(

)

Significant Accounting Policies

	(a)	Basis of Preparation

		The accompanying condensed consolidated balance sheets, statements of operations, shareholders equity, and cash flows as of September 30, 2019 and for the three and nine months ended September 30, 2019 and 2018 are unaudited. The condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) for interim financial information and on a basis consistent with the annual financial statements and, in the opinion of management, reflect all adjustments which include only normal recurring adjustments, necessary to present fairly its financial position as of September 30, 2019, results of operations for the three and nine months ended September 30, 2019 and 2018, and cash flows for the nine months ended September 30, 2019 and 2018. The results for the nine months ended September 30, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019 or for any other interim period or for any other future year. Certain changes in the prior period consolidated balance sheet have been made to conform to the current period presentation. Changes to reduce the December 31, 2018 accounts payable and increase the accrued expenses and other current liabilities accounts were made in the amount of $277,000. These changes had no effect on the Consolidated Statement of Operations or cash flow.

		These condensed consolidated financial statements should be read in conjunction with the audited financial statements and related notes included in the Company’s Annual Report on Form 10 -K for the year ended December 31, 2018, filed with the SEC on April 2, 2019.

	(b)	Liquidity

		The Company has incurred net losses and negative cash flows from operations since its inception and had an accumulated deficit of $97.6 million as of September 30, 2019. Management expects operating losses and negative cash flows to continue through the next several years. These factors raise substantial doubt about the Company’s ability to continue as a going concern beyond one year from the date these financial statements are issued. Based on management’s current plans, management believes cash and cash equivalents of $8,910,000 as of September 30, 2019, will not be sufficient to fund the Company for one year from the date these financial statements are issued. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

		If adequate funds are not available, BioCardia may be required to reduce operating expenses, delay or reduce the scope of its product development programs, obtain funds through arrangements with others that may require it to relinquish rights to certain of its technologies or products that the Company would otherwise seek to develop or commercialize itself, or cease operations. While the Company believes it has a viable strategy to raise additional funds, there can be no assurances that it will be able to obtain additional capital on acceptable terms and in the amounts necessary to fully fund its operating needs.

	(c)	Use of Estimates

		The preparation of the financial statements in accordance with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ materially from those estimates. Significant items subject to such estimates and assumptions include share-based compensation, the useful lives of property and equipment, allowances for doubtful accounts and sales returns, incremental borrowing rate, and inventory valuation.

	(d)	Principles of Consolidation

		The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All intercompany accounts and transactions have been eliminated during the consolidation process.

	(e)	Changes to Significant Accounting Policies

		The Company’s significant accounting policies are described in Note 2 of the notes to the consolidated financial statements included in its Annual Report on Form 10 -K filed for the year ended December 31, 2018. Apart from the adoption of ASU No. 2018 - 07, Compensation–Stock Compensation (Topic 718 ): Improvements to Nonemployee Share-based Payment Accounting on January 1, 2019, which led to an amended stock-based compensation policy, and the adoption of ASU No. 2016 - 02, Leases (Topic 842 ), which led to an amended lease policy as described in the following paragraphs, there have been no changes to those policies. Measurement of nonemployee awards - The measurement of equity-classified nonemployee awards is fixed at the grant date, and the Company may use the expected term to measure nonemployee options or elect to use the contractual term as the expected term, on an award-by-award basis. This differs from the guidance in ASC 505 - 50 that requires the use of the contractual term. Forfeitures of nonemployee awards will be recognized as they occur. Operating lease right-of-use asset and liabilities - The Company will determine if an arrangement is a lease at the inception of the arrangement. All leases are assessed for classification as an operating lease or finance lease. The Company will recognize a lease liability and a ROU asset for all leases, including operating leases, with a term greater than 12 months. ROU assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. The Company’s lease liabilities are recognized at the applicable lease commencement date based on the present value of the lease payments required to be paid over the lease term. Variable lease payments are expensed as incurred and are not included the computation of the lease liability. The lease liability discount rate is generally the Company’s incremental borrowing rate unless the lessor’s rate implicit in the lease is readily determinable, in which case the lessor’s implicit rate is used. The Company's ROU assets are also recognized at the applicable lease commencement date. The ROU asset equals the carrying amount of the related lease liability, adjusted for any lease payments made prior to lease commencement and lease incentives provided by the lessor, if any. The Company amortizes a right-of-use (ROU) asset, and the periodic amortization is the difference between the straight-line total lease cost for the period (including amortization of initial direct costs) and the periodic accretion of the lease liability using the effective interest method. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that it will exercise any such options. Operating lease cost for lease payments is recognized on a straight-line basis over the lease term. The Company’s lease contracts often include lease and non-lease components. The Company has elected the practical expedient offered by the standard to not separate lease from non-lease components and accounts for them as a single lease component. The Company has elected not to recognize ROU assets and lease liabilities for leases with a term of twelve months or less. Lease cost for short-term leases is recognized on a straight-line basis over the lease term.

(f)

Recently Adopted Accounting Pronouncement

February 2016,

the FASB amended its guidance related to lease accounting. The amended guidance required lessees to recognize a majority of their leases on the balance sheet as a ROU asset and a lease liability. In

July 2018,

the FASB issued ASU

No.

2018

11,

Leases (Topic

842

): Targeted Improvements, or ASU

No.

2018

11.

In issuing ASU

No.

2018

11,

the FASB is permitting another transition method for ASU

2016

02,

which allows the transition to the new lease standard by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company elected this available transition method.

The Company adopted the new standard using the cumulative-effect method on

January 1, 2019.

The Company's adoption included lease codification improvements that were issued by the FASB through

March 2019.

The FASB made available several practical expedients in adopting the amended lease accounting guidance. The Company elected the package of practical expedients permitted under the transition guidance, which among other things, allowed registrants to carry forward historical lease classification, its assessment on whether a contract is or contains a lease, and its initial direct costs for any leases that exist prior to adoption of the new standard. BioCardia also elected to keep leases with an initial term of

months or less off the consolidated balance sheet, and to recognize the associated lease payments in the statements of operations on a straight-line basis over the lease term.

The most significant impact was the recognition of ROU assets and related lease liabilities for operating leases on the condensed consolidated balance sheet. The Company recognized ROU assets and related lease liabilities of

$1,505,000

and

$1,593,000

respectively, related to operating lease commitments, as of

January 1, 2019.

The operating lease ROU asset represents the lease liability, plus any lease payments made at or before the commencement date, less any lease incentives received. The amended guidance did

not

have a material impact on the Company's cash flows or results of operations. See Note

of the condensed consolidated financial statements.

June 2018,

the FASB issued ASU

No.

2018

07,

Stock Compensation (Topic

718

): Improvements to Nonemployee Share-Based Payment Accounting. ASU

2018

is intended to reduce the cost and complexity and to improve financial reporting for nonemployee share-based payments. ASU

2018

expands the scope of Topic

718,

Compensation-Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned.

longer will nonemployee awards be marked-to-market every reporting period, nor will the expected term be required to be the contractual term. However, forfeitures will continue to be recognized when incurred. ASU

2018

supersedes Subtopic

505

50,

Equity-Based Payments to Non-Employees. The Company adopted ASU

2018

effective

January 1, 2019

using the cumulative-effect method for equity-classified nonemployee awards which have

not

been settled as of the adoption date. The cumulative effect did

not

have a material impact on the condensed consolidated balance sheet, statement of operations or statement of cash flows.

	(g)	Recently Issued Accounting Pronouncements

		Recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force did not or are not believed by management to have a material impact on the Company’s financial statement presentation or disclosures.