North Carolina | 56-1928817 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
170 Southport Drive Morrisville, North Carolina | 27560 | |
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, no par value per share | CTHR | The Nasdaq Stock Market LLC |
Large accelerated filer | ☐ | Accelerated filer | ☐ |
Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
Emerging growth company | ☐ |
Page Number | ||
PART I | ||
Item 1. | ||
Item 1A. | ||
Item 1B. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II | ||
Item 5. | ||
Item 6. | ||
Item 7. | ||
Item 7A. | ||
Item 8. | ||
Item 9. | ||
Item 9A. | ||
Item 9B. | 85 | |
85 | ||
PART III | ||
Item 10. | ||
Item 11. | ||
Item 12. | ||
Item 13. | ||
Item 14. | ||
PART IV | ||
Item 15. | ||
Item 16. | ||
• | Enhanced Customer Engagement. We plan to further develop and expand our existing content production capabilities by building a broadcast studio in our Research Triangle Park, North Carolina, headquarters. We expect a new studio will provide the setting for live streaming capability on our website as well as other social media broadcast channels. We believe a key element of accomplishing this goal during Fiscal 2022 is our arrangement with and the implementation of Bambuser, a leading live streaming global platform with innovative hosting and broadcasting capabilities. This innovative technology will allow us to host live shows and broadcast events for special initiatives and introducing new product collections. We’re excited to join Bambuser’s list of brands such as LVMH, a leading global luxury products group that includes its Louis Vuitton®, Moët & Chandon©, and Hennessy® family of brands. In addition, Bambuser’s list of participating associates also includes such well-known consumer brands as Clarins®, Samsung©, and Adidas®. We expect this relationship to add a new sales channel opportunity for our direct-to-consumer business and encourage personal interaction with our online customer base, while also providing a platform to explore and engage celebrity and social media influencers. |
• | Product Development. We intend to explore product development opportunities during Fiscal 2022 to bring forward new product offerings that align with our exclusive brand and core values, just as we did in our fiscal year ended June 30, 2021, or Fiscal 2021, with Caydia®, our premium brand of lab grown diamonds. We plan to develop and move forward with new proprietary product offerings, styles, and collections as well as an increased breadth of product categories to further meet the needs of existing and new customers. We expect to also continue focusing on the use of recycled metals and employing sustainable practices in order to serve today’s environmentally aware and conscientious consumer. |
charlesandcolvard.com. We believe that we continue to enhance our primary transactional website to optimize the platform for the online mobile consumer – whether shopping on a computer at home or a mobile device – and to improve our customers’ experiences. Programs such as free shipping, a 60-day returns policy, and an enhanced and personalized shopping experience have been and will continue to be improved and rolled out over time. With data collected through web analytics, and through user surveys that reveal how consumers use the site, |
Retail. In order to create awareness and exposure for our gemstones, jewelry, and brands, we sell loose moissanite jewels and finished jewelry featuring moissanite at wholesale prices to nationally recognized and emerging retail customers through a broad range of channels including jewelry chains and department stores. Wholesale orders are received by way of purchase orders and fulfilled from our centralized fulfillment center. In many cases, we have placed loose moissanite jewels and finished jewelry inventory in stores on a consignment basis. Under this consignment model, in accordance with our revenue recognition accounting policy, we recognize the revenue for these transactions after the retail partner has sold an item to a consumer or other contractual conditions are met. In other cases, a retailer purchases the goods, or a portion of the goods, under what we call an asset purchase model. Under our asset model, we recognize the sale and related revenue upon transfer of the goods to the retailer. Due to the maturity of certain retail relationships, we have migrated select brick-and mortar partners to a blended asset and consignment model account structure, which affords us more favorable customer payment terms that result in more favorable cash flow. We will continue to evolve our retail channel strategy as we optimize our methods and partnering arrangements. |
Description | Refractive Index | Dispersion | Hardness (1) | Toughness | |||||||||
Charles & Colvard Created Moissanite® | 2.65-2.69 | 0.104 | 9.25 – 9.5 | Excellent | |||||||||
Diamond (including mined and lab grown diamonds) | 2.42 | 0.044 | 10 | Good to Excellent (2) | |||||||||
Ruby | 1.77 | 0.018 | 9 | Excellent (3) | |||||||||
Sapphire | 1.77 | 0.018 | 9 | Excellent (3) | |||||||||
Emerald | 1.58 | 0.014 | 7.50 | Poor to Good |
Description | Refractive Index | Dispersion | Hardness (1) | Toughness | |||||||||
Charles & Colvard Created Moissanite® | 2.65-2.69 | 0.104 | 9.25 – 9.5 | Excellent | |||||||||
Diamond | 2.42 | 0.044 | 10 | Good to Excellent (2) | |||||||||
Ruby | 1.77 | 0.018 | 9 | Excellent (3) | |||||||||
Sapphire | 1.77 | 0.018 | 9 | Excellent (3) | |||||||||
Emerald | 1.58 | 0.014 | 7.50 | Poor to Good |
Growing gem-grade raw SiC crystals; |
Manufacturing rough preforms; |
Faceting and polishing jewels; |
Inspecting, sorting, and grading; and |
Engraving. |
• | With our success in developing and promoting Caydia®, our exclusive brand of lab grown diamonds, since September 2020 we believe that we have been able to demonstrate that we are able to successfully integrate and market these premium gems into fine jewelry finished products. |
• | With management’s vast experience in the worldwide fine jewelry industry, we likewise believe that we have been able to build a creative and dependable supply chain for our Caydia® product line. We believe this approach that was built on these many years of experience has proven to be successful as we continue building our brand and expanding this line of fine jewelry set with our exclusive brand of lab grown diamonds. |
Our continued ability and the ability of manufacturers, designers, and retail jewelry partners to select jewelry settings that promote and encourage consumer acceptance of and demand for our jewels and finished jewelry featuring moissanite and lab grown diamonds; |
The ability to understand our consumer market segment and effectively sell a compelling value proposition to that market, which leads successfully to converted customers; |
Our continued ability and the ability of retail jewelers to effectively market and sell finished jewelry featuring moissanite jewels and lab grown diamonds to consumers. |
Those found in nature, generally through mining techniques; |
Synthetic gemstones, which have the same chemical composition and essentially the same physical and optical characteristics of natural gemstones but are created or grown in a laboratory; and |
Our continued ability and the ability of jewelry manufacturers and retail jewelers to set loose moissanite jewels and lab grown diamonds in finished jewelry with high-quality workmanship; and |
the adverse effects on U.S.-based companies operating in foreign markets that might result from war; terrorism; changes in diplomatic, trade, or business relationships (including labor disputes); or other political, social, religious, or economic instability; |
Item 1B. |
Item 5. |
High | Low | |||||||
Year Ended December 31, 2016: | ||||||||
First Quarter | $ | 1.49 | $ | 0.75 | ||||
Second Quarter | $ | 1.26 | $ | 0.93 | ||||
Third Quarter | $ | 1.33 | $ | 0.85 | ||||
Fourth Quarter | $ | 1.23 | $ | 0.83 | ||||
Year Ended December 31, 2017: | ||||||||
First Quarter | $ | 1.19 | $ | 0.90 | ||||
Second Quarter | $ | 1.01 | $ | 0.84 | ||||
Third Quarter | $ | 0.99 | $ | 0.81 | ||||
Fourth Quarter | $ | 1.55 | $ | 0.80 |
• | Product Development. In Fiscal 2021, we expanded our patented Signature Collection of Forever One™ moissanite jewelry assortment to include emerald, elongated cushion, and radiant cut gemstones. Previously, these gems and unique cuts were not available in our Signature Collection line of products. In September 2020 we launched Caydia®, an exclusive brand of premium lab grown diamonds and jewelry. We believe our premium lab grown diamonds provide us access to serve a broader and completely new segment of the gemstone audience and customer base that is predisposed to shopping for a real diamond. Throughout Fiscal 2021, we continued to expand our Caydia® lab grown diamond jewelry assortment with new styles as well as additional gemstone cuts. Currently, our exclusive brand of Caydia® lab grown diamonds are available in round, oval, cushion, emerald, and princess cuts; and |
Year Ended June 30, | ||||||||
2021 | 2020 | |||||||
Net sales | $ | 39,235,839 | $ | 29,189,020 | ||||
Costs and expenses: | ||||||||
Cost of goods sold | 20,809,690 | 21,200,207 | ||||||
Sales and marketing | 8,476,716 | 9,443,244 | ||||||
General and administrative | 4,441,441 | 4,861,297 | ||||||
Total costs and expenses | 33,727,847 | 35,504,748 | ||||||
Income (Loss) from operations | 5,507,992 | (6,315,728 | ) | |||||
Other income (expense): | ||||||||
Gain on extinguishment of debt | 974,328 | - | ||||||
Interest income | 5,581 | 158,091 | ||||||
Interest expense | (8,953 | ) | (884 | ) | ||||
Loss on foreign currency exchange | (603 | ) | (1,829 | ) | ||||
Total other income (expense), net | 970,353 | 155,378 | ||||||
Income (Loss) before income taxes | 6,478,345 | (6,160,350 | ) | |||||
Income tax benefit (expense) | 6,332,421 | (1,733 | ) | |||||
Net income (loss) | $ | 12,810,766 | $ | (6,162,083 | ) |
Year Ended June 30, | Change | |||||||||||||||
2021 | 2020 | Dollars | Percent | |||||||||||||
Finished jewelry | $ | 24,401,546 | $ | 16,777,628 | $ | 7,623,918 | 45 | % | ||||||||
Loose jewels | 14,834,293 | 12,411,392 | 2,422,901 | 20 | % | |||||||||||
Total consolidated net sales | $ | 39,235,839 | $ | 29,189,020 | $ | 10,046,819 | 34 | % |
Year Ended June 30, | Change | |||||||||||||||
2021 | 2020 | Dollars | Percent | |||||||||||||
Product line cost of goods sold: | ||||||||||||||||
Finished jewelry | $ | 11,272,012 | $ | 7,469,790 | $ | 3,802,222 | 51 | % | ||||||||
Loose jewels | 6,857,755 | 6,062,186 | 795,569 | 13 | % | |||||||||||
Total product line cost of goods sold | 18,129,767 | 13,531,976 | 4,597,791 | 34 | % | |||||||||||
Non-product line cost of goods sold | 2,679,923 | 7,668,231 | (4,988,308 | ) | (65 | )% | ||||||||||
Total cost of goods sold | $ | 20,809,690 | $ | 21,200,207 | $ | (390,517 | ) | (2 | )% |
Year Ended June 30, | Change | |||||||||||||||
2021 | 2020 | Dollars | Percent | |||||||||||||
Sales and marketing | $ | 8,476,716 | $ | 9,443,244 | $ | (966,528 | ) | (10 | )% |
Year Ended June 30, | Change | |||||||||||||||
2021 | 2020 | Dollars | Percent | |||||||||||||
General and administrative | $ | 4,441,441 | $ | 4,861,297 | $ | (419,856 | ) | (9 | )% |
Year Ended June 30, | Change | |||||||||||||||
2021 | 2020 | Dollars | Percent | |||||||||||||
Gain on extinguishment of debt | $ | 974,328 | $ | - | $ | 974,328 | 100 | % |
Year Ended June 30, | Change | |||||||||||||||
2021 | 2020 | Dollars | Percent | |||||||||||||
Interest income | $ | 5,581 | $ | 158,091 | $ | (152,510 | ) | (96 | )% |
Year Ended June 30, | Change | |||||||||||||||
2021 | 2020 | Dollars | Percent | |||||||||||||
Interest expense | $ | 8,953 | $ | 884 | $ | 8,069 | 913 | % |
Year Ended June 30, | Change | |||||||||||||||
2021 | 2020 | Dollars | Percent | |||||||||||||
Loss on foreign currency exchange | $ | 603 | $ | 1,829 | $ | (1,226 | ) | (67 | )% |
Year Ended June 30, | Change | |||||||||||||||
2021 | 2020 | Dollars | Percent | |||||||||||||
Product line cost of goods sold: | ||||||||||||||||
Finished jewelry | $ | 11,272,012 | $ | 7,469,790 | $ | 3,802,222 | 51 | % | ||||||||
Loose jewels | 6,857,755 | 6,062,186 | 795,569 | 13 | % | |||||||||||
Total product line cost of goods sold | 18,129,767 | 13,531,976 | 4,597,791 | 34 | % | |||||||||||
Non-product line cost of goods sold | 2,679,923 | 7,668,231 | (4,988,308 | ) | (65 | )% | ||||||||||
Total cost of goods sold | $ | 20,809,690 | $ | 21,200,207 | $ | (390,517 | ) | (2 | )% |
Year Ended June 30, | Change | |||||||||||||||
2021 | 2020 | Dollars | Percent | |||||||||||||
Sales and marketing | $ | 8,476,716 | $ | 9,443,244 | $ | (966,528 | ) | (10 | )% |
Year Ended June 30, | Change | |||||||||||||||
2021 | 2020 | Dollars | Percent | |||||||||||||
General and administrative | $ | 4,441,441 | $ | 4,861,297 | $ | (419,856 | ) | (9 | )% |
Year Ended June 30, | Change | |||||||||||||||
2021 | 2020 | Dollars | Percent | |||||||||||||
Gain on extinguishment of debt | $ | 974,328 | $ | - | $ | 974,328 | 100 | % |
Year Ended June 30, | Change | |||||||||||||||
2021 | 2020 | Dollars | Percent | |||||||||||||
Interest income | $ | 5,581 | $ | 158,091 | $ | (152,510 | ) | (96 | )% |
Year Ended June 30, | Change | |||||||||||||||
2021 | 2020 | Dollars | Percent | |||||||||||||
Interest expense | $ | 8,953 | $ | 884 | $ | 8,069 | 913 | % |
Year Ended June 30, | Change | |||||||||||||||
2021 | 2020 | Dollars | Percent | |||||||||||||
Loss on foreign currency exchange | $ | 603 | $ | 1,829 | $ | (1,226 | ) | (67 | )% |
Year Ended December 31, | ||||||||
2017 | 2016 | |||||||
Net sales | $ | 27,032,964 | $ | 29,168,128 | ||||
Costs and expenses: | ||||||||
Cost of goods sold | 15,470,617 | 20,401,439 | ||||||
Sales and marketing | 7,477,354 | 7,038,277 | ||||||
General and administrative | 4,689,823 | 5,544,452 | ||||||
Research and development | 3,714 | 2,848 | ||||||
Loss on abandonment of property and | ||||||||
equipment | - | 117,930 | ||||||
Total costs and expenses | 27,641,508 | 33,104,946 | ||||||
Loss from operations | (608,544 | ) | (3,936,818 | ) | ||||
Other income (expense): | ||||||||
Interest expense | (541 | ) | (1,737 | ) | ||||
Gain on insurance claim settlement | 183,217 | - | ||||||
Total other income (expense), net | 182,676 | (1,737 | ) | |||||
Loss before income taxes from continuing operations | (425,868 | ) | (3,938,555 | ) | ||||
Income tax net expense from continuing operations | (27,609 | ) | (13,480 | ) | ||||
Net loss from continuing operations | (453,477 | ) | (3,952,035 | ) | ||||
Discontinued operations: | ||||||||
Loss from discontinued operations | - | (586,124 | ) | |||||
Gain on sale of assets from discontinued operations | - | 12,398 | ||||||
Net loss from discontinued operations | - | (573,726 | ) | |||||
Net loss | $ | (453,477 | ) | $ | (4,525,761 | ) |
Year Ended December 31, | Change | |||||||||||||||
2017 | 2016 | Dollars | Percent | |||||||||||||
Loose jewels | $ | 16,580,748 | $ | 21,451,728 | $ | (4,870,980 | ) | -23 | % | |||||||
Finished jewelry | 10,452,216 | 7,716,400 | 2,735,816 | 35 | % | |||||||||||
Total consolidated net sales | $ | 27,032,964 | $ | 29,168,128 | $ | (2,135,164 | ) | -7 | % |
Year Ended December 31, | Change | Year Ended June 30, | Change | |||||||||||||||||||||||||||||
2017 | 2016 | Dollars | Percent | 2021 | 2020 | Dollars | Percent | |||||||||||||||||||||||||
Product line cost of goods sold | ||||||||||||||||||||||||||||||||
Product line cost of goods sold: | ||||||||||||||||||||||||||||||||
Finished jewelry | $ | 11,272,012 | $ | 7,469,790 | $ | 3,802,222 | 51 | % | ||||||||||||||||||||||||
Loose jewels | $ | 8,524,843 | $ | 13,916,749 | $ | (5,391,906 | ) | -39 | % | 6,857,755 | 6,062,186 | 795,569 | 13 | % | ||||||||||||||||||
Finished jewelry | 5,226,660 | 4,148,788 | 1,077,872 | 26 | % | |||||||||||||||||||||||||||
Total product line cost of goods sold | 13,751,503 | 18,065,537 | (4,314,034 | ) | -24 | % | 18,129,767 | 13,531,976 | 4,597,791 | 34 | % | |||||||||||||||||||||
Non-product line cost of goods sold | 1,719,114 | 2,335,902 | (616,788 | ) | -26 | % | 2,679,923 | 7,668,231 | (4,988,308 | ) | (65 | )% | ||||||||||||||||||||
Total cost of goods sold | $ | 15,470,617 | $ | 20,401,439 | $ | (4,930,822 | ) | -24 | % | $ | 20,809,690 | $ | 21,200,207 | $ | (390,517 | ) | (2 | )% |
Year Ended December 31, | Change | |||||||||||||||
2017 | 2016 | Dollars | Percent | |||||||||||||
Sales and marketing | $ | 7,477,354 | $ | 7,038,277 | $ | 439,077 | 6 | % |
Year Ended June 30, | Change | |||||||||||||||
2021 | 2020 | Dollars | Percent | |||||||||||||
Sales and marketing | $ | 8,476,716 | $ | 9,443,244 | $ | (966,528 | ) | (10 | )% |
Year Ended December 31, | Change | |||||||||||||||
2017 | 2016 | Dollars | Percent | |||||||||||||
General and administrative | $ | 4,689,823 | $ | 5,544,452 | $ | (854,629 | ) | -15 | % |
Year Ended June 30, | Change | |||||||||||||||
2021 | 2020 | Dollars | Percent | |||||||||||||
General and administrative | $ | 4,441,441 | $ | 4,861,297 | $ | (419,856 | ) | (9 | )% |
Year Ended June 30, | Change | |||||||||||||||
2021 | 2020 | Dollars | Percent | |||||||||||||
Gain on extinguishment of debt | $ | 974,328 | $ | - | $ | 974,328 | 100 | % |
Year Ended December 31, | Change | |||||||||||||||
2017 | 2016 | Dollars | Percent | |||||||||||||
Loss on abandonment of property and equipment | $ | - | $ | 117,930 | $ | (117,930 | ) | -100 | % |
Year Ended June 30, | Change | |||||||||||||||
2021 | 2020 | Dollars | Percent | |||||||||||||
Interest income | $ | 5,581 | $ | 158,091 | $ | (152,510 | ) | (96 | )% |
Year Ended December 31, | Change | |||||||||||||||
2017 | 2016 | Dollars | Percent | |||||||||||||
Gain on insurance claim settlement | $ | 183,217 | $ | - | $ | 183,217 | 100 | % |
Year Ended June 30, | Change | |||||||||||||||
2021 | 2020 | Dollars | Percent | |||||||||||||
Interest expense | $ | 8,953 | $ | 884 | $ | 8,069 | 913 | % |
Year Ended June 30, | Change | |||||||||||||||
2021 | 2020 | Dollars | Percent | |||||||||||||
Loss on foreign currency exchange | $ | 603 | $ | 1,829 | $ | (1,226 | ) | (67 | )% |
Page Number | |
55 | |
56 | |
Consolidated Statements of Shareholders’ Equity for the fiscal years ended | |
December 31, | June 30, | |||||||||||||||
2017 | 2016 | 2021 | 2020 | |||||||||||||
ASSETS | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 4,594,007 | $ | 7,427,273 | $ | 21,302,317 | $ | 13,993,032 | ||||||||
Restricted cash | 144,634 | 624,202 | ||||||||||||||
Accounts receivable, net | 3,377,451 | 2,794,626 | 1,662,074 | 670,718 | ||||||||||||
Inventory, net | 11,208,658 | 9,770,206 | 11,450,141 | 7,443,257 | ||||||||||||
Note receivable | 250,000 | - | ||||||||||||||
Prepaid expenses and other assets | 969,857 | 682,083 | 952,065 | 1,177,860 | ||||||||||||
Total current assets | 20,149,973 | 20,674,188 | 35,761,231 | 23,909,069 | ||||||||||||
Long-term assets: | ||||||||||||||||
Inventory, net | 19,764,959 | 18,360,211 | 17,722,579 | 23,190,702 | ||||||||||||
Property and equipment, net | 1,242,200 | 1,391,116 | 875,897 | 999,061 | ||||||||||||
Intangible assets, net | 8,597 | 8,808 | 209,658 | 170,151 | ||||||||||||
Operating lease right-of-use assets | 3,952,146 | 584,143 | ||||||||||||||
Deferred income taxes, net | 6,350,830 | - | ||||||||||||||
Other assets | 64,978 | 71,453 | 49,658 | 51,461 | ||||||||||||
Total long-term assets | 21,080,734 | 19,831,588 | 29,160,768 | 24,995,518 | ||||||||||||
TOTAL ASSETS | $ | 41,230,707 | $ | 40,505,776 | $ | 64,921,999 | $ | 48,904,587 | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | $ | 4,466,163 | $ | 3,977,149 | $ | 2,774,373 | $ | 3,748,235 | ||||||||
Operating lease liabilities, current portion | 566,083 | 622,493 | ||||||||||||||
Current maturity of long-term debt | - | 193,000 | ||||||||||||||
Accrued expenses and other liabilities | 980,800 | 631,107 | 2,281,807 | 1,922,332 | ||||||||||||
Total current liabilities | 5,446,963 | 4,608,256 | 5,622,263 | 6,486,060 | ||||||||||||
Long-term liabilities: | ||||||||||||||||
Deferred rent | 463,526 | 594,916 | ||||||||||||||
Long-term debt, net | - | 772,000 | ||||||||||||||
Noncurrent operating lease liabilities | 3,600,842 | 203,003 | ||||||||||||||
Accrued income taxes | 461,592 | 433,983 | 9,878 | 7,947 | ||||||||||||
Total long-term liabilities | 925,118 | 1,028,899 | 3,610,720 | 982,950 | ||||||||||||
Total liabilities | 6,372,081 | 5,637,155 | 9,232,983 | 7,469,010 | ||||||||||||
Commitments and contingencies (Note 9) | ||||||||||||||||
Commitments and contingencies (Note 10) | ||||||||||||||||
Shareholders’ equity: | ||||||||||||||||
Common stock, no par value; 50,000,000 shares authorized; 21,580,102 and 21,369,885 shares issued and outstanding at December 31, 2017 and 2016, respectively | 54,243,816 | 54,243,816 | ||||||||||||||
Common stock, no par value; 50,000,000 shares authorized; 29,913,095 and 28,949,410 shares issued and outstanding at June 30, 2021 and 2020, respectively | 56,057,109 | 54,342,864 | ||||||||||||||
Additional paid-in capital | 14,726,438 | 14,282,956 | 25,608,593 | 25,880,165 | ||||||||||||
Accumulated deficit | (34,111,628 | ) | (33,658,151 | ) | (25,976,686 | ) | (38,787,452 | ) | ||||||||
Total shareholders’ equity | 34,858,626 | 34,868,621 | 55,689,016 | 41,435,577 | ||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 41,230,707 | $ | 40,505,776 | $ | 64,921,999 | $ | 48,904,587 |
Year Ended December 31, | ||||||||
2017 | 2016 | |||||||
Net sales | $ | 27,032,964 | $ | 29,168,128 | ||||
Costs and expenses: | ||||||||
Cost of goods sold | 15,470,617 | 20,401,439 | ||||||
Sales and marketing | 7,477,354 | 7,038,277 | ||||||
General and administrative | 4,689,823 | 5,544,452 | ||||||
Research and development | 3,714 | 2,848 | ||||||
Loss on abandonment of property and equipment | - | 117,930 | ||||||
Total costs and expenses | 27,641,508 | 33,104,946 | ||||||
Loss from operations | (608,544 | ) | (3,936,818 | ) | ||||
Other income (expense): | ||||||||
Interest expense | (541 | ) | (1,737 | ) | ||||
Gain on insurance claim settlement | 183,217 | - | ||||||
Total other income (expense), net | 182,676 | (1,737 | ) | |||||
Loss before income taxes from continuing operations | (425,868 | ) | (3,938,555 | ) | ||||
Income tax net expense from continuing operations | (27,609 | ) | (13,480 | ) | ||||
Net loss from continuing operations | (453,477 | ) | (3,952,035 | ) | ||||
Discontinued operations: | ||||||||
Loss from discontinued operations | - | (586,124 | ) | |||||
Gain on sale of assets from discontinued operations | - | 12,398 | ||||||
Net loss from discontinued operations | - | (573,726 | ) | |||||
Net loss | $ | (453,477 | ) | $ | (4,525,761 | ) | ||
Net loss per common share: | ||||||||
Basic - continuing operations | $ | (0.02 | ) | $ | (0.19 | ) | ||
Basic - discontinued operations | - | (0.03 | ) | |||||
Basic - total | $ | (0.02 | ) | $ | (0.22 | ) | ||
Diluted - continuing operations | $ | (0.02 | ) | $ | (0.19 | ) | ||
Diluted - discontinued operations | - | (0.03 | ) | |||||
Diluted - total | $ | (0.02 | ) | $ | (0.22 | ) | ||
Weighted average number of shares used in computing net loss per common share: | ||||||||
Basic | 21,193,793 | 20,926,120 | ||||||
Diluted | 21,193,793 | 20,926,120 |
Year Ended June 30, | ||||||||
2021 | 2020 | |||||||
Net sales | $ | 39,235,839 | $ | 29,189,020 | ||||
Costs and expenses: | ||||||||
Cost of goods sold | 20,809,690 | 21,200,207 | ||||||
Sales and marketing | 8,476,716 | 9,443,244 | ||||||
General and administrative | 4,441,441 | 4,861,297 | ||||||
Total costs and expenses | 33,727,847 | 35,504,748 | ||||||
Income (Loss) from operations | 5,507,992 | (6,315,728 | ) | |||||
Other income (expense): | ||||||||
Gain on extinguishment of debt | 974,328 | - | ||||||
Interest income | 5,581 | 158,091 | ||||||
Interest expense | (8,953 | ) | (884 | ) | ||||
Loss on foreign currency exchange | (603 | ) | (1,829 | ) | ||||
Total other income (expense), net | 970,353 | 155,378 | ||||||
Income (Loss) before income taxes | 6,478,345 | (6,160,350 | ) | |||||
Income tax benefit (expense) | 6,332,421 | (1,733 | ) | |||||
Net income (loss) | $ | 12,810,766 | $ | (6,162,083 | ) | |||
Net income (loss) per common share: | ||||||||
Basic | $ | 0.44 | $ | (0.22 | ) | |||
Diluted | 0.42 | (0.22 | ) | |||||
Weighted average number of shares used in computing net income (loss) per common share: | ||||||||
Basic | 29,144,820 | 28,644,133 | ||||||
Diluted | 30,232,567 | 28,644,133 |
Common Stock | Common Stock | |||||||||||||||||||||||||||||||||||||||
Number of Shares | Amount | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders’ Equity | Number of Shares | Amount | Additional Paid-in Capital | Accumulated Deficit | Total Shareholders’ Equity | |||||||||||||||||||||||||||||||
Balance at December 31, 2015 | 21,111,585 | $ | 54,240,247 | $ | 13,280,920 | $ | (29,132,390 | ) | $ | 38,388,777 | ||||||||||||||||||||||||||||||
Balance at June 30, 2019 | 28,027,569 | $ | 54,342,864 | $ | 24,488,147 | $ | (32,625,369 | ) | $ | 46,205,642 | ||||||||||||||||||||||||||||||
Issuance of common stock, net of offering costs | 630,500 | - | 932,480 | - | 932,480 | |||||||||||||||||||||||||||||||||||
Stock-based compensation | - | - | 1,003,305 | - | 1,003,305 | - | - | 459,538 | - | 459,538 | ||||||||||||||||||||||||||||||
Issuance of restricted stock | 255,800 | - | - | - | - | 325,000 | - | - | - | - | ||||||||||||||||||||||||||||||
Stock option exercises | 2,500 | 3,569 | (1,269 | ) | - | 2,300 | ||||||||||||||||||||||||||||||||||
Retirement of restricted stock | (33,659 | ) | ||||||||||||||||||||||||||||||||||||||
Net loss | - | - | - | (4,525,761 | ) | (4,525,761 | ) | - | - | - | (6,162,083 | ) | (6,162,083 | ) | ||||||||||||||||||||||||||
Balance at December 31, 2016 | 21,369,885 | $ | 54,243,816 | $ | 14,282,956 | $ | (33,658,151 | ) | $ | 34,868,621 | ||||||||||||||||||||||||||||||
Balance at June 30, 2020 | 28,949,410 | $ | 54,342,864 | $ | 25,880,165 | $ | (38,787,452 | ) | $ | 41,435,577 | ||||||||||||||||||||||||||||||
Stock-based compensation | - | - | 443,482 | - | 443,482 | - | - | 352,583 | - | 352,583 | ||||||||||||||||||||||||||||||
Issuance of restricted stock | 210,217 | - | - | - | - | 178,750 | - | - | - | - | ||||||||||||||||||||||||||||||
Net loss | - | - | - | (453,477 | ) | (453,477 | ) | |||||||||||||||||||||||||||||||||
Balance at December 31, 2017 | 21,580,102 | $ | 54,243,816 | $ | 14,726,438 | $ | (34,111,628 | ) | $ | 34,858,626 | ||||||||||||||||||||||||||||||
Retirement of restricted stock | (162,500 | ) | - | - | - | - | ||||||||||||||||||||||||||||||||||
Stock option exercises | 947,435 | 1,714,245 | (624,155 | ) | - | 1,090,090 | ||||||||||||||||||||||||||||||||||
Net income | - | - | - | 12,810,766 | 12,810,766 | |||||||||||||||||||||||||||||||||||
Balance at June 30, 2021 | 29,913,095 | $ | 56,057,109 | $ | 25,608,593 | $ | (25,976,686 | ) | $ | 55,689,016 |
Year Ended June 30, | ||||||||
2021 | 2020 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net income (loss) | $ | 12,810,766 | $ | (6,162,083 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 567,122 | 490,235 | ||||||
Stock-based compensation | 352,583 | 459,538 | ||||||
Provision for uncollectible accounts | 2,030 | 8,788 | ||||||
Recovery of sales returns | (29,000 | ) | (42,000 | ) | ||||
Inventory write-downs | 150,000 | 5,863,991 | ||||||
(Recovery of) Provision for accounts receivable discounts | (9,153 | ) | 3,751 | |||||
Gain on extinguishment of debt | (974,328 | ) | - | |||||
Benefit for deferred income taxes, net | (6,350,830 | ) | - | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (955,233 | ) | 1,321,214 | |||||
Inventory | 1,311,239 | (2,764,230 | ) | |||||
Prepaid expenses and other assets, net | (3,140,405 | ) | 490,438 | |||||
Accounts payable | (973,862 | ) | 468,687 | |||||
Accrued income taxes | 1,931 | 1,733 | ||||||
Accrued expenses and other liabilities | 3,710,232 | 109,123 | ||||||
Net cash provided by operating activities | 6,473,092 | 249,185 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchases of property and equipment | (437,069 | ) | (458,854 | ) | ||||
Payment to fund note receivable | (250,000 | ) | - | |||||
Payments for intangible assets | (46,396 | ) | (77,122 | ) | ||||
Net cash used in investing activities | (733,465 | ) | (535,976 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Stock option exercises | 1,090,090 | - | ||||||
Proceeds from long-term debt | - | 965,000 | ||||||
Issuance of common stock, net of offering costs | - | 932,480 | ||||||
Net cash provided by financing activities | 1,090,090 | 1,897,480 | ||||||
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 6,829,717 | 1,610,689 | ||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF YEAR | 14,617,234 | 13,006,545 | ||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF YEAR | $ | 21,446,951 | $ | 14,617,234 | ||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||||
Additions to right-of-use assets obtained from new operating lease liabilities | $ | 3,908,249 | $ | - | ||||
Forgiveness of PPP Loan principal | 965,000 | $ | - | |||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid during the year for interest | $ | - | $ | 884 | ||||
Cash paid during the year for income taxes | $ | 14,704 | $ | 2,050 |
Year Ended December 31, | ||||||||
2017 | 2016 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss | $ | (453,477 | ) | $ | (4,525,761 | ) | ||
Net loss from discontinued operations | - | (573,726 | ) | |||||
Net loss from continuing operations | (453,477 | ) | (3,952,035 | ) | ||||
Adjustments to reconcile net loss from continuing operations to net cash (used in) provided by operating activities of continuing operations: | ||||||||
Depreciation and amortization | 422,018 | 557,393 | ||||||
Stock-based compensation | 443,482 | 959,134 | ||||||
Provision for uncollectible accounts | 28,000 | (73,300 | ) | |||||
Provision for sales returns | 122,000 | (316,000 | ) | |||||
Provision for inventory reserves | 598,000 | 200,000 | ||||||
Gain on insurance claim settlement | (183,217 | ) | - | |||||
Loss on abandonment of property and equipment | - | 117,930 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (732,825 | ) | 1,447,325 | |||||
Inventory | (3,503,032 | ) | 3,998,003 | |||||
Prepaid expenses and other assets, net | (36,250 | ) | 162,157 | |||||
Accounts payable | 489,014 | 654,001 | ||||||
Deferred rent | (131,390 | ) | (99,656 | ) | ||||
Accrued income taxes | 27,609 | 13,480 | ||||||
Accrued expenses and other liabilities | 349,693 | (333,731 | ) | |||||
Net cash (used in) provided by operating activities of continuing operations | (2,560,375 | ) | 3,334,701 | |||||
Net cash used in operating activities of discontinued operations | - | (1,125,578 | ) | |||||
Net cash (used in) provided by operating activities | (2,560,375 | ) | 2,209,123 | |||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Purchases of property and equipment | (271,390 | ) | (421,761 | ) | ||||
Intangible assets | (1,501 | ) | (5,615 | ) | ||||
Proceeds from sale of long-term assets | - | 250 | ||||||
Net cash used in investing activities of continuing operations | (272,891 | ) | (427,126 | ) | ||||
Net cash provided by investing activities of discontinued operations | - | 368,671 | ||||||
Net cash used in investing activities | (272,891 | ) | (58,455 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Stock option exercises | - | 2,300 | ||||||
Net cash provided by financing activities of continuing operations | - | 2,300 | ||||||
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (2,833,266 | ) | 2,152,968 | |||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 7,427,273 | 5,274,305 | ||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 4,594,007 | $ | 7,427,273 | ||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid during the year for interest | $ | 541 | $ | 1,737 |
1. | DESCRIPTION OF BUSINESS |
2. | BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES |
June 30, | ||||||||
2021 | 2020 | |||||||
Cash and cash equivalents | $ | 21,302,317 | $ | 13,993,032 | ||||
Restricted cash | 144,634 | 624,202 | ||||||
Total cash, cash equivalents, and restricted cash | $ | 21,446,951 | $ | 14,617,234 |
Year Ended December 31, | Year Ended June 30, | |||||||||||||||
2017 | 2016 | 2021 | 2020 | |||||||||||||
Balance, beginning of year | $ | 415,000 | $ | 731,000 | $ | 704,000 | $ | 746,000 | ||||||||
Additions charged to operations | 3,878,736 | 3,574,297 | 5,631,415 | 4,710,943 | ||||||||||||
Sales returns | (3,756,736 | ) | (3,890,297 | ) | (5,660,415 | ) | (4,752,943 | ) | ||||||||
Balance, end of year | $ | 537,000 | $ | 415,000 | $ | 675,000 | $ | 704,000 |
Year Ended December 31, | Year Ended June 30, | |||||||||||||||
2017 | 2016 | 2021 | 2020 | |||||||||||||
Balance, beginning of year | $ | 226,000 | $ | 1,137,000 | $ | 79,000 | $ | 249,000 | ||||||||
Additions (reductions) charged to operations | 28,000 | (73,300 | ) | |||||||||||||
Additions charged to operations | 2,030 | 8,788 | ||||||||||||||
Write-offs, net of recoveries | - | (837,000 | ) | (10,030 | ) | (178,788 | ) | |||||||||
Balance, end of year | $ | 254,000 | $ | 226,000 | $ | 71,000 | $ | 79,000 |
Machinery and equipment | 5 to 12 years | |
Computer hardware | 3 to 5 years | |
Computer software | 3 years | |
Furniture and fixtures | 5 to 10 years | |
Leasehold improvements | Shorter of the estimated useful life or |
Year Ended December 31, | ||||||||
2017 | 2016 | |||||||
Numerator: | ||||||||
Net loss from continuing operations | $ | (453,477 | ) | $ | (3,952,035 | ) | ||
Net loss from discontinued operations | - | (573,726 | ) | |||||
Net loss | $ | (453,477 | ) | $ | (4,525,761 | ) | ||
Denominator: | ||||||||
Weighted average common shares outstanding: | ||||||||
Basic | 21,193,793 | 20,926,120 | ||||||
Stock options | - | - | ||||||
Diluted | 21,193,793 | 20,926,120 | ||||||
Net loss per common share: | ||||||||
Basic-continuing operations | $ | (0.02 | ) | $ | (0.19 | ) | ||
Basic-discontinued operations | - | (0.03 | ) | |||||
Basic-total | $ | (0.02 | ) | $ | (0.22 | ) | ||
Diluted-continuing operations | $ | (0.02 | ) | $ | (0.19 | ) | ||
Diluted-discontinued operations | - | (0.03 | ) | |||||
Diluted-total | $ | (0.02 | ) | $ | (0.22 | ) | ||
Year Ended June 30, | ||||||||
2021 | 2020 | |||||||
Numerator: | ||||||||
Net income (loss) | $ | 12,810,766 | $ | (6,162,083 | ) | |||
Denominator: | ||||||||
Weighted average common shares outstanding: | ||||||||
Basic | 29,144,820 | 28,644,133 | ||||||
Effect of dilutive securities | 1,087,747 | - | ||||||
Diluted | 30,232,567 | 28,644,133 | ||||||
Net income (loss) per common share: | ||||||||
Basic | $ | 0.44 | $ | (0.22 | ) | |||
Diluted | $ | 0.42 | $ | (0.22 | ) |
3. | SEGMENT INFORMATION AND GEOGRAPHIC DATA |
Year Ended December 31, 2017 | Year Ended June 30, 2021 | |||||||||||||||||||||||
Traditional | Online Channels | Total | Online Channels | Traditional | Total | |||||||||||||||||||
Net sales | ||||||||||||||||||||||||
Finished jewelry | $ | 19,905,199 | $ | 4,496,347 | $ | 24,401,546 | ||||||||||||||||||
Loose jewels | $ | 13,430,776 | $ | 3,149,972 | $ | 16,580,748 | 3,304,439 | 11,529,854 | 14,834,293 | |||||||||||||||
Finished jewelry | 2,515,443 | 7,936,773 | 10,452,216 | |||||||||||||||||||||
Total | $ | 15,946,219 | $ | 11,086,745 | $ | 27,032,964 | $ | 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 | $ | 6,998,485 | $ | 1,526,358 | $ | 8,524,843 | 1,216,942 | 5,640,813 | 6,857,755 | |||||||||||||||
Finished jewelry | 1,610,845 | 3,615,815 | 5,226,660 | |||||||||||||||||||||
Total | $ | 8,609,330 | $ | 5,142,173 | $ | 13,751,503 | $ | 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 | $ | 6,432,291 | $ | 1,623,614 | $ | 8,055,905 | 2,087,497 | 5,889,041 | 7,976,538 | |||||||||||||||
Finished jewelry | 904,598 | 4,320,958 | 5,225,556 | |||||||||||||||||||||
Total | $ | 7,336,889 | $ | 5,944,572 | $ | 13,281,461 | $ | 13,756,899 | $ | 7,349,173 | $ | 21,106,072 | ||||||||||||
Operating (loss) income | $ | (836,797 | ) | $ | 228,253 | $ | (608,544 | ) | ||||||||||||||||
Operating income | $ | 3,739,553 | $ | 1,768,439 | $ | 5,507,992 | ||||||||||||||||||
Depreciation and amortization | $ | 300,308 | $ | 121,711 | $ | 422,018 | $ | 248,995 | $ | 318,127 | $ | 567,122 | ||||||||||||
Capital expenditures | $ | 123,944 | $ | 147,446 | $ | 271,390 | $ | 253,935 | $ | 183,134 | $ | 437,069 |
Year Ended December 31, 2016 | Year Ended June 30, 2020 | |||||||||||||||||||||||
Traditional | Online Channels | Total | Online Channels | Traditional | Total | |||||||||||||||||||
Net sales | ||||||||||||||||||||||||
Finished jewelry | $ | 13,680,440 | $ | 3,097,188 | $ | 16,777,628 | ||||||||||||||||||
Loose jewels | $ | 19,231,534 | $ | 2,220,194 | $ | 21,451,728 | 2,944,100 | 9,467,292 | 12,411,392 | |||||||||||||||
Finished jewelry | 1,075,157 | 6,641,243 | 7,716,400 | |||||||||||||||||||||
Total | $ | 20,306,691 | $ | 8,861,437 | $ | 29,168,128 | $ | 16,624,540 | $ | 12,564,480 | $ | 29,189,020 | ||||||||||||
Product line cost of goods sold | �� | |||||||||||||||||||||||
Finished jewelry | $ | 5,760,413 | $ | 1,709,377 | $ | 7,469,790 | ||||||||||||||||||
Loose jewels | $ | 13,107,366 | $ | 809,383 | $ | 13,916,749 | 1,198,275 | 4,863,911 | 6,062,186 | |||||||||||||||
Finished jewelry | 1,195,640 | 2,953,148 | 4,148,788 | |||||||||||||||||||||
Total | $ | 14,303,006 | $ | 3,762,531 | $ | 18,065,537 | $ | 6,958,688 | $ | 6,573,288 | $ | 13,531,976 | ||||||||||||
Product line gross profit (loss) | ||||||||||||||||||||||||
Product line gross profit | ||||||||||||||||||||||||
Finished jewelry | $ | 7,920,027 | $ | 1,387,811 | $ | 9,307,838 | ||||||||||||||||||
Loose jewels | $ | 6,124,168 | $ | 1,410,811 | $ | 7,534,979 | 1,745,825 | 4,603,381 | 6,349,206 | |||||||||||||||
Finished jewelry | (120,483 | ) | 3,688,095 | 3,567,612 | ||||||||||||||||||||
Total | $ | 6,003,685 | $ | 5,098,906 | $ | 11,102,591 | $ | 9,665,852 | $ | 5,991,192 | $ | 15,657,044 | ||||||||||||
Operating loss | $ | (3,089,559 | ) | $ | (847,259 | ) | $ | (3,936,818 | ) | $ | (249,016 | ) | $ | (6,066,712 | ) | $ | (6,315,728 | ) | ||||||
Depreciation and amortization | $ | 479,517 | $ | 77,876 | $ | 557,393 | $ | 177,703 | $ | 312,532 | $ | 490,235 | ||||||||||||
Capital expenditures | $ | 158,702 | $ | 263,059 | $ | 421,761 | $ | 305,570 | $ | 153,284 | $ | 458,854 |
Year Ended December 31, | Year Ended June 30, | |||||||||||||||
2017 | 2016 | 2021 | 2020 | |||||||||||||
Product line cost of goods sold | $ | 13,751,503 | $ | 18,065,537 | $ | 18,129,767 | $ | 13,531,976 | ||||||||
Non-capitalized manufacturing and production control expenses | 1,352,311 | 1,427,924 | 1,591,114 | 1,443,698 | ||||||||||||
Freight out | 417,074 | 376,726 | 1,013,275 | 510,612 | ||||||||||||
Inventory valuation allowances | 598,000 | 200,000 | ||||||||||||||
Inventory write-downs | 150,000 | 5,863,991 | ||||||||||||||
Other inventory adjustments | (648,271 | ) | 331,252 | (74,466 | ) | (150,070 | ) | |||||||||
Cost of goods sold | $ | 15,470,617 | $ | 20,401,439 | $ | 20,809,690 | $ | 21,200,207 |
Year Ended December 31, | Year Ended June 30, | |||||||||||||||
2017 | 2016 | 2021 | 2020 | |||||||||||||
Net sales | ||||||||||||||||
United States | $ | 25,176,220 | $ | 26,164,660 | $ | 37,225,519 | $ | 26,814,024 | ||||||||
International | 1,856,744 | 3,003,468 | 2,010,320 | 2,374,996 | ||||||||||||
Total | $ | 27,032,964 | $ | 29,168,128 | $ | 39,235,839 | $ | 29,189,020 |
4. | FAIR VALUE MEASUREMENTS |
5. | NOTE RECEIVABLE |
6. | INVENTORIES |
June 30, | ||||||||
2021 | 2020 | |||||||
Finished jewelry: | ||||||||
Raw materials | $ | 1,476,514 | $ | 821,536 | ||||
Work-in-process | 779,593 | 602,390 | ||||||
Finished goods | 8,025,816 | 6,019,985 | ||||||
Finished goods on consignment | 2,050,372 | 2,297,907 | ||||||
Total finished jewelry | 12,332,295 | 9,741,818 | ||||||
Loose jewels: | ||||||||
Raw materials | 1,775,505 | 3,526,399 | ||||||
Work-in-process | 9,893,443 | 10,453,586 | ||||||
Finished goods | 4,942,192 | 6,619,487 | ||||||
Finished goods on consignment | 154,968 | 204,635 | ||||||
Total loose jewels | 16,766,108 | 20,804,107 | ||||||
Total supplies inventory | 74,317 | 88,034 | ||||||
Total inventory | $ | 29,172,720 | $ | 30,633,959 |
December 31, | ||||||||
2017 | 2016 | |||||||
Raw materials | $ | 4,853,049 | $ | 3,106,617 | ||||
Work-in-process | 9,219,383 | 11,048,126 | ||||||
Finished goods | 17,896,992 | 15,057,668 | ||||||
Finished goods on consignment | 1,093,752 | 467,778 | ||||||
Supplies inventory | 75,441 | 17,228 | ||||||
Less inventory reserves | (2,165,000 | ) | (1,567,000 | ) | ||||
Total | $ | 30,973,617 | $ | 28,130,417 | ||||
Short-term portion | $ | 11,208,658 | $ | 9,770,206 | ||||
Long-term portion | 19,764,959 | 18,360,211 | ||||||
Total | $ | 30,973,617 | $ | 28,130,417 |
June 30, | ||||||||
2021 | 2020 | |||||||
Short-term portion | $ | 11,450,141 | $ | 7,443,257 | ||||
Long-term portion | 17,722,579 | 23,190,702 | ||||||
Total inventory | $ | 29,172,720 | $ | 30,633,959 |
7. | PROPERTY AND EQUIPMENT |
December 31, 2017 | December 31, 2016 | |||||||
Loose jewels | ||||||||
Raw materials | $ | 4,288,360 | $ | 2,586,045 | ||||
Work-in-process | 8,328,719 | 10,589,424 | ||||||
Finished goods | 9,487,245 | 9,455,393 | ||||||
Finished goods on consignment | 26,281 | 5,473 | ||||||
Total loose jewels | $ | 22,130,605 | $ | 22,636,335 | ||||
Finished jewelry | ||||||||
Raw materials | $ | 564,689 | $ | 520,572 | ||||
Work-in-process | 890,664 | 458,702 | ||||||
Finished goods | 6,304,747 | 4,081,275 | ||||||
Finished goods on consignment | 1,007,471 | 416,305 | ||||||
Total finished jewelry | 8,767,571 | 5,476,854 | ||||||
Total supplies inventory | 75,441 | 17,228 | ||||||
Total inventory | $ | 30,973,617 | $ | 28,130,417 |
June 30, | ||||||||
2021 | 2020 | |||||||
Computer software | $ | 2,015,548 | $ | 1,827,581 | ||||
Machinery and equipment | 1,250,345 | 1,145,525 | ||||||
Computer hardware | 1,274,561 | 1,158,559 | ||||||
Leasehold improvements | 1,162,995 | 1,158,807 | ||||||
Furniture and fixtures | 371,883 | 347,872 | ||||||
Total | 6,075,332 | 5,638,344 | ||||||
Less accumulated depreciation | (5,199,435 | ) | (4,639,283 | ) | ||||
Property and equipment, net | $ | 875,897 | $ | 999,061 |
December 31, | ||||||||
2017 | 2016 | |||||||
Computer software | $ | 1,206,465 | $ | 1,192,922 | ||||
Machinery and equipment | 1,026,736 | 956,050 | ||||||
Computer hardware | 1,009,008 | 874,347 | ||||||
Leasehold improvements | 1,126,553 | 1,083,634 | ||||||
Furniture and fixtures | 318,627 | 309,046 | ||||||
Total | 4,687,389 | 4,415,999 | ||||||
Less accumulated depreciation | (3,445,189 | ) | (3,024,883 | ) | ||||
Property and equipment, net | $ | 1,242,200 | $ | 1,391,116 |
Weighted Average Remaining Amortization Period (in Years) | ||||||||||||||||||||||||
December 31, | Weighted Average Remaining Amortization Period | June 30, | ||||||||||||||||||||||
2017 | 2016 | (in Years) | 2021 | 2020 | ||||||||||||||||||||
Patents | $ | 958,604 | $ | 958,604 | 0.1 | $ | 1,017,007 | $ | 1,024,267 | 13.6 | ||||||||||||||
Trademarks | 57,325 | 55,824 | 7.7 | 214,339 | 160,683 | 12.9 | ||||||||||||||||||
License rights | 6,718 | 6,718 | 0.0 | 6,718 | 6,718 | - | ||||||||||||||||||
Total | 1,022,647 | 1,021,146 | 1,238,064 | 1,191,668 | ||||||||||||||||||||
Less accumulated amortization | (1,014,050 | ) | (1,012,338 | ) | (1,028,406 | ) | (1,021,517 | ) | ||||||||||||||||
Intangible assets, net | $ | 8,597 | $ | 8,808 | $ | 209,658 | $ | 170,151 |
ACCRUED EXPENSES AND OTHER LIABILITIES |
December 31, | June 30, | |||||||||||||||
2017 | 2016 | 2021 | 2020 | |||||||||||||
Accrued compensation and related benefits | $ | 652,177 | $ | 443,547 | $ | 866,705 | $ | 395,006 | ||||||||
Deferred revenue | 774,891 | 794,740 | ||||||||||||||
Accrued sales tax | 555,547 | 295,651 | ||||||||||||||
Accrued cooperative advertising | 134,018 | 50,000 | 68,185 | 89,517 | ||||||||||||
Deferred rent | 131,389 | 115,307 | ||||||||||||||
Accrued sales tax | 20,844 | 6,885 | ||||||||||||||
Accrued income taxes | 16,478 | - | ||||||||||||||
Accrued severance | - | 338,355 | ||||||||||||||
Other | 42,372 | 15,368 | 1 | 9,063 | ||||||||||||
Accrued expenses and other liabilities | $ | 980,800 | $ | 631,107 | $ | 2,281,807 | $ | 1,922,332 |
COMMITMENTS AND CONTINGENCIES |
2018 | $ | 600,871 | ||
2019 | 617,395 | |||
2020 | 634,373 | |||
2021 | 541,957 | |||
Total | $ | 2,394,596 |
Operating Leases: | ||||
$ | 3,952,146 | |||
Current operating lease liabilities | $ | 566,083 | ||
Noncurrent operating lease liabilities | 3,600,842 | |||
Total operating lease liabilities | $ | 4,166,925 |
2022 | $ | 575,591 | ||
2023 | 869,742 | |||
2024 | 893,660 | |||
2025 | 918,236 | |||
2026 | 943,487 | |||
2027 | 317,327 | |||
Total lease payments | 4,518,043 | |||
Less: imputed interest | 351,118 | |||
Present value of lease payments | 4,166,925 | |||
Less: current lease liability | 566,083 | |||
Total long-term lease liability | $ | 3,600,842 |
SHAREHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION |
Year Ended December 31, | Year Ended June 30, | |||||||||||||||
2017 | 2016 | 2021 | 2020 | |||||||||||||
Employee stock options | $ | 336,534 | $ | 383,778 | $ | 234,947 | $ | 309,999 | ||||||||
Consultant stock options | - | 170,622 | ||||||||||||||
Restricted stock awards | 106,948 | 448,906 | 117,636 | 149,539 | ||||||||||||
Total | $ | 443,482 | $ | 1,003,306 | $ | 352,583 | $ | 459,538 |
Shares | Weighted Average Exercise Price | Shares | Weighted Average Exercise Price | |||||||||||||
Outstanding, December 31, 2015 | 2,441,077 | $ | 2.11 | |||||||||||||
Outstanding at June 30, 2019 | 2,523,638 | $ | 1.39 | |||||||||||||
Granted | 605,387 | $ | 0.95 | |||||||||||||
Forfeited | (125,005 | ) | $ | 1.02 | ||||||||||||
Expired | (194,925 | ) | $ | 1.18 | ||||||||||||
Outstanding at June 30, 2020 | 2,809,095 | $ | 1.19 | |||||||||||||
Granted | 591,005 | $ | 1.14 | 438,533 | $ | 1.05 | ||||||||||
Exercised | (2,500 | ) | $ | 0.92 | (947,435 | ) | 0.95 | |||||||||
Forfeited | (449,122 | ) | $ | 1.43 | (7,000 | ) | $ | 1.23 | ||||||||
Expired | (445,562 | ) | $ | 2.09 | (57,907 | ) | $ | 1.95 | ||||||||
Outstanding, December 31, 2016 | 2,134,898 | $ | 1.99 | |||||||||||||
Granted | 836,369 | $ | 0.94 | |||||||||||||
Forfeited | (103,000 | ) | $ | 1.22 | ||||||||||||
Expired | (641,002 | ) | $ | 2.99 | ||||||||||||
Outstanding, December 31, 2017 | 2,227,265 | $ | 1.35 | |||||||||||||
Outstanding at June 30, 2021 | 2,235,286 | $ | 1.24 |
Year Ended December 31, | Year Ended June 30, | |||||||||||||||
2017 | 2016 | 2021 | 2020 | |||||||||||||
Dividend yield | 0.0 | % | 0.0 | % | 0.0 | % | 0.0 | % | ||||||||
Expected volatility | 63.4 | % | 62.2 | % | 61.7 | % | 63.2 | % | ||||||||
Risk-free interest rate | 1.90 | % | 1.42 | % | 0.36 | % | 0.82 | % | ||||||||
Expected lives (years) | 5.5 | 5.6 | 4.9 | 5.2 |
Options Outstanding | Options Outstanding | Options Exercisable | Options Vested or Expected to Vest | Options Outstanding | Options Exercisable | Options Vested or Expected to Vest | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of 12/31/2017 | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price | Balance as of 12/31/2017 | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price | Balance as of 12/31/2017 | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of 6/30/2021 | Balance as of 6/30/2021 | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price | Balance as of 6/30/2021 | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price | Balance as of 6/30/2021 | Weighted Average Remaining Contractual Life (Years) | Weighted Average Exercise Price | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2,227,265 | 8.06 | $ | 1.35 | 1,359,646 | 7.30 | $ | 1.57 | 2,111,450 | 7.99 | $ | 1.36 | 2,235,286 | 6.47 | $ | 1.24 | 1,696,003 | 5.62 | $ | 1.31 | 2,166,723 | 6.39 | $ | 1.25 |
Shares | Weighted Average Grant Date Fair Value | Shares | Weighted Average Grant Date Fair Value | |||||||||||||
Unvested, December 31, 2015 | 425,000 | $ | 1.87 | |||||||||||||
Unvested at June 30, 2019 | 129,500 | $ | 1.08 | |||||||||||||
Granted | 509,250 | $ | 0.93 | 325,000 | $ | 1.57 | ||||||||||
Vested | (321,400 | ) | $ | 2.00 | (258,341 | ) | $ | 1.07 | ||||||||
Canceled | (253,450 | ) | $ | 1.18 | (33,659 | ) | $ | 1.07 | ||||||||
Unvested, December 31, 2016 | 359,400 | $ | 0.91 | |||||||||||||
Unvested at June 30, 2020 | 162,500 | $ | 1.57 | |||||||||||||
Granted | 420,000 | $ | 1.11 | 178,750 | $ | 0.72 | ||||||||||
Vested | (214,200 | ) | $ | 0.92 | ||||||||||||
Canceled | (209,783 | ) | $ | 0.96 | (162,500 | ) | $ | 1.57 | ||||||||
Unvested, December 31, 2017 | 355,417 | $ | 1.11 | |||||||||||||
Unvested at June 30, 2021 | 178,750 | $ | 0.72 |
Year Ended December 31, | Year Ended June 30, | |||||||||||||||
2017 | 2016 | 2021 | 2020 | |||||||||||||
Current: | ||||||||||||||||
Federal | $ | - | $ | - | $ | - | $ | - | ||||||||
State | (27,609 | ) | (13,480 | ) | (18,409 | ) | (1,733 | ) | ||||||||
Total | (27,609 | ) | (13,480 | ) | ||||||||||||
Total current expense | (18,409 | ) | (1,733 | ) | ||||||||||||
Deferred: | ||||||||||||||||
Federal | - | - | 6,062,222 | - | ||||||||||||
State | - | - | 288,608 | - | ||||||||||||
Total | - | - | ||||||||||||||
Income tax net expense | $ | (27,609 | ) | $ | (13,480 | ) | ||||||||||
Total deferred benefit (expense) | 6,350,830 | - | ||||||||||||||
Income tax net benefit (expense) | $ | 6,332,421 | $ | (1,733 | ) |
December 31, | June 30, | |||||||||||||||
2017 | 2016 | 2021 | 2020 | |||||||||||||
Reserves and accruals | $ | 686,573 | $ | 1,053,863 | ||||||||||||
Prepaid expenses | (28,744 | ) | (43,774 | ) | ||||||||||||
Federal NOL carryforwards | 8,395,472 | 8,530,493 | ||||||||||||||
Deferred tax assets: | ||||||||||||||||
Reversals and accruals | $ | 454,846 | $ | 476,666 | ||||||||||||
Federal net operating loss (“NOL”) carryforwards | 3,989,278 | 4,980,513 | ||||||||||||||
State NOL carryforwards | 681,364 | 615,919 | 585,563 | 663,918 | ||||||||||||
Hong Kong NOL carryforwards | 995,566 | 995,566 | 995,566 | 995,566 | ||||||||||||
Federal benefit on state taxes under uncertain tax positions | 94,142 | 136,969 | 2,073 | 1,668 | ||||||||||||
Stock-based compensation | 422,623 | 342,294 | 149,047 | 177,508 | ||||||||||||
Section 263A adjustment | 122,562 | 215,416 | ||||||||||||||
Research tax credit | 434,637 | 434,637 | - | 252 | ||||||||||||
Alternative minimum tax credit | 350,743 | 348,264 | ||||||||||||||
Contributions carryforward | - | 35,100 | - | 7,184 | ||||||||||||
Depreciation | (178,670 | ) | (286,608 | ) | ||||||||||||
Accrued rent | 138,178 | 216,432 | ||||||||||||||
Inventory valuation reserve | 1,605,871 | 1,594,795 | ||||||||||||||
Operating lease liabilities | 942,471 | 185,422 | ||||||||||||||
Loss on impairment of long-lived assets | 33,864 | 53,042 | - | 32,749 | ||||||||||||
Valuation allowance | (12,025,748 | ) | (12,432,197 | ) | (1,452,296 | ) | (8,988,696 | ) | ||||||||
Total | - | - | ||||||||||||||
Total deferred income tax assets, net | $ | - | $ | - | ||||||||||||
Noncurrent deferred tax assets, net | 7,394,981 | 342,961 | ||||||||||||||
Deferred tax liabilities: | ||||||||||||||||
Prepaid expenses | (44,890 | ) | (39,943 | ) | ||||||||||||
Depreciation | (105,369 | ) | (172,010 | ) | ||||||||||||
Operating lease right-of-use assets | (893,892 | ) | (131,008 | ) | ||||||||||||
Noncurrent deferred tax liabilities | (1,044,151 | ) | (342,961 | ) | ||||||||||||
Total noncurrent deferred tax assets, net | $ | 6,350,830 | $ | - |
Year Ended December 31, | ||||||||
2017 | 2016 | |||||||
Anticipated income tax benefit at statutory rate | $ | 144,795 | $ | 1,534,176 | ||||
State income tax expense, net of federal tax effect | (54,083 | ) | (9,350 | ) | ||||
Federal income tax effect of change in tax rate | (518,974 | ) | - | |||||
Income tax effect of uncertain tax positions | (17,946 | ) | (8,896 | ) | ||||
Return to provision adjustments | 2,982 | (23,070 | ) | |||||
Stock-based compensation | (36,233 | ) | (110,066 | ) | ||||
Other changes in deferred income tax assets, net | (437 | ) | (13,118 | ) | ||||
Decrease (increase) in valuation allowance | 452,287 | (1,383,156 | ) | |||||
Income tax net expense | $ | (27,609 | ) | $ | (13,480 | ) |
Year Ended June 30, | ||||||||
2021 | 2020 | |||||||
Anticipated income tax (expense) benefit at statutory rate | $ | (1,360,452 | ) | $ | 1,293,673 | |||
State income tax (expense) benefit, net of federal tax effect | (84,288 | ) | 64,034 | |||||
Income tax effect of uncertain tax positions | (1,468 | ) | 17,508 | |||||
Return to provision adjustments | (45 | ) | 1 | |||||
Stock-based compensation | 38,197 | (31,195 | ) | |||||
PPP Loan forgiveness | 202,729 | - | ||||||
Other changes in deferred income tax assets, net | 1,348 | (114,288 | ) | |||||
Decrease (Increase) in valuation allowance | 7,536,400 | (1,231,466 | ) | |||||
Income tax net benefit (expense) | $ | 6,332,421 | $ | (1,733 | ) |
Balance as of January 1, 2016 | $ | 519,284 | ||
Increases related to prior year tax positions | 13,480 | |||
Balance as of December 31, 2016 | 532,764 | |||
Increases related to prior year tax positions | 27,609 | |||
Balance as of December 31, 2017 | $ | 560,373 |
Net sales | $ | 804,585 | ||
Costs and expenses: | ||||
Cost of goods sold | 276,100 | |||
Sales and marketing | 940,685 | |||
General and administrative | 173,913 | |||
Interest expense | 11 | |||
Total costs and expenses | 1,390,709 | |||
Loss from discontinued operations | (586,124 | ) | ||
Other income: | ||||
Gain on sale of long-term assets | 12,398 | |||
Total other income, net | 12,398 | |||
Pretax loss from discontinued operations | $ | (573,726 | ) |
June 30, | ||||||||||||||||
December 31, 2017 | December 31, 2016 | 2021 | 2020 | |||||||||||||
Customer A | 12 | % | 16 | % | 30 | % | 26 | % | ||||||||
Customer B | 18 | % | * | % | 22 | % | 14 | % | ||||||||
* Customer B did not have individual balances that represented 10% or more of total gross accounts receivable as of December 31, 2016. | ||||||||||||||||
Customer C | 14 | % | 13 | % |
Year Ended December 31, | ||||||||
2017 | 2016 | |||||||
Customer C | 21 | % | 17 | % | ||||
Customer D | * | % | 23 | % | ||||
* Customer D did not have net sales that represented 10% or more of total net sales for the year ended December 31, 2017. |
Year Ended June 30, | ||||||||
2021 | 2020 | |||||||
Customer A | 13 | % | 12 | % | ||||
Customer B | 12 | % | 13 | % |
15. | EMPLOYEE BENEFIT PLAN |
16. | SUBSEQUENT EVENT |
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; |
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and |
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our assets that could have a material effect on the financial statements. |
Item 9C. |
Name and Principal Position | Year | Salary ($) | Stock Awards ($)(1) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total ($) | ||||||||||||||||||
Suzanne Miglucci | 2017 | $ | 335,000 | $ | 166,875 | (2) | $ | - | $ | - | $ | 18,261 | (3) | $ | 520,136 | ||||||||||
President and Chief Executive Officer | 2016 | 347,885 | 136,500 | (4) | - | - | 17,691 | (5) | 502,076 | ||||||||||||||||
Clint J. Pete | 2017 | 221,696 | 83,438 | (7) | 52,315 | 14,028 | (8) | 4,187 | (9) | 375,664 | |||||||||||||||
Chief Financial Officer and Treasurer(6) | 2016 | 99,718 | - | 14,047 | - | - | 113,765 | ||||||||||||||||||
Don O’Connell, Chief Operating Officer and Senior Vice President, Supply Chain(10) | 2017 | 251,923 | 83,438 | (11) | 52,315 | - | 6,210 | (12) | 393,886 |
Option Awards | Stock Awards | |||||||||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of shares or units of stock that have not vested (#) | Market value of shares or units of stock that have not vested ($)(1) | Equity incentive plan awards: Number of unearned shares, units or other rights that have not vested (#) | Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($)(1) | |||||||||||||||
Suzanne Miglucci | 8/18/2015 | 30,991 | - | $ | 1.21 | 8/18/2025 | ||||||||||||||||||
12/1/2015 | 300,000 | - | 1.21 | 12/1/2025 | ||||||||||||||||||||
2/23/2017 | 150,000 | (2) | 202,500 | |||||||||||||||||||||
Clint J. Pete | 8/23/2016 | 5,000 | 15,000 | (3) | 1.29 | 8/23/2026 | ||||||||||||||||||
2/23/2017 | 75,000 | (2) | 101,250 | |||||||||||||||||||||
5/23/2017 | 25,000 | 75,000 | (4) | 5/23/2027 | ||||||||||||||||||||
Don O’Connell | 3/15/2016 | 25,000 | 25,000 | (5) | 3/15/2026 | |||||||||||||||||||
2/23/2017 | 75,000 | (2) | 101,250 | |||||||||||||||||||||
5/23/2017 | 25,000 | 75,000 | (4) | 5/23/2027 |
Name and Principal Position | Year | Realized Salary ($) | Realized Stock Awards ($)(1) | Realized Option Awards ($)(1) | Realized Non- Equity Incentive Plan Compensation ($)(1) | All Other Compensation ($) | Total ($) | ||||||||||||||||||
Suzanne Miglucci | 2017 | $ | 335,000 | $ | 71,550 | $ | - | $ | - | $ | 18,261 | (2) | $ | 424,811 | |||||||||||
President and Chief Executive Officer | 2016 | 347,885 | - | - | - | 17,691 | (3) | 365,576 | |||||||||||||||||
Clint J. Pete | 2017 | 221,696 | - | - | 14,028 | (5) | 4,187 | (6) | 239,911 | ||||||||||||||||
Chief Financial Officer and Treasurer(4) | 2016 | 99,718 | - | - | - | - | 99,718 | ||||||||||||||||||
Don O’Connell | 2017 | 251,923 | 15,582 | - | - | 6,210 | (8) | 273,715 | |||||||||||||||||
Chief Operating Officer and Senior Vice President, Supply Chain(7) |
Name | Fees Earned or Paid in Cash ($) | Option Awards ($)(1) | All Other Compensation ($) | Total ($) | ||||||||||||
Neal I. Goldman | $ | 50,000 | $ | 57,111 | $ | - | $ | 107,111 | ||||||||
Anne M. Butler | 42,500 | 27,108 | - | 69,608 | ||||||||||||
Benedetta Casamento(2) | 11,827 | 27,066 | - | 38,893 | ||||||||||||
Jaqui Lividini | 35,000 | 27,108 | - | 62,108 | ||||||||||||
Ollin B. Sykes | 50,000 | 27,108 | - | 77,108 |
Item 12. |
Plan Category | (a) Number of securities to be issued upon exercise of outstanding options, warrants and rights(1) | (b) Weighted- average exercise price of outstanding options, warrants, and rights | (c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))(1) | |||||||||
Equity compensation plans approved by security holders | 2,227,265 | (2) | $ | 1.35 | 2,712,728 | (3) | ||||||
Equity compensation plans not approved by security holders | - | $ | - | - | ||||||||
Total | 2,227,265 | $ | 1.35 | 2,712,728 |
Name and Address of Beneficial Owner(1) | Number of Shares Beneficially Owned(2) | Percent of Class | ||||||
Goldman Capital Management Inc.(3) | 1,092,783 | 5.1 | % | |||||
767 Third Ave. | ||||||||
New York, NY 10017 | ||||||||
Neal I. Goldman(4) | 2,001,081 | 9.3 | ||||||
Ollin B. Sykes(5) | 1,535,107 | 7.1 | ||||||
Suzanne Miglucci(6) | 581,875 | 2.7 | ||||||
Anne M. Butler(7) | 442,946 | 2.1 | ||||||
Benedetta Casamento | 20,600 | * | ||||||
Jaqui Lividini(8) | 76,445 | * | ||||||
Clint J. Pete(9) | 142,642 | * | ||||||
Don O’Connell(10) | 193,596 | * | ||||||
Directors and Executive Officers as a Group (8 persons)(11) | 4,994,292 | 23.1 |
Amount of Fees | ||||||||
Type of Service | 2016 | 2017 | ||||||
Audit fees | $ | 159,000 | $ | 152,000 | ||||
Audit-Related Fees | - | - | ||||||
Tax Fees | 19,000 | 23,000 | ||||||
All Other Fees | - | - | ||||||
Total | $ | 178,000 | $ | 175,000 |
Exhibit No. | Description | |
Restated Articles of Incorporation of Charles & Colvard, Ltd. (incorporated herein by reference to Exhibit 3.1 to our Annual Report on Form 10-K for the year ended December 31, 2004) | ||
Bylaws of Charles & Colvard, Ltd., as amended and restated, effective May 19, 2011 (incorporated herein by reference to Exhibit 3.1 to our Current Report on Form 8-K, as filed with the SEC on May 24, 2011) | ||
Specimen Certificate of Common Stock (incorporated herein by reference to Exhibit 4.1 to our Annual Report on Form 10-K for the year ended December 31, 1998) | ||
4.2 | Description of Common Stock++ | |
Exclusive Supply Agreement, dated as of December 12, 2014, by and among Charles & Colvard, Ltd., Cree, Inc. and, solely for purposes of Section 6(c) of the Exclusive Supply Agreement, Charles & Colvard Direct, LLC and moissanite.com, LLC (incorporated herein by reference to Exhibit | ||
First Amendment to Exclusive Supply Agreement, dated as of June | ||
Second Amendment to | ||
Credit |
Line of Credit Note, dated as of | ||
Credit Agreement, dated | ||
Security Agreement, dated as of July 13, 2018, by and among Charles & Colvard, Ltd., charlesandcolvard.com, LLC, Charles & Colvard Direct, LLC, and White Oak Commercial Finance, LLC (incorporated herein by reference to Exhibit 10.4 to our Transition Report on Form 10-KT for the transition period ended June 30, 2018) |
Intercreditor Agreement, dated as of July 13, 2018, by and among Charles & Colvard, Ltd., charlesandcolvard.com, LLC, Charles & Colvard Direct, LLC, Cree, Inc., and White Oak Commercial Finance, LLC (incorporated herein by reference to Exhibit 10.5 to our Transition Report on Form 10-KT for the transition period ended June 30, 2018) | ||
First Amendment to Credit Agreement, dated June 15, 2020, by and among Charles & Colvard, Ltd., charlesandcolvard.com, LLC, Charles & Colvard Direct, LLC, and White Oak Commercial Finance, LLC (incorporated herein by reference to Exhibit 10.7 to our Annual Report on Form 10-K for fiscal year ended June 30, 2020, as filed with the SEC on September 4, 2020) | ||
Promissory Note, dated June 15, 2020, by and between Charles & Colvard, Ltd., and Newtek Small Business Finance, LLC (incorporated herein by reference to Exhibit 10.8 to our Annual Report on Form 10-K for fiscal year ended June 30, 2020, as filed with the SEC on September 4, 2020) | ||
Lease Agreement, dated December 9, 2013, between Charles & Colvard, Ltd. and Southport Business Park Limited Partnership** ++ | ||
First Amendment to Lease, dated December 23, 2013, between Charles & Colvard, Ltd. and Southport Business Park Limited Partnership (incorporated herein by reference to Exhibit 10.20 to our Annual Report on Form 10-K for the year ended December 31, 2013) | ||
Second Amendment to Lease, dated April 15, 2014, between Charles & Colvard, Ltd. and Southport Business Park Limited Partnership (incorporated herein by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2014) | ||
Third Amendment to Lease Agreement, dated January | ||
Board Compensation Program, effective October 1, 2017 (incorporated herein by reference to Exhibit 10.1 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2017)+ | ||
Charles & Colvard, Ltd. 2008 Stock Incentive Plan, as amended (incorporated herein by reference to Exhibit 10.1 to our Current Report on Form 8-K, as filed with the SEC on May 20, 2016)+ | ||
Form of Employee Incentive Stock Option Agreement under the Charles & Colvard, Ltd. 2008 Stock Incentive Plan (incorporated herein by reference to Exhibit | ||
Form of Employee Nonqualified Stock Option Agreement under the Charles & Colvard, Ltd. 2008 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.118 to our Current Report on Form 8-K, as filed with the SEC on June 2, 2008)+ | ||
Charles & Colvard, Ltd. | ||
Form of | ||
Form of | ||
Form of Employee Nonqualified Stock Option Agreement under the Charles & Colvard, Ltd. 2018 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.4 to our Current Report on Form 8-K, as filed with the SEC on | ||
Form of Non-Employee Director Nonqualified Stock Option Agreement under the Charles & Colvard, Ltd. | ||
Form of Independent Contractor Nonqualified Stock Option Agreement under the Charles & Colvard, Ltd. 2018 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.6 to our Current Report on Form 8-K, as filed with the SEC on November 9, 2018) | ||
Charles & Colvard, Ltd. Fiscal 2019 Q1-Q2 Senior Management Equity Incentive Program, effective | ||
Charles & Colvard, Ltd. Fiscal 2019 Q3-Q4 Senior Management Equity Incentive Program, effective January 1, 2019 (incorporated herein by reference to Exhibit | ||
Charles & Colvard, Ltd. | ||
Charles & Colvard, Ltd. Fiscal 2021 Senior Management Equity Incentive Program, effective July 1, 2020 (incorporated herein by reference to Exhibit 10.1 to our Current Report on Form 8-K, as filed with the SEC on August 4, 2020)+ | ||
Employment Agreement, dated December 1, 2015, by and between Charles & Colvard, Ltd. and Suzanne Miglucci (incorporated herein by reference to Exhibit 10.2 to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2015)+ | ||
Employment Agreement, dated May 23, 2017, by and between Charles & Colvard, Ltd. and Clint J. Pete (incorporated herein by reference to Exhibit 10.1 to our Current Report on Form 8-K, as filed with the SEC on May 24, 2017)+ | ||
Employment Agreement, dated May 23, 2017, by and between Charles & Colvard, Ltd. and Don O’Connell (incorporated herein by reference to Exhibit 10.2 to our Current Report on Form 8-K, as filed with the SEC on May 24, 2017)+ | ||
Amendment to 2015 Employment Agreement, dated April 9, 2020, by and between Charles & Colvard, Ltd. and Suzanne Miglucci (incorporated herein by reference to Exhibit 10.1 to our Current Report on Form 8-K, as filed with the SEC on April 9, 2020)+ | ||
Amendment to 2017 Employment Agreement, dated April 9, 2020, by and between Charles & Colvard, Ltd. and Clint J. Pete (incorporated herein by reference to Exhibit 10.2 to our Current Report on Form 8-K, as filed with the SEC on April 9, 2020)+ | ||
Amendment to 2017 Employment Agreement, dated April 9, 2020, by and between Charles & Colvard, Ltd. and Don O’Connell (incorporated herein by reference to Exhibit 10.3 to our Current Report on Form 8-K, as filed with the SEC on April 9, 2020)+ | ||
Separation of Employment Agreement, dated May 28, 2020, by and between Charles & Colvard, Ltd. and Suzanne Miglucci (incorporated herein by reference to Exhibit 10.1 to our Current Report on Form 8-K, as filed with the SEC on May 29, 2020)+ | ||
Amended and Restated Employment Agreement, effective as of June 1, 2020, by and between Charles & Colvard, Ltd. and Don O’Connell (incorporated herein by reference to Exhibit 10.2 to our Current Report on Form 8-K, as filed with the SEC on May 29, 2020)+ | ||
Subsidiaries of Charles & Colvard, Ltd.++ | ||
Consent of BDO USA, | ||
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 | ||
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 | ||
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 | ||
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 | ||
101 | The following materials from Charles & Colvard, Ltd.’s Annual Report on Form 10-K for the fiscal year ended |
* | Asterisks located within the exhibit denote information which has been redacted pursuant to a request for confidential treatment filed with the SEC. | |
** | Asterisks located within the exhibit denote information which has been redacted pursuant to Item 601(b)(10)(iv) of Regulation S-K because it is both not material and would likely cause competitive harm to us if publicly disclosed. | |
+ | Denotes management contract or compensatory plan or arrangement. | |
++ | Denotes filed herewith. |
CHARLES & COLVARD, LTD. | ||
By: | /s/ | |
September 2, 2021 | Don O’Connell | |
President and Chief Executive Officer |
By: | /s/ | |
September 2, 2021 | Don O’Connell | |
Director, President and Chief Executive Officer | ||
By: | /s/ Clint J. Pete | |
September 2, 2021 | Clint J. Pete | |
Chief Financial Officer (Principal Financial Officer and Chief Accounting Officer) | ||
By: | /s/ Neal I. Goldman | |
September 2, 2021 | Neal I. Goldman | |
Chairman of the Board of Directors | ||
By: | /s/ Anne M. Butler | |
September 2, 2021 | Anne M. Butler | |
Director | ||
By: | /s/ Benedetta Casamento | |
September 2, 2021 | Benedetta Casamento | |
Director | ||
By: | /s/ | |
September 2, 2021 | Ollin B. Sykes | |
Director | ||