TANDY BRANDS ACCESSORIES INC, S-3, 1998-08-12

TANDY BRANDS ACCESSORIES INC
S-3, 1998-08-12
APPAREL & OTHER FINISHD PRODS OF FABRICS & SIMILAR MATL

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 12, 1998
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

------------------------------

FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------------

TANDY BRANDS ACCESSORIES, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C>
DELAWARE 75-2349915
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>

690 E. LAMAR BLVD., SUITE 200
ARLINGTON, TEXAS 76011
(817) 548-0090
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------------

J.S.B. JENKINS
TANDY BRANDS ACCESSORIES, INC.
690 E. LAMAR BLVD., SUITE 200
ARLINGTON, TEXAS 76011
(817) 548-0090
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------

Copies to:

<TABLE>
<S> <C>
DARREL A. RICE, ESQ. L. STEVEN LESHIN, ESQ.
WINSTEAD SECHREST & MINICK P.C. JENKENS & GILCHRIST,
5400 RENAISSANCE TOWER A PROFESSIONAL CORPORATION
1201 ELM STREET 1445 ROSS AVENUE, SUITE 3200
DALLAS, TEXAS 75270 DALLAS, TEXAS 75202
(214) 745-5255 (214) 855-4500
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the Registration Statement becomes effective.

If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act") other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. [ ]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
- ---------------

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ---------------

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
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PROPOSED
AMOUNT MAXIMUM PROPOSED
TITLE OF EACH CLASS OF TO BE OFFERING PRICE MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER UNIT(2) OFFERING PRICE(2) REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $1.00 par
value per share............. 2,185,000 $17.625 $38,510,625 $11,360.64
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</TABLE>

(1) Includes 285,000 shares which may be purchased by the Underwriters to cover
over-allotments, if any.

(2) Estimated solely for purposes of calculating the registration fee.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
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<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY THE SECURITIES DESCRIBED HEREIN, NOR SHALL THERE
BE ANY SALE OF THESE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION.

SUBJECT TO COMPLETION, DATED AUGUST 12, 1998

PROSPECTUS

1,900,000 SHARES

TANDY BRANDS ACCESSORIES, INC.
COMMON STOCK

Of the 1,900,000 Shares of Common Stock being offered hereby, 1,732,500
Shares are being sold by Tandy Brands Accessories, Inc. (the "Company") and
167,500 Shares are being sold by Tandy Brands Accessories, Inc. Employees
Investment Plan (the "Selling Stockholder"). See "Principal and Selling
Stockholders." The Company will not receive any of the proceeds from the sale of
the Shares being sold by the Selling Stockholder. The Common Stock is quoted on
the Nasdaq National Market under the symbol "TBAC." On August 11, 1998, the
reported last sale price of the Common Stock on the Nasdaq National Market was
$17.25.
------------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<TABLE>
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------
UNDERWRITING PROCEEDS PROCEEDS
PRICE DISCOUNTS AND TO TO SELLING
TO PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDER
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Per Share......................... $ $ $ $
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Total(3).......................... $ $ $ $
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</TABLE>

(1) See "Underwriting" for indemnification arrangements with the several
Underwriters.
(2) The Company has agreed to pay the expenses of the offering, estimated at
$400,000.
(3) The Company has granted the Underwriters a 30-day option solely to purchase
up to 285,000 additional shares to cover over-allotments, if any. If the
Underwriters exercise the option in full, the total Price to Public,
Underwriting Discounts and Commissions and Proceeds to the Company will be
$ , $ and $ , respectively. See "Underwriting."
------------------------------
The Shares are offered, subject to prior sale, when, as and if delivered to
and accepted by the Underwriters, and subject to certain other conditions. The
Underwriters reserve the right to withdraw, cancel, or modify this offering and
reject orders in whole or in part. It is expected that delivery of the Shares
will be made on or about , 1998, at the offices of Bear, Stearns
& Co. Inc., 245 Park Avenue, New York, New York 10167.

BEAR, STEARNS & CO. INC.
ING BARING FURMAN SELZ LLC
HOAK BREEDLOVE WESNESKI & CO.

, 1998.
<PAGE> 3

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK
INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTION AND THE
IMPOSITION OF PENALTY BIDS. SEE "UNDERWRITING."

------------------------------

THE UNDERWRITERS HAVE ADVISED THE COMPANY AND THE SELLING STOCKHOLDER THAT
CERTAIN OF THE UNDERWRITERS CURRENTLY ACT AS MARKET MAKERS FOR THE COMMON STOCK
AND CURRENTLY INTEND TO CONTINUE TO ACT AS MARKET MAKERS FOLLOWING THE OFFERING.
HOWEVER, THE UNDERWRITERS ARE NOT OBLIGATED TO DO SO AND MAY DISCONTINUE ANY
MARKET MAKING AT ANY TIME.

------------------------------

JONES NEW YORK(R), GREG NORMAN COLLECTION(R), ROLFS(R), HAGGAR(R), BUGLE
BOY(R), CANTERBURY(R), PRINCE GARDNER(R), ROYALLE BY PRINCE GARDNER(R), ROYALLE
BY PRINCESS GARDNER(R), PRINCESS GARDNER(R), AMITY(R), ACCESSORY DESIGN
GROUP(R), TIGER(R), BOTANY 500(R) AND BEVERLY HILLS POLO CLUB(R) ARE REGISTERED
TRADEMARKS OWNED OR LICENSED BY THE COMPANY. THIS PROSPECTUS ALSO INCLUDES
REGISTERED TRADEMARKS OF COMPANIES OTHER THAN THE COMPANY.

ii
<PAGE> 4

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 (as it may be amended, the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act") with respect to the Common Stock offered hereby. This
Prospectus, which constitutes a part of the Registration Statement, does not
contain all of the information set forth in the Registration Statement, certain
items of which are contained in exhibits to the Registration Statement as
permitted by the rules and regulations of the Commission. For further
information with respect to the Company and the Common Stock offered hereby,
reference is made to the Registration Statement, including the exhibits thereto,
which may be inspected without charge at the public reference facility
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and copies of which may be obtained from the Commission at prescribed rates.
Statements made in this Prospectus concerning the contents of any document
referred to herein are not necessarily complete. With respect to each such
document filed with the Commission as an exhibit to the Registration Statement,
reference is made to the exhibit for a more complete description of the matter
involved, and each such statement shall be deemed qualified in its entirety by
such reference.

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith, files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed by the
Company with the Commission can be inspected without charge and copied, at
prescribed rates, at the Public Reference Section of the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and the
Regional Offices of the Commission at 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511, and 7 World Trade Center, New York, New York
10048. Such material may also be accessed electronically by means of the
Commission's web site on the Internet at http://www.sec.gov.

The Common Stock is listed on the Nasdaq National Market, and such reports,
proxy statements and other information can also be inspected and copied at the
offices of the Nasdaq National Market, 1735 K Street, N.W., Washington, D.C.
20006.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

This Prospectus incorporates by reference documents that are not presented
herein or delivered herewith. The Company undertakes to provide without charge
to each person to whom a copy of this Prospectus has been delivered, upon the
written or oral request of any such person, a copy of any or all of the
documents incorporated by reference herein, other than the exhibits to such
documents, unless such exhibits are specifically incorporated by reference into
the information that this Prospectus incorporates. Written or oral requests for
such copies should be directed to: Tandy Brands Accessories, Inc., 690 E. Lamar
Blvd., Suite 200, Arlington, Texas 76011, Attention: Stanley T. Ninemire,
telephone number (817) 548-0090.

The following documents, which have been filed by the Company with the
Commission, are hereby incorporated by reference in this Prospectus:

1. The Company's Annual Report to Stockholders on Form 10-K for the
fiscal year ended June 30, 1997;

2. The Company's Proxy Statement for the 1997 Annual Meeting of
Stockholders filed on September 8, 1997;

3. The Company's Quarterly Report on Form 10-Q for the first quarter
ended September 30, 1997;

4. The Company's Quarterly Report on Form 10-Q for the second quarter
ended December 31, 1997;

5. The Company's Quarterly Report on Form 10-Q for the third quarter
ended March 31, 1998;

6. The Company's Current Report on Form 8-K filed on June 19, 1998;

iii
<PAGE> 5

7. The description of the Company's Common Stock in Item 1 of the
Company's Registration Statement on Form 8-A filed on December 7, 1990; and

8. All documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and
prior to the termination of the Offering shall be deemed to be incorporated
herein by reference and to be a part hereof from the date of filing of such
documents.

Any statement contained in this Prospectus or in a document incorporated or
deemed to be incorporated by reference in this Prospectus shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained in this Prospectus or in any other subsequently filed
document that also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.

iv
<PAGE> 6

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and the financial statements and notes thereto included elsewhere or
incorporated by reference in this Prospectus. This Prospectus contains certain
forward-looking statements that involve risks and uncertainties. The Company's
actual results could differ materially from those discussed in the
forward-looking statements as a result of certain factors including those set
forth under "Risk Factors" and elsewhere in this Prospectus. Unless otherwise
indicated, all information in this Prospectus assumes no exercise of the
Underwriters' over-allotment option and no exercise of outstanding options. See
"Underwriting." References in this Prospectus to the "Company" or "Tandy Brands"
include Tandy Brands Accessories, Inc. and its subsidiaries. The Company's
fiscal year ends on June 30. Accordingly, in this Prospectus, the years ended
June 30, 1995, 1996, 1997 and 1998 are respectively referred to as "fiscal
1995," "fiscal 1996," "fiscal 1997" and "fiscal 1998."

THE COMPANY

Tandy Brands is a leading designer, manufacturer and marketer of branded
men's, women's and children's accessories, including belts and small leather
goods such as wallets. The Company's product line also includes handbags, socks,
scarves, hats, hair accessories, suspenders and neckwear. Tandy Brands'
merchandise is marketed under a broad portfolio of nationally recognized
licensed and proprietary brand names, including Jones New York, Greg Norman
Collection, Rolfs, Haggar, Bugle Boy, Canterbury, Prince Gardner, Princess
Gardner, Amity, Accessory Design Group and Tiger, as well as private brands for
major retail customers. Proprietary brands, licensed brands and private brands
accounted for approximately 27.7%, 13.9% and 58.4%, respectively, of net sales
during fiscal 1998. The Company sells its products through all major retail
distribution channels throughout the United States and Canada, including mass
merchants, national chain stores, department stores, men's and women's specialty
stores, golf pro shops and catalogs. As a result of its strong brand portfolio,
increased market penetration, new product introductions and successful
acquisition strategy, the Company's net sales and net income from continuing
operations have grown at a compound annual growth rate of 17.3% and 19.7%,
respectively, from $83.7 million and $4.2 million for fiscal 1995, to $135.0
million and $7.2 million for fiscal 1998.

Tandy Brands distributes its products to nearly every type and size of
retail operation. Management estimates that the Company's customers include over
10,000 retailers representing over 20,000 retail locations. The Company's key
brands and each brand's targeted distribution channels and products are as
follows:

<TABLE>
<CAPTION>
BRAND DISTRIBUTION CHANNEL PRODUCTS
- ----- -------------------- --------
<S> <C> <C>
Jones New York.............................................. Department stores Handbags
Specialty stores Small leather goods
Greg Norman Collection...................................... Golf pro shops Belts
Specialty stores Small leather goods
Department stores
Catalogs
Rolfs....................................................... Department stores Small leather goods
Specialty stores
Haggar...................................................... National chain stores Belts
Department stores Small leather goods
Catalogs
Bugle Boy................................................... National chain stores Belts
Department stores Small leather goods
Canterbury.................................................. Specialty stores Belts
Golf pro shops Small leather goods
Prince Gardner.............................................. National chain stores Small leather goods
Specialty stores
Princess Gardner............................................ National chain stores Small leather goods
Specialty stores
Amity....................................................... Mass merchants Small leather goods
National chain stores
Accessory Design Group...................................... Mass merchants Belts
National chain stores Women's accessories
Tiger....................................................... Mass merchants Belts
National chain stores
</TABLE>

1
<PAGE> 7

The accessories market is highly fragmented, and management believes that
the Company is one of the largest competitors in the accessories industry.
Management believes the sectors of the accessories market that the Company
serves have grown at an average annual rate of three to five percent in recent
years. This growth has resulted from (i) the trend toward more casual attire,
which has increased demand for accessories outside the traditional dress
category, (ii) increased consumer awareness of branded accessories as a fashion
and lifestyle statement and (iii) a desire for newness and change in accessories
styles. As a result of recent consolidation in the retail industry, retailers
have increasingly chosen to consolidate their supply bases to a core group of
companies that have the resources and expertise to meet the retailers'
increasing demands. Over the past several years, the Company's net sales growth
has exceeded that of the accessories industry, and the Company believes it is
better positioned than its competitors to continue to capitalize on these market
trends because of its following competitive strengths:

COMPETITIVE STRENGTHS

Strong Customer Relationships and Superior Customer Service. Tandy Brands
has strong relationships with most major retailers in the United States and
Canada, including Wal-Mart Stores, Inc. ("Wal-Mart"), Target Stores, Inc.
("Target"), K Mart Corporation ("K Mart"), Shopko Stores, Inc. ("Shopko"), Army
& Air Force Exchange Service ("AAFES"), Sears, Roebuck and Co. ("Sears"), J.C.
Penney Company, Inc. ("JCPenney"), Kohl's Corporation ("Kohl's"), The May
Department Stores Company ("May Department Stores"), Dillard Department Stores,
Inc. ("Dillard's"), Mervyn's, Inc. ("Mervyn's") and Federated Department Stores,
Inc. ("Federated Department Stores"). The Company develops and maintains
relationships at all levels of management with its major retail customers. The
Company believes it will continue to benefit from the consolidation trend in the
retail industry because it is able to provide its customers with a higher degree
of customer service than its smaller, less well-capitalized competitors. For
example, Tandy Brands provides design and marketing expertise to its customers
to help them communicate fashion and lifestyle concepts through targeted product
lines and innovative point-of-sale presentations. In addition, the Company's
automated distribution facilities enable it to meet, efficiently and
economically, the increasingly stringent inventory delivery requirements of its
customers. Tandy Brands emphasizes continuous improvement in customer service to
increase quality and efficiencies and enhance its competitiveness.

Management of a Strong National Brand Portfolio. Tandy Brands manufactures
and markets its products under a broad portfolio of nationally recognized
licensed and proprietary brand names, as well as various private store brands.
This brand portfolio allows the Company to offer differentiated products in
response to the requirements of each of its specific distribution channels. The
Company has historically expanded, and continues to explore opportunities to
expand, its brand portfolio as a means to increase distribution and penetrate
new retail accounts.

Broad Distribution. Tandy Brands distributes its products throughout the
United States and Canada to all major levels of retail distribution. The Company
is a leader in the men's and women's accessories industry, and because the
industry is highly fragmented, management believes that significant
opportunities exist for the Company to increase its market share within its
product groups.

Proprietary Inventory Management Systems. The Company has made significant
investments in systems to better serve its retail customers and assist them in
managing their inventory efficiently. Services provided by the Company enhance
the retail sales process through inventory replenishment and inventory
management programs, quality assurance committed to on-time and one hundred
percent complete deliveries and electronic communications of various sales,
inventory and accounting information to the customer. The Company currently uses
electronic data interchange ("EDI") for electronic communication of invoices,
shipping notices, purchase orders and other transactions at over 14,000 retail
locations. In addition, the Company manages automatic inventory replenishment
programs at over 7,000 retail locations. The investments made in its proprietary
systems help differentiate Tandy Brands from its competitors and build
partnering relationships with its customers.

The Company manufactures approximately 50% of its men's belts (representing
approximately 22% of its net sales) in the United States. Such domestic
manufacturing capabilities, combined with the Company's worldwide sourcing
network, enable the Company to maximize its efficiency in meeting its customers'
requirements for price, timing and delivery.

Product Design and Innovation. The Company's internal design teams design
all of the Company's products and are key to implementing the Company's
marketing strategy, which is driven by responding to consumer tastes,
preferences, lifestyles and demand for quality and style. The teams enable Tandy
Brands to recognize and capitalize upon emerging style and fashion trends that
affect the accessories market. The Company emphasizes new products and design
innovation and makes frequent adjustments to its product lines to reflect
consumer preferences and trends. Each year, approximately 30% of the Company's
stock keeping units are new products. By offering a growing variety of
accessories at a range of price points, the Company is able to cater to
consumers with a variety of tastes and lifestyles.

GROWTH STRATEGIES

Tandy Brands believes that it has the design, manufacturing, sales and
distribution infrastructure necessary to manage and grow its existing business,
develop additional products and brands and acquire complementary businesses. The
Company plans to leverage its existing infrastructure to pursue additional
growth through implementation of the following growth strategies:

Increase Penetration of Existing Accounts. Tandy Brands intends to leverage
its brand portfolio and reputation for customer service to increase its
licensed, proprietary and private brand sales to existing customers. The Company
believes significant potential exists to expand the number of locations it
serves within its existing customer base and expand the product categories and
product lines carried by its existing customers.

Expand Product Lines. The Company intends to continue to expand its product
lines by introducing fashionable, high quality and value-driven accessory items.
Successful recent product introductions include Jones New York handbags and
small leather goods and Greg Norman Collection belts and small leather goods in
fiscal 1997 and private brand scarves and hair accessories in fiscal 1998. New
products to be introduced in fiscal 1999 include boys' belts, coordinated
children's accessories, women's cold weather accessories such as gloves, hats
and mufflers and a line of men's Jones New York belts and wallets.

Pursue Selective Acquisitions. The accessories industry is highly
fragmented. Numerous small manufacturers, developers and marketers of
accessories exist, many of which lack the financial strength and infrastructure
required to support continued growth at a time when retailers are reducing the
size of their supplier bases. The Company believes that attractive opportunities
exist to leverage its infrastructure through strategic acquisitions that will
expand its market share, distribution and customer relationships and broaden its
brand portfolio. The Company also believes that it is one of only a few
participants in its industry with the operational and financial resources
necessary to identify and successfully execute significant acquisitions.

Pursue Additional Opportunities in Licensing and Brand Ownership. The
Company plans to build on its success in brand marketing and development,
together with its manufacturing and distribution expertise, by pursuing
additional opportunities in licensing and brand ownership.

COMPANY HISTORY

The Company and its predecessors have been manufacturers and marketers of
leather accessories for more than 70 years. The Company was formed in 1990 in
connection with the Bombay Company, Inc.'s spin-off of its belt and accessories
business. In 1990, the Company was largely a manufacturer of men's belts. Since
1990, the Company has completed eight acquisitions, entered into 21 license
agreements, developed a $64.0 million women's business and grown its total sales
at a 23.0% compound annual growth rate through fiscal 1998.

The Company is organized under the laws of Delaware with principal
executive offices located at 690 E. Lamar Blvd., Suite 200, Arlington, Texas
(telephone number: (817) 548-0090).

3
<PAGE> 9

THE OFFERING

<TABLE>
<S> <C>
Common Stock:
Common Stock offered by the Company....................... 1,732,500 shares
Common Stock offered by the Selling Stockholder(1)........ 167,500 shares
Total Common Stock offered........................ 1,900,000 shares
Common Stock to be outstanding after the offering(2)........ 7,350,165 shares
Use of proceeds by the Company.............................. The net proceeds to be received by
the Company will be used to repay
certain indebtedness. See "Use of
Proceeds."
Nasdaq National Market symbol............................... TBAC
</TABLE>

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(1) The Selling Stockholder is Tandy Brands Accessories, Inc. Employees
Investment Plan. The net proceeds to the Selling Stockholder will be used to
meet current and anticipated obligations to beneficiaries who are retiring
from the Company, as well as to provide additional liquidity to the plan.
(2) Excludes 557,438 shares of Common Stock issuable upon exercise of employee
stock options outstanding as of August 11, 1998, of which 275,133 were
exercisable as of such date.

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<PAGE> 10

SUMMARY FINANCIAL DATA

The summary financial data for each of the five fiscal years ended June 30,
1993, 1994, 1995, 1996 and 1997 set forth below have been derived from audited
consolidated financial statements of the Company. The summary financial data of
the Company as of March 31, 1997 and 1998, and for the nine months then ended,
have been derived from unaudited consolidated financial statements, which, in
the opinion of management, include all adjustments (consisting of only normal
recurring adjustments) necessary for a fair presentation of such data for the
unaudited interim periods. The following data should be read in conjunction with
the consolidated financial statements of the Company and notes thereto
incorporated by reference in this Prospectus and "Management's Discussion and
Analysis of Consolidated Financial Condition and Results of Operations"
appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
FISCAL YEAR ENDED JUNE 30, (UNAUDITED)
------------------------------------------------ ----------------------
1993 1994 1995 1996 1997 1997 1998
------- ------- ------- ------- -------- ------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales....................... $50,204 $67,254 $83,721 $86,694 $102,507 $77,462 $100,658
Gross profit.................... 19,630 26,666 32,829 32,720 38,258 28,756 37,170
Intangible asset impairment
write-off(1).................. -- -- -- 3,976 -- -- --
Operating income................ 6,133 8,252 7,431 1,362 8,385 6,473 10,699
Interest expense................ 18 214 1,048 1,267 1,242 953 989
Net income from continuing
operations(2)................. 4,082 5,363 4,195 101 4,564 3,508 6,047
Net income from continuing
operations per share(3):
Basic earnings per share.... $0.84 $1.06 $0.81 $0.02 $0.84 $0.65 $1.09
Earnings per
share -- assuming
dilution.................. 0.82 1.04 0.80 0.02 0.83 0.64 1.07
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1998
(UNAUDITED)
JUNE 30, ---------------------
------------------------------------------------ AS
1993 1994 1995 1996 1997 ACTUAL ADJUSTED(4)
------- ------- ------- ------- -------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital................... $19,860 $27,858 $33,069 $34,082 $43,354 $54,406 $63,086
Total assets...................... 32,231 49,318 67,315 58,411 65,364 75,411 84,091
Long-term debt.................... -- 8,000 16,650 12,400 15,850 19,700 --
Stockholders' equity.............. 26,666 33,573 35,839 36,847 42,129 49,078 77,458
</TABLE>

- ---------------

(1) Related to a write-off of intangible assets arising from the acquisition of
Prince Gardner in fiscal 1994.
(2) During fiscal 1995, the Company recorded a loss of $3.2 million from
discontinued operations related to its decision to dispose of the Always In
Style operations.
(3) The earnings per share amounts prior to March 31, 1998 have been restated as
required to comply with Statement of Financial Accounting Standards No. 128,
Earnings Per Share.
(4) As adjusted to reflect the issuance of 1,732,500 shares of Common Stock by
the Company at an assumed offering price of $17.625 per share and the
application of the net proceeds therefrom.

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<PAGE> 11

RISK FACTORS

Prospective investors should carefully consider the following risk factors
in addition to other information included in this Prospectus before purchasing
any of the Shares of Common Stock offered hereby. Information contained or
incorporated by reference in this Prospectus may contain "forward-looking
statements" within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act, which can be identified by the use of forward-looking
terminology such as "may," "will," "expect," "intend," "anticipate," "believe,"
"estimate" or "continue" or the negative thereof or other variations thereon or
comparable terminology. All statements other than statements of historical facts
included in this Prospectus, including those regarding the Company's financial
position, business strategy, projected costs and plans and objectives of
management for future operations are forward-looking statements. The following
matters and certain other factors noted throughout this Prospectus constitute
cautionary statements identifying important factors with respect to any such
forward-looking statements, including certain risks and uncertainties, that
could cause actual results to differ materially from those in such
forward-looking statements. All forward-looking statements contained in this
Prospectus and/or any subsequent written or oral forward-looking statements
attributable to the Company or persons acting on behalf of the Company are
expressly qualified in their entirety by such cautionary statements. The Company
undertakes no obligation to release the results of any revisions to these
forward-looking statements that may be made to reflect any future events or
circumstances.

DEPENDENCE ON SIGNIFICANT CUSTOMERS

Sales to Wal-Mart accounted for 35%, 36% and 43% of the Company's net sales
for fiscal 1996, 1997 and 1998, respectively. A decision by Wal-Mart to
significantly decrease the amount purchased from the Company or to cease
carrying the Company's products could have a material adverse effect on the
Company's financial condition and results of operations. While no other
customers accounted for 10% or more of net sales in fiscal 1998, the Company's
top ten customers (including Wal-Mart) accounted for approximately 70% of the
Company's net sales during that period. If one or more of these customers
substantially reduces the volume of purchases from the Company, the Company's
financial condition and results of operations could be adversely affected.

RISKS ASSOCIATED WITH FOREIGN SOURCING

The Company purchases raw materials and finished goods from suppliers and
manufacturers in numerous foreign countries. The Company's business is subject
to risks generally associated with doing business in countries other than the
United States, including risks associated with foreign governmental regulation
and social, political and economic changes in such countries. Such risks may
have a material adverse effect on the Company, particularly if such factors
cause the conduct of business in a particular country to become undesirable or
impractical. The Company's business is also subject to risks associated with
changes in United States law relating to imports, including the imposition of
additional quotas, duties, tariffs or taxes or other changes or restrictions on
imports, which could adversely affect the price for or the availability of the
Company's imports.

RETAIL INDUSTRY CONDITIONS AND ECONOMIC CYCLES

The accessories industry is affected by national, regional and local
economic conditions, demographic trends and consumer tastes. During the past few
years, several of the Company's customers, including some major retailers, have
declared bankruptcy or otherwise experienced financial difficulties. While the
Company's losses due to uncollectible accounts receivable have been limited,
financial difficulties of its retail customers in response to economic cycles or
otherwise could cause a loss of business and additional risk that is related to
customer receivables. Any significant declines in general economic conditions or
uncertainties with respect to future economic prospects could affect consumer
spending in a manner which could materially and adversely affect the Company's
business, financial condition and results of operations. Furthermore, some
fashion items offered by the Company are affected by relatively rapid changes in
fashion trends and consumer preferences and tastes.

6
<PAGE> 12

RISKS OF ACQUISITIONS AND IMPLEMENTATION OF GROWTH STRATEGIES

The Company's continued growth depends to a significant degree upon its
ability to implement successfully its growth strategies, including acquisitions.
There can be no assurance that the Company can acquire businesses successfully
or that the Company's management will be able to maintain or enhance the
profitability of any acquired business. A key element of the Company's growth
strategy is to expand the scope of its product offerings. However, there can be
no assurance that this strategy will be successful or that new products will be
profitable or generate sales comparable to its existing products. Additionally,
there can be no assurance that the Company will be able to increase sales to
existing customers or obtain additional licenses and brands as contemplated by
its growth strategies.

COMPETITION

Competition in the fashion accessories industry is intense. The Company's
ability to remain competitive depends largely on its ability to create new
designs and products and to offer high-quality merchandise at affordable prices.
The Company's men's belt business competes with a large number of competitors,
including Swank, Humphreys, Leegin, Max Leather and Salant. The Company's men's
wallet business also competes with a large number of competitors, including
Buxton, Humphreys, Mundi, and Fossil. In women's belts, the Company competes
primarily with Omega, Cipriani, Liz Claiborne, Circa and Fossil. The women's
handbag business competes with Nine West, Liz Claiborne, Kenneth Cole, Fossil,
Guess and others. The women's personal leather goods business competes with
Buxton, Mundi, Fossil, Liz Claiborne, Nine West and others. Some of the
Company's competitors have significantly greater financial, advertising,
marketing and distribution resources than the Company. There is no assurance
that changes in market conditions or price competition will not adversely affect
the Company's operations in the future or that the Company will continue to
compete effectively against the existing competitors or new competitors that may
enter its markets.

FLUCTUATIONS IN MATERIALS AND LABOR COSTS

A majority of the Company's products are made of leather. The price of
leather is subject to significant fluctuations. Severe increases in leather
prices could have a material adverse impact on the Company's profitability.
Operating costs may also be adversely affected by fluctuations in labor costs.

DEPENDENCE ON LICENSES

Certain of the brands under which the Company markets its products are
licensed to it under license agreements with unaffiliated third parties. The
Company's failure to retain its existing licenses or replace them with new
licenses as the existing ones expire could adversely affect the Company's net
sales. In addition, the license agreements generally prohibit the distribution
of the licensed goods through certain channels and designate specific
territories for the distribution of such goods. Thus, the Company would be
required to obtain the approval of the licensor for expansion by the Company
into different channels of distribution and territories. In the event that the
Company desires to introduce a licensed good into a new channel of distribution
or territory, there can be no assurance that it will be able to obtain such
approval on favorable terms. See "Business -- Exclusive License Agreements."

DEPENDENCE ON CERTAIN FACILITIES

A substantial portion of the Company's current distribution operations and
all of its current manufacturing operations are located in one building in
Yoakum, Texas. Additionally, substantially all of the Company's small leather
goods and handbags are distributed from one facility in West Bend, Wisconsin. A
substantial portion of women's belts and other accessories is distributed from
the Company's single facility in Dallas, Texas. A disruption of any of these
manufacturing or distribution operations resulting from sustained process
abnormalities, human error, government intervention, natural disaster such as
fire, earthquake or flood or any other occurrence could interrupt the Company's
inventory flow and ability to satisfy its customers' delivery

7
<PAGE> 13

requirements. The loss of a customer as a result of any such interruption could
have a material adverse effect on the Company's business, financial condition
and results of operations.

DEPENDENCE ON KEY PERSONNEL

The Company's success depends to a significant extent upon the continued
service of its executive officers and other key management personnel, including,
in particular, J.S.B. Jenkins, the President and Chief Executive Officer of the
Company, Jerry W. Wood, Executive Vice President of the Company, and Stanley T.
Ninemire, Senior Vice President, Chief Financial Officer and Assistant
Secretary, and other members of the Company's senior management. Although the
Company has incentive compensation programs designed to retain such persons,
there can be no assurance that the Company will be successful in doing so. If,
for any reason, key personnel do not continue to be active in the Company's
management, operations could be adversely affected. The Company does not
maintain key man life insurance for any member of management.

TRADEMARKS

The Company believes that its trademarks and other proprietary rights are
important to its success and its competitive position. Accordingly, the Company
exercises prudence in establishing and protecting such rights. Nevertheless,
there can be no assurance that the actions taken by the Company to establish and
protect its trademarks and other proprietary rights will be adequate to prevent
infringement of such rights by others. Additionally, there can be no assurance
that others will not assert rights in, or ownership of, trademarks or other
proprietary rights of the Company or that the Company would be able to
successfully resolve such conflicts.

YEAR 2000 RISKS

Many existing computer programs use only two digits to identify a year in
the date field. These programs were designed and developed without considering
the impact of the upcoming change in the century. If not corrected, many
computer applications could fail or create erroneous results by or at the year
2000. The Company has addressed this potential problem and is in the process of
implementing a plan with the objective of ensuring that its management
information systems will record, store, process, calculate and present calendar
dates falling on or after (and if applicable, spans of time including) January
1, 2000 in the same manner and with the same functionality as in years prior to
2000. The Company currently is testing its program modifications and believes
that this plan will be successful. However, there can be no assurance that the
Company's plan will be successful or that issues relating to year 2000 risks
will not arise with respect to products furnished by third party manufacturers
or suppliers. Any such problems arising under the Company's plan or similar
issues with manufacturers, suppliers, or customers may result in unforeseen
costs or delays to the Company and therefore have a material adverse effect on
the Company.

POSSIBLE VOLATILITY OF STOCK PRICE

The Common Stock is quoted on the Nasdaq National Market. The stock market
has from time to time experienced extreme price and volume volatility. In
addition, the market price of the Company's Common Stock may be influenced by a
number of factors, including investor perceptions of the Company and comparable
public companies, changes in conditions or trends in the accessories industry or
in the retail industry in general, and changes in general economic and other
conditions. Factors such as quarter-to-quarter variations in the Company's net
sales and earnings could also cause the market price of the Common Stock to
fluctuate significantly.

ANTI-TAKEOVER MATTERS

The Company's Certificate of Incorporation and Bylaws, as well as the
General Corporation Law of the State of Delaware (the "DGCL"), contain
provisions that may have the effect of discouraging a proposal for a takeover of
the Company. These include a provision in the Company's Certificate of
Incorporation authorizing the issuance of "blank check" preferred stock and
provisions in the Company's Bylaws establishing a

8
<PAGE> 14

"staggered" board of directors. The "blank check" provision provides maximum
discretion to the Board of Directors in issuing preferred stock. Such a
provision affords the Board of Directors almost unlimited authority to determine
the terms of the preferred stock, including, but not limited to, the amount,
dividend rate, relative rights of priority and liquidation preference. The
"staggered board" provision provides for the division of the Board of Directors
into three classes with staggered three-year terms. The Company also has adopted
a Preferred Share Purchase Rights Plan (the "Rights Plan") which is designed to
deter coercive or unfair takeover tactics and prevent any acquiror from gaining
control of the Company without offering a fair price to all of the Company's
stockholders. If the Rights Plan is triggered by an acquisition transaction
involving the Company, the share purchase rights issued under the Rights Plan
will cause substantial dilution to a person or group that attempts to acquire
control of the Company on terms not approved by the Company's Board of
Directors, except pursuant to an offer conditioned on a substantial number of
rights being acquired. In addition, Section 203 of the DGCL limits the ability
of a Delaware corporation to engage in certain business combinations with
interested stockholders.

USE OF PROCEEDS

The net proceeds from the sale of the 1,732,500 shares of Common Stock
offered by the Company hereby are estimated to be approximately $28.4 million
($33.1 million if the Underwriters' over-allotment option is exercised in full).

The net proceeds to be received by the Company will be used to retire a
portion of its indebtedness under its existing credit agreements (the "Credit
Agreements"). The Credit Agreements provide for two domestic loan facilities in
the aggregate principal amount of $65 million. Both such loan facilities bear
interest at various rates at the Company's option, which resulted in an annual
average interest rate of 6.5% in fiscal 1998. The loan facilities mature on
April 30, 2000 and May 14, 1999. See "Management's Discussion and Analysis of
Consolidated Financial Condition and Results of Operations -- Liquidity and
Capital Resources." The amounts borrowed under the Credit Agreements were used
by the Company to fund the Company's acquisitions in fiscal 1998 and for working
capital. The Company will not receive any proceeds from the sale of shares of
Common Stock by the Selling Stockholder. The Selling Stockholder is Tandy Brands
Accessories, Inc. Employees Investment Plan. The proceeds to the Selling
Stockholder will be used to meet current and anticipated obligations to
beneficiaries who are retiring from the Company, as well as to provide
additional liquidity to the plan.

PRICE RANGE OF COMMON STOCK

The Common Stock is listed on the Nasdaq National Market where it has been
traded since 1991 under the symbol "TBAC." The following table sets forth the
high and low closing sale price of the Common Stock reported by the Nasdaq
National Market for the periods indicated:

<TABLE>
<CAPTION>
HIGH LOW
----- -----
<S> <C> <C>
FISCAL YEAR ENDED JUNE 30, 1997
First Quarter............................................... $7.50 $6.50
Second Quarter.............................................. 7.50 6.00
Third Quarter............................................... 9.00 6.00
Fourth Quarter.............................................. 10.13 8.00
</TABLE>

<TABLE>
<S> <C> <C>
FISCAL YEAR ENDED JUNE 30, 1998
First Quarter............................................... $14.00 $9.50
Second Quarter.............................................. 18.00 13.00
Third Quarter............................................... 20.38 15.50
Fourth Quarter.............................................. 19.63 17.00
</TABLE>

9
<PAGE> 15

On August 11, 1998, the last reported sale price of the Company's Common
Stock on the Nasdaq National Market was $17.25 per share. As of August 11, 1998,
the Company estimates that there were approximately 1,900 holders of the Common
Stock, of which 1,118 were stockholders of record.

DIVIDEND POLICY

The Company has never paid a cash dividend on its Common Stock. The Company
currently intends to retain its earnings for the foreseeable future to provide
funds for the expansion of its business. The payment of dividends in the future
will be at the sole discretion of the Board of Directors and will depend upon
the Company's profitability, financial condition, capital needs, future
prospects, contractual restrictions and other factors deemed relevant by the
Board of Directors. The Credit Agreements currently contain covenants related to
the maintenance of certain financial ratios which could impose certain
limitations on the payment of dividends.

10
<PAGE> 16

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
March 31, 1998 and as adjusted to give effect to the receipt by the Company of
the estimated net proceeds of $28.4 million from the sale of the 1,732,500
shares of Common Stock offered by the Company hereby and the application
thereof. "As Adjusted" amounts assume the estimated net proceeds received by the
Company were used to repay amounts outstanding under the Credit Agreements. The
table should be read in conjunction with "Management's Discussion and Analysis
of Consolidated Financial Condition and Results of Operations" and the
consolidated financial statements of the Company and notes thereto incorporated
by reference in this Prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1998
------------------------
ACTUAL AS ADJUSTED(2)
------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Long-term debt:
Notes payable, net of current maturities(1)............... $19,700 $ --
Stockholders' equity:
Preferred Stock, $1 par value, 1,000,000 shares
authorized; none issued and outstanding................ -- --
Common Stock, $1 par value, 10,000,000 shares authorized;
5,576,017 shares issued and outstanding; 7,308,517
shares issued and outstanding, as adjusted............. 5,576 7,309
Additional paid-in capital................................ 19,687 46,334
Retained earnings......................................... 23,815 23,815
------- -------
Total stockholders' equity............................. 49,078 77,458
------- -------
Total capitalization.............................. $68,778 $77,458
======= =======
</TABLE>

- ---------------

(1) At March 31, 1998, the Company had $36.3 million available under the Credit
Agreements.

(2) The net proceeds from the issuance of Common Stock were estimated using an
assumed offering price of $17.625 per share.

11
<PAGE> 17

SELECTED FINANCIAL DATA

The selected financial data for each of the five fiscal years ended June
30, 1993, 1994, 1995, 1996 and 1997 set forth below have been derived from
audited consolidated financial statements of the Company. The selected financial
data of the Company as of March 31, 1997 and 1998, and for the nine months then
ended, have been derived from unaudited consolidated financial statements,
which, in the opinion of management, include all adjustments (consisting of only
normal recurring adjustments) necessary for a fair presentation of such data for
the unaudited interim periods. The following data should be read in conjunction
with the consolidated financial statements of the Company and notes thereto
incorporated by reference in this Prospectus and "Management's Discussion and
Analysis of Consolidated Financial Condition and Results of Operations"
appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
FISCAL YEAR ENDED JUNE 30, (UNAUDITED)
------------------------------------------------ ---------------------
1993 1994 1995 1996 1997 1997 1998
------- ------- ------- ------- -------- ------- -----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales....................... $50,204 $67,254 $83,721 $86,694 $102,507 $77,462 $100,658
Gross profit.................... 19,630 26,666 32,829 32,720 38,258 28,756 37,170
Intangible asset impairment
write-off(1).................. -- -- -- 3,976 -- -- --
Operating income................ 6,133 8,252 7,431 1,362 8,385 6,473 10,699
Interest expense................ 18 214 1,048 1,267 1,242 953 989
Net income from continuing
operations(2)................. 4,082 5,363 4,195 101 4,564 3,508 6,047
Net income from continuing
operations per share(3):
Basic earnings per share.... $0.84 $1.06 $0.81 $0.02 $0.84 $0.65 $1.09
Earnings per
share -- assuming
dilution.................. 0.82 1.04 0.80 0.02 0.83 0.64 1.07
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1998
(UNAUDITED)
JUNE 30, ---------------------
------------------------------------------------ AS
1993 1994 1995 1996 1997 ACTUAL ADJUSTED(4)
------- ------- ------- ------- -------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital................. $19,860 $27,858 $33,069 $34,082 $43,354 $54,406 $63,086
Total assets.................... 32,231 49,318 67,315 58,411 65,364 75,411 84,091
Long-term debt.................. -- 8,000 16,650 12,400 15,850 19,700 --
Stockholders' equity............ 26,666 33,573 35,839 36,847 42,129 49,078 77,458
</TABLE>

- ---------------

12
<PAGE> 18

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with
"Selected Financial Data" and the consolidated financial statements of the
Company and notes thereto incorporated by reference in this Prospectus. Except
for the historical information contained herein, the discussion in this
Prospectus contains forward-looking statements that involve risks and
uncertainties, such as statements of the Company's plans, objectives,
expectations and intentions. The cautionary statements made in this Prospectus
should be read as being applicable to all related forward-looking statements
wherever they appear in this Prospectus. The Company's actual results could
differ materially from those anticipated in such forward-looking statements.
Factors that could cause or contribute to such differences include, but are not
limited to, those discussed before and in the section entitled "Risk Factors,"
as well as those discussed elsewhere in this Prospectus.

GENERAL

The Company is a leading designer, manufacturer and marketer of branded
men's, women's and children's accessories, including belts and small leather
goods, such as wallets. The Company's product line also includes handbags,
socks, scarves, hats, hair accessories, suspenders and neckwear. The Company's
merchandise is marketed under a broad portfolio of nationally recognized
licensed and proprietary brand names, including Jones New York, Greg Norman
Collection, Rolfs, Haggar, Bugle Boy, Canterbury, Prince Gardner, Princess
Gardner, Amity, Accessory Design Group and Tiger, as well as private brands for
major retail customers. The Company sells its products through all major levels
of retail distribution channels throughout the United States and Canada,
including mass merchants, national chain stores, department stores, men's and
women's specialty stores, golf pro shops and catalogs.

The Company seeks increased accessory sales and earnings through a variety
of means, including increased sales through the Company's current operating
units, as well as growth through the acquisition of similar businesses. The
following chart summarizes the Company's acquisitions:

<TABLE>
<CAPTION>
NAME OF BUSINESS
DATE ACQUIRED OR ASSETS ACQUIRED PRODUCT LINES BRANDS ACQUIRED
------------- ------------------ ------------- ---------------
<S> <C> <C> <C>
May 1, 1992 Accessory Design Group Women's accessories and Accessory Design Group
belts

June 1, 1993 Durite Leather Goods Women's apparel and Various private brands
accessories

November 29, 1993 Accolade, Inc. Men's and boys' belts Always In Style(1)
and accessories

April 4, 1994 Certain assets of Men's and women's small Prince Gardner
Prince Gardner leather goods Princess Gardner
Incorporated Royalle by Prince
Gardner
Royalle by Princess
Gardner

August 30, 1994 H.A. Sheldon, Inc. Men's belts, wallets and Various private brands
suspenders

May 1, 1995 Canterbury Belts, Ltd. Men's, women's and Canterbury
children's leather and
fabric accessories

May 12, 1998 Certain assets of AR Men's and women's small Amity Rolfs
Accessories Group, leather goods
Inc.

June 1, 1998 Tiger Accessories, Men's and boys' belts Tiger
Inc.
</TABLE>

- ---------------

(1) On March 27, 1995 the Company announced its decision to discontinue its
Always In Style operations.

13
<PAGE> 19

RESULTS OF OPERATIONS

Nine Months Ended March 31, 1997 Compared to the Nine Months Ended March 31,
1998

For the nine-month period ended March 31, 1998, net sales increased 29.9%
to $100,658,000 as compared to net sales of $77,462,000 for the same period last
year. Net income for the nine-month period increased 72.4% to $6,047,000, or
$1.07 per share, compared to net income of $3,508,000, or $.64 per share, for
the same nine months last year.

Women's products had net sales increases of $20,693,000 as compared to the
same period in the prior year. Women's product net sales for the nine-month
period ended March 31, 1998 were higher than the same period last year due in
part to initial order shipments of scarves, women's and children's socks, hair
goods and Jones New York handbags to certain key customers in addition to
increased women's accessories sales.

Men's products had net sales increases of $2,503,000 for the nine-month
period ended March 31, 1998 as compared to the same period in the prior year.
The men's products had net sales increases for the nine month period ended March
31, 1998 due to increased retail store distribution under the Haggar and Greg
Norman Collection brand names.

For the nine-month period ended March 31, 1998, gross margins decreased
0.2% to 36.9%, as compared to the same period for the prior year. During that
nine-month period, increases in men's gross margins offset lower women's product
sales gross margins.

Selling, general and administrative expenses as a percentage of net sales
for the nine months ended March 31, 1998 decreased 2.1% as compared to the same
period of the prior year. A portion of this decrease resulted from a larger mix
of women's product sales, which, on a percentage of sales basis, incur lower
variable selling expenses than men's product sales. Additionally, the majority
of the sales increases for the nine-month period ended March 31, 1998 were to
customers who pay no sales commissions, which decreased selling costs as a
percentage of sales. Although the Company's selling, general and administrative
expenses were favorably impacted by the larger mix of women's product sales, the
Company anticipates that such expenses in the future will be in line with
historical trends.

The effective tax rate for the nine months ended March 31, 1998 was 38.5%
compared to 37.4% for the same period of the prior year due to increased state
income taxes.

Comparison of Fiscal Years Ended June 30, 1995, 1996 and 1997

Net sales and cost of goods sold and selling, general and administrative
expenses for fiscal 1997 compared to the previous two fiscal years were as
follows:

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30,
--------------------------------
1995 1996 1997
------- ------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net sales.......................................... $83,721 $86,694 $102,507
Net sales growth................................... 24.5% 3.6% 18.2%
Cost of goods sold................................. $50,892 $53,974 $ 64,249
Cost of goods sold as a percentage of net sales.... 60.8% 62.3% 62.7%
Selling, general and administrative expenses....... $23,618 $25,279 $ 28,123
Selling, general and administrative expenses as a
percentage of net sales.......................... 28.2% 29.2% 27.4%
</TABLE>

Net sales increased $2,973,000, or 3.6%, in fiscal 1996. Virtually all of
this increase was due to sales generated by Canterbury, which was acquired in
May 1995, and increased mass merchant sales by the Company's Accessory Design
Group division. These increases were offset, to some degree, by a 26% decrease
in Prince Gardner's net sales in fiscal 1996.

14
<PAGE> 20

Net sales increased $15,813,000, or 18.2%, in fiscal 1997. The net sales
increase during fiscal 1997 was attributable to additional product sales through
existing channels of distribution by the Company's women's and men's accessory
businesses, which had percentage increases of 13.8% and 4.4%, respectively.

Gross margins decreased 0.4% in fiscal 1997 compared to fiscal 1996. This
decrease was the result of an increasing women's mass merchant accessory sales
mix as a percentage of net sales. Although these women's mass merchant sales
were at lower gross margins than the Company's historical gross margins, they
also carried a lower selling, general and administrative expense as a percentage
of sales compared to the Company's historical rates. During fiscal 1996, gross
margins declined 1.5% primarily due to merchandise sold at lower prices in an
effort to reduce slow-moving inventory.

Selling, general and administrative expenses as a percentage of net sales
increased 1% in fiscal 1996. The increase was due primarily to lower than
anticipated net sales, rather than to the actual amount of selling, general and
administrative expenses which, for the most part, were very close to planned
amounts. Selling, general and administrative expenses as a percentage of net
sales decreased 1.8% in fiscal 1997. A portion of this decrease resulted from a
larger mix of women's sales which, on a percentage of sales basis, incur lower
variable selling expenses than men's sales. Other contributing factors include
decreased selling costs due to the consolidation of divisional sales personnel
and volume efficiencies generated by greater than planned sales.

Depreciation and amortization expenses were $1,750,000 in fiscal 1997
compared to $2,103,000 in fiscal 1996. The decrease in fiscal 1997 of $353,000
was largely the result of lower amortization expense due to the write-off of
impaired goodwill in the fourth quarter of fiscal 1996.

The effective tax rates for 1995, 1996 and 1997 were 36.5%, 58.9% and
37.3%, respectively. The increase in the effective tax rate in fiscal 1996 was
due, for the most part, to the non-tax deductibility in certain states of the
losses associated with Prince Gardner's operations and impaired asset
write-offs. The effective tax rate in fiscal 1997 returned to historical trends
increasing, 0.8% from fiscal 1995, due to additional state and local taxes.

Income from continuing operations for fiscal 1995 was $4,195,000, or $0.80
per share, compared to $101,000, or $0.02 per share, for fiscal 1996 and
$4,564,000, or $0.83 per share for fiscal 1997. The decrease in income from
continuing operations for fiscal 1996 was due to the Prince Gardner write-off, a
lower gross profit margin percentage and higher selling, general and
administrative costs. The increase in fiscal 1997's income from continuing
operations was attributable to significant sales increases, a decrease in
depreciation and amortization expenses and a decrease in selling, general and
administrative expenses on a percent of sales basis.

LIQUIDITY AND CAPITAL RESOURCES

Generally, the Company's primary sources of liquidity are cash flows from
operations and the Company's lines of credit. The Company has two unsecured
domestic bank credit lines aggregating $55,000,000, which can be used for
seasonal borrowings and letters of credit. In addition, the Company has a
Canadian line of credit of approximately $1,000,000. The Company's borrowings
under its credit lines were $22,850,000 and 19,700,000 as of March 31, 1997 and
1998, respectively. The Company had approximately $36,300,000 available under
such lines of credit at March 31, 1998.

On March 31, 1998, the Company amended one of its unsecured lines of credit
to increase the uncommitted facility thereunder from $5,000,000 to $10,000,000
and extend the maturity date of the $20,000,000 committed facility thereunder
from April 30, 1999 to April 30, 2000. The amount of the bank credit lines was
increased to $65,000,000 subsequent to March 31, 1998.

For the nine months ended March 31, 1998, the Company's operating
activities used cash of $2,955,000 compared to $7,791,000 for the same period of
the prior year. The decrease was attributable to cash receipts collected from
the increase in fiscal 1998 second quarter sales, which were used to fund the
purchase of inventory during the nine months ended March 31, 1998.

15
<PAGE> 21

During fiscal 1995, the Company recorded a loss of $3,242,000 from
discontinued operations related to its decision to dispose of the Always In
Style operations.

During fiscal 1997, the Company provided (used) cash flows from operating
activities of ($271,000) compared to $7,156,000 for fiscal 1996. The decrease in
cash flow in fiscal 1997 was attributable to increased net income, offset by
increased inventory, accounts receivable and decreased accounts payable,
partially offset by an increase in accrued expenses. These changes in cash flows
were caused primarily by increased net sales of the Company in fiscal 1997,
which resulted in increased accounts receivable and inventory levels to support
continuing higher levels of sales activity.

Capital expenditures were $1,484,000 for the nine months ended March 31,
1998, a $709,000 increase over the same prior year period. The increase was due
primarily to the purchase of software applications for the Company's management
information systems.

The Company plans to use future cash flows from operations to develop and
expand current operations. The Company believes that its cash flows from
operations and borrowings available under existing bank lines of credit will be
sufficient to fund its operations and satisfy its future working capital needs.

INFLATION

Although the Company's operations are affected by general economic trends,
the Company does not believe that inflation has had a material effect on the
results of operations.

SEASONALITY

The table below sets forth sales and net income from continuing operations
for each quarter of the previous two fiscal years:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------------------------------------------------------
SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31,
1996 1996 1997 1997 1997 1997 1998
--------- -------- -------- -------- --------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales................... $23,661 $29,879 $23,922 $25,045 $30,865 $36,823 $32,970
Net income from continuing
operations................ 1,063 1,700 745 1,056 1,932 2,731 1,384
</TABLE>

16
<PAGE> 22

BUSINESS

GENERAL

<TABLE>
<CAPTION>
BRAND DISTRIBUTION CHANNEL PRODUCTS
----- -------------------- --------
<S> <C> <C>
Jones New York............................... Department stores Handbags
Specialty stores Small leather goods
Greg Norman Collection....................... Golf pro shops Belts
Specialty stores Small leather goods
Department stores
Catalogs
Rolfs........................................ Department stores Small leather goods
Specialty stores
Haggar....................................... National chain stores Belts
Department stores Small leather goods
Catalogs
Bugle Boy.................................... National chain stores Belts
Department stores Small leather goods
Canterbury................................... Specialty stores Belts
Golf pro shops Small leather goods
Prince Gardner............................... National chain stores Small leather goods
Specialty stores
Princess Gardner............................. National chain stores Small leather goods
Specialty stores
Amity........................................ Mass merchants Small leather goods
National chain stores
Accessory Design Group....................... Mass merchants Belts
National chain stores Women's accessories
Tiger........................................ Mass merchants Belts
National chain stores
</TABLE>

17
<PAGE> 23

Company believes it is better positioned than its competitors to continue to
capitalize on these market trends because of its following competitive
strengths:

COMPETITIVE STRENGTHS

Strong Customer Relationships and Superior Customer Service. Tandy Brands
has strong relationships with most major retailers in the United States and
Canada, including Wal-Mart, Target, K Mart, Shopko, AAFES, Sears, JCPenney,
Kohl's, May Department Stores, Dillard's, Mervyn's and Federated Department
Stores. The Company develops and maintains relationships at all levels of
management with its major retail customers. The Company believes it will
continue to benefit from the consolidation trend in the retail industry because
it is able to provide its customers with a higher degree of customer service
than its smaller, less well-capitalized competitors. For example, Tandy Brands
provides design and marketing expertise to its customers to help them
communicate fashion and lifestyle concepts through targeted product lines and
innovative point-of-sale presentations. In addition, the Company's automated
distribution facilities enable it to meet, efficiently and economically, the
increasingly stringent inventory delivery requirements of its customers. Tandy
Brands emphasizes continuous improvement in customer service to increase quality
and efficiencies and enhance its competitiveness.

Flexible Sourcing. Tandy Brands combines domestic manufacturing and
effective sourcing of raw materials and finished goods from around the world to
enhance its competitiveness and reduce its fixed costs. The Company manufactures
approximately 50% of its men's belts (representing approximately 22% of its net
sales) in the United States. Such domestic manufacturing capabilities, combined
with the Company's worldwide sourcing network, enable the Company to maximize
its efficiency in meeting its customers' requirements for price, timing and
delivery.

GROWTH STRATEGIES

PRODUCTS

The Company's primary products are belts and small leather goods, such as
wallets, which accounted for approximately 61.8% and 15.8%, respectively, of the
Company's net sales for fiscal 1998. The Company's other products include
women's handbags, socks, scarves, hats, hair accessories and men's neckwear,
suspenders and other fashion accessories, which collectively accounted for the
remaining 22.4% of net sales in fiscal 1998. Men's and boys' products accounted
for approximately 52.1% of net sales during fiscal 1998, and women's and girls'
products accounted for approximately 47.9% of net sales during the same period.
Proprietary brands, licensed brands and private brands accounted for
approximately 27.7%, 13.9% and 58.4%, respectively, of net sales during fiscal
1998.

Belts

The Company and its predecessors have been manufacturing and marketing
belts for over 70 years, and belts remain the Company's largest single product
category, representing approximately 61.8% of net sales in fiscal 1998. Tandy
Brands designs all of its belts and markets them under various licensed and
proprietary brands including Jones New York, Canterbury, Haggar, Bugle Boy and
Greg Norman Collection, as well as private brands for major retailers.
Management believes that the recent addition of the Tiger brand name through the
acquisition of Tiger Accessories provides a strong complement to the Company's
existing belt business, establishes the Company well within the boys' belt
segment and strengthens the Company's distribution into the mass merchant retail
segment. The Company competes in all four categories of the belt market: casual,
work, dress and fashion. In fiscal 1998, Tandy Brands manufactured approximately
50% of the men's belts it distributed and imported the balance from China,
Guatemala and various other countries.

19
<PAGE> 25

The continuing trend toward casual attire has created an increasing demand
for belts other than those in the traditional dress category. The Company's belt
sales were $83.4 million in fiscal 1998, which represents a compound annual
growth rate of approximately 23.3% of total belt sales from fiscal 1991 through
fiscal 1998. In fiscal 1998, sales of men's and boys' belts represented $58.6
million, or 70.2% of total belt sales, and women's and girls' belts represented
$24.8 million, or 29.8% of total belt sales.

Small Leather Goods

The Company's small leather goods consist primarily of men's and women's
wallets. The Company designs all of its small leather goods and markets them
under licensed and proprietary brands including Jones New York, Greg Norman
Collection, Rolfs, Haggar, Bugle Boy, Canterbury, Prince Gardner, Princess
Gardner and Amity, as well as private brands. The recent purchase of the Amity
and Rolfs tradenames supports the Company's brand development strategy and
provides strong additions to its brand portfolio. Management believes that the
Company's future results will benefit from its May 1998 purchase of the Amity
and Rolfs tradenames, the results of which were not material to fiscal 1998
consolidated results due to the timing of the purchase. Tandy Brands' small
leather goods are primarily sourced from manufacturers in foreign countries,
such as China, due to the labor-intensive nature of manufacturing small leather
goods and the relative low cost of labor in those countries.

Sales of the Company's small leather goods have increased in recent years
as a result of increased market penetration through the use of licensed and
proprietary brands. Sales of small leather goods accounted for approximately
$21.3 million, or 15.8% of Tandy Brands' net sales in fiscal 1998. In fiscal
1998, sales of men's and boys' small leather goods represented $7.2 million, or
33.8% of total small leather goods sales, and women's and girls' small leather
goods represented $14.1 million, or 66.2% of the Company's total small leather
goods sales.

Other Accessories

In addition to belts and small leather goods, Tandy Brands distributes
accessories such as women's handbags, socks, scarves, hats, hair accessories and
men's suspenders and neckwear. These products are marketed under certain of the
Company's proprietary brands, licensed brands and private brands. These other
accessories complement the Company's core belt and small leather goods products.
All other accessory items sold by the Company are purchased by the Company from
foreign and domestic sources and are manufactured according to the Company's
design specifications. In fiscal 1998, Tandy Brands' sales of other accessories
totaled $30.3 million, or 22.4% of its net sales.

EXCLUSIVE LICENSE AGREEMENTS

Tandy Brands has been awarded exclusive license agreements for several well
recognized brands, including Jones New York, Greg Norman Collection, Bugle Boy,
Haggar, John Weitz, Beverly Hills Polo Club and Botany 500. Generally, these
license agreements cover specific products and require that the Company pay
annual royalties, ranging from two to eight percent of net sales, based on
minimum sales quotas or sales. The terms of the agreements are typically four to
ten years, with options to extend the terms, provided certain sales or royalty
minimums are achieved. For fiscal 1998, sales of the Company's licensed products
accounted for approximately 13.9% of the Company's net sales, with no sales
associated with any individual license agreement accounting for more than five
percent of net sales. The Company maintains excellent relationships with its
licensors, as evidenced by recent license renewals, licensed territory
expansions and product line extensions.

PRIVATE BRAND PRODUCTS

In fiscal 1998, private brand products accounted for approximately $78.8
million, or 58.4% of the Company's net sales. Private brand programs offer the
Company's customers exclusivity and pricing control over their products, both of
which are important factors in the retail marketplace. Management believes that
the Company's flexible sourcing capabilities, advanced electronic inventory
management and replenishment

20
<PAGE> 26

systems and design, product development and merchandising expertise provide
retailers with a superior alternative to direct sourcing of their private brand
products. The Company's principal private brand programs include those for
leading retailers such as Wal-Mart, JCPenney, Sears, and Target and nationally
recognized private brand names such as Farah, Kathy Lee, Arizona, Jacqueline
Ferrar, St. John's Bay and Cherokee.

PROPRIETARY BRANDS

In addition to its licensed and private brands, Tandy Brands produces and
markets products under its own registered trademarks and trade names. The
Company owns leading and well recognized trademarks such as Rolfs, Amity,
Canterbury, Prince Gardner, Princess Gardner, Royalle by Prince Gardner, and
Royalle by Princess Gardner. The Company intends to build on the success of its
proprietary brand portfolio by pursuing additional ownership opportunities and
expanding the assortment of products offered and the retail channels served by
its proprietary brands. Net sales under the Company's proprietary brands were
approximately $37.5 million, or 27.7% of the Company's net sales in fiscal 1998.

CUSTOMERS

During fiscal 1998, the Company supplied over 10,000 retailers representing
over 20,000 retail locations. The Company sells its products through all major
retail distribution channels throughout the United States and Canada, including
mass merchants, national chain stores, major department stores, men's and
women's specialty stores, golf pro shops and catalogs. The Company maintains
strong relationships with major retailers in the United States and Canada,
including Wal-Mart, Target, K Mart, Shopko, AAFES, Sears, JCPenney, Kohl's, May
Department Stores, Dillard's, Mervyn's and Federated Department Stores. For
fiscal 1998, Wal-Mart represented 43% of the Company's net sales. In fiscal
1998, the Company's top ten customers accounted for approximately 70% of net
sales. See "Risk Factors -- Dependence on Significant Customers."

As a result of management's success in creating and maintaining strategic
partnerships with its customers, the Company has received numerous vendor
awards, including five Vendor of the Quarter awards for men's and women's
accessories from Wal-Mart.

SALES, MARKETING, AND CUSTOMER SERVICE

Management believes that the success of Tandy Brands has resulted in large
part from the Company's strong customer relationships, strong sales and
marketing organization and superior customer service, including "quick response"
distribution, vendor inventory management services, EDI capabilities and
expertise in the communication of fashion and lifestyle concepts through product
lines and innovative point-of-sale presentations. The Company's accounts are
developed and maintained through the coordinated efforts of senior management,
regional managers, account executives and an organization of salespeople and
independent sales representatives. Relationships with certain of the Company's
national accounts such as Wal-Mart, Dillard's, JCPenney, Sears, K Mart and
Target are managed by senior management or senior account executives.

Senior managers are responsible for generating profitable performance
results by developing, planning, selling and implementing merchandise programs
for their accounts. Individual senior managers develop and maintain business
relationships with customers' buyers and merchandise managers. Senior managers
also develop and propose comprehensive programs relating to product, pricing and
fixturing and assist customers' buyers and merchandise managers in the
implementation of these programs. The implementation of marketing programs is
coordinated through the efforts of senior and regional managers. Senior managers
are compensated based on a combination of salary and bonus tied to various
measures of profitability.

Regional managers are sales and service professionals with experience in
retail and merchandising management. The regional manager's role, in addition to
hiring, training and supervising sales associates, includes assisting customers
in developing seasonal buying plans, assisting stores in developing plans for
physical layouts of departments and fixtures and developing overall fixture and
product presentation.

21
<PAGE> 27

The Company's in-store customer service relationships with various
specialty stores, national chain stores and major department stores are
maintained by a nationwide team of more than 60 sales associates in the United
States and approximately 30 sales associates in Canada, who are organized on a
regional basis and supervised by regional sales managers. Sales associates are
responsible for overseeing accounts within a defined geographic territory,
developing and maintaining business relationships with their respective
customers, preparing and conducting line presentations and assisting customers
in the implementation of programs at the individual store level. In addition,
sales associates may, depending upon the needs of an individual customer, assist
in the maintenance and presentation of merchandise on the selling floor. The
Company's regional sales organization is supported by account executives. All
sales personnel other than senior managers are compensated based on a
combination of salary and commission.

MERCHANDISING AND PRODUCT DEVELOPMENT

The Company's product development and merchandising professionals work
closely with customers, suppliers and Tandy Brands' licensors to interpret
market trends, develop new products and create and implement comprehensive
merchandising programs which consist of packaging and point-of-sale fixturing
and presentation materials. The Company believes that its ability to design all
of its products internally represents a significant competitive advantage
because retail customers have become increasingly reliant on the design and
merchandising expertise of their suppliers.

COMPETITION

Competition in the fashion accessories industry is intense. The Company's
ability to remain competitive depends largely on its ability to maintain its
customer relationships, create new designs and products and offer high quality
merchandise at popular prices. The Company's men's and boys' belt business
competes with a large number of companies, including Swank, Humphreys, Leegin,
Max Leather and Salant. The Company's men's wallet business also competes with a
large number of competitors, including Buxton, Humphreys, Mundi and Fossil. In
women's and girls' belts, the Company competes primarily with Omega, Cipriani,
Liz Claiborne, Circa and Fossil. The women's handbag business competes with Nine
West, Liz Claiborne, Kenneth Cole, Fossil, Guess and others, while the women's
personal leather goods business competes with Buxton, Mundi, Fossil, Liz
Claiborne, Nine West and others.

Tandy Brands competes on the basis of customer service, brand recognition,
product quality and price. The Company believes that its ability to compete
successfully is based on its strong customer relationships, superior customer
service, strong national brand portfolio, national distribution capabilities,
proprietary inventory management systems, flexible sourcing and product design
and innovation. See "Business -- Competitive Strengths."

RAW MATERIALS AND SUPPLIERS

The major raw materials for the Company's products are readily available
from a variety of foreign and domestic sources. In fiscal 1998, the Company
sourced certain finished products representing approximately 78.5% of its net
sales from outside manufacturers, both domestic and foreign. The Company has
strong relationships with a number of high quality, low-cost foreign
manufacturers who provide particularly labor-intensive products, such as small
leather goods, manufactured to the Company's specifications.

MANUFACTURING OPERATIONS

The Company's manufacturing facilities are located in Yoakum, Texas and
Scarborough, Ontario. The Yoakum, Texas facility has the capacity to manufacture
approximately 4.8 million belts per year. During fiscal 1998, Tandy Brands'
manufacturing facilities operated at approximately 88% of capacity. The Company
continually seeks to increase the automation of its manufacturing operations.
The Company believes that it is one of the lowest-cost domestic belt producers
because of its automated equipment, large production volumes and economies of
scale in raw materials and finished goods sourcing.

22
<PAGE> 28

EMPLOYEES

The Company had approximately 1,000 employees as of June 30, 1998. The
Company believes that employee relations are generally good. A total of 78 of
the Company's employees are subject to a collective bargaining agreement. In
addition, the United Paperworkers International Union, which represented certain
of the Company's employees who were formerly subject to a collective bargaining
agreement when they were employed by AR Accessories Group, Inc., has asked the
Company to bargain over the employment terms and conditions of the employees of
the Company's West Bend, Wisconsin distribution facility. The Company is
currently evaluating whether the union represents the majority of the
distribution facility employees. The Company will respond appropriately to the
union's request depending on the results of its evaluation.

PROPERTIES

The Company owns and operates the various facilities in Yoakum, Texas which
are used for leather product manufacturing, product distribution and
administrative offices. The Company leases facilities in Scarborough, Canada,
which are used for the manufacture and distribution of leather goods.
Additionally, the Company leases warehouse space in Dallas, Texas and office
space in Arlington, Texas, New York, New York and San Francisco, California. The
Company has a renewal option for its corporate office space in Arlington. The
Company owns the West Bend, Wisconsin facility which is utilized for the
distribution of small leather goods. Management believes Tandy Brands' various
properties are adequate and suitable for the particular uses involved.

The total space owned, leased and occupied by the Company as of June 30,
1998, was as follows:

APPROXIMATE SQUARE FEET

<TABLE>
<CAPTION>
OWNED LEASED TOTAL
------- ------- -------
<S> <C> <C> <C>
Warehouse and Office.................................... 413,000 165,000 578,000
Factory................................................. 63,000 42,000 105,000
------- ------- -------
Total......................................... 476,000 207,000 683,000
======= ======= =======
</TABLE>

LEGAL PROCEEDINGS

The Company is not involved in any material pending legal proceedings,
other than ordinary routine litigation incidental to the Company's business.

GOVERNMENTAL REGULATIONS

Many of the Company's products are manufactured in countries other than the
United States. Accordingly, those countries and the United States may from time
to time modify existing quotas, duties, tariffs, or import restrictions, or
otherwise regulate or restrict imports in a manner which could be material and
adverse to the Company. For example, trade disputes between the United States
and a country in which the Company's products are manufactured could lead to the
withdrawal of the "most favored nation" status for that country. In addition,
economic and political disruptions in Asia and other parts of the world from
which the Company imports goods could have an adverse effect on the Company's
ability to maintain an uninterrupted flow of products to its major customers.

Due to the fact that the Company sells its products to retail exchange
operations of the United States military, and thus is a supplier to the federal
government, the Company must comply with all federal statutes applicable to
federal government suppliers.

23
<PAGE> 29

MANAGEMENT

The following table and text set forth the name, age and position of each
executive officer and director of the Company.

<TABLE>
<CAPTION>
NAME AGE POSITIONS HELD
---- --- --------------
<S> <C> <C>
J.S.B. Jenkins.................. 55 Director, President and Chief Executive
Officer
Jerry W. Wood................... 53 Executive Vice President
Stanley T. Ninemire............. 42 Senior Vice President, Chief Financial Officer
and Assistant Secretary
C.A. Rundell, Jr................ 66 Director
Robert E. Runice................ 68 Director
Dr. James F. Gaertner........... 55 Director, Chairman of the Board
Maxine K. Clark................. 49 Director
Gene Stallings.................. 63 Director
Marvin J. Girouard.............. 59 Director
</TABLE>

J.S.B. Jenkins has served as President and Chief Executive Officer of the
Company since its formation in November 1990. Mr. Jenkins served as Executive
Vice President of The Bombay Company, Inc. ("Bombay") from July 1, 1985 until
December 31, 1990, and as Vice President of Bombay from 1980 until 1985. He also
served as the President of the Tandy Brands Accessories division of Bombay, of
which the Company was a division until its spin-off in December 1990, from April
1986 until the spin-off. Mr. Jenkins also is a member of the Texas A&M
University College of Business Administration/Graduate School of Business
Development Council, the Texas A&M University Center for Retailing Advisory
Board, the Texas A&M University President's Council and the Board of Directors
of the Arlington Chamber of Commerce.

Jerry W. Wood has served as Executive Vice President since May 1995. Mr.
Wood served as Senior Vice President of the Company from September 1994 through
May 1995 and as Vice President of the Company from its formation in November
1990 through September 1994. Mr. Wood served as Executive Vice President of the
Tandy Brands Accessories division of Bombay from April 1986 until December 31,
1990.

Stanley T. Ninemire has served as Senior Vice President, Chief Financial
Officer and Assistant Secretary of the Company since January 1997. Mr. Ninemire
served as Vice President -- International Operations of the Company from
November 1994 through June 1995, and as Vice President and Treasurer of the
Company from its formation in November 1990 until November 1994. In addition,
Mr. Ninemire served as Secretary of the Company from November 1990 to June 1991
and as Assistant Secretary from June 1991 through November 1994. From July 1995
to December 1996, Mr. Ninemire was Senior Vice President of Finance and
Operations of Practitioners Publishing Company, a division of Thomson
Publishing. Mr. Ninemire is a certified public accountant.

C.A. Rundell, Jr. has been a director of the Company since November 1990.
Mr. Rundell has operated as sole proprietor of Rundell Enterprises, a private
investment company with principal involvement in manufacturing companies, since
1988. Mr. Rundell is Chairman of the Board of NCI Building Systems, Inc., the
President and Chief Executive Officer and a director of Tyler Corporation and
serves on the board of directors of Dain Rauscher Corporation.

Robert E. Runice has been a director of the Company since November 1990.
Mr. Runice is presently a business consultant and private investor. He served as
Vice President of US WEST, Inc. and President, Commercial Development Division
of US WEST, Inc. from September 1983 through the end of 1991. US WEST, Inc. is a
telecommunications service corporation headquartered in Englewood, Colorado. Mr.
Runice serves on the board of directors of Bombay and of Utilx Corporation.

Dr. James F. Gaertner has been a director of the Company since November
1990. Dr. Gaertner currently serves as Dean of the College of Business at The
University of Texas at San Antonio ("UTSA"). Prior to his appointment as Dean on
September 1, 1987, Dr. Gaertner served for four years as professor and Director
of the Division of Accounting and Information Systems at UTSA.

24
<PAGE> 30

Maxine K. Clark has been a director of the Company since April 1996. Ms.
Clark is the President and Chief Executive Officer of the Build-A-Bear Workshop,
L.L.C., an operator of interactive children's entertainment retail stores, which
she founded in February 1996. Ms. Clark was President of Payless Shoe Source
from November 1992 to January 1996, and Executive Vice President of Venture
Stores from January 1988 to November 1992. Ms. Clark also serves on the board of
directors of The Earthgrains Company, a bread company, Wave Technologies, Inc.,
a training company for the technology industry and Department 56, a collectible
gift and decorative accessory manufacturer. She is a member of the Board of
Trustees of the University of Georgia Foundation, the Advisory Board of The
Hatchery, Washington University Olin School of Business and the President's
Advising Counsel of the Greater St. Louis Council of Girl Scouts.

Gene Stallings has been a director of the Company since June 1997. Mr.
Stallings is presently an author and private investor. From January 1990 to
December 1996, he was the head football coach of the University of Alabama. Mr.
Stallings was head coach of the St. Louis/Phoenix Cardinals professional
football team from 1986 to 1989. Mr. Stallings is a member of the Board of
Directors of the First National Bank of Paris, Texas, the Board of Regents of
Abilene Christian University, the Board of St. Joseph's Hospital in Paris,
Texas, and the Board of Directors of Great Southern Wood Incorporated. Mr.
Stallings also is a member of the Board of Disability Resources, a non-profit
organization supporting group housing for physically and mentally handicapped
individuals.

Marvin J. Girouard has been a director of the Company since June 1998. Mr.
Girouard is presently the President, Chief Executive Officer and a director of
Pier 1 Imports, Inc. Mr. Girouard served as President and Chief Operating
Officer of Pier 1 Imports, Inc. from August 1988 until July 1998.

EXECUTIVE COMPENSATION

The following table sets forth certain information with respect to annual
and long-term compensation for services rendered in all capacities during fiscal
1998, 1997, 1996, and 1995 paid to Mr. Jenkins, the Company's Chief Executive
Officer, and each of the other executive officers of the Company (the "Named
Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-------------------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
FISCAL -------------------- UNDERLYING COMPENSATION
NAME/TITLE YEAR SALARY BONUS OPTIONS (1)
---------- ------ -------- -------- ---------- ------------
<S> <C> <C> <C> <C> <C>
J.S.B. Jenkins.......................... 1998 $320,000 $370,084 15,000 $91,059
President and Chief Executive Officer 1997 304,140 187,562 15,000 64,483
1996 304,140 -- -- 40,807
1995 293,850 -- 15,000 65,903
Jerry W. Wood........................... 1998 $179,000 $201,168 9,000 $53,517
Executive Vice President 1997 170,000 100,815 9,000 39,854
1996 170,000 -- -- 26,201
1995 147,000 -- 9,000 33,136
Stanley T. Ninemire..................... 1998 $170,000 $103,409 6,000 $41,008
Senior Vice President, Chief Financial 1997 75,000(2) 25,790(2) 7,500(2) 15,752(2)
Officer and Assistant Secretary 1996 --(3) -- -- --
1995 129,645 -- -- 77,535(4)
</TABLE>

- ---------------
(1) Represents primarily the Company's matching contributions under the Tandy
Brands Accessories, Inc. Stock Purchase Program, the Tandy Brands
Accessories, Inc. Benefit Restoration Plan and the Tandy Brands Accessories,
Inc. Employees Investment Plan.
(2) These amounts represent compensation for the last six months of fiscal 1997.
(3) Mr. Ninemire was Senior Vice President of Finance and Operations of
Practitioners Publishing Company, a division of Thomson Publishing, from
July 1995 to December 1996.
(4) Includes approximately $46,400 in severance-related payments.

25
<PAGE> 31

OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth information concerning stock options granted
to each of the Named Officers during fiscal 1998:

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE OF ASSUMED
ANNUAL RATES OF STOCK
NUMBER OF SHARES PERCENTAGE OF PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED FOR OPTION TERM(1)
OPTIONS TO EMPLOYEES EXERCISE PRICE EXPIRATION ----------------------
NAME GRANTED DURING FISCAL YEAR PER SHARE DATE 5% 10%
---- ---------------- ------------------ -------------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
J.S.B. Jenkins....... 15,000 17.2% $12.3125 8/7/2007 $116,149 $294,344
Jerry W. Wood........ 9,000 10.3% 12.3125 8/7/2007 69,689 176,607
Stanley T.
Ninemire........... 6,000 6.9% 12.3125 8/7/2007 46,460 117,738
</TABLE>

- ---------------

(1) The amounts shown in these columns represent the potential realizable values
using the options granted and the exercise price. The assumed rates of stock
price appreciation are set by the Commission's executive compensation
disclosure rules and are not intended to forecast appreciation of the Common
Stock.

OPTION EXERCISES AND YEAR-END OPTION VALUES

The following table sets forth certain information with respect to options
exercised during fiscal 1998 by each of the Named Officers and the value of
unexercised options held by the Named Officers at June 30, 1998.

AGGREGATED OPTION EXERCISES IN THE LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED ON OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END(1)
EXERCISE VALUE --------------------------- ---------------------------
NAME (#) REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
J.S.B. Jenkins.......... -- -- 58,888 35,000 $426,587 $293,438
Jerry W. Wood........... -- -- 33,288 20,800 252,228 176,063
Stanley T. Ninemire..... -- -- 1,500 12,000 18,368 111,345
</TABLE>

- ---------------

(1) The June 30, 1998 closing market price of $18.625 is used in the calculation
to determine the value of unexercised options.

26
<PAGE> 32

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information concerning the
beneficial ownership of the Common Stock as of July 31, 1998 and as adjusted to
reflect the sale of 167,500 shares of Common Stock by the Selling Stockholder
and 1,732,500 shares of Common Stock by the Company in the Offering, including
beneficial ownership by (i) each person (or group within the meaning of Section
13(d)(3) of the Exchange Act) known by the Company to own beneficially more than
five percent (5%) of the Common Stock, (ii) the Named Officers as a group, (iii)
each director, (iv) all directors and executive officers as a group, and (v) the
Selling Stockholder. The address of each person listed below is 690 E. Lamar
Boulevard, Suite 200, Arlington, Texas 76011, unless otherwise indicated.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO OWNED AFTER
THE OFFERING(1) SHARES THE OFFERING(1)
-------------------- BEING -------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT OFFERED NUMBER PERCENT
------------------------ -------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
Tandy Brands Accessories, Inc.................. 970,145(2) 17.2% 167,500 802,645 10.9%
Employees Investment Plan
Dr. James F. Gaertner.......................... 24,384(3) * -- 24,384 *
J.S.B. Jenkins................................. 564,025(4) 9.9% -- 564,025 7.6%
C.A. Rundell, Jr............................... 30,482(5) * -- 30,482 *
Robert E. Runice............................... 24,720(6) * -- 24,720 *
Maxine K. Clark................................ 8,937(7) * -- 8,937 *
Gene Stallings................................. 4,653(8) * -- 4,653 *
Marvin J. Girouard............................. -- * -- -- *
Jerry W. Wood.................................. 160,935(9) 2.8% -- 160,935 2.2%
Stanley T. Ninemire............................ 71,990(10) 1.3% -- 71,990 1.0%
All directors and executive officers as a group
(9 persons).................................. 890,126(11) 15.7% -- 890,126 11.8%
</TABLE>

- ---------------

* Represents less than one percent
(1) Shares are deemed to be "beneficially owned" by a person if such person,
directly or indirectly, has or shares (i) voting power with respect
thereto, including the power to vote or to direct the voting of such
shares, or (ii) investment power with respect thereto, including the power
to dispose or to direct the disposition of such shares. In addition, a
person is deemed to be the beneficial owner of shares if such person has
the right to acquire beneficial ownership of such shares within 60 days.
Directors and officers have sole voting and investment power with respect
to the shares shown unless otherwise indicated below.
(2) Voting power of the shares held pursuant to this plan is vested in Frost
Bank, N.A., as trustee, subject to the right of participants in the plan to
direct the voting of each of their allocable shares of Common Stock in the
plan. The trustee votes any shares for which no directions are received in
the same proportion as those shares with respect to which directions
regarding voting are received. A total of 120,725 shares are pledged to a
bank to secure a $1.5 million loan.
(3) Includes 3,375 shares held of record by Dr. Gaertner, 17,849 shares subject
to stock options exercisable within 60 days and 3,160 shares attributable
to ownership of stock units held in the Tandy Brands Accessories, Inc. 1995
Stock Deferral Plan for Non-Employee Directors.
(4) Includes 328,540 shares held of record by Mr. Jenkins, 64,888 shares
subject to stock options exercisable within 60 days, 2,462 shares held
indirectly through the Tandy Brands Accessories, Inc. Stock Purchase
Program, 15,736 shares held indirectly through the Tandy Brands
Accessories, Inc. Benefit Restoration Plan and 1,275 shares held of record
by Mr. Jenkins' daughter. Also includes 151,124 shares attributable to unit
ownership in the Tandy Brands Accessories, Inc. Employees Investment Plan,
as to which Mr. Jenkins disclaims beneficial ownership. Does not include
94,184 shares held by certain irrevocable family trusts in which Mr.
Jenkins has no beneficial interest.

27
<PAGE> 33

(5) Includes 9,430 shares held of record by Mr. Rundell, 17,483 shares subject
to stock options exercisable within 60 days and 3,569 shares attributable
to ownership of stock units held in the Tandy Brands Accessories, Inc. 1995
Stock Deferral Plan for Non-Employee Directors.
(6) Includes 2,925 shares held of record by Mr. Runice, 17,483 shares subject
to stock options exercisable within 60 days and 4,312 shares attributable
to ownership of stock units held in the Tandy Brands Accessories, Inc. 1995
Stock Deferral Plan for Non-Employee Directors.
(7) Includes 5,916 shares subject to stock options exercisable within 60 days
and 3,021 shares attributable to ownership of stock units held in the Tandy
Brands Accessories, Inc. 1995 Stock Deferral Plan for Non-Employee
Directors.
(8) Includes 2,837 shares held of record by Mr. Stallings and 1,816 shares
subject to stock options exercisable within 60 days.
(9) Includes 67,492 shares held of record by Mr. Wood, 36,888 shares subject to
stock options exercisable within 60 days, 1,598 shares held indirectly
through the Tandy Brands Accessories, Inc. Stock Purchase Program and 2,383
shares held indirectly through the Tandy Brands Accessories, Inc. Benefit
Restoration Plan. Also includes 52,574 shares attributable to unit
ownership in the Tandy Brands Accessories, Inc. Employees Investment Plan,
as to which Mr. Wood disclaims beneficial ownership.
(10) Includes 45,183 shares held of record by Mr. Ninemire, 2,700 shares subject
to stock options exercisable within 60 days, 1,598 shares held indirectly
through the Tandy Brands Accessories, Inc. Stock Purchase Program and 90
shares held indirectly through the Tandy Brands Accessories, Inc. Benefit
Restoration Plan. Also includes 22,419 shares attributable to unit
ownership in the Tandy Brands Accessories, Inc. Employees Investment Plan,
as to which Mr. Ninemire disclaims beneficial ownership.
(11) Includes 165,023 shares subject to stock options exercisable within 60
days, 5,658 shares held indirectly through the Tandy Brands Accessories,
Inc. Stock Purchase Program, 226,117 shares attributable to unit ownership
in the Tandy Brands Accessories, Inc. Employees Investment Plan, 18,209
shares held indirectly through the Tandy Brands Accessories, Inc. Benefit
Restoration Plan and 14,062 shares attributable to ownership of stock units
held in the Tandy Brands Accessories, Inc. 1995 Stock Deferral Plan for
Non-Employee Directors.

28
<PAGE> 34

UNDERWRITING

Upon the terms and subject to the conditions stated in the Underwriting
Agreement, the Underwriters named below, through their Representatives, Bear,
Stearns & Co. Inc., ING Baring Furman Selz LLC and Hoak Breedlove Wesneski & Co.
have severally agreed to purchase from the Company and the Selling Stockholder,
the number of shares of Common Stock set forth opposite the name of such
Underwriter.

<TABLE>
<CAPTION>
UNDERWRITER NUMBER OF SHARES
----------- ----------------
<S> <C>
Bear, Stearns & Co. Inc.....................................
ING Baring Furman Selz LLC..................................
Hoak Breedlove Wesneski & Co................................

---------
Total............................................. 1,900,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the Shares are subject to
approval of certain legal matters by counsel and to certain other conditions.
The Underwriters are obligated to take and pay for all shares of Common Stock
offered hereby (other than those covered by the over-allotment option described
below) if any such shares are taken.

The Underwriters, for whom Bear, Stearns & Co. Inc., ING Baring Furman Selz
LLC and Hoak Breedlove Wesneski & Co., acting as Representatives, propose to
offer part of the Shares directly to the public at the public offering price set
forth on the cover page of this Prospectus and part of the Shares to certain
dealers at a price which represents a concession not in excess of $ per
share under the public offering price. The Underwriters may allow, and such
dealers may allow, a concession not in excess of $ per share to certain
other dealers. After the Offering of the shares to the public, the public
offering price and such concessions may be changed by the Representatives.

The Company, its officers and directors, and certain stockholders of the
Company designated by the Representatives, including the Selling Stockholder,
have agreed that for a period of 120 days from the date of this Prospectus, they
will not, without the prior written consent of Bear, Stearns & Co. Inc., offer,
sell, contract

29
<PAGE> 35

to sell, or otherwise dispose of, any shares of Common Stock of the Company or
any securities convertible into, or exercisable or exchangeable for, Common
Stock of the Company.

The Company has granted to the Underwriters an option to purchase up to
285,000 additional shares of Common Stock at the public offering price less the
underwriting discounts and commissions set forth on the cover page of this
Prospectus, solely to cover over-allotments, if any. Such option may be
exercised at any time until 30 days after the date of this Prospectus. If the
Underwriters exercise such option, each of the Underwriters will be committed,
subject to certain conditions, to purchase a number of additional shares
proportionate to such Underwriter's initial commitment as indicated in the
preceding table. The Company and the Selling Stockholder have agreed to
indemnify, jointly and severally, each of the Underwriters and the directors,
officers, employees, agents and control persons of each Underwriter against all
losses, claims, damages, expenses or liabilities under the Securities Act, the
Exchange Act, and other federal and state laws or regulations insofar as such
losses, claims, damages or liabilities arise out of or based upon any untrue
statement or alleged untrue statement of material fact or arise out of or based
upon any omission or alleged omission to state a material fact required to be
stated to make statements not misleading. Each Underwriter has severally agreed
to indemnify the Company and its directors and officers who sign the
Registration Statement and each control person of the Company to the same extent
as the foregoing indemnity to each Underwriter but only with respect to written
information furnished by the Underwriters to the Company for inclusion in the
offering documents. Each of the foregoing indemnities is in addition to any
liabilities that the parties may otherwise have.

Insofar as indemnification for liabilities arising under the Securities
Act, may be permitted to officers, directors or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act, and is therefore unenforceable.

LEGAL MATTERS

Unless otherwise specified, the validity of the Common Stock offered hereby
will be passed upon for the Company by Winstead Sechrest & Minick P.C., Dallas,
Texas. Certain legal matters in connection with the Offering of Common Stock
will be passed upon for the Underwriters by Jenkens & Gilchrist, a Professional
Corporation, Dallas, Texas.

EXPERTS

The consolidated financial statements of the Company incorporated by
reference in the Company's Annual Report (Form 10-K) for the year ended June 30,
1997 have been audited by Ernst & Young LLP, independent auditors, as set forth
in their report incorporated by reference therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.

30
<PAGE> 36

- ------------------------------------------------------
- ------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THIS OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY, THE SELLING STOCKHOLDER OR THE UNDERWRITERS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE
COMMON STOCK IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THERE HAS NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR
IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.

------------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 1
Risk Factors.......................... 6
Use of Proceeds....................... 9
Price Range of Common Stock........... 9
Dividend Policy....................... 10
Capitalization........................ 11
Selected Financial Data............... 12
Management's Discussion and Analysis
of Consolidated Financial Condition
and Results of Operations........... 13
Business.............................. 17
Management............................ 24
Principal and Selling Stockholders.... 27
Underwriting.......................... 29
Legal Matters......................... 30
Experts............................... 30
</TABLE>

------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------

1,900,000 SHARES

TANDY BRANDS
ACCESSORIES, INC.

COMMON STOCK
-----------------

PROSPECTUS
-----------------
BEAR, STEARNS & CO. INC.

ING BARING FURMAN SELZ LLC

HOAK BREEDLOVE WESNESKI & CO.
, 1998

- ------------------------------------------------------
- ------------------------------------------------------
<PAGE> 37

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The expenses in connection with the Common Stock offered hereby all of
which will be borne by the registrant are as follows (all amounts are estimates
except for the Securities & Exchange Commission Registration fee):

<TABLE>
<S> <C>
Registration Fee............................................ $11,360.64
NASD Filing Fee............................................. 4,351.07
Nasdaq Listing Fee*.........................................
Printing and Engraving*.....................................
Legal Fees and Expenses*....................................
Accounting Fees and Expenses*...............................
Blue Sky Fees and Expenses*.................................
Transfer Agent*.............................................
Miscellaneous*..............................................
----------
Total............................................. $
==========
</TABLE>

- ---------------

* To be filed by amendment

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Delaware General Corporation Law

Section 145(a) of the Delaware General Corporation Law (the "DGCL")
provides that a corporation may indemnify any person who was or is a party or
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believes to be in or not opposed to the best
interests of the corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.

Section 145(b) of the DGCL provides that a corporation may indemnify any
person who was or is a party or threatened to be made a party to any threatened,
pending or completed action or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that he is or was a
director, officer, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Courts of Chancery or such other court shall deem proper.

II-1
<PAGE> 38

Section 145(c) of the DGCL provides that to the extent that a director,
officer, employee or agent of a corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred to in
subsections (a) and (b) of Section 145, or in defense of any claim, issue or
matter therein, he shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection therewith.

Section 145(d) of the DGCL provides that any indemnification under
subsections (a) and (b) of Section 145 (unless ordered by a court) shall be made
by the corporation only as authorized in the specific case upon a determination
that indemnification of the present or former director, officer, employee or
agent is proper in the circumstances because has met the applicable standard of
conduct set forth in subsections (a) and (b) of Section 145. Such determination
shall be made (1) by the board of directors by a majority vote of a quorum
consisting of directors who were not parties to such action, suit or proceeding,
or (2) if such a quorum is not obtainable, or, even if obtainable, if a quorum
of disinterested directors so directs, by independent legal counsel in a written
opinion, or (3) by the securityholders.

Section 145(e) of the DGCL provides that expenses (including attorneys'
fees) incurred by an officer or director in defending any civil, criminal,
administrative or investigative action, suit or proceeding may be paid by the
corporation in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that he is not
entitled to repay such amount if it shall ultimately be determined that he is
not entitled to be indemnified by the corporation as authorized in Section 145.
Such expenses (including attorneys' fees) incurred by other employees and agents
may be so paid upon such terms and conditions, if any, as the board of directors
deems appropriate.

Certificate of Incorporation

The Certificate of Incorporation of the Company provides that a director of
the Company shall not be personally liable to the Company or its stockholders
for monetary damages for breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to the Company or
its stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for a transaction
from which the director derived an improper personal benefit or (iv) unlawful
payment of dividends or unlawful stock repurchases or redemptions. If the DGCL
is amended to authorize the further elimination or limitation of the liability
of directors, the liability of a director of the Company, in addition to the
limitation on personal liability described above, shall be limited to the
fullest extent permitted by the DGCL, as so amended. Further any repeal or
modification of such provision of the Certificate of Incorporation by the
stockholders of the Company shall be prospective only, and shall not adversely
affect any limitation on the personal liability of a director of the Company
existing at the time of such repeal or modification.

Bylaws

The Bylaws of the Company provide that each person who was or is made a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that he or she or a person of whom he or she is the legal
representative, is or was or has agreed to become a director or officer of the
Company or is or was servicing or has agreed to serve at the request of the
Company as a director or officer, whether the basis of such proceedings is
alleged action in an official capacity as a director or officer or in any other
capacity while serving or having agreed to serve as a director or officer, shall
be indemnified and held harmless by the Company to the fullest extent authorized
by Section 145 of the DGCL, as an effect or as it may be amended from time to
time, against all reasonable expenses incurred by, imposed upon or resulting
from any action, suit or proceeding to which he may be made a party by reason of
his being or having been a director or officer of the Company or any of its
subsidiaries, or of any other corporation at the request of the Company. Such
indemnity shall inure to the benefit of his or her heirs, executors and
administrators. The Company may also make such reimbursement in the event of a
settlement of any such action, suit or proceeding prior to final adjudication
when such settlement appears to be in the interest of the Company.
II-2
<PAGE> 39

ITEM 16. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES

(a) Exhibits:

<TABLE>
<C> <S>
1.3 -- Form of Underwriting Agreement for Common Stock*
5.1 -- Opinion of Winstead Sechrest & Minick P.C.*
23.1 -- Consent of Ernst & Young LLP, Independent Auditors
23.2 -- Consent of Winstead Sechrest & Minick P.C. (to be
included in the opinion contained as Exhibit 5.1)*
24.1 -- Power of Attorney (included on the signature page of the
Registration Statement)
</TABLE>

- ---------------

* To be filed by amendment or as an exhibit to a document to be incorporated by
reference herein in connection with an offering of the Common Stock.

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made
a post-effective amendment to this Registration Statement to include any
material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change
to such information in the Registration Statement.

(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the Offering.

The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act), that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered. The registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

II-3
<PAGE> 40

The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report, to security holders that is incorporated by
reference in the Prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X is not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.

SIGNATURE

Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Arlington and the State of Texas, on August 12, 1998.

TANDY BRANDS ACCESSORIES, INC.

By: /s/ J.S.B. JENKINS
----------------------------------
J.S.B. Jenkins,
President and Chief Executive
Officer

Each individual whose signature appears below hereby designates and
appoints J.S.B. Jenkins, Jerry W. Wood and Stanley T. Ninemire, and each of
them, any one of whom may act without joinder of the other, as his true and
lawful attorney-in-fact and agent (the "Attorneys-in-Fact"), with full power of
substitution and resubstitution, for such person and in such person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement, which
amendments may make such changes in this Registration Statement as such
Attorney-in-Fact deems appropriate, and any registration statement relating to
the same offering filed pursuant to Rule 462(b) under the Securities Act and
request to accelerate the effectiveness of such registration statements, and to
file each such amendment with all requests to accelerate the effectiveness of
such registration statements, and to file each such amendment with all exhibits
thereto, and all documents in connection therewith, with the Securities and
Exchange Commission, granting unto such and each of them, full power and
authority to do and perform each and every action and thing requisite and
necessary to be done as fully to all intents and purposes as such person might
or could do in person, hereby ratifying and confirming all that such
Attorneys-in-Fact or any of them, or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof. Pursuant to the requirements
of the Securities Act, this Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<C> <S> <C>
/s/ J.S.B. JENKINS President and Chief Executive August 12, 1998
- ----------------------------------------------------- Officer and Director
J.S.B. Jenkins

/s/ JERRY W. WOOD Executive Vice President August 12, 1998
- -----------------------------------------------------
Jerry W. Wood

/s/ STANLEY T. NINEMIRE Senior Vice President, Chief August 12, 1998
- ----------------------------------------------------- Financial Officer and
Stanley T. Ninemire Assistant Secretary
(Principal Accounting and
Principal Financial Officer)
</TABLE>

II-4
<PAGE> 41

<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<C> <S> <C>
/s/ C.A. RUNDELL, JR. Director August 12, 1998
- -----------------------------------------------------
C.A. Rundell, Jr.

/s/ ROBERT E. RUNICE Director August 12, 1998
- -----------------------------------------------------
Robert E. Runice

/s/ DR. JAMES F. GAERTNER Director August 12, 1998
- -----------------------------------------------------
Dr. James F. Gaertner

/s/ MAXINE K. CLARK Director August 12, 1998
- -----------------------------------------------------
Maxine K. Clark

/s/ GENE STALLINGS Director August 12, 1998
- -----------------------------------------------------
Gene Stallings

/s/ MARVIN J. GIROUARD Director August 12, 1998
- -----------------------------------------------------
Marvin J. Girouard
</TABLE>

II-5
<PAGE> 42

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S>
1.3 -- Form of Underwriting Agreement for Common Stock*
5.1 -- Opinion of Winstead Sechrest & Minick P.C.*
23.1 -- Consent of Ernst & Young LLP, Independent Auditors
23.2 -- Consent of Winstead Sechrest & Minick P.C. (to be
included in the opinion contained as Exhibit 5.1)*
24.1 -- Power of Attorney (included on the signature page of the
Registration Statement)
</TABLE>

- ---------------

* To be filed by amendment or as an exhibit to a document to be incorporated by
reference herein in connection with an offering of the Common Stock.

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-3 and related Prospectus of Tandy Brands
Accessories, Inc. for the registration of 1,900,000 shares of its common stock
and to the incorporation by reference therein of our reports dated August 7,
1997, with respect to the consolidated financial statements of Tandy Brands
Accessories, Inc. incorporated by reference in its Annual Report (Form 10-K) for
the year ended June 30, 1997 and the related financial statement schedule
included therein, filed with the Securities and Exchange Commission.

/s/ ERNST & YOUNG LLP

------------------------------------

Fort Worth, Texas
August 7, 1998