The following discussion and analysis of our unaudited condensed consolidated
financial condition and results of operations should be read in conjunction with
the audited consolidated financial statements and accompanying notes included in
the Company's Annual Report on Form 1-K for the year ended December 31, 2019, as
filed with the Securities and Exchange Commission ("SEC") on May 15, 2020 ("Form
1-K").



Forward Looking Statements



This quarterly report on Form 10-Q ("Quarterly Report") and other reports filed
by Scopus BioPharma Inc. (the "Company") from time to time with the SEC
(collectively, the "Filings") contain or may contain forward-looking statements
and information that are based upon beliefs of, and information currently
available to, the Company's management, as well as estimates and assumptions
made by Company's management. Readers are cautioned not to place undue reliance
on these forward-looking statements, which are only predictions and speak only
as of the date hereof. When used in the Filings, the words "may", "will",
"anticipate", "believe", "estimate", "expect", "future", "intend", "plan", or
the negative of these terms and similar expressions as they relate to the
Company or the Company's management are intended to identify forward-looking
statements. Such statements reflect the current view of the Company with respect
to future events and we caution you that these statements are not guarantees of
future performance or events and are subject to risks, assumptions, and other
factors. Should one or more of these risks or uncertainties materialize, or
should the underlying assumptions prove incorrect, actual results may differ
significantly from those anticipated, believed, estimated, expected, intended,
or planned. Unless otherwise stated in this Quarterly Report, "we", "us", "our",
"Company", "Scopus" and "Scopus BioPharma" refer to Scopus BioPharma Inc.



Although the Company believes that the expectations reflected in the
forward-looking statements are reasonable, the Company cannot guarantee future
results, levels of activity, performance, or achievements. Except as required by
applicable law, including the securities laws of the United States, the Company
does not intend to update any of the forward-looking statements to conform these
statements to actual results.



Our unaudited condensed consolidated financial statements are prepared in
accordance with accounting principles generally accepted in the United States
("GAAP"). These accounting principles require us to make certain estimates,
judgments and assumptions. We believe that the estimates, judgments and
assumptions upon which we rely are reasonable based upon information available
to us at the time that these estimates, judgments and assumptions are
made. These estimates, judgments and assumptions can affect the reported amounts
of assets and liabilities as of the date of the financial statements, as well as
the reported amounts of revenues and expenses during the periods presented. Our
unaudited condensed consolidated financial statements would be affected to the
extent there are material differences between these estimates and actual
results. In many cases, the accounting treatment of a particular transaction is
specifically dictated by GAAP and does not require management's judgment in its
application. There are also areas in which management's judgment in selecting
any available alternative would not produce a materially different result. The
following discussion should be read in conjunction with our financial statements
and notes thereto appearing elsewhere in this Quarterly Report.



Overview




We are a biopharmaceutical company developing transformational therapeutics
targeting serious diseases with significant unmet medical needs. Our mission is
to improve patient outcomes and save lives. To achieve our mission, we are
capitalizing on groundbreaking scientific and medical discoveries at some of the
world's foremost research and academic institutions.



Our lead development program is a novel, targeted immuno-oncology gene therapy
for the treatment of multiple cancers. We have partnered with City of Hope, or
COH, for CpG-STAT3siRNA, or CO-sTiRNATM, a STAT3 inhibitor gene therapy.
Pre-clinical testing at City of Hope was designed to determine whether CO-sTiRNA
would reduce growth and metastasis of various pre-clinical tumor models,
including melanoma, and colon and bladder cancers, as well as leukemia and
lymphoma. Based upon such testing, an investigational new drug application, or
IND, for CO-sTiRNA for B-cell lymphoma is currently anticipated to be filed with
the United States Food and Drug Administration, or FDA, in H1 2021. We currently
anticipate that a first-in-human Phase 1 clinical trial for B-cell lymphoma

will
commence in H2 2021.



  24

In conjunction with City of Hope, Phase 1 clinical trials for additional cancer indications are being contemplated for CO-sTiRNA in combination with immune checkpoint inhibitors and chimeric antigen receptor T-cells, or CAR-Ts.


Our second lead development program is MRI-1867, a peripherally-restricted,
dual-action cannabinoid-1, or CB1, receptor inverse agonist and inhibitor of
inducible nitric oxide synthase, or iNOS. We have partnered with the National
Institutes of Health, or NIH, for MRI-1867 and are initially targeting systemic
sclerosis, or SSc. Over-activation of CB1 and iNOS has been implicated in the
pathophysiology of SSc, which includes fibrosis of the skin, lung, kidney, heart
and the gastrointestinal tract. We are currently continuing to conduct
pre-clinical work for MRI-1867 to support an IND filing with the FDA.

We are also partnered with The Hebrew University of Jerusalem, or Hebrew University, on several additional research and development programs. These programs relate to a proprietary opioid-sparing anesthetic and synthesis of novel compounds and new chemical entities, or NCEs.





We have devoted substantially all of our resources to our development efforts
relating to our drug candidates, including sponsoring research with
world-renowned academic and medical research institutions, designing future
pre-clinical studies, providing general and administrative support for these
operations and securing and protecting our licensed intellectual property. We do
not have any products approved for sale and have not generated any revenue from
product sales. From inception (April 18, 2017) until September 30, 2020, we have
funded our operations primarily through the private placement of convertible
notes, common stock and warrants.



We have incurred net losses in each year since our inception. As of September
30, 2020, we had an accumulated deficit of $13,450,830. Substantially all of our
net losses resulted from costs incurred in connection with our research and
development programs and from general and administrative costs associated with
our operations.



We expect to continue to incur significant expenses and increasing operating
losses for at least the next several years. We anticipate that all our expenses
will increase substantially as we:

• continue our research and development efforts;

• contract with third-party research organizations to management our clinical and


   pre-clinical trials for our drug candidates;

• outsource the manufacturing of our drug candidates for clinical testing and


   pre-clinical trials;

• seek to obtain regulatory approvals for our drug candidates;

• maintain, expand and protect our intellectual property portfolio;

• add operational, financial and management information systems and personnel to


   support our research and development and regulatory efforts; and

• operate as a public company.


We do not expect to generate revenue from product sales unless and until we
successfully complete development and obtain marketing approval for one or more
of our drug candidates, which we expect will take a number of years and is
subject to significant uncertainty. Accordingly, we will need to raise
additional capital prior to the commercialization any of our current or future
drug candidates. Until such time, if ever, as we can generate substantial
revenue from product sales, we expect to finance our operating activities
through equity and debt offerings. We may also raise capital through government
or other third-party funding and grants, collaborations and development
agreements, strategic alliances and licensing arrangements. However, we may be
unable to raise additional funds or enter into such other arrangements when
needed on favorable terms or at all. Our failure to raise capital or enter into
such other arrangements as and when needed would have a negative impact on our
financial condition and our ability to develop our drug candidates.



  25

Critical Accounting Policies and Estimates





Our management's discussion and analysis of our financial condition and results
of operations is based on our unaudited condensed consolidated financial
statements, which we have prepared in accordance with GAAP. The preparation of
these unaudited condensed consolidated financial statements requires us to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date
of the financial statements, as well as the reported revenues and expenses
during the reporting periods. We evaluate these estimates and judgments on an
ongoing basis. We base our estimates on historical experience and on various
other factors that we believe are reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying value of
assets and liabilities that are not readily apparent from other sources. Our
actual results may differ from these estimates under different assumptions

or
conditions.



Our significant accounting policies are more fully described in Note 1 to our
unaudited condensed consolidated financial statements appearing elsewhere in
this Quarterly Report and Note 2 to our consolidated financial statements
appearing in our Form 1-K. We believe that the accounting policies are critical
for fully understanding and evaluating our financial condition and results

of
operations.



Net Loss Per Share



Basic net loss per common share attributable to common shareholders is
calculated by dividing net loss attributable to common shareholders by the
weighted average number of common shares outstanding for the period. Since the
Company was in a loss position for all periods presented, basic net loss per
share is the same as dilutive net loss per share as the inclusion of all
potential dilutive common shares which consist of stock options and warrants,
would be anti-dilutive.



JOBS Act



On April 5, 2012, the Jumpstart Our Business Startups Act of 2012, or the JOBS
Act, was enacted. Under the JOBS Act, emerging growth companies can delay
adopting new or revised accounting standards issued subsequent to the enactment
of the JOBS Act until such time as those standards apply to private companies.
We have irrevocably elected to avail ourselves of this exemption from new or
revised accounting standards, and, therefore, will not be subject to the same
new or revised accounting standards as public companies that are not emerging
growth companies. As a result of this election, our financial statements may not
be comparable to companies that are not emerging growth companies.



We are in the process of evaluating the benefits of relying on other exemptions
and reduced reporting requirements provided by the JOBS Act. Subject to certain
conditions set forth in the JOBS Act, as an "emerging growth company," we intend
to rely on certain of these exemptions, including without limitation,
(i) providing an auditor's attestation report on our system of internal controls
over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act
and (ii) complying with any requirement that may be adopted by the PCAOB
regarding mandatory audit firm rotation or a supplement to the auditor's report
providing additional information about the audit and the financial statements,
known as the auditor discussion and analysis. We will remain an "emerging growth
company" until the earliest of (i) the last day of the fiscal year in which we
have total annual gross revenues of $1.07 billion or more; (ii) the last day of
our fiscal year following the fifth anniversary of the date of the completion of
an initial public offering; (iii) the date on which we have issued more than
$1 billion in non-convertible debt during the previous three years; or (iv) the
date on which we are deemed to be a large accelerated filer under the rules

of
the SEC.



  26






Financial Overview

Three Months Ended September 30, 2020 versus Three Months Ended September 30, 2019

The following table summarizes our results of operations for the three months ended September 30, 2020 and 2019, respectively.





                                       Three Months Ended September 30,
                                                                                                %
                                          2020                2019             Change         Change
Operating Expenses:
General and Administrative            $    806,045       $       715,097     $   90,948           12.7 %
Research and Development                    69,421                82,123        (12,702 )        (15.5 )%
Loss from Operations                       875,466               797,220   

     78,246            9.8 %
Net Loss                                 1,159,986               797,220        362,766           45.5 %

Our net losses were $1,159,986 and $797,220 for the three months ended September 30, 2020 and 2019, respectively.





Revenue




We did not generate any revenue in either the three months ended September 30,
2020 or 2019. Our ability to generate product revenues in the future will depend
almost entirely on our ability to successfully develop, obtain regulatory
approval for and then successfully commercialize one or more drug candidates in
the United States.



Operating Expenses

General and Administrative Expenses





General and administrative expenses consist primarily of costs related to our
personnel and management services agreements, or MSAs. Other significant general
and administrative expenses include, accounting and legal services, expenses
associated with obtaining and maintaining patents and the expenses related to
the issuance of stock options to our President and certain of our scientific and
senior advisors. We incurred general and administrative expenses in the three
months ended September 30, 2020 and 2019 of $806,045 and $715,097, respectively.
We attribute this growth in our general and administrative expenses to a greater
level of our business activities (managing our research programs at City of
Hope, the NIH and Hebrew University, negotiating and executing our license
agreements, pursuing patent protection for our intellectual property,
investigating additional business opportunities, retaining new employees and
preparing for our initial public offering ("IPO"), including increased costs to
comply with corporate governance, internal controls and similar requirements
applicable to public companies), all of which have increased the amounts payable
(i) for compensation and benefits and (ii) to our accounting and legal advisors,
offset primarily by a reduction in travel and entertainment expenses due to
COVID-19. In this regard, in the three months ended September 30, 2020 compared
to the same period in 2019, approximately an additional $51,065 and $195,821
were attributable to increased amounts payable for compensation and benefits to
our President and amounts payable for professional services, respectively,
offset by a decrease of $86,816 attributable to a reduction in travel and
entertainment expenses due to COVID-19.



  27

Research and Development Expenses





We recognize research and development expenses as they are incurred. Our
research and development expenses consist of fees incurred under our agreements
with City of Hope, the NIH and Hebrew University, including the expenses
associated with warrants issued in connection with the agreements with Hebrew
University. For the three months ended September 30, 2020 and 2019, we incurred
research and development expenses of $69,421 and $82,123, respectively. These
expenses decreased primarily as a result of a decline in the amounts payable
pursuant to certain of our research agreements in accordance with their terms.
We plan to increase our research and development expenses for the foreseeable
future as we continue the clinical and pre-clinical development of our two lead
drug candidates, CO-sTiRNA and MRI-1867, and to further advance the development
of our other research and development programs, subject to the availability

of
additional funding.

Nine Months Ended September 30, 2020 Versus Nine Months Ended September 30, 2019

The following table summarizes our results of operation for the nine months ended September 30, 2020 and 2019, respectively.





                                          Nine Months Ended September 30,
                                                                                                      %
                                            2020                   2019             Change          Change
Operating Expenses:
General and Administrative            $      2,087,423       $      1,446,519     $   640,904           44.3 %
Research and Development                     7,354,295                279,543       7,074,752        2,530.8 %
Loss from Operations                         9,441,718              1,726,062       7,715,656          447.0 %
Net Loss                                     9,811,383              1,726,062       8,085,321          468.4 %




Our net losses were $9,811,383 and $1,726,062 for the nine months ended
September 30, 2020 and 2019, respectively. We anticipate our fiscal year net
losses will increase as we continue to advance our research and drug development
activities and incur additional general and administrative expenses to meet

the
needs of our business.



Revenue




We did not have any revenue during the nine months ended September 30, 2020 or
2019. Our ability to generate product revenues in the future will depend almost
entirely on our ability to successfully develop, obtain regulatory approval for
and then successfully commercialize a drug candidate in the United States.




  28






Operating Expenses

General and Administrative Expenses





General and administrative expenses consist primarily of costs related to our
personnel and MSAs. Other significant general and administrative expenses
include, accounting and legal services, expenses associated with obtaining and
maintaining patents and the expenses related to the issuance of stock options to
our President and certain of our scientific and senior advisors. We incurred
general and administrative expenses in the nine months ended September 30, 2020
and 2019 of $2,087,423 and $1,446,519, respectively. We attribute this growth in
our general and administrative expenses to a greater level of our business
activities (managing our research programs at City of Hope, the NIH and Hebrew
University, negotiating and executing our license agreements, pursuing patent
protection for our intellectual property, investigating additional business
opportunities, retaining new employees and preparing for our IPO, including
increased costs to comply with corporate governance, internal controls and
similar requirements applicable to public companies), all of which have
increased the amounts payable (i) under our MSAs; (ii) in compensation and
benefits; and (iii) to our accounting and legal advisors. In this regard, in the
nine months ended September 30, 2020 compared to the same period in 2019,
approximately an additional $65,392, $434,260 and $165,746 were attributable to
increased amounts payable under our MSAs, compensation and benefits payable to
our President and amounts payable for professional services, respectively,
offset primarily by a reduction of $92,428 in travel and entertainment expenses
due to COVID-19. The increase in compensation and benefits payable to our
President is attributable to the fact that our president was hired in August
2019 resulting in compensation and benefits expenses for only two months in the
nine months ended September 30, 2019 compared to nine months in the nine months
ended September 30, 2020.

Research and Development and Expenses





We recognize research and development expenses as they are incurred. Our
research and development expenses consist of fees incurred under our agreements
with City of Hope, the NIH and Hebrew University, including the expenses
associated with warrants issued in connection with the agreements with Hebrew
University. For the nine months ended September 30, 2020 and 2019, we incurred
research and development expenses of $7,354,295 and $279,543, respectively.
These expenses increased primarily as a result of us entering into the COH
License Agreement and SRA relating to CO-sTiRNA, including our related
transactions with Bioscience Oncology. The aggregate upfront expenses relating
to the COH License Agreement and Bioscience Oncology, which totaled nearly $7.2
million, were recognized in "Research and Development" expenses during the nine
months ended September 30, 2020. We plan to increase our research and
development expenses for the foreseeable future as we continue the clinical and
pre-clinical development of our two lead drug candidates, CO-sTiRNA and
MRI-1867, and to further advance the development of our other research and
development programs, subject to the availability of additional funding.

Liquidity and Capital Resources


We have incurred losses since our inception and, as of September 30, 2020, we
had an accumulated deficit of $13,450,830. We anticipate that we will continue
to incur losses for at least the next several years. We expect that our research
and development and general and administrative expenses will continue to
increase and, as a result, we will need additional capital to fund our
operations. We expect to finance our cash needs primarily through equity and
debt offerings. We may also raise capital through government or other
third-party funding and grants, collaborations and development agreements,
strategic alliances and licensing arrangements. Between June 2020 and September
2020, we issued an aggregate initial principal amount of $2,253,605 of
convertible notes ("Convertible Notes") in a private placement ("Convertible
Notes Private Placement"). The Convertible Notes have an annual interest rate of
10% per annum, a scheduled maturity on the earlier of July 31, 2021 or a change
of control of the company, and are convertible, including accrued and unpaid
interest, into W Warrants at a conversion price of $0.50 per W Warrant. For each
$1.00 of initial principal, the purchaser also received one W Warrant. Between
February 2020 and June 2020, we issued, on a direct basis, convertible notes and
W Warrants on identical terms to those of the Convertible Notes Private
Placement in an aggregate initial principal amount of $636,230 for $187,500 in
cash with the balance as consideration for legal and management services
rendered. Between July 2020 and September 2020, we issued 21,906 Series A Units
("A Units"), each such A Unit comprised of one share of common stock and two W
Warrants, for approximately $110,000 in gross proceeds. To enhance our liquidity
and capital resources, we have from time to time issued convertible notes and
warrants to various parties, including related parties, to satisfy certain fees
and other payables. We may also seek to satisfy other obligations and payables
through the issuance of additional convertible notes and warrants. On December
18, 2020, we completed an IPO of our common stock at a public offering price of
$5.50 per share for aggregate gross proceeds, including our underwriters'
exercise, in full, of their over-allotment option, of $3,162,500. In addition,
on January 26, 2021, we priced a $9,000,000 follow-on offering of our common
stock at a public offering price of $9.00 per share. We also granted the
underwriters a 45-day option to purchase up to an additional 150,000 shares of
common stock at the public offering price. The follow-on offering is expected to
close on or about January 29, 2021, subject to customary closing conditions.



  29







Since April 18, 2017 (inception) through September 30, 2020, we have funded our
operations principally with $5,869,997 in gross proceeds from the sale of
convertible notes, common stock, warrants, and units comprised of common stock
and warrants, and the exercise of a portion of such warrants. As of September
30, 2020, we had cash of $420,557. In addition, on December 18, 2020, we
completed our IPO raising aggregate gross proceeds of $3,162,500. Further, on
January 26, 2021, we priced a $9,000,000 follow-on offering of our common stock,
which is expected to close on or about January 29, 2021, subject to customary
closing conditions.



Future Funding Requirements



We have not generated any revenue. We do not know when, or if, we will generate
any revenue from product sales. We do not expect to generate significant revenue
from product sales unless and until we obtain regulatory approval of and
commercialize any of our drug candidates. At the same time, we expect our
expenses to increase in connection with our ongoing development activities,
particularly as we continue to research, develop, and seek regulatory approval
for, our drug candidates. We expect to incur additional costs associated with
operating as a public company. In addition, subject to obtaining regulatory
approval of any of our drug candidates, we expect to incur significant
commercialization expenses for product sales, marketing, manufacturing and
distribution. We anticipate that we will need substantial additional funding in
connection with our continuing operations.



Based on our current financial resources, our expected level of operating
expenditures and the net proceeds and/or anticipated net proceeds, respectively,
from prior financings (including our IPO) and currently contemplated securities
offerings, we believe that we will be able to fund our projected operating
requirements for at least the next 12 months. This period could be shortened if
there are any significant increases in planned spending on development programs
or more rapid progress on our development programs than anticipated. Thereafter,
we will need to obtain additional financing to fund future clinical trials for
our drug candidates and other expenses. We expect to finance our cash needs
primarily through debt and equity offerings. We may also raise capital through
government or other third-party funding and grants, collaborations and
development agreements, strategic alliances and licensing arrangements. Because
of the numerous risks and uncertainties associated with the development and
commercialization of our drug candidates, we are unable to estimate the amounts
of additional capital outlays and operating expenditures necessary to complete
the development of our drug candidates. Thereafter, we will need to obtain
additional financing to fund future clinical trials for our drug candidates.
Because of the numerous risks and uncertainties associated with the development
and commercialization of our drug candidates, we are unable to estimate the
amounts of increased capital outlays and operating expenditures necessary to
complete the development of our drug candidates.

Our future capital requirements will depend on many factors, including:

• the progress, costs, results and timing of our drug candidates' future clinical

studies and future pre-clinical trials, and the clinical development of our

drug candidates for other potential indications beyond their initial target


   indications;

• the willingness of the FDA and the EMA to accept our future drug candidate

clinical trials, as well as our other completed and planned clinical and

pre-clinical studies and other work, as the basis for review and approval of


   our drug candidates;




  30

• the outcome, costs and timing of seeking and obtaining FDA, EMA and any other


   regulatory approvals;

• the number and characteristics of drug candidates that we pursue, including our


   drug candidates in future pre-clinical development;

• the ability of our drug candidates to progress through clinical development


   successfully;

• our need to expand our research and development activities;

• the costs associated with securing and establishing commercialization and


   manufacturing capabilities;

• the costs of acquiring, licensing or investing in businesses, products, drug


   candidates and technologies;

• our ability to maintain, expand and defend the scope of our licensed

intellectual property portfolio, including the amount and timing of any

payments we may be required to make, or that we may receive, in connection with

the licensing, filing, prosecution, defense and enforcement of any patents or


   other intellectual property rights;

• our need and ability to hire additional management and scientific and medical


   personnel;

• the effect of competing technological and market developments;

• our need to implement additional internal systems and infrastructure, including


   financial and reporting systems;

• the duration and spread of the COVID-19 pandemic, and associated operational


   delays and disruptions and increased costs and expenses; and

• the economic and other terms, timing and success of any collaboration,


   licensing or other arrangements into which we may enter in the future.




Until such time, if ever, as we can generate substantial revenue from product
sales, we expect to finance our cash needs through a combination of debt
financings and equity offerings, government or other third-party funding,
marketing and distribution arrangements and other collaborations, strategic
alliances and licensing arrangements. To the extent that we raise additional
capital through the sale of debt and equity securities, the ownership interests
of our common stockholders will be diluted, and the terms of these securities
may include liquidation or other preferences that adversely affect the rights of
our common stockholders. Debt financing, if available, may involve agreements
that include covenants limiting or restricting our ability to take specific
actions, such as incurring additional debt, making capital expenditures or
declaring dividends. If we raise additional funds through government or other
third-party funding, marketing and distribution arrangements or other
collaborations, strategic alliances or licensing arrangements with third
parties, we may have to relinquish valuable rights to our technologies, future
revenue streams, research programs or drug candidates or to grant licenses on
terms that may not be favorable to us.



We have considered the spread of the COVID-19 coronavirus outbreak, which the
World Health Organization has declared a "Public Health Emergency of
International Concern." The COVID-19 outbreak is disrupting supply chains and
affecting production and sales across a range of industries. The extent of the
impact of COVID-19 on our operational and financial performance will depend on
certain developments, including the duration and spread of the pandemic and its
impact on our employees and vendors, and our ability to raise capital, all of
which are uncertain and cannot be predicted. At this point, the extent to which
COVID-19 may impact our financial condition or results of operations is
uncertain.



  31

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements as defined under SEC rules.

Recent Accounting Pronouncements


In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The FASB
issued this update to increase transparency and comparability among
organizations by recognizing lease assets and lease liabilities on the balance
sheet and disclosing key information about leasing arrangements. The guidance of
ASU 2016-02 is effective for public business entities for fiscal years beginning
after December 15, 2018, including interim periods within that reporting period,
and for all other entities, the amendments arc effective for fiscal years
beginning after December 15, 2021, and interim periods within that reporting
period. We do not currently hold any leases and therefore adoption of ASU
2016-02 is not expected to have a material impact on our condensed consolidated
financial statements and consolidated financial statements.



In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260),
Distinguishing Liabilities from Equity (Topic 480) and Derivatives and Hedging
(Topic 815): I. Accounting for Certain Financial Instruments with Down Round
Features; II. Replacement of the Indefinite Deferral for Mandatorily Redeemable
Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily
Redeemable Noncontrolling Interests with a Scope Exception ("ASU 2017-11").
Part I of this update addresses the complexity of accounting for certain
financial instruments with down round features. Down round features are features
of certain equity-linked instruments (or embedded features) that result in the
strike price being reduced on the basis of the pricing of future equity
offerings. Current accounting guidance creates cost and complexity for entities
that issue financial instruments (such as warrants and convertible instruments)
with down round features that require fair value measurement of the entire
instrument or conversion option. Part II of this update addresses the difficulty
of navigating Topic 480, Distinguishing Liabilities from Equity, because of the
existence of extensive pending content in the FASB Accounting Standards
Codification. This pending content is the result of the indefinite deferral of
accounting requirements about mandatorily redeemable financial instruments of
certain nonpublic entities and certain mandatorily redeemable noncontrolling
interests. The amendments in Part II of this update do not have an accounting
effect. The amendments in Part I of this ASU are effective for public business
entities for fiscal years, and interim periods within those fiscal years,
beginning after December 15, 2018. For all other entities, including EGCs, the
amendments in Part I of this Update are effective for fiscal years beginning
after December 15, 2019, and interim periods within fiscal years beginning after
December 15, 2020. Early adoption is permitted. The company's early adoption of
ASU 2017-11 on January 1, 2019 did not have a material impact on the condensed
consolidated financial statements or condensed consolidated financial
statements.



As previously noted, we, as an emerging growth company, have elected to take
advantage of the benefits of the extended transition period provided for in
Section 7(a)(2)(B) of the Securities Act, for complying with new or revised
accounting standards, which allows us to defer adoption of certain accounting
standards until those standards would otherwise apply to private companies
unless otherwise noted.



We have reviewed other recent accounting pronouncements and concluded they are
either not applicable to the business or no material effect is expected on the
condensed consolidated financial statements or consolidated financial statements
as a result of future adoption.

Effect of Inflation and Changes in Prices

We do not believe that inflation and changes in prices will have a material effect on our operations.

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