The Company maintains the SMTC Corporation Incentive Plan (the Plan”), which was adopted by the Board of Directors and approved by the stockholders of the Company in In the plan authorized an initial limit of shares. In the years to the authorized number of shares increased by under the Plan as approved by the Board of Directors and approved by the stockholders, in addition to annual increases authorized based on the evergreen annual increase formula of the Plan. In the Company’s stockholders approved an increase in the number of shares available for issuance under the Plan by shares. The evergreen annual increases based on the formula of the Plan was shares in and shares in The total number of shares remaining available for future issuance under the Plan as at is

 

 

The Company settles its stock options in shares of common stock. A summary of stock option activity under the Incentive Plans for the years ended and is as follows:

 

		Total Outstanding options				Weighted average exercise price				Aggregate intrinsic value				Weighted average remaining contractual term (years)
Outstanding balance at January 3, 2016			655,114			$	1.98
Options granted			387,255				1.33
Options forfeited			(363,847	)			1.46
Options expired			(61,756	)			3.46
Options exercised			—				—
Outstanding balance at January 1, 2017			616,766				1.82
Options granted			1,468,716				1.29
Options forfeited			(40,722	)			1.80
Options expired			(174,007	)			1.89
Options exercised			—				—
Outstanding balance at December 31, 2017			1,870,753				1.39
Options granted			385,929				2.16
Options forfeited			(316,180	)			1.25
Options expired			—				—
Options exercised			(220,678	)			1.71
Outstanding balance at December 30, 2018			1,719,824			$	1.55			$	1,998				8.6
Exercisable balance at December 30, 2018			771,192			$	1.55			$	1,871				8.0

 

The estimated fair value of stock options is determined using the Black-Scholes option pricing model (excluding stock options that contain performance vesting conditions) and are amortized over the vesting period on a straight line basis. The Company estimates the expected term of the stock options based on evaluating historical exercise data. The Company considers exercise data based on employee behavior when developing the expected term assumptions. The computation of expected volatility is based on the Company’s historical volatility from its traded common stock over the expected term of the stock option grants. The interest rate for periods within the expected term of the award is based on the U.S. Treasury yield curve in effect at the time of grant. The following weighted average assumptions were used in calculating the estimated fair value of stock options used to compute stock-based compensation expenses:

 

 

		Year ended December 3 0 , 2018				Year ended December 31, 2017				Year ended January 1, 2017
Black-Scholes weighted-average assumptions
Expected dividend yield			0.0	%			N/A				0.0	%
Expected volatility			42.1	%			N/A				43.8	%
Expected forfeiture			30.0	%			N/A				29.0	%
Risk-free interest rate			2.84	%			N/A				1.33	%
Expected stock option life in years			4.0				N/A				4.0
Weighted-average stock option fair value per stock option granted		$	1.00			$	N/A			$	0.48

 

Certain stock options granted during have market-based performance conditions such that tranches of stock awards vest and are issuable only if the Company’s common stock meets or exceeds specified target market prices during the vesting period as defined by the administrator of the Plan. If the market-based performance conditions are met during the option life ( years), the stock options will vest and will expire. These stock options with market-based performance conditions have been valued using the Binomial Model. The following weighted average assumptions were used in calculating the estimated fair value of awards with market-based performance conditions used to compute stock-based compensation expenses:

 

		Year ended December 3 0 , 2018				Year ended December 31, 2017				Year ended January 1, 2017 (1)
Binomial Model weighted-average assumptions
Stock Price		$	2.07			$	1.29				N/A
Expected volatility			43.0	%			43.0	%			N/A
Expected forfeiture			30.0	%			30.0	%			N/A
Risk-free interest rate			1.02	%			1.02	%			N/A
Expected stock option life in years			4.0				4.9				N/A
Weighted-average stock option fair value per award granted		$	0.47			$	0.30			$	N/A

 

() stock options with market-based performance conditions were granted in fiscal

 

During the years ended and the Company recorded stock-based compensation expense and a corresponding increase in additional paid in capital of and respectively.

 

During the years ended and and options vested, respectively. As at compensation expense of related to non-vested stock options has been recognized.

 

The following table presents information about stock options outstanding as of

 

Outstanding options			Weighted average exercise price				Exercisable options				Weighted average exercise price
326,108			$	1.80				233,704			$	1.80
671,858				1.23				268,744				1.23
335,929				1.26				134,372				1.26
50,000				2.74				—				—
335,929				2.07				134,372				2.07
1,719,824				1.55				771,192				1.55

 

 

 

 

Restricted Stock Units (“RSU”) are settled in shares of common stock. RSUs are issued under the Plan and have same terms and conditions as other equity compensation awards issued under the Plan. RSUs are valued at the closing stock price on the date the RSUs are granted. RSUs have vesting terms of to years. The compensation expense is recorded on a straight line basis over the vesting period.

 

Certain RSUs granted during have market-based performance conditions such that the awards vest and are issuable only if the market price of the Company’s common stock meets or exceeds a specified target during the vesting period as defined by the administrator of the Plan. If the market-based performance condition is met, the RSUs will vest and will be forfeited. The RSUs with market-based performance conditions have been valued using the Binomial Model. The following weighted average assumptions were used in calculating the estimated fair value of awards with market-based performance conditions used to compute stock-based compensation expenses:

  

Year ended December 3 0 , 2018 ( 1 )

Year ended December 31, 2017 (1)

Year ended January 1, 2017

Binomial Model weighted-average assumptions

Stock Price

N/A

N/A

$

1.34

Expected volatility

N/A

N/A

42.2

%

Expected forfeiture

N/A

N/A

29.0

%

Risk-free interest rate

N/A

N/A

0.60

%

RSU term in years

N/A

N/A

3.0

Weighted-average RSU fair value per award granted

N/A

N/A

$

0.42

 

()    RSU’s with market-based performance conditions were granted in or in

 

		Outstanding options				Weighted average stock price				Weighted average remaining contractual term (years)
Outstanding balance at January 3, 2016			479,564			$	1.88
RSU granted			987,764				0.84
RSU forfeited			(352,077	)			0.87
RSU converted into common shares			(25,125	)			1.99
Outstanding balance at January 1, 2017			1,090,126				1.22				1.01
RSU granted			229,950				1.50
RSU forfeited			(261,606	)			0.89
RSU converted into common shares			(482,447	)			1.72
Outstanding balance at December 31, 2017			576,023				1.13				1.84
RSU granted			54,811				3.09
RSU forfeited			(75,151	)			0.91
RSU converted into common shares			(198,306	)			1.82
Outstanding balance at December 30, 2018			357,377			$	0.96				1.21

 

During the periods ended and the Company recorded stock-based compensation expense and a corresponding increase in additional paid in capital of and respectively, with respect to RSUs.