(

)

Operating Lease Right-of-Use Asset, Net

The Company's operating lease is a property lease for its laboratory and corporate offices. BioCardia's lease agreement does

not

contain any material residual guarantees or material restrictive covenants, nor does it contain an additional lease extension. The Company determines if an arrangement is a lease at inception by assessing whether it conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Company's lease does

not

provide an implicit rate. The Company used an adjusted historical incremental borrowing rate, based on the information available at the approximate lease commencement date, to determine the present value of lease payments. Variable rent expense is made up of expenses for common area maintenance and shared utilities and were

not

included in the determination of the present value of lease payments. The Company has

finance leases.

The lease expense for the

three

and

nine

months ended

September 30, 2020,

respectively, was

$150,000

and

$451,000.

The lease expense for the

three

and

nine

months ended

September 30, 2019,

respectively, was

$150,000

and

$450,000.

The cash paid under the operating lease during the

three

and

nine

months ended

September 30, 2020,

respectively, was

$158,000

and

$473,000.

The cash paid under the operating lease during the

three

and

nine

months ended

September 30, 2019,

respectively, was

$153,000

and

$459,000.

September 30, 2020,

the weighted average remaining lease term was

1.25

years, and the weighted average discount rate was

12.05%.

Future minimum lease payments under the operating lease as of

September 30, 2020

are as follows (in thousands):

	Operating Lease
	September 30, 2020
Remainder of 2020	$	158
For the year ending December 31, 2021		649
Total undiscounted lease payments		807
Less imputed interest		54
Total operating lease liabilities	$	753