|  |
|--|

| Delaware                                                            |   | 75-2543540                               |
|---------------------------------------------------------------------|--------|------------------------------------------|
| (State      or other jurisdiction of incorporation of organization) |   | (IRS      Employer IdentificationNumber) |

| Class                                          |   | Shares outstanding as of May 7,      2009 |
|------------------------------------------------|--------|-------------------------------------------|
| Common      Stock, par value $0.0024 per share |   | 10,671,518                                |

----

TABLE OF CONTENTS

|                                                                                            | PAGE NO. |
|-------------------------------------------------------------------------------------------------|----------|
|                                                                                            |     |
| PART      I.  FINANCIAL INFORMATION                                                   |     |
|                                                                                            |     |
|   Item 1.  Financial Statements                                             |     |
|                                                                                            |     |
|     Consolidated      Balance Sheets                                        |     |
|      March      31, 2009 and December 31, 2008                         | 1        |
|                                                                                            |     |
|     Consolidated      Statements of Income                                  |     |
|      Three      months ended March 31, 2009 and 2008                   | 2        |
|                                                                                            |     |
|     Consolidated      Statements of Cash Flows                              |     |
|      Three      months ended March 31, 2009 and 2008                   | 3        |
|                                                                                            |     |
|     Consolidated      Statements of Stockholders' Equity                    |     |
|      Three      months ended March 31, 2009 and 2008                   | 4        |
|                                                                                            |     |
|     Notes to Consolidated Financial      Statements                         | 5        |
|                                                                                            |     |
|   Item 2.  Management's Discussion and Analysis of      Financial           |     |
|    Condition and      Results of Operations                                      | 8        |
|                                                                                            |     |
|   Item 3.  Quantitative and Qualitative Disclosures      About Market Risk  | 10       |
|                                                                                            |     |
|   Item 4.  Controls and      Procedures                                     | 10       |
|                                                                                            |     |
| PART      II.  OTHER INFORMATION                                                      |     |
|                                                                                            |     |
|   Item 2.  Unregistered Sales of Equity      Securities and Use of Proceeds | 10       |
|                                                                                            |     |
|   Item 6.  Exhibits                                                         | 11       |
|                                                                                            |     |
| SIGNATURES                                                                                      | 11       |
|                                                                                            |     |

----

Item 1. Financial Statements

|                                                       | March      31, 2009(unaudited)                                     |                                                                        | December      31, 2008(audited)                       |
|------------------------------------------------------------|-------------------------------------------------------------------------|-----------------------------------------------------------------------------|------------------------------------------------------------|
| ASSETS                                                     |                                                                    |                                                                        |                                                       |
| CURRENT      ASSETS:                                       |                                                                    |                                                                        |                                                       |
|                                                       | Cash                                                                    | $5,642,990                                                                  |                                                       | $7,810,298 |
|                                                       | Short-term      investments, including certificates of deposit          | 5,978,000                                                                   |                                                       | 3,011,000 |
|                                                       | Accounts      receivable-trade, net of allowance for doubtful accounts  |                                                                        |                                                       |   |
|                                                       |                                                                    |                                                                        | of      $28,000 and $43,000 in 2009 and 2008, respectively | 1,537,619 |   | 1,180,349 |
|                                                       | Inventory                                                               | 15,614,369                                                                  |                                                       | 16,011,147 |
|                                                       | Prepaid      income taxes                                               | 92,113                                                                      |                                                       | - |
|                                                       | Deferred      income taxes                                              | 218,531                                                                     |                                                       | 229,501 |
|                                                       | Other      current assets                                               | 1,450,402                                                                   |                                                       | 777,550 |
|                                                       |                                                                    |                                                                        |                                                       | Total      current assets | 30,534,024 |   | 29,019,845 |
|                                                       |                                                                    |                                                                        |                                                       |
| PROPERTY      AND EQUIPMENT, at cost                       | 15,604,842                                                              |                                                                        | 15,340,732                                                 |
| Less      accumulated depreciation and amortization        | (5,276,551)                                                             |                                                                        | (5,019,885)                                                |
|                                                       | 10,328,291                                                              |                                                                        | 10,320,847                                                 |
|                                                       |                                                                    |                                                                        |                                                       |
| GOODWILL                                                   | 962,667                                                                 |                                                                        | 966,655                                                    |
| OTHER      INTANGIBLES, net of accumulated amortization of |                                                                    |                                                                        |                                                       |
|                                                       | $379,000      and $367,000 in 2009 and 2008, respectively               | 341,832                                                                     |                                                       | 355,492 |
| OTHER      assets                                          | 311,876                                                                 |                                                                        | 313,074                                                    |
|                                                       | $42,478,690                                                             |                                                                        | $40,975,913                                                |
|                                                       |                                                                    |                                                                        |                                                       |
| LIABILITIES      AND STOCKHOLDERS' EQUITY                  |                                                                    |                                                                        |                                                       |
| CURRENT      LIABILITIES:                                  |                                                                    |                                                                        |                                                       |
|                                                       | Accounts      payable-trade                                             | $2,337,381                                                                  |                                                       | $1,148,577 |
|                                                       | Accrued      expenses and other liabilities                             | 3,208,189                                                                   |                                                       | 3,182,194 |
|                                                       | Income      taxes payable                                               | -                                                                           |                                                       | 271,122 |
|                                                       | Current      maturities of capital lease obligation                     | 268,883                                                                     |                                                       | 265,111 |
|                                                       | Current      maturities of long-term debt and capital lease obligations | 202,500                                                                     |                                                       | 202,500 |
|                                                       |                                                                    |                                                                        |                                                       | Total      current liabilities | 6,016,953 |   | 5,069,504 |
|                                                       |                                                                    |                                                                        |                                                       |
| DEFERRED      INCOME TAXES                                 | 630,076                                                                 |                                                                        | 600,309                                                    |
|                                                       |                                                                    |                                                                        |                                                       |
| LONG-TERM      DEBT, net of current maturities             | 3,661,875                                                               |                                                                        | 3,712,500                                                  |
| CAPITAL      LEASE OBLIGATION, net of current maturities   | 260,186                                                                 |                                                                        | 328,838                                                    |
|                                                       |                                                                    |                                                                        |                                                       |
| COMMITMENTS      AND CONTINGENCIES                         |                                                                    |                                                                        |                                                       |
|                                                       |                                                                    |                                                                        |                                                       |
| STOCKHOLDERS'      EQUITY:                                 |                                                                    |                                                                        |                                                       |
|                                                       | Preferred      stock, $0.10 par value; 20,000,000 shares authorized;    |                                                                        |                                                       |   |
|                                                       |                                                                    | none      issued or outstanding; attributes to be determined on    issuance | -                                                          |   | - |
|                                                       | Common      stock, $0.0024 par value; 25,000,000 shares authorized;     |                                                                        |                                                       |   |
|                                                       |                                                                    | 11,019,951      and 10,994,951 shares issued at 2009 and 2008;              |                                                       |   |   |
|                                                       |                                                                    | 10,689,555      and 10,664,555 shares outstanding at 2009 and 2008          | 26,448                                                     |   | 26,388 |
|                                                       | Paid-in      capital                                                    | 5,490,360                                                                   |                                                       | 5,464,443 |
|                                                       | Retained      earnings                                                  | 27,339,770                                                                  |                                                       | 26,641,853 |
|                                                       | Treasury      stock (330,396 shares at cost)                            | (828,385)                                                                   |                                                       | (828,385) |
|                                                       | Accumulated      other comprehensive income                             | (118,593)                                                                   |                                                       | (39,537) |
|                                                       |                                                                    |                                                                        |                                                       | Total      stockholders' equity | 31,909,600 |   | 31,264,762 |
|                                                       | $42,478,690                                                             |                                                                        | $40,975,913                                                |

----

TABLE OF CONTENTS

|                                                | 2009                              |      | 2008        |
|-----------------------------------------------------|-----------------------------------|-----------|-------------|
|                                                |                              |      |        |
| NET      SALES                                      | $13,360,990                       |      | $13,260,160 |
| COST      OF SALES                                  | 5,544,544                         |      | 5,519,138   |
|                                                | Gross      profit                 | 7,816,446 |        | 7,741,022 |
|                                                |                              |      |        |
| OPERATING      EXPENSES                             | 6,779,137                         |      | 7,019,638   |
| INCOME      FROM OPERATIONS                         | 1,037,309                         |      | 721,384     |
|                                                |                              |      |        |
| OTHER      (INCOME) EXPENSE:                        |                              |      |        |
| Interest      expense                               | 77,409                            |      | 81,741      |
| Other,      net                                     | (77,272)                          |      | (280,390)   |
|                                                | Total      other (income) expense | 137       |        | (198,649) |
|                                                |                              |      |        |
| INCOME      BEFORE INCOME TAXES                     | 1,037,172                         |      | 920,033     |
|                                                |                              |      |        |
| PROVISION      FOR INCOME TAXES                     | 339,255                           |      | 335,535     |
|                                                |                              |      |        |
| NET      INCOME                                     | $697,917                          |      | $584,498    |
|                                                |                              |      |        |
|                                                |                              |      |        |
| NET      INCOME PER COMMON SHARE – BASIC      | $0.06                             |      | $0.05       |
|                                                |                              |      |        |
| NET      INCOME PER COMMON SHARE – DILUTED    | $0.06                             |      | $0.05       |
|                                                |                              |      |        |
| Weighted      Average Number of Shares Outstanding: |                              |      |        |
|   Basic                                   | 10,670,111                        |      | 10,977,092  |
|   Diluted                                 | 10,721,954                        |      | 11,067,863  |

----

TABLE OF CONTENTS

|                                                              | 2009                                                     |                                    | 2008                                                                                     |
|-------------------------------------------------------------------|----------------------------------------------------------|-----------------------------------------|------------------------------------------------------------------------------------------|
| CASH      FLOWS FROM OPERATING ACTIVITIES:                        |                                                     |                                    |                                                                                     |
|                                                              | Net      income                                          | $697,917                                |                                                                                     | $584,498 |
|                                                              | Adjustments      to reconcile net income to net cash     |                                    |                                                                                     |   |
|                                                              |                                                     | provided      by operating activities - |                                                                                     |   |   |
|                                                              |                                                     |                                    | Depreciation      and amortization                                                       | 279,499 |   | 225,424 |
|                                                              |                                                     |                                    | Gain      on disposal of assets                                                          | - |   | (12,109) |
|                                                              |                                                     |                                    | Non-cash      stock-based compensation                                                   | 2,540 |   | 7,625 |
|                                                              |                                                     |                                    | Deferred      income taxes                                                               | 40,737 |   | 150,368 |
|                                                              |                                                     |                                    | Other                                                                                    | (70,127) |   | (46,598) |
|                                                              |                                                     |                                    | Net      changes in assets and liabilities, net of effect of business      acquisitions: |   |   |   |
|                                                              |                                                     |                                    |                                                                                     | Accounts      receivable-trade, net | (357,270) |   | 494,697 |
|                                                              |                                                     |                                    |                                                                                     | Inventory | 396,778 |   | 1,245,724 |
|                                                              |                                                     |                                    |                                                                                     | Income      taxes | (363,235) |   | 203,562 |
|                                                              |                                                     |                                    |                                                                                     | Other      current assets | (672,852) |   | (143,935) |
|                                                              |                                                     |                                    |                                                                                     | Accounts      payable-trade | 1,188,804 |   | (11,781) |
|                                                              |                                                     |                                    |                                                                                     | Accrued      expenses and other liabilities | 25,995 |   | 574,776 |
|                                                              | Total      adjustments                                   | 470,869                                 |                                                                                     | 2,687,753 |
|                                                              |                                                     |                                    |                                                                                     |   | Net      cash provided by operating activities | 1,168,786 |   | 3,272,251 |
|                                                              |                                                     |                                    |                                                                                     |
| CASH      FLOWS FROM INVESTING ACTIVITIES:                        |                                                     |                                    |                                                                                     |
|                                                              | Purchase      of property and equipment                  | (278,224)                               |                                                                                     | (2,136,246) |
|                                                              | Purchase      of certificates of deposit                 | (4,048,000)                             |                                                                                     | - |
|                                                              | Proceeds      from maturities of certificates of deposit | 1,081,000                               |                                                                                     | - |
|                                                              | Decrease      (increase) in other assets                 | 1,198                                   |                                                                                     | 690,560 |
|                                                              |                                                     |                                    |                                                                                     |   | Net      cash used in investing activities | (3,244,026) |   | (1,445,686) |
|                                                              |                                                     |                                    |                                                                                     |
| CASH      FLOWS FROM FINANCING ACTIVITIES:                        |                                                     |                                    |                                                                                     |
|                                                              | Payments      on capital lease obligations               | (64,880)                                |                                                                                     | (44,959) |
|                                                              | Payments      on notes payable and long-term debt        | (50,625)                                |                                                                                     | - |
|                                                              | Proceeds      from issuance of common stock              | 23,437                                  |                                                                                     | - |
|                                                              | Proceeds      from sale of assets                        | -                                       |                                                                                     | 18,329 |
|                                                              |                                                     |                                    |                                                                                     |   | Net      cash provided by (used in) financing activities | (92,068) |   | (26,630) |
|                                                              |                                                     |                                    |                                                                                     |
| NET      INCREASE (DECREASE) IN CASH                              | (2,167,308)                                              |                                    | 1,799,935                                                                                |
|                                                              |                                                     |                                    |                                                                                     |
| CASH,      beginning of period                                    | 7,810,298                                                |                                    | 6,310,396                                                                                |
|                                                              |                                                     |                                    |                                                                                     |
| CASH,      end of period                                          | $5,642,990                                               |                                    | $8,110,331                                                                               |
|                                                              |                                                     |                                    |                                                                                     |
|                                                              |                                                     |                                    |                                                                                     |
| SUPPLEMENTAL      DISCLOSURES OF CASH FLOW INFORMATION:           |                                                     |                                    |                                                                                     |
| Interest      paid during the period                              | $77,409                                                  |                                    | $81,741                                                                                  |
| Income      tax paid during the period, net of (refunds)          | 369,180                                                  |                                    | 60,210                                                                                   |
|                                                              |                                                     |                                    |                                                                                     |
| NON-CASH      INVESTING ACTIVITIES:                               |                                                     |                                    |                                                                                     |
| Equipment      acquired under capital lease financing arrangement | -                                                        |                                    | $803,712                                                                                 |

----

TABLE OF CONTENTS

|                                                      |  Number      of Shares |   |  Par      Value |   |  Paid-in      Capital |   |  TreasuryStock |   |  Retained      Earnings |   | Accumulated      Other Comprehensive Income      (Loss) |   |  Total |   |  ComprehensiveIncome      (Loss) |
|-----------------------------------------------------------|-----------------------------|--------|----------------------|--------|----------------------------|--------|---------------------|--------|------------------------------|--------|---------------------------------------------------------|--------|-------------|--------|---------------------------------------|
| BALANCE,      December 31, 2007                           | 10,977,092                  |   | $26,359              |   | $5,419,477                 |   | $(25,487)           |   | $24,037,672                  |   | $357,483                                                |   | $29,815,504 |   |                                  |
|                                                      |                        |   |                 |   |                       |   |                |   |                         |   |                                                    |   |        |   |                                  |
| Shares      issued - stock options and warrants exercised |                        |   |                 |   |                       |   |                |   |                         |   |                                                    |   |        |   |                                  |
| Stock-based      compensation                             | -                           |   | -                    |   | 7,625                      |   | -                   |   | -                            |   | -                                                       |   | 7,625       |   |                                  |
| Net  income                                     | -                           |   | -                    |   | -                          |   | -                   |   | 584,498                      |   | -                                                       |   | 584,498     |   | $584,498                              |
| Translation      adjustment                               | -                           |   | -                    |   | -                          |   | -                   |   | -                            |   | (50,853)                                                |   | (50,853)    |   | (50,853)                              |
| BALANCE,      March 31, 2008                              | 10,977,092                  |   | $26,359              |   | $5,427,102                 |   | $(25,487)           |   | $24,622,170                  |   | $306,630                                                |   | $30,356,774 |   |                                  |

| Comprehensive      income for the three months ended March 31, 2008 | $533,645 |
|---------------------------------------------------------------------|----------|

| BALANCE,      December 31, 2008                                 | 10,664,555   |   | $26,388  |   | $5,464,443   |   | $(828,385) |   | $26,641,853 |   | $(39,537)  |   | $31,264,762  |   |     |
|-----------------------------------------------------------------|--------------|--------|----------|--------|--------------|--------|------------|--------|-------------|--------|------------|--------|--------------|--------|----------|
|                                                            |         |   |     |   |         |   |       |   |        |   |       |   |         |   |     |
|  Shares      issued - stock options and warrants exercised | 25,000  |   | 60  |   | 23,377  |   | -     |   | -      |   | -     |   | 23,437  |   |     |
| Stock-based      compensation                                   | -            |   | -        |   | 2,540        |   | -          |   | -           |   | -          |   | 2,540        |   |     |
| Net  income                                           | -            |   | -        |   | -            |   | -          |   | 697,917     |   | -          |   | 697,917      |   | $697,917 |
| Translation      adjustment                                     | -            |   | -        |   | -            |   | -          |   | -           |   | (79,056)   |   | (79,056)     |   | (79,056) |
| BALANCE,      March 31, 2009                                    | 10,689,555   |   | $26,448  |   | $5,490,360   |   | $(828,385) |   | $27,339,770 |   | $(118,593) |   | $31,909,600  |   |     |

| Comprehensive      income for the three months ended March 31, 2009 | $618,861 |
|---------------------------------------------------------------------|----------|

----

TABLE OF CONTENTS

1.  BASIS OF PRESENTATION AND CERTAIN SIGNIFICANTACCOUNTING POLICIES

|                                   | As      of          |
|----------------------------------------|---------------------|
|                                   | March      31, 2009 |   | December      31, 2008 |
| Inventory      on hand:                |                |   |   |
| Finished      goods held for sale      | $14,112,684         |   | $14,867,830 |
| Raw      materials and work in process | 423,686             |   | 415,644 |
| Inventory      in transit              | 1,077,999           |   | 727,673 |
|                                   | $15,614,369         |   | $16,011,147 |

|                              | Leather      Factory | Tandy      Leather | Total    |
|-----------------------------------|----------------------|--------------------|----------|
| Balance,      December 31, 2007   | $607,130             | $383,406           | $990,536 |
| Acquisitions      and adjustments | -                    | -                  | -        |
| Foreign      exchange gain/loss   | (4,255)              | -                  | (4,255)  |
| Impairments                       | -                    | -                  | -        |
| Balance,      March 31, 2008      | $602,875             | $383,406           | $986,281 |
|                              |                 |               |     |
| Balance,      December 31, 2008   | $583,259             | $383,406           | $966,665 |
| Acquisitions      and adjustments | -                    | -                  | -        |
| Foreign      exchange gain/loss   | (3,998)              | -                  | (3,998)  |
| Impairments                       | -                    | -                  | -        |
| Balance,      March 31, 2009      | $579,261             | $383,406           | $962,667 |

|                        | As      of March 31, 2009 |                          | As      of December 31, 2008 |
|-----------------------------|---------------------------|-------------------------------|------------------------------|
|                        | Gross                     | Accumulated      Amortization | Net                          |   | Gross | Accumulated      Amortization | Net |
| Trademarks,      Copyrights | $544,369                  | $328,849                      | $215,520                     |   | $544,369 | $319,776 | $224,593 |
| Non-Compete      Agreements | 176,795                   | 50,483                        | 126,312                      |   | 177,708 | 46,809 | 130,899 |
|                        | $721,164                  | $379,332                      | $341,832                     |   | $722,077 | $366,585 | $355,492 |

|   | Wholesale Leathercraft | Retail Leathercraft | Total   |
|--------|------------------------|---------------------|---------|
| 2009   | $20,954                | $30,337             | $51,291 |
| 2010   | 20,954                 | 30,337              | 51,291  |
| 2011   | 20,027                 | 30,337              | 50,364  |
| 2012   | 1,250                  | 30,337              | 31,587  |
| 2013   | -                      | 30,337              | 30,337  |

----

TABLE OF CONTENTS

| Due      within one year                  | $5,483,000 |
|-------------------------------------------|------------|
| Due      between one and five years       | -          |
| Due      between five and ten years       | 99,000     |
| Due      between ten and fifteen years    | 198,000    |
| Due      between fifteen and twenty years | 198,000    |
|                                      | $5,978,000 |

|                                                                                                                                                                                                   | March 31, 2009               |   | December 31, 2008 |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------|--------|-------------------|
| Credit      Agreement with JPMorgan Chase Bank – collateralized by real estate;      payable as follows:                                                                                         |                         |   |              |
| Line      of Credit Note dated July 31, 2007, converted to a 10-year term note on      April 30, 2008; $16,875 monthly principal payments plus interest at 7.1%      per annum; matures April 30, 2018 |  $  3,864,375 |   |  $3,915,000  |
|                                                                                                                                                                                                   |                         |   |              |
| Capital      lease secured by HVAC equipment – total monthly principal and interest      payments of $24,328 at approximately 5.7% interest per annum, matures      February 2011                | 529,069                      |   | 593,949           |
|                                                                                                                                                                                                   | 4,393,444                    |   | 4,508,949         |
| Less      - Current maturities                                                                                                                                                                         | (471,383)                    |   | (467,611)         |
|                                                                                                                                                                                                   | $3,922,061                   |   | $4,041,338        |

|                              | Weighted      Average Exercise      Price | #      ofshares | Weighted      Average Remaining Contractual      Term (in years) | Aggregate      Intrinsic      Value |
|-----------------------------------|-------------------------------------------|-----------------|------------------------------------------------------------------|-------------------------------------|
| Outstanding,      January 1, 2008 | $2.11                                     | 236,700         |                                                             |                                |
| Granted                           | -                                         | -               |                                                             |                                |
| Cancelled                         | -                                         | -               |                                                             |                                |
| Exercised                         | -                                         | -               |                                                             |                                |
| Outstanding,      March 31, 2008  | $2.11                                     | 236,700         | 3.79                                                             | $270,780                            |
| Exercisable,      March 31, 2008  | $1.97                                     | 220,700         | 3.65                                                             | $237,740                            |
|                              |                                      |            |                                                             |                                |
| Outstanding,      January 1, 2009 | $2.16                                     | 224,700         |                                                             |                                |
| Granted                           | -                                         | -               |                                                             |                                |
| Cancelled                         | -                                         | -               |                                                             |                                |
| Exercised                         | 0.9375                                    | 25,000          |                                                             |                                |
| Outstanding,      March 31, 2009  | $2.31                                     | 199,700         | 3.09                                                             | $247,123                            |
| Exercisable,      March 31, 2009  | $2.30                                     | 197,700         | 3.07                                                             | $244,583                            |

|                                                                 | March 31,      2009 | March 31,      2008 |
|----------------------------------------------------------------------|---------------------|---------------------|
| Weighted      average grant-date fair value of stock options granted | N/A                 | N/A                 |
| Total      fair value of stock options vested                        | $2,540              | $7,625              |
| Total      intrinsic value of stock options exercised                | $14,878             | N/A                 |

----

TABLE OF CONTENTS

|                                                                                            |                            | 2009   |       | 2008   |
|-------------------------------------------------------------------------------------------------|---------------------------------|--------|------------|--------|
| Net      income                                                                                 | $697,917                        |   | $584,498   |
| Numerator      for basic and diluted earnings per share                                         | $697,917                        |   | $584,498   |
|                                                                                            |                            |   |       |   |
| Denominator      for basic earnings per share –  weighted-average      shares   | 10,670,111                      |   | 10,977,092 |
|                                                                                            |                            |   |       |   |
| Effect      of dilutive securities:                                                             |                            |   |       |
|                                                                                            | Stock      options              | 51,843 |       | 90,771 |
|                                                                                            | Warrants                        | -      |       | -      |
| Dilutive      potential common shares                                                           | 51,843                          |   | 90,771     |
|                                                                                            |                            |   |       |   |
| Denominator      for diluted earnings per share –  weighted-average      shares | 10,721,954                      |   | 11,067,863 |
|                                                                                            |                            |   |       |   |
|                                                                                            | Basic      earnings per share   | $0.06  |       | $0.05  |
|                                                                                            | Diluted      earnings per share | $0.06  |       | $0.05  |

| a.   | Wholesale      Leathercraft, which consists of a chain of warehouse distribution      units operating under the name, The Leather Factory,      located in North America; |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| b.   | Retail      Leathercraft, which consists of a chain of retail stores operating      under the name, Tandy      Leather Company, located in the North  America; |
|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

| c.   | International      Leathercraft, which sells to both wholesale and retail      customers.  It carries the same products as North American      stores.  We started this operation in February 2008 and have one      store located in Northampton, UK;and |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| d.   | Other,      which consists of Roberts, Cushman & Co., a distributor of decorative      hat trims sold directly to hatmanufacturers. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------|

|                                                             | Wholesale      Leathercraft | Retail      Leathercraft | Int’l      Leathercraft | Other    | Total       |
|------------------------------------------------------------------|-----------------------------|--------------------------|-------------------------------|----------|-------------|
| For      the quarter ended March 31, 2009                        |                        |                     |                          |     |        |
| Net      sales                                                   | $6,286,702                  | $6,603,522               | $292,872                      | $177,894 | $13,360,990 |
| Gross      profit                                                | 3,567,923                   | 3,950,164                | 222,359                       | 76,000   | 7,816,446   |
| Operating      earnings                                          | 366,247                     | 550,168                  | 81,116                        | 39,778   | 1,037,309   |
| Interest      expense                                            | 77,409                      | -                        | -                             | -        | 77,409      |
| Other,      net                                                  | (94,008)                    | 191                      | 16,545                        | -        | (77,272)    |
| Income      before income taxes                                  | 382,846                     | 549,977                  | 64,571                        | 39,778   | 1,037,172   |
|                                                             |                        |                     |                          |     |        |
|      Depreciation      and amortization | 247,102                     | 29,024                   | 3,164                         | 209      | 279,499     |
|      Fixed      asset additions         | 253,786                     | 24,438                   | -                             | -        | $278,224    |
|      Total      assets                  | $35,839,248                 | $5,510,987               | $989,159                      | $139,296 | $42,478,690 |
|                                                             |                        |                     |                          |     |        |
| For      the quarter ended March 31, 2008                        |                        |                     |                          |     |        |
| Net      sales                                                   | $6,738,210                  | $6,270,774               | $41,738                       | $209,438 | $13,260,160 |
| Gross      profit                                                | 3,719,054                   | 3,908,469                | 29,724                        | 83,775   | 7,741,022   |
| Operating      earnings                                          | 123,955                     | 614,451                  | (41,460)                      | 24,438   | 721,384     |
| Interest      expense                                            | 81,741                      | -                        | -                             | -        | 81,741      |
| Other,      net                                                  | (280,608)                   | 266                      | (48)                          | -        | (280,390)   |
| Income      before income taxes                                  | 322,822                     | 614,185                  | (41,412)                      | 24,438   | 920,033     |
|                                                             |                        |                     |                          |     |        |
|      Depreciation      and amortization | 189,690                     | 32,025                   | 2,647                         | 1,062    | 225,424     |
|      Fixed      asset additions         | 2,856,751                   | 15,260                   | 67,947                        | -        | $2,939,958  |
|      Total      assets                  | $34,097,700                 | $5,368,486               | $272,964                      | $124,031 | $39,863,181 |

|                     | 2009        | 2008        |
|--------------------------|-------------|-------------|
| United      States       | $11,735,710 | $11,531,896 |
| Canada                   | 1,051,073   | 1,242,484   |
| All      other countries | 574,207     | 485,780     |
|                     | $13,360,990 | $13,260,160 |

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TABLE OF CONTENTS

Item2. 

| Ø   | We      believe that a rise in oil and natural gas prices will 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   | Continued      weakness in the economy 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.  Furthermore, negative trends in      general consumer-spending levels, including the impact of the availability      and level of consumer debt and levels of consumer confidence could      adversely affect our sales. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                          | Quarter      Ended March 31, 2009 |   | Quarter      Ended March 31, 2008 |
|-------------------------------|-----------------------------------|--------|-----------------------------------|
|                          | Sales                             |   | Operating      Income             |   | Sales |   | Operating      Income |
| Wholesale      Leathercraft   | $6,286,702                        |   | $366,247                          |   | $6,738,210 |   | $123,955 |
| Retail      Leathercraft      | 6,603,522                         |   | 550,168                           |   | 6,270,774 |   | 614,451 |
| Int’l      Leathercraft | 292,872                           |   | 81,116                            |   | 41,738 |   | (41,461) |
| Other                         |   177,894               |   | 39,778                            |   |   209,438 |   | 24,439 |
| Total      Operations         | $13,360,990                       |   | $1,037,309                        |   | $13,260,160 |   | $721,384 |

|            | 2009     |   | 2008     | % change |
|-----------------|----------|--------|----------|----------|
| Net      income | $697,917 |   | $584,498 | 19.4%    |

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TABLE OF CONTENTS

|                                                                                                                   | Quarter      ended |
|------------------------------------------------------------------------------------------------------------------------|--------------------|
| Customer Group                                                                                                         | 03/31/09           |   | 03/31/08 |
|   RETAIL      (end users, consumers,      individuals)                                                       | 29%                |   | 28% |
|   INSTITUTION      (prisons, prisoners,      hospitals, schools, youth organizations, etc.)                  | 7%                 |   | 7% |
|   WHOLESALE      (resellers &      distributors, saddle & tack shops, authorized dealers,      etc.) | 41%                |   | 43% |
|   MANUFACTURERS                                                                                              | 7%                 |   | 10% |
|   NATIONAL      ACCOUNTS                                                                                     | 16%                |   | 12% |
|                                                                                                                   | 100%               |   | 100% |

|                        | Quarter      Ended  03/31/09 |   | Quarter      Ended  03/31/08 |   | $ change   | % change |
|-----------------------------|----------------------------------------|--------|----------------------------------------|--------|------------|----------|
| Same      store sales (29)  | $5,414,997                             |   | $5,991,951                             |   | $(576,954) | (9.6)%   |
| National      account group | 871,705                                |   | 746,259                                |   | 125,446    | 16.8%    |
|                        | $6,286,702                             |   | $6,738,210                             |   | $(451,508) | (6.7)%   |

|                             | #      Stores | Qtr      ended 03/31/09 | Qtr      ended 03/31/08 | $      Incr (decr) | %      Incr (decr) |
|----------------------------------|---------------|-------------------------|-------------------------|--------------------|--------------------|
| Same      (existing) store sales | 72            | $6,468,173              | $6,270,774              | $197,399           | 3.1%               |
| New      store sales             | 2             | 135,349                 | -                       | 135,349            | N/A                |
| Total      sales                 | 74            | $6,603,522              | $6,270,774              | $332,748           | 5.3%               |

|                                                                                                                   | Quarter      ended |
|------------------------------------------------------------------------------------------------------------------------|--------------------|
| Customer Group                                                                                                         | 03/31/09           |   | 03/31/08 |
|   RETAIL      (end users, consumers,      individuals)                                                       | 65%                |   | 64% |
|   INSTITUTION      (prisons, prisoners,      hospitals, schools, youth organizations, etc.)                  | 7                  |   | 8 |
|   WHOLESALE      (resellers &      distributors, saddle & tack shops, authorized dealers,      etc.) | 27                 |   | 27 |
|   NATIONAL      ACCOUNTS                                                                                     | -                  |   | - |
|   MANUFACTURERS                                                                                              | 1                  |   | 1 |
|                                                                                                                   | 100%               |   | 100% |

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Item 3.

Item 4.

Item 2.

| ISSUER      PURCHASES OF EQUITY SECURITIES |
|--------------------------------------------|
| Period                                     | (a)      Total Number of Shares  Purchased | (b)      Average Price Paid per      Share | (c)      Total Number of Shares Purchased as Part of Publicly Announced Plans or      Programs | (d)      Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be      Purchased Under the Plans or Programs |
| January      1 - January 31                | - | - | - | - |
| February      1 – February 28        | - | - | - | - |
| March      1 – March 31              | - | - | - | 1,000,000      (1) |
| Total                                      | - | - | - | 1,000,000      (1) |

| (1)   | On      February 27, 2009, our Board of Directors approved a stock repurchase      program, permitting us to repurchase up to one million shares of our      common stock at prevailing market prices not to exceed      $2.85.  The repurchase program commenced on April 1, 2009 and      will continue through March 10, 2010.  As of March 31, 2009, we      had not repurchased any of our shares in connection with this repurchase      offer. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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TABLE OF CONTENTS

Item 6. Exhibits

| ExhibitNumber    |  Description                                                                                                                                                                                                                                                                                                                                               |
|-----------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1                   | Certificate      of Incorporation of The Leather Factory, Inc., and Certificate of      Amendment to Certificate of Incorporation of The Leather Factory, Inc.      filed as Exhibit 3.1 to Form 10-Q filed by Tandy Leather Factory, Inc.      with the Securities and Exchange Commission on August 12, 2005 and      incorporated by reference herein.  |
| 3.2                   | Bylaws      of The Leather Factory, Inc., filed as Exhibit 3.2 to the Registration      Statement on Form SB-2 of 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.                                                              |
| 10.1                  | Consulting      Agreement, dated January 1, 2009, by and between Tandy Leather Factory,      Inc. and J. Wray Thompson, filed as Exhibit 10.1 to Form 8-K filed by      Tandy Leather Factory, Inc. with the Securities and Exchange Commission on      February 17, 2009 and incorporated by reference herein.                                            |
| *31.1                 | 13a-14(a)      Certification by Ron Morgan, Chief Executive Officer and      President.                                                                                                                                                                                                                                                                    |
| *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. |                                                                                                                                                                                                                                                                                                                                                            |

|                               | TANDY      LEATHER FACTORY, INC.                                       |
|------------------------------------|------------------------------------------------------------------------|
|                               | (Registrant)                                                           |
|                               |                                                                   |
| Date:  May      13, 2009 | By:  /s/ Ron Morgan                                          |
|                               | Ron      Morgan                                                        |
|                               | Chief      Executive Officer                                           |
|                               |                                                                   |
| Date:  May      13, 2009 | By:  /s/ Shannon L. Greene                                   |
|                               | Shannon      L. Greene                                                 |
|                               | Chief      Financial Officer and Treasurer (Chief Accounting  Officer) |