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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 |
Delaware
|
75-2543540
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
Title of each class
|
Trading Symbol
|
Name of each exchange on which registered
|
Common Stock, par value $0.0024
|
TLF
|
|
Large accelerated filer ☐
|
Non-accelerated filer ☒
|
|
Accelerated filer ☐
|
Smaller reporting company ☒
|
|
Emerging growth company ☐
|
2
|
|
2
|
|
6
|
|
17 | |
25 | |
30 |
|
30 |
|
30 |
|
30 | |
31 | |
33 |
Item 1. |
Condensed Consolidated Financial Statements.
|
Three Months Ended March 31,
|
||||||||
2023
|
2022
|
|||||||
Net sales
|
$
|
20,360
|
$
|
20,500
|
||||
Cost of sales
|
8,541
|
8,569
|
||||||
Gross profit
|
11,819
|
11,931
|
||||||
Operating expenses
|
10,838
|
11,102
|
||||||
Income from operations
|
981
|
829
|
||||||
Other (income) expense:
|
||||||||
Interest expense
|
-
|
2
|
||||||
Other, net
|
39
|
(15
|
)
|
|||||
Total other income
|
39
|
(13
|
)
|
|||||
Income before income taxes
|
942
|
842
|
||||||
Income tax provision
|
278
|
197
|
||||||
Net income
|
$
|
664
|
$
|
645
|
||||
Foreign currency translation adjustments, net of tax
|
(39
|
)
|
65
|
|||||
Comprehensive income
|
$
|
625
|
$
|
710
|
||||
Net income per common share:
|
||||||||
Basic
|
$
|
0.08
|
$
|
0.08
|
||||
Diluted
|
$
|
0.08
|
$
|
0.08
|
||||
Weighted average number of shares outstanding:
|
||||||||
Basic
|
8,303,117
|
8,574,888
|
||||||
Diluted
|
8,356,166
|
8,580,182
|
For the Three Months Ended March 31,
|
||||||||
2023
|
2022
|
|||||||
Cash flows from operating activities:
|
||||||||
Net income
|
$
|
664
|
$
|
645
|
||||
Adjustments to reconcile net income to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
285
|
301
|
||||||
Operating lease asset amortization
|
834
|
811
|
||||||
Loss on disposal of assets |
27 |
- | ||||||
Stock-based compensation
|
228
|
340
|
||||||
Deferred income taxes
|
-
|
(1
|
)
|
|||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable-trade
|
(104
|
)
|
(69
|
)
|
||||
Inventory
|
2,356
|
823
|
||||||
Prepaid expenses
|
(130
|
)
|
6
|
|||||
Other current assets
|
(12
|
)
|
1
|
|||||
Accounts payable-trade
|
(2,053
|
)
|
(1,395
|
)
|
||||
Accrued expenses and other liabilities
|
(694
|
)
|
(477
|
)
|
||||
Income taxes, net
|
278
|
94
|
||||||
Other assets
|
(31
|
)
|
48
|
|||||
Operating lease liabilities
|
(851
|
)
|
(850
|
)
|
||||
Total adjustments
|
133
|
(368
|
)
|
|||||
Net cash provided by operating activities
|
797
|
277
|
||||||
Cash flows from investing activities:
|
||||||||
Purchase of property and equipment
|
(87
|
)
|
(164
|
)
|
||||
Net cash used in investing activities
|
(87
|
)
|
(164
|
)
|
||||
Cash flows from financing activities:
|
||||||||
Payment of finance lease obligations
|
-
|
(4
|
)
|
|||||
Net cash used in financing activities
|
-
|
(4
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
(39
|
)
|
71
|
|||||
Net increase in cash and cash equivalents
|
671
|
180
|
||||||
Cash and cash equivalents, beginning of period
|
7,975
|
10,155
|
||||||
Cash and cash equivalents, end of period
|
$
|
8,646
|
$
|
10,335
|
Number of
Shares
Common
Stock
Outstanding
|
Par Value
|
Paid-in Capital
|
Treasury Stock
|
Retained Earnings
|
Accumulated
Other Comprehensive Income (Loss) |
Total
|
||||||||||||||||||||||
Balance, December 31, 2022
|
8,293,149
|
$
|
23
|
$
|
3,222
|
$
|
(9,773
|
)
|
$
|
59,891
|
$
|
(1,900
|
)
|
$
|
51,463
|
|||||||||||||
Stock-based compensation expense
|
-
|
-
|
228
|
-
|
-
|
-
|
228
|
|||||||||||||||||||||
Vesting of restricted stock units
|
17,518
|
-
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Net income
|
-
|
-
|
-
|
-
|
664
|
-
|
664
|
|||||||||||||||||||||
Foreign currency translation adjustments, net of tax
|
-
|
-
|
-
|
-
|
-
|
(39
|
)
|
(39
|
)
|
|||||||||||||||||||
Balance, March 31, 2023
|
8,310,667
|
$
|
23
|
$
|
3,450
|
$
|
(9,773
|
)
|
$
|
60,555
|
$
|
(1,939
|
)
|
$
|
52,316
|
|||||||||||||
Balance, December 31, 2021
|
8,547,335
|
$ | 24 |
$
|
3,959
|
$
|
(9,773
|
)
|
$
|
58,664
|
$
|
(1,373
|
)
|
$
|
51,501
|
|||||||||||||
Stock-based compensation expense
|
-
|
- |
340
|
-
|
-
|
-
|
340
|
|||||||||||||||||||||
Vesting of restricted stock units
|
47,423
|
- |
-
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||
Net income
|
- |
-
|
-
|
-
|
645
|
-
|
645
|
|||||||||||||||||||||
Foreign currency translation adjustments, net of tax
|
- |
-
|
-
|
-
|
-
|
65
|
65
|
|||||||||||||||||||||
Balance, March 31, 2022
|
8,594,758 |
$
|
24
|
$
|
4,299
|
$
|
(9,773
|
)
|
$
|
59,309
|
$
|
(1,308
|
)
|
$
|
52,551
|
Three Months Ended March 31,
|
||||||||
(in thousands)
|
2023
|
2022
|
||||||
United States
|
$
|
18,099
|
$
|
18,134
|
||||
Canada
|
1,907
|
1,989
|
||||||
Other | 354 | 377 | ||||||
Net sales
|
$
|
20,360
|
$
|
20,500
|
(in thousands)
|
March 31, 2023
|
December 31, 2022
|
||||||
On hand:
|
||||||||
Finished goods held for sale
|
$
|
33,129
|
$
|
35,234
|
||||
Raw materials and work in process
|
1,088
|
925
|
||||||
Inventory in transit
|
1,656
|
2,068
|
||||||
TOTAL
|
$
|
35,873
|
$
|
38,227
|
●
|
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.
|
Shares
(in thousands)
|
Weighted Average
Share Price
|
|||||||
Balance, January 1, 2023
|
441
|
$
|
6.46
|
|||||
Granted
|
-
|
-
|
||||||
Forfeited
|
-
|
-
|
||||||
Vested
|
(18
|
)
|
4.85
|
|||||
Balance, March 31, 2023
|
423
|
$
|
6.40
|
Unrecognized Expense
|
||||
2023
|
$
|
503
|
||
2024
|
217
|
|||
2025
|
81
|
|||
2026 |
7 |
|||
|
$
|
808
|
|
Three Months Ended March 31,
|
|||||||
(in thousands, except share data) |
2023
|
2022
|
||||||
Numerator: | ||||||||
Net income
|
$
|
664
|
$
|
645
|
||||
Denominator:
|
||||||||
Basic weighted-average common shares outstanding
|
8,303,117
|
8,574,888
|
||||||
Dilutive effect of service-based restricted stock awards granted to Board of Directors under the Plan
|
47,050 | - | ||||||
Dilutive effect of service-based restricted stock awards granted to employees under the Plan |
- | 5,294 | ||||||
Diluted weighted-average common shares outstanding
|
8,356,166
|
8,580,182
|
Three Months Ended March 31,
|
||||||||||||||||
(in thousands)
|
2023
|
2022
|
$ Change
|
% Change
|
||||||||||||
Sales
|
$
|
20,360
|
$
|
20,500
|
$
|
(140
|
)
|
(0.7
|
)%
|
|||||||
Gross profit
|
11,819
|
11,931
|
(112
|
)
|
(0.9
|
)%
|
||||||||||
Gross margin percentage
|
58.1
|
%
|
58.2
|
%
|
(0.1
|
)%
|
||||||||||
Operating expenses
|
10,838
|
11,102
|
(264
|
)
|
(2.4
|
)%
|
||||||||||
Income from operations
|
$
|
981
|
$
|
829
|
$
|
152
|
18.3
|
%
|
Three Months Ended March 31,
|
||||||||
(in thousands)
|
2023
|
2022
|
||||||
Operating expenses
|
$
|
10,838
|
$
|
11,102
|
||||
Non-routine items related to restatement
|
-
|
(77
|
)
|
|||||
Adjusted operating expenses
|
$
|
10,838
|
$
|
11,025
|
||||
|
||||||||
Operating expenses % of sales
|
53.2
|
%
|
54.2
|
%
|
||||
Adjusted operating expenses % of sales
|
53.2
|
%
|
53.8
|
%
|
Three Months Ended March 31,
|
||||||||
(amounts in thousands)
|
2023
|
2022
|
||||||
Net cash provided by operating activities
|
$
|
797
|
$
|
277
|
||||
Net cash used in investing activities
|
(87
|
)
|
(164
|
)
|
||||
Net cash used in financing activities
|
-
|
(4
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
(39
|
)
|
71
|
|||||
Net increase in cash and cash equivalents
|
$
|
671
|
$
|
180
|
Three Months Ended March 31,
|
||||||||
(amounts in thousands)
|
2023
|
2022
|
||||||
Net cash provided by operating activities
|
$
|
795
|
$
|
277
|
||||
Net cash used in investing activities
|
(87
|
)
|
(164
|
)
|
||||
Net cash used in financing activities
|
-
|
(4
|
)
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
(38
|
)
|
71
|
|||||
Net increase in cash and cash equivalents
|
$
|
670
|
$
|
180
|
Item 4. |
Controls and Procedures.
|
• |
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. The remaining two 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.
|
• |
Ongoing recruitment and hiring of permanent, qualified public-company accounting personnel;
|
• |
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, and (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; and
|
• |
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.
|
• |
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.
|
• |
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:
|
o |
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;
|
o |
Timely reviews each quarter of the most significant accounting estimates and judgments;
|
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 with the certification process.
|
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds.
|
ISSUER PURCHASES OF EQUITY SECURITIES
|
||||||||||||||||
Period
|
(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) Maximum value
of shares that may
yet be purchased
under the plans or
programs
|
||||||||||||
January 1 – January 31, 2023
|
—
|
—
|
—
|
$
|
4,997,000
|
|||||||||||
February 1 – February 28, 2023
|
—
|
—
|
—
|
$
|
4,997,000
|
|||||||||||
March 1 – March 31, 2023
|
—
|
—
|
—
|
$
|
4,997,000
|
|||||||||||
Total
|
—
|
—
|
—
|
Exhibit
Number
|
Description
|
3.1
|
|
3.2
|
|
3.3
|
|
Certificate of Amendment of Certificate of Incorporation, dated March 1, 2023
|
|
4.1
|
|
10.1
|
|
10.2
|
|
10.3
|
|
10.4
|
|
10.5
|
|
10.6
|
10.7
|
|
10.8
|
|
10.9
|
Form of Stock Purchase Agreement dated December 8, 2021 between the Company and Right Lane I, LP,
filed as Exhibit 10.9 to Tandy Leather Factory, Inc.’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 16, 2022 and incorporated by reference herein.
|
14.1
|
|
21.1
|
|
13a-14(a) or 15d-14(a) Certification by the Chief Executive 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. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2022.
|
|
*101.INS
|
XBRL Instance Document.
|
*101.SCH
|
XBRL Taxonomy Extension Schema Document.
|
*101.CAL
|
XBRL Taxonomy Extension Calculation Document.
|
*101.DEF
|
XBRL Taxonomy Extension Definition Document.
|
*101.LAB
|
XBRL Taxonomy Extension Labels Document.
|
*101.PRE
|
XBRL Taxonomy Extension Presentation Document.
|
TANDY LEATHER FACTORY, INC.
|
||
(Registrant)
|
||
Date: May 15, 2023
|
By:
|
/s/ Janet Carr
|
Janet Carr
|
||
Chief Executive Officer
|
1 Year Tandy Leather Factory (PK) Chart |
1 Month Tandy Leather Factory (PK) Chart |
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