STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2019

STOCKHOLDERS' EQUITY [Abstract]

STOCKHOLDERS' EQUITY

12.  STOCKHOLDERS’ EQUITY

Equity Compensation Plans

Restricted Stock Plan

The Tandy Leather Factory, Inc. 2013 Restricted Stock Plan (the “2013 Plan”) was adopted by our Board of Directors in January 2013 and approved by our stockholders in June 2013.  The 2013 Plan initially reserved up to 300,000 shares of our common stock for restricted stock and restricted stock unit (“RSU”) awards, on or prior to June 2018, to our executive officers, non-employee directors and other key employees (of which, there were 149,605 shares available for future awards as of December 31, 2019).  Awards granted under the 2013 Plan may be service-based awards or performance-based awards, and may be subject to a graded vesting schedule with a minimum vesting period of four years, unless otherwise determined by the Compensation Committee of the Board of Directors that administers the plan.  In March 2019, as part of their annual director compensation, certain of our non-employee directors were granted a total of 28,191 service-based RSUs under the 2013 Plan which will vest ratably over the next three years provided that the participant is still on the board on the vesting date.  In December 2019 certain of our key employees were granted a total of 17,988 service-based RSUs under the 2013 Plan which will vest ratably over the next three years provided that the participants are employed on the vesting date.

In June 2020, our stockholders approved an increase to the plan reserve to 800,000 shares of our common stock and extended the 2013 Plan through June 2023.

In addition to grants under the Company’s 2013 Restricted Stock Plan, in October 2018 we granted a total of 644,000 RSUs to the Company’s Chief Executive Officer (“CEO”), of which (i) 460,000 are service-based RSUs that vest ratably over a period of five years from the grant date based on our CEO’s continued employment in her role, (ii) 92,000 are performance-based RSUs that will vest if the Company’s operating income exceeds $12 million dollars two fiscal years in a row, and (iii) 92,000 are performance-based RSUs that will vest if the Company’s operating income exceeds $14 million dollars in one fiscal year.

A summary of the activity for non-vested restricted stock and RSU awards is as follows:

	Shares			Grant Fair Value
Balance, January 1, 2017		61,098		$	8.03
Granted		9,005			8.05
Vested		(33,300	)		8.14
Balance, December 31, 2017		36,803		$	7.93
Balance, January 1, 2018		36,803		$	7.93
Granted		654,000			5.31
Vested		(33,086	)		7.94
Balance, December 31, 2018		657,717		$	7.39
Balance, January 1, 2019		657,717		$	7.39
Granted		46,179			5.67
Forfeited		(5,319	)		5.64
Vested		(93,408	)		7.39
Balance, December 31, 2019		605,169		$	7.27

The Company’s stock-based compensation relates primarily to RSU awards.  For these service-based awards, our stock-based compensation expense, included in operating expenses, was $0.8 million, $0.3 million, and $0.2 million in 2019, 2018 and 2017, respectively.

As of December 31, 2019, the Company has concluded it is not probable that the performance conditions related to performance-based RSUs will be achieved, and as a result no compensation expense related to performance-based RSUs has been recorded.

As of December 31, 2019, there was unrecognized compensation cost related to non-vested, service-based awards of $2.8 million which will be recognized over 3.6 weighted average years in each of the following years:

Unrecognized Expense
2020	$	777,537
2021		758,325
2022		721,284
2023		509,910
	$	2,767,056

We issue shares from authorized shares upon the lapsing of vesting restrictions on restricted stock and RSUs.  In 2019, 2018 and 2017, we issued 93,408, 33,086 and 33,300 shares, respectively, resulting from the vesting of restricted stock.  We do not use cash to settle equity instruments issued under stock-based compensation awards.

Stock Options

We had a stock option plan that terminated in March 2017, which permitted stock option grants to non-employee directors with an exercise price equal to the fair market value of the shares at the date of grant.  Options outstanding and exercisable were granted at a stock option price which was not less than the fair market value of our common stock on the date the option was granted, and no option has a term in excess of ten years.

A summary of stock option transactions for the year ended December 31, 2017 is as follows (no amounts shown for 2018, as the plan was terminated in March 2017):

	Option			Weighted Average
	Shares			Exercise Price
Outstanding at January 1		56,400		$	5.14
Granted		-			-
Forfeited or cancelled		(12,000	)		5.14
Exercised		(44,400	)		5.14
Outstanding at December 31		-		$	-
Exercisable at end of year		-		$	-
Weighted-average fair value of
options granted during year		n/a

Because there were no grants of stock options or vested options outstanding in 2019, 2018 or 2017, there were no amounts of compensation cost recorded.  The intrinsic value of stock options exercised in 2017 was $0.2 million.  Cash received from the exercise of stock options for 2017 was $0.2 million.

Share Repurchase Program

In August 2015, our Board of Directors authorized a share repurchase program, pursuant to which we were authorized to repurchase up to 1.2 million shares of our common stock at prevailing market rates through August 2016.  Subsequently, the program was amended to increase the number of shares available for repurchase to 2.2 million and to extend the program through August 2019.  In June 2019, the program was again amended to increase the number of shares available to one million as of such date and to extend the program through August 9, 2020.

For the years ended December 31, we repurchased the following shares:

Year ended December 31,	Total shares repurchased		Average price per share
2019		131,782	$	5.58
2018		243,387	$	6.79

As of December 31, 2019, there were 996,163 shares that remained available for repurchase under the plan.

On August 9, 2020, the Board of Directors approved a new program to repurchase up to $5.0 million of its common stock between August 9, 2020 and July 31, 2022, subject to the completion of our financial restatement and the filing of all Delinquent Filings with the SEC.  The Company’s previous share repurchase program expired in August 2020.

On January 28, 2021, we entered into an agreement with an institutional shareholder of the Company, to repurchase 500,000 shares of our common stock, par value $0.0024 in a private transaction. The purchase price was $3.35 per share for a total of $1.7 million. The closing of the repurchase of these shares took place on February 1, 2021. Prior to the repurchase, the shares represented approximately 5.5% of our outstanding common stock.