Item 1.01 Entry into a Material Definitive Agreement

On August 11, 2009, Tandy Leather Factory, Inc. (the "Company") announced that it has entered into an agreement with Ronald C. Morgan, founder and former Chief Executive Officer, to purchase a total of 500,000 shares of the Company's outstanding stock from Mr. Morgan and his wife. The shares represent approximately 4.7% of the Company total outstanding common stock. The shares will be purchased for $2.85 per share, or a total purchase price of $1.425 million. This price represents a 6.5% discount to the August 7, 2009 closing price. The Company intends to fund the stock purchase transaction out of currently available cash. This transaction is expected to be completed as soon as possible, subject to certain customary closing conditions.

The full text of the press release is furnished as Exhibit 99.1 to this report.

Item 9.01 Financial Statements and Exhibits.

Exhibit No. Description

99.1 Press Release, dated August 11, 2009

99.2 Stock Purchase Agreement