| **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 June 30, 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |   |
| or                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |
| **[                    ] Transition report pursuant to section 13 of 15(d) of the Securities                    Exchange Act of 1934**                                                                                                                                                                                                                                                                                                                                                                                              |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
| For                    the transition period from ________ to __________                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
| Commission                    File Number 1-12368                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
| **T****ANDY                    LEATHER FACTORY, INC.**(formerly                    The Leather Factory, Inc.)(Exact                    name of registrant as specified in its charter)                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |
| **Delaware**(State                    or other jurisdiction of incorporation or organization)                                                                                                                                                                                                                                                                                                                                                                                                                                       | **75-2543540**(I.R.S.                    Employer Identification Number) |
|  **3847                    East Loop 820 South, Ft. Worth, Texas 76119**(Address                    of principal executive offices) (Zip Code)                                                                                                                                                                                                                                                                                                                                                                                 |
| **(817)                    496-4414**(Registrant’s                    telephone number, including area code)                                                                                                                                                                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| Indicate                    by check mark whether the registrant (1) has filed all reports                    required to                    by 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 is an accelerated                    filer.                                                                                                                                                                                                                                                                                                                                                                                                                  |
| Yes                    [     ]                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | No                    [ X ] |
|  Indicate                    the number of shares outstanding of each of the issuer’s classes of common                    stock, as of the latest practicable date.                                                                                                                                                                                                                                                                                                                                                     |
| ClassCommon                    Stock, par value $0.0024 per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Shares                    outstanding as of August 10, 200510,670,802 |

----

**TANDY          LEATHER FACTORY, INC.**

**(f/k/a          The Leather Factory, Inc.)**

**TABLE          OF CONTENTS**

|                                                                                                                            | PAGE                    NO. |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------|
|                                                                                                                                                     |                        |
| **PART                    I. FINANCIAL INFORMATION**                                                                                                     |                        |
|                                                                                                                                                     |                        |
| Item                    1. Financial Statements                                                                                                          |                        |
|                                                                                                                                                     |                        |
| Consolidated                    Balance Sheets as of June 30, 2005 and December 31, 2004                                                            | 3                           |
|                                                                                                                                                     |                        |
| Consolidated                    Statements of Income for the three and six months ended June                    30, 2005 and                    2004     | 4                           |
|                                                                                                                                                     |                        |
| Consolidated                    Statements of Cash Flows for the six months ended June 30, 2005                    and                    2004           | 5                           |
|                                                                                                                                                     |                        |
| Consolidated                    Statements of Stockholders' Equity for the six months ended June                    30, 2005                    and 2004 | 6                           |
|                                                                                                                                                     |                        |
| Notes                    to Consolidated Financial Statements                                                                                            | 7                           |
|                                                                                                                                                     |                        |
| Item                    2. Management's Discussion and Analysis of Financial Condition                    and Results                    of Operations   | 10                     |
|                                                                                                                                                     |                        |
| Item                    3. Quantitative and Qualitative Disclosures About Market Risk                                                                    | 15                          |
|                                                                                                                                                     |                        |
| Item                    4. Controls and Procedures                                                                                                       | 15                          |
|                                                                                                                                                     |                        |
| **PART                    II. OTHER INFORMATION**                                                                                                        |                        |
|                                                                                                                                                     |                        |
| Item                    4. Submission of Matters to a Vote of Security Holders                                                                           | 15                          |
| Item                    5. Other Information                                                                                                             | 15                          |
| Item                    6. Exhibits                                                                                                                      | 16                          |
|                                                                                                                                                     |                        |
|                                                                                                                                                     |                        |
| **SIGNATURES**                                                                                                                                           | 17                          |
|                                                                                                                                                     |                        |

----

**TANDY        LEATHER FACTORY, INC.**

**CONSOLIDATED        BALANCE SHEETS**

|                                                                                                                                          | **June                  30,****2005****(unaudited)** |   | **December                  31,****2004****(audited)** |
|-----------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------|--------|--------------------------------------------------------|
| **ASSETS**                                                                                                                                    |                                                 |   |                                                   |
| CURRENT                  ASSETS:                                                                                                              |                                                 |   |                                                   |
| Cash                                                                                                                                          | $2,815,421                                           |   | $2,560,202                                             |
| Accounts                  receivable-trade, net of allowance for doubtful accounts                                                            |                                                 |   |                                                   |
| of                  $143,000 and $85,000 in 2005 and 2004, respectively                                                                       | 2,520,900                                            |   | 2,032,289                                              |
| Inventory                                                                                                                                     | 14,956,985                                           |   | 12,749,709                                             |
| Income                  tax receivable                                                                                                        | 44,440                                               |   | -                                                      |
| Deferred                  income taxes                                                                                                        | 222,564                                              |   | 199,308                                                |
| Other                  current assets                                                                                                         | 946,644                                              |   | 629,723                                                |
| Total                  current assets                                                                                                         | 21,506,954                                           |   | 18,171,231                                             |
|                                                                                                                                          |                                                 |   |                                                   |
| PROPERTY                  AND EQUIPMENT, at cost                                                                                              | 6,237,902                                            |   | 6,005,526                                              |
| Less                  accumulated depreciation and amortization                                                                               | (4,466,254)                                          |   | (4,100,961)                                            |
|                                                                                                                                          | 1,771,648                                            |   | 1,904,565                                              |
|                                                                                                                                          |                                                 |   |                                                   |
| GOODWILL,                  net of accumulated amortization of $767,000 and                                                                    |                                                 |   |                                                   |
| $758,000                  in 2005 and 2004, respectively                                                                                      | 740,712                                              |   | 742,860                                                |
| OTHER                  INTANGIBLES, net of accumulated amortization of                                                                        |                                                 |   |                                                   |
| $195,000                  and $185,000 in 2005 and 2004, respectively                                                                         | 418,113                                              |   | 437,758                                                |
| OTHER                  assets                                                                                                                 | 1,049,474                                            |   | 910,749                                                |
|                                                                                                                                          | **$25,486,901**                                      |   | **$22,167,163**                                        |
|                                                                                                                                          |                                                 |   |                                                   |
| **LIABILITIES                  AND STOCKHOLDERS' EQUITY**                                                                                     |                                                 |   |                                                   |
| CURRENT                  LIABILITIES:                                                                                                         |                                                 |   |                                                   |
| Accounts                  payable-trade                                                                                                       | $                  2,010,616                         |   | $                  1,954,146                           |
| Accrued                  expenses and other liabilities                                                                                       | 3,410,518                                            |   | 1,682,003                                              |
| Income                  taxes payable                                                                                                         | 262,248                                              |   | 22,764                                                 |
| Current                  maturities of capital lease obligations                                                                              | 134,067                                              |   | 134,067                                                |
| Total                  current liabilities                                                                                                    | 5,817,449                                            |   | 3,792,980                                              |
|                                                                                                                                          |                                                 |   |                                                   |
| DEFERRED                  INCOME TAXES                                                                                                        | 227,216                                              |   | 313,006                                                |
|                                                                                                                                          |                                                 |   |                                                   |
| LONG-TERM                  DEBT, net of current maturities                                                                                    | -                                                    |   | 505,154                                                |
| CAPITAL                  LEASE OBLIGATIONS, net of current maturities                                                                         | 178,756                                              |   | 245,790                                                |
| COMMITMENTS                  AND CONTINGENCIES                                                                                                | -                                                    |   | -                                                      |
|                                                                                                                                          |                                                 |   |                                                   |
| STOCKHOLDERS'                  EQUITY:                                                                                                        |                                                 |   |                                                   |
| Preferred                  stock, $0.10 par value; 20,000,000 shares authorized; none issued                  or                  outstanding | -                                                    |   | -                                                      |
| Common                  stock, $0.0024 par value; 25,000,000 shares authorized;                                                               |                                                 |   |                                                   |
| 10,656,661                  and 10,560,661 shares issued at 2005 and 2004,                  respectively;                                     |                                                 |   |                                                   |
| 10,650,802                  and 10,554,711 outstanding at 2005 and 2004, respectively                                                         | 25,576                                               |   | 25,345                                                 |
| Paid-in                  capital                                                                                                              | 4,912,931                                            |   | 4,796,999                                              |
| Retained                  earnings                                                                                                            | 14,295,651                                           |   | 12,458,760                                             |
| Treasury                  stock                                                                                                               | (25,487)                                             |   | (25,487)                                               |
| Accumulated                  other comprehensive income                                                                                       | 54,809                                               |   | 54,616                                                 |
| Total                  stockholders' equity                                                                                                   | 19,263,480                                           |   | 17,310,233                                             |
|                                                                                                                                          | **$25,486,901**                                      |   | **$22,167,163**                                        |

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

----

**TANDY        LEATHER FACTORY, INC.**

**CONSOLIDATED        STATEMENTS OF INCOME**

**(UNAUDITED)**

**THREE        AND SIX MONTHS ENDED JUNE 30, 2005 AND 2004**

|                                          | **THREE                  MONTHS** |   | **SIX                  MONTHS** |
|-----------------------------------------------|-----------------------------------|--------|---------------------------------|
|                                          | **2005**                          |   | **2004**                        |   | **2005** |   | **2004** |
| NET                  SALES                    | $12,181,699                       |   | $10,959,813                     |   | $24,889,215 |   | $23,140,689 |
|                                          |                              |   |                            |   |   |   |   |
| COST                  OF SALES                | 5,281,828                         |   | 4,978,754                       |   | 10,832,061 |   | 10,434,717 |
|                                          |                              |   |                            |   |   |   |   |
| Gross                  profit                 | 6,899,871                         |   | 5,981,059                       |   | 14,057,154 |   | 12,705,972 |
|                                          |                              |   |                            |   |   |   |   |
| OPERATING                  EXPENSES           | 5,578,257                         |   | 5,127,223                       |   | 11,165,993 |   | 10,405,002 |
|                                          |                              |   |                            |   |   |   |   |
| INCOME                  FROM OPERATIONS       | 1,321,614                         |   | 853,836                         |   | 2,891,161 |   | 2,300,970 |
|                                          |                              |   |                            |   |   |   |   |
| OTHER                  INCOME (EXPENSE):      |                              |   |                            |   |   |   |   |
| Interest                  expense             | -                                 |   | (12,471)                        |   | (3,188) |   | (26,109) |
| Other,                  net                   | 39,684                            |   | (25,353)                        |   | 24,219 |   | (27,089) |
| Total                  other income (expense) | 39,684                            |   | (37,824)                        |   | 21,031 |   | (53,198) |
|                                          |                              |   |                            |   |   |   |   |
| INCOME                  BEFORE INCOME TAXES   | 1,361,298                         |   | 816,012                         |   | 2,912,192 |   | 2,247,772 |
|                                          |                              |   |                            |   |   |   |   |
| PROVISION                  FOR INCOME TAXES   | 573,629                           |   | 299,799                         |   | 1,075,301 |   | 760,594 |
|                                          |                              |   |                            |   |   |   |   |
| NET                  INCOME                   | $                  787,669        |   | $                  516,213      |   | $                  1,836,891 |   | $                  1,487,178 |
|                                          |                              |   |                            |   |   |   |   |

| NET                  INCOME PER COMMON SHARE-BASIC                  |  $                  0.07 |   |  $                  0.05 |   |  $                  0.17 |   |  $                  0.14 |
|---------------------------------------------------------------------|-------------------------------|--------|-------------------------------|--------|-------------------------------|--------|-------------------------------|
| NET                  INCOME PER COMMON SHARE-DILUTED                |  $                  0.07 |   |  $                  0.05 |   |  $                  0.17 |   |  $                  0.14 |
|                                                                |                          |   |                          |   |                          |   |                          |
|                                                                |                          |   |                          |   |                          |   |                          |
| **Weighted                  Average Number of Shares Outstanding:** |                          |   |                          |   |                          |   |                          |
| Basic                                                               | 10,615,802                    |   | 10,553,243                    |   | 10,600,156                    |   | 10,530,119                    |
| Diluted                                                             | 10,955,282                    |   | 11,006,638                    |   | 10,933,433                    |   | 11,011,525                    |

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

----

**TANDY        LEATHER FACTORY, INC.**

**CONSOLIDATED        STATEMENTS OF CASH FLOWS**

**(UNAUDITED)**

**SIX        MONTHS ENDED JUNE 30, 2005 AND 2004**

|                                                                                                                | 2005                         |   | 2004                         |
|---------------------------------------------------------------------------------------------------------------------|------------------------------|--------|------------------------------|
| CASH                  FLOWS FROM OPERATING ACTIVITIES:                                                              |                         |   |                         |
| Net                  income                                                                                         | $                  1,836,891 |   | $                  1,487,178 |
| Adjustments                  to reconcile net income to net cash provided by operating                  activities- |                         |   |                         |
| Depreciation                  & amortization                                                                    | 235,677                      |   | 252,701                      |
| Loss                  (gain) on disposal of assets                                                                  | (9,144)                      |   | -                            |
| Deferred                  income taxes                                                                              | (109,046)                    |   | (66,398)                     |
| Other                                                                                                               | 2,341                        |   | (19,240)                     |
| Net                  changes in assets and liabilities:                                                             |                         |   |                         |
| Accounts                  receivable-trade, net                                                                     | (488,611)                    |   | (867,259)                    |
| Inventory                                                                                                           | (2,207,276)                  |   | (1,064,766)                  |
| Income                  taxes                                                                                       | 195,044                      |   | 201,635                      |
| Other                  current assets                                                                               | (316,921)                    |   | (106,548)                    |
| Accounts                  payable                                                                                   | 56,470                       |   | 342,974                      |
| Accrued                  expenses and other liabilities                                                             | 1,728,515                    |   | 102,301                      |
| Total                  adjustments                                                                                  | (912,951)                    |   | (1,224,600)                  |
|                                                                                                                |                         |   |                         |
| Net                  cash provided by operating activities                                                          | 923,940                      |   | 262,578                      |
|                                                                                                                |                         |   |                         |
| CASH                  FLOWS FROM INVESTING ACTIVITIES:                                                              |                         |   |                         |
| Purchase                  of property and equipment                                                                 | (83,115)                     |   | (131,050)                    |
| Payments                  in connection with businesses acquired                                                    | -                            |   | (125,452)                    |
| Proceeds                  from sale of assets                                                                       | 9,144                        |   | -                            |
| Decrease                  (increase) in other assets                                                                | (138,725)                    |   | 12,287                       |
|                                                                                                                |                         |   |                         |
| Net                  cash used in investing activities                                                              | (212,696)                    |   | (244,215)                    |
|                                                                                                                |                         |   |                         |
| CASH                  FLOWS FROM FINANCING ACTIVITIES:                                                              |                         |   |                         |
| Net                  increase (decrease) in revolving credit loans                                                  | (505,154)                    |   | (692,984)                    |
| Payments                  on capital lease obligations                                                              | (67,034)                     |   | (1,134)                      |
| Payments                  received on notes secured by common stock                                                 | -                            |   | 5,000                        |
| Proceeds                  from issuance of common stock                                                             | 116,163                      |   | 124,015                      |
|                                                                                                                |                         |   |                         |
| Net                  cash used in financing activities                                                              | (456,025)                    |   | (565,103)                    |
|                                                                                                                |                         |   |                         |
| NET                  CHANGE IN CASH                                                                                 | 255,219                      |   | (546,740)                    |
|                                                                                                                |                         |   |                         |
| CASH,                  beginning of period                                                                          | 2,560,202                    |   | 1,728,344                    |
|                                                                                                                |                         |   |                         |
| CASH,                  end of period                                                                                | $                  2,815,421 |   | $                  1,181,604 |
|                                                                                                                |                         |   |                         |
| SUPPLEMENTAL                  DISCLOSURES OF CASH FLOW INFORMATION:                                                 |                         |   |                         |
| Interest                  paid during the period                                                                    | $                  3,188     |   | $                  29,639    |
| Income                  taxes paid during the period, net of (refunds)                                              | 972,205                      |   | 577,678                      |

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

----

**TANDY          LEATHER FACTORY, INC.**

**CONSOLIDATED          STATEMENTS OF STOCKHOLDERS' EQUITY**

**(UNAUDITED)**

**FOR          THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004**

|                                                                                              |   **Number                    of Shares** |   |   **Par                    Value** |   |   **Paid-in                    Capital** |   |   **Treasury****Stock** |   |   **Retained                    Earnings** |   | **Notes                    receivable****secured                    by common stock** |   | **Accumulated                    Other Comprehensive Income (Loss)** |   |    **Total** |   |   **Comprehensive****Income                    (Loss)** |
|---------------------------------------------------------------------------------------------------|-----------------------------------------------------|--------|----------------------------------------------|--------|----------------------------------------------------|--------|-----------------------------------|--------|------------------------------------------------------|--------|---------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------|--------|-----------------------------|--------|-------------------------------------------------------------------|
| BALANCE,                    December 31, 2003                                                     | 10,487,961                                          |   | $25,171                                      |   | $4,673,158                                         |   | -                                 |   | $9,804,719                                           |   | $(20,000)                                                                             |   | $26,445                                                              |   | $14,509,493                 |   |                                                              |
|                                                                                              |                                                |   |                                         |   |                                               |   |                              |   |                                                 |   |                                                                                  |   |                                                                 |   |                        |   |                                                              |
| Payments                    on notes receivable secured by common stock                           |  -                                             |   |  -                                      |   |  -                                            |   |  -                           |   |  -                                              |   |  5,000                                                                           |   |  -                                                              |   |  5,000                 |   |                                                              |
| Shares                    issued - stock options exercised                                        |  72,700                                        |   |  174                                    |   |  74,896                                       |   |  -                           |   |  -                                              |   |  -                                                                               |   |  -                                                              |   |  75,070                |   |                                                              |
|  Warrants                    issued to acquire 50,000 shares of common stock                 | -                                                   |   | -                                            |   | 48,945                                             |   | -                                 |   | -                                                    |   | -                                                                                     |   | -                                                                    |   | 48,945                      |   |                                                              |
|  Net                    income                                                               | -                                                   |   | -                                            |   | -                                                  |   | -                                 |   | 1,487,178                                            |   | -                                                                                     |   | -                                                                    |   | 1,487,178                   |   | $1,487,178                                                        |
|  Translation                    adjustment                                                   | -                                                   |   | -                                            |   | -                                                  |   | -                                 |   | -                                                    |   | -                                                                                     |   | (22,085)                                                             |   | (22,085)                    |   | (22,085)                                                          |
| BALANCE,                    June 30, 2004                                                         | 10,560,661                                          |   | $25,345                                      |   | $4,796,999                                         |   | -                                 |   | $11,291,897                                          |   | $(15,000)                                                                             |   | $4,360                                                               |   | $16,103,601                 |   |                                                              |
|                                                                                              |                                                |   |                                         |   |                                               |   |                              |   |                                                 |   |                                                                                  |   |                                                                 |   |                        |   |                                                              |
| Comprehensive                    income for the six months ended June                    30, 2004 |                                                |   |                                         |   |                                               |   |                              |   |                                                 |   |                                                                                  |   |                                                                 |   |                        |   | $1,465,093                                                        |
|                                                                                              |                                                |   |                                         |   |                                               |   |                              |   |                                                 |   |                                                                                  |   |                                                                 |   |                        |   |                                                              |
|                                                                                              |                                                |   |                                         |   |                                               |   |                              |   |                                                 |   |                                                                                  |   |                                                                 |   |                        |   |                                                              |
| BALANCE,                    December 31, 2004                                                     | 10,560,661                                          |   | $25,345                                      |   | $4,796,999                                         |   | $(25,487)                         |   | $12,458,760                                          |   | -                                                                                     |   | $54,616                                                              |   | $17,310,233                 |   |                                                              |
|                                                                                              |                                                |   |                                         |   |                                               |   |                              |   |                                                 |   |                                                                                  |   |                                                                 |   |                        |   |                                                              |
| Shares                    issued - stock options exercised                                        |  96,000                                        |   |  231                                    |   |  115,932                                      |   |  -                           |   |  -                                              |   |  -                                                                               |   |  -                                                              |   |  116,163               |   |                                                              |
|  Net                    income                                                               | -                                                   |   | -                                            |   | -                                                  |   | -                                 |   | 1,836,891                                            |   | -                                                                                     |   | -                                                                    |   | 1,836,891                   |   | $1,836,891                                                        |
|  Translation                    adjustment                                                   | -                                                   |   | -                                            |   | -                                                  |   | -                                 |   | -                                                    |   | -                                                                                     |   | 193                                                                  |   | 193                         |   | 193                                                               |
| BALANCE,                    June 30, 2005                                                         | 10,656,661                                          |   | $25,576                                      |   | $4,912,931                                         |   | $(25,487)                         |   | $14,295,651                                          |   | -                                                                                     |   | $54,809                                                              |   | $19,263,480                 |   |                                                              |
|                                                                                              |                                                |   |                                         |   |                                               |   |                              |   |                                                 |   |                                                                                  |   |                                                                 |   |                        |   |                                                              |
| Comprehensive                    income for the six months ended June                    30, 2005 |                                                |   |                                         |   |                                               |   |                              |   |                                                 |   |                                                                                  |   |                                                                 |   |                        |   | $1,837,084                                                        |

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

----

**TANDY        LEATHER FACTORY, INC.**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS**

**1.        BASIS OF PRESENTATION AND CERTAIN SIGNIFICANT ACCOUNTING        POLICIES**

*Inventory*
*.        *

|                                               | **As                  of**         |
|----------------------------------------------------|------------------------------------|
|                                               | **June                  30, 2005** |   | **December                  31, 2004** |
| Inventory                  on hand:                |                               |   |   |
| Finished                  goods held for sale      | $11,992,205                        |   | $11,571,869 |
| Raw                  materials and work in process | 960,337                            |   | 1,177,840 |
| Inventory                  in transit              | 2,004,443                          |   | - |
|                                               | $14,956,985                        |   | $12,749,709 |

*Goodwill        and Other Intangibles*

|                                    | **As                  of June 30, 2005** |                            | **As                  of December 31, 2004** |
|-----------------------------------------|------------------------------------------|---------------------------------|----------------------------------------------|
|                                    |  **Gross**                          | **Accumulated****Amortization** |  **Net**                                |   |  **Gross** | **Accumulated****Amortization** |  **Net** |
| Trademarks,                  Copyrights | $544,369                                 | $192,756                        | $351,613                                     |   | $544,369 | $174,611 | $369,758 |
| Non-Compete                  Agreements | 78,000                                   | 11,500                          | 66,500                                       |   | 78,000 | 10,000 | 68,000 |
|                                    | $622,369                                 | $204,256                        | $418,113                                     |   | $622,369 | $184,611 | $437,758 |

|   | **Wholesale                  Leathercraft** | **Retail                  Leathercraft** | **Total** |
|--------|---------------------------------------------|------------------------------------------|-----------|
| 2005   | $5,954                                      | $32,837                                  | $38,791   |
| 2006   | 5,954                                       | 32,337                                   | 38,291    |
| 2007   | 5,954                                       | 31,837                                   | 37,791    |
| 2008   | 5,954                                       | 30,337                                   | 36,291    |
| 2009   | 5,954                                       | 30,337                                   | 30,337    |

*Revenue        Recognition*
*.        *

*Recent        Accounting Pronouncements*
*.        *

----

**2.        STOCK-BASED COMPENSATION**

|                                                                                                          | **Three                  Months Ended****June                  30,** |   | **Six                  Months Ended****June                  30,** |
|---------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------|--------|--------------------------------------------------------------------|
|                                                                                                          | **2005**                                                             |   | **2004**                                                           |   | **2005** |   | **2004** |
|                                                                                                          |                                                                 |   |                                                               |   |   |   |   |
| Net                  income, as reported                                                                      | $787,669                                                             |   | $516,213                                                           |   | $1,836,891 |   | $1,487,178 |
| Add:                  Stock-based compensation expense included in reported net                  income       |  -                                                              |   |  -                                                            |   |  - |   |  - |
| Deduct:                  Stock-based compensation expense determined under fair value                  method |  27,780                                                         |   |  27,145                                                       |   |  55,560 |   |  54,290 |
| Net                  income, pro forma                                                                        | $759,889                                                             |   | $489,068                                                           |   | $1,781,331 |   | $1,432,888 |
|                                                                                                          |                                                                 |   |                                                               |   |   |   |   |
| Net                  income per share:                                                                        |                                                                 |   |                                                               |   |   |   |   |
| Basic                  - as reported                                                                          | $                  0.07                                              |   | $                  0.05                                            |   | $                  0.17 |   | $                  0.14 |
| Basic                  - pro forma                                                                            | $                  0.07                                              |   | $                  0.05                                            |   | $                  0.17 |   | $                  0.14 |
|                                                                                                          |                                                                 |   |                                                               |   |   |   |   |
| Diluted                  - as reported                                                                        | $                  0.07                                              |   | $                  0.05                                            |   | $                  0.17 |   | $                  0.14 |
| Diluted                  - pro forma                                                                          | $                  0.07                                              |   | $                  0.04                                            |   | $                  0.16 |   | $                  0.13 |

**3.        EARNINGS PER SHARE**

|                                                                | **Three                  Months Ended June 30,**                                                     |             | **Six                  Months Ended June 30,** |
|---------------------------------------------------------------------|------------------------------------------------------------------------------------------------------|------------------|------------------------------------------------|
|                                                                |                                                                                                 | **2005**         |                                           | **2004** |   | **2005** |   | **2004** |
| Numerator:                                                          |                                                                                                 |             |                                           |   |   |   |   |   |
|                                                                | Net                  income                                                                          | $787,669         |                                           | $516,213 |   | $1,836,891 |   | $1,487,178 |
| Numerator                  for basic and diluted earnings per share |                                                                                                 | 787,669     |                                                | 516,213  |   | 1,836,891  |   | 1,487,178 |
| Denominator:                                                        |                                                                                                 |             |                                           |   |   |   |   |   |
|                                                                | Weighted-average                  shares outstanding-basic                                           | 10,615,711       |                                           | 10,553,243 |   | 10,600,065 |   | 10,530,119 |
|                                                                |                                                                                                 |             |                                           |   |   |   |   |   |
| Effect                  of dilutive securities:                     |                                                                                                 |             |                                           |   |   |   |   |   |
|                                                                | Stock                  options                                                                       | 315,317          |                                           | 416,580 |   | 315,955 |   | 441,999 |
|                                                                | Warrants                                                                                             | 24,163           |                                           | 36,815 |   | 17,322 |   | 39,407 |
| Dilutive                  potential common shares                   |                                                                                                 | 339,480          |                                           | 453,395 |   | 333,277 |   | 481,406 |
|                                                                | Denominator                  for diluted earnings per share-weighted-average                  shares |  10,955,191 |                                           |  11,006,638 |   |  10,933,342 |   |  11,011,525 |
|                                                                |                                                                                                 |             |                                           |   |   |   |   |   |
|                                                                | Basic                  earnings per share                                                            | $0.07            |                                           | $0.05 |   | $0.17 |   | $0.14 |
|                                                                | Diluted                  earnings per share                                                          | $0.07            |                                           | $0.05 |   | $0.17 |   | $0.14 |

----

**4.        SEGMENT INFORMATION**

| ***a.  *** | ***Wholesale                  Leathercraft,***                  which consists of a chain of warehouse distribution units operating                  under                  the name, *The                  Leather Factory*,                  located in the United States and Canada; |
|----------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ***b.  *** | ***Retail                  Leathercraft,***which                  consists of a chain of retail stores operating under the name,                  *Tandy                  Leather Company*,                  located in the United States and Canada; and |
|----------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ***c.  *** | ***Other***,                  which is a manufacturer of decorative hat trims sold directly to                  hat                  manufacturers. |
|----------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                     | **Wholesale****Leathercraft** | **Retail****Leathercraft** |  **Other** |  **Total** |
|----------------------------------------------------------|-------------------------------|----------------------------|-----------------|-----------------|
| **For                  the quarter ended June 30, 2005** |                          |                       |            |            |
| Net                  sales                               | $7,665,067                    | $4,094,303                 | $422,329        | $12,181,699     |
| Gross                  profit                            | 4,202,978                     | 2,553,456                  | 143,437         | 6,899,871       |
| Operating                  earnings                      | 861,177                       | 414,734                    | 45,703          | 1,321,614       |
| Interest                  expense                        | -                             | -                          | -               | -               |
| Other,                  net                              | 23,762                        | 15,922                     | -               | 39,684          |
| Income                  before income taxes              | 884,939                       | 430,656                    | 45,703          | 1,361,298       |
|                                                     |                          |                       |            |            |
| Depreciation                  and amortization           | 84,129                        | 30,842                     | 2,275           | 117,246         |
| Fixed                  asset additions                   | 39,075                        | 13,756                     | 1,254           | 54,085          |
| Total                  assets                            | $20,923,120                   | $3,824,773                 | $739,008        | $25,486,901     |

| **For                  the quarter ended June 30, 2004** |        |                         |                       |        |
|----------------------------------------------------------|-------------|------------------------------|----------------------------|-------------|
| Net                  sales                               | $7,423,795  | $2,972,746                   | $563,272                   | $10,959,813 |
| Gross                  profit                            | 3,978,355   | 1,848,618                    | 154,086                    | 5,981,059   |
| Operating                  earnings                      | 645,146     | 190,756                      | 17,934                     | 853,836     |
| Interest                  expense                        | (12,471)    | -                            | -                          | (12,471)    |
| Other,                  net                              | (26,196)    | 843                          | -                          | (25,353)    |
| Income                  before income taxes              | 606,479     | 191,599                      | 17,934                     | 816,012     |
|                                                     |        |                         |                       |        |
| Depreciation                  and amortization           | 93,351      | 27,716                       | 2,216                      | 123,283     |
| Fixed                  asset additions                   | 7,972       | 37,348                       | 3,615                      | 48,935      |
| Total                  assets                            | $16,224,401 | $                  3,248,015 | $                  929,913 | $20,402,329 |

|                                                        | **Wholesale****Leathercraft** | **Retail****Leathercraft** |  **Other** |  **Total** |
|-------------------------------------------------------------|-------------------------------|----------------------------|-----------------|-----------------|
| **For                  the six months ended June 30, 2005** |                          |                       |            |            |
| Net                  sales                                  | $15,578,959                   | $8,379,909                 | $930,347        | $24,889,215     |
| Gross                  profit                               | 8,575,556                     | 5,214,486                  | 267,112         | $14,057,154     |
| Operating                  earnings                         | 2,030,159                     | 801,452                    | 59,550          | $2,891,161      |
| Interest                  expense                           | (3,188)                       | -                          | -               | (3,188)         |
| Other,                  net                                 | 11,101                        | 13,118                     | -               | 24,219          |
| Income                  before income taxes                 | 2,038,072                     | 814,570                    | 59,550          | 2,912,192       |
|                                                        |                          |                       |            |            |
| Depreciation                  and amortization              | 170,516                       | 60,554                     | 4,607           | 235,677         |
| Fixed                  asset additions                      | 53,015                        | 26,754                     | 3,346           | 83,115          |
| Total                  assets                               | $20,923,120                   | $3,824,773                 | $739,008        | $25,486,901     |

| **For                  the six months ended June 30, 2004** |                          |                         |                         |        |
|-------------------------------------------------------------|-------------------------------|------------------------------|------------------------------|-------------|
| Net                  sales                                  | $                  15,866,885 | $                  6,139,484 | $                  1,134,320 | $23,140,689 |
| Gross                  profit                               | 8,554,193                     | 3,775,267                    | 376,512                      | 12,705,972  |
| Operating                  earnings                         | 1,718,178                     | 492,322                      | 90,470                       | 2,300,970   |
| Interest                  expense                           | (26,109)                      | -                            | -                            | (26,109)    |
| Other,                  net                                 | (27,998)                      | 909                          | -                            | (27,089)    |
| Income                  before income taxes                 | 1,664,071                     | 493,231                      | 90,470                       | 2,247,772   |
|                                                        |                          |                         |                         |        |
| Depreciation                  and amortization              | 195,379                       | 52,869                       | 4,453                        | 252,701     |
| Fixed                  asset additions                      | 47,709                        | 75,391                       | 7,950                        | 131,050     |
| Total                  assets                               | $16,224,401                   | $                  3,248,015 | $                  929,913   | $20,402,329 |

|                                 | **Three                  Months Ended June 30,** |        | **Six                  Months Ended June 30,** |
|--------------------------------------|--------------------------------------------------|-------------|------------------------------------------------|
|                                 | **2005**                                         | **2004**    |                                           | **2005** | **2004** |
| United                  States       | $10,918,231                                      | $10,198,130 |                                           | $22,273,007 | $21,483,986 |
| Canada                               | 832,956                                          | 408,448     |                                           | 1,758,610 | 886,459 |
| All                  other countries | 430,512                                          | 353,235     |                                           | 857,598 | 770,244 |
|                                 | $12,181,699                                      | $10,959,813 |                                           | $24,889,215 | $23,140,689 |

----

**Item        2.**
**Management’s        Discussion and Analysis of Financial Condition**

** **
**and        Results of Operations.**

**Our        Business**

**Wholesale        Leathercraft**
*The        Leather Factory;*
**Retail        Leathercraft**
*Tandy        Leather Company;*
**Other**

**Critical        Accounting Policies**

**Forward-Looking        Statements**

| *Ø  * | *We                  may fail to realize the anticipated benefits of the opening of                  Tandy                  Leather retail stores or we may be unable to obtain sufficient                  new                  locations on acceptable terms to meet our growth plans. Also, other                  retail                  initiatives may not be                  successful.* |
|----------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *Ø  * | *Recent                  declines in sales to national accounts by our Leather Factory operation                  could continue.* |
|----------------------|------------------------------------------------------------------------------------------------------------------------------------|

| *Ø  * | *Political                  considerations in the United States and abroad could disrupt our                  sources                  of supplies from abroad or affect the prices we pay for goods.                  Continued                  involvement by the United States in war and other military operations                  in                  the Middle East and other areas abroad could disrupt international                  trade                  and affect our inventory                  sources.* |
|----------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *Ø  * | *If,                  for whatever reason, the costs of our raw materials and inventory                  increase, we may not be able to pass those costs on to our customers,                  particularly if the economy has not recovered from its                  downturn.* |
|----------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *Ø  * | *The                  recent rise in oil and natural gas prices may increase the costs                  of the                  goods that we sell, including the costs of shipping those goods                  from the                  manufacturer to our stores and                  customers.* |
|----------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| *Ø  * | *The                  recent economic downturn in the United States, as well as abroad,                  may                  cause our sales to decrease or not to increase or adversely affect                  the                  prices charged for our products. Also, hostilities, terrorism or                  other                  events could worsen this                  condition.* |
|----------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Results        of Operations**

|                                    | **Quarter                  Ended June 30, 2005** |   | **Quarter                  Ended June 30, 2004** |
|-----------------------------------------|--------------------------------------------------|--------|--------------------------------------------------|
|                                    |  **Sales**                                  |   | **Operating****Income**                          |   |  **Sales** |   | **Operating****Income** |
| Wholesale                  Leathercraft | $7,665,067                                       |   | $861,177                                         |   | $                  7,423,795 |   | $645,146 |
| Retail                  Leathercraft    | 4,094,303                                        |   | 414,734                                          |   | 2,972,746 |   | 190,756 |
| Other                                   | 422,329                                          |   | 45,703                                           |   | 563,272 |   | 17,934 |
| Total                  Operations       | $12,181,699                                      |   | $1,321,614                                       |   | $10,959,813 |   | $853,836 |

|                                    | **Six                  Months Ended June 30, 2005** |   | **Six                  Months Ended June 30, 2004** |
|-----------------------------------------|-----------------------------------------------------|--------|-----------------------------------------------------|
|                                    |  **Sales**                                     |   | **Operating****Income**                             |   |  **Sales** |   | **Operating****Income** |
| Wholesale                  Leathercraft | $15,578,959                                         |   | $2,030,159                                          |   | $15,866,885 |   | $1,718,178 |
| Retail                  Leathercraft    | 8,379,909                                           |   | 801,452                                             |   | 6,139,484 |   | 492,322 |
| Other                                   | 930,347                                             |   | 59,550                                              |   | 1,134,320 |   | 90,470 |
| Total                  Operations       | $24,889,215                                         |   | $2,891,161                                          |   | $23,140,689 |   | $2,300,970 |

|                        | **Quarter                  Ended 06/30/05**    | **Quarter                  Ended 06/30/04**    | **%                  change** |
|-----------------------------|------------------------------------------------|------------------------------------------------|-------------------------------|
| Net                  income | $                  787,669                     | $                  516,213                     | 52.6%                         |
|                        |                                           |                                           |                          |
|                        | **Six                  Months Ended 06/30/05** | **Six                  Months Ended 06/30/04** | **%                  change** |
| Net                  income | $                  1,836,891                   | $                  1,487,178                   | 23.5%                         |

----

**Wholesale        Leathercraft **

|                                             |  **Quarter                  Ended****06/30/05** | **Quarter                  Ended**** 06/30/04 ** | ** $                  change** | ** %                  change** |
|--------------------------------------------------|------------------------------------------------------|------------------------------------------------------------|-------------------------------------|-------------------------------------|
|  Wholesale                  Center sales    |  $6,381,864                                     | $5,993,624                                                 | $388,240                       |  6.5%                          |
|  National                Account sales |  1,283,203                                      |  1,430,171                                            |  (146,968)                     |  (10.3)%                       |
|  Total                sales                 |  $7,665,067                                     |  $7,423,795                                           |  $241,272                      |  3.2%                          |

|                                                                                                                                           | **Quarter                  ended** |
|------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------|
| **Customer                  Group**                                                                                                            | **6/30/05**                        |   | **6/30/04** |
| RETAIL                  (end                  users, consumers, individuals)                                                                   | 21%                                |   | 21% |
| INSTITUTION                  (prisons,                  prisoners, hospitals, schools, youth organizations, etc.)                              | 8                                  |   | 9 |
| WHOLESALE                  (resellers                  & distributors, saddle & tack shops, authorized dealers,                  etc.) | 46                                 |   | 45 |
| NATIONAL                  ACCOUNTS                                                                                                             | 16                                 |   | 18 |
| MANUFACTURERS                                                                                                                                  | 9                                  |   | 7 |
|                                                                                                                                           | 100%                               |   | 100% |

|                                             | ** Six                  Months Ended****06/30/05** | **Six                  Months Ended****06/30/04 ** | ** $                  change** | ** %                  change** |
|--------------------------------------------------|---------------------------------------------------------|---------------------------------------------------------|-------------------------------------|-------------------------------------|
|  Wholesale                  Center sales    |  $13,030,817                                       | $12,734,917                                             | $295,900                       |  2.3%                          |
|  National                Account sales |  2,548,142                                         |  3,131,968                                         |  (583,826)                     |  (18.6)%                       |
|  Total                sales                 |  $15,578,959                                       |  $15,866,885                                       |  $(287,926)                    |  (1.8)%                        |

----

**Retail        Leathercraft **

|                                                     | **Quarter                  ended****06/30/05** | **Quarter                  ended****06/30/04** |  **$                  Incr (decr)** |  **%                  Incr(decr)** |
|----------------------------------------------------------|------------------------------------------------|------------------------------------------------|------------------------------------------|-----------------------------------------|
| Same                  store sales (32 stores)            | $3,203,196                                     | $2,972,746                                     | $230,450                                 | 7.8%                                    |
| New                  or acquired store sales (14 stores) | 891,107                                        | -                                              | 891,107                                  | ***                                     |
| Total                  sales                             | $4,094,303                                     | $2,972,746                                     | $1,121,557                               | 37.7%                                   |

|                                                                                                                                           | **Quarter                  ended** |
|------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------|
| **Customer                  Group**                                                                                                            | **06/30/05**                       |   | **06/30/04** |
| RETAIL                  (end                  users, consumers, individuals)                                                                   | 64%                                |   | 68% |
| INSTITUTION                  (prisons,                  prisoners, hospitals, schools, youth organizations, etc.)                              | 10                                 |   | 10 |
| WHOLESALE                  (reseller                  & distributors, saddle & tack stores, authorized dealers,                  etc.) | 25                                 |   | 22 |
| NATIONAL                  ACCOUNTS                                                                                                             | *                                  |   | * |
| MANUFACTURERS                                                                                                                                  | 1                                  |   | * |
|                                                                                                                                           |                               | 100% |   | 100% |

|                                                     | **Six                  months ended****06/30/05** | **Six                  months ended****06/30/04** |  **$                  Incr (decr)** |  **%                  Incr(decr)** |
|----------------------------------------------------------|---------------------------------------------------|---------------------------------------------------|------------------------------------------|-----------------------------------------|
| Same                  store sales (29 stores)            | $6,191,872                                        | $6,011,473                                        | $180,399                                 | 3.0%                                    |
| New                  or acquired store sales (17 stores) | 2,188,037                                         | 128,011                                           | 2,060,026                                | ***                                     |
| Total                  sales                             | $8,379,909                                        | $6,139,484                                        | $2,240,425                               | 36.5%                                   |

----

**Other        (Roberts, Cushman)**

**Other        Income and Expenses **

**Capital        Resources, Liquidity and Financial Condition**

----

**Item        3. Quantitative and Qualitative Disclosures About Market        Risk**

**Item        4. Controls and Procedures **

*Limitations        on the Effectiveness of Controls. *

**PART        II. OTHER INFORMATION**

**Item        4. Submission of Matters to a Vote of Security Holders**

|                                              | For       | Against | Abstaining |
|---------------------------------------------------|-----------|---------|------------|
| Shannon                  L. Greene                | 9,511,971 | 8,124   | -          |
| T.                  Field Lange                   | 9,511,471 | 8,624   | -          |
| Joseph                  R. Mannes                 | 9,512,171 | 7,924   | -          |
| H.W.                  “Hub” Markwardt | 9,279,481 | 235,690 | -          |
| Michael                  A. Markwardt             | 9,463,781 | 56,314  | -          |
| Ronald                  C. Morgan                 | 9,514,171 | 5,924   | -          |
| Michael                  A. Nery                  | 9,514,671 | 5,424   | -          |
| Wray                  Thompson                    | 9,513,971 | 6,124   | -          |

| For       | Against | Abstaining |
|-----------|---------|------------|
| 9,485,848 | 17,996  | 17,432     |

**Item        5. Other Information**

----

**Item        6. Exhibits**

| **Exhibit****Number**             |  ** ****Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|-----------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *3.1                              | Certificate of                    Amendment to Certificate of Incorporation of Tandy Leather Factory,                    Inc.                    and Certificate of Incorporation of Tandy Leather Factory,                    Inc.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| 3.2                               | Bylaws                  of Tandy Leather Factory, Inc. (f/k/a The Leather Factory, Inc.),                  filed as                  Exhibit 3.2 to the Registration Statement on Form SB-2 of Tandy                  Leather                  Factory, Inc. (f/k/a The Leather Factory, Inc.) (Commission File                  No.                  33-81132), filed with the Securities and Exchange Commission on                  July 5,                  1994 and incorporated by reference herein.                                                                                                                                                                                                                                  |
| 4.1                               | Financial                  Advisor's Warrant Agreement, dated February 12, 2003, between Tandy                  Leather Factory, Inc. (f/k/a The Leather Factory, Inc.) and Westminster                  Securities Corporation, filed as Exhibit 4.1 to Form 10-Q filed                  by Tandy                  Leather Factory, Inc. (f/k/a The Leather Factory, Inc.) with the                  Securities and Exchange Commission on May 14, 2003 and incorporated                  by                  reference herein.                                                                                                                                                                                                            |
| 4.2                               | Capital                  Markets Services Engagement Agreement, dated February 12, 2003,                  between                  Tandy Leather Factory, Inc. (f/k/a The Leather Factory, Inc.) and                  Westminster Securities Corporation, filed as Exhibit 4.2 to Form                  10-Q                  filed by Tandy Leather Factory, Inc. (f/k/a The Leather Factory,                  Inc.)                  with the Securities and Exchange Commission on May 14, 2003 and                  incorporated by reference herein.                                                                                                                                                                                   |
| 4.3                               | Financial                  Advisor's Warrant Agreement, dated February 24, 2004, between Tandy                  Leather Factory, Inc. (f/k/a The Leather Factory, Inc.) and Westminster                  Securities Corporation, filed as Exhibit 4.1 to Form 10-Q filed                  by Tandy                  Leather Factory, Inc. (f/k/a The Leather Factory, Inc.) with the                  Securities and Exchange Commission on May 14, 2004 and incorporated                  by                  reference herein.                                                                                                                                                                                                            |
| 4.4                               | Capital                  Markets Services Engagement Agreement, dated February 24, 2004,                  between                  Tandy Leather Factory, Inc. (f/k/a The Leather Factory, Inc.) and                  Westminster Securities Corporation, filed as Exhibit 4.2 to Form                  10-Q                  filed by Tandy Leather Factory, Inc. (f/k/a The Leather Factory,                  Inc.)                  with the Securities and Exchange Commission on May 14, 2004 and                  incorporated by reference herein.                                                                                                                                                                                   |
| 10.1                              | Credit                  Agreement, dated as of October 6, 2004, made by Tandy Leather Factory,                  Inc. (f/k/a The Leather Factory, Inc.), a Delaware corporation,                  and Bank                  One, National Association, filed as Exhibit 10.1 to the Current                  Report on                  Form 8-K of Tandy Leather Factory, Inc. (f/k/a The Leather Factory,                  Inc.)                  (Commission File No. 1-12368) filed with the Securities and Exchange                  Commission on November 5, 2004 and incorporated by reference                  herein.                                                                                                              |
| 10.2                              | Line                  of Credit Note, dated October 6, 2004, in the principal amount                  of up to                  $3,000,000 given by Tandy Leather Factory, Inc. (f/k/a The Leather                  Factory, Inc.), a Delaware corporation as borrower, payable to                  the order                  of Bank One, National Association, filed as Exhibit 10.2 to the                  Current                  Report on Form 8-K of Tandy Leather Factory, Inc. (f/k/a The Leather                  Factory, Inc.) (Commission File No. 1-12368) filed with the Securities                  and                  Exchange Commission on November 5, 2004 and incorporated by reference                  herein.  |
| 14.1                              | Code                  of Business Conduct and Ethics of Tandy Leather Factory, Inc. (f/k/a                  The                  Leather Factory, Inc.), adopted by the Board of Directors on February                  26,                  2004, filed as Exhibit 14.1 to Annual Report on Form 10-K of Tandy                  Leather                  Factory, Inc. (f/k/a The Leather Factory, Inc.) (Commission File                  No.                  1-12368) filed with the Securities and Exchange Commission on March                  29,                  2004 and incorporated by reference herein.                                                                                                                       |
| 21.1                              | List                  of Subsidiaries of the Company, filed as Exhibit 21.1 to the Annual                  Report                  on Form 10-K of Tandy Leather Factory, Inc. (f/k/a The Leather                  Factory,                  Inc.) for the year ended December 31, 2002 filed with the Securities                  and                  Exchange commission on March 28, 2003, and incorporated by reference                  herein.                                                                                                                                                                                                                                                                                       |
| *31.1                             | 13a-14(a)                  Certification by Wray Thompson, Chairman of the Board and Chief                  Executive                  Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| *31.2                             | 13a-14(a)                  Certification by Shannon Greene, 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                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| ______________                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| *Filed                  herewith. |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |

----

**SIGNATURES**

**TANDY        LEATHER FACTORY, INC.**

----