(

)

Share-Based Compensation

BioCardia Lifesciences adopted, and the BioCardia Lifesciences shareholders approved, the

2002

Stock Plan in

2002

(the

“2002

Plan”), and the Company assumed the

2002

Plan in the Merger. We

have

not

granted or do

not

intend to grant any additional awards under the

2002

Plan following the Merger. In

2016,

BioCardia Lifesciences adopted, and the BioCardia Lifesciences shareholders approved, the

2016

Equity Incentive Plan (the

“2016

Plan”), and the Company assumed the

2016

Plan in the Merger. We have granted awards, including incentive stock options and nonstatutory stock options, under the

2016

Plan following the Merger. Under the

2002

Plan and the

2016

Plan, the number of shares, terms, and vesting periods are determined by the Company’s board of directors or a committee thereof on an option-by-option basis. Options generally vest ratably over service periods of

four

years and expire

ten

years from the date of grant. The per share exercise price shall be

less than the fair market value on the date of grant. Compensation cost for employee share-based awards is based on the grant-date fair value and is recognized over the vesting period of the applicable award on a straight-line basis.

The Company recognizes in the consolidated statements of operations the grant-date fair value of stock options and other equity-based compensation. Share-based compensation expense for the years ended

December 31, 2017,

2016

and

2015

was recorded as follows (in thousands):

	Years ended December 31 ,
	201 7		201 6		201 5
Cost of goods sol d	$	140	$	14	$	4
Research and developmen t		678		127		29
Selling, general and administrativ e		1,889		801		250
Share-based compensation expens e	$	2,707	$	942	$	283

The following table summarizes activity under the Company’s stock option plans, including the

2002

Plan and the

2016

Plan and related information (in thousands, except share and per share amounts and term):

	Options outstanding
				Weighted		Weighted		Aggregate
				average		average		intrinsic
	Number of			exercise		remaining contractual		value
	shares			price		term (years)		(in thousands)
Balance, December 31, 2016		3,491,937		$	1.78		8.7	$	39,046
Stock options granted		842,653			7.66
Stock options exercised		( 87,542	)		1.87
Stock options cancelled		( 33,948	)		0.48
Balance, December 31, 2017		4,213,100		$	2.96		8.1	$	1,890
Exercisable, December 31, 2017		1,556,234		$	2.28		6.9	$	844
Unexercisable, December 31, 2017		2,656,866		$	3.36		8.8	$	1,046

The total intrinsic value of options exercised during the years ended

December 31, 2017,

2016

and

2015

was approximately

$400,000,

$144,000

and

$137,000,

respectively. The weighted average grant-date fair value of options granted during the years ended

December 31, 2017

and

2016

was

$5.8

and

$1.33

per share, respectively.

Employee Share-Based Compensation

During the year

s ended

December 31, 2017

and

2016,

BioCardia Lifesciences granted stock options to certain non-employee directors and employees

to purchase

796,399

and

2,190,629

shares of common stock, respectively. There were

grants to employees during the year ended

December 31, 2015.

The fair value of each option grant was estimated on the date of the grant using the Black-Scholes

option pricing model with the following assumptions:

	Years ended December 31 ,
	201 7			201 6
Risk-free interest rat e	1.76	-	2.25%	1.28	-	1.58%
Volatilit y	81	-	89%		88%
Dividend yiel d		None			None
Expected term (in years )	5.00	-	6.25		6.25

Unrecognized share-based compensation for

non-employee directors and

employee options granted through

December 31, 2017

is approximately

$4.9

million to be recognized over a remaining weighted average service period of

2.8

years.

Non-Employee Director

Share-Based Compensation (RSUs)

During the

year ended

December 31, 2017,

the Company granted to certain non-employee directors

97,996

restricted stock units, or RSUs. The fair value of each RSU is estimated on the closing market price on the grant date.

The following summarizes the activity of non-vested RSUs:

			Weighte d
			averag e
			grant dat e
	Number o f		fair valu e
	share s		per shar e
Balance, December 31, 201 6		—
RSUs grante d		97,996	$	8.71
RSUs veste d		—
RSUs forfeite d		—
Balance, December 31, 201 7		97,996	$	8.71

Unrecognized share-based compensation for employee RSUs granted through

December 31, 2017

was approximately

$541,000

to be recognized over a remaining weighted average service period of

1.8

years.

Nonemployee Share-Based Compensation

During the year ended

December 31,

201

and

2016,

the Company granted options to purchase

46,254

and

490,849

shares of common stock to consultants. These options were granted in exchange for consulting services to be rendered and vest over the term specified in the grant, which correlates to the period the services are rendered.

options to non-employees were granted during the year ended

December 31, 2015.

The Company recorded nonemployee share-based compensation expense of

$768,000,

$545,000

and

$10,000

for the years ended

December 31, 2017,

2016

and

2015

respectively.

The Company accounts for share-based compensation arrangements with nonemployees, using the B

lack Scholes option pricing model, based on the fair value as these instruments vest. Accordingly, at each reporting date, the Company revalues the unearned portion of the share-based compensation and the resulting change in fair value is recognized in the consolidated statements of operations over the period the related services are rendered. The following assumptions were used to value the awards.

	Years ended December 31 ,
	201 7			201 6			201 5
Risk-free interest rate	2.25	-	2.40%	1.60	-	2.42%	1.26	-	2.30%
Volatility	81	-	87%	89	-	91%	71	-	95%
Dividend yield		None			None			None
Expected term (in years)	8.6	-	9.8	9.6	-	9.9	8.5	-	9.7