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What changed in TANDY LEATHER FACTORY INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of TANDY LEATHER FACTORY INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+114 added−121 removedSource: 10-K (2026-02-24) vs 10-K (2025-02-26)

Top changes in TANDY LEATHER FACTORY INC's 2025 10-K

114 paragraphs added · 121 removed · 88 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeGoing forward, our strategy is to continue to: • manage our cost base and use of cash and focus on strengthening our sales by leveraging our competitive advantage of our retail stores. • improving our employee product knowledge, customer service level, and in-store and virtual classes and community engagement as well as expanding workshop space in stores with machines are the highest priorities. • give customers good reasons to visit stores, and an excellent return on their time investment when they do.
Biggest changeGoing forward, our strategy is to continue to: • Manage our cost base and use of cash and focus on strengthening our sales by: o Leveraging our competitive advantage of our retail stores. o Unlocking store potential by opening new stores and expanding classes, and outreach. o Growing ecommerce in scaling our digital footprint and using marketplaces as acquisition channels. o Launching our new loyalty program optimizing a new buy online and pick up in stores (BOPIS). • Improving our employee product knowledge, customer service level, and in-store and virtual classes and community engagement. • Expanding workshop space in stores with machines are the highest priorities. • Give customers good reasons to visit stores and an excellent return on their time investment when they do. • Improve our overall digital and technological capabilities to include artificial intelligence where applicable across our entire operation and channels.
Major trademarks include federal trade name registrations for “Tandy Leather Factory,” “Tandy Leather Company,” and “Tandy.” The Company is not dependent on any one particular trademark or design patent, although it believes that the “Tandy” and “Tandy Leather” names are important for its business. In addition, Tandy owns several patents for specific belt buckles and leather-working equipment.
Major trademarks include federal trade name registrations for “Tandy Leather Factory,” “Tandy Leather,” and “Tandy.” The Company is not dependent on any one particular trademark or design patent, although it believes that the “Tandy” and “Tandy Leather” names are important for its business. In addition, Tandy owns several patents for specific belt buckles and leather-working equipment.
Operations Information regarding net sales, gross profit, operating income, and total assets is included within Item 7, Management’s Discussion and Analysis of financial condition and results of operations, and within Item 8, Financial Statements and Supplementary Data. Our stores offer a broad selection of products combined with leathercraft expertise in a one-stop shop.
Operations Information regarding net sales, gross profit, operating income, and total assets is included within Item 7, Management’s Discussion and Analysis of financial condition and results of operations, and within Item 8, Financial Statements and Supplementary Data. Our stores and website offer a broad selection of products combined with leathercraft expertise in a one-stop shop.
Founded in 1919 in Fort Worth, Texas, the Company introduced leathercrafting to millions of American and later Canadian and other international customers and has built a track record as the trusted source of quality leather, tools, hardware, supplies, kits and teaching materials for leatherworkers everywhere.
Founded in 1919 in Fort Worth, Texas, the Company introduced leathercrafting to millions of American and later Canadian and other international customers and has built a track record as the trusted source of quality leather, machines, tools, hardware, supplies, kits and teaching materials for leatherworkers everywhere.
We also offer numerous classes and open workbenches where customers can work on projects together with the leathercrafting community, and test new tools and techniques. Most of our stores range in size from 1,300 square feet to 9,000 square feet, with the average at approximately 3,500 square feet. Our Fort Worth flagship store is approximately 22,000 square feet.
We also offer numerous classes and open workbenches where customers can work on projects together with the leathercrafting community, and test new tools and techniques. Most of our stores range in size from 1,300 square feet to 9,000 square feet, with the average at approximately 3,500 square feet. Our new Fort Worth flagship store is approximately 8,000 square feet.
The Company’s common shares currently trade on the Nasdaq Capital Market Group under the symbol “TLF.” 3 Table of Contents Retail Fleet The Company currently operates a total of 101 retail stores. There are 91 stores in the United States (“U.S.”), 9 stores in Canada and one store in Spain.
The Company’s common shares currently trade on the Nasdaq Capital Market Group under the symbol “TLF.” 3 Table of Contents Retail Fleet The Company currently operates a total of 101 retail stores. There are 91 stores in the United States (“U.S.”), nine stores in Canada and one store in Spain.
Suppliers We purchase merchandise and raw materials from nearly 150 suppliers from the United States and approximately 20 foreign countries. In general, our 10 largest suppliers account for approximately 55% of our inventory purchases, and we had one supplier in 2024 who represented about 12% of our purchases.
Suppliers We purchase merchandise and raw materials from nearly 150 suppliers from the United States and approximately 20 foreign countries. In general, our 10 largest suppliers account for approximately 55% of our inventory purchases, and we had one supplier in 2025 who represented about 12% of our purchases.
We are not a party to any collective bargaining agreements. Overall, we believe that our relations with employees are good. Intellectual Property The Company owns all the material trademark rights used in connection with the production, marketing, distribution and sale of all Tandy-branded products.
We are not a party to any collective bargaining agreements. Overall, we believe that our relations with employees are good. 6 Table of Contents Intellectual Property The Company owns all the material trademark rights used in connection with the production, marketing, distribution and sale of all Tandy-branded products.
Our commercial division is tailored to the needs of those customers who build businesses around leather. With dedicated direct account representatives, a direct-from-our-warehouse shipping model, volume-based competitive pricing, customized product development, and assembly and pre-assembly services, we are building long-term, strategic relationships with our largest customers.
Our commercial division is tailored to the needs of those customers who build businesses around leather. With our commercial support team direct-from-our-warehouse shipping model, volume-based competitive pricing, customized product development, and assembly and pre-assembly services, we are building long-term, strategic relationships with our largest customers.
We believe that this combination of qualities is unique to Tandy and gives the brand competitive advantages that are difficult for others to replicate. We sell our products primarily through company-owned stores and through orders generated from our global websites, and through direct account representatives in our commercial division.
We believe that this combination of qualities is unique to Tandy and gives the brand competitive advantages that are difficult for others to replicate. We sell our products primarily through company-leased stores and through orders generated from our global websites, and through our commercial division.
We distribute product under the Tandy Leather TM , Eco-Flo TM , Craftool TM , CraftoolPro TM and Dr. Jackson’s TM brands, along with our premium TandyPro® line of products.
The factory produces approximately 10% of our products. We distribute product under the Tandy Leather TM , Eco-Flo TM , Craftool TM , CraftoolPro TM and Dr. Jackson’s TM brands, along with our premium TandyPro® line of products.
Compliance with Environmental Laws Our compliance with federal, state and local environmental protection laws has not had, and is not expected to have, a material effect on our capital expenditures, earnings, or competitive position. Employees As of December 31, 2024, we employed 542 people, 414 of whom were employed on a full-time basis.
Compliance with Environmental Laws Our compliance with federal, state and local environmental protection laws has not had, and is not expected to have, a material effect on our capital expenditures, earnings, or competitive position. Employees As of December 31, 2025, we employed globally 538 people, 401 of whom were employed on a full-time basis.
What differentiates Tandy from the competition is our high brand equity, awareness, and strong brand equity and loyalty, our network of retail stores that provides convenience, a high-touch customer service experience, and a hub for the local leathercrafting community, and our 100-year plus heritage.
What differentiates Tandy from the competition is our high brand equity, awareness, and strong brand equity and loyalty, our network of retail stores that provides convenience, a high-touch customer service experience, a wide assortment in our e-commerce channel, a hub for local leathercrafting communities, and our 100-year plus heritage.
Our goal is to optimize the tradeoff between the sales and market share we realize from having a broad product line against the safety stock required to support those items. We generally maintain higher inventories of imported or long-lead-time items to ensure a continuous supply.
We have a global customer service team that handles web order inquiries and phone orders. Our goal is to optimize the tradeoff between the sales and market share we realize from having a broad product line against the safety stock required to support those items. We generally maintain higher inventories of imported or long-lead-time items to ensure a continuous supply.
We produce leather lace, cut leather pieces and most of the do-it-yourself kits that are sold in our stores and on our websites. We also offer production services to our business customers such as cutting (“clicking”) and splitting and some assembly. We maintain our principal offices at 1900 Southeast Loop 820, Fort Worth, Texas 76140.
We produce leather lace, cut leather pieces and most of the do-it-yourself kits that are sold in our stores and on our websites. We also offer production services to our business customers such as cutting (“clicking”) and splitting and some assembly. We maintain our principal offices at 7602 Southwest Loop 820, Suite 101, Benbrook, TX 76126.
Information about our Executive Officers The following table sets forth information concerning our executive officers as of December 31, 2024: Name Age Executive Since Position Janet Carr 63 2018 Chief Executive Officer Janet Carr has served as our Chief Executive Officer and as a member of our Board of Directors since October 2018. Prior to her current role, Ms.
Information about our Executive Officers The following table sets forth information concerning our executive officers as of December 31, 2025: Name Age Executive Since Position Johan Hedberg 59 2025 Chief Executive Officer Johan Hedberg has served as our Chief Executive Officer and as a member of our Board of Directors since January 6, 2025. Mr.
Furthermore, it is not clear how a new U.S. administration will affect inflation, employment, cost of goods through tariffs, tax policy and other external factors that may have an impact on our employees, our customers or the financial performance of Tandy.
Furthermore, it is not clear how the U.S. administration will affect inflation, employment, cost of goods through ongoing shifts in tariffs, tax policy and other external factors that may have an impact on our employees, our customers or the financial performance of Tandy. 4 Table of Contents Customers Our customers fall into two broad categories: those who shop in retail stores and on our website (“Retail Customers”) and those whom we serve through our commercial division (“Commercial Customers”).
Economic Conditions Over the past 3 years, as post-covid inflation had significant impact on food and housing costs, our customers have pulled back on discretionary spending.
Economic Conditions Over the past 5 years, as post-covid inflation had significant impact on food and housing costs, our customers had initially pulled back on discretionary spending, but we experienced a slight positive change in their behavior at the beginning of 2025.
These reports are available on the Securities and Exchange Commission’s website at www.sec.gov. Our corporate website is located at www.tandyleather.com.
Available Information We file reports with the SEC. These reports include our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to these filings. These reports are available on the Securities and Exchange Commission’s website at www.sec.gov . Our corporate website is located at www.tandyleather.com.
We carry about 6,500 stock-keeping units (SKUs) in our current product line and continue to refine both the line, the lead times and safety stock levels required to meet customer demand, online vs. in-store assortment, and overall total inventory levels needed to grow sales and market share. 5 Table of Contents Competition Our competitors include smaller, independently-owned brick-and-mortar retailers, internet-based retailers including those selling on platforms like Amazon and eBay, national craft chains like Michaels Stores, Inc. and Hobby Lobby Stores, Inc., some wholesale-focused distributors, and two mid-sized competitors – Weaver Leather and Springfield Leather – who have one store and an online business.
Competition Our competitors include smaller, independently-owned brick-and-mortar retailers, internet-based retailers including those selling on platforms like Amazon and eBay, national craft chains like Michaels Stores, Inc. and Hobby Lobby Stores, Inc., some wholesale-focused distributors, and two mid-sized competitors – Weaver Leather and Springfield Leather – who have one store and an online business.
The Company expects that its material trademarks will remain in full force and effect for as long as we continue to use and renew them. 6 Table of Contents Foreign Sales Information regarding our sales from the United States and abroad and our long-lived assets is found in Note 2, Significant Accounting Policies: Revenue Recognition and Note 3, Balance Sheet Components , of the notes to the consolidated financial statements.
Foreign Sales Information regarding our sales from the United States and abroad and our long-lived assets is found in Note 2, Significant Accounting Policies: Revenue Recognition and Note 3, Balance Sheet Components , of the notes to the consolidated financial statements. For a description of some of the risks related to our foreign operations, see Item 1A, Risk Factors .
We operate a production facility in Fort Worth, Texas, where we produce kits, thread lace, belt strips and straps, and Craftaid® tooling templates, and provide some custom production services for commercial and business customers. The factory produces approximately 10% of our products.
Merchandise We carry a wide assortment of products organized into a number of categories, including leather, hand tools, hardware, kits, liquids, machines, and other supplies. We operate a production facility in Benbrook, Texas, where we produce kits, thread lace, belt strips and straps, and Craftaid® tooling templates, and provide some custom production services for commercial and business customers.
Historically, we generate slightly more sales in the fourth quarter of each year due to the holiday shopping season (approximately 28-30% of annual sales), while the other three quarters average approximately 22-24% of annual sales each quarter.
Historically, we generate slightly more sales in the fourth quarter of each year due to the holiday shopping season (approximately 28-30% of annual sales), while the other three quarters average approximately 22-24% of annual sales each quarter. 5 Table of Contents Distribution Our stores receive the majority of their inventory from our central distribution center located in Benbrook, Texas, in weekly or, increasingly, bi-monthly shipments, using third-party transportation providers.
Affinity groups like Military and First Responders and smaller and larger businesses who purchase in our retail stores receive special pricing or general discounts.
Retail Customers range from hobbyists to institutions (schools, camps, and other groups) to small businesses. Affinity groups like Military and First Responders and smaller and larger businesses who purchase in our retail stores receive special pricing or general discounts. To be served through our commercial division, customers generally need to spend more than $20,000 annually.
Distribution Our stores receive the majority of their inventory from our central distribution center located in Fort Worth, Texas, in weekly or, increasingly, bi-monthly shipments, using third-party transportation providers. Occasionally, merchandise is shipped to stores directly from the vendor. We now fulfill all of our U.S. and many of our international web orders from our Fort Worth distribution center.
Occasionally, merchandise is shipped to stores directly from the vendor. We now fulfill all of our U.S. and many of our international web orders from our Benbrook distribution center. Canada web orders are fulfilled out of our nine Canada stores, and European web orders are fulfilled out of our Spain store.
As of December 31, 2024, all Tandy locations, other than our corporate headquarters facilities (which includes our flagship store, corporate offices, distribution center, and production facility) were leased. Since January 22, 2025, when the Company completed the sale of its corporate headquarters facilities in Fort Worth, Texas, all Tandy locations are leased.
As of December 31, 2025 and 2024, there were no temporary store closure. As of December 31, 2025, all Tandy locations, including our corporate headquarters facilities ( our corporate offices, distribution center, and production facility) are leased. Business Strategy Tandy Leather has been introducing people to leatherworking for over 100 years.
Tandy monitors its trademarks and trade names and where appropriate pursues infringers.
Tandy monitors its trademarks and trade names and where appropriate pursues infringers. The Company expects that its material trademarks will remain in full force and effect for as long as we continue to use and renew them.
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Business Strategy Tandy Leather has been introducing people to leatherworking for over 100 years.
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We carry about 6,500 stock-keeping units (SKUs) in our current product line and continue to refine both the line, the lead times and safety stock levels required to meet customer demand, online vs. in-store assortment, and overall total inventory levels needed to grow sales and market share.
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Customers Our customers fall into two broad categories: those who shop in retail stores and on our website (“Retail Customers”) and those whom we serve through our commercial division (“Commercial Customers”). Retail Customers range from hobbyists to institutions (schools, camps, and other groups) to small businesses.
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Hedberg brings more than 30 years of retail leadership experience, most recently as Chief Sales Officer and President, Americas, of Fiskars Group from September 2021 until December 2023. He also served there as Global Chief Sales Officer Fiskars Group from April 2020 until August 2021 and Senior Vice President Global Sales BA Vita from July 2019 until March 2020.
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To be served through our commercial division, customers generally need to spend more than $20,000 annually. 4 Table of Contents Merchandise We carry a wide assortment of products organized into a number of categories including leather, hand tools, hardware, kits, liquids, machines, and other supplies.
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Prior to Fiskars, he was Vice President Sales and Marketing, Region Europe and Rest of World, for Thule Group from January 2013 until July 2019. Mr. Hedberg earned a Bachelor of Business Administration from the Cox School of Business, Southern Methodist University, and a Masters of Business Administration from the Kellogg School of Management, Northwestern. 7 Table of Contents
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Canada web orders are fulfilled out of our 9 Canada stores, and European web orders are fulfilled out of our Spain store. We have a global customer service team that handles web order inquiries and phone orders.
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While pandemic-related supply chain shocks have been resolved, freight costs and reliability remain volatile and tight labor markets and rising wages continue to pressure costs across all areas.
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For a description of some of the risks related to our foreign operations, see Item 1A, Risk Factors . Available Information We file reports with the SEC. These reports include our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to these filings.
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Carr served as the Senior Vice-President of Global Business Development for Caleres Inc. (formerly Brown Shoe Company Inc.) from 2016 to 2017. While there, she was responsible for international wholesale and retail for all of their brands. Prior to Caleres, Ms.
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Carr was the President of the Handbag Division of Nine West Group Inc. from 2013 to 2014, where she was responsible for all aspects of design, development and sales in both wholesale and retail. Ms. Carr has deep experience in strategy and consumer insights in various roles at a number of prominent retailers, including Tapestry, Inc.
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(formerly Coach, Inc.), Gap Inc. and Safeway. Ms. Carr resigned as Chief Executive Officer and was replaced on January 6, 2025, by Johan Hedberg. See note on “Subsequent Events” below. 7 Table of Contents

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe cannot guarantee that we will be able to secure all of the additional cash or working capital we might require to continue our operations. 11 Table of Contents Risks Related to Technology, Data Security and Privacy Failure to protect the integrity and security of personal information of our customers and employees could result in substantial costs, expose us to litigation and damage our reputation.
Biggest changeRisks Related to Technology, Data Security and Privacy Failure to protect the integrity and security of personal information of our customers and employees could result in substantial costs, expose us to litigation and damage our reputation. We receive and maintain certain personal, financial, and other information about our customers, employees, and vendors.
We receive and maintain certain personal, financial, and other information about our customers, employees, and vendors. In addition, our vendors receive and maintain certain personal, financial, and other information about our employees and customers. The use and transmission of this information is regulated by evolving and increasingly demanding laws and regulations across various jurisdictions.
In addition, our vendors receive and maintain certain personal, financial, and other information about our employees and customers. The use and transmission of this information is regulated by evolving and increasingly demanding laws and regulations across various jurisdictions.
In addition, as each of our leases expire, we may be unable to negotiate renewals, either on commercially acceptable terms or at all, which could cause us to close retail stores in desirable locations. Our inability to secure desirable retail space or favorable lease terms could impact our ability to grow.
In addition, as each of our leases expires, we may be unable to negotiate renewals, either on commercially acceptable terms or at all, which could cause us to close retail stores in desirable locations. Our inability to secure desirable retail space or favorable lease terms could impact our ability to grow.
The growth of internet retailers has also significantly reduced traffic to many shopping centers and physical stores, which, if not countered by an increase in our own online retailing, could have a material adverse effect on our in-store or overall sales. Declines in foot traffic in our retail store locations could negatively impact our sales and profits.
The growth of internet retailers has also significantly reduced traffic to many shopping centers and physical stores, which, if not countered by an increase in our own online retailing, could have a material adverse effect on our in-store or overall sales. 9 Table of Contents Declines in foot traffic in our retail store locations could negatively impact our sales and profits.
If our digital commerce platforms do not meet customers’ expectations in terms of security, speed, attractiveness or ease of use, customers may be less inclined to return to such digital commerce platforms, which could negatively impact our business. Risks Related to the Macroeconomic Environment Our business may be negatively impacted by general economic conditions in the United States and abroad.
If our digital commerce platforms do not meet customers’ expectations in terms of security, speed, attractiveness or ease of use, customers may be less inclined to return to such digital commerce platforms, which could negatively impact our business. 12 Table of Contents Risks Related to the Macroeconomic Environment Our business may be negatively impacted by general economic conditions in the United States and abroad.
Likewise, our obligation to continue making lease payments in respect of leases for closed retail or other spaces could have a material adverse effect on our business, financial condition and results of operations. 9 Table of Contents We may be unable to sustain our financial performance or our past growth, which could have a material adverse effect on our future operating results.
Likewise, our obligation to continue making lease payments in respect of leases for closed retail or other spaces could have a material adverse effect on our business, financial condition and results of operations. We may be unable to sustain our financial performance or our past growth, which could have a material adverse effect on our future operating results.
As a Company engaged in sourcing on a global scale, we are subject to the risks inherent in such activities, including, but not limited to: • unavailability of, or significant fluctuations in the cost of, raw materials; • disruptions or delays in shipments; and volatility of pricing in shipment costs. • loss or impairment of key assembly or distribution sites, which also could result in a former manufacturer beginning to produce similar products that compete with ours; • inability to engage new independent manufacturers that meet the Company’s cost-effective sourcing model; • product quality issues; • compliance by us and our independent manufacturers and suppliers with labor laws and other foreign governmental regulations; • imposition of additional duties, taxes, new tariffs, and other charges on imports or exports; • embargoes against products originating in countries from which we source; • increases in the cost of labor, fuel (including volatility in the price of oil), travel and transportation; • compliance by our independent manufacturers and suppliers with our Code of Business Conduct and Ethics and our Animal Welfare Policy; • political unrest; • unforeseen public health crises, such as pandemic (e.g., the COVID-19 pandemic) and epidemic diseases; • natural disasters or other extreme weather events, whether as a result of climate change or otherwise; and • acts of war or terrorism and other external factors over which we have no control.
As a Company engaged in sourcing on a global scale, we are subject to the risks inherent in such activities, including, but not limited to: • unavailability of, or significant fluctuations in the cost of, raw materials; • disruptions or delays in shipments; and volatility of pricing in shipment costs. • loss or impairment of key assembly or distribution sites, which also could result in a former manufacturer beginning to produce similar products that compete with ours; • inability to engage new independent manufacturers that meet the Company’s cost-effective sourcing model; • product quality issues; • compliance by us and our independent manufacturers and suppliers with labor laws and other foreign governmental regulations; • imposition of additional duties, taxes, new tariffs, and other charges on imports or exports; • embargoes against products originating in countries from which we source; • increases in the cost of labor, fuel (including volatility in the price of oil), travel and transportation; • compliance by our independent manufacturers and suppliers with our Code of Business Conduct and Ethics and our Animal Welfare Policy; • political unrest; • natural disasters or other extreme weather events, whether as a result of climate change or otherwise; and • acts of war or terrorism and other external factors over which we have no control.
Further, we could incur substantial costs in legal actions relating to our use of intellectual property or the use of our intellectual property by others. Even if we are successful in these actions, the costs we incur could have a material adverse effect on us. 14 Table of Contents
Further, we could incur substantial costs in legal actions relating to our use of intellectual property or the use of our intellectual property by others. Even if we are successful in these actions, the costs we incur could have a material adverse effect on us.
In addition, adverse weather conditions, economic or political instability and consumer confidence volatility could have material adverse impacts on overall customer demand, which may impact our sales and operating results. 10 Table of Contents Our success depends, in part, on attracting, developing and retaining qualified employees, including key personnel.
In addition, adverse weather conditions, economic or political instability and consumer confidence volatility could have material adverse impacts on overall customer demand, which may impact our sales and operating results. Our success depends, in part, on attracting, developing and retaining qualified employees, including key personnel.
Risks Related to Legal, Regulatory and Compliance If the United States maintains current tariffs on products manufactured in China, or if additional tariffs or trade restrictions are implemented by other countries or by the U.S., the cost of our products manufactured in China or other countries and imported into the U.S. or other countries could increase.
Risks Related to Legal, Regulatory and Compliance If the United States maintains current tariffs on products manufactured in China or other major countries where we source our products, or if additional tariffs or trade restrictions are implemented by other countries or by the U.S., the cost of our products manufactured in China or other countries and imported into the U.S. or other countries could increase.
Historically, the Company has funded its business primarily with cash from operations and has utilized only small lines of working capital for seasonal expenditures. In 2023, we obtained a line of credit facility through JP Morgan Chase Bank to provide working capital as needed; as of the date of this report, we have not borrowed any amounts under this facility.
Historically, the Company has funded its business primarily with cash from operations and has utilized only small lines of working capital for seasonal expenditures. In 2025, we renewed our line of credit facility through JP Morgan Chase Bank to provide working capital as needed; as of the date of this report, we have not borrowed any amounts under this facility.
In addition, we have signed a lease for the Company’s future principal offices and distribution center (including some factory production) that will run through September 2035. We believe that most of the lease agreements we will enter into in the future will be long-term and non-cancelable.
In addition, we lease the Company’s principal offices and distribution center (including some factory production) under a lease that will run through September 2035 and is renewable for an additional ten years. We believe that most of the lease agreements we will enter into in the future will be long-term and non-cancelable.
Our stores offer leather and leathercraft-related items, which are viewed as discretionary items. Pressure on discretionary income brought on by economic downturns and slow recoveries, including housing market declines, rising energy prices and weak labor markets, may cause consumers to reduce the amount they spend on discretionary items.
Pressure on discretionary income brought on by economic downturns and slow recoveries, including housing market declines, rising energy prices and weak labor markets, may cause consumers to reduce the amount they spend on discretionary items.
If we close a leased retail space, we might remain obligated under the applicable lease. We lease our retail store locations under long-term, non-cancelable leases, which have initial or renewed terms typically ranging from three years to ten years and may include lease renewal options.
We lease our retail store locations under long-term, non-cancelable leases, which have initial or renewed terms typically ranging from three years to ten years and may include lease renewal options.
The theft, destruction, loss, misappropriation, or release of sensitive and/or confidential information or intellectual property, or interference with our information technology systems or the technology systems of third parties on which we rely, could result in business disruption, negative publicity, brand damage, violation of privacy laws, loss of customers, potential liability and competitive disadvantage. 12 Table of Contents Unreliable or inefficient information technology or the failure to successfully implement or invest in technology initiatives in the future could adversely impact operating results.
The theft, destruction, loss, misappropriation, or release of sensitive and/or confidential information or intellectual property, or interference with our information technology systems or the technology systems of third parties on which we rely, could result in business disruption, negative publicity, brand damage, violation of privacy laws, loss of customers, potential liability and competitive disadvantage.
In addition, the State of California enacted the California Consumer Privacy Act (the “CCPA”), which became effective January 2020 and requires companies that process information on California residents to, among other things, provide new disclosures and options to consumers about data collection, use and sharing practices.
In addition, the State of California enacted the California Consumer Privacy Act (the “CCPA”), which became effective January 2020 and requires companies that process information on California residents to, among other things, provide new disclosures and options to consumers about data collection, use and sharing practices. 11 Table of Contents Moreover, each of the GDPR and the CCPA confer a private right-of-action on certain individuals and associations.
This revenue, when translated into U.S. dollars for consolidated reporting purposes, could be materially affected by fluctuations in the U.S. dollar, negatively impacting our results of operations and our ability to generate revenue growth. 13 Table of Contents We face risks related to the effect of economic uncertainty. ​During events of economic downturn and slow recovery, our growth prospects, results of operations, cash flows and financial condition could be adversely impacted.
This revenue, when translated into U.S. dollars for consolidated reporting purposes, could be materially affected by fluctuations in the U.S. dollar, negatively impacting our results of operations and our ability to generate revenue growth. We face risks related to the effect of economic uncertainty.
Our ability to meet the needs of our customers and our retail stores and e-commerce sites depends on the proper operation of these centers. If any of these centers were to shut down or otherwise become inoperable or inaccessible for any reason, we could suffer a substantial loss of inventory and/or disruptions of deliveries to our retail and wholesale customers.
If any of these centers were to shut down or otherwise become inoperable or inaccessible for any reason, we could suffer a substantial loss of inventory and/or disruptions of deliveries to our retail and wholesale customers.
The unexpected loss of one or more of our key personnel or any negative public perception with respect to these individuals could have a material adverse effect on our business, results of operations and financial condition. We do not maintain key-person or similar life insurance policies on any of senior management team or other key personnel.
The unexpected loss of one or more of our key personnel or any negative public perception with respect to these individuals could have a material adverse effect on our business, results of operations and financial condition.
If we are unable to provide quality products and exceptional customer service to our customers, including education, which Tandy Leather has traditionally been known for, our brand name may be impaired which could adversely affect our operating results. Changes in customer demand could materially adversely affect our sales, results of operations and cash flow.
Our success to date has been due in large part to the strength of that brand. If we are unable to provide quality products and exceptional customer service to our customers, including education, which Tandy Leather has traditionally been known for, our brand name may be impaired which could adversely affect our operating results.
In 2024, we also experienced declines, which management believes were primarily resulting from macroeconomic factors, including inflation (particularly higher food, fuel, housing and transportation costs), higher interest rates and lower government subsidies, all of which impacted the specialty retail industry and impacts our customers’ ability to make discretionary purchases such as our products.
In 2025, we also experienced sales improvement compared to the prior year, which management believes primarily resulted from our sales campaigns, stronger retail management, and increase in prices offset by pressures from macroeconomic factors, including inflation (particularly higher food, fuel, housing and transportation costs), tariffs increases, higher interest rates and lower government subsidies, all of which impacted the specialty retail industry and impacts our customers’ ability to make discretionary purchases such as our products.
In addition, the violation of labor, environmental or other laws by an independent manufacturer or supplier, or divergence of an independent manufacturer’s or supplier’s labor practices from those generally accepted as ethical or appropriate in the U.S., could interrupt or otherwise disrupt the shipment of our products, harm our trademarks or damage our reputation.
This could in turn adversely affect the profitability for these products and have an adverse effect on our business, financial condition and results of operations. 13 Table of Contents In addition, the violation of labor, environmental or other laws by an independent manufacturer or supplier, or divergence of an independent manufacturer’s or supplier’s labor practices from those generally accepted as ethical or appropriate in the U.S., could interrupt or otherwise disrupt the shipment of our products, harm our trademarks or damage our reputation.
Our success depends on our ability to anticipate and respond in a timely manner to changing customer demands and preferences for leather and leathercraft-related items.
Changes in customer demand could materially adversely affect our sales, results of operations and cash flow. Our success depends on our ability to anticipate and respond in a timely manner to changing customer demands and preferences for leather and leathercraft-related items.
We are dependent on a limited number of distribution and sourcing centers, primarily the center located at our Fort Worth, Texas headquarters, which will be relocated during 2025 as referenced above and in Note 11 of this document.
We are dependent on a limited number of distribution and sourcing centers, primarily the center located at our Benbrook, Texas headquarters, where we relocated during 2025 as referenced above and in Note 11 of this document. Our ability to meet the needs of our customers and our retail stores and e-commerce sites depends on the proper operation of these centers.
Disruptions in the operation of our Fort Worth distribution center or assembly facility could have an adverse effect on our ability to supply our retail stores, fulfill web orders and/or manufacture product, resulting in possible decreases in sales and margin.
We do not maintain key-person or similar life insurance policies on any of senior management team or other key personnel. 10 Table of Contents Disruptions in the operation of our U.S. distribution center or assembly facility could have an adverse effect on our ability to supply our retail stores, fulfill web orders and/or manufacture product, resulting in possible decreases in sales and margin.
These issues could have a material adverse effect on the Company’s business and operations in 2025 or beyond. We are subject to risks associated with leasing retail, distribution and office space under long-term and non-cancelable leases. We may be unable to renew leases on acceptable terms.
The occurrence of any of these events could adversely affect our business and our results of operations. We are subject to risks associated with leasing retail, distribution and office space under long-term and non-cancelable leases. We may be unable to renew leases on acceptable terms. If we close a leased retail space, we might remain obligated under the applicable lease.
The Company believes that long-term growth will be realized through these transformational efforts over time, however there is no assurance that such efforts will be successful. Actual costs incurred and the timeline of these initiatives may differ from our expectations. If these initiatives are unsuccessful, our business, financial condition and results of operation could be materially adversely affected.
Actual costs incurred and the timeline of these initiatives may differ from our expectations. If these initiatives are unsuccessful, our business, financial condition and results of operation could be materially adversely affected. Our business is subject to the risks inherent in global sourcing activities.
Our business could be harmed if we are unable to maintain our brand image. Tandy Leather is one of the most recognized brand names in our industry. Our success to date has been due in large part to the strength of that brand.
Furthermore, declines in traffic could result in store impairment charges if expected future cash flows of the related asset group do not exceed the carrying value. Our business could be harmed if we are unable to maintain our brand image. Tandy Leather is one of the most recognized brand names in our industry.
We may also seek capital through the private issuance of debt or equity securities.
We may also seek capital through the private issuance of debt or equity securities. We cannot guarantee that we will be able to secure all of the additional cash or working capital we might require to continue our operations.
These include the closing or relocation of underperforming stores and opening of new store concepts, the further development of our new division focused on serving commercial customers, pricing and marketing initiatives, systems improvements, and other changes.
These include the closing or relocation of underperforming stores and opening of new store concepts, pricing and marketing initiatives, systems improvements, and other changes. The Company believes that long-term growth will be realized through these transformational efforts over time, however there is no assurance that such efforts will be successful.
Many of our stores are located in light industrial areas, where foot traffic tends to be lower than in traditional retail shopping areas. Furthermore, our initiatives to service our larger customers through a dedicated Commercial Program rather than primarily through local stores may also lead to a decline in the traffic to our store locations.
Many of our stores are located in light industrial areas, where foot traffic tends to be lower than in traditional retail shopping areas. Declines in consumer traffic could have a negative impact on our net sales and could materially adversely affect our financial condition and results of operations.
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Our business is subject to the risks inherent in global sourcing activities.
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Unreliable or inefficient information technology or the failure to successfully implement or invest in technology initiatives in the future could adversely impact operating results.
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The occurrence of any of these events could adversely affect our business and our results of operations. Relocation of the Company’s headquarters and main distribution facility in 2025 might cause significant disruption to the Company’s business and operations.
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During events of economic downturn and slow recovery, our growth prospects, results of operations, cash flows and financial condition could be adversely impacted. Our stores offer leather and leathercraft-related items, which are viewed as discretionary items.
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In January 2025, the Company completed the sale of its headquarters facilities, including its main distribution facility and flagship store, in Fort Worth, Texas. The Company plans to relocate these operations to new spaces beginning around the third quarter of 2025.
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These relocation activities will inevitably cause disruption to the Company’s business and operations, including (but not limited to) requiring the Company set up temporary fulfillment centers for web orders while the move is in progress and establishing new facilities and procedures for distribution of products to stores and all customers during and after this period.
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The Company is actively working to plan for and manage these transitions, but we cannot assure you that these processes will be completed as planned, that they will not cost significantly more than expected, or that we will not encounter unforeseen problems or challenges.
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In 2020, we experienced declines in sales and operating income primarily resulting from the COVID-19 pandemic.
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Declines in consumer traffic could have a negative impact on our net sales and could materially adversely affect our financial condition and results of operations. Furthermore, declines in traffic could result in store impairment charges if expected future cash flows of the related asset group do not exceed the carrying value.
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We anticipate, and are planning for, a period of disruption in 2025 while we move our distribution facilities to their new location near Fort Worth, but we cannot be sure that this disruption will not exceed our forecast or interfere with our ability to allocate or distribute products as needed.
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Moreover, each of the GDPR and the CCPA confer a private right-of-action on certain individuals and associations.
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While the impact of the COVID-19 pandemic has mostly receded, there are residual effects such as higher consumer prices and interest rates. Furthermore, another serious outbreak of coronavirus or other deadly disease could also have a material adverse effect on our business and liquidity.
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The COVID-19 pandemic had an unprecedented and lasting impact on the U.S. economy, some of which continues to today. The possibility of another outbreak of a coronavirus variant or other deadly disease that would have material adverse effect on the economy, our supply chain partners, our employees and our customers is now all too real.
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While we are better prepared to handle a future pandemic, it could impact our ability to keep our stores open, to obtain merchandise or payment terms from our vendors, to transport merchandise to and from our warehouse, to operate our warehouse, factory and other facilities that require on-site activities, and thus materially adversely affect our revenues, earnings, liquidity and cash flows.
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This could in turn adversely affect the profitability for these products and have an adverse effect on our business, financial condition and results of operations.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeKey components of our cybersecurity risk management program The Company’s cybersecurity program includes: • Advanced security infrastructure with state-of-the-art firewalls and intrusion detection systems. • Regular cybersecurity training for employees. • Strict data access controls and authentication protocols. • Continuous monitoring of our networks and systems for signs of unauthorized activity. • Partnerships with leading cybersecurity software and hardware providers for real-time systems monitoring and threat intelligence.
Biggest changeKey components of our cybersecurity risk management program The Company’s cybersecurity program includes: • Advanced security infrastructure with state-of-the-art firewalls and intrusion detection systems. • Regular cybersecurity training for employees. • Strict data access controls and authentication protocols. • Continuous monitoring of our networks and systems for signs of unauthorized activity. 14 Table of Contents • Partnerships with leading cybersecurity software and hardware providers for real-time systems monitoring and threat intelligence.
We face certain ongoing risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition. See “Risk Factors”. 15 Table of Contents Cybersecurity Governance The Company’s Board of Directors oversees management’s cybersecurity strategy.
We face certain ongoing risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition. See “Risk Factors”. Cybersecurity Governance The Company’s Board of Directors oversees management’s cybersecurity strategy.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeLocations: Alabama 1 Missouri 3 Alaska 1 Montana 1 Arizona 3 Nebraska 1 Arkansas 1 Nevada 2 California 7 New Jersey 1 Colorado 4 New Mexico 2 Connecticut 1 New York 2 Florida 4 North Carolina 2 Georgia 2 Ohio 3 Idaho 1 Oklahoma 2 Illinois 1 Oregon 2 Indiana 1 Pennsylvania 2 Iowa 1 South Dakota 1 Kansas 1 Tennessee 3 Kentucky 1 Texas 18 Louisiana 2 Utah 4 Maryland 1 Washington 3 Massachusetts 1 Wisconsin 1 Michigan 2 Wyoming 1 Minnesota 2 Virginia 1 Canadian Locations: Alberta 3 Ontario 2 British Columbia 1 Saskatchewan 1 Manitoba 1 Nova Scotia 1 International Locations: Spain 1 The broader economic impact of the pandemic and the war in Ukraine and the Middle East have put pressure on store profitability with dampened demand, higher wages and staffing challenges, rising retail rents, and increases in other retail store operating costs.
Biggest changeLocations: Alabama 1 Missouri 3 Alaska 1 Montana 1 Arizona 3 Nebraska 1 Arkansas 1 Nevada 2 California 7 New Jersey 1 Colorado 4 New Mexico 2 Connecticut 1 New York 2 Florida 4 North Carolina 2 Georgia 2 Ohio 3 Idaho 1 Oklahoma 2 Illinois 1 Oregon 2 Indiana 1 Pennsylvania 2 Iowa 1 South Dakota 1 Kansas 1 Tennessee 3 Kentucky 1 Texas 18 Louisiana 2 Utah 4 Maryland 1 Washington 3 Massachusetts 1 Wisconsin 1 Michigan 2 Wyoming 1 Minnesota 2 Virginia 1 Canadian Locations: Alberta 3 Ontario 2 British Columbia 1 Saskatchewan 1 Manitoba 1 Nova Scotia 1 International Locations: Spain 1 We regularly review recent and future projected store 4-wall cash flow taking these forecasted costs as well as projected consumer demand, other nearby stores and a number of other factors into consideration when making decisions to close or open stores in a given location.
The following table summarizes the locations of our leased premises as of the date of this filing: U. S.
The following table summarizes the locations of our leased premises excluding our corporate offices as of the date of this filing: 15 Table of Contents U. S.
ITEM 2. PROPERTIES We lease our store locations, with the exception of our flagship store located in Fort Worth, Texas which we still owned as of December 31, 2024. The majority of our stores have initial lease terms of at least five years. The leases are generally renewable, with increases in lease rental rates in some cases.
ITEM 2. PROPERTIES We lease our store locations and the majority of our stores have initial lease terms of at least five years. The leases are generally renewable, with increases in lease rental rates in some cases. We believe that all of our properties are adequately covered by insurance.
The facility consists of 191,000 square feet located on approximately 30 acres. In January 2025, the Company completed the sale of its flagship store and corporate headquarters buildings, and those spaces have also been leased since that time as referenced in our “Subsequent Events” footnote below.
In January 2025, the Company completed the sale of its corporate headquarters buildings which consisted of 191,000 square feet located on approximately 30 acres along with our flagship store and details of this transaction can be found in Note 11 below.
We believe that all of our properties are adequately covered by insurance. As of December 31, 2024, we owned the 22,000 square foot building that houses our flagship store. Further, we owned our corporate headquarters, which includes our central distribution center and production facility, sales, marketing, administrative, and executive offices.
As of December 31, 2025, we lease our corporate headquarters, which includes our distribution center and production facility, sales, marketing, administrative, and executive offices.
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We regularly review recent and future projected store 4-wall cash flow taking these forecasted costs as well as projected consumer demand, other nearby stores and a number of other factors into consideration when making decisions to close or open stores in a given location.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 17 ITEM 6. SELECTED FINANCIAL DATA 17 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 18 ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 25 ITEM 9.
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ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock trades on the Nasdaq Capital Market under the symbol “TLF.” There were approximately 271 stockholders of record on February 24, 2026.
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CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 52 ITEM 9A. CONTROLS AND PROCEDURES 52
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We did not sell any shares of our equity securities during our fiscal year ended December 31, 2025 that were not registered under the Securities Act. On January 24, 2025, our Board of Directors authorized a $1.50 per share special one-time cash dividend that was paid to our stockholders of record at the close of business on February 3, 2025.
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The dividend, totaling $12.7 million, was paid to our stockholders on February 18, 2025. Our Board of Directors may consider future cash dividends after giving consideration to our profitability, cash flow, capital requirements, current and forecasted liquidity, as well as financial and other business conditions existing at the time.
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This policy is subject to change based on future industry and market conditions, as well as other factors. We did not repurchase any shares of our common stocks during the fourth quarter of fiscal year 2025.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeWe regularly review all inventory items to determine if there are (i) damaged goods (e.g., for leather, excessive scars or damage from ultra-violet (“UV”) light), (ii) items that need to be removed from our product line (e.g., slow-moving items, inability of a supplier to provide items of acceptable quality or quantity, and to maintain freshness in the product line) and (iii) pricing actions that need to be taken to adequately value our inventory at the lower of FIFO cost or net realizable value. 22 Table of Contents Since the determination of net realizable value of inventory involves both estimation and judgement with regard to market values and reasonable costs to sell, differences in these estimates could result in ultimate valuations that differ from the recorded asset.
Biggest changeCarrying values of inventory are analyzed and, to the extent that the cost of inventory exceeds the net realizable value, provisions are made to reduce the carrying amount of the inventory. 22 Table of Contents We regularly review all inventory items to determine if there are (i) damaged goods (e.g., for leather, excessive scars or damage from ultra-violet (“UV”) light), (ii) items that need to be removed from our product line (e.g., slow-moving items, inability of a supplier to provide items of acceptable quality or quantity, and to maintain freshness in the product line) and (iii) pricing actions that need to be taken to adequately value our inventory at the lower of FIFO cost or net realizable value.
As of December 31, 2024, the Company had purchased less than $10,000 of shares under this plan. 20 Table of Contents On September 17, 2024, the Board of Directors approved the renewal of the stock plan, and the Company shall be authorized to repurchase up to $5 million (at then-current market value) of the Company’s common stock in open-market transactions at prevailing market prices upon periodic instructions from the Board or an authorized sub-committee of the Board until September 30, 2026.
As of December 31, 2025, the Company had purchased less than $10,000 of shares under this plan. 20 Table of Contents On September 17, 2024, the Board of Directors approved the renewal of the stock plan, and the Company shall be authorized to repurchase up to $5 million (at then-current market value) of the Company’s common stock in open-market transactions at prevailing market prices upon periodic instructions from the Board or an authorized sub-committee of the Board until September 30, 2026.
Finished goods held for sale includes the cost of merchandise purchases, the costs to bring the merchandise to our Texas distribution center, warehousing and handling expenditures, and distributing and delivering merchandise to our stores. These costs include depreciation of long-lived assets utilized in acquiring, warehousing and distributing inventory.
Finished goods held for sale include the cost of merchandise purchases, the costs to bring the merchandise to our Texas distribution center, warehousing and handling expenditures, and distributing and delivering merchandise to our stores. These costs include depreciation of long-lived assets utilized in acquiring, warehousing and distributing inventory.
Our effective tax rate differs from the federal statutory rate primarily due to U.S. state income tax expense, expenses that are nondeductible for tax purposes, and the release of valuation allowance associated with our deferred tax assets in 2023. Capital Resources, Liquidity and Financial Condition We require cash principally for day-to-day operations, to purchase inventory and to finance capital investments.
Our effective tax rate differs from the federal statutory rate primarily due to U.S. state income tax expense, expenses that are nondeductible for tax purposes, and the release of valuation allowance associated with our deferred tax assets in 2024. Capital Resources, Liquidity and Financial Condition We require cash principally for day-to-day operations, to purchase inventory and to finance capital investments.
There can be no assurance, however, that the current global economic conditions would not result in further restrictions on our business operations in a manner that would more materially impact our cash flow. 21 Table of Contents Off-Balance Sheet Arrangements We did not have any off-balance sheet arrangements during 2024 or 2023, and we do not currently have any such arrangements.
There can be no assurance, however, that the current global economic conditions would not result in further restrictions on our business operations in a manner that would more materially impact our cash flow. 21 Table of Contents Off-Balance Sheet Arrangements We did not have any off-balance sheet arrangements during 2025 or 2024, and we do not currently have any such arrangements.
Currently, the Company operates a total of 101 retail stores. There are 91 stores in the United States (“U.S,”), 9 stores in Canada and one store in Spain. Tandy Leather has been introducing people to leatherworking for over 100 years.
Currently, the Company operates a total of 101 retail stores. There are 91 stores in the United States (“U.S,”), nine stores in Canada and one store in Spain. Tandy Leather has been introducing people to leatherworking for over 100 years.
Today, our mission remains to build on our legacy of inspiring the timeless art and trade of leatherworking. What differentiates Tandy from the competition is our high brand awareness and strong brand equity and loyalty, our network of retail stores that provides convenience, a high-touch customer service experience, and a hub for the local leathercrafting community, and our 100-year heritage.
Today, our mission remains to build on our legacy of inspiring the timeless art and trade of leatherworking. 17 Table of Contents What differentiates Tandy from the competition is our high brand awareness and strong brand equity and loyalty, our network of retail stores that provides convenience, a high-touch customer service experience, and a hub for the local leathercrafting community, and our 100-year heritage.
We believe that cash flow from operations and our existing cash reserves will be adequate to fund our operations through 2025, considering the current effects of the inflationary pressure on our business and cash flow and our current business performance.
We believe that cash flow from operations and our existing cash reserves will be adequate to fund our operations through 2026, considering the current effects of the inflationary pressure on our business and cash flow and our current business performance.
As of December 31, 2024, we have no sublease agreements and no lease agreements in which we are named as a lessor. We do not have any contingent rental payment agreements. Impairment of Long-Lived Assets .
As of December 31, 2025, we have no sublease agreements and no lease agreements in which we are named as a lessor. We do not have any contingent rental payment agreements. Impairment of Long-Lived Assets .
On January 3, 2023, the Company entered into a credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A. Under the Credit Agreement, the bank will provide the Company a credit facility of up to $5,000,000 on standard terms and conditions, including affirmative and negative covenants set forth in the Credit Agreement.
On January 3, 2023, the Company entered into a credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A. Under the Credit Agreement, the bank provides the Company a credit facility of up to $5,000,000 on standard terms and conditions, including affirmative and negative covenants set forth in the Credit Agreement.
In addition, we anticipate that this cash flow and our current cash reserves will enable us to meet our contractual obligations and commercial commitments throughout 2025.
In addition, we anticipate that this cash flow and our current cash reserves will enable us to meet our contractual obligations and commercial commitments throughout 2026.
We may be subject to periodic audits by the Internal Revenue Service and other taxing authorities. These audits may challenge certain of our tax positions, such as the timing and amount of deductions and allocation of taxable income to the various jurisdictions. 24 Table of Contents
We may be subject to periodic audits by the Internal Revenue Service and other taxing authorities. These audits may challenge certain of our tax positions, such as the timing and amount of deductions and allocation of taxable income to the various jurisdictions.
As of the date of this filing, no funds had been borrowed under this facility, and we are in compliance with all covenants. In the fourth quarter of 2024, the Company renewed the promissory note under its Credit Agreement with JPMorgan Chase Bank, N.A. through October 31, 2025 under the same terms as above.
As of the date of this filing, no funds had been borrowed under this facility, and we are in compliance with all covenants. In the fourth quarter of 2025, the Company renewed the promissory note under its Credit Agreement with JPMorgan Chase Bank, N.A. through October 31, 2026.
We expect to fund our operating and liquidity needs primarily from a combination of current cash balances, and cash generated from operating activities. Any excess cash will be invested as determined by our Board of Directors in accordance with its approved investment policy. Our cash balance as of December 31, 2024 totaled $13.3 million.
We expect to fund our operating and liquidity needs primarily from a combination of current cash balances, and cash generated from operating activities. Any excess cash will be invested as determined by our Board of Directors in accordance with its approved investment policy. Our cash balance as of December 31, 2025 totaled $16.1 million.
For 2023, we generated $4.5 million of cash from operations driven by net income of $3.8 million, the add-back of non-cash expenses of $4.5 million, including depreciation, amortization, loss on disposal of fixed assets, stock based compensation, and deferred taxes, an increase in accrued expenses and other liabilities of $0.5 million, a decrease in inventory of $0.2 million and a decrease in accounts receivable of $0.1 million; offset by a decrease in operating lease liabilities payments of $3.6 million, a decrease in accounts payable of $0.8 million, and an increase in prepaid expenses of $0.2 million.
For 2024, we generated $4.6 million of cash from operations driven by net income of $0.8 million, the add-back of non-cash expenses of $5.4 million, including depreciation, amortization, loss on disposal of fixed assets, stock based compensation, and deferred taxes, a decrease in inventory of $2.0 million, and an increase in accrued expense of $0.3 million; offset by a decrease in operating lease liabilities payments of $3.5 million and an increase in prepaid expense of $0.4 million.
Income Taxes. Income taxes are estimated for each jurisdiction in which we operate. This involves assessing current tax exposure together with temporary differences resulting from differing treatment of items for tax and financial statement accounting purposes. Any resulting deferred tax assets are evaluated for recoverability based on estimated future taxable income.
This involves assessing current tax exposure together with temporary differences resulting from differing treatment of items for tax and financial statement accounting purposes. Any resulting deferred tax assets are evaluated for recoverability based on estimated future taxable income.
We produce leather lace, cut leather pieces and most of the do-it-yourself kits that are sold in our stores and on our websites. We also offer production services to our business customers such as cutting (“clicking”) and splitting and some assembly. We maintain our principal offices at 1900 Southeast Loop 820, Fort Worth, Texas 76140.
We produce leather lace, cut leather pieces and most of the do-it-yourself kits that are sold in our stores and on our websites. We also offer production services to our business customers such as cutting (“clicking”) and splitting and some assembly. We maintain our principal offices at 7602 Southwest Loop 820, Suite 101, Benbrook, TX 76126.
We use similar factors to determine whether to open new stores. Gross Profit Gross profit decreased by $3.4 million, or 7.4%, from 2023 to 2024.
We use similar factors to determine whether to open new stores. Gross Profit Gross profit increased by $1.7 million, or 4.1%, from 2024 to 2025.
Provision for Income Taxes Our effective tax rate was 24.2% and 17.1% for the years ended December 31, 2024 and 2023, respectively.
Provision for Income Taxes Our effective tax rate was 26.0% and 24.2% for the years ended December 31, 2025 and 2024, respectively.
Cash Flows (amounts in thousands) 2024 2023 Net cash provided by operating activities $ 4,548 $ 4,537 Net cash used in investing activities (2,983 ) (576 ) Net cash used in financing activities (1 ) (26 ) Effect of exchange rate changes on cash and cash equivalents (452 ) 249 Net increase in cash and cash equivalents $ 1,112 $ 4,184 For 2024, we generated $4.6 million of cash from operations driven by net income of $0.8 million, the add-back of non-cash expenses of $5.4 million, including depreciation, amortization, loss on disposal of fixed assets, stock based compensation, and deferred taxes, a decrease in inventory of $2.0 million, and an increase in accrued expense of $0.3 million; offset by a decrease in operating lease liabilities payments of $3.5 million and an increase in prepaid expense of $0.4 million.
Cash Flows (amounts in thousands) 2025 2024 Net cash (used in) provided by operating activities $ (556 ) $ 4,548 Net cash provided by (used in) investing activities 17,360 (2,983 ) Net cash used in financing activities (14,108 ) (1 ) Effect of exchange rate changes on cash and cash equivalents 120 (452 ) Net increase in cash and cash equivalents $ 2,816 $ 1,112 For 2025, we used $0.6 million of cash in operations driven by net loss from operation of $0.9 million which excluded the sale of the building, the add-back of non-cash expenses of $1.3 million, including depreciation, amortization, and stock based compensation, a decrease in inventory of $2.6 million, offset by a decrease in operating lease liabilities payments of $3.1 million and a decrease in account payable of $1.3 million; adjusted by an decrease in deferred tax asset of $0.8 million.
Assembled inventory including raw materials and work-in-process is valued on a FIFO basis using full absorption accounting which includes material, labor, and other applicable assembly overhead. Carrying values of inventory are analyzed and, to the extent that the cost of inventory exceeds the net realizable value, provisions are made to reduce the carrying amount of the inventory.
Assembled inventory including raw materials and work-in-process is valued on a FIFO basis using full absorption accounting which includes material, labor, and other applicable assembly overhead.
Other Income Other income consists primarily of interest income and foreign currency gain. For the year ended December 31, 2024 and 2023, we recognized other income of $0.5 million of which $0.3 million was related to interest earned on our short term investment and $0.3 million in foreign currency exchange gain offset by $0.1 million in foreign tax penalties.
For the year ended December 31, 2025 , we recognized other income of $13.3 million of which $24.9 million was generated from the sales of our corporate headquarters, $0.6 million was related to interest earned on our short term investment; offset by $8.7 in disposal of our building and land and $3.5 million dollar in relocation expenses and other foreign exchange impact.
We invested $0.6 million in capital expenditures for the purchase of store fixtures and systems implementations. The activities above, in addition to the effect of exchange rate changes, resulted in a net increase in cash of $4.2 million.
These activities, together with the effect of exchange rate changes of $0.2 million, resulted in a net increase in cash of $2.8 million.
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With dedicated direct account representatives, a direct-from-our-warehouse shipping model, volume-based competitive pricing, customized product development, and production and pre-production services, we are building long-term, strategic relationships with our largest customers. 18 Table of Contents Going forward, our strategy is to continue to manage our cost base and use of cash and focus on strengthening our sales by leveraging our competitive advantage of our retail stores.
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With dedicated direct account representatives, a direct-from-our-warehouse shipping model, volume-based competitive pricing, customized product development, and production and pre-production services, we are building long-term, strategic relationships with our largest customers. • Manage our cost base and use of cash and focus on strengthening our sales by: o Leveraging our competitive advantage of our retail stores. o Unlocking store potential by opening new stores and expanding classes, and outreach. o Growing ecommerce in scaling our digital footprint and using marketplaces as acquisition channels. o Launching our new loyalty program optimizing a new buy online and pick up in stores (BOPIS). • Improving our employee product knowledge, customer service level, and in-store and virtual classes and community engagement. • Expanding workshop space in stores with machines are the highest priorities. • Give customers good reasons to visit stores and an excellent return on their time investment when they do. • Improve our overall digital and technological capabilities to include artificial intelligence where applicable across our entire operation and channels. • 18 Table of Contents Results of Operations The following table presents selected financial data: Twelve Months Ended December 31, (in thousands) 2025 2024 $ Change % Change Sales $ 76,324 $ 74,391 $ 1,933 2.6 % Gross profit 43,539 41,804 1,735 4.1 % Gross margin percentage 57.0 % 56.2 % 0.8 % Operating expenses 44,502 41,176 3,326 8.1 % (Loss) Income from operations $ (963 ) $ 628 $ (1,591 ) (253.3 )% Net Sales Consolidated net sales increased by $1.9 million, or 2.6%, from 2024 to 2025.
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Improving our employee product knowledge, customer service level, in-store and virtual classes and community engagement as well as expanding workshop space in stores with machines are the highest priorities. We need to continue to give customers good reasons to visit stores, and an excellent return on their time investment when they do.
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Management believes the increase was primarily attributable to more stable consumer demand compared to prior years, as well as changes in the depth and timing of promotional activity, improved execution in retail stores, and a stronger inventory position across the retail fleet.
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Results of Operations The following table presents selected financial data: (in thousands) 2024 2023 $ Change % Change Sales $ 74,391 $ 76,229 $ (1,838 ) (2.4 )% Gross profit 41,804 45,163 (3,359 ) (7.4 )% Gross margin percentage 56.2 % 59.2 % - (3.0 )% Operating expenses 41,176 40,753 423 1.0 % Income from operations $ 628 $ 4,410 $ (3,782 ) (85.8 )% Net Sales Consolidated net sales decreased by $1.8 million, or 2.4%, from 2023 to 2024.
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These factors were partially offset by sales disruptions resulting from the approximately six-week closure of the distribution center and factory in connection with the relocation of those facilities and the corporate offices. Our store footprint consisted of 101 stores at December 31, 2025 and 101 stores at December 31, 2024.
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We believe the decrease in sales was due to ongoing weak consumer demand compared to a year ago, resulting from continued weakness in consumer discretionary spending related to sustained increases in key non-discretionary items like food and housing, exacerbated by temporary store closures and moves.
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Our gross margin percentage for the year ended December 31, 2025 increased to 57.0% versus 56.2% in the same period in 2024, mainly due to pricing strategies implemented to combat tariffs and cost efficiency gains in our distribution center; offset by tariff increases from various countries where we source our products.
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Our store footprint consisted of 101 stores at December 31, 2024 and 102 stores at December 31, 2023. Since January 1, 2024, we closed two stores and opened one store.
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Operating Expenses Operating expenses increased by $3.3 million in 2025 as compared to the prior year.
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Our gross margin percentage for the year ended December 31, 2024 decreased to 56.2% versus 59.2% in the same period in 2023, due to higher freight and warehouse overhead throughout the year, and increased promotional activity to compensate for weak consumer discretionary spending. 19 Table of Contents Operating Expenses Operating expenses increased by $0.4 million in 2024 as compared to the prior year.
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The primary drivers of the increase were increased rent driven by total lease cost of our corporate facilities of approximately $1.4 million that was previously owned in 2025, increased retail rent of $0.2 million, bonus expense of $1.0 million for overall achieving acceptable targets in the midst of disruptions and closures of our operations, higher employment costs of approximately $1.0 million for increased healthcare premiums and employee merit increase; offset by a reduction in accrued property tax of $0.2 million, and the reduction in utilities of $0.1 million. 19 Table of Contents Other Income Other income consists primarily of interest income and foreign currency gain.
Removed
The primary drivers of the increase were higher employment costs of approximately $1.4 million for full time employees across the Company, and an increase in occupancy and utilities of $0.4 million due to the renewal of our store leases; offset by reduction in accrued bonus of $0.9 million, the expiration and forfeiture of RSUs of $0.2 million, a reduction in credit card fees of $0.2 million, a reduction in office supplies of $0.1 million, and a reduction in repair and maintenance of $0.1 million.
Added
Under the Credit Agreement, the bank provides the Company a credit facility of up to $4,000,000 on standard terms and conditions, including affirmative and negative covenants set forth in the Credit Agreement. As security for the credit facility, the Company has pledged, as collateral, certain of its assets, including the Company’s cash in deposit accounts, inventory and equipment.
Removed
As of December 31, 2024, $5.0 million remained available for repurchase under this new program.
Added
The interest rate is based on CME term SOFR + 210 basis points, and the credit facility renews annually. As of the date of this filing, no funds had been borrowed under this facility, and we are in compliance with all covenants.
Added
As of December 31, 2025, $5.0 million remained available for repurchase under this new program. On June 17, 2025, the Company entered into a stock purchase agreement with Janet Carr, our former Chief Executive Officer; wherein the Company agreed to purchase 430,897 shares from Ms. Carr at $3.00 per share, for a total of $1,292,691.
Added
The transaction was completed on July 18, 2025; accordingly, the Company immediately cancelled the shares and the impact of this transaction is reflected in our cash balance, common shares and additional paid-in-capital in our financial statements as of December 31, 2025.
Added
The shares of common stock outstanding shown on the balance sheet and as part of these financial statements have also been updated as of December 31, 2025.
Added
Cash provided by investing activities was $17.4 million which included the net proceeds from the sale of our corporate headquarters of $24.9 million, partially offset by the purchase of property and equipment of $7.5 million. Cash used in financing activities was $14.1 million, primarily for dividend payments.
Added
Since the determination of net realizable value of inventory involves both estimation and judgement with regard to market values and reasonable costs to sell, differences in these estimates could result in ultimate valuations that differ from the recorded asset.
Added
In February 2025, in connection with hiring Johan Hedberg as the Company’s Chief Executive Officer, the Company granted Mr. Hedberg 100,000 RSU, which will vest in February 2026, and 900,000 RSUs, which will vest upon the Company’s achievement of certain performance and market targets.
Added
In June 2025, the Company’s stockholders approved an increase to the plan reserve of an additional 900,000 shares of our common stock for the potential vesting those performance-based and market based RSU grants to Mr. Hedberg.
Added
The Company also had a market based award which consist of the Company’s common stock trading on its principal stock market/exchange for 15 consecutive trading days with a daily closing price of $5.50 or more; the Company’s common stock trading on its principal stock market/exchange for 15 consecutive trading days with a daily closing price of $6.50 or more; and the Company’s common stock trading on its principal stock market/exchange for 15 consecutive trading days with a daily closing price of $7.50 or more.
Added
The Company determined the grant date fair value under based on the authoritative guidance and recorded the impact as of December 31, 2025. 24 Table of Contents Income Taxes. Income taxes are estimated for each jurisdiction in which we operate.

Other TLF 10-K year-over-year comparisons