TANDY LEATHER FACTORY INC

Our Risk Factors are discussed fully in Part I Item 1A “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, and incorporated herein by reference. In addition, we have identified the following additional risk factors:

Recent Changes to U.S. Tariff Rates. The products we sell are primarily purchased from third parties across multiple countries, most notably China, Mexico and Brazil. In February 2026, the U.S. Supreme Court ruled that tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) were not authorized, and U.S. Customs and Border Protection subsequently established a process for importers to request refunds of IEEPA tariffs previously paid. The Company has submitted refund requests under this process. These refunds are non-recurring, and the timing and amount of any further refunds are uncertain and remain subject to ongoing legal and administrative proceedings. We continue to focus on opportunities to mitigate negative impacts and increase efficiencies and scale within our supply chain. However, significant increases in tariff rates, particularly for products imported mainly from China and Brazil, would substantially increase our cost for those products and may require us to increase our prices to customers , which could in turn lead to a decrease in our sales. Even if we are able to avoid raising the prices of our own products, the macro-economic inflationary impact of tariffs on other products could also harm our sales by reducing our customers’ ability to make discretionary purchases of items such as our products. We may also be exposed to retaliatory tariffs implications for our intercompany sales to Canadian stores if implemented. The global tariff environment is changing rapidly, and we cannot be assured that we will not be materially negatively impacted by these changes .

Increased Expenses from Renting Headquarters Facilities and Flagship Store. Until January 2025, the Company owned the buildings housing its principal offices, distribution center and flagship retail store in Fort Worth, Texas. Since the sale of those buildings in January 2025, the Company has leased spaces for all of these facilities. Excluding buildout, furniture, equipment and other costs associated with the move to the new facilities, the Company expects to pay combined rent for new headquarters and flagship store facilities in excess of $1.6 million per year (adjusted for inflation annually over the term). If the Company is unable to generate additional sales and profits to offset these added expenses, this could have a material adverse effect on the Company and its operations.