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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Tandy Leather Factory Inc (PK) | USOTC:TLFA | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 5.48 | 5.02 | 5.70 | 0.00 | 01:00:00 |
☒ |
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Commission File Number 1-12368
|
Delaware
|
75-2543540
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
1900 Southeast Loop 820
Fort Worth, Texas 76140
|
76140
|
|
(Address of Principal Executive Offices)
|
(Zip Code)
|
Title of each class
|
Trading Symbol
|
Name of each exchange on which registered
|
Common Stock, par value $0.0024
|
TLFA
|
OTC Pink Market
|
3
|
||
3
|
||
10
|
||
18
|
||
18
|
||
19
|
||
19
|
||
20
|
||
20
|
||
20
|
||
21
|
||
30
|
||
37
|
||
56
|
||
56
|
||
60
|
||
61
|
||
61
|
||
61
|
||
61
|
||
61
|
||
61
|
||
62
|
||
62
|
||
65
|
||
66
|
||
67
|
ITEM 1. |
BUSINESS
|
1. |
Improving our brand proposition, with both Retail and Commercial customers
|
2. |
Rebuilding our foundation – the talent, processes, tools and systems needed to serve these customers
|
3. |
Position us for long-term growth – creating the vision and roadmap for the future
|
■ |
Significantly improving the product quality, breadth of assortment and value
|
■ |
Reinventing the pricing architecture/strategy to simplify it, provide great everyday value and also the excitement of sale
|
■ |
Improving the quality, clarity and efficiency of the marketing collateral and mix
|
■ |
Relaunching and dramatically improving the website; centralizing web fulfillment
|
■ |
Significantly improving the Retail organization and skills: new team, training, career paths, incentives
|
■ |
Launching the Commercial Division: a completely new business model tailored to the needs of the largest customers
|
■ |
Recruiting, developing and retaining the right team for the work ahead; creating a collaborative, performance-based culture
|
■ |
Building people management infrastructure: performance evaluations, benefits, communications, recognition, incentives, training
|
■ |
Replacing and significantly upgrading general ledger, warehouse management and point-of-sale systems
|
■ |
Developing a robust counter-sourcing program for product and supplies
|
■ |
Reorganizing and improving factory and warehouse capabilities
|
■ |
Creating a roadmap for future growth
|
Name and Age
|
Position
|
Served as Executive
Officer Since
|
||
Janet Carr, 60
|
|
Chief Executive Officer
|
|
2018
|
Michael Galvan, 53
|
|
Chief Financial Officer
|
|
2021
|
ITEM 1A. |
RISK FACTORS
|
• |
unavailability of, or significant fluctuations in the cost of, raw materials;
|
• |
compliance by us and our independent manufacturers and suppliers with labor laws and other foreign governmental regulations;
|
• |
imposition of additional duties, taxes 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;
|
• |
disruptions or delays in shipments;
|
• |
loss or impairment of key manufacturing 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;
|
• |
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.
|
ITEM 1B. |
UNRESOLVED STAFF COMMENTS
|
ITEM 2. |
PROPERTIES
|
U.S. Locations
|
||||
Alabama
|
1
|
Missouri
|
3
|
|
Alaska
|
1
|
Montana
|
1
|
|
Arizona
|
3
|
Nebraska
|
1
|
|
Arkansas
|
1
|
Nevada
|
2
|
|
California
|
10
|
New Mexico
|
2
|
|
Colorado
|
4
|
New York
|
1
|
|
Connecticut
|
1
|
New Jersey
|
1
|
|
Florida
|
5
|
North Carolina
|
2
|
|
Georgia
|
2
|
Ohio
|
3
|
|
Idaho
|
1
|
Oklahoma
|
2
|
|
Illinois
|
1
|
Oregon
|
2
|
|
Indiana
|
1
|
Pennsylvania
|
3
|
|
Iowa
|
1
|
South Carolina
|
1
|
|
Kansas
|
1
|
South Dakota
|
1
|
|
Kentucky
|
1
|
Tennessee
|
3
|
|
Louisiana
|
2
|
Texas
|
16
|
|
Maryland
|
1
|
Utah
|
4
|
|
Massachusetts
|
1
|
Washington
|
3
|
|
Michigan
|
2
|
Wisconsin
|
1
|
|
Minnesota
|
2
|
Wyoming
|
1
|
|
Canadian locations:
|
||||
Alberta
|
3
|
Ontario
|
3
|
|
British Columbia
|
1
|
Saskatchewan
|
1
|
|
Manitoba
|
1
|
|||
Nova Scotia
|
1
|
International locations:
|
||
Spain
|
1
|
ITEM 3. |
LEGAL PROCEEDINGS
|
ITEM 4. |
MINE SAFETY DISCLOSURES
|
ITEM 5. |
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
Period (2)
|
(a) Total number of shares purchased
|
(b) Average price paid per share
|
(c) Total number of
shares purchased as
part of publicly
announced plans or
programs
|
(d) Dollar value of
shares that may yet be
purchased under the
plans or programs (1)
|
||||||||||||
October 1 – October 31, 2021
|
-
|
$
|
-
|
-
|
$
|
5,000,000
|
||||||||||
November 1 – November 30, 2021
|
-
|
$
|
-
|
-
|
$
|
5,000,000
|
||||||||||
December 1 – December 31, 2021
|
214,581
|
$
|
5.00
|
-
|
$
|
5,000,000
|
||||||||||
Total
|
214,581
|
$
|
5.00
|
-
|
ITEM 6. |
SELECTED FINANCIAL DATA
|
ITEM 7. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
1. |
Improving our brand proposition, with both Retail and Commercial customers
|
2. |
Rebuilding our foundation – the talent, processes, tools and systems needed to serve these customers
|
3. |
Position us for long-term growth – creating the vision and roadmap for the future
|
(in thousands)
|
2021
|
2020
|
$ Change
|
% Change
|
||||||||||||
Sales
|
$
|
82,661
|
$
|
64,084
|
$
|
18,577
|
29.0
|
%
|
||||||||
Gross profit
|
46,999
|
36,058
|
10,941
|
30.3
|
%
|
|||||||||||
Gross margin percentage
|
56.9
|
%
|
56.3
|
%
|
0.6
|
%
|
||||||||||
Operating expenses
|
44,699
|
41,328
|
3,371
|
8.2
|
%
|
|||||||||||
Impairment expense
|
-
|
1,078
|
(1,078
|
)
|
(100.0
|
)%
|
||||||||||
Income (loss) from operations
|
$
|
2,300
|
$
|
(6,348
|
)
|
$
|
8,648
|
136.2
|
%
|
(in thousands)
|
2021
|
2020
|
||||||
Operating expenses
|
$
|
44,699
|
$
|
41,328
|
||||
Non-routine items related to restatement
|
(1,252
|
)
|
(3,587
|
)
|
||||
Non-routine items related to CFO transition
|
-
|
(388
|
)
|
|||||
Adjusted operating expenses
|
$
|
43,447
|
$
|
37,353
|
||||
Operating expenses % of sales
|
54.1
|
%
|
64.5
|
%
|
||||
Adjusted operating expenses % of sales
|
52.6
|
%
|
58.3
|
%
|
(amounts in thousands)
|
2021
|
2020
|
||||||
Net cash provided by (used in) operating activities
|
$
|
3,716
|
$
|
(12,527
|
)
|
|||
Net cash provided by (used in) investing activities
|
(1,001
|
)
|
6,256
|
|||||
Net cash provided by (used in) financing activities
|
(2,777
|
)
|
416
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
(112
|
)
|
279
|
|||||
Net decrease in cash and cash equivalents
|
$
|
(174
|
)
|
$
|
(5,576
|
)
|
ITEM 8. |
CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
• |
We obtained an understanding of the controls over the valuation of inventory.
|
• |
We tested the inventory costs incurred by the Company by reviewing supplier invoices and ensuring that appropriate application of the first-in first-out principle was
followed.
|
• |
We evaluated the appropriateness and consistency of management’s methodology and assumptions used in calculating the capitalizable overhead costs allocation ratio.
|
• |
We evaluated the appropriateness of the capitalized overhead costs by analyzing them against actual overhead costs incurred during the year.
|
• |
We tested the mathematical accuracy of the Company’s inventory obsolescence reserve calculation.
|
• |
We evaluated the appropriateness and consistency of management’s methodology and assumptions used in developing its estimate of the inventory obsolescence reserve.
|
• |
We performed analytical procedures on the current year reserve rates (by product category) by comparing them to prior year rates and then obtaining corroborating evidence
for any significant fluctuations.
|
• |
We tested on a sample basis, sales subsequent to yearend of the written-down items to ensure that the net realizable value was not lower than the previously written down
value.
|
For the Years Ended December 31,
|
||||||||
2021
|
2020
|
|||||||
Net sales
|
$
|
82,661
|
$
|
64,084
|
||||
Cost of sales
|
35,662
|
28,026
|
||||||
Gross profit
|
46,999
|
36,058
|
||||||
Operating expenses
|
44,699
|
41,328
|
||||||
Impairment expense
|
-
|
1,078
|
||||||
Income (loss) from operations
|
2,300
|
(6,348
|
)
|
|||||
Other (income) expense:
|
||||||||
Interest expense
|
16
|
7
|
||||||
Other, net
|
91
|
(76
|
)
|
|||||
Total other (income) expense
|
107 | (69 | ) | |||||
Income (loss) before income taxes
|
2,193
|
(6,279
|
)
|
|||||
Income tax provision (benefit)
|
839
|
(1,378
|
)
|
|||||
Net income (loss)
|
$
|
1,354
|
$
|
(4,901
|
)
|
|||
Foreign currency translation adjustments, net of tax
|
(81
|
)
|
(211
|
)
|
||||
Comprehensive income (loss)
|
$
|
1,273
|
$
|
(5,112
|
)
|
|||
Net income (loss) per common share:
|
||||||||
Basic
|
$
|
0.16
|
$
|
(0.54
|
)
|
|||
Diluted
|
$
|
0.16
|
$
|
(0.54
|
)
|
|||
Weighted average number of shares outstanding:
|
||||||||
Basic
|
8,709,866
|
9,062,598
|
||||||
Diluted
|
8,720,469
|
9,062,598
|
For the Years Ended December 31,
|
||||||||
2021
|
2020
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income (loss)
|
$
|
1,354
|
$
|
(4,901
|
)
|
|||
Adjustments to reconcile net loss to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
1,105
|
1,021
|
||||||
Operating lease asset amortization
|
3,202
|
3,193
|
||||||
Impairment of goodwill and long-lived assets
|
-
|
1,078
|
||||||
Loss (gain) on disposal of assets
|
(8
|
)
|
59
|
|||||
Stock-based compensation
|
797
|
887
|
||||||
Deferred income taxes
|
83
|
442
|
||||||
Exchange (gain) loss
|
23
|
(5
|
)
|
|||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable-trade
|
(325 | ) |
86
|
|||||
Inventory
|
(2,777
|
)
|
(12,686
|
)
|
||||
Prepaid expenses
|
83
|
675
|
||||||
Other current assets
|
(8
|
)
|
1,574
|
|||||
Accounts payable-trade
|
1,143 |
(440
|
)
|
|||||
Accrued expenses and other liabilities
|
743
|
1,022
|
||||||
Income taxes, net
|
1,775
|
(1,120
|
)
|
|||||
Other assets
|
(52 | ) |
(41
|
)
|
||||
Operating lease liabilities
|
(3,422
|
)
|
(3,371
|
)
|
||||
Total adjustments
|
2,362
|
(7,626
|
)
|
|||||
Net cash provided by (used in) operating activities
|
3,716
|
(12,527
|
)
|
|||||
Cash flows from investing activities:
|
||||||||
Purchase of property and equipment
|
(1,001
|
)
|
(1,313
|
)
|
||||
Proceeds from sales of short-term investments
|
-
|
7,523
|
||||||
Proceeds from sales of assets
|
-
|
46
|
||||||
Net cash provided by (used in) investing activities
|
(1,001
|
)
|
6,256
|
|||||
Cash flows from financing activities:
|
||||||||
Proceeds from long-term debt
|
-
|
416
|
||||||
Payments of capital lease obligations
|
(14
|
)
|
-
|
|||||
Repurchase of common stock
|
(2,738
|
)
|
-
|
|||||
Purchase of vested stock for employee payroll tax |
(25 | ) | - | |||||
Net cash provided by (used in) financing activities
|
(2,777
|
)
|
416
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
(112 | ) |
279
|
|||||
Net decrease in cash and cash equivalents
|
(174
|
)
|
(5,576
|
)
|
||||
Cash and cash equivalents, beginning of period
|
10,329
|
15,905
|
||||||
Cash and cash equivalents, end of period
|
$
|
10,155
|
$
|
10,329
|
For the Years Ended December 31,
|
||||||||
2021
|
2020
|
|||||||
Supplemental disclosures of cash flow information:
|
||||||||
Interest paid during the period
|
$
|
16
|
$
|
17
|
||||
Income tax paid (refunded) during the period, net
|
$
|
(994
|
)
|
$
|
56
|
|||
Supplemental disclosures of non-cash activity:
|
||||||||
Change in accruals related to property and equipment
|
$
|
-
|
$
|
(105
|
)
|
|||
Operating lease assets obtained in exchange for lease liabilities, net |
$ | 1,853 | $ | 1,702 |
Number of Shares
Common
Stock Outstanding
|
Par Value
|
Paid-in
Capital
|
Treasury
Stock
|
Retained Earnings
|
Accumulated Other Comprehensive Income
(Loss)
|
Total
|
||||||||||||||||||||||
Balance, December 31,
2019
|
9,022,187
|
$
|
25
|
$
|
5,037
|
$
|
(9,773
|
)
|
$
|
62,211
|
$
|
(1,081
|
)
|
56,419
|
||||||||||||||
Stock-based compensation expense
|
-
|
-
|
887
|
-
|
-
|
-
|
887
|
|||||||||||||||||||||
Issuance of restricted stock
|
128,619
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Net loss
|
-
|
-
|
-
|
-
|
(4,901
|
)
|
-
|
(4,901
|
)
|
|||||||||||||||||||
Foreign currency translation adjustments, net of tax
|
-
|
-
|
-
|
-
|
-
|
(211
|
)
|
(211
|
)
|
|||||||||||||||||||
Balance, December 31,
2020
|
9,150,806
|
$
|
25
|
$
|
5,924
|
$
|
(9,773
|
)
|
$
|
57,310
|
$
|
(1,292
|
)
|
$
|
52,194
|
|||||||||||||
Stock-based compensation expense
|
-
|
-
|
797
|
-
|
-
|
-
|
797
|
|||||||||||||||||||||
Issuance of restricted stock
|
114,075
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Purchase of vested stock for employee payroll tax |
(4,856 | ) | - | (25 | ) | - | - | - | (25 | ) | ||||||||||||||||||
Repurchase of common stock | (712,690 | ) | (1 | ) | (2,737 | ) | - | - | - | (2,738 | ) | |||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
1,354
|
-
|
1,354
|
|||||||||||||||||||||
Foreign currency translation adjustments, net of tax
|
-
|
-
|
-
|
-
|
-
|
(81
|
)
|
(81
|
)
|
|||||||||||||||||||
Balance, December 31,
2021
|
8,547,335
|
$
|
24
|
$
|
3,959
|
$
|
(9,773
|
)
|
$
|
58,664
|
$
|
(1,373
|
)
|
$
|
51,501
|
(in thousands)
|
2021
|
2020
|
||||||
United States
|
$
|
73,546
|
$
|
56,877
|
||||
Canada
|
7,470 | 5,798 | ||||||
Spain
|
1,645 | 1,409 | ||||||
Net sales
|
$
|
82,661
|
$
|
64,084
|
• |
Level 1 – observable inputs that reflect quoted prices in active markets for identical assets or liabilities.
|
• |
Level 2 – significant observable inputs other than quoted prices in active markets for similar assets and liabilities, such as quoted prices for identical or similar assets or
liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
|
• |
Level 3 – significant unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants.
|
(in thousands)
|
December 31, 2021
|
December 31, 2020
|
||||||
On hand:
|
||||||||
Finished goods held for sale
|
$
|
34,928
|
$
|
32,654
|
||||
Raw materials and work in process
|
828
|
828
|
||||||
Inventory in transit
|
2,328
|
3,297
|
||||||
TOTAL
|
$
|
38,084
|
$
|
36,779
|
(in thousands)
|
December 31, 2021
|
December 31, 2020
|
||||||
Building | $ | 9,257 | $ | 9,240 | ||||
Land
|
1,451
|
1,451
|
||||||
Leasehold improvements
|
1,833
|
1,853
|
||||||
Equipment and machinery
|
7,704
|
7,361
|
||||||
Furniture and fixtures
|
7,350
|
7,339
|
||||||
Vehicles
|
155
|
224
|
||||||
27,750
|
27,468
|
|||||||
Lesss: accumulated depreciation
|
(15,989
|
)
|
(15,078
|
)
|
||||
TOTAL
|
$
|
11,761
|
$
|
12,390
|
(in thousands)
|
December 31, 2021
|
December 31, 2020
|
||||||
United States
|
$
|
11,508
|
$
|
12,077
|
||||
Canada
|
252
|
309
|
||||||
United Kingdom
|
-
|
2
|
||||||
Spain
|
1
|
2
|
||||||
$
|
11,761
|
$
|
12,390
|
Accrued Expenses and Other Liabilities
|
December 31, 2021
|
December 31, 2020
|
||||||
(in thousands)
|
||||||||
Accrued employee related costs
|
2,508
|
1,121
|
||||||
Unearned gift card revenue
|
351
|
301
|
||||||
Estimated returns
|
242
|
241
|
||||||
Sales and payroll taxes payable
|
987
|
935
|
||||||
Accrued vendor payables
|
214 |
1,044
|
||||||
TOTAL
|
$
|
4,302
|
$
|
3,642
|
Leases
|
Balance Sheet Classification
|
December 31, 2021
|
December 31, 2020
|
|||||||
(in thousands)
|
||||||||||
Assets:
|
||||||||||
Operating
|
|
$
|
10,438
|
$
|
11,772
|
|||||
Finance
|
|
37
|
44
|
|||||||
Total assets
|
$
|
10,475
|
$
|
11,816
|
||||||
Liabilities:
|
||||||||||
Current
|
||||||||||
Operating
|
|
$
|
3,025
|
$
|
3,530
|
|||||
Finance
|
|
15
|
14
|
|||||||
Non-current
|
||||||||||
Operating
|
|
8,194
|
9,245
|
|||||||
Finance
|
|
15
|
29
|
|||||||
Total lease liabilities
|
$
|
11,249
|
$
|
12,818
|
Lease Cost
|
Income Statement Classification
|
December 31, 2021
|
December 31, 2020
|
||||||
(in thousands)
|
|||||||||
Operating lease cost
|
Operating expenses
|
$
|
3,664
|
$
|
3,809
|
||||
Operating lease cost
|
Impairment expense
|
-
|
601
|
||||||
Short-term lease cost |
Operating expenses
|
45 | - | ||||||
Variable lease cost (1)
|
Operating expenses
|
946
|
937
|
||||||
Finance: (2)
|
|||||||||
Amortization of lease assets
|
Operating expenses
|
7
|
-
|
||||||
Interest on lease liabilities
|
Interest expense
|
2
|
-
|
||||||
Total lease cost
|
$
|
4,664
|
$
|
5,347
|
December 31, 2021
|
||||||||
Maturity of Lease Liabilities
|
Operating Leases
|
Finance Leases
|
||||||
(in thousands)
|
||||||||
2022
|
$
|
3,488
|
$
|
17
|
||||
2023
|
2,665
|
$ |
15
|
|||||
2024
|
2,021
|
$ |
-
|
|||||
2025
|
1,386
|
$ |
-
|
|||||
2026
|
1,114
|
$ |
-
|
|||||
Thereafter
|
2,218
|
$ |
-
|
|||||
Total lease payments
|
$
|
12,892
|
$
|
32
|
||||
Less: Interest
|
(1,673
|
)
|
(2
|
)
|
||||
Present value of lease liabilities
|
$
|
11,219
|
$
|
30
|
Other Information
|
December 31, 2021
|
December 31, 2020
|
||||||
(in thousands)
|
||||||||
Cash paid for amounts included in the measurement of lease liabilities:
|
||||||||
Operating cash flows used in operating leases
|
$
|
3,876
|
$
|
3,866
|
||||
Operating cash flows used in finance leases
|
2
|
-
|
||||||
Financing cash flows used in finance leases
|
14
|
-
|
||||||
Operating lease assets obtained in exchange for lease obligations
|
||||||||
Operating leases, initial recognition
|
1,653
|
317
|
||||||
Operating leases, modifications and remeasurements
|
200
|
1,340
|
||||||
Finance leases, initial recognition
|
- |
45
|
Lease Term and Discount Rate
|
December 31, 2021
|
December 31, 2020
|
||||||
Weighted-average remaining lease term (years):
|
||||||||
Operating leases
|
5.3 | 5.9 | ||||||
Finance leases
|
1.9 | 2.9 | ||||||
Weighted-average discount rate:
|
||||||||
Operating leases
|
4.5 | % | 4.4 | % | ||||
Finance leases
|
6.5 | % | 6.5 | % |
(in thousands)
|
2021
|
2020
|
||||||
Institute of Official Credit (“ICO”) Guarantee for Small and Medium-sized Enterprises with Banco Santander S.A. (Spain) as described more fully above - interest due
monthly at 1.50%; matures June 4, 2025
|
$
|
336
|
$
|
446
|
||||
$
|
336
|
$
|
446
|
|||||
Less current maturities
|
79
|
-
|
||||||
TOTAL
|
$
|
415
|
$
|
446
|
(in thousands)
|
Year Ended December 31,
|
|||||||
Income Tax Benefit
|
2021
|
2020
|
||||||
Current provision (benefit):
|
||||||||
Federal
|
$
|
640
|
$
|
(1,385
|
)
|
|||
State
|
98
|
65
|
||||||
Foreign
|
-
|
6
|
||||||
Related to UTP
|
19
|
20
|
||||||
757
|
(1,294
|
)
|
||||||
Deferred provision (benefit): | ||||||||
Federal
|
- | (62 | ) | |||||
State | - | (3 | ) | |||||
Foreign | 82 | (19 | ) | |||||
82 | (84 | ) | ||||||
Total tax provision (benefit)
|
$ | 839 | $ | (1,378 | ) |
(in thousands)
|
Year Ended December 31,
|
|||||||
Income (Loss) Before Income Taxes
|
2021
|
2020
|
||||||
United States
|
$
|
2,552
|
$
|
(6,222
|
)
|
|||
Spain
|
(135
|
)
|
161
|
|||||
Canada
|
(229
|
)
|
(204
|
)
|
||||
Australia
|
(1
|
)
|
(7
|
)
|
||||
United Kingdom
|
6
|
(7
|
)
|
|||||
TOTAL
|
$
|
2,193
|
$
|
(6,279
|
)
|
Deferred income tax assets:
|
2021
|
2020
|
||||||
(in thousands)
|
||||||||
Inventory
|
$
|
464
|
$
|
498
|
||||
Stock-based compensation
|
59
|
63
|
||||||
Accounts receivable
|
4
|
4
|
||||||
Sales returns
|
125
|
105
|
||||||
Foreign currency translation gain/loss in OCI
|
342
|
323
|
||||||
Goodwill and other intangible assets amortization
|
-
|
5
|
||||||
Net operating loss
|
646
|
665
|
||||||
Accrued expenses
|
359
|
170
|
||||||
Leases
|
195
|
250
|
||||||
Other
|
2
|
1
|
||||||
Total deferred income tax assets
|
2,196
|
2,084
|
||||||
Less: valuation allowance
|
(1,489
|
)
|
(1,320
|
)
|
||||
Total deferred income tax assets, net of valuation allowance
|
$
|
707
|
$
|
764
|
||||
Property and equipment depreciation
|
$
|
707
|
$
|
682
|
||||
Total deferred income tax liabilities
|
707
|
682
|
||||||
Net deferred tax asset (liability)
|
$
|
-
|
$
|
82
|
Year Ended December 31,
|
||||||||
2021 |
2020
|
|||||||
Statutory rate – Federal U.S. income tax
|
21
|
%
|
21
|
%
|
||||
State and local taxes
|
9
|
%
|
3
|
%
|
||||
Permanent book/tax differences
|
3
|
%
|
(2
|
)%
|
||||
Difference in tax rates in loss carryback periods
|
0
|
%
|
8
|
%
|
||||
Change in valuation allowance
|
6
|
%
|
(10
|
)%
|
||||
Rate differential on UTP reversals
|
1
|
%
|
0
|
%
|
||||
Other, net
|
(2
|
)%
|
2
|
%
|
||||
Effective rate
|
38
|
%
|
22
|
%
|
2021
|
2020
|
|||||||
UTP at beginning of the year
|
$
|
393
|
$
|
296
|
||||
Gross increase to tax positions in current period
|
3
|
77
|
||||||
Interest expense
|
19
|
20 | ||||||
UTP at end of year
|
$
|
415
|
$
|
393
|
Balance, January 1, 2021
|
|
522
|
$
|
7.11
|
||||
Granted
|
25
|
3.88
|
||||||
Forfeited
|
(10
|
)
|
3.53
|
|||||
Vested
|
(114
|
)
|
7.00
|
|||||
Balance, December 31, 2021
|
|
423
|
$
|
7.03
|
Unrecognized Expense
|
||||
2022
|
$
|
784
|
||
2023
|
537
|
|||
2024
|
24
|
|||
2025 |
5 | |||
$
|
1,350
|
i.
|
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;
|
ii.
|
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;
|
iii.
|
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);
|
iv.
|
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);
|
v.
|
Established a greater sense of accountability by requiring sub-certifications below the CEO and CFO level for certain key accounting, finance and operations personnel.
|
i.
|
Ongoing recruitment and hiring of permanent, qualified public-company accounting personnel;
|
ii.
|
Converting the remaining 12 stores onto our new point-of-sale system;
|
iii.
|
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;
|
iv.
|
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;
|
v.
|
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;
|
vi.
|
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;
|
vii.
|
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; and
|
viii.
|
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
guide.
|
■
|
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.
|
■
|
Regular performance evaluations to include position-specific criteria for functional competence, including performance of internal control responsibilities.
|
■
|
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:
|
o
|
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;
|
o
|
Timely reviews each quarter of the most significant accounting estimates and judgements;
|
o
|
Validation of results through detailed variance analyses and reconciliation of account balances performed on a timely basis;
|
o
|
Monthly business review of actual financial performance compared to forecasts with participation from leadership across the organization; and
|
o
|
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.
|
ITEM 10. |
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE*
|
ITEM 11. |
EXECUTIVE COMPENSATION*
|
ITEM 12. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS*
|
ITEM 13. |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE*
|
ITEM 14. |
PRINCIPAL ACCOUNTANT FEES AND SERVICES*
|
ITEM 15. |
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
• |
Report of Independent Registered Public Accounting Firm (PCAOB ID Number
) |
• |
Consolidated Balance Sheets as of December 31, 2021 and 2020
|
• |
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2021 and 2020
|
• |
Consolidated Statements of Cash Flows for the years ended December 31, 2021 and 2020
|
• |
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2021 and 2020
|
ITEM 16. |
FORM 10-K SUMMARY
|
TANDY LEATHER FACTORY, INC.
|
||
By:
|
||
/s/ Janet Carr
|
||
Janet Carr
|
||
Chief Executive Officer
|
Signature
|
Title
|
Date
|
||
/s/ Jefferson Gramm
|
Chairman of the Board
|
March 31, 2022
|
||
Jefferson Gramm
|
||||
/s/ Janet Carr
|
Chief Executive Officer, Director
|
March 31, 2022
|
||
Janet Carr
|
(principal executive officer)
|
|||
/s/ Michael Galvan
|
Chief Financial Officer
|
March 31, 2022
|
||
Michael Galvan
|
(principal financial officer and
|
|||
principal accounting officer)
|
||||
/s/ William M. Warren
|
Director
|
March 31, 2022
|
||
William M. Warren
|
||||
/s/ James Pappas
|
Director
|
March 31, 2022
|
||
James Pappas
|
||||
/s/ Vicki Cantrell
|
Director
|
March 31, 2022
|
||
Vicki Cantrell
|
||||
/s/ Sharon M. Leite
|
Director
|
March 31, 2022
|
||
Sharon M. Leite
|
||||
/s/ Sejal Patel
|
Director
|
March 31, 2022
|
||
Sejal Patel
|
||||
/s/ Elaine D. Crowley
|
Director
|
March 31, 2022
|
||
Elaine D. Crowley
|
1 Year Tandy Leather Factory (PK) Chart |
1 Month Tandy Leather Factory (PK) Chart |
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