What changed in this filing

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Item 9A. Controls and Procedures

2023-03-31 compared with 2022-03-31 · 137 added, 137 removed, 109 unchanged (72% of the section changed)

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Evaluation of Disclosure Controls and Procedures

As part of the filing of this Form 10-K for the period ended December 31, 2021, our management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), evaluated the

effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

As a result of this evaluation, our CEO and

CFO concluded that our disclosure controls and procedures were not effective due to the material weaknesses described below.

As part of the filing of this Form 10-K for the period ended December 31, 2022, our management, with the participation of our Chief Executive Officer (“CEO”), evaluated the effectiveness of the

design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

As a result of this evaluation, our CEO concluded that our

disclosure controls and procedures were not effective due to the material weaknesses described below.

Management’s Annual Report on Internal Control over Financial Reporting

Our management, including our CEO and CFO, is responsible for establishing and maintaining adequate internal control over our financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

Management’s establishing and maintaining adequate internal control over financial reporting is based upon the criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway

Commission (the “COSO Framework”).

A system of internal control over financial reporting should be designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external

purposes in accordance with GAAP.

An effective internal control system, no matter how well designed, has inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud, and therefore can provide

only reasonable assurance with respect to reliable financial reporting.

Our management, including our CEO, is responsible for establishing and maintaining adequate internal control over our financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the

Exchange Act.

of the Treadway Commission (the “COSO Framework”).

A system of internal control over financial reporting should be designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial

statements for external purposes in accordance with GAAP.

An effective internal control system, no matter how well designed, has inherent limitations, including the possibility of human error, the circumvention or overriding of controls, or fraud, and

therefore can provide only reasonable assurance with respect to reliable financial reporting.

Because of its inherent limitations, our internal control over financial reporting may not prevent or detect all misstatements.

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misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Based on this definition, our management, with the participation of our CEO and CFO, evaluated the effectiveness and design of our

internal control over financial reporting against the COSO Framework and concluded that our internal control over financial reporting was not effective as of December 31, 2021 due to material weaknesses arising from flaws in our control

environment, risk oversight measures, control activities, information processing and communication and our monitoring systems, each of which is described in more detail below.

Based on this definition, our management, with the participation of our CEO, evaluated the effectiveness and design of our internal

control over financial reporting against the COSO Framework and concluded that our internal control over financial reporting was not effective as of December 31, 2022 due to material weaknesses arising from flaws in our control environment, risk

oversight measures, control activities, information processing and communication and our monitoring systems, each of which is described in more detail below.

Control environment.

We concluded that we did not maintain effective controls in the following areas:

(i) managerial functions, procedures and oversight;

(i) managerial

functions, procedures and oversight;

(ii) organizational structure, delegation of authority and responsibilities;

(iii) segregation of duties;

(iv) adequacy of trained accounting and financial reporting personnel to ensure that internal control responsibilities were performed

effectively and material accounting errors were detected;

and (v) maintenance and enforcement of internal control responsibilities, including holding individuals accountable for their internal control responsibilities.

(iv) adequacy of trained accounting and financial reporting personnel to ensure that internal control

responsibilities were performed effectively and material accounting errors were detected;

and (v) maintenance and enforcement of internal control responsibilities, including holding individuals accountable for their internal control

responsibilities.

Risk oversight environment.

We did not maintain adequate risk oversight measures related to the (i) identification and assessment of risks that could

impact achieving our objectives and (ii) identification and analysis of the potential changes that could affect our internal controls environment.

We did not maintain adequate risk oversight measures related to the (i) identification

and assessment of risks that could impact achieving our objectives and (ii) identification and analysis of the potential changes that could affect our internal controls environment.

Control activities.

We concluded that we did not have effective control activities in the following areas:

(i) selecting and developing control activities

to mitigate risks, including the development of alternative control activities that address segregation of duties issues;

(ii) selecting and implementing information technology and related systems supportive to our internal control over financial

and (iii) deploying control activities through policies and establishing procedures that put these policies into action, including timely review of account reconciliations and methodologies used to calculate and report financial

information and results, as well as timely periodic management reviews of financial information and results that would help identify misstatements.

selecting and developing control activities to mitigate risks, including the development of alternative control activities that address segregation of duties issues;

(ii) selecting and implementing information technology and related systems

supportive to our internal control over financial reporting;

and (iii) deploying control activities through policies and establishing procedures that put these policies into action, including timely review of account reconciliations and

methodologies used to calculate and report financial information and results, as well as timely periodic management reviews of financial information and results that would help identify misstatements.

Information and communication.

We identified deficiencies associated with information and communication within our internal control framework.

Specifically, we did not effectively assign responsibility to personnel for gathering required information nor did we periodically communicate objectives and internal control responsibilities throughout the organization which contributed to

inadequate documentation of processes, untimely review of account reconciliations and calculations involving judgement and delays in the accounting close cycle, hindering timely communication with management, the Board of Directors and our

independent auditors.

We identified deficiencies associated with information and communication within our

internal control framework.

organization which contributed to inadequate documentation of processes, untimely review of account reconciliations and calculations involving judgement and delays in the accounting close cycle, hindering timely communication with management,

the Board of Directors and our independent auditors.

Monitoring activities.

We concluded that we did not design and implement effective monitoring activities related to (i) selecting,

developing, and performing separate evaluations of our internal control over financial reporting;

and (ii) evaluating and communicating internal control deficiencies in a timely manner to parties responsible for taking corrective actions.

We concluded that we did not design and implement effective monitoring activities related to

(i) selecting, developing, and performing separate evaluations of our internal control over financial reporting;

and (ii) evaluating and communicating internal control deficiencies in a timely manner to parties responsible for taking corrective

Remediation Efforts to Address Material Weaknesses

Our management, including our CEO and CFO, continue to work with expert accounting consultants and our Audit Committee to design and implement both a short-term and a long-term

remediation plan to correct the material weaknesses in our disclosure controls and procedures and our internal control over financial reporting.

The following activities highlight our commitment to remediating our identified material

During 2020, 2021 and through the filing date of this Form 10-K, we have taken the following measures, among others:

Replaced critical roles within our accounting team with contract accounting resources and continue to search for full-time employees with expertise in GAAP accounting, SEC reporting and

disclosure, internal audit and internal controls;

Replaced our legacy accounting systems with an integrated enterprise resource planning (“ERP”) solution which includes general ledger, warehouse management and factory production

modules designed to calculate inventory on a FIFO basis;

Implemented a new point-of-sale system for 94 U.S.

stores that is fully integrated with our new ERP system (the remaining 12 stores will be converted during the remainder of 2022);

Created a risk controls matrix which includes, among other things, a comprehensive list of key and mitigating controls, a description of the risk the control is designed to mitigate,

the individual responsible for each control, the frequency in which the control is performed, and a mapping of each control to the five COSO Framework components (control environment, risk assessment, control activities, information and

communication, or monitoring activities);

Established a greater sense of accountability by requiring sub-certifications below the CEO and CFO level for certain key accounting, finance and operations personnel.

Our management, including our CEO, continues to work with expert accounting consultants and our Audit Committee to design and implement both a short-term and a long-term remediation plan to

correct the material weaknesses in our disclosure controls and procedures and our internal control over financial reporting.

The following activities highlight our commitment to remediating our identified material weaknesses:

Since 2020, and through the filing date of this Form 10-K, we have taken the following measures, among others:

Replaced critical roles within our accounting team with full-time employees with expertise in GAAP accounting, SEC reporting and disclosure, internal audit and internal controls;

Replaced our legacy accounting systems with an integrated enterprise resource planning (“ERP”) solution which includes general ledger, warehouse management and factory production modules designed to

calculate inventory on a FIFO basis;

Implemented a new point-of-sale system for most of our stores that is fully integrated with our new ERP system.

All 12 of the remaining stores will be converted in 2023;

Implemented new accounting processes and procedures aligned with our new ERP system that incorporate best practices to minimize errors and putting into action control activities that will prevent

misstatements and that address appropriate segregation of duties;

Updated process narrative documentation in the following areas:

(i) fixed assets and lease accounting, (ii) information technology (IT) governance, and (iii) HR and payroll;

Created a risk controls matrix which includes, among other things, a comprehensive list of key and mitigating controls, a description of the risk the control is designed to mitigate, the individual

responsible for each control, the frequency in which the control is performed, and a mapping of each control to the five COSO Framework components (control environment, risk assessment, control activities, information and communication,

or monitoring activities);

Established a greater sense of accountability by requiring sub-certifications below the CEO level for certain key accounting, finance and operations personnel.

Our continuing plan and additional steps for remediation include:

Ongoing recruitment and hiring of permanent, qualified public-company accounting personnel;

Converting the remaining 12 stores onto our new point-of-sale system;

Redesigning our accounting procedures and activities to align with our new ERP system that will include built-in controls to improve upon the reliability of

financial reporting and the preparation of financial statements in accordance with GAAP;

Continuing to improve the accounting close process, including periodic review and update of our accounting close checklists for completeness of duties, accuracy of owners and deadlines

to maintain accountability, timely review of account reconciliations and calculations involving judgement, and timely reporting of financial results;

Updating process narrative documentation in the following areas:

(i) financial reporting, (ii) inventory, (iii) purchasing and accounts payable, (iv) revenue, (v) fixed assets and

lease accounting, (vi) general accounting, treasury and financial planning & analysis, (vii) tax, (viii) information technology (IT) governance, and (ix) HR and payroll;

Periodically reviewing of our risk controls matrix and process narrative documentation to ensure changes such as personnel, information sources, processes, systems, and frequency in

performing the control are properly reflected in a timely manner;

Reporting the progress and results of our remediation plan to the Audit Committee on a recurring basis, including the identification, status, and resolution of internal control

deficiencies;

Converting remaining stores onto our new point-of-sale system;

Continuing to implement new accounting procedures and activities aligned with our new ERP system that improve upon the reliability of financial reporting and the preparation of financial statements in

accordance with GAAP;

Continuing to improve the accounting close process, including periodic review and update of our accounting close checklists for completeness of duties, accuracy of owners and deadlines to maintain

accountability, timely review of account reconciliations and calculations involving judgement, and timely reporting of financial results;

Continuing to refine and improve narrative documentation in particular in the following areas:

(i) financial reporting, (ii) inventory, (iii) purchasing and accounts payable, (iv) revenue, (v) general

accounting, treasury, and financial planning & analysis, (vi) tax,

Periodically reviewing our risk controls matrix and process narrative documentation to ensure changes such as personnel, information sources, processes, systems, and frequency in performing the control are

properly reflected in a timely manner;

Reporting the progress and results of our remediation plan to the Audit Committee on a recurring basis, including the identification, status, and resolution of internal control deficiencies;

Creating a comprehensive approach to regularly evaluate the operating effectiveness of our disclosure controls and procedures and our internal control over financial reporting using the COSO Framework as a

Control Environment

Our management, including our CEO and CFO, our Audit Committee and our Board of Directors have taken certain steps to set the proper tone-at-the-top in support of the Company’s values and climate to develop and

maintain an effective internal control environment.

Our management, including our CEO, our Audit Committee and our Board of Directors have taken certain steps to set the proper tone-at-the-top in support of the Company’s values and climate to

develop and maintain an effective internal control environment.

These actions include:

Recurring meetings with leadership, finance and accounting and other key functional areas to train staff on processes for oversight and emphasize each individual’s accountability for

internal control compliance, and to create a pattern of regular discussion of such controls.

Periodic communications from the CEO, CFO and other key senior leaders on the Company’s mission, core values, Code of Business Conduct and Ethics, whistleblower policies, and each

employee’s individual responsibility for internal control compliance.

Reorganization of the finance and accounting team to address segregation of duties issues, oversight and review of work, and recruiting and hiring qualified, competent employees with

relevant experience for the roles.

Recurring meetings with leadership, finance and accounting and other key functional areas to train staff on processes for oversight and emphasize each individual’s accountability for internal control

compliance, and to create a pattern of regular discussion of such controls.

Regular periodic communications from the CEO and other key senior leaders on the Company’s mission, core values, Code of Business Conduct and Ethics, whistleblower policies, and each employee’s individual

responsibility for internal control compliance.

Reorganization of the finance and accounting team to address segregation of duties issues, oversight, and review of work, and recruiting and hiring qualified, competent employees with relevant experience

for the roles.

Regular performance evaluations to include position-specific criteria for functional competence, including performance of internal control responsibilities.

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organization and to conduct an assessment across the organization of the risks to meeting those objectives, including the risk of fraud.

Furthermore, on a quarterly basis, management will review our periodic filings to ensure that identified risks

have been appropriately disclosed.

In the areas of reporting and compliance objectives, we are also developing a process to conduct monthly business reviews by functional area that would include risk assessments of reporting accuracy based on

complexity and transaction levels as well as compliance with GAAP and other regulatory requirements, in order to evaluate whether our existing control activities appropriately mitigate such risks or if additional controls need to be employed.

Furthermore, on a quarterly basis, management will review our periodic filings to ensure that identified

risks have been appropriately disclosed.

on complexity and transaction levels as well as compliance with GAAP and other regulatory requirements, in order to evaluate whether our existing control activities appropriately mitigate such risks or if additional controls need to be employed.

Control Activities

We continue to redesign and implement our internal control activities.

Specifically, we are conducting detailed working sessions to document our current and prior finance and accounting

Specifically, we have conducted detailed working sessions to document our current and prior finance and accounting

policies, procedures, and step-by-step activities.

These sessions are expected to identify specific areas that require improvement and redesign of processes, structure, authorities and controls, and those actions include:

Completing the implementation of our new point-of-sale system, which is fully integrated with our ERP system, for our remaining 12 stores during the remainder of 2022.

Continuing to implement functionality in our ERP system to improve on our internal controls over financial reporting, such as implementing the

ERP’s bank reconciliation module.

Creating and implementing newly-designed processes, structures, delegation of authority and controls, in accordance with the COSO Framework, including:

Quarterly updates for the CFO regarding upcoming accounting pronouncement and proposed changes to GAAP accounting standards, tax regulations, and other requirements that may impact the

Company’s financial reporting;

Timely reviews each quarter of the most significant accounting estimates and judgements;

These sessions have identified specific areas that require improvement and redesign of processes, structure, authorities and controls, and those actions include:

Completing the implementation of our new point-of-sale system, which is fully integrated with our ERP system.

Continuing to implement functionality in our ERP system to improve on our internal controls over financial reporting, such as implementing the ERP’s bank reconciliation module.

Continuing to implement newly-designed processes, structures, delegation of authority and controls, in accordance with the COSO Framework, including:

Quarterly updates for our Controller regarding upcoming accounting pronouncement and proposed changes to GAAP accounting standards, tax regulations, and other requirements that may impact the Company’s

financial reporting;

Timely reviews each quarter of the most significant accounting estimates and judgments;

Validation of results through detailed variance analyses and reconciliation of account balances performed on a timely basis;

Monthly business review of actual financial performance compared to forecasts with participation from leadership across the organization;

Establishing a disclosure committee comprised of key management throughout the different areas of the organization to evaluate the appropriateness of disclosures in the Company’s

periodic filings on Forms 10-K and 10-Q and to support the CEO and CFO with the certification process.

Establishing a disclosure committee comprised of key management throughout the different areas of the organization to evaluate the appropriateness of disclosures in the Company’s periodic filings on Forms

10-K and 10-Q and to support the CEO with the certification process.

Information Processing and Communication

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accounting processes were manual.

This new ERP system allows us to automate certain accounting processes, reducing the risk of management override, and eliminated the need for topside adjustments outside of the system.

In addition, management is

developing detailed policies, procedures and internal controls related to our financial reporting and working to develop regular reporting from our new systems that can validate the quality of our data and provide accurate information to support

internal and external reporting and audit requirements.

This new ERP system allows us to automate certain accounting processes, reducing the risk of management override, and eliminating the need for topside adjustments outside of the system.

In addition, management

is developing detailed policies, procedures and internal controls related to our financial reporting and working to develop regular reporting from our new systems that can validate the quality of our data and provide accurate information to

support internal and external reporting and audit requirements.

Monitoring Activities

In addition to the items noted above, as we continue to evaluate, remediate, and improve our internal control over financial reporting, our management expects to continue to implement additional

measures to address control deficiencies and further refine and improve the remediation efforts described above.

Specifically, we are developing a checklist of activities based on the criteria established in the COSO Framework against which we

will assess the design of entity-level and activity-level controls, and the operational effectiveness of such controls.

Deficiencies identified in this process will be addressed by management, including our CEO and CFO.

In addition to the items noted above, as we continue to evaluate, remediate, and improve our internal control over financial reporting, our management expects to continue to implement

additional measures to address control deficiencies and further refine and improve the remediation efforts described above.

Specifically, we are developing a checklist of activities based on the criteria established in the COSO Framework against

which we will assess the design of entity-level and activity-level controls, and the operational effectiveness of such controls.

Deficiencies identified in this process will be addressed by management, including our CEO.

This assessment, any

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and performs periodic penetration testing to monitor its cybersecurity environment.

However, the Company has not performed a formalized risk assessment to address cybersecurity risks or documented internal controls that assist in alleviating such

However, the Company has not performed a formalized risk assessment to address cybersecurity risks or documented internal controls that assist in alleviating

Changes in Internal Control Over Financial Reporting

As discussed in the remediation section above, we implemented the warehouse management, factory production system and general ledger systems modules as part of our new ERP system

implementation which had a go-live date of September 1, 2020, and we implemented our new point-of-sale system, which is fully integrated with our ERP system, in 94 of our U.S.

stores with the remaining 12 stores to be converted during the

remainder of 2022.

Although we had not fully remediated all material weaknesses in our internal control over financial reporting as of December 31, 2021, as the phased implementation of this system continues, we are experiencing certain

changes to our processes and procedures which, in turn, result in changes to our internal control over financial reporting.

While we expect our new ERP system to strengthen our internal financial controls by automating certain manual processes and

standardizing business processes and reporting across our organization, management will continue to evaluate and monitor our internal controls as each of the affected areas evolves.

implementation, and we implemented our new point-of-sale system, which is fully integrated with our ERP system, in most of our U.S.

stores with the remaining stores to be converted in early 2023.

Although we had not fully remediated all material

weaknesses in our internal control over financial reporting as of December 31, 2022, as the phased implementation of this system continues, we are experiencing certain changes to our processes and procedures which, in turn, result in changes to

our internal control over financial reporting.

While we expect our new ERP system to strengthen our internal financial controls by automating certain manual processes and standardizing business processes and reporting across our organization,

management will continue to evaluate and monitor our internal controls as each of the affected areas evolves.

OTHER INFORMATION

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EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) The following are filed as part of this Form 10-K:

The following are filed as part of this Form 10-K:

Financial Statements

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Consolidated Balance Sheets as of December 31, 2022 and 2021

Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2021 and 2020

Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2022 and 2021

Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021

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Financial Statement Schedules

All financial statement schedules are omitted because the required information is not present or not present in sufficient amounts to require submission of the schedule or because the information is reflected in the

Consolidated Financial Statements or notes thereto.

All financial statement schedules are omitted because the required information is not present or not present in sufficient amounts to require submission of the schedule or because the

information is reflected in the Consolidated Financial Statements or notes thereto.

TANDY LEATHER FACTORY, INC.

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Certificate of Incorporation of The Leather Factory, Inc., and Certificate of Amendment to Certificate of Incorporation of The Leather Factory, Inc.

filed as Exhibit 3.1 to Tandy Leather Factory, Inc.’s Quarterly Report on Form 10-Q

filed with the Securities and Exchange Commission on August 12, 2005 and incorporated by reference herein.

Bylaws of Tandy Leather Factory, Inc., filed as Exhibit 3.1 to Tandy Leather Factory, Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 8, 2021 and incorporated

by reference herein.

filed as Exhibit 3.1 to Tandy

Leather Factory, Inc.’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 12, 2005 and incorporated by reference herein.

Bylaws of Tandy Leather Factory, Inc., filed as Exhibit 3.1 to Tandy Leather Factory, Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 8,

2021 and incorporated by reference herein.

Certificate of Designations of Series A Junior Participating Preferred Stock of Tandy Leather Factory, Inc.

filed as Exhibit 3.1 to Tandy Leather Factory, Inc.’s Current Report on Form 8-K filed with the Securities and Exchange

Commission on June 10, 2013 and incorporated by reference herein.

Description of Securities filed as Exhibit 4.1 to Tandy Leather Factory, Inc.’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on June 22, 2021 and incorporated by reference herein.

filed as Exhibit 3.1 to Tandy Leather Factory, Inc.’s Current Report on Form

8-K filed with the Securities and Exchange Commission on June 10, 2013 and incorporated by reference herein.

Certificate of Amendment of Certificate of Incorporation of Tandy Leather Factory, Inc.

dated March 1, 2023.

Description of Securities filed as Exhibit 4.1 to Tandy Leather Factory, Inc.’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on June 22, 2021 and

incorporated by reference herein.

Tandy Leather Factory, Inc.

2013 Restricted Stock Plan, filed as Exhibit 10.1 to Tandy Leather Factory’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 14, 2013 and incorporated by reference

2013 Restricted Stock Plan, filed as Exhibit 10.1 to Tandy Leather Factory’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission

on November 14, 2013 and incorporated by reference herein.

Amendment #1 to Tandy Leather Factory, Inc.

2013 Restricted Stock Plan filed as Exhibit 10.5 to Tandy Leather Factory, Inc.’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on June 22, 2021 and

incorporated by reference herein.

Form of Non-Employee Director Restricted Stock Agreement under Tandy Leather Factory, Inc.’s 2013 Restricted Stock Plan, filed as Exhibit 10.1 to Tandy Leather Factory, Inc.’s Current Report on Form 8-K filed with the Securities and

Exchange Commission on February 14, 2014 and incorporated by reference herein.

Form of Employee Restricted Stock Award Agreement under Tandy Leather Factory, Inc.’s 2013 Restricted Stock Plan, filed as Exhibit 10.7 to Tandy Leather Factory, Inc.’s Current Report on Form 8-K filed with the Securities and Exchange

Commission on February 14, 2014 and incorporated by reference herein.

Form of Employment Agreement dated October 2, 2018 between the Company and Janet Carr, filed as Exhibit 10.1 to Tandy Leather Factory Inc.’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2018

and incorporated by reference herein.

Form of Stand-Alone Restricted Stock Unit Agreement dated October 2, 2018 between the Company and Janet Carr, filed as Exhibit 10.2 to Tandy Leather Factory Inc.’s Current Report on Form 8-K filed with the Securities and Exchange

Commission on October 5, 2018 and incorporated by reference herein.

Form of Stand-Alone Restricted Stock Unit Agreement dated October 2, 2018 between the Company and Janet Carr, filed as Exhibit 10.3 to Tandy Leather Factory Inc.’s Current Report on Form 8-K filed with the Securities and Exchange

Commission on October 5, 2018 and incorporated by reference herein.

Form of Stock Purchase Agreement dated January 28, 2021 between the Company and Central Square Management, filed as Exhibit 10.14 to the Tandy Leather Factory, Inc.’s 2019 Quarterly Report on Form 10-Q filed with the Securities and

Exchange Commission on June 22, 2021 and incorporated by reference herein.

Form of Stock Purchase Agreement dated December 8, 2021 between the Company and Right Lane I, LP.

Code of Business Conduct and Ethics of Tandy Leather Factory, Inc., adopted by the Board of Directors on December 4, 2018, filed as Exhibit 14.1 to Tandy Leather Factory, Inc.’s Quarterly Report on Form 10-Q filed with the Securities and

2013 Restricted Stock Plan filed as Exhibit 10.5 to Tandy Leather Factory, Inc.’s Quarterly Report on Form 10-Q filed with the Securities and

Exchange Commission on June 22, 2021 and incorporated by reference herein.

Form of Non-Employee Director Restricted Stock Agreement under Tandy Leather Factory, Inc.’s 2013 Restricted Stock Plan, filed as Exhibit 10.1 to Tandy Leather Factory, Inc.’s Current

Report on Form 8-K filed with the Securities and Exchange Commission on February 14, 2014 and incorporated by reference herein.

Form of Employee Restricted Stock Award Agreement under Tandy Leather Factory, Inc.’s 2013 Restricted Stock Plan, filed as Exhibit 10.7 to Tandy Leather Factory, Inc.’s Current Report

on Form 8-K filed with the Securities and Exchange Commission on February 14, 2014 and incorporated by reference herein.

Form of Employment Agreement dated October 2, 2018 between the Company and Janet Carr, filed as Exhibit 10.1 to Tandy Leather Factory Inc.’s Current Report on Form 8-K filed with the

Securities and Exchange Commission on October 5, 2018 and incorporated by reference herein.

Form of Stand-Alone Restricted Stock Unit Agreement dated October 2, 2018 between the Company and Janet Carr, filed as Exhibit 10.2 to Tandy Leather Factory Inc.’s Current Report on

Form 8-K filed with the Securities and Exchange Commission on October 5, 2018 and incorporated by reference herein.

Form of Stand-Alone Restricted Stock Unit Agreement dated October 2, 2018 between the Company and Janet Carr, filed as Exhibit 10.3 to Tandy Leather Factory Inc.’s Current Report on

Form 8-K filed with the Securities and Exchange Commission on October 5, 2018 and incorporated by reference herein.

Credit Agreement dated October 26, 2022 between the Company and JP Morgan Chase Bank, N.A.

Code of Business Conduct and Ethics of Tandy Leather Factory, Inc., adopted by the Board of Directors on December 4, 2018, filed as Exhibit 14.1 to Tandy Leather Factory, Inc.’s

Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on June 22, 2021 and incorporated by reference herein.

Subsidiaries of Tandy Leather Factory, Inc.

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Certification by the Chief Executive Officer and President pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.

Certification by the Chief Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as amended.

Certification Pursuant to 18 U.S.C.

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FORM 10-K SUMMARY

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Form 10-K to be signed on its behalf by the

undersigned, thereunto duly authorized.

TANDY LEATHER FACTORY, INC.

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March 31, 2023

Pursuant to the requirements of the Securities Exchange Act of 1934 as amended, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Pursuant to the requirements of the Securities Exchange Act of 1934 as amended, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and

on the dates indicated.

/s/ Jefferson Gramm

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(principal executive officer)

/s/ Michael Galvan

Chief Financial Officer

March 31, 2022

Michael Galvan

(principal financial officer and

principal accounting officer)

/s/ William M.

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Vicki Cantrell

/s/ Sharon M.

March 31, 2022

/s/ Sejal Patel

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures