|
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
|
|
|
Large accelerated filer
|
☐ |
Accelerated filer
|
☐ | |
|
☒ |
Smaller reporting company
|
||
Emerging growth company
|
Page
Number
|
||
PART I – FINANCIAL INFORMATION
|
||
Item 1.
|
Financial Statements
|
|
|
1
|
|
|
2
|
|
|
3
|
|
|
4
|
|
|
Notes to Condensed Consolidated Financial Statements (unaudited) |
5
|
Item 2.
|
20
|
|
Item 3.
|
33
|
|
Item 4.
|
33
|
|
PART II – OTHER INFORMATION
|
||
Item 1.
|
34
|
|
Item 1A.
|
34
|
|
Item 2.
|
34
|
|
Item 6.
|
35
|
|
|
Signatures |
36
|
Item 1. |
Financial Statements
|
March 31, 2023
(unaudited)
|
June 30, 2022 | |||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Restricted cash
|
|
|
||||||
Accounts receivable, net
|
|
|
||||||
Inventory, net
|
|
|
||||||
Note receivable
|
|
|
||||||
Prepaid expenses and other assets
|
|
|
||||||
Total current assets
|
|
|
||||||
Long-term assets:
|
||||||||
Inventory, net
|
|
|
||||||
Property and equipment, net
|
|
|
||||||
Intangible assets, net
|
|
|
||||||
Operating lease right-of-use assets
|
|
|
||||||
Deferred income taxes, net
|
||||||||
Note receivable
|
||||||||
Other assets
|
|
|
||||||
Total long-term assets
|
|
|
||||||
TOTAL ASSETS
|
$
|
|
$
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
|
$
|
|
||||
Operating lease liabilities, current portion
|
|
|
||||||
Accrued expenses and other liabilities
|
|
|
||||||
Total current liabilities
|
|
|
||||||
Long-term liabilities:
|
||||||||
Noncurrent operating lease liabilities
|
|
|
||||||
Total long-term liabilities
|
|
|
||||||
Total liabilities
|
|
|
||||||
Commitments and contingencies (Note 9)
|
||||||||
Shareholders’ equity:
|
||||||||
Common stock,
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Treasury stock, at cost,
|
( |
) | ( |
) | ||||
Accumulated deficit
|
(
|
)
|
(
|
)
|
||||
Total shareholders’ equity
|
|
|
||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
|
$
|
|
Three Months Ended March 31,
|
Nine Months Ended March 31,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Net sales
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Costs and expenses:
|
||||||||||||||||
Cost of goods sold
|
|
|
|
|
||||||||||||
Sales and marketing
|
|
|
|
|
||||||||||||
General and administrative
|
|
|
|
|
||||||||||||
Total costs and expenses
|
|
|
|
|
||||||||||||
(Loss) Income from operations
|
(
|
)
|
|
(
|
)
|
|
||||||||||
Other income (expense):
|
||||||||||||||||
Interest income
|
|
|
|
|
||||||||||||
Loss on foreign currency exchange
|
|
|
|
(
|
)
|
|||||||||||
Total other income (expense), net
|
|
|
|
|
||||||||||||
(Loss) Income before income taxes
|
(
|
)
|
|
(
|
)
|
|
||||||||||
Income tax expense
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Net (loss) income
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||
Net (loss) income per common share:
|
||||||||||||||||
Basic
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||
Diluted
|
$
|
(
|
)
|
$ |
|
$
|
(
|
)
|
$
|
|
||||||
Weighted average number of shares used in computing net (loss) income per common share:
|
||||||||||||||||
Basic
|
|
|
|
|
||||||||||||
Diluted
|
|
|
|
|
Nine Months Ended March 31, 2023 | ||||||||||||||||||||||||
Common Stock
|
||||||||||||||||||||||||
Number of
Shares
|
Amount
|
Additional
Paid-in
Capital
|
Treasury Stock |
Accumulated
Deficit
|
Total
Shareholders’
Equity
|
|||||||||||||||||||
Balance at June 30, 2022
|
|
$
|
|
$
|
|
$ |
( |
) |
$
|
(
|
)
|
$
|
|
|||||||||||
Stock-based compensation
|
-
|
|
|
|
|
|||||||||||||||||||
Cancellation of restricted stock
|
( |
) | ||||||||||||||||||||||
Repurchases of common stock
|
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Net loss
|
-
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||
Balance at September 30, 2022
|
|
|
|
|
|
( |
) |
|
(
|
)
|
|
|
||||||||||||
Stock-based compensation
|
-
|
|
|
|
|
|||||||||||||||||||
Issuance of restricted stock
|
|
|
|
|
|
|||||||||||||||||||
Net loss
|
-
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||
Balance at December 31, 2022
|
|
|
|
|
|
( |
) |
|
(
|
)
|
|
|
||||||||||||
Stock-based compensation
|
-
|
|
|
|
|
|||||||||||||||||||
Net loss
|
-
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||
Balance at March 31, 2023
|
|
$
|
|
$
|
|
$ |
( |
) |
$
|
(
|
)
|
$
|
|
Nine Months Ended March 31, 2022
|
||||||||||||||||||||||||
Common Stock
|
||||||||||||||||||||||||
Number of
Shares
|
Amount
|
Additional
Paid-in
Capital
|
Treasury Stock |
Accumulated
Deficit
|
Total
Shareholders’
Equity
|
|||||||||||||||||||
Balance at June 30, 2021
|
|
$
|
|
$
|
|
$ |
$
|
(
|
)
|
$
|
|
|||||||||||||
Stock-based compensation
|
-
|
|
|
|
|
|||||||||||||||||||
Issuance of restricted stock
|
|
|
|
|
|
|||||||||||||||||||
Stock option exercises
|
|
|
(
|
)
|
|
|
||||||||||||||||||
Net income
|
-
|
|
|
|
|
|||||||||||||||||||
Balance at September 30, 2021
|
|
|
|
|
|
|
(
|
)
|
|
|
||||||||||||||
Stock-based compensation
|
-
|
|
|
|
|
|||||||||||||||||||
Stock option exercises
|
( |
) | ||||||||||||||||||||||
Net income
|
-
|
|
|
|
|
|||||||||||||||||||
Balance at December 31, 2021
|
|
|
|
|
|
|
(
|
)
|
|
|
||||||||||||||
Stock-based compensation
|
-
|
|
|
|
|
|||||||||||||||||||
Stock option exercises
|
( |
) | ||||||||||||||||||||||
Net income
|
-
|
|
|
|
|
|||||||||||||||||||
Balance at March 31, 2022
|
|
$
|
|
$
|
|
$ |
$
|
(
|
)
|
$
|
|
Nine Months Ended March 31,
|
||||||||
2023
|
2022
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net (loss) income
|
$
|
(
|
)
|
$
|
|
|||
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
|
||||||||
Depreciation and amortization
|
|
|
||||||
Stock-based compensation
|
|
|
||||||
(Recovery of) Provision for uncollectible accounts
|
(
|
)
|
|
|||||
Provision for (Recovery of) sales returns
|
|
(
|
)
|
|||||
Inventory write-downs
|
|
|
||||||
Provision for accounts receivable discounts
|
|
|
||||||
Deferred income taxes
|
||||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
|
|
||||||
Inventory
|
|
(
|
)
|
|||||
Prepaid expenses and other assets, net
|
|
|
||||||
Accounts payable
|
(
|
)
|
|
|||||
Accrued income taxes
|
|
|
||||||
Accrued expenses and other liabilities
|
(
|
)
|
(
|
)
|
||||
Net cash (used in) provided by operating activities
|
(
|
)
|
|
|||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchases of property and equipment
|
(
|
)
|
(
|
)
|
||||
Payments for intangible assets
|
(
|
)
|
(
|
)
|
||||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Repurchases of common stock |
( |
) | ||||||
Stock option exercises | ||||||||
Net cash (used in) provided by financing activities
|
(
|
)
|
|
|||||
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
|
(
|
)
|
|
|||||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD
|
|
|
||||||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD
|
$
|
|
$
|
|
||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid during the period for income taxes
|
$
|
|
$
|
|
1. |
DESCRIPTION OF BUSINESS
|
2. |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
|
March 31,
2023
|
June 30,
2022
|
|||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Restricted cash
|
|
|
||||||
Total cash, cash equivalents, and restricted cash
|
$
|
|
$
|
|
3. |
SEGMENT INFORMATION AND GEOGRAPHIC DATA
|
Three Months Ended March 31, 2023
|
||||||||||||
Online
Channels
|
Traditional
|
Total
|
||||||||||
Net sales
|
||||||||||||
Finished jewelry
|
$
|
|
$
|
|
$
|
|
||||||
Loose jewels
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
||||||
Product line cost of goods sold
|
||||||||||||
Finished jewelry
|
$
|
|
$
|
|
$
|
|
||||||
Loose jewels
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
||||||
Product line gross profit
|
||||||||||||
Finished jewelry
|
$
|
|
$
|
|
$
|
|
||||||
Loose jewels
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
||||||
Operating loss
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||
Depreciation and amortization
|
$
|
|
$
|
|
$
|
|
||||||
Capital expenditures
|
$
|
|
$
|
|
$
|
|
Three Months Ended March 31, 2022
|
||||||||||||
Online
Channels
|
Traditional
|
Total
|
||||||||||
Net sales
|
||||||||||||
Finished jewelry
|
$
|
|
$
|
|
$
|
|
||||||
Loose jewels
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
||||||
Product line cost of goods sold
|
||||||||||||
Finished jewelry
|
$
|
|
$
|
|
$
|
|
||||||
Loose jewels
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
||||||
Product line gross profit
|
||||||||||||
Finished jewelry
|
$
|
|
$
|
|
$
|
|
||||||
Loose jewels
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
||||||
Operating income
|
$
|
|
$
|
|
$
|
|
||||||
Depreciation and amortization
|
$
|
|
$
|
|
$
|
|
||||||
Capital expenditures
|
$
|
|
$
|
|
$
|
|
Nine Months Ended March 31, 2023
|
||||||||||||
Online
Channels
|
Traditional
|
Total
|
||||||||||
Net sales
|
||||||||||||
Finished jewelry
|
$
|
|
$
|
|
$
|
|
||||||
Loose jewels
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
||||||
Product line cost of goods sold
|
||||||||||||
Finished jewelry
|
$
|
|
$
|
|
$
|
|
||||||
Loose jewels
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
||||||
Product line gross profit
|
||||||||||||
Finished jewelry
|
$
|
|
$
|
|
$
|
|
||||||
Loose jewels
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
||||||
Operating income
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||
Depreciation and amortization
|
$
|
|
$
|
|
$
|
|
||||||
Capital expenditures
|
$
|
|
$
|
|
$
|
|
Nine Months Ended March 31, 2022
|
||||||||||||
Online
Channels
|
Traditional
|
Total
|
||||||||||
Net sales
|
||||||||||||
Finished jewelry
|
$
|
|
$
|
|
$
|
|
||||||
Loose jewels
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
||||||
Product line cost of goods sold
|
||||||||||||
Finished jewelry
|
$
|
|
$
|
|
$
|
|
||||||
Loose jewels
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
||||||
Product line gross profit
|
||||||||||||
Finished jewelry
|
$
|
|
$
|
|
$
|
|
||||||
Loose jewels
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
||||||
Operating income
|
$
|
|
$
|
|
$
|
|
||||||
Depreciation and amortization
|
$
|
|
$
|
|
$
|
|
||||||
Capital expenditures
|
$
|
|
$
|
|
$
|
|
Three Months Ended March 31,
|
Nine Months Ended March 31,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Product line cost of goods sold
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Non-capitalized manufacturing and production control expenses
|
|
|
|
|
||||||||||||
Freight out
|
|
|
|
|
||||||||||||
Inventory write-downs
|
|
|
|
|
||||||||||||
Other inventory adjustments
|
|
(
|
)
|
|
(
|
)
|
||||||||||
Cost of goods sold
|
$
|
|
$
|
|
$
|
|
$
|
|
Three Months Ended March 31,
|
Nine Months Ended March 31,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Net sales
|
||||||||||||||||
United States
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
International
|
|
|
|
|
||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
|
4. |
FAIR VALUE MEASUREMENTS
|
5. |
INVENTORIES
|
March 31,
2023
|
June 30,
2022
|
|||||||
Finished jewelry:
|
||||||||
Raw materials
|
$
|
|
$
|
|
||||
Work-in-process
|
|
|
||||||
Finished goods
|
|
|
||||||
Finished goods on consignment
|
|
|
||||||
Total finished jewelry
|
$
|
|
$
|
|
||||
Loose jewels:
|
||||||||
Raw materials
|
$
|
|
$
|
|
||||
Work-in-process
|
|
|
||||||
Finished goods
|
|
|
||||||
Finished goods on consignment
|
|
|
||||||
Total loose jewels
|
|
|
||||||
Total supplies inventory
|
|
|
||||||
Total inventory
|
$
|
|
$
|
|
March 31,
2023
|
June 30,
2022
|
|||||||
Short-term portion
|
$
|
|
$
|
|
||||
Long-term portion
|
|
|
||||||
Total
|
$
|
|
$
|
|
6. |
NOTE RECEIVABLE
|
7. |
ACCRUED EXPENSES AND OTHER LIABILITIES
|
March 31,
2023
|
June 30,
2022
|
|||||||
Deferred revenue
|
$ |
|
$ |
|
||||
Accrued compensation and related benefits
|
||||||||
Accrued sales taxes and franchise taxes
|
|
|
||||||
Accrued cooperative advertising
|
|
|
||||||
Other accrued expenses
|
|
|
||||||
Total accrued expenses and other liabilities
|
$
|
|
$
|
|
8. |
INCOME TAXES
|
9. |
COMMITMENTS AND CONTINGENCIES
|
Operating Leases:
|
||||
Noncurrent operating lease ROU assets
|
$
|
|
||
|
||||
Current operating lease liabilities
|
$
|
|
||
Noncurrent operating lease liabilities
|
|
|||
Total operating lease liabilities
|
$
|
|
2023
|
$
|
|
||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027
|
|
|||
Total lease payments
|
|
|||
Less: imputed interest
|
|
|||
Present value of lease payments
|
|
|||
Less: current lease liability
|
|
|||
Total long-term lease liability
|
$
|
|
10. |
DEBT
|
11. |
SHAREHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION
|
Three Months Ended
March 31,
|
Nine Months Ended
March 31,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Employee stock options
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Restricted stock awards
|
(
|
)
|
|
|
|
|||||||||||
Totals
|
$
|
|
$
|
|
$
|
|
$
|
|
Shares
|
Weighted
Average
Exercise Price
|
|||||||
Outstanding, June 30, 2022
|
|
$
|
|
|||||
Granted
|
|
$
|
|
|||||
Forfeited
|
(
|
)
|
$
|
|
||||
Expired
|
(
|
)
|
$
|
|
||||
Outstanding, March 31, 2023
|
|
$
|
|
Options Outstanding
|
Options Exercisable
|
Options Vested or Expected to Vest
|
||||||||||||||||||||||||||||||||
Balance
as of
March 31,
2023
|
Weighted
Average
Remaining
Contractual
Life
(Years)
|
Weighted
Average
Exercise
Price
|
Balance
as of
March 31,
2023
|
Weighted
Average
Remaining
Contractual
Life
(Years)
|
Weighted
Average
Exercise
Price
|
Balance
as of
March 31,
2023
|
Weighted
Average
Remaining
Contractual
Life
(Years)
|
Weighted
Average
Exercise
Price
|
||||||||||||||||||||||||||
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
Shares
|
Weighted
Average
Grant Date
Fair Value
|
|||||||
Unvested, June 30, 2022
|
|
$
|
|
|||||
Granted
|
|
$
|
|
|||||
Vested
|
( |
) | ||||||
Cancelled
|
( |
) | $ |
|||||
Unvested, March 31, 2023
|
|
$
|
|
12. |
NET (LOSS) INCOME PER COMMON SHARE
|
Three Months Ended
March 31,
|
Nine Months Ended
March 31,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Numerator:
|
||||||||||||||||
Net (loss)income
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||
Denominator:
|
||||||||||||||||
Weighted average common shares outstanding:
|
||||||||||||||||
Basic
|
|
|
|
|
||||||||||||
Effect of dilutive securities
|
|
|
|
|
||||||||||||
Diluted
|
|
|
|
|
||||||||||||
Net (loss) income per common share:
|
||||||||||||||||
Basic
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||
Diluted
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
13. |
MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK
|
March 31,
2023
|
June 30,
2022
|
|||||||
Customer A
|
|
%
|
|
%
|
||||
Customer B
|
|
%
|
% | |||||
Customer C
|
% |
%
|
||||||
Customer D |
% | % |
*
|
|
**
|
|
Three Months Ended March 31,
|
Nine Months Ended March 31,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Customer A
|
% |
|
%
|
|
%
|
|
%
|
14. |
SUBSEQUENT EVENT
|
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
1.
|
Our business and our results of operations could be materially adversely affected as a result of general economic and market conditions;
|
2.
|
Our future financial performance depends upon increased consumer acceptance, growth of sales of our products, and operational execution of our strategic initiatives;
|
3.
|
We face intense competition in the worldwide gemstone and jewelry industry;
|
4.
|
Our information technology, or IT, infrastructure, and our network may be impacted by a cyber-attack or other security incident as a result of the rise of cybersecurity events;
|
5.
|
Constantly evolving privacy regulatory regimes are creating new legal compliance challenges;
|
6.
|
We are subject to certain risks due to our international operations, distribution channels and vendors;
|
7.
|
Our business and our results of operations could be materially adversely affected as a result of our inability to fulfill orders on a timely basis;
|
8.
|
We are currently dependent on a limited number of distributor and retail partners in our Traditional segment for the sale of our products;
|
9.
|
We may experience quality control challenges from time to time that can result in lost revenue and harm to our brands and reputation;
|
10.
|
Seasonality of our business may adversely affect our net sales and operating income;
|
11.
|
The effects of COVID-19 and other potential future public health crises, epidemics, pandemics or similar events on our business, operating results, and cash flows are uncertain;
|
12.
|
Our operations could be disrupted by natural disasters;
|
13.
|
Sales of moissanite and lab grown diamond jewelry could be dependent upon the pricing of precious metals, which is beyond our control;
|
14.
|
Our current customers may potentially perceive us as a competitor in the finished jewelry business;
|
15.
|
We depend on a single supplier for substantially all of our silicon carbide, or SiC, crystals, the raw materials we use to produce moissanite jewels; if our supply of high-quality SiC crystals is
interrupted, our business may be materially harmed;
|
16.
|
If the e-commerce opportunity changes dramatically or if e-commerce technology or providers change their models, our results of operations may be adversely affected;
|
17.
|
Governmental regulation and oversight might adversely impact our operations;
|
18.
|
The execution of our business plans could significantly impact our liquidity;
|
19.
|
The financial difficulties or insolvency of one or more of our major customers or their lack of willingness and ability to market our products could adversely affect results;
|
20.
|
Negative or inaccurate information on social media could adversely impact our brand and reputation;
|
21.
|
We rely on assumptions, estimates, and data to calculate certain of our key metrics and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business;
|
22.
|
We may not be able to adequately protect our intellectual property, which could harm the value of our products and brands and adversely affect our business;
|
23.
|
Environmental, social, and governance matters may impact our business, reputation, financial condition, and results of operations;
|
24.
|
If we fail to evaluate, implement, and integrate strategic acquisition or disposition opportunities successfully, our business may suffer;
|
25.
|
Our failure to maintain compliance with The Nasdaq Stock market’s continued listing requirements could result in the delisting of our common stock;
|
26.
|
Some anti-takeover provisions of our charter documents may delay or prevent a takeover of our Company; and
|
27.
|
We cannot guarantee that our share repurchase program will be utilized to the full value approved, or that it will enhance long-term stockholder value and repurchases we consummate could increase the
volatility of the price of our common stock and could have a negative impact on our available cash balance.
|
Three Months Ended
March 31,
|
Nine Months Ended
March 31,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Net sales
|
$
|
6,641,799
|
$
|
9,751,835
|
$
|
24,382,003
|
$
|
33,785,281
|
||||||||
Costs and expenses:
|
||||||||||||||||
Cost of goods sold
|
4,493,125
|
5,296,530
|
14,650,910
|
17,347,026
|
||||||||||||
Sales and marketing
|
3,267,436
|
2,932,587
|
10,715,066
|
9,741,774
|
||||||||||||
General and administrative
|
1,053,357
|
1,106,850
|
3,654,788
|
3,880,684
|
||||||||||||
Total costs and expenses
|
8,813,918
|
9,335,967
|
29,020,764
|
30,969,484
|
||||||||||||
(Loss) Income from operations
|
(2,172,119
|
)
|
415,868
|
(4,638,761
|
)
|
2,815,797
|
||||||||||
Other income (expense):
|
||||||||||||||||
Interest income
|
69,159
|
1,120
|
168,935
|
1,964
|
||||||||||||
Loss on foreign currency exchange
|
-
|
-
|
-
|
(34
|
)
|
|||||||||||
Total other income (expense), net
|
69,159
|
1,120
|
168,935
|
1,930
|
||||||||||||
(Loss) Income before income taxes
|
(2,102,960
|
)
|
416,988
|
(4,469,826
|
)
|
2,817,727
|
||||||||||
Income tax expense
|
(6,293,048
|
)
|
(78,480
|
)
|
(5,858,155
|
)
|
(484,582
|
)
|
||||||||
Net (loss) income
|
$
|
(8,396,008
|
)
|
$
|
338,508
|
$
|
(10,327,981
|
)
|
$
|
2,333,145
|
Three Months Ended
March 31,
|
Change
|
Nine Months Ended
March 31,
|
Change
|
|||||||||||||||||||||||||||||
2023
|
2022
|
Dollars
|
Percent
|
2023
|
2022
|
Dollars
|
Percent
|
|||||||||||||||||||||||||
Finished jewelry
|
$
|
5,321,301
|
$
|
7,420,591
|
$
|
(2,099,290
|
)
|
(28
|
)%
|
$
|
19,297,915
|
$
|
23,646,044
|
$
|
(4,348,129
|
)
|
(18
|
)%
|
||||||||||||||
Loose jewels
|
1,320,498
|
2,331,244
|
(1,010,746
|
)
|
(43
|
)%
|
5,084,088
|
10,139,237
|
(5,055,149
|
)
|
(50
|
)%
|
||||||||||||||||||||
Total consolidated net sales
|
$
|
6,641,799
|
$
|
9,751,835
|
$
|
(3,110,036
|
)
|
(32
|
)%
|
$
|
24,382,003
|
$
|
33,785,281
|
$
|
(9,403,278
|
)
|
(28
|
)%
|
Three Months Ended
March 31,
|
Change
|
Nine Months Ended
March 31,
|
Change
|
|||||||||||||||||||||||||||||
2023
|
2022
|
Dollars
|
Percent
|
2023
|
2022
|
Dollars
|
Percent
|
|||||||||||||||||||||||||
Product line cost of goods sold:
|
||||||||||||||||||||||||||||||||
Finished jewelry
|
$
|
2,840,321
|
$
|
3,709,864
|
$
|
(869,543
|
)
|
(23
|
)%
|
$
|
9,632,352
|
$
|
10,748,323
|
$
|
(1,115,971
|
)
|
(10
|
)%
|
||||||||||||||
Loose jewels
|
645,259
|
1,013,986
|
(368,727
|
)
|
(36
|
)%
|
2,342,133
|
4,507,997
|
(2,165,864
|
)
|
(48
|
)%
|
||||||||||||||||||||
Total product line cost of goods sold
|
3,485,580
|
4,723,850
|
(1,238,270
|
)
|
(26
|
)%
|
11,974,485
|
15,256,320
|
(3,281,835
|
)
|
(22
|
)%
|
||||||||||||||||||||
Non-product line cost of goods sold
|
1,007,545
|
572,680
|
434,865
|
76
|
%
|
2,676,425
|
2,090,706
|
585,719
|
28
|
%
|
||||||||||||||||||||||
Total cost of goods sold
|
$
|
4,493,125
|
$
|
5,296,530
|
$
|
(803,405
|
)
|
(15
|
)%
|
$
|
14,650,910
|
$
|
17,347,026
|
$
|
(2,696,116
|
)
|
(16
|
)%
|
Three Months Ended
March 31,
|
Change
|
Nine Months Ended
March 31,
|
Change
|
|||||||||||||||||||||||||||||
2023
|
2022
|
Dollars
|
Percent
|
2023
|
2022
|
Dollars
|
Percent
|
|||||||||||||||||||||||||
Sales and marketing
|
$
|
3,267,436
|
$
|
2,932,587
|
$
|
334,849
|
11
|
%
|
$
|
10,715,066
|
$
|
9,741,774
|
$
|
973,292
|
10
|
%
|
Three Months Ended
March 31,
|
Change
|
Nine Months Ended
March 31,
|
Change
|
|||||||||||||||||||||||||||||
2023
|
2022
|
Dollars
|
Percent
|
2023
|
2022
|
Dollars
|
Percent
|
|||||||||||||||||||||||||
General and administrative
|
$
|
1,053,357
|
$
|
1,106,850
|
$
|
(53,493
|
)
|
(5
|
)%
|
$
|
3,654,788
|
$
|
3,880,684
|
$
|
(225,896
|
)
|
(6
|
)%
|
Three Months Ended
March 31,
|
Change
|
Nine Months Ended
March 31,
|
Change
|
|||||||||||||||||||||||||||||
2023
|
2022
|
Dollars
|
Percent
|
2023
|
2022
|
Dollars
|
Percent
|
|||||||||||||||||||||||||
Interest income
|
$
|
69,159
|
$
|
1,120
|
$
|
68,039
|
*
|
%
|
$
|
168,935
|
$
|
1,964
|
$
|
166,971
|
*
|
%
|
* |
Not meaningful
|
Three Months Ended
March 31,
|
Change
|
Nine Months Ended
March 31,
|
Change
|
|||||||||||||||||||||||||||||
2023
|
2022
|
Dollars
|
Percent
|
2023
|
2022
|
Dollars
|
Percent
|
|||||||||||||||||||||||||
Loss on foreign currency exchange
|
$
|
-
|
$
|
-
|
$
|
-
|
-
|
%
|
$
|
-
|
$
|
34
|
$
|
(34
|
)
|
(100
|
)%
|
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4. |
Controls and Procedures
|
Item 1. |
Legal Proceedings
|
Item 1A. |
Risk Factors
|
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds
|
Period
|
Total
Number of
Shares
Purchased
|
Average Price
Paid per share
|
Total Number of
shares Purchased as
Part of Publicly
Announced Plans
or Programs(1)
|
Approximate Dollar
Value of Shares that
May Yet be Purchased
Under the Plans
or Programs
|
||||||||||||
January 1, 2023 – January 31, 2023
|
-
|
$
|
-
|
-
|
$
|
4,510,021
|
||||||||||
February 1, 2023 – February 28, 2023
|
-
|
$
|
-
|
-
|
$
|
4,510,021
|
||||||||||
March 1, 2023 – March 31, 2023
|
-
|
$
|
-
|
-
|
$
|
4,510,021
|
||||||||||
Total
|
-
|
$
|
-
|
-
|
$
|
4,510,021
|
(1)
|
On May 5, 2022, we announced that our Board of Directors had approved a share repurchase program to permit us to repurchase up to $5.00 million worth of our issued and outstanding common stock over the three-year period ending April
29, 2025.
|
Item 6. |
Exhibits
|
Exhibit No.
|
Description
|
|
Certification by Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
||
Certification by Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
||
|
|
|
Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
||
Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
||
101.INS
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
|
101.SCH
|
Inline XBRL Taxonomy Extension Schema Document
|
|
101.CAL
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document
|
|
101.DEF
|
Inline XBRL Taxonomy Extension Definition Linkbase Document
|
|
101.LAB
|
Inline XBRL Taxonomy Extension Label Linkbase Document
|
|
101.PRE
|
Inline XBRL Taxonomy Extension Presentation Linkbase document
|
|
104
|
Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document contained in Exhibit 101
|
CHARLES & COLVARD, LTD.
|
|||
By:
|
/s/ Don O’Connell
|
||
May 4, 2023
|
Don O’Connell
|
||
President and Chief Executive Officer
|
|||
By:
|
/s/ Clint J. Pete
|
||
May 4, 2023
|
Clint J. Pete
|
||
Chief Financial Officer
|
|||
(Principal Financial Officer and Chief Accounting Officer)
|