Financial Results - Tandy Leather Factory, Inc. announced its financial results for Q3 2025 on November 10, 2025[5] - The press release detailing the financial results is attached as Exhibit 99.1[7] Company Information - The company is listed on Nasdaq under the trading symbol TLF[3] - The company has not indicated any changes to its status as an emerging growth company[4] Forward-Looking Statements - The report includes forward-looking statements regarding future performance and market conditions[8]

Core Insights - Tandy Leather Factory, Inc. reported third quarter sales of $17.3 million in 2025, a slight decrease of 0.5% from $17.4 million in 2024 [1][4] - The company achieved a gross profit of $10.2 million, an increase from $10.0 million in the previous year [1] - The company ended the quarter with $12.0 million in cash and cash equivalents, up from $10.0 million a year earlier, reflecting proceeds from the sale of its corporate headquarters [1] - The company reported a net loss of $1.4 million for the quarter, compared to a net loss of $0.1 million in 2024 [4] Financial Performance - Gross margins improved to 58.9%, up from 57.8% in 2024 [4] - Operating expenses increased by 5.4% to $10.8 million [4] - Adjusted EBITDA from operations was reported at ($0.4) million [4] - Basic and diluted net losses per share were $0.17, compared to $0.02 in the prior year [1] Operational Highlights - The relocation of the headquarters and distribution center was deemed a success, with retail store sales exceeding last year's figures [2] - Online order shipments were impacted during the move, but operations have resumed from the new location [2] - The company is optimistic about a solid fourth quarter performance in both retail and online channels [2]

Financial Performance - Net sales for Q3 2025 were $17,264, a slight decrease of 0.5% compared to $17,351 in Q3 2024[11] - Gross profit for the nine months ended September 30, 2025, increased to $31,460, up 1.6% from $30,960 in the same period of 2024[11] - Net income for the nine months ended September 30, 2025, was $10,032, significantly higher than $495 in the same period of 2024[13] - Operating expenses for Q3 2025 were $10,848, an increase of 5.4% compared to $10,289 in Q3 2024[11] - The company reported a loss from operations of $678 in Q3 2025, compared to a loss of $267 in Q3 2024[11] - For the three months ended September 30, 2025, net sales were $17.264 million, a slight decrease from $17.351 million in the same period of 2024[29] - For the nine months ended September 30, 2025, net sales totaled $54.072 million, compared to $53.913 million in 2024, indicating a year-over-year increase[29] - The company reported a net loss of $1.35 million for the three months ended September 30, 2025, compared to a loss of $0.13 million in 2024[68] - Basic earnings per share (EPS) for the nine months ended September 30, 2025, was $1.20, compared to $0.06 in 2024[68] Cash and Assets - Cash and cash equivalents at the end of Q3 2025 were $12,018, up from $10,055 at the end of Q3 2024[13] - The company recognized a gain of $16,225 from the disposal of headquarters assets during the nine months ended September 30, 2025[11] - Total other income for the nine months ended September 30, 2025, was $13,740, compared to $228 in the same period of 2024[11] - The company paid dividends totaling $12,745 during the nine months ended September 30, 2025[13] - Finished goods inventory as of September 30, 2025, was valued at $32.376 million, an increase from $31.022 million as of December 31, 2024[39] - The total inventory on hand as of September 30, 2025, was $35.947 million, compared to $35.556 million as of December 31, 2024[39] - The net book value of the disposed headquarters assets was $8.7 million, leading to a net gain of $16.225 million[76] Corporate Developments - As of September 30, 2025, the Company operates a total of 101 retail stores, with 91 in the U.S., 9 in Canada, and 1 in Spain[20] - The Company signed a 10-year lease for new corporate headquarters and distribution facilities in Benbrook, Texas, effective July 1, 2025[78] - Johan Hedberg was appointed as the new Chief Executive Officer on January 6, 2025, following the resignation of Janet Carr[79] Tax and Compliance - The effective income tax rate for the three months ended September 30, 2025, was 26.2%, down from 27.9% in 2024, primarily due to tax benefits from corporate property sales[61] - The Company operates under GAAP and has made normal recurring adjustments to present its financial position fairly as of September 30, 2025[21] - As of the date of the filing, no funds had been borrowed under the credit facility, and the Company is in compliance with all covenants[81] Stock and Compensation - The weighted average number of shares outstanding for Q3 2025 was 8,142,441, compared to 8,422,514 in Q3 2024[11] - The company has a credit facility of up to $5 million with JPMorgan Chase Bank, with no funds borrowed as of the filing date[59] - Stock-based compensation expense for the three months ended September 30, 2025, was $0.1 million, compared to $0.2 million in 2024[65] - The company granted a total of 1,018,000 RSUs during the nine months ended September 30, 2025[65] - The company completed the purchase of 430,897 shares from the former CEO at $3.00 per share, totaling $1.29 million[72] - The company has $5 million remaining available for stock repurchase under the renewed program until September 30, 2026[71] Errors and Corrections - An immaterial error related to the accounting for the sale of property resulted in an overstatement of gain by approximately $1.4 million pre-tax, which was corrected in the third quarter of 2025[76] - Net income for the three months ended March 31, 2025, was overstated by $1.1 million net of tax, equating to $0.11 per share basic and $0.12 per share diluted[77]

Core Insights - Brompton Tech Leaders Income ETF (TLF) has been awarded the LSEG Lipper Fund Awards Canada 2025 for Best Sector Equity Fund over ten years, highlighting its strong risk-adjusted performance relative to peers [1][6]. Fund Performance - TLF offers a current distribution rate of 6.2% as of November 5, 2025, and has achieved an 18.6% per annum total return over the last 10 years, as of October 31, 2025 [3]. - The fund's performance metrics include a 25.2% return over the past year, 29.6% over three years, and 18.3% over five years [8]. Fund Management - The Chief Investment Officer of Brompton, Laura Lau, emphasized the team's commitment to providing high-quality investment solutions and focusing on long-term growth and reliable income for investors [2]. About Brompton Funds - Brompton Funds, established in 2000, specializes in income and growth-focused investment solutions, including ETFs and other investment funds traded on the Toronto Stock Exchange [5].

[Filing Details](index=1&type=section&id=Filing%20Details) Provides essential identification and registration information for Tandy Leather Factory, Inc.'s Form 8-K filing [Registrant and Filing Information](index=1&type=section&id=Registrant%20and%20Filing%20Information) Details the registrant's identity, incorporation, principal offices, and filing date for this Form 8-K Registrant and Filing Information | Detail | Value | | :--- | :--- | | **Registrant Name** | Tandy Leather Factory, Inc. | | **Date of Report** | August 11, 2025 | | **State of Incorporation** | Delaware | | **Principal Executive Offices** | 1900 Southeast Loop 820, Fort Worth, Texas 76140 | | **Telephone Number** | (817) 872-3200 | [Securities Registration and Status](index=1&type=section&id=Securities%20Registration%20and%20Status) Outlines the company's registered securities and its classification regarding emerging growth company status Securities Registration | Class of Security | Trading Symbol | Exchange Registered | | :--- | :--- | :--- | | Common Stock, par value $0.0024 | TLF | Nasdaq | - The registrant is not an emerging growth company[4](index=4&type=chunk) [Current Report on Form 8-K](index=2&type=section&id=Current%20Report%20on%20Form%208-K) Covers the announcement of financial results and the nature of information furnished in this Form 8-K [Item 2.02. Results of Operations and Financial Condition](index=2&type=section&id=Item%202.02.%20Results%20of%20Operations%20and%20Financial%20Condition) Announces Tandy Leather Factory, Inc.'s Q2 FY2025 financial results and clarifies the furnished nature of this information - On August 11, 2025, Tandy Leather Factory, Inc. issued a press release and filed its Quarterly Report on Form 10-Q, announcing financial results for the second quarter of fiscal year 2025[5](index=5&type=chunk) - The information furnished under Item 2.02 is not deemed 'filed' for purposes of Section 18 of the Securities Exchange Act of 1934, limiting associated liabilities[6](index=6&type=chunk) [Item 9.01 Financial Statements and Exhibits.](index=2&type=section&id=Item%209.01%20Financial%20Statements%20and%20Exhibits.) Lists the specific exhibits accompanying the Form 8-K filing, including the press release and interactive data Financial Statements and Exhibits | No. | Exhibit | | :--- | :--- | | 99.1 | Press Release dated August 11, 2025 | | 104 | Cover page interactive data file (embedded within the Inline XBRL document) | [Legal and Concluding Information](index=2&type=section&id=Legal%20and%20Concluding%20Information) Contains disclaimers regarding forward-looking statements and the official signing of the Form 8-K report [Forward Looking Statements](index=2&type=section&id=Forward%20Looking%20Statements) Clarifies the nature of forward-looking statements, associated risks, and the company's update obligations - The report contains forward-looking statements, identifiable by terms such as 'may,' 'will,' 'expect,' and 'plan,' which are subject to risks and uncertainties[8](index=8&type=chunk) - Readers are directed to the Company's Annual Report on Form 10-K for FY2024 for more information on factors that could negatively impact the Company[8](index=8&type=chunk) - The Company assumes no obligation to update or revise its forward-looking statements, except as required by law[8](index=8&type=chunk) [Signatures](index=3&type=section&id=SIGNATURES) Formally concludes the Form 8-K filing with the authorized signature of the Chief Executive Officer - The report was signed on August 11, 2025, by Johan Hedberg, Chief Executive Officer of Tandy Leather Factory, Inc.[10](index=10&type=chunk)[11](index=11&type=chunk)[12](index=12&type=chunk)

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations and comprehensive income, cash flows, and stockholders' equity, along with detailed notes explaining the basis of presentation, significant accounting policies, and specific financial items for the periods ended June 30, 2025, and December 31, 2024 [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (amounts in thousands) | Item | June 30, 2025 | December 31, 2024 | Change ($) | Change (%) | | :-------------------------------- | :------------ | :---------------- | :--------- | :--------- | | **ASSETS** | | | | | | Cash and cash equivalents | $16,419 | $13,271 | $3,148 | 23.7% | | Total current assets | $54,469 | $50,536 | $3,933 | 7.8% | | Property and equipment, net | $9,404 | $12,335 | $(2,931) | -23.8% | | Total assets | $76,542 | $74,924 | $1,618 | 2.2% | | **LIABILITIES & EQUITY** | | | | | | Total current liabilities | $11,141 | $9,886 | $1,255 | 12.7% | | Total stockholders' equity | $57,225 | $57,153 | $72 | 0.1% | | Total liabilities and stockholders' equity | $76,542 | $74,924 | $1,618 | 2.2% | [Condensed Consolidated Statements of Operations and Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) Condensed Consolidated Statements of Operations and Comprehensive Income (amounts in thousands, except per share data) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $17,773 | $17,286 | $36,809 | $36,561 | | Gross profit | $10,573 | $10,018 | $21,291 | $20,938 | | Income from operations | $66 | $63 | $328 | $712 | | Gain on disposal of headquarter | $- | $- | $17,676 | $- | | Net income (loss) | $(199) | $101 | $12,477 | $626 | | Basic EPS | $(0.02) | $0.01 | $0.06 | $0.07 | | Diluted EPS | $(0.02) | $0.01 | $0.06 | $0.07 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (amounts in thousands) for the Six Months Ended June 30 | Cash Flow Activity | 2025 | 2024 | | :-------------------------------------- | :----- | :----- | | Net cash (used in) provided by operating activities | $(4,501) | $572 | | Net cash provided by (used in) investing activities | $20,240 | $(1,428) | | Net cash used in financing activities | $(12,921) | $(1) | | Net increase (decrease) in cash and cash equivalents | $3,148 | $(628) | | Cash and cash equivalents, end of period | $16,419 | $11,531 | [Condensed Consolidated Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) - Total stockholders' equity increased slightly from **$57,153 thousand** at December 31, 2024, to **$57,225 thousand** at June 30, 2025. This was influenced by net income of **$12,676 thousand** (for the period ending March 31, 2025) and **$118 thousand** in stock-based compensation expense, offset by **$12,745 thousand** in dividends paid and a net loss of **$199 thousand** (for the period ending June 30, 2025)[14](index=14&type=chunk) [NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)](index=8&type=section&id=NOTES%20TO%20CONSOLIDATED%20FINANCIAL%20STATEMENTS%20(UNAUDITED)) [1. BASIS OF PRESENTATION AND CERTAIN SIGNIFICANT ACCOUNTING POLICIES](index=8&type=section&id=1.%20BASIS%20OF%20PRESENTATION%20AND%20CERTAIN%20SIGNIFICANT%20ACCOUNTING%20POLICIES) - Tandy Leather Factory, Inc. is a specialty retailer of leather and leathercraft-related items, founded in 1919. The company differentiates itself through high brand awareness, strong brand equity, a network of retail stores (**101 globally as of June 30, 2025**, with **91 in the U.S., 9 in Canada, and 1 in Spain**), and a 100-year heritage[17](index=17&type=chunk)[18](index=18&type=chunk)[20](index=20&type=chunk) - Revenue is recognized when control of merchandise is transferred to the customer, primarily through company-owned stores, global websites, and a commercial division. Sales tax is excluded from net sales, while shipping charges to customers are included[19](index=19&type=chunk)[26](index=26&type=chunk) - Inventory is valued at the lower of FIFO cost or net realizable value, with regular reviews for damaged goods, slow-moving items, and pricing adjustments. The majority of inventory purchases are in U.S. dollars to limit foreign currency exposure[35](index=35&type=chunk)[36](index=36&type=chunk)[38](index=38&type=chunk) Inventory Composition (in thousands) | Category | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :---------------- | | Finished goods held for sale | $32,476 | $31,022 | | Raw materials and work in process | $1,125 | $1,819 | | Inventory in transit | $2,598 | $2,715 | | **TOTAL** | **$36,199** | **$35,556** | - The Company leases real estate for its offices, distribution center, and retail stores. Right-of-use (ROU) assets and lease liabilities are recognized at commencement, based on the present value of lease payments. Short-term leases (**12 months or less**) are not recorded on the balance sheet[40](index=40&type=chunk)[41](index=41&type=chunk) - Long-lived assets, including ROU lease assets and property and equipment, are evaluated quarterly for impairment based on estimated undiscounted future net cash flows, primarily at the individual store level[45](index=45&type=chunk) - The Company's principal financial instruments include T-Bills (Level 1 fair value hierarchy) and accounts receivable/payable (Level 3 fair value hierarchy). Carrying values approximated fair values as of June 30, 2025, and December 31, 2024[47](index=47&type=chunk) - Income taxes are estimated for each jurisdiction, assessing current tax exposure and temporary differences. Deferred tax assets are evaluated for recoverability, and a valuation allowance is recorded if realization is not more-likely-than-not. Uncertain tax positions are recognized when it is more-likely-than-not that the position will be sustained[48](index=48&type=chunk)[51](index=51&type=chunk) - Stock-based compensation primarily relates to Restricted Stock Unit (RSU) awards. Compensation expense for service-based awards is recognized straight-line over the service period, while performance-based awards are recognized when achievement of conditions is probable[54](index=54&type=chunk)[55](index=55&type=chunk) [2. NOTES PAYABLE AND LONG-TERM DEBT](index=14&type=section&id=2.%20NOTES%20PAYABLE%20AND%20LONG-TERM%20DEBT) - The Company has a credit facility of up to **$5.0 million** with JPMorgan Chase Bank, N.A., renewed through October 31, 2025. The interest rate is CME term SOFR + **210 basis points**. No funds have been borrowed under this facility as of the filing date, and the Company is in compliance with all covenants[60](index=60&type=chunk)[61](index=61&type=chunk) [3. INCOME TAX](index=14&type=section&id=3.%20INCOME%20TAX) Effective Income Tax Rates | Period | June 30, 2025 | June 30, 2024 | | :-------------------- | :------------ | :------------ | | Three Months Ended | (10.8%) | 25.2% | | Six Months Ended | 32.7% | 27.0% | - The effective tax rate for the three months ended June 30, 2025, was **(10.8%)**, primarily due to tax benefits from the sale of corporate property, partially offset by forecasted income tax losses from 2025 operations and foreign/state obligations. For the six months ended June 30, 2025, the rate was **32.7%**[62](index=62&type=chunk) [4. STOCK-BASED COMPENSATION](index=15&type=section&id=4.%20STOCK-BASED%20COMPENSATION) - The Company operates under the 2023 Incentive Stock Plan, which reserved **800,000 shares** for equity awards. In February 2025, **100,000 RSUs** were granted to the new CEO, Johan Hedberg, vesting in February 2026, and **900,000 performance-based RSUs** were granted, contingent on achieving certain targets. Stockholders approved an additional **900,000 shares** for these performance-based grants in June 2025[64](index=64&type=chunk) RSU Activity (in thousands, except share price) | Item | Shares | Weighted Average Share Price | | :-------------------- | :----- | :--------------------------- | | Balance, January 1, 2025 | 409 | $4.32 | | Granted | 1,018 | $4.58 | | Forfeited | (355) | $4.32 | | Vested | (19) | $4.39 | | Balance, June 30, 2025 | 1,053 | $3.96 | Unrecognized Compensation Cost for Non-Vested RSUs (in thousands) | Year | Unrecognized Expense | | :--- | :------------------- | | 2025 | $252 | | 2026 | $172 | | 2027 | $36 | | 2028 | $17 | | 2029 | $6 | | **Total** | **$483** | [5. EARNINGS PER SHARE](index=16&type=section&id=5.%20EARNINGS%20PER%20SHARE) Net Income (Loss) Per Common Share (in thousands, except share data) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income (loss) | $(199) | $101 | $12,477 | $626 | | Basic weighted-average common shares outstanding | 8,494,546 | 8,415,795 | 8,497,857 | 8,406,156 | | Diluted weighted-average common shares outstanding | 8,494,546 | 8,505,068 | 8,497,857 | 8,467,156 | | Basic earnings (loss) per share | $(0.02) | $0.01 | $0.06 | $0.07 | | Diluted earnings (loss) per share | $(0.02) | $0.01 | $0.06 | $0.07 | [6. COMMITMENTS AND CONTINGENCIES](index=17&type=section&id=6.%20COMMITMENTS%20AND%20CONTINGENCIES) - The Company is periodically involved in litigation but does not expect any pending matters to have a material impact on its financial position or operating results[70](index=70&type=chunk) [7. SHARE REPURCHASE PROGRAM AND SHARE REPURCHASES](index=17&type=section&id=7.%20SHARE%20REPURCHASE%20PROGRAM%20AND%20SHARE%20REPURCHASES) - The Board of Directors approved a renewal of the stock repurchase plan on September 17, 2024, authorizing the repurchase of up to **$5.0 million** of common stock until September 30, 2026. As of June 30, 2025, the full **$5.0 million** remained available under this new program[72](index=72&type=chunk) [8. SALES OF CORPORATE HEADQUARTERS & NEW CEO EMPLOYMENT](index=17&type=section&id=8.%20SALES%20OF%20CORPORATE%20HEADQUARTERS%20%26%20NEW%20CEO%20EMPLOYMENT) - On January 22, 2025, the Company finalized the sale of its corporate headquarters and distribution facilities for net proceeds of **$24.9 million**, resulting in a gain of **$17.7 million**. This gain is recorded in 'Other income' on the consolidated statements of operations[74](index=74&type=chunk) Sales and Disposal of Headquarter (in thousands) | Item | Amount | | :------------------------ | :----- | | Net Proceeds | $24,897 | | NBV of Headquarter Assets | $7,221 | | Net Gain | $17,676 | - The Company signed a **10-year lease** for new corporate headquarters and distribution facilities in Benbrook, Texas, effective September 1, 2025. Johan Hedberg was hired as the new CEO on January 6, 2025, succeeding Janet Carr[75](index=75&type=chunk)[76](index=76&type=chunk) [9. SUBSEQUENT EVENTS](index=18&type=section&id=9.%20SUBSEQUENT%20EVENTS) - On June 17, 2025, the Company agreed to purchase **430,897 shares** from former CEO Janet Carr at **$3.00 per share**, totaling **$1,292,691**. This transaction was completed on July 18, 2025, and is not reflected in the June 30, 2025 balance sheet[77](index=77&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations, highlighting key performance drivers, strategic initiatives, and liquidity. It covers the business strategy, detailed results for the three and six months ended June 30, 2025 and 2024, and an analysis of capital resources and cash flows [The Business and Strategy](index=18&type=section&id=The%20Business%20and%20Strategy) - Tandy Leather Factory, Inc. is a leading specialty retailer of leather and leathercraft items, operating **101 retail stores** (**91 U.S., 9 Canada, 1 Spain**) and global websites. The company's strategy focuses on improving financial sustainability and profitability by managing operating expenses and gross margin, while selectively investing in profitable sales growth[78](index=78&type=chunk)[82](index=82&type=chunk)[84](index=84&type=chunk) - Key competitive advantages include high brand awareness, strong brand loyalty, a network of retail stores offering customer service and community hubs, and a 100-year heritage. The Commercial Division caters to businesses with dedicated representatives, bulk pricing, and production services[80](index=80&type=chunk)[83](index=83&type=chunk) - The Company sold its corporate headquarters and distribution facilities in Fort Worth, Texas, on January 22, 2025, for **$26.5 million** (gross sale), and subsequently signed a **10-year lease** for new facilities in Benbrook, Texas, effective September 1, 2025. Johan Hedberg was appointed CEO on January 6, 2025[85](index=85&type=chunk)[86](index=86&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20Operations) [Three Months Ended June 30, 2025 and 2024](index=20&type=section&id=Three%20Months%20Ended%20June%2030,%202025%20and%202024) Financial Performance (Three Months Ended June 30, in thousands) | Item | 2025 | 2024 | $ Change | % Change | | :-------------------- | :----- | :----- | :------- | :------- | | Net Sales | $17,773 | $17,286 | $487 | 2.8% | | Gross Profit | $10,573 | $10,018 | $555 | 5.5% | | Gross Margin Percentage | 59.5% | 58.0% | 1.5% | | | Operating Expenses | $10,507 | $9,955 | $552 | 5.5% | | Income from Operations | $66 | $63 | $3 | 4.8% | - Net sales increased by **$0.5 million (2.8%)** due to successful sales campaigns. Gross profit rose by **$0.6 million (5.5%)**, with gross margin improving by **150 basis points**, driven by inventory cost adjustments and pricing changes to balance tariffs[89](index=89&type=chunk)[90](index=90&type=chunk) - Operating expenses increased by **$0.6 million (5.5%)**, primarily due to a **$0.4 million** increase in occupancy costs (rent for previously owned corporate offices), a **$0.3 million** increase in salaries (due to key management hires and relocation costs), partially offset by a **$0.1 million** decrease in contract labor[91](index=91&type=chunk) - The effective income tax rate for the three months ended June 30, 2025, was **(10.8%)**, compared to **25.2%** in the prior year, mainly due to tax benefits from the corporate property sale, offset by forecasted operational losses and foreign/state tax obligations[92](index=92&type=chunk) [Six Months Ended June 30, 2025 and 2024](index=21&type=section&id=Six%20Months%20Ended%20June%2030,%202025%20and%202024) Financial Performance (Six Months Ended June 30, in thousands) | Item | 2025 | 2024 | $ Change | % Change | | :-------------------- | :----- | :----- | :------- | :------- | | Net Sales | $36,809 | $36,561 | $248 | 0.7% | | Gross Profit | $21,291 | $20,938 | $353 | 1.7% | | Gross Margin Percentage | 57.8% | 57.3% | 0.5% | | | Operating Expenses | $20,963 | $20,226 | $737 | 3.6% | | Income from Operations | $328 | $712 | $(384) | -53.9% | - Consolidated net sales increased by **$0.2 million (0.7%)** for the six months, driven by increased sales campaigns in Q2, partially offset by global political and economic uncertainties. The store footprint decreased from **103 stores** in June 2024 to **101 stores** in June 2025[94](index=94&type=chunk)[95](index=95&type=chunk) - Gross profit increased by **$0.4 million (1.7%)**, with gross margin percentage improving by **50 basis points** year-over-year. Operating expenses rose by **$0.7 million (3.6%)**, mainly due to a **$0.5 million** increase in occupancy costs and a **$0.4 million** increase in salaries, partially offset by a **$0.2 million** decrease in depreciation due to the corporate office sale[96](index=96&type=chunk)[97](index=97&type=chunk) - The effective income tax rate for the six months ended June 30, 2025, was **25.2%**, compared to **27.0%** in the prior year, primarily due to tax benefits from the corporate property sale, offset by forecasted operational losses and foreign/state tax obligations[98](index=98&type=chunk) [Capital Resources, Liquidity and Financial Condition](index=22&type=section&id=Capital%20Resources,%20Liquidity%20and%20Financial%20Condition) - The Company's cash balance as of June 30, 2025, was **$16.4 million**. Operating and liquidity needs are expected to be funded by current cash balances and cash generated from operating activities. The **$5.0 million** credit facility with JPMorgan Chase Bank, N.A., remains undrawn[99](index=99&type=chunk)[100](index=100&type=chunk) - The Board renewed the stock repurchase plan on September 17, 2024, authorizing up to **$5.0 million** in common stock repurchases until September 30, 2026. As of June 30, 2025, the entire **$5.0 million** remained available[102](index=102&type=chunk) Cash Flow Summary (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2025 | 2024 | | :-------------------------------------- | :----- | :----- | | Net cash (used in) provided by operating activities | $(4,501) | $572 | | Net cash provided by (used in) investing activities | $20,240 | $(1,428) | | Net cash used in financing activities | $(12,921) | $(1) | | Net increase (decrease) in cash and cash equivalents | $3,148 | $(628) | - For the six months ended June 30, 2025, cash used in operations was **$4.5 million**, while cash provided by investing activities was **$20.2 million**, primarily from the **$24.9 million** net proceeds of the headquarters sale, offset by **$4.7 million** in asset purchases for the new facility. Cash used in financing activities was **$12.9 million**, including **$12.8 million** in dividends paid[104](index=104&type=chunk) [Item 4. Controls and Procedures](index=23&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, with the participation of the CEO, evaluated the effectiveness of the Company's disclosure controls and procedures and concluded they were effective at a reasonable assurance level as of June 30, 2025. There were no material changes in internal control over financial reporting during the quarter - Management concluded that the Company's disclosure controls and procedures were effective at a reasonable assurance level as of June 30, 2025[106](index=106&type=chunk) - There were no changes in internal control over financial reporting during the fiscal quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting[107](index=107&type=chunk) [PART II. OTHER INFORMATION](index=24&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=24&type=section&id=Item%201.%20Legal%20Proceedings) This section incorporates by reference the information regarding legal proceedings from Note 6 to the Consolidated Financial Statements, indicating no material impact is expected from current litigation - The Company is periodically involved in litigation that arises in the ordinary course of business, but no matters are pending that are expected to have a material impact on its financial position or operating results[70](index=70&type=chunk)[108](index=108&type=chunk) [Item 1A. Risk Factors](index=24&type=section&id=Item%201A.%20Risk%20Factors) This section highlights additional risk factors beyond those in the annual report, specifically focusing on the potential negative impacts of recent changes to U.S. tariff rates and increased expenses from renting new headquarters facilities - New risk factors include potential negative impacts from increased U.S. tariff rates, particularly on products imported from China and Brazil, which could raise costs, force price increases, and reduce sales. Retaliatory tariffs on intercompany sales to Canadian stores are also a concern[109](index=109&type=chunk) - Increased expenses from renting new headquarters and flagship store facilities (expected to exceed **$1.5 million annually** starting in 2026) pose a risk if the Company cannot generate additional sales and profits to offset these costs[110](index=110&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=25&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports on purchases of equity securities by the issuer, indicating no shares were purchased under publicly announced plans or programs during the quarter ended June 30, 2025, with $5.0 million remaining available for repurchase Purchases of Equity Securities by the Issuer (Quarter Ended June 30, 2025) | Period | Total number of shares purchased | Average price paid per share | Total number of shares purchased as part of publicly announced plans or programs | Maximum value of shares that may yet be purchased under the plans or programs | | :----------------------- | :------------------------------- | :--------------------------- | :----------------------------------------------------------------- | :---------------------------------------------------------------- | | April 1 – April 30, 2025 | — | — | — | $5,000,000 | | May 1 – May 31, 2025 | — | — | — | $5,000,000 | | June 1 – June 30, 2025 | — | — | — | $5,000,000 | | **Total** | **—** | **—** | **—** | | [Item 6. Exhibits](index=26&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including organizational documents, stock plans, employment agreements, and certifications, many of which are incorporated by reference from previous SEC filings - The exhibits include the Certificate of Incorporation, Bylaws, various stock plans (2013 Restricted Stock Plan, 2023 Incentive Stock Plan), employment agreements (e.g., with Janet Carr and Johan Hedberg), and certifications (13a-14(a) and 18 U.S.C. Section 1350)[115](index=115&type=chunk)[116](index=116&type=chunk) [SIGNATURES](index=29&type=section&id=SIGNATURES) This section confirms the official signing and submission of the Form 10-Q report by the registrant's authorized officer - The report was signed on August 11, 2025, by Johan Hedberg, Chief Executive Officer (principal executive officer and principal financial officer) of Tandy Leather Factory, Inc[120](index=120&type=chunk)

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)