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Stockholders' Equity | 3 Months Ended
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Mar. 31, 2020
Stockholders' Equity [Abstract] |
Stockholders' Equity | NOTE 7. STOCKHOLDERS’ EQUITY Equity Plans As of March 31, 2020, in total, we had three active equity compensation plans: the 2010 Equity Incentive Plan (“2010 Plan”), the 2010 Outside Director Equity Incentive Plan (“2010 Director Plan”) and the 2010 Employee Stock Purchase Plan (“ESPP”). Pursuant to the terms of the then-in-process Merger Agreement, the ESPP was terminated after the completion of the purchase period ended March 1, 2019. After the merger with Illumina was terminated in January 2020, we began offerings under the ESPP again starting with the offering period beginning on March 1, 2020. Stock Options The following table summarizes stock option activity for all our stock option plans for the three months ended March 31, 2020 (in thousands, except per share amounts):
|  | Stock Options Outstanding
|  |  |  |  |  |  | Weighted
|  | Number |  |  |  |  | average
|  | of shares |  | Exercise price |  | exercise price
Balances, December 31, 2019 |  | 22,697 |  | $ | 1.16 – 16.00 |  | $ | 5.57
Options granted |  | 35 |  |  | 2.45 |  |  | 2.45
Options exercised |  | (67) |  |  | 1.16 – 4.25 |  |  | 3.00
Options canceled |  | (980) |  |  | 2.54 – 15.77 |  |  | 7.80
Balances, March 31, 2020 |  | 21,685 |  | $ | 1.16 – 16.00 |  | $ | 5.48
For the three months ended March 31, 2020 and 2019, we recognized compensation expense of $1.7 million and $3.2 million, respectively, related to options. Restricted Stock Units, or “RSUs” Time-based RSUs The following table summarizes the time-based RSUs activity for the three months ended March 31, 2020 (in thousands, except per share amounts):
|  |  | Weighted average
| Number |  | grant date
| of shares |  | fair value
RSUs outstanding at December 31, 2019 | 1,086 |  | $ | 6.12
RSUs granted | 4,960 |  |  | 4.41
RSUs released | (850) |  |  | 6.79
RSUs forfeited | (115) |  |  | 4.82
Unvested RSUs outstanding at March 31, 2020 | 5,081 |  | $ | 4.36
For the three months ended March 31, 2020 and 2019, we recognized compensation expense of $2.2 million and $0.7 million, respectively, related to time-based RSUs. Performance-based RSUs The following table summarizes the performance-based RSUs activity for the three months ended March 31, 2020 (in thousands, except per share amounts):
|  |  | Weighted average
| Number |  | grant date
| of shares |  | fair value
PSUs outstanding at December 31, 2019 | 138 |  | $ | 2.63
PSUs granted | — |  |  | —
PSUs released | — |  |  | —
PSUs forfeited | — |  |  | —
Unvested PSUs outstanding at March 31, 2020 | 138 |  | $ | 2.63
For the three months ended March 31, 2020 and 2019, we recognized compensation expense of $0 and $7,000, respectively, related to the performance-based RSUs. In January 2020, an additional 7.7 million shares and 1.5 million shares, respectively, were reserved under the 2010 Plan and the 2010 Director Plan. As of March 31, 2020, we had an aggregate of 26.4 million shares of common stock reserved and available for future issuance under the 2010 Plan and 2010 Director Plan. ESPP shares Shares issued under our ESPP were none and 1,306,329 during the three months ended March 31, 2020 and 2019, respectively. In January 2020, an additional 3.1 million shares were reserved under the ESPP. As of March 31, 2020, 6,713,447 shares of our common stock remain available for issuance under our ESPP. For the three months ended March 31, 2020 and 2019, we recognized compensation expense of $129,000 and $548,000, respectively, related to the ESPP shares. Stock-Based Compensation The following table summarizes the stock-based compensation expense for the three months ended March 31, 2020 and 2019, respectively (in thousands):
| Three Months Ended March 31, |
| 2020 |  | 2019 |
Cost of revenue | $ | 527 |  | $ | 512 |
Research and development |  | 1,759 |  |  | 2,012 |
Sales, general and administrative |  | 1,746 |  |  | 1,857 |
Total stock-based compensation expense | $ | 4,032 |  | $ | 4,381 |
W e estimated the fair value of employee stock options on the grant date using the Black-Scholes option pricing model. The estimated fair value of employee stock options is amortized on a straight-line basis over the requisite service period of the awards. We did no t grant any stock options for the year ended December 31, 2019 due to the then-in-process merger with Illumina.
| Three Months Ended March 31, |
Stock Option | 2020 |  | 2019 |
Expected term in years | 5.1 |  | — |
Expected volatility | 57% |  | — |
Risk-free interest rate | 1.2% |  | — |
Dividend yield | — |  | — |
We estimate the value of employee stock purchase rights on the grant date using the Black-Scholes option pricing model. Pursuant to the terms of the then-in-process merger with Illumina, the ESPP was terminated after the completion of the purchase period ended March 1, 2019 and there were no offerings after March 1, 2019. As such there were no new Black-Scholes calculations performed to calculate the fair value of new purchase rights granted for the year ended December 31, 2019. After the merger with Illumina was terminated in January 2020, we began offerings under the ESPP again starting with the offering period on March 1, 2020.
| Three Months Ended March 31,
ESPP | 2020 |  | 2019
Expected term in years | 0.5-2.0 |  | —
Expected volatility | 57% |  | —
Risk-free interest rate | 0.8%-1.0% |  | —
Dividend yield | — |  | —

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