10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

Form 10-Q

(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2018

or

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to __________

Commission File Number 1-12368

TANDY LEATHER FACTORY, INC.

(Exact name of registrant as specified in its charter)

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

(Address of principal executive offices) (Zip code)

(817) 872-3200

(Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [X]  No [  ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X]  No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of "large accelerated filer," "accelerated filer,"  "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer [  ]Non-accelerated filer [  ]

Accelerated filer [  ]Smaller reporting company [X]

Emerging growth company [  ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

As of November 7, 2018, the registrant had 9,154,208 shares of Common Stock, par value $0.0024 per share, outstanding.

1

TANDY LEATHER FACTORY, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2018

TABLE OF CONTENTS

	PAGE NO.
PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements
Consolidated Balance Sheets	3
Consolidated Statements of Comprehensive (Loss) Income	4
Consolidated Statements of Cash Flows	5
Consolidated Statements of Stockholders' Equity	6
Notes to Consolidated Financial Statements	7
Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3.  Quantitative and Qualitative Disclosures About Market Risk
	14
Item 4.  Controls and Procedures
	14
PART II.  OTHER INFORMATION
Item 1.  Legal Proceedings	15
Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds	15
Item 6.  Exhibits	15
SIGNATURES	16

2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Tandy Leather Factory, Inc.

Consolidated Balance Sheets

	September 30, 2018			December 31, 2017
ASSETS
CURRENT ASSETS:
Cash	$	16,814,972		$	18,337,258
Accounts receivable-trade, net of allowance for doubtful accounts
of $9,839 and $22,642 in 2018 and 2017, respectively		418,612			461,212
Inventory		40,720,630			37,311,197
Prepaid income taxes		452,389			41,307
Prepaid expenses		1,348,113			1,473,147
Other current assets		290,028			189,029
Total current assets		60,044,744			57,813,150
PROPERTY AND EQUIPMENT, at cost		27,950,353			27,218,481
Less accumulated depreciation and amortization		(12,976,025	)		(11,750,639	)
Property and equipment, net		14,974,328			15,467,842
DEFERRED INCOME TAXES		281,721			271,738
GOODWILL		960,304			962,949
OTHER INTANGIBLES, net of accumulated amortization of approximately
$712,000 and $710,000 in 2018 and 2017, respectively		17,166			19,222
OTHER ASSETS		387,487			379,695
TOTAL ASSETS	$	76,665,750		$	74,914,596
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable-trade	$	1,441,975		$	1,413,450
Accrued expenses and other liabilities		4,512,211			4,953,477
Current maturities of long-term debt		174,056			614,311
Total current liabilities		6,128,242			6,981,238
DEFERRED INCOME TAXES		1,467,481			1,636,958
LONG-TERM DEBT, net of current maturities		8,180,613			6,757,419
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $0.10 par value; 20,000,000 shares authorized;
none issued or outstanding; attributes to be determined on issuance		-			-
Common stock, $0.0024 par value; 25,000,000 shares authorized;
11,330,340 and 11,313,692 shares issued at 2018 and 2017, respectively;
9,154,208 and 9,270,862 shares outstanding at 2018 and 2017, respectively		27,193			27,153
Paid-in capital		6,907,678			6,831,271
Retained earnings		66,345,110			63,921,244
Treasury stock at cost (2,176,132 and 2,042,830 shares at 2018 and 2017, respectively)		(11,273,822	)		(10,278,584	)
Accumulated other comprehensive income (loss)		(1,116,745	)		(962,103	)
Total stockholders' equity		60,889,414			59,538,981
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	76,665,750		$	74,914,596

The accompanying notes are an integral part of these financial statements.

3

Tandy Leather Factory, Inc.

Consolidated Statements of Comprehensive (Loss) Income

For the Three and Nine Months Ended September 30

	THREE MONTHS						NINE MONTHS
	2018			2017			2018			2017
NET SALES	$	18,887,099		$	18,388,381		$	58,353,784		$	57,818,996
COST OF SALES		7,040,266			6,753,050			20,545,547			21,002,086
Gross profit		11,846,833			11,635,331			37,808,237			36,816,910
OPERATING EXPENSES		11,531,389			10,985,056			33,742,351			32,773,707
INCOME FROM OPERATIONS		315,444			650,275			4,065,886			4,043,203
OTHER INCOME (EXPENSE):
Interest expense		(80,710	)		(53,141	)		(223,534	)		(143,165	)
Other, net		40,846			95,936			126,459			115,599
Total other income (expense)		(39,864	)		42,795			(97,075	)		(27,566	)
INCOME BEFORE INCOME TAXES		275,580			693,070			3,968,811			4,015,637
PROVISION FOR INCOME TAXES		397,114			171,656			1,376,634			1,235,226
NET (LOSS) INCOME	$	(121,534	)	$	521,414		$	2,592,177		$	2,780,411
Foreign currency translation adjustments		118,165			370,240			(154,642	)		1,028,599
COMPREHENSIVE (LOSS) INCOME	$	(3,369	)	$	891,654		$	2,437,535		$	3,809,010
NET (LOSS) INCOME PER COMMON SHARE:
Basic	$	(0.01	)	$	0.06		$	0.28		$	0.30
Diluted	$	(0.01	)	$	0.06		$	0.28		$	0.30
Weighted Average Number of Shares Outstanding:
Basic		9,154,209			9,270,862			9,199,173			9,232,397
Diluted		9,155,031			9,273,950			9,199,959			9,246,066

The accompanying notes are an integral part of these financial statements.

4

Tandy Leather Factory, Inc.

Consolidated Statements of Cash Flows

For the Nine Months Ended September 30

	2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	2,592,177		$	2,780,411
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		1,310,774			1,466,534
Loss on disposal or abandonment of assets		4,556			10,484
Non-cash stock-based compensation		76,447			205,380
Deferred income taxes		(115,460	)		(214,092	)
Foreign currency translation		(93,163	)		961,860
Net changes in assets and liabilities:
Accounts receivable-trade		42,600			31,606
Inventory		(3,409,433	)		(7,970,520	)
Prepaid expenses		125,034			(43,507	)
Other current assets		(111,688	)		(212,527	)
Accounts payable-trade		28,525			947,132
Accrued expenses and other liabilities		(609,577	)		(1,323,785	)
Income taxes payable		(475,082	)		16,816
Total adjustments		(3,226,467	)		(6,124,619	)
Net cash used in operating activities		(634,290	)		(3,344,208	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(887,679	)		(1,530,547	)
Proceeds from sale of assets		17,718			699
Increase in other assets		(5,736	)		(32,268	)
Net cash used in investing activities		(875,697	)		(1,562,116	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable and long term debt		982,939			-
Repurchase of common stock (treasury stock)		(995,238	)		-
Proceeds from exercise of stock options		-			223,404
Net cash (used in) provided by financing activities		(12,299	)		223,404
NET DECREASE IN CASH		(1,522,286	)		(4,682,920	)
CASH, beginning of period		18,337,258			16,862,304
CASH, end of period	$	16,814,972		$	12,179,384
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid during the period	$	223,534		$	143,165
Income tax paid during the period, net of refunds	$	1,967,176		$	1,218,410

The accompanying notes are an integral part of these financial statements.

5

Tandy Leather Factory, Inc.

Consolidated Statements of Stockholders' Equity

For the Nine Months Ended September 30

	Number of Shares			Par Value		Paid-in Capital		Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income (loss)			Total
BALANCE, January 1, 2017		9,193,162		$	26,966	$	6,368,455	$	(10,278,584	)	$	59,469,493		$	(1,893,129	)	$	53,693,201
Exercise of stock options		44,400			107		223,297.		-			-			-			223,404
Stock-based compensation		33,300			80		205,300		-			-			-			205,380
Net income		-			-		-		-			2,780,411			-			2,780,411
Translation adjustment		-			-		-		-			-			1,028,599			1,028,599
BALANCE, September 30, 2017		9,270,862		$	27,153	$	6,797,052	$	(10,278,584	)	$	62,249,904		$	(864,530	)	$	57,930,995
	Number of Shares			Par Value		Paid-in Capital		Treasury Stock			Retained Earnings			Accumulated Other Comprehensive Income (loss)			Total
BALANCE, January 1, 2018		9,270,862		$	27,153	$	6,831,271	$	(10,278,584	)	$	63,921,244		$	(962,103	)	$	59,538,981
Cumulative effect of accounting      change (see Note 1)		-			-		-		-			(168,311	)		-			(168,311	)
Stock-based compensation		16,648			40		76,407		-			-			-			76,447
Purchase of treasury stock		(133,302	)		-		-		(995,238	)		-			-			(995,238	)
Net income		-			-		-		-			2,592,177			-			2,592,177
Translation adjustment		-			-		-		-			-			(154,642	)		(154,642	)
BALANCE, September 30, 2018		9,154,208		$	27,193	$	6,907,678	$	(11,273,822	)	$	66,345,110		$	(1,116,745	)	$	60,889,414

6

The accompanying notes are an integral part of these financial statements.

6

TANDY LEATHER FACTORY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION AND CERTAIN SIGNIFICANT ACCOUNTING POLICIES

Tandy Leather Factory, Inc. (we, us, our, Tandy, or the Company) is a specialty retailer of leather and leathercraft related items, offering a broad range of leather, quality tools, hardware, accessories, liquids, lace, kits and teaching materials. We sell our products through company-owned stores and through orders generated from our website, www.tandyleather.com. We also manufacture the leather lace and some of our do-it-yourself kits that are sold in our stores and website.

In the opinion of management, the accompanying consolidated financial statements for Tandy Leather Factory, Inc. and its consolidated subsidiaries contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly its financial position as of September 30, 2018 and December 31, 2017, and its results of operations and cash flows for the three and nine-month periods ended September 30, 2018 and 2017.  Operating results for the three and nine-month periods ended September 30, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018.  These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2017.

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.  Actual results could differ from those estimates.

Inventory.  Inventory is valued at the lower of cost or net realizable value.  In addition, the value of inventory is periodically reduced to net realizable value for slow-moving or obsolete inventory based on management's review of items on hand compared to their estimated future demand.Based on negotiations with vendors, title generally passes to us when merchandise is put on board.  Merchandise to which we have title but have not yet received is recorded as inventory in transit.

	September 30, 2018		December 31, 2017
Inventory on hand:
Finished goods held for sale	$	37,526,245	$	34,824,728
Raw materials and work in process		917,966		1,138,316
Inventory in transit		2,276,419		1,348,153
Total	$	40,720,630	$	37,311,197

Goodwill and Other Intangibles.  Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a business combination. Goodwill is required to be evaluated for impairment on an annual basis, absent indicators of impairment during the interim.  Application of the goodwill impairment test requires exercise of judgment, including the estimation of future cash flows, determination of appropriate discount rates and other important assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment for each reporting unit. During the first nine months of 2018, no indicators of impairment were identified.  Further, the only change in our goodwill for the nine-month periods ended September 30, 2018 and 2017 resulted from foreign currency translation of $2,645 and $7,651, respectively.

Other intangibles consist of the following:

	September 30, 2018						December 31, 2017
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Trademarks, Copyrights	$	554,369	$	546,536	$	7,833	$	554,369	$	545,897	$	8,472
Non-Compete Agreements		175,316		165,983		9,333		175,316		164,566		10,750
	$	729,685	$	712,519	$	17,166	$	729,685	$	710,463	$	19,222

We recorded amortization expense of approximately $2,100 during the nine months ended September 30, 2018 compared to approximately $1,300 during the nine months ended September 30, 2017.  All of our intangible assets, other than goodwill, are subject to amortization under U.S. GAAP.  Based on the current amount of intangible assets subject to amortization, the estimated amortization expense for each of the succeeding 5 years is estimated to be less than $2,500 per year.

Revenue Recognition.  Our sales generally occur via two methods: (1) at the counter in our stores, and (2) shipment by common carrier.  Sales at the counter are recorded and title passes as transactions occur.  Otherwise, sales are recorded and title passes when the merchandise is shipped to the customer.  Shipping terms are normally FOB shipping point.  Sales tax and comparable foreign tax are excluded from revenue.

We offer an unconditional satisfaction guarantee to our customers and accept all product returns.  Net sales represent gross sales less negotiated price allowances, product returns, and allowances for defective merchandise.

Historically, the sale of gift cards has not been material to our financial condition, results of operations or cash flows.  As such, prior to January 1, 2018, gift cards were recognized as sales in the period the gift card was sold.  Effective January 1, 2018, in conjunction with the adoption of Accounting Standards Codification 606, "Revenue from Contracts with Customers" ("ASC 606"), we began recording a gift card liability on the date we issue a gift card to a customer, of which $168,311 was recognized on January 1, 2018 as the cumulative effect of an accounting change .  We record revenue and reduce the gift card liability as the customer redeems the gift card.  In addition, for gift card breakage, we recognize a proportionate amount for the expected unredeemed gift cards over the expected customer redemption period which is one year.  At September 30, 2018, our gift card liability, included in accrued expenses and other liabilities, totaled $163,285.

Disaggregated Revenue.  In the following table, revenue is disaggregated by our major customer groups for the three and nine-months ended September 30:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
RETAIL (end users, consumers, individuals)		59	%		57	%		60	%		57	%
NON-RETAIL (hospitals, organizations, distributors, businesses)		41	%		43	%		40	%		43	%
		100	%		100	%		100	%		100	%

For the nine months ended September 30, 2018, North America represents approximately 95% of total sales, while International represents approximately 5% of total sales.  As such, we believe that revenue by customer group more closely aligns with North America than International.  Note 7 also contains additional disaggregated revenue information by segment and geographic area.

Comprehensive Income (loss). Comprehensive income includes net income and certain other items that are recorded directly to Stockholders' Equity.  Our only source of other comprehensive income is foreign currency translation adjustments.

7

Recent Accounting Pronouncements.  ASC 606 requires revenue to be recognized based on the amount an entity is expected to be entitled to for promised goods or services provided to customers. ASC 606 also requires expanded disclosures regarding contracts with customers.  We adopted this standard effective January 1, 2018 using the modified retrospective basis which allows an adjustment to equity as of January 1, 2018 for all existing contracts and intend to apply the new standard to all new contracts that begin in 2018.  Given the nature of our business and that our sales generally occur at the counter or by shipment through common carrier at observable transaction prices with little, if any, variable consideration factors, there were no significant changes to the amount and timing of revenue recognition, except for our accounting for gift cards which has been discussed above.  While we offer an unconditional right of return to our customers, this has historically been immaterial to our financial condition, results of operations and cash flows (annual gross product returns have historically represented less than 0.5% of our net sales).   In conjunction with our adoption of ASC 606 on January 1, 2018, as it relates to our gift card liability, we recorded a net decrease to opening retained earnings of $168,311 for gift cards where satisfaction of our performance obligation had not yet been completed.

In February 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-02, "Leases", a comprehensive new standard that amends various aspects of existing accounting guidance for leases, including the recognition of a right of use asset and a lease liability for leases with a duration greater than one year.  The guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.  Early adoption is permitted.  We have not completed our review of the new guidance; however, we anticipate that upon adoption of the standard, using a modified retrospective approach, we will recognize additional assets and corresponding liabilities related to leases on our balance sheet.

2. NOTES PAYABLE AND LONG-TERM DEBT

On September 18, 2015, we executed a Promissory Note and Business Loan Agreement with BOKF, NA d/b/a Bank of Texas ("BOKF"), which provides us with a line of credit facility of up to $6,000,000 and is secured by our inventory.   On August 20, 2018, this line of credit was amended to extend the maturity to September 18, 2020 and to reduce the interest rate by 0.35%.  The Business Loan Agreement contains covenants that requires us to maintain a funded debt to EBITDA ratio of no greater than 1.5 to 1 and a "Fixed Charge Coverage Ratio" greater than or equal to 1.2 to 1.  Both ratios are calculated quarterly and are based on a trailing four quarter basis.  For the nine-month periods ended September 30, 2018 and 2017, there were no amounts drawn on this line.

Also, on September 18, 2015, we executed a Promissory Note and Business Loan Agreement with BOKF which provides us with a line of credit facility of up to $10,000,000 for the purpose of repurchasing shares of our common stock pursuant to our stock repurchase program, announced in August 2015 and subsequently amended, which permits us to repurchase up to 2.2 million shares of our common stock at prevailing market prices through August 2019.  Subsequently, this line of credit was amended to increase the availability from $10,000,000 to $15,000,000 for the repurchase of shares of our common stock through the earlier of August 25, 2019 or the date on which the entire amount is drawn and amended to reduce the interest rate.   In addition, this promissory note was amended on August 20, 2018 to reduce the interest rate by 0.35%.  During the draw down period, we are required to make monthly interest-only payments. At the end of this draw down period, we expect that the principal balance will be rolled into a 4-year term note. This Promissory Note is secured by a Deed of Trust on the real estate located at 1900 SE Loop 820, Fort Worth, Texas.   For the nine months ended September 30, 2018, we drew approximately $983,000 on this line which was used to purchase 133,302 shares of our common stock.  There were no amounts drawn on this line during the nine-months ended September 30, 2017.  At September 30, 2018, the unused portion of the line of credit was approximately $6.6 million.

Prior to August 20, 2018, amounts drawn under either Promissory Note accrue interest at the London interbank Eurodollar market rate for U.S. dollars (commonly known as "LIBOR") plus 1.85%.  Beginning after August 20, 2018, the notes accrue interest at LIBOR plus 1.5% (---3.7% at September 30, 2018).

Amount outstanding under the above agreements consisted of the following:

	Sep 30, 2018		Dec 31, 2017
Business Loan Agreement with BOKF – collateralized by real estate; payable as follows:
Line of Credit Note, as amended, in the maximum principal amount of $15,000,000, interest due monthly at LIBOR plus 1.5%; matures September 18, 2023	$	8,354,669	$	7,371,730
Line of Credit Note, as amended, in the maximum principal amount of $6,000,000, interest due monthly at LIBOR plus 1.5%; matures September 18, 2020		-		-
	$	8,354,669	$	7,371,730
Less current maturities		174,056		614,311
	$	8,180,613	$	6,757,419

The terms of our lines of credit contain various covenants with which we were in compliance as of September 30, 2018 and December 31, 2017.

3.  INCOME TAX

Our effective tax rate for the three and nine-months ended September 30 is presented below:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Effective tax rate		144.1	%		24.8	%		34.7	%		30.8	%

Our effective tax rate differs from the federal statutory rate primarily due to US state income tax expense, foreign income/loss positions and timing of our deferred tax position, particularly in fixed assets. In addition, to a lesser extent, our effective tax rate is impacted by the new global intangible low-taxed income tax ("GILTI") for our estimated foreign earnings.  GILTI was established as part of the Tax Cuts and Jobs Act (the "Tax Act"), which was enacted on December 22, 2017. The Tax Act also reduced the federal statutory rate from 35% in 2017 to 21% in 2018.

During the three months ended September 30, 2018, we completed our accounting for the income tax effects of the Tax Act and recorded approximately $250,000 of additional transitional tax as certain of our international net operating losses were subjected to federal limitation rules.  In addition, during the quarter ended September 30, 2018, certain of our international locations incurred operating losses for which no tax benefit was recorded.  As a result, this additional transition tax and our position on foreign losses unfavorably impacted the effective tax rates compared to the prior year periods.

For the nine months ended September 30, 2018, we did not record any GILTI tax expense or benefit related to our estimated foreign earnings (losses), as our foreign locations are currently in a net loss position.  This GILTI tax was created as part of the Tax Act.  Accordingly, there was no such provision during the same period in 2017.

8

4. STOCK-BASED COMPENSATION

We have a restricted stock plan that was adopted by our Board of Directors in January 2013 and approved by our stockholders in June 2013.  The plan reserves up to 300,000 shares of our common stock for restricted stock awards to our executive officers, non-employee directors and other key employees.  Awards granted under the plan may be stock awards or performance awards, and may be subject to a graded vesting schedule with a minimum vesting period of four years, unless otherwise determined by the committee that administers the plan.

The fair value of restricted stock grants is based on the market value of our common stock on the date of grant.  Compensation costs for these awards is recognized on a straight-line basis over the four-year vesting period.

A summary of the activity for non-vested restricted common stock awards as of September 30, 2018 and 2017 is presented below:

	Shares			Award Fair Value
Balance, January 1, 2018		36,801		$	8.03
Granted		-			-
Forfeited		-			-
Vested		(16,648	)		8.22
Unvested Balance, September 30, 2018		20,153		$	7.69
Balance, January 1, 2017		62,046		$	8.24
Granted		9,005			8.05
Forfeited		(5,403	)		8.05
Vested		(28,847	)		7.84
Unvested Balance, September 30, 2017		36,801		$	7.93

As of September 30, 2018, there was unrecognized compensation cost related to non-vested restricted stock awards of $97,906 which will be recognized in each of the following years as follows:

2018	$	23,719
2019		58,125
2020		14,853
2021		1,209

5. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share ("EPS") for the three and nine months ended September 30:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2018			2017		2018		2017
Net (loss) income	$	(121,534	)	$	521,414	$	2,592,177	$	2,780,411
Numerator for basic and diluted earnings per share	$	(121,534	)		521,414		2,592,177		2,780,411
Denominator for basic EPS: weighted-average shares		9,154,209			9,270,862		9,199,173		9,232,397
Effect of dilutive securities:
Stock options		-			-		-		9,810
Restricted stock		822			3,088		786		3,859
Dilutive potential common shares		822			3,088		786		13,669
Denominator for diluted EPS-weighted-average shares		9,155,031			9,273,950		9,199,959		9,246,066
Basic (loss) earnings per share	$	(0.01	)	$	0.06	$	0.28	$	0.30
Diluted (loss) earnings per share	$	(0.01	)	$	0.06	$	0.28	$	0.30

The net effect of assuming the exercise of all potentially dilutive common share equivalents, including stock options to purchase common stock at exercise prices less than the average market prices and restricted stock awards of an aggregate of 20,153 and 36,801 shares of common stock have been included in the computations of diluted EPS for the periods ended September 30, 2018 and 2017, respectively.

6. COMMITMENTS AND CONTINGENCIES

Legal Proceedings.  We are periodically involved in litigation that arises in the ordinary course of business and operations.  There are no such matters pending that we expect to have a material impact on our financial position or operating results.  Legal costs associated with the resolution of claims, lawsuits and other contingencies are expensed as incurred.

7. SEGMENT INFORMATION

We operate in two segments:  North America and International.  Our reportable operating segments have been determined as separately identifiable business units, and we measure segment earnings as operating earnings, defined as income before interest and income taxes.

9

	North America			International			Total
For the quarter ended September 30, 2018
Net sales	$	18,046,045		$	841,054		$	18,887,099
Gross profit		11,383,738			463,095			11,846,833
Operating income (loss)		566,544			(251,100	)		315,444
Interest (expense)		(80,710	)		-			(80,710	)
Other income (expense), net		34,583			6,263			40,846
Income (loss) before income taxes		520,417			(244,837	)		275,580
Depreciation and amortization		407,841			23,948			431,789
Fixed asset additions		437,615			28,202			465,817
Total assets	$	72,009,096		$	4,656,654		$	76,665,750
For the quarter ended September 30, 2017
Net sales	$	17,421,013		$	967,368		$	18,388,381
Gross profit		11,037,486			597,845			11,635,331
Operating income (loss)		649,797			478			650,275
Interest (expense)		(53,141	)		-			(53,141	)
Other income (expense), net		94,196			1,740			95,936
Income (loss) before income taxes		690,852			2,218			693,070
Depreciation and amortization		513,250			23,876			537,126
Fixed asset additions		523,546			2,095			525,641
Total assets	$	70,083,363		$	4,288,478		$	74,371,841

	North America			International			Total
For the nine months ended September 30, 2018
Net sales	$	55,640,190		$	2,713,594		$	58,353,784
Gross profit		36,128,829			1,679,408			37,808,237
Operating income (loss)		4,383,393			(317,507	)		4,065,886
Interest (expense)		(223,534	)		-			(223,534	)
Other income (expense), net		108,110			18,349			126,459
Income (loss) before income taxes		4,267,969			(299,158	)		3,968,811
Depreciation and amortization		1,237,093			73,651			1,310,744
Fixed asset additions		780,696			106,983			887,679
Total assets	$	72,009,096		$	4,656,654		$	76,665,750
For the nine months ended September 30, 2017
Net sales	$	55,080,152		$	2,738,844		$	57,818,996
Gross profit		35,239,645			1,577,265			36,816,910
Operating income (loss)		4,276,247			(233,044	)		4,043,203
Interest (expense)		(143,165	)		-			(143,165	)
Other income (expense), net		127,045			(11,446	)		115,599
Income (loss) before income taxes		4,260,127			(244,490	)		4,015,637
Depreciation and amortization		1,398,319			68,215			1,466,534
Fixed asset additions		1,508,426			22,121			1,530,547
Total assets	$	70,083,363		$	4,288,478		$	74,371,841

Net sales for geographic areas were as follows:

Three months ended September 30,	2018		2017
United States	$	16,200,989	$	15,551,725
Canada		1,579,521		1,653,051
All other countries		1,106,589		1,183,605
	$	18,887,099	$	18,388,381
Nine months ended September 30,		2018		2017
United States	$	49,910,923	$	49,380,463
Canada		4,942,124		5,072,785
All other countries		3,500,737		3,365,748
	$	58,353,784	$	57,818,996

Geographic sales information is based on the location of the customer.  No single foreign country, except for Canada, accounted for any material amount of our consolidated net sales for the three and nine-month periods ended September 30, 2018 and 2017.  We do not have any significant long-lived assets outside of the United States.

8. SUBSEQUENT EVENTS

On October 2, 2018, we announced certain leadership changes including the resignations of our former Chief Executive Officer and our former President, both of whom also resigned their positions from the Company's Board of Directors.  The resignations were not the result of any dispute or disagreement with the Company related to our operations, policies or practices.  On that same day, we announced the appointment of Janet Carr, as our new Chief Executive Officer who also became a member of our Board of Directors.  In connection with these leadership changes, we incurred approximately $304,000 of legal and advisory costs, recorded as operating expenses in the accompanying income statement, during the three and nine months ended September 30, 2018.  In addition,  Ms. Carr received (i) a time-based equity grant of 460,000 restricted stock units ("RSU") that vest over five years; (ii) a performance-based equity grant of 92,000 RSUs that vest if/when the Company's operating income exceeds $12 million dollars two fiscal years in a row; and (iii) a performance-based equity grant of 92,000 RSUs that vest if/when the Company's operating income exceeds $14 million dollars in one fiscal year.  We will begin accounting for these RSU's in the fourth quarter of 2018.

10

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Our Business

To our knowledge, we are the world's largest specialty retailer of leather and leathercraft related items (based on sales), offering a wide range of leather, quality tools, hardware, accessories, liquids, lace, kits and teaching materials. We sell our products through company-owned stores and through orders generated from our website, www.tandyleather.com.  We have built our business by offering our customers a broad selection of quality products combined with knowledgeable store associates, in one location, at competitive prices.

We operate in two segments, based on management responsibility and store location:  North America and International.  As of November 7, 2018, our North America segment operates 117 company-owned stores located in 42 U.S. states and 7 Canadian provinces, while our International segment operates three company-owned stores with one located in the United Kingdom, Australia, and Spain.

Our customer base is diverse, with individual retail customers as our largest customer group, representing approximately 60% of our year-to-date 2018 sales.  The remaining 40% of our year-to-date 2018 sales were to our wholesale, manufacturer and institutional groups (including horse and tack shops, Western wear, crafters, upholsterers, cobblers, auto repair, education, hospitals, prisons and other large businesses that use our products as raw materials to produce goods for resale).  Generally, our retail customers provide a higher gross profit than our wholesale and manufacturer groups.

On October 2, 2018, we announced certain leadership changes including the resignations of our former Chief Executive Officer and our former President, both of whom also resigned their positions from the Company's Board of Directors.  Also, on that same day, we announced the appointment of a new Chief Executive Officer who also became a member of our Board of Directors.

Our prior leadership invested significant resources into opening new stores, relocating existing stores from warehouse locations to more retail-centered shopping centers, launching a new product line of small machines, extending our store hours including Sunday openings, and optimizing our advertising and marketing spend.   To date in 2018, new stores in Austin, TX (July 2018) and Calgary, Alberta (July 2018) were opened, while in September 2018, our Northampton, UK store was closed to consolidate our UK operations into a single location.

Janet Carr, our new CEO, brings a broad retail background with over 25 years of experience across multiple business functional areas.  Since her appointment as CEO, Ms. Carr has been immersing herself in our business – talking to employees, visiting stores, and meeting key stakeholders, vendors and customers – to develop a strategy for our future with a focus on reinvigorating Tandy's brand, improving our customer's retail experience, and developing an enhanced proposition to win back business customers.  Current actions that are being undertaken under our new leadership include pausing on new store openings and relocations and evaluating our infrastructure and resources, including our field and home office organizational structure.

We believe describing the above initiatives and changes will provide additional background for our recent and future financial results.

Critical Accounting Policies

A description of our critical accounting policies appears in Item 7 "Management's Discussions and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017.  See Note 1 for disclosures related to our adoption of the new revenue recognition standard.

Forward-Looking Statements

Certain statements contained in this report and other materials we file with the Securities and Exchange Commission, as well as information included in oral statements or other written statements made or to be made by us, other than statements of historical fact, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  Forward-looking statements generally are accompanied by words such as "may," "will," "could," "should," "anticipate," "believe," "budgeted," "expect," "intend," "plan," "project," "potential," "estimate," "continue," or "future" variations thereof or other similar statements. There are certain important risks that could cause results to differ materially from those anticipated by some of the forward-looking statements. Some, but not all, of the important risks, including, without limitation, those described below, could cause actual results to differ materially from those suggested by the forward-looking statements.  Please refer also to our Annual Report on Form 10-K for fiscal year ended December 31, 2017 for additional information concerning these and other uncertainties that could negatively impact the Company. Potential factors that could cause our actual results of operations to differ materially from those in the forward-looking statements include, among others:

Ø General economic conditions in the United States and abroad;

Ø Increased pressure on margins;

Ø Increases in the cost of the products we sell or a reduction in availability of those products;

Ø Challenges in implementing our planned expansion and district restructuring;

Ø Failure to hire and train qualified personnel to operate new and existing stores;

Ø Failure to protect our trademarks and other proprietary intellectual property rights;

Ø Negative impact of foreign currency fluctuations on our financial condition and results of operations;

Ø Information technology system failures or network disruptions;

Ø Significant data security or privacy breach of our information systems;

Ø Loss or prolonged disruption in the operation of our centralized distribution center; and

Ø Damage to our brand.

We assume no obligation to update or otherwise revise our forward-looking statements even if experience or future changes make it clear that any projected results, express or implied, will not be realized.

11

Results of Operations

Three Months Ended September 30, 2018 and 2017

The following tables present selected financial data for each of our segments:

	Quarter Ended Sept 30, 2018					Quarter Ended Sept 30, 2017
	Net Sales		Income from Operations			Net Sales		Income from Operations
North America	$	18,046,045	$	566,544		$	17,421,013	$	649,797
International		841,054		(251,100	)		967,368		478
Total	$	18,887,099	$	315,444		$	18,388,381	$	650,275

Consolidated net sales for the quarter ended September 30, 2018 increased $499,000, or 2.7%, compared to the same period in 2017.  North America reported a sales increase of 3.6%, while International reported a sales decline of 13.1%.   Income from operations on a consolidated basis for the quarter ended September 30, 2018 decreased $335,00, from the third quarter of 2017, primarily due to a 5.0% increase in operating expenses, partially offset by a 1.8% increase in gross profit.  Our operating expenses increased during the third quarter of 2018 primarily due to two new stores that opened, one store closure in the UK, higher labor costs associated with our new extended hours and a tighter labor market, and legal and advisory costs associated with recent changes in leadership, partially offset by reductions in our advertising and marketing spend.  As for gross profit, the improvement is a result of a continued shift in our customer base from non-retail to retail and from the mix of products sold.

Additional information appears below for each segment (see also the information contained in Note 7 to the consolidated financial statements included in Item 1 of this Report).

North America

North America consisted of 117 and 115 stores at September 30, 2018 and 2017, respectively, as we opened stores in Austin, TX and Calgary, Ontario in July 2018.  Since the beginning of 2017, we have also opened stores in Allen, TX (April 2017); Miami, FL (May 2017); and McAllen, TX (May 2017).    A store is categorized as "new" until it is operating for the full comparable period in the prior year.

	# Stores		Qtr Ended 09/30/18		# Stores		Qtr Ended 09/30/17		$ Change		% Change
Same stores		115	$	17,900,890		115	$	17,421,013	$	479,877		2.8	%
New stores		2		145,155		-		-		145,155		n/a
Total net sales		117	$	18,046,045		115	$	17,421,013	$	623,032		3.6	%

The following table presents our sales mix by customer categories for the quarters ended September 30:

Customer Group	2018			2017
RETAIL (end users, consumers, individuals)		59	%		57	%
NON-RETAIL (hospitals, organizations, resellers, distributors, businesses)		41	%		43	%
		100	%		100	%

Net sales increased 3.6%, or $623,000, for the third quarter of 2018 compared to the third quarter of 2017, primarily due to a $480,000 increase in same store sales which is mostly attributable to growth in our retail customer base and our new product launches and $145,000 of new store sales.

Income from operations for North America during the quarter ended September 30, 2018 decreased by $83,000 from the comparative 2017 quarter due to an increase in gross profit of $346,000, offset by increase in operating expenses of $430,000. The increase in gross profit was primarily the result of the trend in customer mix.  Operating expenses increased $430,000 or 4.1% compared to last year's comparable period, due to $167,000 from the two new stores opened in the third quarter of 2018, $200,000 of higher labor costs resulting from a tight labor market and our new extended hours including Sunday openings, as well as $304,000 of legal and advisory costs incurred in connection with our recent changes in leadership.  These increases in operating costs were partially offset by lower advertising spend.

International

International consists of all stores located outside of North America.  As of September 30, 2018 and 2017, the segment contained three and four stores, respectively.  We closed our Northampton, UK store in late September 2018, consolidating into one location in the United Kingdom and one each in Australia and Spain.   This segment's sales totaled approximately $841,000 for the third quarter of 2018, compared to approximately $967,000 in the third quarter of 2017, a decrease of $126,000 or 13.1%.  On a constant currency basis, sales would have been $98,000 lower.

The following table presents our sales mix by customer categories for the quarters ended September 30:

Customer Group	2018			2017
RETAIL (end users, consumers, individuals)		46	%		41	%
NON-RETAIL (hospitals, youth organizations, resellers, distributors, businesses)		54	%		59	%
		100	%		100	%

International's gross profit decreased $135,000 primarily due to lower sales and foreign currency impacts.  International's operating expenses increased $116,000 due to $130,000 of expense recorded for the Northampton, UK store closure, mostly related to severance and store lease costs.

Other Expenses

We paid $81,000 in interest on our bank debt in the third quarter of 2018, compared to $53,000 in the third quarter of 2017 due to a slightly higher interest rate and higher weighted average outstanding balance in 2018 compared to 2017.  We recorded income of $41,000 in the third quarter of 2018 primarily for interest income, vendor rebates and discounts earned, compared to $96,000 in the third quarter of 2017.

Income Taxes

During the three months ended September 30, 2018, we completed our accounting for the income tax effects of the Tax Act and recorded approximately $250,000 of additional transitional tax as certain of our international net operating losses were subjected to federal limitation rules.  In addition, during the quarter ended September 30, 2018, certain of our international locations incurred operating losses for which no tax benefit was recorded.  As a result, this additional transition tax and our position on foreign losses unfavorably impacted the effective tax rate compared to the prior year.

12

Nine Months Ended September 30, 2018 and 2017

The following tables present selected financial data for each of our segments:

	Nine Months Ended Sept 30, 2018					Nine Months Ended Sept 30, 2017
	Net Sales		Income from Operations			Net Sales		Income from Operations
North America	$	55,640,190	$	4,383,393		$	55,080,152	$	4,276,247
International		2,713,594		(317,507	)		2,738,844		(233,044	)
Total	$	58,353,784	$	4,065,886		$	57,818,996	$	4,043,203

Consolidated net sales for the nine months ended September 30, 2018 increased $535,000, or 0.9%, compared to the same period in 2017.  North America reported a sales increase of 1.0%, while International reported a sales decrease of 0.9%. Income from operations on a consolidated basis for the nine months ended September 30, 2018 increased 0.6%, or $23,000, from the first nine months of 2017 primarily due to an improvement in gross profit, partially offset by an increase in operating expenses.  The increase in operating expenses primarily related to five new stores opened since the beginning of 2017, investments in our district manager program and new small machine product launch, higher labor costs associated with extended store hours including Sunday openings and a tighter labor market, legal and advisory costs associated with recent changes in leadership, and the closure of Northampton, UK store.  These increases in operating costs were partially offset by lower advertising and marketing spend.

Additional information appears below for each segment (see also the information contained in Note 7 to the consolidated financial statements included in Item 1 of this Report).

North America

	# Stores		Nine Months Ended 09/30/18		# Stores		Nine Months Ended 09/30/17		$ Change			% Change
Same stores		112	$	54,529,907		112	$	54,747,017	$	(217,110	)		(0.4	%)
New stores		5		1,110,283		-		333,135		777,148			233.3	%
Total net sales		117	$	55,640,190		112	$	55,080,152	$	560,038			1.0	%

The following table presents our sales mix by customer categories for the nine months ended September 30:

Customer Group	2018			2017
RETAIL (end users, consumers, individuals)		60	%		57	%
NON-RETAIL (hospitals, organizations, resellers, manufacturers, businesses)		40	%		43	%
		100	%		100	%

Net sales increased 1.0%, or $560,000, for the first nine months of 2018 compared to the first nine months of 2017, primarily due to contributions from new stores, partially offset by 0.4% decrease in same store sales resulting from increased competition to our non-retail customers and lower sales in Canada (on a constant currency basis, Canada's sales declined $201,000).

Income from operations for North America for the nine months ended September 30, 2018 increased $107,000 from the comparative 2017 period.  An increase in gross profit of $889,000, partially offset by an increase in operating expenses of $782,000 contributed to the improvement in income from operations.  Gross profit as a percentage of sales increased from 64.0% in the first nine months of 2017 to 64.9% in the first nine months of 2018, due to an increase in sales of higher margin products and the continued shift in more retail than non-retail sales.

Operating expenses increased 2.5% compared to last year's comparable period.  The most significant expense increases occurred in personnel, occupancy and selling costs related to five new stores opened ($380,000); increases in our comparable store associate wages from extended store hours and a tighter labor market ($317,000); and legal and advisory costs associated with recent changes in leadership ($304,000).

International

International's sales totaled approximately $2,714,000 for the first nine months of 2018, compared to approximately $2,739,000 in the first nine months of 2017, a decrease of $25,000 or 0.9%.  On a constant currency basis, sales would have been $139,000 lower.

The following table presents our sales mix by customer categories for the nine months ended September 30:

Customer Group	2018			2017
RETAIL (end users, consumers, individuals)		47	%		43	%
NON-RETAIL (hospitals, organizations, resellers, manufacturers, businesses)		53	%		57	%
		100	%		100	%

Gross profit margin increased from 57.6% in 2017 to 61.9% in 2018, primarily due to the shift in customers from non-retail to retail.  International's operating expenses increased by $187,000, primarily due to closure costs related to the Northampton, UK store.

Other Expenses

We paid approximately $224,000 in interest on our bank debt in the first nine months of 2018, compared to approximately $143,000 in the first nine months of 2017 due to slightly higher interest rates and higher weighted average outstanding balances in 2018 compared to 2017.  We recorded income of $125,000 in the first nine months of 2018 primarily for interest income, vendor rebates and discounts earned, compared to $116,000 in the first nine months of 2017.

Income Taxes

During the nine months ended September 30, 2018, we completed our accounting for the income tax effects of the Tax Act and recorded approximately $250,000 of additional transitional tax as certain of our international net operating losses were subjected to federal limitation rules.  In addition, during the nine months ended September 30, 2018, certain of our international locations incurred operating losses for which no tax benefit was recorded.  As a result, this additional transition tax and our position on foreign losses unfavorably impacted the effective tax rate compared to the prior year.

13

Capital Resources, Liquidity and Financial Condition

We require cash principally for day-to-day operations, to purchase inventory, to finance capital investments, and to service our outstanding debt.  We expect to fund our operating and liquidity needs as well as our store growth from a combination of current cash balances and internally generated funds.  Our cash balances at September 30, 2018 totaled $16.8 million.  In addition, we have available a $6 million line of credit, more fully described below.

In August 2015, our Board authorized a share repurchase program where we may repurchase up to 1.2 million shares of our common stock at prevailing market rates through August 2016.  Subsequently, the program was amended to increase the number of shares available for repurchase to 2.2 million and to extend the program through August 2019.  For the nine months ended September 30, 2018, 133,303 shares were repurchased, while no shares were repurchased during the first nine months of 2017.   At September 30, 2018, there are 1,017,491 shares available for repurchase under the plan.

On September 18, 2015, we executed a Promissory Note and Business Loan Agreement with BOKF, NA d/b/a Bank of Texas ("BOKF") which provided us with a line of credit facility of up to $10,000,000 for the purpose of repurchasing shares of our common stock pursuant to our stock repurchase program.  Subsequently, this line of credit was amended to increase the availability from $10,000,000 to $15,000,000 for the repurchase of shares of our common stock through the earlier of August 25, 2019 or the date on which the entire amount is drawn.     In addition, this promissory note was amended on August 20, 2018 to reduce the interest rate by 0.35%.  During the draw down period, we are required to make monthly interest-only payments. At the end of this draw down period, we expect that the principal balance will be rolled into a 4-year term note. This Promissory Note is secured by a Deed of Trust on the real estate located at 1900 SE Loop 820, Fort Worth, Texas.   During the nine months ended September 30, 2018, we drew approximately $983,000 on this line which was used to purchase shares of our common stock.  There were no amounts drawn on this line during the nine months ended September 30, 2017.  At September 30, 2018, the unused portion of the line of credit was approximately $6.6 million.

Also, on September 18, 2015, we executed a Promissory Note and Business Loan Agreement with BOKF which provides us with a line of credit facility of up to $6,000,000 and is secured by our inventory.   On August 20, 2018, this line of credit was amended to extend the maturity to September 18, 2020 and the reduce the interest rate by 0.35%.  The Business Loan Agreement contains covenants that require us to maintain a funded debt to EBITDA ratio of no greater than 1.5 to 1 and a "Fixed Charge Coverage Ratio" greater than or equal to 1.2 to 1.  Both ratios are calculated quarterly on a trailing four quarter basis.  For the nine months ended September 30, 2018 and 2017, there were no amounts drawn on this line.

Prior to August 20, 2018, amounts drawn under either Promissory Note accrue interest at the London interbank Eurodollar market rate for U.S. dollars (commonly known as "LIBOR") plus 1.85%.  Beginning after August 20, 2018, the notes accrue interest at LIBOR plus 1.5% (---3.7% at September 30, 2018).

The terms of our lines of credit contain various covenants with which we were in compliance as of September 30, 2018 and December 31, 2017.

On our consolidated balance sheet, total assets increased from $74.9 million at year-end 2017 to $76.7 million at September 30, 2018.  Total stockholders' equity increased from $59.5 million at December 31, 2017 to $60.9 million at September 30, 2018, primarily due to net income earned in the first nine months of 2018, offset by treasury stock purchases.  Our current ratio increased from 8.3 at December 31, 2017 to 9.8 at September 30, 2018, due primarily to the decrease in our current maturities of debt resulting from the August 20, 2018 amendment which extended our debt maturities.

As of September 30, 2018, our investment in inventory increased by $3.4 million from year-end 2017, as we stocked up following the holiday sales and invested in new stores and products.  We expect that our inventory levels will continue to increase as we introduce new products.  At September 30, 2018, average inventory per store was $190,000 compared to $179,000 at December 31, 2017.

During the first nine months of 2018, cash flow used in operating activities was $0.6 million, composed of net income of $2.6 million, plus $1.3 million of depreciation and amortization, offset by changes in working capital including an increase in inventory levels.

By comparison, during the first nine months of 2017, cash flow used in operating activities was approximately $3.3 million, composed of net income of $2.8 million, plus $1.5 million of depreciation and amortization, offset by an increase in inventory of $8.0 million.

Cash flow used in investing activities totaled approximately $0.9 million and $1.5 million in the first nine months of 2018 and 2017, respectively, consisting primarily of the purchase of fixtures for new stores, store moves and remodels and computer equipment, and in 2017, vehicles and computer equipment for our new district managers.

During the first nine months of 2018, we funded approximately $1.0 million of treasury share purchases with proceeds from our line of credit.  In the comparable period in 2017, we received proceeds of $0.2 million from the exercise of stock options.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.

For disclosures about market risk affecting us, see Item 7A "Quantitative and Qualitative Disclosures About Market Risk" in our Annual Report on Form 10-K for fiscal year ended December 31, 2017.  We believe that our exposure to market risks has not changed significantly since December 31, 2017.  We expect that our exposure to foreign currency exchange risk may increase as our international presence increases.

Item 4.  Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management team, under the supervision and with the participation of our principal executive officer and our principal financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of the last day of the fiscal period covered by this report, September 30, 2018. The term disclosure controls and procedures means our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, our principal executive officer and our principal financial officer concluded that, as of September 30, 2018, our disclosure controls and procedures were effective at a reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the fiscal quarter ended September 30, 2018 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

14

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings.

The information contained in Note 6 to the consolidated financial statements included in Item 1 of this Report is hereby incorporated into this Item 1 by reference.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

The following table provides information about purchases we have made of our common stock during the quarter ended September 30, 2018:

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 Number of Shares that May Yet Be Purchased Under the Plans or Programs (1)
July 1- July 31		7	$	7.50		7		1,017,491
August 1 – August 31		-	$	-		-		1,017,491
September 1 – September 30		-	$	-		-		1,017,498
Total		7	$	7.50		7		1,017,491

(1) Represents shares which may be purchased through our stock repurchase program, announced on August 10, 2015, permitting us to repurchase up to 1.2 million shares of our common stock at prevailing market prices.  This program has been amended to increase the number of available shares from 1.2 million to 2.2 million and to extend the termination date to August 9, 2019.  Purchases under the program commenced on August 24, 2015 and will terminate on August 9, 2019.

Item 6. Exhibits.

Exhibit Number	Description
3.1	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 Form 10-Q filed with the Securities and Exchange Commission on August 12, 2005 and incorporated by reference herein.
3.2	Bylaws of The Leather Factory, Inc. (n/k/a Tandy Leather Factory, Inc.), filed as Exhibit 3.5 to the Current Report on Form 8-K filed by Tandy Leather Factory, Inc (f/k/a The Leather Factory, Inc.) with the Securities and Exchange Commission on July 14, 2004 and incorporated by reference herein.
3.3	Certificate of Designations of Series A Junior Participating Preferred Stock of Tandy Leather Factory, Inc. filed as Exhibit 3.1 to Tandy Leather Factory's Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 10, 2013 and incorporated by reference herein.
10.1	$6,000,000 Promissory Note, dated August 20, 2018, by and between Tandy Leather Factory, Inc. and BOKF, NA dba Bank of Texas, filed as Exhibit 10.1 to Tandy Leather Factory's Current Report on Form 8-K filed with the Securities and Exchange Commission on August 21, 2018 and incorporated by reference herein.
10.2	$15,000,000 Promissory Note, dated August 20, 2018, by and between Tandy Leather Factory, Inc. and BOKF, NA dba Bank of Texas, filed as Exhibit 10.2 to Tandy Leather Factory's Current Report on Form 8-K filed with the Securities and Exchange Commission on August 21, 2018 and incorporated by reference herein.
10.3	Employment Agreement, dated October 2, 2018, by and between Tandy Leather Factory, Inc. and Janet Carr, filed as Exhibit 10.1 to Tandy Leather Factory's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2018 and incorporated by reference herein.
10.4	Stand Alone Restricted Stock Unit Agreement, dated October 2, 2018, by and between Tandy Leather Factory, Inc. and Janet Carr, filed as Exhibit 10.2 to Tandy Leather Factory's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2018 and incorporated by reference herein.
10.5	Stand Alone Restricted Stock Unit Agreement, dated October 2, 2018, by and between Tandy Leather Factory, Inc. and Janet Carr, filed as Exhibit 10.3 to Tandy Leather Factory's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2018 and incorporated by reference herein.
*31.1	13a-14(a) or 15d-14(a) Certification by Janet Carr, Chief Executive Officer.
*31.2	13a-14(a) or 15d-14(a) Certification by Tina Castillo, Chief Financial Officer and Treasurer.
*32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*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.
____________
*Filed herewith.

15

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	TANDY LEATHER FACTORY, INC.
	(Registrant)
Date:  November 8, 2018	By:  /s/ Janet Carr
	Janet Carr
	Chief Executive Officer
Date:  November 8, 2018	By:  /s/ Tina Castillo
	Tina Castillo
	Chief Financial Officer

16

EXHIBIT INDEX

Exhibit Number	Description
3.1	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 Form 10-Q filed with the Securities and Exchange Commission on August 12, 2005 and incorporated by reference herein.
3.2	Bylaws of The Leather Factory, Inc. (n/k/a Tandy Leather Factory, Inc.), filed as Exhibit 3.5 to the Current Report on Form 8-K filed by Tandy Leather Factory, Inc (f/k/a The Leather Factory, Inc.) with the Securities and Exchange Commission on July 14, 2004 and incorporated by reference herein.
3.3	Certificate of Designations of Series A Junior Participating Preferred Stock of Tandy Leather Factory, Inc. filed as Exhibit 3.1 to Tandy Leather Factory's Inc.'s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 10, 2013 and incorporated by reference herein.
10.1	$6,000,000 Promissory Note, dated August 20, 2018, by and between Tandy Leather Factory, Inc. and BOKF, NA dba Bank of Texas, filed as Exhibit 10.1 to Tandy Leather Factory's Current Report on Form 8-K filed with the Securities and Exchange Commission on August 21, 2018 and incorporated by reference herein.
10.2	$15,000,000 Promissory Note, dated August 20, 2018, by and between Tandy Leather Factory, Inc. and BOKF, NA dba Bank of Texas, filed as Exhibit 10.2 to Tandy Leather Factory's Current Report on Form 8-K filed with the Securities and Exchange Commission on August 21, 2018 and incorporated by reference herein.
10.3	Employment Agreement, dated October 2, 2018, by and between Tandy Leather Factory, Inc. and Janet Carr, filed as Exhibit 10.1 to Tandy Leather Factory's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2018 and incorporated by reference herein.
10.4	Stand Alone Restricted Stock Unit Agreement, dated October 2, 2018, by and between Tandy Leather Factory, Inc. and Janet Carr, filed as Exhibit 10.2 to Tandy Leather Factory's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2018 and incorporated by reference herein.
10.5	Stand Alone Restricted Stock Unit Agreement, dated October 2, 2018, by and between Tandy Leather Factory, Inc. and Janet Carr, filed as Exhibit 10.3 to Tandy Leather Factory's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 5, 2018 and incorporated by reference herein.
*31.1	13a-14(a) or 15d-14(a) Certification by Janet Carr, Chief Executive Officer.
*31.2	13a-14(a) or 15d-14(a) Certification by Tina Castillo, Chief Financial Officer and Treasurer.
*32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*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.
____________
*Filed herewith.

17

EX-31.1

EXHIBIT 31.1

RULE 13a-14(a) CERTIFICATION

I, Janet Carr, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Tandy Leather Factory, Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's first fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.  The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

Date:  November 8, 2018
	/s/ Janet Carr
	Janet Carr
	Chief Executive Officer
	(principal executive officer)

EX-31.2

EXHIBIT 31.2

RULE 13a-14(a) CERTIFICATION

I, Tina Castillo, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of Tandy Leather Factory, Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's first fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.  The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting.

Date:  November 8, 2018
	/s/ Tina Castillo
	Tina Castillo
	Treasurer and Chief Financial Officer
	(principal financial officer)

EX-32.1

EXHIBIT 32.1

Certification Pursuant to 18 U.S.C. Section 1350,

as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Tandy Leather Factory, Inc. (the "Company") for the quarter ended September 30, 2018 as filed with the United States Securities and Exchange Commission on the date hereof (the "Report"), Janet Carr, as Chief Executive Officer of the Company, and Tina Castillo, as Treasurer and Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

i. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

ii. The information contained in the Report fully presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

November 8, 2018	By: /s/ Janet Carr
	Janet Carr
	Chief Executive Officer

By: /s/ Tina Castillo

Tina Castillo

Chief Financial Officer and Treasurer

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Nov. 07, 2018
Document Information [Line Items]
Entity Registrant Name	TANDY LEATHER FACTORY INC
Entity Central Index Key	0000909724
Trading Symbol	tlf
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Common Stock, Shares Outstanding (in shares)		9,154,208
Document Type	10-Q
Document Period End Date	Sep. 30, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
CURRENT ASSETS:
Cash	$ 16,814,972	$ 18,337,258
Accounts receivable-trade, net of allowance for doubtful accounts of $9,839 and $22,642 in 2018 and 2017, respectively	418,612	461,212
Inventory	40,720,630	37,311,197
Prepaid income taxes	452,389	41,307
Prepaid expenses	1,348,113	1,473,147
Other current assets	290,028	189,029
Total current assets	60,044,744	57,813,150
PROPERTY AND EQUIPMENT, at cost	27,950,353	27,218,481
Less accumulated depreciation and amortization	(12,976,025)	(11,750,639)
Property and equipment, net	14,974,328	15,467,842
DEFERRED INCOME TAXES	281,721	271,738
GOODWILL	960,304	962,949
OTHER INTANGIBLES, net of accumulated amortization of approximately $712,000 and $710,000 in 2018 and 2017, respectively	17,166	19,222
OTHER ASSETS	387,487	379,695
TOTAL ASSETS	76,665,750	74,914,596
CURRENT LIABILITIES:
Accounts payable-trade	1,441,975	1,413,450
Accrued expenses and other liabilities	4,512,211	4,953,477
Current maturities of long-term debt	174,056	614,311
Total current liabilities	6,128,242	6,981,238
DEFERRED INCOME TAXES	1,467,481	1,636,958
LONG-TERM DEBT, net of current maturities	8,180,613	6,757,419
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.10 par value; 20,000,000 shares authorized; none issued or outstanding; attributes to be determined on issuance
Common stock, $0.0024 par value; 25,000,000 shares authorized; 11,330,340 and 11,313,692 shares issued at 2018 and 2017, respectively; 9,154,208 and 9,270,862 shares outstanding at 2018 and 2017, respectively	27,193	27,153
Paid-in capital	6,907,678	6,831,271
Retained earnings	66,345,110	63,921,244
Treasury stock at cost (2,176,132 and 2,042,830 shares at 2018 and 2017, respectively)	(11,273,822)	(10,278,584)
Accumulated other comprehensive income (loss)	(1,116,745)	(962,103)
Total stockholders’ equity	60,889,414	59,538,981
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 76,665,750	$ 74,914,596

XML

Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Accounts receivable-trade, allowance for doubtful accounts	$ 9,839	$ 22,642
Other intangibles, accumulated amortization	$ 712,519	$ 710,463
Preferred stock, par value (in dollars per share)	$ 0.10	$ 0.10
Preferred stock, shares authorized (in shares)	20,000,000	20,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.0024	$ 0.0024
Common stock, shares authorized (in shares)	25,000,000	25,000,000
Common stock, shares issued (in shares)	11,330,340	11,313,692
Common stock, shares outstanding (in shares)	9,154,208	9,270,862
Treasury stock, shares (in shares)	2,176,132	2,042,830

XML

Consolidated Statements of Comprehensive (Loss) Income (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
NET SALES	$ 18,887,099	$ 18,388,381	$ 58,353,784	$ 57,818,996
COST OF SALES	7,040,266	6,753,050	20,545,547	21,002,086
Gross profit	11,846,833	11,635,331	37,808,237	36,816,910
OPERATING EXPENSES	11,531,389	10,985,056	33,742,351	32,773,707
INCOME FROM OPERATIONS	315,444	650,275	4,065,886	4,043,203
OTHER INCOME (EXPENSE):
Interest expense	(80,710)	(53,141)	(223,534)	(143,165)
Other, net	40,846	95,936	126,459	115,599
Total other income (expense)	(39,864)	42,795	(97,075)	(27,566)
INCOME BEFORE INCOME TAXES	275,580	693,070	3,968,811	4,015,637
PROVISION FOR INCOME TAXES	397,114	171,656	1,376,634	1,235,226
NET (LOSS) INCOME	(121,534)	521,414	2,592,177	2,780,411
Foreign currency translation adjustments	118,165	370,240	(154,642)	1,028,599
COMPREHENSIVE (LOSS) INCOME	$ (3,369)	$ 891,654	$ 2,437,535	$ 3,809,010
NET (LOSS) INCOME PER COMMON SHARE:
Basic (in dollars per share)	$ (0.01)	$ 0.06	$ 0.28	$ 0.30
Diluted (in dollars per share)	$ (0.01)	$ 0.06	$ 0.28	$ 0.30
Weighted Average Number of Shares Outstanding:
Basic (in shares)	9,154,209	9,270,862	9,199,173	9,232,397
Diluted (in shares)	9,155,031	9,273,950	9,199,959	9,246,066

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 2,592,177	$ 2,780,411
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	1,310,774	1,466,534
Loss on disposal or abandonment of assets	4,556	10,484
Non-cash stock-based compensation	76,447	205,380
Deferred income taxes	(115,460)	(214,092)
Foreign currency translation	(93,163)	961,860
Net changes in assets and liabilities:
Accounts receivable-trade	42,600	31,606
Inventory	(3,409,433)	(7,970,520)
Prepaid expenses	125,034	(43,507)
Other current assets	(111,688)	(212,527)
Accounts payable-trade	28,525	947,132
Accrued expenses and other liabilities	(609,577)	(1,323,785)
Income taxes payable	(475,082)	16,816
Total adjustments	(3,226,467)	(6,124,619)
Net cash used in operating activities	(634,290)	(3,344,208)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(887,679)	(1,530,547)
Proceeds from sale of assets	17,718	699
Increase in other assets	(5,736)	(32,268)
Net cash used in investing activities	(875,697)	(1,562,116)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable and long term debt	982,939
Repurchase of common stock (treasury stock)	(995,238)
Proceeds from exercise of stock options		223,404
Net cash (used in) provided by financing activities	(12,299)	223,404
NET DECREASE IN CASH	(1,522,286)	(4,682,920)
CASH, beginning of period	18,337,258	16,862,304
CASH, end of period	16,814,972	12,179,384
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid during the period	223,534	143,165
Income tax paid during the period, net of refunds	$ 1,967,176	$ 1,218,410

XML

Consolidated Statements of Stockholders' Equity (Unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Treasury Stock [Member]	Retained Earnings [Member]	AOCI Attributable to Parent [Member]	Total
Balance (in shares) at Dec. 31, 2016	9,193,162
Balance at Dec. 31, 2016	$ 26,966	$ 6,368,455	$ (10,278,584)	$ 59,469,493	$ (1,893,129)	$ 53,693,201
Exercise of stock options (in shares)	44,400
Exercise of stock options	$ 107	223,297				223,404
Stock-based compensation (in shares)	33,300
Stock-based compensation	$ 80	205,300				205,380
Net income				2,780,411		2,780,411
Translation adjustment					1,028,599	1,028,599
Balance (in shares) at Sep. 30, 2017	9,270,862
Balance at Sep. 30, 2017	$ 27,153	6,797,052	(10,278,584)	62,249,904	(864,530)	57,930,995
Balance (in shares) at Dec. 31, 2017	9,270,862
Balance at Dec. 31, 2017	$ 27,153	6,831,271	(10,278,584)	63,921,244	(962,103)	59,538,981
Stock-based compensation (in shares)	16,648
Stock-based compensation	$ 40	76,407				76,447
Net income				2,592,177		2,592,177
Translation adjustment					(154,642)	(154,642)
Cumulative effect of accounting change (see Note 1) at Dec. 31, 2017				(168,311)		(168,311)
Purchase of treasury stock (in shares)	(133,302)
Purchase of treasury stock			(995,238)			(995,238)
Balance (in shares) at Sep. 30, 2018	9,154,208
Balance at Sep. 30, 2018	$ 27,193	$ 6,907,678	$ (11,273,822)	$ 66,345,110	$ (1,116,745)	$ 60,889,414

XML

Note 1 - Basis of Presentation and Certain Significant Accounting Policies

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Basis of Presentation and Significant Accounting Policies [Text Block]

1. BASIS OF PRESENTATION AND CERTAIN SIGNIFICANT ACCOUNTING POLICIES

Tandy Leather Factory, Inc. (we, us, our, Tandy, or the Company) is a specialty retailer of leather and leathercraft related items, offering a broad range of leather, quality tools, hardware, accessories, liquids, lace, kits and teaching materials. We sell our products through company-owned stores and through orders generated from our website, www.tandyleather.com. We also manufacture the leather lace and some of our do-it-yourself kits that are sold in our stores and website.

In the opinion of management, the accompanying consolidated financial statements for Tandy Leather Factory, Inc. and its consolidated subsidiaries contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly its financial position as of

September 30, 2018

and

December 31, 2017,

and its results of operations and cash flows for the

three

and

nine

-month periods ended

September 30, 2018

and

2017.

Operating results for the

three

and

nine

-month periods ended

September 30, 2018

are

not

necessarily indicative of the results that

may

be expected for the year ending

December 31, 2018.

These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form

10

-K for the year ended

December 31, 2017.

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Inventory

.

Inventory is valued at the lower of cost or net realizable value. In addition, the value of inventory is periodically reduced to net realizable value for slow-moving or obsolete inventory based on management's review of items on hand compared to their estimated future demand. Based on negotiations with vendors, title generally passes to us when merchandise is put on board. Merchandise to which we have title but have

not

yet received is recorded as inventory in transit.

	September 30, 201 8		December 31, 201 7
Inventory on hand:
Finished goods held for sale	$	37,526,245	$	34,824,728
Raw materials and work in process		917,966		1,138,316
Inventory in transit		2,276,419		1,348,153
Total	$	40,720,630	$	37,311,197

Goodwill and Other Intangibles

. Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a business combination. Goodwill is required to be evaluated for impairment on an annual basis, absent indicators of impairment during the interim. Application of the goodwill impairment test requires exercise of judgment, including the estimation of future cash flows, determination of appropriate discount rates and other important assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment for each reporting unit. During the

first

nine

months of

2018,

no

indicators of impairment were identified. Further, the only change in our goodwill for the

nine

-month periods ended

September 30, 2018

and

2017

resulted from foreign currency translation of

$2,645

and

$7,651,

respectively.

Other intangibles consist of the following:

	September 30, 201 8						December 31, 201 7
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Trademarks, Copyrights	$	554,369	$	546,536	$	7,833	$	554,369	$	545,897	$	8,472
Non-Compete Agreements		175,316		165,983		9,333		175,316		164,566		10,750
	$	729,685	$	712,519	$	17,166	$	729,685	$	710,463	$	19,222

We recorded amortization expense of approximately

$2,100

during the

nine

months ended

September 30, 2018

compared to approximately

$1,300

during the

nine

months ended

September 30, 2017. 

All of our intangible assets, other than goodwill, are subject to amortization under U.S. GAAP.  Based on the current amount of intangible assets subject to amortization, the estimated amortization expense for each of the succeeding

5

years is estimated to be less than

$2,500

per year.

Revenue Recognition

.

Our sales generally occur via

two

methods: (

1

) at the counter in our stores, and (

2

) shipment by common carrier. Sales at the counter are recorded and title passes as transactions occur. Otherwise, sales are recorded and title passes when the merchandise is shipped to the customer. Shipping terms are normally FOB shipping point. Sales tax and comparable foreign tax are excluded from revenue.

We offer an unconditional satisfaction guarantee to our customers and accept all product returns. Net sales represent gross sales less negotiated price allowances, product returns, and allowances for defective merchandise.  

Historically, the sale of gift cards has

not

been material to our financial condition, results of operations or cash flows.  As such, prior to

January 1, 2018,

gift cards were recognized as sales in the period the gift card was sold.  Effective

January 1, 2018,

in conjunction with the adoption of Accounting Standards Codification

606,

"Revenue from Contracts with Customers" ("ASC

606"

), we began recording a gift card liability on the date we issue a gift card to a customer, of which

$168,311

was recognized on

January 1, 2018

as the cumulative effect of an accounting change .  We record revenue and reduce the gift card liability as the customer redeems the gift card.  In addition, for gift card breakage, we recognize a proportionate amount for the expected unredeemed gift cards over the expected customer redemption period which is

one

year.  At

September 30, 2018,

our gift card liability, included in accrued expenses and other liabilities, totaled

$163,285.

Disaggregated Revenue

. 

In the following table, revenue is disaggregated by our major customer groups for the

three

and

nine

-months ended

September 30:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
RETAIL (end users, consumers, individuals)		59	%		57	%		60	%		57	%
NON-RETAIL (hospitals, organizations, distributors, businesses)		41	%		43	%		40	%		43	%
		100	%		100	%		100	%		100	%

For the

nine

months ended

September 30, 2018,

North America represents approximately

95%

of total sales, while International represents approximately

5%

of total sales.  As such, we believe that revenue by customer group more closely aligns with North America than International.  Note

7

also contains additional disaggregated revenue information by segment and geographic area.

Comprehensive Income (

loss

).

Comprehensive income includes net income and certain other items that are recorded directly to Stockholders’ Equity. Our only source of other comprehensive income is foreign currency translation adjustments.

Recent Accounting Pronouncements.

 ASC

606

requires revenue to be recognized based on the amount an entity is expected to be entitled to for promised goods or services provided to customers. ASC

606

also requires expanded disclosures regarding contracts with customers.  We adopted this standard effective

January 1, 2018

using the modified retrospective basis which allows an adjustment to equity as of

January 1, 2018

for all existing contracts and intend to apply the new standard to all new contracts that begin in

2018.

  Given the nature of our business and that our sales generally occur at the counter or by shipment through common carrier at observable transaction prices with little, if any, variable consideration factors, there were

no

significant changes to the amount and timing of revenue recognition, except for our accounting for gift cards which has been discussed above.  While we offer an unconditional right of return to our customers, this has historically been immaterial to our financial condition, results of operations and cash flows (annual gross product returns have historically represented less than

0.5%

of our net sales).   In conjunction with our adoption of ASC

606

on

January 1, 2018,

as it relates to our gift card liability, we recorded a net decrease to opening retained earnings of

$168,311

for gift cards where satisfaction of our performance obligation had

not

yet been completed.

In

February 2016,

the Financial Accounting Standards Board (“FASB”) issued ASU

2016

-

02,

“Leases”, a comprehensive new standard that amends various aspects of existing accounting guidance for leases, including the recognition of a right of use asset and a lease liability for leases with a duration greater than

one

year. The guidance is effective for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. Early adoption is permitted. We have

not

completed our review of the new guidance; however, we anticipate that upon adoption of the standard, using a modified retrospective approach, we will recognize additional assets and corresponding liabilities related to leases on our balance sheet.

XML

Note 2 - Notes Payable and Long-term Debt

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Debt Disclosure [Text Block]

2. N OTES PAYABLE AND LONG-TERM DEBT

On

September 18, 2015,

we executed a Promissory Note and Business Loan Agreement with BOKF, NA d/b/a Bank of Texas (“BOKF”), which provides us with a line of credit facility of up to

$6,000,000

and is secured by our inventory. On

August 20, 2018,

this line of credit was amended to extend the maturity to

September 18, 2020

and to reduce the interest rate by

0.35%.

The Business Loan Agreement contains covenants that requires us to maintain a funded debt to EBITDA ratio of

no

greater than

1.5

to

1

and a “Fixed Charge Coverage Ratio” greater than or equal to

1.2

to

1.

Both ratios are calculated quarterly and are based on a trailing

four

quarter basis.  For the

nine

-month periods ended

September 30, 2018

and

2017,

there were

no

amounts drawn on this line.

Also, on

September 18, 2015,

we executed a Promissory Note and Business Loan Agreement with BOKF which provides us with a line of credit facility of up to

$10,000,000

for the purpose of repurchasing shares of our common stock pursuant to our stock repurchase program, announced in

August 2015

and subsequently amended, which permits us to repurchase up to

2.2

million shares of our common stock at prevailing market prices through

August 2019.

Subsequently, this line of credit was amended to increase the availability from

$10,000,000

to

$15,000,000

for the repurchase of shares of our common stock through the earlier of

August 25, 2019

or the date on which the entire amount is drawn and amended to reduce the interest rate. In addition, this promissory note was amended on

August 20, 2018

to reduce the interest rate by

0.35%.

During the draw down period, we are required to make monthly interest-only payments. At the end of this draw down period, we expect that the principal balance will be rolled into a

4

-year term note. This Promissory Note is secured by a Deed of Trust on the real estate located at

1900

SE Loop

820,

Fort Worth, Texas. For the

nine

months ended

September 30, 2018,

we drew approximately

$983,000

on this line which was used to purchase

133,302

shares of our common stock. There were

no

amounts drawn on this line during the

nine

-months ended

September 30, 2017.

At

September 30, 2018,

the unused portion of the line of credit was approximately

$6.6

million.

Prior to

August 20, 2018,

amounts drawn under either Promissory Note accrue interest at the London interbank Eurodollar market rate for U.S. dollars (commonly known as “LIBOR”) plus

1.85%.

  Beginning after

August 20, 2018,

the notes accrue interest at LIBOR plus

1.5%

(

3.7%

at

September 30, 2018).

Amount outstanding under the above agreements consisted of the following:

	Sep 30, 201 8		Dec 31, 201 7
Business Loan Agreement with BOKF – collateralized by real estate; payable as follows:
Line of Credit Note, as amended, in the maximum principal amount of $15,000,000, interest due monthly at LIBOR plus 1.5%; matures September 18, 2023	$	8,354,669	$	7,371,730
Line of Credit Note, as amended, in the maximum principal amount of $6,000,000, interest due monthly at LIBOR plus 1.5%; matures September 18, 2020		-		-
	$	8,354,669	$	7,371,730
Less current maturities		174,056		614,311
	$	8,180,613	$	6,757,419

The terms of our lines of credit contain various covenants with which we were in compliance as of

September 30, 2018

and

December 31, 2017.

XML

Note 3 - Income Tax

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Income Tax Disclosure [Text Block]

3.

INCOME TAX

Our effective tax rate for the

three

and

nine

-months ended

September 30

is presented below:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Effective tax rate		144.1	%		24.8	%		34.7	%		30.8	%

Our effective tax rate differs from the federal statutory rate primarily due to US state income tax expense, foreign income/loss positions and timing of our deferred tax position, particularly in fixed assets. In addition, to a lesser extent, our effective tax rate is impacted by the new global intangible low-taxed income tax (“GILTI”) for our estimated foreign earnings. GILTI was established as part of the Tax Cuts and Jobs Act (the “Tax Act”), which was enacted on

December 22, 2017.

The Tax Act also reduced the federal statutory rate from

35%

in

2017

to

21%

in

2018.

During the

three

months ended

September 30, 2018,

we completed our accounting for the income tax effects of the Tax Act and recorded approximately

$250,000

of additional transitional tax as certain of our international net operating losses were subjected to federal limitation rules.  In addition, during the quarter ended

September 30, 2018,

certain of our international locations incurred operating losses for which

no

tax benefit was recorded.  As a result, this additional transition tax and our position on foreign losses unfavorably impacted the effective tax rates compared to the prior year periods. 

For the

nine

months ended

September 30, 2018,

we did

not

record any GILTI tax expense or benefit related to our estimated foreign earnings (losses), as our foreign locations are currently in a net loss position.  This GILTI tax was created as part of the Tax Act.  Accordingly, there was

no

such provision during the same period in

2017.

XML

Note 4 - Stock-based Compensation

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

4.

STOCK-BASED COMPENSATI

ON

We have a restricted stock plan that was adopted by our Board of Directors in

January 2013

and approved by our stockholders in

June 2013.

The plan reserves up to

300,000

shares of our common stock for restricted stock awards to our executive officers, non-employee directors and other key employees. Awards granted under the plan

may

be stock awards or performance awards, and

may

be subject to a graded vesting schedule with a minimum vesting period of

four

years, unless otherwise determined by the committee that administers the plan.

The fair value of restricted stock grants is based on the market value of our common stock on the date of grant. Compensation costs for these awards is recognized on a straight-line basis over the

four

-year vesting period.

A summary of the activity for non-vested restricted common stock awards as of

September 30, 2018

and

2017

is presented below:

	Shares			Award Fair Value
Balance, January 1, 2018		36,801		$	8.03
Granted		-			-
Forfeited		-			-
Vested		(16,648	)		8.22
Unvested Balance, September 30, 2018		20,153		$	7.69
Balance, January 1, 2017		62,046		$	8.24
Granted		9,005			8.05
Forfeited		(5,403	)		8.05
Vested		(28,847	)		7.84
Unvested Balance, September 30, 2017		36,801		$	7.93

As of

September 30, 2018,

there was unrecognized compensation cost related to non-vested restricted stock awards of

$97,906

which will be recognized in each of the following years as follows:

2018	$	23,719
2019		58,125
2020		14,853
2021		1,209

XML

Note 5 - Earnings Per Share

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Earnings Per Share [Text Block]

5.

EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share (“EPS”) for the

three

and

nine

months ended

September 30:

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2018			2017		2018		2017
Net (loss) income	$	(121,534	)	$	521,414	$	2,592,177	$	2,780,411
Numerator for basic and diluted earnings per share	$	(121,534	)		521,414		2,592,177		2,780,411
Denominator for basic EPS: weighted-average shares		9,154,209			9,270,862		9,199,173		9,232,397
Effect of dilutive securities:
Stock options		-			-		-		9,810
Restricted stock		822			3,088		786		3,859
Dilutive potential common shares		822			3,088		786		13,669
Denominator for diluted EPS-weighted-average shares		9,155,031			9,273,950		9,199,959		9,246,066
Basic (loss) earnings per share	$	(0.01	)	$	0.06	$	0.28	$	0.30
Diluted (loss) earnings per share	$	(0.01	)	$	0.06	$	0.28	$	0.30

The net effect of assuming the exercise of all potentially dilutive common share equivalents, including stock options to purchase common stock at exercise prices less than the average market prices and restricted stock awards of an aggregate of

20,153

and

36,801

shares of common stock have been included in the computations of diluted EPS for the periods ended

September 30, 2018

and

2017,

respectively.

XML

Note 6 - Commitments and Contingencies

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

6.

COMMITMENTS AND CONTINGENCIES

Legal Proceedings.

We are periodically involved in litigation that arises in the ordinary course of business and operations. There are

no

such matters pending that we expect to have a material impact on our financial position or operating results. Legal costs associated with the resolution of claims, lawsuits and other contingencies are expensed as incurred.

XML

Note 7 - Segment Information

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

7.

SEGMENT INFORMATION

We operate in

two

segments: North America and International. Our reportable operating segments have been determined as separately identifiable business units, and we measure segment earnings as operating earnings, defined as income before interest and income taxes.

	North America			International			Total
For the quarter ended September 30 , 20 1 8
Net sales	$	18,046,045		$	841,054		$	18,887,099
Gross profit		11,383,738			463,095			11,846,833
Operating income (loss)		566,544			(251,100	)		315,444
Interest (expense)		(80,710	)		-			(80,710	)
Other income (expense), net		34,583			6,263			40,846
Income (loss) before income taxes		520,417			(244,837	)		275,580
Depreciation and amortization		407,841			23,948			431,789
Fixed asset additions		437,615			28,202			465,817
Total assets	$	72,009,096		$	4,656,654		$	76,665,750
For the quarter ended September 30 , 20 1 7
Net sales	$	17,421,013		$	967,368		$	18,388,381
Gross profit		11,037,486			597,845			11,635,331
Operating income (loss)		649,797			478			650,275
Interest (expense)		(53,141	)		-			(53,141	)
Other income (expense), net		94,196			1,740			95,936
Income (loss) before income taxes		690,852			2,218			693,070
Depreciation and amortization		513,250			23,876			537,126
Fixed asset additions		523,546			2,095			525,641
Total assets	$	70,083,363		$	4,288,478		$	74,371,841

	North America			International			Total
For the nine months ended September 30 , 20 1 8
Net sales	$	55,640,190		$	2,713,594		$	58,353,784
Gross profit		36,128,829			1,679,408			37,808,237
Operating income (loss)		4,383,393			(317,507	)		4,065,886
Interest (expense)		(223,534	)		-			(223,534	)
Other income (expense), net		108,110			18,349			126,459
Income (loss) before income taxes		4,267,969			(299,158	)		3,968,811
Depreciation and amortization		1,237,093			73,651			1,310,744
Fixed asset additions		780,696			106,983			887,679
Total assets	$	72,009,096		$	4,656,654		$	76,665,750
For the nine months ended September 30 , 20 1 7
Net sales	$	55,080,152		$	2,738,844		$	57,818,996
Gross profit		35,239,645			1,577,265			36,816,910
Operating income (loss)		4,276,247			(233,044	)		4,043,203
Interest (expense)		(143,165	)		-			(143,165	)
Other income (expense), net		127,045			(11,446	)		115,599
Income (loss) before income taxes		4,260,127			(244,490	)		4,015,637
Depreciation and amortization		1,398,319			68,215			1,466,534
Fixed asset additions		1,508,426			22,121			1,530,547
Total assets	$	70,083,363		$	4,288,478		$	74,371,841

Net sales for geographic areas were as follows:

Three months ended September 30,	20 18		20 17
United States	$	16,200,989	$	15,551,725
Canada		1,579,521		1,653,051
All other countries		1,106,589		1,183,605
	$	18,887,099	$	18,388,381

Nine months ended September 30,	201 8		2017
United States	$	49,910,923	$	49,380,463
Canada		4,942,124		5,072,785
All other countries		3,500,737		3,365,748
	$	58,353,784	$	57,818,996

Geographic sales information is based on the location of the customer. 

No

single foreign country, except for Canada, accounted for any material amount of our consolidated net sales for the

three

and

nine

-month periods ended

September 30, 2018

and

2017.

  We do

not

have any significant long-lived assets outside of the United States.

XML

Note 8 - Subsequent Events

9 Months Ended

Sep. 30, 2018

Notes to Financial Statements

Subsequent Events [Text Block]

8.

SUBSEQUENT EVENTS

On

October 2, 2018,

we announced certain leadership changes including the resignations of our former Chief Executive Officer and our former President, both of whom also resigned their positions from the Company’s Board of Directors.  The resignations were

not

the result of any dispute or disagreement with the Company related to our operations, policies or practices.  On that same day, we announced the appointment of Janet Carr, as our new Chief Executive Officer who also became a member of our Board of Directors.  In connection with these leadership changes, we incurred approximately

$304,000

of legal and advisory costs, recorded as operating expenses in the accompanying income statement, during the

three

and

nine

months ended

September 30, 2018. 

In addition,  Ms. Carr received (i) a time-based equity grant of

460,000

restricted stock units (“RSU”) that vest over

five

years; (ii) a performance-based equity grant of

92,000

RSUs that vest if/when the Company’s operating income exceeds

$12

million dollars

two

fiscal years in a row; and (iii) a performance-based equity grant of

92,000

RSUs that vest if/when the Company’s operating income exceeds

$14

million dollars in

one

fiscal year.  We will begin accounting for these RSU’s in the

fourth

quarter of

2018.

XML

Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2018

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Tandy Leather Factory, Inc. (we, us, our, Tandy, or the Company) is a specialty retailer of leather and leathercraft related items, offering a broad range of leather, quality tools, hardware, accessories, liquids, lace, kits and teaching materials. We sell our products through company-owned stores and through orders generated from our website, www.tandyleather.com. We also manufacture the leather lace and some of our do-it-yourself kits that are sold in our stores and website.

In the opinion of management, the accompanying consolidated financial statements for Tandy Leather Factory, Inc. and its consolidated subsidiaries contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly its financial position as of

September 30, 2018

and

December 31, 2017,

and its results of operations and cash flows for the

three

and

nine

-month periods ended

September 30, 2018

and

2017.

Operating results for the

three

and

nine

-month periods ended

September 30, 2018

are

not

necessarily indicative of the results that

may

be expected for the year ending

December 31, 2018.

These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes included in our Annual Report on Form

10

-K for the year ended

December 31, 2017.

The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Inventory, Policy [Policy Text Block]

Inventory

.

Inventory is valued at the lower of cost or net realizable value. In addition, the value of inventory is periodically reduced to net realizable value for slow-moving or obsolete inventory based on management's review of items on hand compared to their estimated future demand. Based on negotiations with vendors, title generally passes to us when merchandise is put on board. Merchandise to which we have title but have

not

yet received is recorded as inventory in transit.

	September 30, 201 8		December 31, 201 7
Inventory on hand:
Finished goods held for sale	$	37,526,245	$	34,824,728
Raw materials and work in process		917,966		1,138,316
Inventory in transit		2,276,419		1,348,153
Total	$	40,720,630	$	37,311,197

Goodwill and Intangible Assets, Policy [Policy Text Block]

Goodwill and Other Intangibles

. Goodwill represents the excess of the purchase price over the fair value of net assets acquired in a business combination. Goodwill is required to be evaluated for impairment on an annual basis, absent indicators of impairment during the interim. Application of the goodwill impairment test requires exercise of judgment, including the estimation of future cash flows, determination of appropriate discount rates and other important assumptions. Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment for each reporting unit. During the

first

nine

months of

2018,

no

indicators of impairment were identified. Further, the only change in our goodwill for the

nine

-month periods ended

September 30, 2018

and

2017

resulted from foreign currency translation of

$2,645

and

$7,651,

respectively.

Other intangibles consist of the following:

	September 30, 201 8						December 31, 201 7
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Trademarks, Copyrights	$	554,369	$	546,536	$	7,833	$	554,369	$	545,897	$	8,472
Non-Compete Agreements		175,316		165,983		9,333		175,316		164,566		10,750
	$	729,685	$	712,519	$	17,166	$	729,685	$	710,463	$	19,222

We recorded amortization expense of approximately

$2,100

during the

nine

months ended

September 30, 2018

compared to approximately

$1,300

during the

nine

months ended

September 30, 2017. 

All of our intangible assets, other than goodwill, are subject to amortization under U.S. GAAP.  Based on the current amount of intangible assets subject to amortization, the estimated amortization expense for each of the succeeding

5

years is estimated to be less than

$2,500

per year.

Revenue Recognition, Policy [Policy Text Block]

Revenue Recognition

.

Our sales generally occur via

two

methods: (

1

) at the counter in our stores, and (

2

) shipment by common carrier. Sales at the counter are recorded and title passes as transactions occur. Otherwise, sales are recorded and title passes when the merchandise is shipped to the customer. Shipping terms are normally FOB shipping point. Sales tax and comparable foreign tax are excluded from revenue.

We offer an unconditional satisfaction guarantee to our customers and accept all product returns. Net sales represent gross sales less negotiated price allowances, product returns, and allowances for defective merchandise.  

Historically, the sale of gift cards has

not

been material to our financial condition, results of operations or cash flows.  As such, prior to

January 1, 2018,

gift cards were recognized as sales in the period the gift card was sold.  Effective

January 1, 2018,

in conjunction with the adoption of Accounting Standards Codification

606,

"Revenue from Contracts with Customers" ("ASC

606"

), we began recording a gift card liability on the date we issue a gift card to a customer, of which

$168,311

was recognized on

January 1, 2018

as the cumulative effect of an accounting change .  We record revenue and reduce the gift card liability as the customer redeems the gift card.  In addition, for gift card breakage, we recognize a proportionate amount for the expected unredeemed gift cards over the expected customer redemption period which is

one

year.  At

September 30, 2018,

our gift card liability, included in accrued expenses and other liabilities, totaled

$163,285.

Disaggregated Revenue

. 

In the following table, revenue is disaggregated by our major customer groups for the

three

and

nine

-months ended

September 30:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
RETAIL (end users, consumers, individuals)		59	%		57	%		60	%		57	%
NON-RETAIL (hospitals, organizations, distributors, businesses)		41	%		43	%		40	%		43	%
		100	%		100	%		100	%		100	%

For the

nine

months ended

September 30, 2018,

North America represents approximately

95%

of total sales, while International represents approximately

5%

of total sales.  As such, we believe that revenue by customer group more closely aligns with North America than International.  Note

7

also contains additional disaggregated revenue information by segment and geographic area.

Comprehensive Income, Policy [Policy Text Block]

Comprehensive Income (

loss

).

Comprehensive income includes net income and certain other items that are recorded directly to Stockholders’ Equity. Our only source of other comprehensive income is foreign currency translation adjustments.

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements.

 ASC

606

requires revenue to be recognized based on the amount an entity is expected to be entitled to for promised goods or services provided to customers. ASC

606

also requires expanded disclosures regarding contracts with customers.  We adopted this standard effective

January 1, 2018

using the modified retrospective basis which allows an adjustment to equity as of

January 1, 2018

for all existing contracts and intend to apply the new standard to all new contracts that begin in

2018.

  Given the nature of our business and that our sales generally occur at the counter or by shipment through common carrier at observable transaction prices with little, if any, variable consideration factors, there were

no

significant changes to the amount and timing of revenue recognition, except for our accounting for gift cards which has been discussed above.  While we offer an unconditional right of return to our customers, this has historically been immaterial to our financial condition, results of operations and cash flows (annual gross product returns have historically represented less than

0.5%

of our net sales).   In conjunction with our adoption of ASC

606

on

January 1, 2018,

as it relates to our gift card liability, we recorded a net decrease to opening retained earnings of

$168,311

for gift cards where satisfaction of our performance obligation had

not

yet been completed.

In

February 2016,

the Financial Accounting Standards Board (“FASB”) issued ASU

2016

-

02,

“Leases”, a comprehensive new standard that amends various aspects of existing accounting guidance for leases, including the recognition of a right of use asset and a lease liability for leases with a duration greater than

one

year. The guidance is effective for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. Early adoption is permitted. We have

not

completed our review of the new guidance; however, we anticipate that upon adoption of the standard, using a modified retrospective approach, we will recognize additional assets and corresponding liabilities related to leases on our balance sheet.

XML

Note 1 - Basis of Presentation and Certain Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2018

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	September 30, 201 8		December 31, 201 7
Inventory on hand:
Finished goods held for sale	$	37,526,245	$	34,824,728
Raw materials and work in process		917,966		1,138,316
Inventory in transit		2,276,419		1,348,153
Total	$	40,720,630	$	37,311,197

Schedule of Finite-Lived Intangible Assets [Table Text Block]

	September 30, 201 8						December 31, 201 7
	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Trademarks, Copyrights	$	554,369	$	546,536	$	7,833	$	554,369	$	545,897	$	8,472
Non-Compete Agreements		175,316		165,983		9,333		175,316		164,566		10,750
	$	729,685	$	712,519	$	17,166	$	729,685	$	710,463	$	19,222

Disaggregation of Revenue [Table Text Block]

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
RETAIL (end users, consumers, individuals)		59	%		57	%		60	%		57	%
NON-RETAIL (hospitals, organizations, distributors, businesses)		41	%		43	%		40	%		43	%
		100	%		100	%		100	%		100	%

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Note 2 - Notes Payable and Long-term Debt (Tables)

9 Months Ended

Sep. 30, 2018

Notes Tables

Schedule of Debt [Table Text Block]

	Sep 30, 201 8		Dec 31, 201 7
Business Loan Agreement with BOKF – collateralized by real estate; payable as follows:
Line of Credit Note, as amended, in the maximum principal amount of $15,000,000, interest due monthly at LIBOR plus 1.5%; matures September 18, 2023	$	8,354,669	$	7,371,730
Line of Credit Note, as amended, in the maximum principal amount of $6,000,000, interest due monthly at LIBOR plus 1.5%; matures September 18, 2020		-		-
	$	8,354,669	$	7,371,730
Less current maturities		174,056		614,311
	$	8,180,613	$	6,757,419

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Note 3 - Income Tax (Tables)

9 Months Ended

Sep. 30, 2018

Notes Tables

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017
Effective tax rate		144.1	%		24.8	%		34.7	%		30.8	%

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Note 4 - Stock-based Compensation (Tables)

9 Months Ended

Sep. 30, 2018

Notes Tables

Schedule of Share-based Compensation, Restricted Stock and Restricted Stock Units Activity [Table Text Block]

	Shares			Award Fair Value
Balance, January 1, 2018		36,801		$	8.03
Granted		-			-
Forfeited		-			-
Vested		(16,648	)		8.22
Unvested Balance, September 30, 2018		20,153		$	7.69
Balance, January 1, 2017		62,046		$	8.24
Granted		9,005			8.05
Forfeited		(5,403	)		8.05
Vested		(28,847	)		7.84
Unvested Balance, September 30, 2017		36,801		$	7.93

Schedule of Unrecognized Compensation Cost, Nonvested Awards [Table Text Block]

2018	$	23,719
2019		58,125
2020		14,853
2021		1,209

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Note 5 - Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2018

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2018			2017		2018		2017
Net (loss) income	$	(121,534	)	$	521,414	$	2,592,177	$	2,780,411
Numerator for basic and diluted earnings per share	$	(121,534	)		521,414		2,592,177		2,780,411
Denominator for basic EPS: weighted-average shares		9,154,209			9,270,862		9,199,173		9,232,397
Effect of dilutive securities:
Stock options		-			-		-		9,810
Restricted stock		822			3,088		786		3,859
Dilutive potential common shares		822			3,088		786		13,669
Denominator for diluted EPS-weighted-average shares		9,155,031			9,273,950		9,199,959		9,246,066
Basic (loss) earnings per share	$	(0.01	)	$	0.06	$	0.28	$	0.30
Diluted (loss) earnings per share	$	(0.01	)	$	0.06	$	0.28	$	0.30

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Note 7 - Segment Information (Tables)

9 Months Ended

Sep. 30, 2018

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	North America			International			Total
For the quarter ended September 30 , 20 1 8
Net sales	$	18,046,045		$	841,054		$	18,887,099
Gross profit		11,383,738			463,095			11,846,833
Operating income (loss)		566,544			(251,100	)		315,444
Interest (expense)		(80,710	)		-			(80,710	)
Other income (expense), net		34,583			6,263			40,846
Income (loss) before income taxes		520,417			(244,837	)		275,580
Depreciation and amortization		407,841			23,948			431,789
Fixed asset additions		437,615			28,202			465,817
Total assets	$	72,009,096		$	4,656,654		$	76,665,750
For the quarter ended September 30 , 20 1 7
Net sales	$	17,421,013		$	967,368		$	18,388,381
Gross profit		11,037,486			597,845			11,635,331
Operating income (loss)		649,797			478			650,275
Interest (expense)		(53,141	)		-			(53,141	)
Other income (expense), net		94,196			1,740			95,936
Income (loss) before income taxes		690,852			2,218			693,070
Depreciation and amortization		513,250			23,876			537,126
Fixed asset additions		523,546			2,095			525,641
Total assets	$	70,083,363		$	4,288,478		$	74,371,841

	North America			International			Total
For the nine months ended September 30 , 20 1 8
Net sales	$	55,640,190		$	2,713,594		$	58,353,784
Gross profit		36,128,829			1,679,408			37,808,237
Operating income (loss)		4,383,393			(317,507	)		4,065,886
Interest (expense)		(223,534	)		-			(223,534	)
Other income (expense), net		108,110			18,349			126,459
Income (loss) before income taxes		4,267,969			(299,158	)		3,968,811
Depreciation and amortization		1,237,093			73,651			1,310,744
Fixed asset additions		780,696			106,983			887,679
Total assets	$	72,009,096		$	4,656,654		$	76,665,750
For the nine months ended September 30 , 20 1 7
Net sales	$	55,080,152		$	2,738,844		$	57,818,996
Gross profit		35,239,645			1,577,265			36,816,910
Operating income (loss)		4,276,247			(233,044	)		4,043,203
Interest (expense)		(143,165	)		-			(143,165	)
Other income (expense), net		127,045			(11,446	)		115,599
Income (loss) before income taxes		4,260,127			(244,490	)		4,015,637
Depreciation and amortization		1,398,319			68,215			1,466,534
Fixed asset additions		1,508,426			22,121			1,530,547
Total assets	$	70,083,363		$	4,288,478		$	74,371,841

Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas [Table Text Block]

Three months ended September 30,	20 18		20 17
United States	$	16,200,989	$	15,551,725
Canada		1,579,521		1,653,051
All other countries		1,106,589		1,183,605
	$	18,887,099	$	18,388,381

Nine months ended September 30,	201 8		2017
United States	$	49,910,923	$	49,380,463
Canada		4,942,124		5,072,785
All other countries		3,500,737		3,365,748
	$	58,353,784	$	57,818,996

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Note 1 - Basis of Presentation and Certain Significant Accounting Policies (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Jan. 01, 2018	Dec. 31, 2017
Goodwill, Impairment Loss			$ 0
Goodwill, Foreign Currency Translation Gain (Loss)			2,645	$ 7,651
Amortization of Intangible Assets, Total			$ 2,100	$ 1,300
Cumulative Effect of New Accounting Principle in Period of Adoption						$ (168,311)
Revenue from Contract with Customer, Including Assessed Tax, Percent	100.00%	100.00%	100.00%	100.00%
Maximum [Member]
Sales Revenue, Annual Gross Product Returns			0.50%
North America Segment [Member]
Revenue from Contract with Customer, Including Assessed Tax, Percent			95.00%
International [Member]
Revenue from Contract with Customer, Including Assessed Tax, Percent			5.00%
Accounts Payable and Accrued Liabilities [Member]
Gift Card Liability, Current					$ 163,285
Retained Earnings [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption						$ (168,311)
Retained Earnings [Member] | Accounting Standards Update 2014-09 [Member]
Cumulative Effect of New Accounting Principle in Period of Adoption					$ (168,311)

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Note 1 - Basis of Presentation and Certain Significant Accounting Policies - Components of Inventory (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Inventory on hand:
Finished goods held for sale	$ 37,526,245	$ 34,824,728
Raw materials and work in process	917,966	1,138,316
Inventory in transit	2,276,419	1,348,153
Total	$ 40,720,630	$ 37,311,197

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Note 1 - Basis of Presentation and Certain Significant Accounting Policies - Intangible Assets (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Other intangibles, gross	$ 729,685	$ 729,685
Accumulated Amortization	712,519	710,463
Other intangibles, net	17,166	19,222
Trademarks and Copyrights [Member]
Other intangibles, gross	554,369	554,369
Accumulated Amortization	546,536	545,897
Other intangibles, net	7,833	8,472
Noncompete Agreements [Member]
Other intangibles, gross	175,316	175,316
Accumulated Amortization	165,983	164,566
Other intangibles, net	$ 9,333	$ 10,750

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Note 1 - Basis of Presentation and Certain Significant Accounting Policies - Disaggregated Revenue (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Revenue, Percent	100.00%	100.00%	100.00%	100.00%
Retail [Member]
Revenue, Percent	59.00%	57.00%	60.00%	57.00%
Non-Retail [Member]
Revenue, Percent	41.00%	43.00%	40.00%	43.00%

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Note 2 - Notes Payable and Long-term Debt (Details Textual)			8 Months Ended	9 Months Ended
	Aug. 20, 2018	Sep. 18, 2015 USD ($) shares	Aug. 20, 2018	Sep. 30, 2018 USD ($) shares	Sep. 30, 2017 USD ($)	Aug. 25, 2016 USD ($)	Aug. 24, 2016 USD ($)
Proceeds from Issuance of Long-term Debt, Total				$ 982,939
Stock Repurchase Program, Number of Shares Authorized to be Repurchased | shares		2,200,000
Promissory Note and Business Loan Agreement with BOKF [Member]
Line of Credit Facility, Maximum Borrowing Capacity		$ 6,000,000
Debt Instrument, Interest Rate, Increase (Decrease)	(0.35%)
Proceeds from Issuance of Long-term Debt, Total				0	0
Promissory Note and Business Loan Agreement with BOKF [Member] | Maximum [Member]
Debt Instrument, Covenants, Debt to EBITDA Ratio		1.5
Promissory Note and Business Loan Agreement with BOKF [Member] | Minimum [Member]
Debt Instrument, Covenants, Fixed Charge Coverage Ratio		1.2
Promissory Note with BOKF [Member]
Line of Credit Facility, Maximum Borrowing Capacity		$ 10,000,000				$ 15,000,000	$ 10,000,000
Debt Instrument, Interest Rate, Increase (Decrease)	(0.35%)
Proceeds from Issuance of Long-term Debt, Total				$ 983,000	$ 0
Line of Credit Facility, Term of the Term Note into which the Principal Balance Will Be Rolled				4 years
Treasury Stock, Shares, Acquired | shares				133,302
Line of Credit Facility, Remaining Borrowing Capacity				$ 6,600,000
Two Promissory Notes with BOKF [Member]
Debt Instrument, Interest Rate, Effective Percentage				3.70%
Two Promissory Notes with BOKF [Member] | London Interbank Offered Rate (LIBOR) [Member]
Debt Instrument, Basis Spread on Variable Rate			1.85%	1.50%

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Note 2 - Notes Payable and Long-term Debt - Summary of Credit Agreement and Line of Credit Note (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Long-term debt	$ 8,354,669	$ 7,371,730
Long-term debt	8,354,669	7,371,730
Less current maturities	174,056	614,311
LONG-TERM DEBT, net of current maturities	8,180,613	6,757,419
Promissory Note with BOKF [Member]
Long-term debt	8,354,669	7,371,730
Long-term debt	8,354,669	7,371,730
Promissory Note and Business Loan Agreement with BOKF [Member]
Long-term debt
Long-term debt

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Note 2 - Notes Payable and Long-term Debt - Summary of Credit Agreement and Line of Credit Note (Details) (Parentheticals) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Promissory Note with BOKF [Member]
Line of credit note, principal amount	$ 15,000,000	$ 15,000,000
Promissory Note with BOKF [Member] | London Interbank Offered Rate (LIBOR) [Member]
Line of credit note, interest rate	1.50%	1.50%
Promissory Note and Business Loan Agreement with BOKF [Member]
Line of credit note, principal amount	$ 6,000,000	$ 6,000,000
Promissory Note and Business Loan Agreement with BOKF [Member] | London Interbank Offered Rate (LIBOR) [Member]
Line of credit note, interest rate	1.50%	1.50%

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Note 3 - Income Tax (Details Textual) - USD ($)	3 Months Ended	9 Months Ended		12 Months Ended
	Sep. 30, 2018	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2018	Dec. 31, 2017
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent					35.00%
Income Tax Expense (Benefit), Continuing Operations, Adjustment of Deferred Tax (Asset) Liability	$ 250,000
Current Foreign Tax Expense (Benefit)		$ 0
Tax Adjustments, Settlements, and Unusual Provisions		$ 0	$ 0
Scenario, Forecast [Member]
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent				21.00%

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Note 3 - Income Tax - Effective Tax Rate (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Effective tax rate	144.10%	24.80%	34.70%	30.80%

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Note 4 - Stock-based Compensation (Details Textual) - Restricted Stock Plan [Member] - Restricted Stock [Member] - USD ($)	9 Months Ended
	Sep. 30, 2018	Jan. 31, 2013
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Share-based Awards Other than Options	$ 97,906
Executive Officers, Non-employee Directors and Other Key Employees [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized		300,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	4 years
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	4 years

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Note 4 - Stock-based Compensation - Activity for Nonvested Restricted Common Stock Awards (Details) - Restricted Stock [Member] - $ / shares	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Balance, shares (in shares)	36,801	62,046
Balance, grant fair value (in dollars per share)	$ 8.03	$ 8.24
Granted, shares (in shares)		9,005
Granted, grant fair value (in dollars per share)		$ 8.05
Forfeited, shares (in shares)		(5,403)
Forfeited, grant fair value (in dollars per share)		$ 8.05
Vested, shares (in shares)	(16,648)	(28,847)
Vested, grant fair value (in dollars per share)	$ 8.22	$ 7.84
Balance, shares (in shares)	20,153	36,801
Balance, grant fair value (in dollars per share)	$ 7.69	$ 7.93

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Note 4 - Stock-based Compensation - Unrecognized Compensation Expense for Nonvested Restricted Stock Awards (Details)	Sep. 30, 2018 USD ($)
2018	$ 23,719
2019	58,125
2020	14,853
2021	$ 1,209

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Note 5 - Earnings Per Share (Details Textual) - shares	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Weighted Average Number Diluted Shares Outstanding Adjustment, Total	20,153	36,801

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Note 5 - Earnings Per Share - Computation of Basic and Diluted Earnings Per Share (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Net (loss) income	$ (121,534)	$ 521,414	$ 2,592,177	$ 2,780,411
Numerator for basic and diluted earnings per share	$ (121,534)	$ 521,414	$ 2,592,177	$ 2,780,411
Denominator for basic EPS: weighted-average shares (in shares)	9,154,209	9,270,862	9,199,173	9,232,397
Effect of dilutive securities:
Effect of dilutive securities (in shares)	822	3,088	786	13,669
Denominator for diluted EPS-weighted-average shares (in shares)	9,155,031	9,273,950	9,199,959	9,246,066
Basic (loss) earnings per share (in dollars per share)	$ (0.01)	$ 0.06	$ 0.28	$ 0.30
Diluted (loss) earnings per share (in dollars per share)	$ (0.01)	$ 0.06	$ 0.28	$ 0.30
Employee Stock Option [Member]
Effect of dilutive securities:
Effect of dilutive securities (in shares)				9,810
Restricted Stock [Member]
Effect of dilutive securities:
Effect of dilutive securities (in shares)	822	3,088	786	3,859

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Note 7 - Segment Information (Details Textual)	9 Months Ended
	Sep. 30, 2018
Number of Reportable Segments	2

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Note 7 - Segment Information - Summary of Reportable Operating Segments (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017	Dec. 31, 2017
Net sales	$ 18,887,099	$ 18,388,381	$ 58,353,784	$ 57,818,996
Gross profit	11,846,833	11,635,331	37,808,237	36,816,910
Operating income (loss)	315,444	650,275	4,065,886	4,043,203
Interest (expense)	(80,710)	(53,141)	(223,534)	(143,165)
Other income (expense), net	40,846	95,936	126,459	115,599
Income (loss) before income taxes	275,580	693,070	3,968,811	4,015,637
Depreciation and amortization	431,789	537,126	1,310,774	1,466,534
Fixed asset additions	465,817	525,641	887,679	1,530,547
Total assets	76,665,750	74,371,841	76,665,750	74,371,841	$ 74,914,596
North America Segment [Member]
Net sales	18,046,045	17,421,013	55,640,190	55,080,152
Gross profit	11,383,738	11,037,486	36,128,829	35,239,645
Operating income (loss)	566,544	649,797	4,383,393	4,276,247
Interest (expense)	(80,710)	(53,141)	(223,534)	(143,165)
Other income (expense), net	34,583	94,196	108,110	127,045
Income (loss) before income taxes	520,417	690,852	4,267,969	4,260,127
Depreciation and amortization	407,841	513,250	1,237,093	1,398,319
Fixed asset additions	437,615	523,546	780,696	1,508,426
Total assets	72,009,096	70,083,363	72,009,096	70,083,363
International [Member]
Net sales	841,054	967,368	2,713,594	2,738,844
Gross profit	463,095	597,845	1,679,408	1,577,265
Operating income (loss)	(251,100)	478	(317,507)	(233,044)
Interest (expense)
Other income (expense), net	6,263	1,740	18,349	(11,446)
Income (loss) before income taxes	(244,837)	2,218	(299,158)	(244,490)
Depreciation and amortization	23,948	23,876	73,651	68,215
Fixed asset additions	28,202	2,095	106,983	22,121
Total assets	$ 4,656,654	$ 4,288,478	$ 4,656,654	$ 4,288,478

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Note 7 - Segment Information - Net Sales for Geographic Areas (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Net sales	$ 18,887,099	$ 18,388,381	$ 58,353,784	$ 57,818,996
UNITED STATES
Net sales	16,200,989	15,551,725	49,910,923	49,380,463
CANADA
Net sales	1,579,521	1,653,051	4,942,124	5,072,785
All Other Countries [Member]
Net sales	$ 1,106,589	$ 1,183,605	$ 3,500,737	$ 3,365,748

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Note 8 - Subsequent Events (Details Textual) - USD ($)		3 Months Ended	9 Months Ended
	Oct. 02, 2018	Sep. 30, 2018	Sep. 30, 2018
Legal Fees		$ 304,000	$ 304,000
Restricted Stock Units (RSUs) [Member] | Janet Carr [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	460,000
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	5 years
Restricted Stock Units (RSUs) [Member] | Janet Carr [Member] | Share-based Compensation Award, Tranche One [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	92,000
Share-based Compensation Arrangement by Share-based Payment Award, Minimum Operating Income	$ 12,000,000
Restricted Stock Units (RSUs) [Member] | Janet Carr [Member] | Share-based Compensation Award, Tranche Two [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	92,000
Share-based Compensation Arrangement by Share-based Payment Award, Minimum Operating Income	$ 14,000,000