STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2020

STOCKHOLDERS' EQUITY [Abstract]

STOCKHOLDERS' EQUITY

10.  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.   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 (of which, there were 606,712 shares available for future awards as of December 31, 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 employed on the vesting date.  In July 2020, our new CFO was granted a total of 9,063 service-based RSUs under the 2013 Plan which were scheduled to vest ratably over the next 3 years, provided that the participant is employed on the vesting date.  This award was forfeited in January 2021when the grantee left the employ of the Company.  In December 2020, certain of our key employees were granted a total of 18,255 service-based RSUs which vested immediately, under the 2013 Plan.

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 (in thousands)			Weighted Average Share Price
Balance, January 1, 2019		658		$	7.39
Granted		46			5.67
Forfeited		(5	)		5.64
Vested		(93	)		7.39
Balance, December 31, 2019		606		$	7.27
Balance, January 1, 2020		606		$	7.27
Granted		51			3.94
Vested		(135	)		6.63
Balance, December 31, 2020		522		$	7.11

The Company’s stock-based compensation relates to restricted stock and RSU awards.  For these service-based awards, our stock-based compensation expense, included in operating expenses, was $0.9 million and $0.8 million in 2020 and 2019, respectively.

As of December 31, 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 December 31, 2020, there was unrecognized compensation cost related to non-vested, service-based awards of $2.1 million which will be recognized over 1.9 weighted average years in each of the following years:

Unrecognized Expense
2021	$	811,580
2022		759,540
2023		516,286
	$	2,087,406

We issue shares from authorized shares upon the lapsing of vesting restrictions on restricted stock and RSUs.  In 2020 and 2019, we issued 128,619 and 93,408 shares, respectively, resulting from the vesting of restricted stock.  We do not use cash to settle equity instruments issued under stock-based compensation awards.

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, 2020 and 2019, we repurchased the following shares:

Year ended December 31,	Total shares repurchased		Average price per share
2020		-	$	-
2019		131,782	$	5.58

As of December 31, 2020, we could repurchase $5,000,000 of our common stock.

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. As of December 31, 2020, the full $5.0 million of our common stock remained available for repurchase under this program.

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.  This repurchase was separately authorized by our Board of Directors and did not reduce the remaining amount authorized to be repurchased under the plan described in the previous paragraph.