4. STOCK-BASED COMPENSATION

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. In June 2020, our stockholders approved an increase to the 2013 Plan reserve to 800,000 shares of our common stock for restricted stock and restricted stock unit (“RSU”) awards, on or prior to June 2023, to our executive officers, non-employee directors and other key employees (of which, there were 619,497 shares available for future awards at September 30, 2020). 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 2020, as part of their annual director compensation, certain of our non-employee directors were granted a total of 24,010 service-based RSUs under the 2013 Plan which will vest ratably over the next 3 years provided that the participant is still on the board on the vesting date. In December 2020, certain of our key employees were granted a total of 18,255 RSUs under the 2013 Plan which vested immediately.

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 as of September 30, 2020 and 2019 is presented below:

(in thousands, except per share data)	Shares			Grant Fair Value
Balance, December 31, 2019	$	606		$	7.27
Granted		33			4.38
Vested		(19	)		6.61
Balance, September 30, 2020	$	620		$	7.27

Balance, December 31, 2018	$	658		$	7.39
Granted		28			5.64
Forfeited		(5	)		5.64
Vested		(1	)		7.72
Balance, September 30, 2019	$	680		$	7.39

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 $0.2 million and $0.6 million for the three and nine-month periods ended September 30, 2020 and $0.2 million and $0.6 million for the three and nine-month periods ended September 30, 2019, respectively.

As of September 30, 2020, 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 September 30, 2020, there was unrecognized compensation cost related to non-vested, service-based restricted stock and RSU awards of $2.3 million which will be recognized in each of the following years:

(in thousands)
2020	$	208
2021		812
2022		760
2023		516
Total unrecognized expense	$	2,296

We issue shares from authorized shares upon the lapsing of vesting restrictions on restricted stock and RSUs. For the nine months ended September 30, 2020, we issued 19,031 shares resulting from the vesting of restricted stock. We do not use cash to settle equity instruments issued under stock-based compensation awards.