Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 Form 8-K CURRENT REPORT Date of report (Date of earliest event reported:) August 11, 2025 Tandy Leather Factory, Inc. (Exact Name of Registrant as Specified in Its Charter) Delaware (State or Other Jurisdiction of Incorporation 1-12368 75-2543540 (Commission File Number) (IRS Employer Identification Number) 1900 Southeast Loop 820, Fort Worth, Texas 76140 (Address of ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 (Address of principal executive offices) (Zip code) (817) 872-3200 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to ______________ Commission File Number 1-12368 TANDY LEATHER FACTORY, INC. (Exa ...

Core Viewpoint - Tandy Leather Factory, Inc. reported a modest increase in sales and gross profit for the second quarter of 2025, despite facing economic challenges and rising operating expenses [1][2]. Financial Performance - Second quarter sales reached $17.8 million, a 2.8% increase from $17.3 million in 2024 [1][4]. - Gross profit for the quarter was $10.6 million, up from $10.0 million in the previous year [1]. - The company reported a net loss of $0.2 million, compared to a net income of $0.1 million in the same quarter of 2024 [4]. - Gross margins improved to 59.5%, up from 58.0% in 2024 [4]. - Operating expenses increased by 5.5% to $10.5 million [4]. - The company ended the quarter with $16.4 million in cash and cash equivalents, an increase from $13.3 million a year earlier [1][4]. Operational Insights - The increase in sales was primarily driven by enhanced sales productivity in U.S. retail stores [2]. - Operating expenses rose due to the transition to leasing headquarters and distribution center spaces, which were previously owned [2]. - The company anticipates that these costs will contribute to operating losses for the full year of 2025 [2]. Adjusted Financial Metrics - Adjusted EBITDA from operations was reported at $0.3 million [3][4]. - Adjusted net income, which accounts for certain adjustments, was $0.2 million [3][5].

Core Insights - Tandy Leather Factory, Inc. reported a decline in first quarter sales to $19.0 million in 2025, down 1.2% from $19.3 million in 2024 [1][4] - The company achieved a gross profit of $10.7 million, a decrease from $10.9 million in the previous year [1] - The company ended the quarter with $23.6 million in cash and cash equivalents, significantly up from $12.3 million a year earlier, primarily due to the sale of its corporate headquarters [1][4] Financial Performance - First quarter 2025 basic net income was $1.49 per share and diluted net income was $1.47 per share, compared to $0.06 per share in the prior year [1] - Adjusted net income from operations was reported at $0.4 million, with an adjusted EBITDA from operations of $0.6 million [3][4] - Operating expenses increased by 1.8% to $10.5 million, while gross margins decreased to 56.3% from 56.7% in 2024 [4] Strategic Developments - The sale of the corporate headquarters allowed the company to pay a special dividend of $1.50 per share to stockholders [2] - The company is in the process of relocating to a new headquarters, which is expected to lead to increased costs and potential operating losses for the full year 2025 [2] - The company has not yet fully experienced the impact of announced tariffs on imported products, which may necessitate retail price increases and could affect sales and profits [2]

[Form 8-K Current Report](index=1&type=section&id=Form%208-K) [Item 2.02. Results of Operations and Financial Condition](index=2&type=section&id=Item%202.02.%20Results%20of%20Operations%20and%20Financial%20Condition) Tandy Leather Factory, Inc. announced its Q1 2025 financial results through a press release and Form 10-Q, with specific liability disclaimers - The Company announced its financial results for the first quarter of fiscal year 2025 on May 12, 2025[5](index=5&type=chunk) - The results were disclosed in a press release (Exhibit 99.1) and the company's Form 10-Q[5](index=5&type=chunk) - Information furnished in this report under Item 2.02 is not deemed 'filed' for purposes of Section 18 of the Exchange Act, limiting legal liability under that section[6](index=6&type=chunk) [Item 9.01 Financial Statements and Exhibits](index=2&type=section&id=Item%209.01%20Financial%20Statements%20and%20Exhibits.) This section details the exhibits accompanying the Form 8-K, including the press release and interactive data file | No. | Exhibit | | :--- | :--- | | 99.1 | Press Release dated May 12, 2025 | | 104 | Cover page interactive data file (embedded within the Inline XBRL document) | [Forward Looking Statements](index=2&type=section&id=Forward%20Looking%20Statements) The report includes forward-looking statements subject to risks and uncertainties, with further details available in the company's 2024 Form 10-K - The report includes forward-looking statements identified by words such as 'may,' 'will,' 'anticipate,' 'believe,' 'expect,' etc[8](index=8&type=chunk) - For additional information on risks and uncertainties, the company refers to its Annual Report on Form 10-K for the fiscal year ended December 31, 2024[8](index=8&type=chunk)

PART I. FINANCIAL INFORMATION [Condensed Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited).) Unaudited consolidated financial statements for Tandy Leather Factory, Inc. as of March 31, 2025, show a **$17.7 million** gain from headquarters sale, boosting net income and cash Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $23,594 | $13,271 | | Inventory | $34,350 | $35,556 | | Property and equipment, net | $6,251 | $12,335 | | **Total Assets** | **$77,916** | **$74,924** | | **Liabilities & Equity** | | | | Total current liabilities | $13,188 | $9,886 | | Total stockholders' equity | $56,889 | $57,153 | | **Total Liabilities and Stockholders' Equity** | **$77,916** | **$74,924** | Consolidated Statements of Operations Highlights (in thousands, except per share data) | Account | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net sales | $19,036 | $19,275 | | Gross profit | $10,718 | $10,920 | | Income from operations | $262 | $649 | | Gain on disposal of Headquarter | $17,676 | $0 | | **Net income** | **$12,676** | **$525** | | **Diluted EPS** | **$1.47** | **$0.06** | Consolidated Statements of Cash Flows Highlights (in thousands) | Activity | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($536) | $1,086 | | Net cash provided from (used in) investing activities | $23,566 | ($1,227) | | Net cash used in financing activities | ($12,745) | ($1) | | **Net increase in cash and cash equivalents** | **$10,323** | **$156** | - The company finalized the sale of its corporate headquarters for net proceeds of **$24.9 million**, resulting in a gain of **$17.7 million**[73](index=73&type=chunk)[75](index=75&type=chunk) [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=8&type=section&id=NOTES%20TO%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS%20(UNAUDITED)) This section details accounting policies, business operations, **$5.0 million** credit facility, headquarters sale impact, and new CEO appointment - The company operates as a specialty retailer of leather and related items through **101 retail stores** (91 in the U.S., 9 in Canada, 1 in Spain) and its websites[17](index=17&type=chunk)[20](index=20&type=chunk) - The company has an unused **$5.0 million** credit facility with JPMorgan Chase Bank, N.A., renewed through October 31, 2025[59](index=59&type=chunk)[60](index=60&type=chunk) - The company sold its corporate headquarters for net proceeds of **$24.9 million**, realizing a gain of **$17.7 million**, and subsequently signed a 10-year lease for new facilities[73](index=73&type=chunk)[75](index=75&type=chunk) - Johan Hedberg was appointed as the new Chief Executive Officer on **January 6, 2025**[76](index=76&type=chunk) - A **$5.0 million** share repurchase program was renewed until September 30, 2026, with the full amount remaining available[71](index=71&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations.) Management discusses Q1 2025 performance, noting **1.2%** sales decrease to **$19.0 million**, **59.6%** drop in operating income to **$0.3 million**, and liquidity boosted by headquarters sale [Results of Operations](index=20&type=section&id=Results%20of%20Operations) Net sales decreased **1.2%** to **$19.0 million** due to store closures and weak demand, with operating expenses up **1.8%**, causing a **59.6%** decline in operating income to **$0.3 million** Selected Financial Data (in thousands) | Metric | Q1 2025 | Q1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Sales | $19,036 | $19,275 | $(239) | (1.2)% | | Gross profit | $10,718 | $10,920 | $(202) | (1.8)% | | Gross margin % | 56.3% | 56.7% | - | (0.4)% | | Operating expenses | $10,456 | $10,271 | $185 | 1.8% | | Income from operations | $262 | $649 | $(387) | (59.6)% | - The decrease in sales was attributed to temporary store closures for relocation and ongoing weak consumer demand[91](index=91&type=chunk) - Operating expenses increased by **$0.2 million (1.8%)** due to higher employment costs (**$0.3 million**) and occupancy costs (**$0.1 million**)[94](index=94&type=chunk) [Capital Resources, Liquidity and Financial Condition](index=21&type=section&id=Capital%20Resources%2C%20Liquidity%20and%20Financial%20Condition) The company's liquidity is strong with **$23.6 million** cash, significantly boosted by **$23.6 million** from headquarters sale, despite **$0.5 million** used in operations and **$12.7 million** in financing - The company's cash balance was **$23.6 million** as of March 31, 2025[96](index=96&type=chunk) Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash (used by) from operating activities | $(536) | $1,086 | | Net cash from (used in) investing activities | $23,566 | $(1,227) | | Net cash used in financing activities | $(12,745) | $(1) | | **Net increase in cash** | **$10,323** | **$156** | - Key cash flow events in Q1 2025 included receiving **$24.9 million** from the headquarters sale, purchasing **$1.3 million** in assets for the new facility, and paying dividends of **$12.7 million**[101](index=101&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=23&type=section&id=Item%201.%20Legal%20Proceedings.) The company is periodically involved in ordinary course litigation, but no pending matters are expected to materially impact its financial position or operating results - There are no pending legal proceedings expected to have a material impact on the company's financial position or results of operations[69](index=69&type=chunk)[106](index=106&type=chunk) [Risk Factors](index=23&type=page&id=Item%201A.%20Risk%20Factors.) This section highlights new risks: increased costs/reduced sales from U.S. tariff hikes, and a new annual rental expense exceeding **$1.5 million** for headquarters and flagship store - Increased U.S. tariff rates on imported goods, particularly from China, pose a new risk, potentially increasing product costs and decreasing sales[107](index=107&type=chunk) - The company faces increased expenses from renting its new headquarters and flagship store, with initial combined rent expected to exceed **$1.5 million** per year, potentially impacting profitability[108](index=108&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=24&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's stock repurchase program, noting no repurchases in Q1 2025, with **$5.0 million** remaining available until September 30, 2026 Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Maximum Value Remaining Under Program | | :--- | :--- | :--- | :--- | | Jan 1 – Jan 31, 2025 | 0 | $0 | $5,000,000 | | Feb 1 – Feb 28, 2025 | 0 | $0 | $5,000,000 | | Mar 1 – Mar 31, 2025 | 0 | $0 | $5,000,000 | | **Total** | **0** | **$0** | **$5,000,000** | [Exhibits](index=24&type=section&id=Item%206.%20Exhibits.) This section lists exhibits filed with the Form 10-Q, including corporate governance documents, stock plans, CEO employment agreements, and SEC-required certifications - The report includes a list of filed exhibits, such as the Certificate of Incorporation, Bylaws, stock plans, and employment agreements[110](index=110&type=chunk) - Key filed exhibits include the employment agreement for the new CEO, Johan Hedberg, and certifications pursuant to the Securities Exchange Act of 1934 and the Sarbanes-Oxley Act of 2002[111](index=111&type=chunk) [Signatures](index=26&type=section&id=SIGNATURES) - The Form 10-Q report was duly signed and authorized on **May 12, 2025**, by Johan Hedberg, the Chief Executive Officer[113](index=113&type=chunk)

Financial Results Announcement - Tandy Leather Factory, Inc. announced its financial results for fiscal year 2024 on February 26, 2025[5]. - The company filed its Annual Report on Form 10-K, which includes detailed financial performance metrics[5]. - The press release detailing the financial results is attached as Exhibit 99.1[7]. - The report includes forward-looking statements regarding the company's expectations and potential future performance[8]. - The report does not include specific financial figures or performance metrics from the fiscal year 2024[5]. - The report was signed by Johan Hedberg, Chief Executive Officer, indicating official acknowledgment of the financial results[12]. Company Status and Operations - The company is incorporated in Delaware and trades on Nasdaq under the symbol TLF[3]. - The company has not indicated any changes to its status as an emerging growth company[4]. - There are no updates on new product developments or market expansion strategies mentioned in the report[5]. - The company assumes no obligation to update its forward-looking statements except as required by law[8].

Core Insights - Tandy Leather Factory, Inc. reported a decline in both fourth quarter and full year sales for 2024 compared to 2023, reflecting challenges in the retail environment [3][4][8] - The company experienced an increase in operating expenses, which negatively impacted profitability, despite maintaining a positive cash position [4][5][8] - Future strategies include improving sales through stores and e-commerce, while managing costs associated with relocating headquarters and flagship store [6][8] Financial Performance - Fourth quarter sales were $20.5 million, down from $20.8 million in 2023 [3] - Full year sales totaled $74.4 million, a decrease of 2.4% from $76.2 million in 2023 [4][8] - Gross profit for the fourth quarter was $10.8 million, down from $11.5 million in 2023, with full year gross profit at $41.8 million, down from $45.2 million [3][4] - Net income for the fourth quarter was $0.04 per share, compared to $0.23 in the prior year, with full year net income at $0.8 million, down from $3.8 million [3][4][8] - Operating expenses increased to $41.2 million, up from $40.8 million in 2023, representing 55.4% of sales compared to 53.5% in the previous year [4][8] Cash and Inventory - As of December 31, 2024, the company held $13.3 million in cash and cash equivalents, an increase from $12.2 million a year earlier [3] - Inventory decreased to $35.6 million from $38.0 million as of December 31, 2023 [3] Future Outlook - The company aims to enhance sales in 2025 while managing the transition to leasing properties, which may disrupt sales and profitability [6] - The CEO expressed disappointment with 2024 results but highlighted the return of value to shareholders through a significant dividend payment of $1.50 per share [5]

Retail Operations - Tandy Leather Factory operates a total of 101 retail stores, with 91 in the U.S., 9 in Canada, and 1 in Spain[12]. - Tandy's stores generate slightly more sales in the fourth quarter, accounting for approximately 28-30% of annual sales[22]. - Tandy's strategy includes leveraging its retail stores to enhance customer engagement and community involvement in leathercrafting[14]. Production and Supply Chain - The company produces approximately 10% of its products at its Fort Worth, Texas facility, which includes leather kits and custom production services[18]. - Tandy's largest suppliers account for about 55% of inventory purchases, with one supplier representing 12% of total purchases in 2024[26]. - Tandy maintains about 6,500 stock-keeping units (SKUs) in its product line and continues to refine inventory levels to meet customer demand[23]. Workforce and Employee Management - The company employs 542 people as of December 31, 2024, with 414 in full-time positions[30]. - The company focuses on improving employee product knowledge and customer service, as well as expanding workshop space in stores[17]. - The company must attract and retain qualified employees to execute its business goals, facing intense competition in the labor market[51]. Financial Performance and Economic Impact - In 2024, the company experienced declines in sales and operating income due to macroeconomic factors such as inflation and higher interest rates, impacting the specialty retail industry[45]. - Economic conditions, including inflation and geopolitical tensions, have impacted customer discretionary spending, affecting overall sales[15]. - Economic conditions in the U.S. and globally are negatively impacting consumer spending, with high inflation and rising interest rates affecting discretionary purchases[63]. - The company may struggle to maintain sales levels during economic downturns, potentially leading to reduced cash flows and profitability[64]. Strategic Changes and Risks - The company is undergoing a multi-year transformation to improve sales and operational efficiency, including closing underperforming stores and developing a new division for commercial customers[38]. - The company plans to relocate its headquarters and main distribution facility in 2025, which may cause significant disruptions to operations[42]. - The company is dependent on a limited number of distribution centers, and disruptions during the relocation could adversely affect inventory and delivery capabilities[53]. Competition and Market Challenges - Competition from internet-based retailers and larger specialty retailers could negatively impact the company's market share and pricing strategies[46]. - Changes in customer demand and preferences for leather products could materially affect sales and operating results[49]. Regulatory and Cybersecurity Concerns - The company is subject to evolving data privacy regulations, such as GDPR and CCPA, which could result in financial penalties and damage to reputation if not adhered to[58]. - The company faces significant cybersecurity risks due to reliance on technology for operations, which could lead to business disruption and loss of sensitive information[59]. Global Sourcing and Currency Risks - The company faces risks related to global sourcing, including fluctuations in the prices of leather and other materials, which could affect profitability[39]. - Foreign currency fluctuations could adversely affect the company's financial results, particularly as a large portion of products is sourced internationally[65]. - Tariffs on products manufactured in China could increase costs, adversely affecting profitability and overall financial condition[70]. Brand and Intellectual Property - The company has a strong brand equity and loyalty, which provides competitive advantages over smaller retailers and online platforms[9]. - The company emphasizes the importance of protecting its trademarks and intellectual property, as failure to do so could harm its competitive position[72]. Ongoing Challenges - The ongoing effects of the COVID-19 pandemic, including higher consumer prices, continue to pose risks to the company's operations and liquidity[68].

Core Points - Tandy Leather Factory, Inc. announced a special cash dividend of $1.50 per share to its stockholders, to be paid on or about February 18, 2025 [1] - The ex-dividend date is set for February 19, 2025, due to the dividend amount exceeding 25% of the current market price of the Company's common stock [2] - Tandy Leather Factory operates 99 stores across North America and one store in Spain, specializing in leather products and related tools [3] Company Overview - Tandy Leather Factory is headquartered in Fort Worth, Texas, and trades on the Nasdaq Capital Market under the symbol "TLF" [3] - The Company offers a wide range of products including leather, leatherworking tools, buckles, dyes, finishes, and do-it-yourself kits [3]