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.

1. Executive Overview and Outlook

Rogue One, Inc., (together with its subsidiaries, the “Company” or “Rogue”) The
Company’s primary operations are conducted by and through its wholly owned
subsidiary, Human Brands International, Inc. (the “Subsidiary” or “Human
Brands”). The Subsidiary was incorporated in late 2014 and it focuses its
limited financial and managerial resources on those segments of the market that
it believes may have stronger potential in the retail alcoholic beverage
industry. In recent years the Company has honed its focus on the fast-growing
retail tequila market.

Based on the Company’s own internal assessments developed without any external
or professional evaluation, the Company believes that global tequila market has
significant future growth potential. Some have projected that growth may
continue for an extended period of time however the Company has relied upon
other sources that it believes are reliable.

We employ what we call a ‘ground to glass’ strategy with the goal of controlling
sales and assets along every level of the tequila sales chain; from the agave
plants in the ground to the cocktail at the bar. We believe that on a long-term
basis this will best serve our interests however, our business plan and our
strategy has been evaluated internally only by our Board of Directors without
the benefit of any third-party evaluation.

As an integral part of this strategy and if circumstances allow, we seek to
build a foundation through investment, acquisition, and relationships at each
level. If we are to implement this strategy, we anticipate that we will need to
raise a significant amount of additional capital. We cannot assure you that we
will be successful in these efforts or if we are successful in implementing our
business plans, that we will also achieve and sustain profitability or even
sales growth for any period of time. In many respects we are attempting to
implement and grow a new business and, in that respect, there can be assurance
that, like any new business, that we will.

Operationally, the Company is organized along geographic lines with management
teams having responsibility for the business and financial results in each
region, the United Mexican States and the United States of America. In general,
for a brand of liquor to be imported and be sold in the United States, that
brand must be sold through a licensed importer. Our Subsidiary’s subsidiary,
CapCity Beverage (“CapCity”), is a U.S. licensed importer and distributor.
Because of the way the U.S. liquor laws are set up, an importer is generally the
conduit between the brand owner and the distribution customer. Importers will
generally buy the product from the brand owner, bring the product into the U.S
and then sell directly to distributors. Importers will usually add anywhere from
a 5% to 15% margin on the sale.

We believe that having a licensed import company allows our Subsidiary to not
only bring in its own products, but it may, if circumstances allow, also include
others. Based on our own internal management assessments, undertaken without the
benefit of any professional third-party evaluation, this may give our us another
layer of potential sales revenue generating opportunities.

Currently, CapCity imports and sells, or has the right to sell, Shinju Japanese
Whisky, Copa Imperial, Mazeray, Cote’ Or, Armero, Fervor, Profano, 88 West,
Nevele, and Canelo Alvarez’ No Boxing No Life.

                                      52

A large portion of CapCity’s current focus is on Shinju. Shinju has gained
significant traction in the U.S. The Brand is currently sold by CapCity into
fifteen U.S. states, many being the largest markets, covering over 60% of the
U.S. population. Shinju is also sold on many of the largest online,
direct-to-consumer platforms like ReserveBar and Drizly. Currently liquor on
these platforms can be sold directly to consumers in 35 U.S. states.

[[Image Removed: Text Box:]]The ‘ground’ level of the Subsidiary’s foundation is
agave plants. Tequila cannot be made without the agave plant. Part of our
strategy is to plant and own as many agave plants as possible. We believe that
the dramatic increase in demand for tequila has made the supply of agave plants
more valuable. By our own informal assessment, the price of agave has increased
roughly 338% since 2016. However, there can be no assurance that these trends
will continue or if they do continue, that they can be sustained or otherwise
result in any benefit to our business.

Source: Development of a Predictive Model for Agave Prices Employing
Environmental, Economic, and Social Factors: Towards a Planned Supply Chain for
Agave-Tequila Industry, National Library of Medicine- Authors: Walter M.
Warren-Vega, et.al. Arun K Bhunia, Academic Editor

Through the Subsidiary, we currently own or manage an aggregate of approximately
400,000 agave plants and we hope that if circumstances allow, we may be able to
plant or manage more agave plants in coming years. Once the plants mature the
Company will harvest them. Our strategy is to sell t

he plants creating significant revenue for the Company or to use in our bulk
production to produce tequila which may allow us, if favorable market conditions
allow, an ability to better manage our costs.

The next level is the bulk tequila production level. This is the most
significant piece of our business. We currently have a production partnership
and ownership interest in Hacienda Capellania, a top 15 rated tequila
distillery. Their distillery is located at the global epicenter of the tequila
industry in the highly regarded highlands region of Jalisco, Mexico.

Our partnership with Capellania includes supply contracts with well-known and
award-winning tequila brands, large distilleries, celebrities, athletes,
restaurant groups, and retailers. This partnership, under ideal conditions,
produces 100,000 to 250,000liters of 100% tequila monthly and if market
conditions and our cash resources allow, we hope that we may be able to grow to
one (1) million liters of production per month. The timing and extent that these
plans may be achieved is subject to significant external risks and our ability
to fully implement our business and financial plans.

We are aware that there are roughly only 150 tequila distilleries in the world.
As worldwide demand for tequila increases, the distillery supply and value of
that supply will continue to increase. However, we face significant competition
from many well-established competitors who possess significantly greater
financial and managerial resources than we currently have and likely will have
in the foreseeable future.

Our third level involves our control and sale of assets is the brand level. Our
Subsidiary owns multiple brands including, Tequila Armero, Fervor Mezcal,
Profano Mezcal, 88 West Rum, and Nevele. We believe that our ability to “brand”
our products may allow us to achieve at least a modest level of marketing
control in the future.

                                      53

Armero and Fervor were recently launched into the U.S. market with an initial
focus on the New York and DC markets. The Company utilizes the NY and DC markets
as a launch platform for its brands. Over the past few years, through the launch
of Shinju Japanese Whisky, our Subsidiary has been able to build a significant
customer base in these two markets. This customer base may allow us an ability
to develop and brand other products in the future which in turn may allow us to
gain a greater market presence in certain markets, if circumstances, market
conditions, and our financial resources allow. In that event and if these and
other factors are favorable, we may seek to increase sales revenues from the
sale of these and related products. AS circumstances allow, we may be able to
expand into one or more geographic markets in the United States with the goal of
selling the brands at a national level.

If market conditions are favorable and if sufficient financial resources are
available, we may launch new products, namely, Profano, 88 West, and Nevele
under the same strategy in the future. These branded products may provide us
with some degree of diversification and possibly profit potential.

We are also employing a strategy of taking ownership interest in brands to make
the tequila for third parties. With the growth and profile of tequila
intensifying, the demand for private-label production is increasing, especially
from celebrities and influencers. Currently, a significant part of the
Subsidiary’s business is producing and developing brands for third parties. If
circumstances allow, we may seek to retain partial ownership in those brands.

We are aware that launching a product brand is an intensely competitive and
difficult strategy and there can be no guarantee of success or, if it later
becomes successful, that it is not preceded by heavy losses and negative cash
flow for an extended period of time. But we believe that such efforts may be
entirely worthwhile. We have noted that in recent years some have sold their
branded product lines to other, larger market competitors.

The fourth level of our Subsidiary’s business is the import/export level. In
general, for a brand of liquor to be imported and be sold in the United States,
that brand must be sold through a licensed importer. Our Subsidiary’s
subsidiary, CapCity Beverage (“CapCity”), is a U.S. licensed importer and
distributor. Because of the way the U.S. liquor laws are set up, an importer is
generally the conduit between the brand owner and the distribution customer.
Importers will generally buy the product from the brand owner, bring the product
into the U.S and then sell directly to distributors. Importers will usually add
anywhere from a 5% to 15% margin on the sale.

2. Discussion on Results of Operations

Worldwide Net sales were $ 1,198,434 for the nine-months ended on September 30,
2021, and no sales were in the same period as of September 30, 2021. The reason
for that was the merge with Human Brands, including its subsidiaries, was
concluded on June 30, 2021.

It is important to include into the considerations on commercial activities in
the US that, more than 110,000[1] eating and drinking establishments closed in
2020 and additional 80,000[2] have temporarily or permanently closed in 2021.

3. Discussion of Segment Results

The Company markets its products in two countries, Mexico and the US in two
products segments: Alcoholic beverages and finished bulk lot tequila. The
Company evaluates segment performance based on several factors, including
Operating profit.

Alcoholic beverages and finished bulk lot tequila

                                      54





                      For the Nine-Months ended on September 30, 2021



Mexico
Wholesale market    $                                   1,081,871
Retail market                                              11,208
USA
Wholesale market                                          105,354
           Total:   $                                   1,198,434
Operating profits                                         178,755
% of Net Sales                                              14.92 %






4.    Non-GAAP Financial Measure

Generally, the Company uses non-GAAP measures for internal budgeting, segment
evaluation and understanding of overall performances. However, related to Sales
the Company adopted ASC 605 and ASC 606 for all measurement and analysis,
therefore the Company believes that no reconciliation of Net Sales (GAAP) is
needed to non-GAAP measures for the Company.

5. Liquidity and Capital Resources

The Company expects cash flow from operations and debt issuances will be not
enough to meet foreseeable business operating and recurring cash needs
(including costs emerging from the June 30, 2021, Merger Agreement and Plan of
Reorganization – the “Acquisition Agreement” -). To solve this bottleneck the
Company is negotiating with private investors, interested on acquiring shares of
the Company common stock.

Cash Flow

Net cash provided by operations as of the nine-month period ended on September
30, 2021, $ 1,013,523 compared to ($101,408) used as of December 31, 2020. Net
cash provided by operations for the nine-month period ended on September 30,
2021, increase due to strong operating earnings (partially offset by the impact
of the Net profit attributable to noncontrolled interest) and the increase in
the extended payments facilities provided by vendors in the normal course of
business. The short period from the Acquisition Agreement, and the nine-month
period ended on September 30, 2021, does not allow further comments.

6. Off-Balance Sheet Arrangements

The Company does not have off-balance sheet financing or unconsolidated special
purpose entities.

7. Managing Foreign Currency, Interest Rate, Commodity Prices and Credit Risk
Exposure

The Company is exposed to market risk from foreign currency exchange rates,
interest rates and commodity price fluctuations. Volatility relating to these
exposures is managed in both countries (Mexico and USA) by utilizing a number of
techniques, including working capital management, selling price increases,
selective borrowings in local currencies and entering into selective derivative
instrument transactions, issued with standard features, in accordance with the
Company’s treasury and risk management policies. The Company’s treasury and risk
management policies prohibit the use of derivatives for speculative purposes and
leveraged derivatives for any purpose.

The sensitivity of our financial instruments to market fluctuations is discussed
hereto, see Note 1 Sub-Section Basis of Presentation and Disclosure of
accounting policies and Fair Value of Financial Instruments and Note 8 Fair
Value Measurements.

                                      55



8.    Critical Accounting Policies and Use of Estimates

In certain instances, accounting principles generally accepted in the United
States of America allow for the selection of alternative accounting methods. The
Company’s significant policies that involve the selection of alternative methods
are accounting for shipping and handling costs and inventories. The Company
reports such costs, primarily related to outbound freight in the Consolidated
Statements of Income as a component of Operational Expenses. Accordingly the
Company’s Gross profit margin is not comparable with the gross profit margins of
those companies that include shipping and handling in cost of sales. If such
cost had been included in Cost of Sales, Gross profit margin would have
decreased by 21 bps.

The Company accounts for inventories on ready-to-market products using the
first-in-, first-out (“FIFO”) method. There would have been no material impact
on reported earnings for the nine-month period ended on September 30, 2021, had
all inventories been accounted for under the FIFO method.

As of September 30, 2021, the Company has 377,105 agave plants in the ground.
This number does not include the additional “hijuelos” which are baby agave
shoots that grow around the main plant. We do not include the hijuelos as part
of the assets on our balance sheet, but they are viable agave plants and can be
sold in the future.

The Company’s subsidiaries acquired plants, or planted agave, between the years
of 2018-2020. The Company will look to harvest and sell much of the agave
planted in 2018 and early 2019 in the 2022 calendar year. The Company intends to
do this not only as a source of revenue, but primarily to help pay down a
majority of its liability owed to its agave partner in its subsidiary of
Comercializadora Agave Weber SA de CV.

When valuing our agave plants, we take into account multiple factors:

• When the plant was planted – the age

• The size (based on its age)

• The average price per kilogram in the market

The price, or value of an agave plant, is based on its weight – a cost per
kilogram. As a plant is in the ground it continues to grow, increasing in weight
and value. This is a factor we take into consideration when placing a value on
our plants.

The growth of a plant can vary over its lifecycle. Once harvested the weight of
a plant can be anywhere from 36kgs to 136kgs. Many factors play into this – the
soil, climate, how they are farmed, etc.

The argument for ‘when’ the agave should be harvested is a much-debated topic in
the tequila industry. It has been a generally accepted opinion that the agave
used in tequila should not be harvested until it has been in the ground for 6 –
8 years. However, because of the growth in demand for tequila, and the lack of
supply to keep up, many farmers are now harvesting the plants at 4 – 5 years.

In our calculations, we factor in an average growth rate per year and
subsequently per quarter. We derived this rate by taking the average weight of
the plant at harvest (32kgs) and divided it by the ‘standard’ number of years
the agave is in the ground (7 years).

Using a seven-year standard, along with the average weight, we calculate that
our agave plants grow at an average of 4.5kgs per year. The 4.5kgs per year is
used in our calculations, which breaks down to 1.125kgs per quarter.

The final piece in our value calculation, and the key piece, is the price per
kilogram. Prices can fluctuate due to the supply/demand economic forces. In
making our value calculations we generally use a per year average price, using
the most conservative price based on what the industry pays on an average basis.

Through multiple industry data points the current price per kilogram average
sits at MX$29/kg.

Depending on having the proper funding, the Company will look to continue to
plant agave each year to backfill the plants being sold. If proper capital is
not available, the Company may hold off on making new investment in plants and
put its time and capital on quicker revenue generating opportunities like bulk
tequila production.

                                      56

With the continued growth in the demand for tequila, the Company foresees a
continuing need for supply of agave, which should maintain the higher prices
paid by customers for the plants. The Company sees this as a very valuable
opportunity, but sufficient capital will be needed to sustain this model.

9. Goodwill Impairment

To comply with the requirements of S-K303(a)(3)(ii), the Company understand that
shareholders may requires a description of, at the time this filing is made,
some known uncertainties, and at the same time ensuring that investors are
provided with information that allows for an assessment of the probability of a
future material impairment charge.

While best efforts were made to move forward with both “Tequila Copter” to
develop a re-launch the Museo project in Puerto Vallarta, Mexico and the
“Boludo” project in Guadalajara, Mexico, the effects of the global pandemic made
it extremely difficult to move forward with both projects as planned as of
2021-Q3. There are still opportunities move forward with similar projects with
each entity, which the Company is currently exploring.

Based on the foregoing the Company understand that a Goodwill impairment would
be recorded in an estimated amount of $1,677,116.

10. The Company’s Performance and Goals

With limited funding the Company must rely on partnerships with active
distilleries to produce and supply its bulk tequila turns. The downside to
having to rely on a partnership is the distillery partner receives a majority of
the profit from a turn. The Company’s long-term goal, with adequate funding, is
to eventually own a distillery outright. This would provide the Company with
more control over the production timing and give the Company 100% of the
margin/profit on a bulk sale.

In 2021, in order to diversify and expand its production capabilities, the
Company partnered with a second distillery, El Patriota. This gave the Company
access to more available turns.

On one bulk production turn, roughly 25,000 liters, the cost to produce that
turn is on average $120,000. This includes all costs that go into making 25,000
liters, including the agave, utilities, labor, water, among others. Economic
forces can make these costs more or less expensive.

On a 25,000 liter turn it generally takes on average 30-45 days from start to
sale. This timeline can vary, quicker or longer, based on some factors out of
our control. For example, the CRT (Tequila Regulatory Commission) monitors and
regulates all sale of tequila. There are times when their schedule and
availability plays a role in how fast a sale can happen. Although the CRT can
cause delays on the timing of a sale, having the CRT, by law, involved in the
process ensures a fair, safe, and equitable process for both the seller and
buyer. This process ensures that we will be paid on each turn.

To date the Company has been funding its bulk turns through private financing.
With limited funding available the Company has averaged 1-3 turns per month. The
Company has the availability to do more turns, but additional financing is
needed. The Company’s goal, with additional financing, would be to have 5-6
turns producing each month.

Although the profit margins are small, the sales can happen quickly and on a
large scale. If additional funding is available the Company will look to
increase its production to a consistent number of turns per month which would
generate significant revenue for the Company.

Going forward, the Company has a goal of establishing its own distillery. This
would allow the Company to take 100% of the profits from each bulk sale.
Currently, based on market prices, the net profit is roughly $55,000 per turn.

In Q3 Armero and Fervor were well-received in the market as the Company’s
limited inventory sold out within two months. With its initial success the
Company sees a greater opportunity with these brands, but additional funding is
needed to continue sales of these brands in the market. The first production run
of Amero and Fervor was limited as it was seen as a ‘market test’. A much larger
production run will be needed to fill the initial demand in the market and
additional capital is needed to do the production. Along with that, more
marketing dollars will be needed to support the brands. If the Company cannot
obtain the necessary funding for the brands, the Company will have to put
further expansion and sales of these brands on hold.

                                      57

The Company understands that margins as an importer are slim. An importer must
rely heavily on moving a large volume of product through its level for it to be
profitable. Currently CapCity is only importing Shinju on a larger scale and
Armero and Fervor on a smaller scale. The volume is still not at the levels for
CapCity to be consistently profitable.

The Company understands this and if in the future the model is not sustainable
the Company will look to close CapCity. However, having a Federal Import License
is valuable and gives the Company additional control over the full process on
the sale of liquor into the United States. As an importer the Company can
minimize and control certain costs that occur on the importation of its own
brands. The Company believes this is a valuable piece that many brands do not
have.

                        [space intentionally left blank]

                                      58

© Edgar Online, source Glimpses