued various convertible notes to help finance its operations,
some of which have embedded derivative features. The value of these instruments
will fluctuate as the trading price of our common stock changes. During the
three months ended June 30, 2021, recorded an unrealized loss of $286,615 from
the increase in value of these derivative features, compared to an unrealized
loss of $2,706,281 from the change in the value of these derivative features
during the three months ended June 30, 2020.
During the three months ended June 30, 2021, we recorded interest expense
related to the amortization of debt discounts totaling $12,450, compared to $
10,933 during the three months ended June 30, 2020. During the three months
ended June 30, 2020, we accrued interest expense on convertible notes or
$53,182, compared to interest expense of $55,412 during the three months ended
June 30, 2020.
Net Loss
We incurred a net loss of $461,239, or $0.00 per share, for the three months
ended June 30, 2021, compared to a net loss of $2,916,070, or $0.03 per share,
for the three months ended June 30, 2020.
The weighted average number of basic and fully diluted shares outstanding for
the three months ended June 30, 2021 was 116,934,786, compared to 96,515,927 for
the three months ended June 30, 2020. There are no dilutive equivalents included
in our calculation of fully diluted shares for the three months ended June 30,
2021, since their inclusion would be anti-dilutive due to our net loss per
share.
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Results of Operations for the Six Months Ended June 30, 2021 and 2020
Sales
We did not record any revenues for the six months ended June 30, 2021 and 2021.
While we believe that our new focus will create opportunities that will generate
future revenue for the Company, we can provide no assurance that we will be
successful in the execution of our business plan.
Gross Profit
We did not record any cost of goods sold for either of the six months ended June
30, 2021 and 2020. As such, we did not realize any gross profit during either of
the six-month periods ended June 30, 2021 and 2020.
Operating Expenses
Operating expenses totaled $397,724 for the six months ended June 30, 2021,
compared to $115,686 in operating expenses for the six months ended June 30,
2020, or an increase of $282,038.
Our operating expenses are primarily comprised of compensation and benefits,
professional fees and other general and administrative costs. The increase in
operating expenses was due to the timing of services rendered in relation to our
financial reporting and fees incurred from various state compliance filings. We
expect our operating expenses to increase proportionally to our business
activities as we begin to execute upon our business plan in future periods.
Other Income (Expense)
Net other expense totaled $593,763 for the six months ended June 30, 2021,
compared to $2,817,885 in net other expense for the six months ended June 30,
2020, or an increase in net other expense of $2,224,122.
The Company has issued various convertible notes to help finance its operations,
some of which have embedded derivative features. The value of these instruments
will fluctuate as the trading price of our common stock changes. During the six
months ended June 30, 2021, we recorded an unrealized loss of $448,598 from the
increase in value of these derivative features, compared to a non-cash
derivative expense of $102,248 and experienced an unrealized loss of $2,592,696
from the increase in value of these derivative features during the six months
ended June 30, 2020.
During the six months ended June 30, 2021, we recorded interest expense related
to the amortization of debt discounts totaling $33,750, compared to $10,933
during the six months ended June 30, 2020. During the six months ended June 30,
2021, we accrued interest expense on convertible notes or $110,165, compared to
interest expense of $112,031 during the six months ended June 30, 2020.
Net Loss
We incurred a net loss of $991,487, or $0.01 per share, for the six months ended
June 30, 2021, compared to a net loss of $2,933,571, or $0.03 per share, for the
six months ended June 30, 2020.
The weighted average number of basic and fully diluted shares outstanding for
the six months ended June 30, 2021 was 109,572,911, compared to 87,098,894 for
the six months ended June 30, 2020. There are no dilutive equivalents included
in our calculation of fully diluted shares for the six months ended June 30,
2021 and 2020, since their inclusion would be anti-dilutive due to our net loss
per share.
Liquidity and Capital Resources
The accompanying unaudited financial statements have been prepared assuming that
the Company will continue as a going concern, which contemplates, among other
things, the realization of assets and satisfaction of liabilities in the
ordinary course of business.
The Company sustained a net loss of $991,487 for the six months ended June 30,
2021. Because of the absence of positive cash flows from operations, the Company
requires additional funding to execute upon its business plan. These factors
raise substantial doubt about the Company's ability to continue as a going
concern. The accompanying condensed consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.
We are presently unable to meet our obligations as they come due. As of June 30,
2021, we had cash and cash equivalents totaling $179,925 and a working capital
surplus of $6,120,408. Our working capital surplus is primarily due to the merge
as of June 30, 2021.
During the six months ended June 30, 2021, net cash provided in operating
activities was $9,624,242, compared to $59,963 net cash used in operating
activities for the twelve months ended December 31, 2020. During the six months
ended June 30, 2021, net cash provided by financing activities was $1,814,904
compared, to $60,000 of cash provided by financing activities for the twelve
months ended December 31, 2020.
We anticipate that our cash requirements will arise from the need to fund our
growth from operations, pay current obligations and future capital expenditures.
The primary sources of funding in the near term for such requirements are
expected to be cash generated from raising additional funds by the issuance of
convertible notes. However, we can provide no assurances that we will be able to
generate sufficient cash flow or obtain additional financing on terms
satisfactory to us if at all, to remain a going concern. Our continuation as a
going concern is dependent upon our ability to generate sufficient cash flow to
meet our obligations on a timely basis and ultimately to attain profitability.
In addition, our plan for the next twelve months is to raise capital to continue
to expand our operations. We are presently engaged in capital raising activities
through one or more private offerings of our company's securities. See "Note 2-
Going Concern" in our financial statements for additional information as to the
possibility that we may not be able to continue as a "going concern."
Inflation
Although our operations are influenced by general economic conditions, we do not
believe that inflation had a material effect on our results of operations during
the nine-month period ended June 30, 2021.
Off-Balance Sheet Arrangements
Not applicable.
Critical Accounting Estimates
Our financial statements and accompanying notes have been prepared in accordance
with U.S. GAAP. The preparation of these financial statements requires
management to make estimates, judgments and assumptions that affect reported
amounts of assets, liabilities, revenues and expenses. We continually evaluate
the accounting policies and estimates used to prepare the condensed financial
statements. The estimates are based on historical experience and assumptions
believed to be reasonable under current facts and circumstances. Actual amounts
and results could differ from these estimates made by management. Certain
accounting policies that require significant management estimates and are deemed
critical to our results of operations or financial position are discussed in our
Annual Report on Form 10-K for the year ended December 31, 2020 in the Critical
Accounting Policies section of Management's Discussion and Analysis of Financial
Condition and Results of Operations.
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ROGUE ONE, INC. 
