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SEGMENT INFORMATION AND GEOGRAPHIC DATA
12 Months Ended
Jun. 30, 2022
SEGMENT INFORMATION AND GEOGRAPHIC DATA [Abstract]  
SEGMENT INFORMATION AND GEOGRAPHIC DATA
3.
SEGMENT INFORMATION AND GEOGRAPHIC DATA

The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making operating decisions and assessing performance as the source of the Company’s operating and reportable segments.

The Company manages its business through two operating and reportable segments based on its distribution channels to sell its product lines, loose jewels and finished jewelry: its “Online Channels” segment, which consists of e-commerce outlets including charlesandcolvard.com, moissaniteoutlet.com, third-party online marketplaces, drop-ship retail, and other pure-play, exclusively e-commerce outlets; and its “Traditional” segment, which consists of wholesale and retail customers. The accounting policies of the Online Channels segment and Traditional segment are the same as those described in Note 2, “Basis of Presentation and Significant Accounting Policies.”

The Company evaluates the financial performance of its segments based on net sales; product line gross profit, or the excess of product line sales over product line cost of goods sold; and operating income. The Company’s product line cost of goods sold is defined as product cost of goods sold, excluding non-capitalized expenses from the Company’s manufacturing and production control departments, comprising personnel costs, depreciation, leases, utilities, and corporate overhead allocations; freight out; inventory write-downs; and other inventory adjustments, comprising costs of quality issues, and damaged goods.

The Company allocates certain general and administrative expenses between its Online Channels segment and its Traditional segment based on net sales and number of employees to arrive at segment operating income. Unallocated expenses remain in its Traditional segment.

Summary financial information by reportable segment for the periods presented is as follows:

   
Year Ended June 30, 2022
 
   
Online
Channels
    Traditional    
Total
 
Net sales
                 
Finished jewelry
 
$
23,539,347
   
$
6,172,883
   
$
29,712,230
 
Loose jewels
   
3,240,702
     
10,136,092
     
13,376,794
 
Total
 
$
26,780,049
   
$
16,308,975
   
$
43,089,024
 
                         
Product line cost of goods sold
                       
Finished jewelry
 
$
9,837,830
   
$
4,094,870
   
$
13,932,700
 
Loose jewels
   
1,209,832
     
4,959,958
     
6,169,790
 
Total
 
$
11,047,662
   
$
9,054,828
   
$
20,102,490
 
                         
Product line gross profit
                       
Finished jewelry
 
$
13,701,517
   
$
2,078,013
   
$
15,779,530
 
Loose jewels
   
2,030,870
     
5,176,134
     
7,207,004
 
Total
 
$
15,732,387
   
$
7,254,147
   
$
22,986,534
 
                         
Operating income
 
$
2,550,991
   
$
322,213
   
$
2,873,204
 
                         
Depreciation and amortization
 
$
235,643
   
$
243,665
   
$
479,308
 
                         
Capital expenditures
 
$
305,586
   
$
1,190,885
   
$
1,496,471
 

   
Year Ended June 30, 2021
 
   
Online
Channels
    Traditional    
Total
 
Net sales
                 
Finished jewelry
 
$
19,905,199
   
$
4,496,347
   
$
24,401,546
 
Loose jewels
   
3,304,439
     
11,529,854
     
14,834,293
 
Total
 
$
23,209,638
   
$
16,026,201
   
$
39,235,839
 
                         
Product line cost of goods sold
                       
Finished jewelry
 
$
8,235,797
   
$
3,036,215
   
$
11,272,012
 
Loose jewels
   
1,216,942
     
5,640,813
     
6,857,755
 
Total
 
$
9,452,739
   
$
8,677,028
   
$
18,129,767
 
                         
Product line gross profit
                       
Finished jewelry
 
$
11,669,402
   
$
1,460,132
   
$
13,129,534
 
Loose jewels
   
2,087,497
     
5,889,041
     
7,976,538
 
Total
 
$
13,756,899
   
$
7,349,173
   
$
21,106,072
 
                         
Operating income
 
$
3,739,553
 
$
1,768,439
 
$
5,507,992
                         
Depreciation and amortization
 
$
248,995
   
$
318,127
   
$
567,122
 
                         
Capital expenditures
 
$
253,935
   
$
183,134
   
$
437,069
 

The Company does not allocate any assets to the reportable segments, and, therefore, no asset information is reported to the chief operating decision maker or disclosed in the financial information for each segment.

A reconciliation of the Company’s product line cost of goods sold to cost of goods sold as reported in the consolidated financial statements is as follows:

   
Year Ended June 30,
 
   
2022
   
2021
 
Product line cost of goods sold
 
$
20,102,490
   
$
18,129,767
 
Non-capitalized manufacturing and production control expenses
   
1,661,207
     
1,591,114
 
Freight out
   
1,195,062
     
1,013,275
 
Inventory write-downs
   
195,000
     
150,000
 
Other inventory adjustments
   
(308,057
)
   
(74,466
)
Cost of goods sold
 
$
22,845,702
   
$
20,809,690
 

The Company recognizes sales by geographic area based on the country in which the customer is based. Sales to international end consumers made through the Company’s transactional websites, charlesandcolvard.com and moissaniteoutlet.com, are included in international sales for financial reporting purposes. A portion of the Company’s Traditional segment sales made to international wholesale distributors represents products sold internationally that may be re-imported to U.S. retailers.

All intangible assets, as well as property and equipment, as of June 30, 2022 and 2021, are held and located in the United States.

The following presents net sales data by geographic area for the periods presented:

   
Year Ended June 30,
 
   
2022
   
2021
 
Net sales
           
United States
 
$
41,138,538
   
$
37,225,519
 
International
   
1,950,486
     
2,010,320
 
Total
 
$
43,089,024
   
$
39,235,839