Charles & Colvard (CTHR) 10-K 8 Mar 16 2015 FY Annual report Financial data

Document and Entity Information

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2015	Mar. 04, 2016	Jun. 30, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	CHARLES & COLVARD LTD
Entity Central Index Key	1,015,155
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Public Float			$ 27,502,821
Entity Common Stock, Shares Outstanding		21,111,585
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	FY
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2015

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 5,274,305	$ 4,007,341
Accounts receivable, net	3,852,651	5,510,253
Inventory, net	10,739,798	13,320,639
Prepaid expenses and other assets	784,105	602,850
Total current assets	20,650,859	23,441,083
Long-term assets:
Inventory, net	21,588,622	25,617,990
Property and equipment, net	1,615,683	1,859,355
Intangible assets, net	71,086	216,947
Other assets	214,588	291,022
Total long-term assets	23,489,979	27,985,314
TOTAL ASSETS	44,140,838	51,426,397
Current liabilities:
Accounts payable	3,463,148	3,286,086
Accrued cooperative advertising	58,000	220,000
Accrued expenses and other liabilities	1,100,187	684,577
Total current liabilities	4,621,335	4,190,663
Long-term liabilities:
Accrued expenses and other liabilities	710,223	809,879
Accrued income taxes	420,503	407,682
Total long-term liabilities	1,130,726	1,217,561
Total liabilities	$ 5,752,061	$ 5,408,224
Commitments and contingencies
Shareholders' equity:
Common stock, no par value; 50,000,000 shares authorized; 21,111,585 and 20,382,333 shares issued and outstanding at December 31, 2015 and 2014, respectively	$ 54,240,247	$ 53,949,001
Additional paid-in capital - stock-based compensation	13,280,920	11,628,503
Accumulated deficit	(29,132,390)	(19,559,331)
Total shareholders' equity	38,388,777	46,018,173
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 44,140,838	$ 51,426,397

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2015	Dec. 31, 2014
Shareholders' equity
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized (in shares)	50,000,000	50,000,000
Common stock, shares issued (in shares)	21,111,585	20,382,333
Common stock, shares outstanding (in shares)	21,111,585	20,382,333

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract]
Net sales	$ 30,767,117	$ 25,640,649
Costs and expenses:
Cost of goods sold	20,552,707	18,013,335
Sales and marketing	12,362,511	9,853,671
General and administrative	7,384,119	6,789,274
Research and development	17,795	18,070
Loss on abandonment of assets	0	10,523
Total costs and expenses	40,317,132	34,684,873
Loss from operations	(9,550,015)	(9,044,224)
Other income (expense):
Interest income	11	65
Interest expense	(10,359)	(901)
Gain on sale of long-term assets	125	0
Total other expense, net	(10,223)	(836)
Loss before income taxes	(9,560,238)	(9,045,060)
Income tax net expense	(12,821)	(4,051,963)
Net loss	$ (9,573,059)	$ (13,097,023)
Net loss per common share:
Basic (in dollars per share)	$ (0.47)	$ (0.65)
Diluted (in dollars per share)	$ (0.47)	$ (0.65)
Weighted average number of shares used in computing net loss income per common share:
Basic (in shares)	20,407,764	20,295,618
Diluted (in shares)	20,407,764	20,295,618

CONSOLIDATED STATEMENTS OF SHAR

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($)	Common Stock [Member]	Additional Paid-in Capital - Stock-Based Compensation [Member]	Accumulated Deficit [Member]	Total
Balance at Dec. 31, 2013	$ 53,949,001	$ 9,940,980	$ (6,462,308)	$ 57,427,673
Balance (in shares) at Dec. 31, 2013	20,197,301
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	$ 0	1,687,523	0	1,687,523
Issuance of restricted stock	$ 0	0	0	0
Issuance of restricted stock (in shares)	185,032
Net loss	$ 0	0	(13,097,023)	(13,097,023)
Balance at Dec. 31, 2014	$ 53,949,001	11,628,503	(19,559,331)	46,018,173
Balance (in shares) at Dec. 31, 2014	20,382,333
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	$ 0	1,770,897	0	1,770,897
Issuance of restricted stock	$ 0	0	0	0
Issuance of restricted stock (in shares)	487,500
Stock option exercises	$ 291,246	(118,480)	0	172,766
Stock option exercises (in shares)	241,752
Net loss	$ 0	0	(9,573,059)	(9,573,059)
Balance at Dec. 31, 2015	$ 54,240,247	$ 13,280,920	$ (29,132,390)	$ 38,388,777
Balance (in shares) at Dec. 31, 2015	21,111,585

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (9,573,059)	$ (13,097,023)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	863,353	1,107,955
Stock-based compensation	1,770,897	1,687,523
Provision for uncollectible accounts	89,462	734,243
Provision for sales returns	(179,000)	(276,000)
Provision for inventory reserves	436,000	295,000
Provision for deferred income taxes	0	4,039,723
Loss on abandonment of assets	0	10,523
Gain on sale of long-term assets	(125)	0
Changes in assets and liabilities:
Accounts receivable	1,747,140	4,276,236
Inventory	6,174,209	3,178,473
Prepaid expenses and other assets, net	(104,821)	116,459
Accounts payable	177,062	(384,465)
Accrued cooperative advertising	(162,000)	32,000
Accrued income taxes	12,821	12,240
Accrued expenses and other liabilities	315,954	302,110
Net cash provided by operating activities	1,567,893	2,034,997
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(428,128)	(545,543)
Patent, license rights, and trademark costs	(45,742)	(55,518)
Proceeds from sale of assets	175	0
Net cash used in investing activities	(473,695)	(601,061)
CASH FLOWS FROM FINANCING ACTIVITIES:
Stock option exercises	172,766	0
Net cash provided by financing activities	172,766	0
NET INCREASE IN CASH AND CASH EQUIVALENTS	1,266,964	1,433,936
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	4,007,341	2,573,405
CASH AND CASH EQUIVALENTS, END OF PERIOD	5,274,305	4,007,341
Supplemental disclosure of cash flow information:
Cash paid during the year for interest	10,359	901
Cash paid during the year for income taxes	0	0
Non-cash investing activities:
Tenant improvement allowance received under operating lease	$ 0	$ 550,160

DESCRIPTION OF BUSINESS

DESCRIPTION OF BUSINESS	12 Months Ended
	Dec. 31, 2015
DESCRIPTION OF BUSINESS [Abstract]
DESCRIPTION OF BUSINESS	1. DESCRIPTION OF BUSINESS Charles & Colvard, Ltd. (the “Company”), a North Carolina corporation founded in 1995, manufactures, markets, and distributes Charles & Colvard Created Moissanite ® The Company sells loose moissanite jewels and finished jewelry at wholesale to distributors, manufacturers, and retailers and at retail to end consumers through its wholly owned operating subsidiaries, Moissanite.com, LLC and Charles & Colvard Direct, LLC (until March 2016), and through third-party marketplaces. In February 2016, the Company Lulu Avenue ® Note 14, “Subsequent Events.” For the years ended December 31, 2015 and 2014, the Company managed its business primarily through its three distribution channels that it used to sell its product lines, loose jewels and finished jewelry, which included Charles and Colvard Direct, LLC. Accordingly, for the years ended December 31, 2015 and 2014, the Company’s reportable segments remained its wholesale distribution channel transacted through the Company’s parent entity, and its two direct-to-consumer distribution channels transacted through the wholly owned operating subsidiaries, Moissanite.com, LLC and Charles & Colvard Direct, LLC.

BASIS OF PRESENTATION AND SIGNI

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES	12 Months Ended
	Dec. 31, 2015
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract]
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES	2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation - All intercompany accounts have been eliminated. Use of Estimates - T “ ” Cash and Cash Equivalents - Concentration of Credit Risk - Trade receivables potentially subject the Company to credit risk. The Company’s standard wholesale customer payment terms on trade receivables are generally between 30 and 90 days, . The Company extends credit to its customers based upon a number of factors, including an evaluation of the customer’s financial condition and credit history that is verified through trade association reference services, the customer’s payment history with the Company, the customer’s reputation in the trade, and/or an evaluation of the Company’s opportunity to introduce its moissanite jewels or finished jewelry featuring moissanite to new or expanded markets. See Note 12, “Major Customers and Concentration of Credit Risk,” for further discussion of credit risk within trade accounts receivable. Accounts Receivable Reserves - The following is a reconciliation of the allowance for sales returns: Year Ended December 31, 2015 2014 Balance, beginning of period $ 910,000 $ 1,186,000 Additions charged to operations 3,651,741 1,942,191 Sales returns (3,830,741 ) (2,218,191 ) Balance, end of period $ 731,000 $ 910,000 The second reserve is an allowance for doubtful accounts for estimated losses resulting from the failure of the Company’s customers to make required payments. This allowance reduces trade accounts receivable to an amount expected to be collected. The Company generally uses an internal collection effort, which may include its sales personnel as it deems appropriate. After all internal collection efforts have been exhausted, the Company generally writes off the account receivable. Any accounts with significant balances are reviewed separately to determine an appropriate allowance based on the facts and circumstances of the specific account. on these criteria, management determined that allowances for doubtful accounts receivable of $1.14 million and $1.07 million at December 31, The following is a reconciliation of the allowance for doubtful accounts: Year Ended December 31, 2015 2014 Balance, beginning of period $ 1,074,000 $ 522,000 Additions charged to operations 89,462 734,243 Write-offs, net of recoveries (26,462 ) (182,243 ) Balance, end of period $ 1,137,000 $ 1,074,000 Although the Company believes that its reserves are adequate, if the financial condition of its customers deteriorates, resulting in an impairment of their ability to make payments, or if it underestimates the allowances required, additional allowances may be necessary, Inventories - Inventory costs include direct material and labor, inbound freight, purchasing and receiving costs, inspection costs, and warehousing costs. The Company’s work-in-process inventories include raw SiC crystals on which processing costs, such as labor and sawing, have been incurred; and components, such as metal castings and finished good moissanite jewels, that have been issued to jobs in the manufacture of finished jewelry. The Company’s moissanite jewel manufacturing process involves the production of intermediary shapes, called “preforms,” that vary depending upon the size and shape of the finished jewel. To maximize manufacturing efficiencies, preforms may be made in advance of current finished inventory needs but remain in work-in-process inventories. As of December 31, 2015 and 2014, work-in-process inventories issued to active production jobs approximated $3.02 million and $2.05 million, respectively. All inventories are carefully reviewed for quality standards before they are entered into finished goods. As conditions warrant, the Company’s grading standards change. The Company reviews the inventory on an ongoing basis to ensure its inventory meets current quality standards. The Company’s jewels do not degrade in quality over time and inventory generally consists of the shapes and sizes most commonly used in the jewelry industry. In addition, the majority of jewel inventory is not mounted in finished jewelry settings and is therefore not subject to fashion trends nor is obsolescence a significant factor. The Company has very small market penetration in the worldwide jewelry market, and the Company had the exclusive right in the U.S. through August 2015 and has the exclusive right in many other countries through mid-2016 to produce and sell created SiC for use in jewelry applications. During the year ended December 31, 2015, management identified an opportunity to sell approximately $2.28 million of slow-moving loose jewel inventory of less desirable quality. As a result of this sale and feedback from customers on the value of some of these goods, the Company determined a lower of cost or market reserve of $352,000 was required on some of the remaining inventory of these lower quality goods. In view of the foregoing factors, management has concluded that no excess or obsolete loose jewel inventory reserve requirements existed as of December 31, 2015 and 2014 on goods other than the lower quality goods noted previously. The Company manufactures finished jewelry featuring moissanite. Relative to loose moissanite jewels, finished jewelry is more fashion oriented and subject to styling trends that could render certain designs obsolete. The majority of the Company’s finished jewelry featuring moissanite is held in inventory for resale and consists of such basic designs as stud earrings, solitaire and three-stone rings, pendants, and bracelets that tend not to be subject to significant obsolescence risk due to their classic styling. In addition, the Company manufactures small individual quantities of designer-inspired moissanite fashion jewelry as part of its sample line that are used in the selling process to its wholesale customers. Prior to March 2016, the Company purchased fashion finished jewelry comprising base metals and non-precious gemstones for sale through Lulu Avenue ® Jewelry inventories consist primarily of finished goods, a portion of which the Company acquired as part of a January 2009 settlement agreement with a former manufacturer customer to reduce the outstanding receivable to the Company. Due to the lack of a plan to market this inventory at that time, a jewelry inventory reserve was established to reduce the majority of the acquired jewelry inventory value to scrap value, or the amount the Company would expect to obtain by melting the gold in the jewelry and returning to loose-jewel finished goods inventory those jewels that meet grading standards. Because the finished jewelry the Company began manufacturing in 2010 after it entered that business was made pursuant to an operational plan to market and sell the inventory, it is not subject to this reserve. This reserve was $4,000 and $101,000 as of December 31, 2015 and 2014, respectively. The Company also maintains inventory reserves for shrinkage, recuts, and repairs. Shrinkage refers to loose jewels and finished jewelry on review with customers and vendors that may not be returned to the Company. The recuts reserve is for the projected material loss resulting from the re-cutting of damaged jewels into smaller loose jewels to remove the damage. The repairs reserve is for finished jewelry in need of repair before it can be returned to finished goods inventory and be available for sale. These reserves totaled $625,000 and $552,000 as of December 31, 2015 and 2014, respectively. The need for adjustments to inventory reserves is evaluated on a period-by-period basis. Property and Equipment - 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 the lease term Intangible Assets - Impairment of Long-Lived Assets - whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount of the asset to future net undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment is measured as the amount by which the carrying amount exceeds the fair value and is recognized as an operating expense in the period in which the determination is made. Assets to be disposed are reported at the lower of the carrying amount or fair value less costs to sell. As of December 31, 2015, the Company did not identify any indicators of long-lived asset impairment. In addition to the recoverability assessment, the Company routinely reviews the remaining estimated useful lives of its long-lived assets. Any reduction in the useful-life assumption will result in increased depreciation and amortization expense in the period when such determination is made, as well as in subsequent periods. During the year ended December 31, 2013, the useful lives of leasehold improvements associated with the Company’s then-current lease were adjusted to the length of the lease term through July 2014. The additional depreciation recognized for the year ended December 31, 2014 as a result of the shortened lives was approximately $74,000. Revenue Recognition - Cost of Goods Sold - Advertising Costs - The Company also offers a cooperative advertising program to certain of its wholesale customers that reimburses, via a credit towards future purchases, a portion of their marketing costs based on the customers’ net purchases from the Company and is subject to the customer providing documentation of all advertising performed that includes the Company’s products. For the years ended December 31, 2015 and 2014, these approximate amounts were a credit of ($4,000) and $321,000, respectively, and are included as a component of sales and marketing expenses. The credit for the year ended December 31, 2015 is a result of the decision of our domestic distributors to not utilize the advertising credits we had accrued during 2014 within the allowable period that we reversed during the three months ended March 31, 2015. Advertising expenses, inclusive of the cooperative advertising program, for the years ended December 31, 2015 and 2014 were approximately $1.76 million and $1.84 million, respectively. Sales and Marketing - wholly owned operating subsidiaries Moissanite.com, LLC and Charles & Colvard Direct, LLC. General and Administrative - Research and Development - Stock-Based Compensation - The Company recognizes compensation expense for stock-based awards based on estimated fair values on the date of grant. Fair value of stock options using the Black-Scholes-Merton option pricing model is estimated on the date of grant utilizing certain assumptions for dividend yield, expected volatility, risk-free interest rate, and expected lives of the awards, as follows: · Dividend yield - · Expected volatility - Volatility is a measure of the amount by which a financial variable such as share price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. . · Risk-free interest rate - · Expected lives - The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and the Company uses different assumptions, the Company’s stock-based compensation expense could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rates of stock-based awards and only recognize expense for those shares expected to vest. In estimating the Company’s forfeiture rates, the Company analyzed its historical forfeiture rates, the remaining lives of unvested stock-based awards, and the amount of vested awards as a percentage of total awards outstanding. If the Company’s actual forfeiture rates are materially different from its estimates, or if the Company re-evaluates the forfeiture rates in the future, the stock-based compensation expense could be significantly different from what the Company has recorded in the current period. Income Taxes - Net Loss per Common Share - The following table reconciles the differences between the basic and diluted net loss per share presentations: Year Ended December 31, 2015 2014 Numerator: Net loss $ (9,573,059 ) $ (13,097,023 ) Denominator: Weighted average common shares outstanding: Basic 20,407,764 20,295,618 Stock options - - Diluted 20,407,764 20,295,618 Net loss per common share: Basic $ (0.47 ) $ (0.65 ) Diluted $ (0.47 ) $ (0.65 ) For the years ended December 31, 2015 and 2014, stock options to purchase approximately 2.21 million and 1.67 million shares, respectively, were excluded from the computation of diluted net loss per common share because the exercise price of the stock options was greater than the average market price of the common shares or the effect of inclusion of such amounts would be anti-dilutive to net loss per common share. For the year ended December 31, 2015, 425,000 restricted shares that have been issued but not yet vested have been excluded from the computation of diluted net loss per common share. Recently Adopted/Issued Accounting Pronouncements - In May 2014, the Financial Accounting Standards Board (the “FASB”) issued a new accounting standard that supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of the new standard is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. The new standard defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after December 15, 2017, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting the standard recognized at the date of adoption (which includes additional footnote disclosures). The Company is currently evaluating the impact of the pending adoption of the standard on its consolidated financial statements and has not yet determined the method by which the Company will adopt the standard in 2018. In August 2014, the FASB issued new accounting guidance intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. Under U.S. GAAP, financial statements are prepared under the presumption that the reporting organization will continue to operate as a going concern, except in limited circumstances. The going concern basis of accounting is critical to financial reporting because it establishes the fundamental basis for measuring and classifying assets and liabilities. Currently, U.S. GAAP lacks guidance about management’s responsibility to evaluate whether there is substantial doubt about the organization’s ability to continue as a going concern or to provide related footnote disclosures. This new accounting guidance provides guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. This new accounting guidance is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early application is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The Company does not expect this new accounting guidance to have a material impact on its consolidated financial statements. In July 2015, the FASB issued new accounting guidance that will require an entity to measure inventory valued under the average cost method from the lower of cost or market to the lower of cost or net realizable value, with net realizable value defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. No other changes were made to the current guidance on inventory measurement. This guidance is effective on a prospective basis for public entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early application is permitted as of the beginning of an interim or annual reporting period. The Company does not anticipate early adoption at this time and is currently evaluating the impact of this guidance on its consolidated financial statements. In November 2015, the FASB issued new accounting guidance that requires that deferred tax assets and liabilities be classified as noncurrent in a classified statement of financial position. The guidance is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Earlier application is permitted for all entities as of the beginning of an interim or annual report period. The amendments in this guidance may be applied either prospectively to all deferred tax assets and liabilities or retrospectively to all periods presented. The Company adopted this standard as of December 31, 2015 with prospective application. As a result, the Company reclassified its deferred tax assets classified as current to noncurrent and its deferred tax liabilities classified as current to noncurrent in its December 31, 2015 consolidated balance sheet. Prior balance sheets presented were retrospectively adjusted. In February 2016, the FASB issued new guidance that establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the impact of its pending adoption of the new standard on its consolidated financial statements. All other new and recently issued, but not yet effective, accounting pronouncements have been deemed to be not relevant to the Company and therefore are not expected to have any impact once adopted.

SEGMENT INFORMATION AND GEOGRAP

SEGMENT INFORMATION AND GEOGRAPHIC DATA	12 Months Ended
	Dec. 31, 2015
SEGMENT INFORMATION AND GEOGRAPHIC DATA [Abstract]
SEGMENT INFORMATION AND GEOGRAPHIC DATA	3. SEGMENT INFORMATION AND GEOGRAPHIC DATA The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making operating decisions and assessing performance as the source of the Company’s operating and reportable segments. During 2014 and 2015, the Company ® T The Company allocates certain general and administrative expenses from its parent entity to its two direct-to-consumer distribution segments primarily based on net sales and number of employees to arrive at segment operating loss. Unallocated expenses, which also include interest and taxes, remain in the parent entity’s wholesale distribution segment. Summary financial information by reportable segment is as follows: Year Ended December 31, 2015 Wholesale Moissanite.com Charles & Colvard Direct Total Net sales Loose jewels $ 14,581,554 $ 531,695 $ (45 ) $ 15,113,204 Finished jewelry 5,683,478 4,896,565 5,073,870 15,653,913 Total $ 20,265,032 $ 5,428,260 $ 5,073,825 $ 30,767,117 Product line cost of goods sold Loose jewels $ 9,375,195 $ 83,964 $ 65 $ 9,459,224 Finished jewelry 3,867,080 2,429,684 1,242,623 7,539,387 Total $ 13,242,275 $ 2,513,648 $ 1,242,688 $ 16,998,611 Product line gross profit Loose jewels $ 5,206,359 $ 447,731 $ (110 ) $ 5,653,980 Finished jewelry 1,816,398 2,466,881 3,831,247 8,114,526 Total $ 7,022,757 $ 2,914,612 $ 3,831,137 $ 13,768,506 Operating loss $ (3,736,111 ) $ (1,328,117 ) $ (4,485,787 ) $ (9,550,015 ) Depreciation and amortization $ 652,326 $ 106,461 $ 104,566 $ 863,353 Total assets $ 43,881,011 $ 174,899 $ 84,928 $ 44,140,838 Capital expenditures $ 291,372 $ 116,080 $ 20,676 $ 428,128 Year Ended December 31, 2014 Wholesale Moissanite.com Charles & Colvard Direct Total Net sales Loose jewels $ 12,324,045 $ 600,505 $ 1,820 $ 12,926,370 Finished jewelry 8,452,800 2,812,158 1,449,321 12,714,279 Total $ 20,776,845 $ 3,412,663 $ 1,451,141 $ 25,640,649 Product line cost of goods sold Loose jewels $ 7,458,355 $ 100,851 $ 7,623 $ 7,566,829 Finished jewelry 6,584,937 1,371,056 472,189 8,428,182 Total $ 14,043,292 $ 1,471,907 $ 479,812 $ 15,995,011 Product line gross profit Loose jewels $ 4,865,690 $ 499,654 $ (5,803 ) $ 5,359,541 Finished jewelry 1,867,863 1,441,102 977,132 4,286,097 Total $ 6,733,553 $ 1,940,756 $ 971,329 $ 9,645,638 Operating loss $ (4,802,435 ) $ (1,265,035 ) $ (2,976,754 ) $ (9,044,224 ) Depreciation and amortization $ 887,287 $ 174,562 $ 46,106 $ 1,107,955 Total assets $ 51,183,888 $ 128,049 $ 114,460 $ 51,426,397 Capital expenditures $ 1,093,055 $ 1,386 $ 1,262 $ 1,095,703 A reconciliation of the Company’s product line cost of goods sold to cost of goods sold as reported in the consolidated financial statements is as follows: Year Ended December 31, 2015 2014 Product line cost of goods sold $ 16,998,611 $ 15,995,011 Non-capitalized manufacturing and production control expenses 1,388,567 949,385 Freight out 698,840 284,944 Inventory valuation allowances 436,000 295,000 Other inventory adjustments 1,030,689 488,995 Cost of goods sold $ 20,552,707 $ 18,013,335 The Company’s net inventories by product line maintained in the parent entity’s wholesale distribution segment are as follows: December 31, 2015 2014 Loose jewels Raw materials $ 6,741,712 $ 4,658,692 Work-in-process 5,516,799 5,752,103 Finished goods 15,877,436 21,495,873 Finished goods on consignment 55,388 46,284 Total $ 28,191,335 $ 31,952,952 Finished jewelry Raw materials $ 190,427 $ 258,707 Work-in-process 514,946 540,576 Finished goods 3,193,569 5,557,417 Finished goods on consignment 200,613 578,200 Total $ 4,099,555 $ 6,934,900 Supplies inventories of approximately $38,000 and $51,000 at December 31, 2015 and 2014, respectively, included in finished goods inventories in the consolidated financial statements are omitted from inventories by product line because they are used in both product lines and are not maintained separately. The Company’s two operating subsidiaries comprising the two direct-to-consumer distribution segments carry no net inventories, and inventory is transferred without intercompany markup from the parent entity’s wholesale distribution segment as product line cost of goods sold when sold to the end consumer. The Company recognizes sales by geographic area based on the country in which the customer is based. A portion of the Company’s international wholesale distribution segment sales represents products sold internationally that may be re-imported to U.S. retailers. Sales to international end consumers made by the Company’s two segments are included in U.S. sales because products are shipped and invoiced to a U.S.-based intermediary party that assumes all international shipping and credit risks. The following presents certain data by geographic area: Year Ended December 31, 2015 2014 Net sales United States $ 27,297,901 $ 22,101,974 International 3,469,216 3,538,675 Total $ 30,767,117 $ 25,640,649 December 31, 2015 2014 Property and equipment, net United States $ 1,615,683 $ 1,859,355 International - - Total $ 1,615,683 $ 1,859,355 December 31, 2015 2014 Intangible assets, net United States $ 15,362 $ 39,050 International 55,724 177,897 Total $ 71,086 $ 216,947

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	12 Months Ended
	Dec. 31, 2015
FAIR VALUE MEASUREMENTS [Abstract]
FAIR VALUE MEASUREMENTS	4. FAIR VALUE MEASUREMENTS U · Level 1 - · Level 2 - · Level 3 - The Company evaluates assets and liabilities subject to fair value measurements on a recurring and non-recurring basis to determine the appropriate level to classify them for each reporting period. This determination requires significant judgments to be made by management of the Company. The financial instruments identified as subject to fair value measurements on a recurring basis are cash and cash equivalents, trade accounts receivable, and trade accounts payable. All financial instruments are reflected in the consolidated balance sheets at carrying value, which approximates fair value due to the short-term nature of these financial instruments. Assets that are measured at fair value on a non-recurring basis include property and equipment, leasehold improvements, and intangible assets, comprising patents, license rights, and trademarks. These items are recognized at fair value when they are considered to be impaired.

INVENTORIES

INVENTORIES	12 Months Ended
	Dec. 31, 2015
INVENTORIES [Abstract]
INVENTORIES	5. INVENTORIES The Company’s total inventories, net of reserves, consisted of the following as of December 31, 2015 and 2014: December 31, 2015 2014 Raw materials $ 6,932,139 $ 4,917,399 Work-in-process 6,031,745 6,292,679 Finished goods 20,441,535 27,985,067 Finished goods on consignment 293,001 677,484 Less inventory reserves (1,370,000 ) (934,000 ) Total $ 32,328,420 $ 38,938,629 Short-term portion $ 10,739,798 $ 13,320,639 Long-term portion 21,588,622 25,617,990 Total $ 32,328,420 $ 38,938,629 Periodically, the Company ships finished goods inventory to wholesale customers on consignment terms. Under these terms, the customer assumes the risk of loss and has an absolute right of return for a specified period. Finished goods on consignment . Total net loose jewel inventories at December 31, 2015 and 2014, including inventory on consignment net of reserves, were $28.19 million and $31.95 million, respectively. The loose jewel inventories at December 31, 2015 and 2014 include shrinkage reserves of $50,000 and $17,000, respectively, which includes $10,000 and $17,000 of shrinkage reserves on inventory on consignment at December 31, 2015 and 2014, respectively. Loose jewel inventories at December 31, 2015 and 2014 also include recut reserves of $449,000 and $216,000, respectively. During the year ended December 31, 2015, management identified an opportunity to sell approximately $2.28 million of slow-moving loose jewel inventory of less desirable quality. As a result of this sale and feedback from customers on the value of some of these goods, the Company determined a lower of cost or market reserve of $352,000 was required on some of the remaining inventory of these lower quality goods. In view of the foregoing factors, management has concluded that no excess or obsolete loose jewel inventory reserve requirements existed as of December 31, 2015 and 2014 on goods other than the lower quality goods noted previously. Total net jewelry inventories at December 31, 2015 and 2014, including inventory on consignment net of reserves, finished jewelry featuring moissanite manufactured by the Company since entering the finished jewelry business in 2010, and fashion finished jewelry purchased by the Company for sale through Lulu Avenue ® The need for adjustments to inventory reserves is evaluated on a period-by-period basis.

PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT	12 Months Ended
	Dec. 31, 2015
PROPERTY AND EQUIPMENT [Abstract]
PROPERTY AND EQUIPMENT	6. PROPERTY AND EQUIPMENT Property and equipment consists of the following: December 31, 2015 2014 Computer software $ 1,771,102 $ 1,622,806 Machinery and equipment 922,532 818,362 Computer hardware 855,348 750,776 Leasehold improvements 1,030,423 1,002,357 Furniture and fixtures 302,064 259,944 Total 4,881,469 4,454,245 Less accumulated depreciation (3,265,786 ) (2,594,890 ) Property and equipment, net $ 1,615,683 $ 1,859,355 Depreciation expense for the years ended December 31, 2015 and 2014 was approximately $672,000 and $946,000, respectively.

INTANGIBLE ASSETS

INTANGIBLE ASSETS	12 Months Ended
	Dec. 31, 2015
INTANGIBLE ASSETS [Abstract]
INTANGIBLE ASSETS	7. INTANGIBLE ASSETS Intangible assets consist of the following: December 31, Weighted Average Amortization Period 2015 2014 (in Years) Patents $ 958,604 $ 912,862 0.4 Trademarks 50,208 50,208 1.8 License rights 6,718 6,718 0.0 Total 1,015,530 969,788 Less accumulated amortization (944,444 ) (752,841 ) Intangible assets, net $ 71,086 $ 216,947 Amortization expense for the years ended December 31, 2015 and 2014 was approximately $192,000 and $162,000, respectively. Amortization expense on existing intangible assets is estimated to be $63,000 for 2016, and $8,000 for 2017.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	12 Months Ended
	Dec. 31, 2015
COMMITMENTS AND CONTINGENCIES [Abstract]
COMMITMENTS AND CONTINGENCIES	8. COMMITMENTS AND CONTINGENCIES Lease Commitments In March 2004, the Company entered into a seven-year lease, beginning in August 2004, for approximately 16,500 square feet of mixed-use space from an unaffiliated third-party at a base cost with escalations throughout the lease term plus additional common-area expenses based on the Company’s proportionate share of the lessor’s operating costs. The lease provided for two rent holidays, during which no rent was payable, and a moving allowance. In January 2011, the Company amended the lease effective January 1, 2011 to extend the term through January 2017 in exchange for a reduced rental rate and 50% rent abatement in the first 12 months of the extended term. The amended lease included 3% annual rent escalations and a one-time option to terminate the lease effective as of July 31, 2014. The Company exercised this right to terminate the lease by giving notice to the lessor prior to October 31, 2013. The cost to terminate the lease effective July 31, 2014 was approximately $112,000, which the Company paid at the time notice was given to terminate the lease. The Company recognizes rent expense on a straight-line basis, giving consideration to the rent holidays and escalations, the lease signing and moving allowance to be paid to the Company, and the rent abatement. As of December 31, 2015, the Company’s future minimum payments under the operating leases were as follows: 2016 $ 569,138 2017 584,789 2018 600,871 2019 617,395 2020 634,373 Thereafter 541,957 Total $ 3,548,523 Rent expense for the years ended December 31, 2015 and 2014 was approximately $504,000 and $373,000, respectively. Purchase Commitments On June 6, 1997, the Company entered into an amended and restated exclusive supply agreement with Cree, Inc. (“Cree”). The exclusive supply agreement had an initial term of ten years that was extended in January 2005 to July 2015. In connection with the amended and restated exclusive supply agreement, the Company committed to purchase from Cree a minimum of 50%, by dollar volume, of its raw material SiC crystal requirements. If the Company’s orders required Cree to expand beyond specified production levels, the Company committed to purchase certain minimum quantities. On December 12, 2014, the Company entered into a new exclusive supply agreement with Cree (the “New Supply Agreement”), which superseded and replaced (with respect to materials ordered subsequent to the effective date of the New Supply Agreement) the exclusive supply agreement that was set to expire in 2015. Under the New Supply Agreement, subject to certain terms and conditions, the Company agreed to exclusively purchase from Cree, and Cree agreed to exclusively supply, 100% of the Company’s required SiC materials in quarterly installments that must equal or exceed a set minimum order quantity. The initial term of the New Supply Agreement will expire on June 24, 2018, unless extended by the parties. The Company also has one option to unilaterally extend the term of the agreement for an additional two-year period, subject to certain conditions. The Company’s total purchase commitment under the New Supply Agreement until June 2018 is dependent upon the size of the SiC material and ranges between approximately $29.6 million and approximately $31.5 million. During the year ended December 31, 2015 and 2014, the Company purchased approximately $6.86 million and $5.84 million, respectively, of SiC crystals from Cree.

LINE OF CREDIT

LINE OF CREDIT	12 Months Ended
	Dec. 31, 2015
LINE OF CREDIT [Abstract]
LINE OF CREDIT	9. LINE OF CREDIT On September 20, 2013, the Company obtained a $10,000,000 revolving line of credit (the “Line of Credit”) from PNC Bank, National Association (“PNC Bank”) for general corporate and working capital purposes. The Line of Credit was evidenced by a Committed Line of Credit Note, dated September 20, 2013 (the “Note”), which was set to mature on June 15, 2015. The interest rate under the Note was the one-month LIBOR rate (adjusted daily) plus 1.50%, calculated on an actual/360 basis. The Line of Credit was also governed by a loan agreement, dated September 20, 2013, and was guaranteed by Charles & Colvard Direct, LLC, and Moissanite.com, LLC. The Line of Credit was secured by a lien on substantially all assets of the Company and its subsidiaries. Effective June 25, 2014, the Line of Credit was terminated concurrent with the Company entering into a new banking relationship with Wells Fargo Bank, National Association (“Wells Fargo”). The Company had not utilized the Line of Credit. The Company recognized the remaining $19,000 of deferred legal expenses associated with this Line of Credit upon termination. On June 25, 2014, the Company and its wholly owned subsidiaries, Charles & Colvard Direct, LLC, and Moissanite.com, LLC (collectively, the “Borrowers”), obtained a $10,000,000 asset-backed revolving credit facility (the “Credit Facility”) from Wells Fargo. The Credit Facility will be used for general corporate and working capital purposes, including transaction fees and expenses incurred in connection therewith and the issuance of letters of credit up to a $1,000,000 sublimit. The Credit Facility will mature on June 25, 2017. The Credit Facility includes a $5,000,000 sublimit for advances that are supported by a 90% guaranty provided by the U.S. Export-Import Bank. Advances under the Credit Facility are limited to a borrowing base, which is computed by applying specified advance rates to the value of the Borrowers’ eligible accounts and inventory, less reserves. Advances against inventory are further subject to an initial $3,000,000 maximum. The Borrowers must maintain a minimum of $1,000,000 in excess availability at all times. There are no other financial covenants. Each advance accrues interest at a rate equal to Wells Fargo’s 3-month LIBOR rate plus 2.50%, calculated on an actual/360 basis and payable monthly in arrears. Principal outstanding during an event of default accrues interest at a rate of 3% in excess of the above rate. Any advance may be prepaid in whole or in part at any time. In addition, the maximum line amount may be reduced by the Company in whole or part at any time, subject to a fee equal to 2% of any reduction in the first year after closing, 1% of any reduction in the second year after closing, and 0% thereafter. There are no mandatory prepayments or line reductions. The Credit Facility is secured by a lien on substantially all assets of the Borrowers, each of which is jointly and severally liable for all obligations thereunder. Wells Fargo’s security interest in certain SiC materials is subordinate to Cree’s security interest in such materials pursuant to the New Supply Agreement and an Intercreditor Agreement with Wells Fargo. The Credit Facility is evidenced by a credit and security agreement, dated as of June 25, 2014 and amended as of September 16, 2014 and December 12, 2014 (collectively, the “Credit Agreement”), and customary ancillary documents. The Credit Agreement contains customary covenants, representations and cash dominion provisions, including a financial reporting covenant and limitations on dividends, distributions, debt, contingent obligations, liens, loans, investments, mergers, acquisitions, divestitures, subsidiaries, affiliate transactions, and changes in control. Events of default under the Credit Facility include, without limitation, (1) any impairment of the Export-Import Bank guaranty, unless the guaranteed advances are repaid within two business days, (2) an event of default under any other indebtedness of the Borrowers in excess of $200,000, and (3) a material adverse change in the ability of the Borrowers to perform their obligations under the Credit Agreement or in the Borrowers’ assets, liabilities, businesses or prospects, or other circumstances that Wells Fargo believes may impair the prospect of repayment. If an event of default occurs, Wells Fargo is entitled to take enforcement action, including acceleration of amounts due under the Credit Agreement and foreclosure upon collateral. The Credit Agreement contains other customary terms, including indemnity, expense reimbursement, yield protection, and confidentiality provisions. Wells Fargo is permitted to assign the Credit Facility. As of December 31, 2015, the Company had not borrowed against the Credit Facility.

SHAREHOLDERS' EQUITY AND STOCK-

SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION	12 Months Ended
	Dec. 31, 2015
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION [Abstract]
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION	10. SHAREHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION Common Stock The Company is authorized to issue 50,000,000 shares of common stock, no par value. As of December 31, 2015 and 2014, it had 21,111,585 and 20,382,333 shares of common stock outstanding, respectively. Holders of common stock are entitled to one vote for each share held. In November 2009, the Board of Directors authorized a repurchase program for up to 1,000,000 shares of the Company’s common stock. On August 6, 2013, the Board authorized the extension of the Company’s share repurchase program for an additional 12 months. The program, which was originally authorized on November 13, 2009, authorized the Company to repurchase up to 1,000,000 shares of the Company’s common stock until August 12, 2014 in open market or in privately negotiated transactions. The Company expected to use available cash to finance these purchases and would determine the timing and amount of stock repurchases based on the Company’s evaluation of market conditions, the market price of the Company’s common stock, and management’s assessment of the Company’s liquidity and cash flow needs. The Company had no obligations to repurchase shares under the program and the program could be suspended or terminated at any time. The Company did not repurchase any shares under this program during the year ended December 31, 2014. The Company did not extend the plan past its expiration due to covenants within the Credit Facility described in Note 9, “Line of Credit.” Preferred Stock The Board of Directors is authorized, without further shareholder approval, to issue up to 10,000,000 shares of preferred stock, no par value. The preferred stock may be issued from time to time in one or more series. No shares of preferred stock had been issued as of December 31, 2015. Equity Compensation Plans 1997 Omnibus Stock Plan In 1997, the Company adopted the 1997 Omnibus Stock Plan of Charles & Colvard, Ltd. (the “1997 Omnibus Plan”). The 1997 Omnibus Plan authorized the Company to grant stock options, stock appreciation rights, and restricted stock awards (collectively, “awards”) to selected employees, independent contractors, and directors of the Company and related corporations in order to promote a closer identification of their interests with those of the Company and its shareholders. All stock options granted under the 1997 Omnibus Plan have an exercise price equal to the market price of the Company’s common stock on the date the stock option was granted. Stock options granted to employees under the 1997 Omnibus Plan generally vest over three years and have terms of up to 10 years, with the exception of stock options granted in 2005 under the Executive Compensation Plan (which is governed by and subject to the 1997 Omnibus Plan) that vested immediately and stock options granted in 2006 under the Executive Compensation Plan that vested at the end of three years. Stock options granted to the Board of Directors under the 1997 Omnibus Plan generally vested over one year and have terms of up to 10 years. The terms of stock options granted to independent contractors varied depending on the specific grant, but the terms are no longer than 10 years. Restricted stock awards granted to members of the Board of Directors vested at the end of one year. The 1997 Omnibus Plan expired (with respect to future grants) on September 30, 2007. As of December 31, 2015 and 2014, there were 540 and 11,776 stock options outstanding under the 1997 Omnibus Plan, respectively. 2008 Stock Incentive Plan In May 2008, the shareholders of the Company approved the adoption of the Charles & Colvard, Ltd. 2008 Stock Incentive Plan, as amended on March 31, 2015 and approved by the shareholders of the Company on May 20, 2015 (the “2008 Plan”), which replaced the 1997 Omnibus Plan. The 2008 Plan authorizes the Company to grant stock options, stock appreciation rights, restricted stock, and other equity awards to selected employees, directors, and independent contractors. The aggregate number of shares of the Company’s common stock that may be issued pursuant to awards granted under the 2008 Plan shall not exceed the sum of 4,500,000 plus any shares of common stock subject to an award granted under the 1997 Omnibus Plan or any other stock incentive plan maintained by the Company prior to the 2008 Plan (each, a “Prior Plan”) that is forfeited, cancelled, terminated, expires, or lapses for any reason without the issuance of shares pursuant to the award, or shares subject to an award granted under a Prior Plan which shares are forfeited to, or repurchased or reacquired by, the Company. Stock options granted to employees under the 2008 Plan generally vest over three years and have terms of up to 10 years. The vesting schedules and terms of stock options granted to independent contractors vary depending on the specific grant, but the terms are no longer than 10 years. Restricted stock awards granted to members of the Board of Directors vest at the end of one year on the date of the Annual Meeting of Shareholders. The vesting schedules of restricted stock awards granted to employees or independent contractors vary depending on the specific grant but are generally three years or less. Only stock options and restricted stock have been granted under the 2008 Plan. As of December 31, 2015 and 2014, there were 2,212,160 and 1,654,170 stock options outstanding under the 2008 Plan, respectively. Stock-Based Compensation The following table summarizes the components of the Company’s stock-based compensation included in net loss: Year Ended December 31, 2015 2014 Employee stock options $ 697,269 $ 840,568 Consultant stock options 257,342 - Restricted stock awards 816,286 846,955 Total $ 1,770,897 $ 1,687,523 Due to the Company’s valuation allowance against deferred tax assets as discussed further in Note 11, “Income Taxes,” the income tax benefits for 2015 and 2014 were fully reserved. No stock-based compensation was capitalized as a cost of inventory during the years ended December 31, 2015 and 2014. Stock Options The following is a summary of the stock option activity for the years ended December 31, 2015 and 2014: Shares Weighted Average Exercise Price Outstanding, December 31, 2013 1,204,297 $ 3.14 Granted 535,000 $ 2.49 Exercised - $ - Forfeited (30,775 ) $ 2.51 Expired (42,576 ) $ 3.64 Outstanding, December 31, 2014 1,665,946 $ 2.93 Granted 1,413,765 $ 1.28 Exercised (241,752 ) $ 0.71 Forfeited (132,731 ) $ 3.08 Expired (492,528 ) $ 3.17 Outstanding, December 31, 2015 2,212,700 $ 2.06 The weighted average grant date fair value of stock options granted during the years ended December 31, 2015 and 2014 was $0.72 and $1.67, respectively. The total fair value of stock options that vested during the years ended December 31, 2015 and 2014 was approximately $862,000 and $805,000, respectively. The fair value of each stock option is estimated on the date of grant using the Black-Scholes-Merton option pricing model with the following weighted average assumptions for stock options granted during the years ended December 31, 2015 and 2014: Year Ended December 31, 2015 2014 Dividend yield 0.0 % 0.0 % Expected volatility 63.8 % 81.1 % Risk-free interest rate 1.64 % 1.77 % Expected lives (years) 5.7 5.8 The following table summarizes information about stock options outstanding at December 31, 2015: Options Outstanding Options Exercisable Options Vested or Expected to Vest Balance as of 12/31/2015 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Balance as of 12/31/2015 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Balance as of 12/31/2015 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price 2,212,700 8.26 $ 2.06 1,008,577 7.03 $ 2.47 2,113,395 8.21 $ 2.08 As of December 31, 2015, the unrecognized stock-based compensation expense related to unvested stock options was approximately $891,000, which is expected to be recognized over a weighted average period of approximately 20 months. The aggregate intrinsic value of stock options outstanding, exercisable, and vested or expected to vest at December 31, 2015 was approximately $13,000 for each. These amounts are before applicable income taxes and represent the closing market price of the Company’s common stock at December 31, 2015 less the grant price, multiplied by the number of stock options that had a grant price that is less than the closing market price. This amount represents the amount that would have been received by the optionees had these stock options been exercised on that date. During the years ended December 31, 2015 and 2014, the aggregate intrinsic value of stock options exercised was approximately $167,000 and $0, respectively. Restricted Stock The following is a summary of the restricted stock activity for the years ended December 31, 2015 and 2014: Shares Weighted Average Grant Date Fair Value Unvested, December 31, 2013 350,903 $ 4.26 Granted 185,032 $ 2.09 Vested (248,929 ) $ 3.77 Canceled - $ - Unvested, December 31, 2014 287,006 $ 3.29 Granted 487,500 $ 1.38 Vested (349,506 ) $ 2.36 Canceled - $ - Unvested, December 31, 2015 425,000 $ 1.87 The unvested restricted shares as of December 31, 2015 are all As of December 31, 2015, the estimated unrecognized stock-based compensation expense related to these unvested restricted shares subject to the achievement of performance goals was approximately $295,000, all of which is expected to be recognized over a weighted average period of approximately four months. Dividends The Company has not paid any cash dividends during the years ended December 31, 2015 and 2014.

INCOME TAXES

INCOME TAXES	12 Months Ended
	Dec. 31, 2015
INCOME TAXES [Abstract]
INCOME TAXES	11. INCOME TAXES The Company accounts for income taxes under the liability method. Under the liability method, deferred income taxes are recognized for the income tax consequences of “temporary differences” by applying enacted statutory income tax rates applicable to future years to differences between the financial statement carrying amounts and the income tax bases of existing assets and liabilities. Income tax net expense Year Ended December 31, 2015 2014 Current: Federal $ - $ - State (12,821 ) (7,749 ) Total (12,821 ) (7,749 ) Deferred: Federal - (3,691,163 ) State - (353,051 ) Total - (4,044,214 ) Income tax net expense $ (12,821 ) $ (4,051,963 ) Significant components of the Company’s deferred income tax assets are as follows: December 31, 2015 2014 Reserves and accruals $ 1,578,374 $ 1,472,997 Prepaid expenses (50,966 ) (48,427 ) Federal NOL carryforwards 6,762,537 4,185,179 State NOL carryforwards 583,651 616,655 Hong Kong NOL carryforwards 995,566 995,566 Federal benefit on state taxes under uncertain tax positions 132,385 128,026 Stock-based compensation 481,917 189,045 Investment loss - 9,373 Research tax credit 434,637 434,637 Alternative minimum tax credit 348,264 348,264 Contributions carryforward 33,582 3,929 Depreciation (312,023 ) (418,154 ) Accrued rent 254,404 297,362 Loss on impairment of long-lived assets 52,226 53,533 Valuation allowance (11,294,554 ) (8,267,985 ) Total - - Total deferred income tax assets, net $ - $ - A reconciliation between expected income taxes, computed at the statutory federal income tax rate of 34% applied to pretax accounting loss, and the income tax net expense included in the consolidated statements of operations for the years ended December 31, 2015 and 2014 is as follows: Year Ended December 31, 2015 2014 Anticipated income tax benefit at statutory rate $ 3,315,420 $ 3,075,321 State income tax benefit, net of federal tax effect 35,814 215,109 Capital loss carryforward expiration (9,227 ) - Income tax effect of uncertain tax positions (8,461 ) (8,080 ) Return to provision adjustments (82,341 ) (2,751 ) Stock-based compensation (215,030 ) (279,985 ) Other changes in deferred income tax assets, net (22,414 ) 25,493 Increase in valuation allowance (3,026,582 ) (7,077,070 ) Income tax net expense $ (12,821 ) $ (4,051,963 ) As of each reporting date, management considers new evidence, both positive and negative, that could impact its view with regard to future realization of deferred tax assets. As of December 31, 2015, the Company had approximately $882,000 of remaining federal income tax credits, $533,000 of which expire between 2018 and 2021 and the balance without an expiration, which can be carried forward to offset future income taxes. As of December 31, 2015, the Company had federal tax net operating loss carryforwards under U.S. GAAP of approximately $19.89 million, expiring between 2020 and 2035, which can be used to offset against future federal taxable income, North Carolina tax net operating loss carryforwards across all of the entities of approximately $18.05 million expiring between 2023 and 2030, and various other state tax net operating loss carryforwards expiring between 2016 and 2035, which can be used to offset against future state taxable income. As of December 31, 2015, there was approximately $6.03 million in net operating loss carryforwards in Hong Kong. In accordance with the Hong Kong tax code, these amounts can be carried forward indefinitely to offset future taxable income in Hong Kong. The Company’s deferred tax assets in Hong Kong were fully reserved with a valuation allowance of $996,000 as of December 31, 2015 and 2014 and had been fully reserved in all prior periods due to the uncertainty of future taxable income in this jurisdiction to utilize the deferred tax assets. Uncertain Tax Positions The gross liability for income taxes associated with uncertain tax positions at December 31, 2015 was approximately $519,000. This amount is shown net of approximately $98,000 recorded as a direct reduction to the associated deferred tax asset. The gross liability, if recognized, would favorably affect the Company’s effective tax rate. The Company’s policy for recording interest and penalties associated with tax audits is to record such items as a component of the provision for income taxes. For each of the years ended December 31, 2015 and 2014, the Company accrued approximately $13,000 and $12,000, respectively, of interest and penalties associated with uncertain tax positions. Including the interest and penalties recorded for uncertain tax positions, there is a total of approximately $152,000 and $139,000 of interest and penalties included in the accrued income tax liability for uncertain tax positions at December 31, 2015 and 2014, respectively. To the extent interest and penalties are not ultimately incurred with respect to uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision. In all of the significant federal and state jurisdictions where it is required to file income tax returns, the Company has analyzed filing positions for all tax years in which the statute of limitations is open. The only periods subject to examination by the major tax jurisdictions where the Company does business are the 2012 through 2014 tax years. The Company does not believe that the outcome of any examination will have a material impact on its consolidated financial statements and does not expect settlement on any uncertain tax positions within the next 12 months. The following summarizes the activity related to the Company ’ Balance as of January 1, 2014 $ 494,222 Increases related to prior year tax positions 12,241 Balance as of December 31, 2014 506,463 Increases related to prior year tax positions 12,821 Balance as of December 31, 2015 $ 519,284

MAJOR CUSTOMERS AND CONCENTRATI

MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK	12 Months Ended
	Dec. 31, 2015
MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK [Abstract]
MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK	12. MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK At times, a portion of the Company’s accounts receivable will be due from customers that have individual balances in excess of 10% of the Company’s total net accounts receivable. The following is a summary of customers that represent greater than or equal to 10% of total net accounts receivable as of December 31, 2015 and 2014: Year Ended December 31, 2015 2014 Customer A 17 % 28 % Customer B 14 % 10 % Customer C 11 % * Customer D 10 % * *Customers C and D did not have individual balances that represented a significant portion of total net accounts receivable as of December 31, 2014. A significant portion of sales is derived from certain customer relationships. The following is a summary of customers that represent greater than or equal to 10% of total gross sales: Year Ended December 31, 2015 2014 Customer A 21 % 28 % Customer B -1 % 10 % The Company records its sales return allowance at the corporate level based on several factors including historical sales return activity and specific allowances for known customer returns. For this disclosure, the Company reports the customer activity without effect of specific sales return allowances. Customer B returned goods in excess of its purchases during the year ended December 31, 2015; however, these returns did not affect current period revenue as these returns had been specifically reserved as of December 31, 2014. As these returns were received from Customer B, the Company reduced its sales return allowance related to these returns.

EMPLOYEE BENEFIT PLAN

EMPLOYEE BENEFIT PLAN	12 Months Ended
	Dec. 31, 2015
EMPLOYEE BENEFIT PLAN [Abstract]
EMPLOYEE BENEFIT PLAN	13. EMPLOYEE BENEFIT PLAN All full-time employees who meet certain age and length of service requirements are eligible to participate in the Company’s 401(k) Plan. The plan provides for matching contributions by the Company in such amounts as the Board of Directors may annually determine, as well as a 401(k) option under which eligible participants may defer a portion of their salaries. The Company contributed a total of $120,000 and $129,000 to the plan during the years ended December 31, 2015 and 2014, respectively.

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	12 Months Ended
	Dec. 31, 2015
SUBSEQUENT EVENTS [Abstract]
SUBSEQUENT EVENTS	14. SUBSEQUENT EVENTS On February 4, 2016, the Company’s Board of Directors made the strategic decision to explore a potential divestiture of the direct-to-consumer home party business operated through Charles & Colvard Direct, LLC. After careful analysis of the Company’s core competencies, go-to-market strategies, and intent to advance toward profitability, the management team and Board of Directors determined a divestiture of this distribution channel to be in both the Company’s and its shareholders’ best interests. On March 4, 2016, the Company and Charles & Colvard Direct, LLC entered into an asset purchase agreement with Yanbal, pursuant to which Yanbal agreed to purchase certain assets of Charles & Direct, LLC (the “Transferred Assets”). The transactions contemplated by the asset purchase agreement also closed on March 4, 2016 (the “Closing Date”). Pursuant to the terms of the asset purchase agreement, the Transferred Assets included, among other things, (i) an inventory credit to be used towards $250,000 in existing non-moissanite and moissanite inventory as of the Closing Date, consisting of Charles & Colvard Direct, LLC’s current jewelry offered under the “Lulu Avenue” trademarks, (ii) all existing marketing collateral such as packaging and catalogs for Charles & Colvard Direct, LLC’s current jewelry offered under the “Lulu Avenue” trademarks as of the Closing Date, (iii) certain assigned contracts, (iv) style advisor and customer lists, and (v) all intellectual property rights owned by the Company and Charles & Colvard Direct, LLC and used solely in connection with the operation of Charles & Colvard Direct, LLC’s direct-to-consumer home party business of the sale of fashion jewelry and related products and services in the United States, excluding the “Lulu Avenue” and “Love Knot” trademarks and other “Lulu Avenue” specific intellectual property such as the domain name www.luluavenue.com and all content located on such website (the “Lulu Intellectual Property”). The inventory credit and an exclusive, nontransferable license to use the Lulu Intellectual Property that was also granted to Yanbal on the Closing Date will expire on July 31, 2016. After the Closing Date, the Company and Charles & Colvard Direct, LLC may not engage in the direct-to-consumer home party business and may not solicit style advisors or customers of the direct-to-consumer home party business. The Company has also agreed to provide to Yanbal certain transition services. The purchase price for the Transferred Assets was $500,000, and Yanbal assumed certain liabilities related to the Transferred Assets. The Purchase Agreement contains various representations, warranties, covenants, and indemnities that are customary for a transaction of this nature.

BASIS OF PRESENTATION AND SIG21

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)	12 Months Ended
	Dec. 31, 2015
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract]
Basis of Presentation and Principles of Consolidation	Basis of Presentation and Principles of Consolidation - All intercompany accounts have been eliminated.
Use of Estimates	Use of Estimates - T “ ”
Cash and Cash Equivalents	Cash and Cash Equivalents -
Concentration of Credit Risk	Concentration of Credit Risk - Trade receivables potentially subject the Company to credit risk. The Company’s standard wholesale customer payment terms on trade receivables are generally between 30 and 90 days, . The Company extends credit to its customers based upon a number of factors, including an evaluation of the customer’s financial condition and credit history that is verified through trade association reference services, the customer’s payment history with the Company, the customer’s reputation in the trade, and/or an evaluation of the Company’s opportunity to introduce its moissanite jewels or finished jewelry featuring moissanite to new or expanded markets. See Note 12, “Major Customers and Concentration of Credit Risk,” for further discussion of credit risk within trade accounts receivable.
Accounts Receivable Reserves	Accounts Receivable Reserves - The following is a reconciliation of the allowance for sales returns: Year Ended December 31, 2015 2014 Balance, beginning of period $ 910,000 $ 1,186,000 Additions charged to operations 3,651,741 1,942,191 Sales returns (3,830,741 ) (2,218,191 ) Balance, end of period $ 731,000 $ 910,000 The second reserve is an allowance for doubtful accounts for estimated losses resulting from the failure of the Company’s customers to make required payments. This allowance reduces trade accounts receivable to an amount expected to be collected. The Company generally uses an internal collection effort, which may include its sales personnel as it deems appropriate. After all internal collection efforts have been exhausted, the Company generally writes off the account receivable. Any accounts with significant balances are reviewed separately to determine an appropriate allowance based on the facts and circumstances of the specific account. on these criteria, management determined that allowances for doubtful accounts receivable of $1.14 million and $1.07 million at December 31, The following is a reconciliation of the allowance for doubtful accounts: Year Ended December 31, 2015 2014 Balance, beginning of period $ 1,074,000 $ 522,000 Additions charged to operations 89,462 734,243 Write-offs, net of recoveries (26,462 ) (182,243 ) Balance, end of period $ 1,137,000 $ 1,074,000 Although the Company believes that its reserves are adequate, if the financial condition of its customers deteriorates, resulting in an impairment of their ability to make payments, or if it underestimates the allowances required, additional allowances may be necessary,
Inventories	Inventories - Inventory costs include direct material and labor, inbound freight, purchasing and receiving costs, inspection costs, and warehousing costs. The Company’s work-in-process inventories include raw SiC crystals on which processing costs, such as labor and sawing, have been incurred; and components, such as metal castings and finished good moissanite jewels, that have been issued to jobs in the manufacture of finished jewelry. The Company’s moissanite jewel manufacturing process involves the production of intermediary shapes, called “preforms,” that vary depending upon the size and shape of the finished jewel. To maximize manufacturing efficiencies, preforms may be made in advance of current finished inventory needs but remain in work-in-process inventories. As of December 31, 2015 and 2014, work-in-process inventories issued to active production jobs approximated $3.02 million and $2.05 million, respectively. All inventories are carefully reviewed for quality standards before they are entered into finished goods. As conditions warrant, the Company’s grading standards change. The Company reviews the inventory on an ongoing basis to ensure its inventory meets current quality standards. The Company’s jewels do not degrade in quality over time and inventory generally consists of the shapes and sizes most commonly used in the jewelry industry. In addition, the majority of jewel inventory is not mounted in finished jewelry settings and is therefore not subject to fashion trends nor is obsolescence a significant factor. The Company has very small market penetration in the worldwide jewelry market, and the Company had the exclusive right in the U.S. through August 2015 and has the exclusive right in many other countries through mid-2016 to produce and sell created SiC for use in jewelry applications. During the year ended December 31, 2015, management identified an opportunity to sell approximately $2.28 million of slow-moving loose jewel inventory of less desirable quality. As a result of this sale and feedback from customers on the value of some of these goods, the Company determined a lower of cost or market reserve of $352,000 was required on some of the remaining inventory of these lower quality goods. In view of the foregoing factors, management has concluded that no excess or obsolete loose jewel inventory reserve requirements existed as of December 31, 2015 and 2014 on goods other than the lower quality goods noted previously. The Company manufactures finished jewelry featuring moissanite. Relative to loose moissanite jewels, finished jewelry is more fashion oriented and subject to styling trends that could render certain designs obsolete. The majority of the Company’s finished jewelry featuring moissanite is held in inventory for resale and consists of such basic designs as stud earrings, solitaire and three-stone rings, pendants, and bracelets that tend not to be subject to significant obsolescence risk due to their classic styling. In addition, the Company manufactures small individual quantities of designer-inspired moissanite fashion jewelry as part of its sample line that are used in the selling process to its wholesale customers. Prior to March 2016, the Company purchased fashion finished jewelry comprising base metals and non-precious gemstones for sale through Lulu Avenue ® Jewelry inventories consist primarily of finished goods, a portion of which the Company acquired as part of a January 2009 settlement agreement with a former manufacturer customer to reduce the outstanding receivable to the Company. Due to the lack of a plan to market this inventory at that time, a jewelry inventory reserve was established to reduce the majority of the acquired jewelry inventory value to scrap value, or the amount the Company would expect to obtain by melting the gold in the jewelry and returning to loose-jewel finished goods inventory those jewels that meet grading standards. Because the finished jewelry the Company began manufacturing in 2010 after it entered that business was made pursuant to an operational plan to market and sell the inventory, it is not subject to this reserve. This reserve was $4,000 and $101,000 as of December 31, 2015 and 2014, respectively. The Company also maintains inventory reserves for shrinkage, recuts, and repairs. Shrinkage refers to loose jewels and finished jewelry on review with customers and vendors that may not be returned to the Company. The recuts reserve is for the projected material loss resulting from the re-cutting of damaged jewels into smaller loose jewels to remove the damage. The repairs reserve is for finished jewelry in need of repair before it can be returned to finished goods inventory and be available for sale. These reserves totaled $625,000 and $552,000 as of December 31, 2015 and 2014, respectively. The need for adjustments to inventory reserves is evaluated on a period-by-period basis.
Property and Equipment	Property and Equipment - 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 the lease term
Intangible Assets	Intangible Assets -
Impairment of Long-Lived Assets	Impairment of Long-Lived Assets - whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount of the asset to future net undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment is measured as the amount by which the carrying amount exceeds the fair value and is recognized as an operating expense in the period in which the determination is made. Assets to be disposed are reported at the lower of the carrying amount or fair value less costs to sell. As of December 31, 2015, the Company did not identify any indicators of long-lived asset impairment. In addition to the recoverability assessment, the Company routinely reviews the remaining estimated useful lives of its long-lived assets. Any reduction in the useful-life assumption will result in increased depreciation and amortization expense in the period when such determination is made, as well as in subsequent periods. During the year ended December 31, 2013, the useful lives of leasehold improvements associated with the Company’s then-current lease were adjusted to the length of the lease term through July 2014. The additional depreciation recognized for the year ended December 31, 2014 as a result of the shortened lives was approximately $74,000.
Revenue Recognition	Revenue Recognition -
Cost of Goods Sold	Cost of Goods Sold -
Advertising Costs	Advertising Costs - The Company also offers a cooperative advertising program to certain of its wholesale customers that reimburses, via a credit towards future purchases, a portion of their marketing costs based on the customers’ net purchases from the Company and is subject to the customer providing documentation of all advertising performed that includes the Company’s products. For the years ended December 31, 2015 and 2014, these approximate amounts were a credit of ($4,000) and $321,000, respectively, and are included as a component of sales and marketing expenses. The credit for the year ended December 31, 2015 is a result of the decision of our domestic distributors to not utilize the advertising credits we had accrued during 2014 within the allowable period that we reversed during the three months ended March 31, 2015. Advertising expenses, inclusive of the cooperative advertising program, for the years ended December 31, 2015 and 2014 were approximately $1.76 million and $1.84 million, respectively.
Sales and Marketing	Sales and Marketing - wholly owned operating subsidiaries Moissanite.com, LLC and Charles & Colvard Direct, LLC.
General and Administrative	General and Administrative -
Research and Development	Research and Development -
Stock-Based Compensation	Stock-Based Compensation - The Company recognizes compensation expense for stock-based awards based on estimated fair values on the date of grant. Fair value of stock options using the Black-Scholes-Merton option pricing model is estimated on the date of grant utilizing certain assumptions for dividend yield, expected volatility, risk-free interest rate, and expected lives of the awards, as follows: · Dividend yield - · Expected volatility - Volatility is a measure of the amount by which a financial variable such as share price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. . · Risk-free interest rate - · Expected lives - The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and the Company uses different assumptions, the Company’s stock-based compensation expense could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rates of stock-based awards and only recognize expense for those shares expected to vest. In estimating the Company’s forfeiture rates, the Company analyzed its historical forfeiture rates, the remaining lives of unvested stock-based awards, and the amount of vested awards as a percentage of total awards outstanding. If the Company’s actual forfeiture rates are materially different from its estimates, or if the Company re-evaluates the forfeiture rates in the future, the stock-based compensation expense could be significantly different from what the Company has recorded in the current period.
Income Taxes	Income Taxes -
Net Loss per Common Share	Net Loss per Common Share - The following table reconciles the differences between the basic and diluted net loss per share presentations: Year Ended December 31, 2015 2014 Numerator: Net loss $ (9,573,059 ) $ (13,097,023 ) Denominator: Weighted average common shares outstanding: Basic 20,407,764 20,295,618 Stock options - - Diluted 20,407,764 20,295,618 Net loss per common share: Basic $ (0.47 ) $ (0.65 ) Diluted $ (0.47 ) $ (0.65 ) For the years ended December 31, 2015 and 2014, stock options to purchase approximately 2.21 million and 1.67 million shares, respectively, were excluded from the computation of diluted net loss per common share because the exercise price of the stock options was greater than the average market price of the common shares or the effect of inclusion of such amounts would be anti-dilutive to net loss per common share. For the year ended December 31, 2015, 425,000 restricted shares that have been issued but not yet vested have been excluded from the computation of diluted net loss per common share.
Recently Adopted/Issued Accounting Pronouncements	Recently Adopted/Issued Accounting Pronouncements - In May 2014, the Financial Accounting Standards Board (the “FASB”) issued a new accounting standard that supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of the new standard is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. The new standard defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after December 15, 2017, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting the standard recognized at the date of adoption (which includes additional footnote disclosures). The Company is currently evaluating the impact of the pending adoption of the standard on its consolidated financial statements and has not yet determined the method by which the Company will adopt the standard in 2018. In August 2014, the FASB issued new accounting guidance intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. Under U.S. GAAP, financial statements are prepared under the presumption that the reporting organization will continue to operate as a going concern, except in limited circumstances. The going concern basis of accounting is critical to financial reporting because it establishes the fundamental basis for measuring and classifying assets and liabilities. Currently, U.S. GAAP lacks guidance about management’s responsibility to evaluate whether there is substantial doubt about the organization’s ability to continue as a going concern or to provide related footnote disclosures. This new accounting guidance provides guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. This new accounting guidance is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early application is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The Company does not expect this new accounting guidance to have a material impact on its consolidated financial statements. In July 2015, the FASB issued new accounting guidance that will require an entity to measure inventory valued under the average cost method from the lower of cost or market to the lower of cost or net realizable value, with net realizable value defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. No other changes were made to the current guidance on inventory measurement. This guidance is effective on a prospective basis for public entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early application is permitted as of the beginning of an interim or annual reporting period. The Company does not anticipate early adoption at this time and is currently evaluating the impact of this guidance on its consolidated financial statements. In November 2015, the FASB issued new accounting guidance that requires that deferred tax assets and liabilities be classified as noncurrent in a classified statement of financial position. The guidance is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Earlier application is permitted for all entities as of the beginning of an interim or annual report period. The amendments in this guidance may be applied either prospectively to all deferred tax assets and liabilities or retrospectively to all periods presented. The Company adopted this standard as of December 31, 2015 with prospective application. As a result, the Company reclassified its deferred tax assets classified as current to noncurrent and its deferred tax liabilities classified as current to noncurrent in its December 31, 2015 consolidated balance sheet. Prior balance sheets presented were retrospectively adjusted. In February 2016, the FASB issued new guidance that establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company is currently evaluating the impact of its pending adoption of the new standard on its consolidated financial statements. All other new and recently issued, but not yet effective, accounting pronouncements have been deemed to be not relevant to the Company and therefore are not expected to have any impact once adopted.

BASIS OF PRESENTATION AND SIG22

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables)	12 Months Ended
	Dec. 31, 2015
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract]
Reconciliation of allowance for sales returns	The following is a reconciliation of the allowance for sales returns: Year Ended December 31, 2015 2014 Balance, beginning of period $ 910,000 $ 1,186,000 Additions charged to operations 3,651,741 1,942,191 Sales returns (3,830,741 ) (2,218,191 ) Balance, end of period $ 731,000 $ 910,000
Reconciliation of allowance for doubtful accounts	The following is a reconciliation of the allowance for doubtful accounts: Year Ended December 31, 2015 2014 Balance, beginning of period $ 1,074,000 $ 522,000 Additions charged to operations 89,462 734,243 Write-offs, net of recoveries (26,462 ) (182,243 ) Balance, end of period $ 1,137,000 $ 1,074,000
Schedule of estimated useful life of property, plant and equipment	Property and equipment are stated at cost and are depreciated over their estimated useful lives using the straight-line method as follows: 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 the lease term
Reconciliation of basic and fully diluted earnings per share	The following table reconciles the differences between the basic and diluted net loss per share presentations: Year Ended December 31, 2015 2014 Numerator: Net loss $ (9,573,059 ) $ (13,097,023 ) Denominator: Weighted average common shares outstanding: Basic 20,407,764 20,295,618 Stock options - - Diluted 20,407,764 20,295,618 Net loss per common share: Basic $ (0.47 ) $ (0.65 ) Diluted $ (0.47 ) $ (0.65 )

SEGMENT INFORMATION AND GEOGR23

SEGMENT INFORMATION AND GEOGRAPHIC DATA (Tables)	12 Months Ended
	Dec. 31, 2015
SEGMENT INFORMATION AND GEOGRAPHIC DATA [Abstract]
Summary information by segment	Summary financial information by reportable segment is as follows: Year Ended December 31, 2015 Wholesale Moissanite.com Charles & Colvard Direct Total Net sales Loose jewels $ 14,581,554 $ 531,695 $ (45 ) $ 15,113,204 Finished jewelry 5,683,478 4,896,565 5,073,870 15,653,913 Total $ 20,265,032 $ 5,428,260 $ 5,073,825 $ 30,767,117 Product line cost of goods sold Loose jewels $ 9,375,195 $ 83,964 $ 65 $ 9,459,224 Finished jewelry 3,867,080 2,429,684 1,242,623 7,539,387 Total $ 13,242,275 $ 2,513,648 $ 1,242,688 $ 16,998,611 Product line gross profit Loose jewels $ 5,206,359 $ 447,731 $ (110 ) $ 5,653,980 Finished jewelry 1,816,398 2,466,881 3,831,247 8,114,526 Total $ 7,022,757 $ 2,914,612 $ 3,831,137 $ 13,768,506 Operating loss $ (3,736,111 ) $ (1,328,117 ) $ (4,485,787 ) $ (9,550,015 ) Depreciation and amortization $ 652,326 $ 106,461 $ 104,566 $ 863,353 Total assets $ 43,881,011 $ 174,899 $ 84,928 $ 44,140,838 Capital expenditures $ 291,372 $ 116,080 $ 20,676 $ 428,128 Year Ended December 31, 2014 Wholesale Moissanite.com Charles & Colvard Direct Total Net sales Loose jewels $ 12,324,045 $ 600,505 $ 1,820 $ 12,926,370 Finished jewelry 8,452,800 2,812,158 1,449,321 12,714,279 Total $ 20,776,845 $ 3,412,663 $ 1,451,141 $ 25,640,649 Product line cost of goods sold Loose jewels $ 7,458,355 $ 100,851 $ 7,623 $ 7,566,829 Finished jewelry 6,584,937 1,371,056 472,189 8,428,182 Total $ 14,043,292 $ 1,471,907 $ 479,812 $ 15,995,011 Product line gross profit Loose jewels $ 4,865,690 $ 499,654 $ (5,803 ) $ 5,359,541 Finished jewelry 1,867,863 1,441,102 977,132 4,286,097 Total $ 6,733,553 $ 1,940,756 $ 971,329 $ 9,645,638 Operating loss $ (4,802,435 ) $ (1,265,035 ) $ (2,976,754 ) $ (9,044,224 ) Depreciation and amortization $ 887,287 $ 174,562 $ 46,106 $ 1,107,955 Total assets $ 51,183,888 $ 128,049 $ 114,460 $ 51,426,397 Capital expenditures $ 1,093,055 $ 1,386 $ 1,262 $ 1,095,703
Schedule of reconciliation of product line cost of goods sold to cost of goods sold as reported in consolidated financial statements	A reconciliation of the Company’s product line cost of goods sold to cost of goods sold as reported in the consolidated financial statements is as follows: Year Ended December 31, 2015 2014 Product line cost of goods sold $ 16,998,611 $ 15,995,011 Non-capitalized manufacturing and production control expenses 1,388,567 949,385 Freight out 698,840 284,944 Inventory valuation allowances 436,000 295,000 Other inventory adjustments 1,030,689 488,995 Cost of goods sold $ 20,552,707 $ 18,013,335
Schedule of inventories by product line maintained in its wholesale distribution segment	The Company’s net inventories by product line maintained in the parent entity’s wholesale distribution segment are as follows: December 31, 2015 2014 Loose jewels Raw materials $ 6,741,712 $ 4,658,692 Work-in-process 5,516,799 5,752,103 Finished goods 15,877,436 21,495,873 Finished goods on consignment 55,388 46,284 Total $ 28,191,335 $ 31,952,952 Finished jewelry Raw materials $ 190,427 $ 258,707 Work-in-process 514,946 540,576 Finished goods 3,193,569 5,557,417 Finished goods on consignment 200,613 578,200 Total $ 4,099,555 $ 6,934,900
Data by geographic area	The following presents certain data by geographic area: Year Ended December 31, 2015 2014 Net sales United States $ 27,297,901 $ 22,101,974 International 3,469,216 3,538,675 Total $ 30,767,117 $ 25,640,649 December 31, 2015 2014 Property and equipment, net United States $ 1,615,683 $ 1,859,355 International - - Total $ 1,615,683 $ 1,859,355 December 31, 2015 2014 Intangible assets, net United States $ 15,362 $ 39,050 International 55,724 177,897 Total $ 71,086 $ 216,947

INVENTORIES (Tables)

INVENTORIES (Tables)	12 Months Ended
	Dec. 31, 2015
INVENTORIES [Abstract]
Schedule of inventory, net of reserves	The Company’s total inventories, net of reserves, consisted of the following as of December 31, 2015 and 2014: December 31, 2015 2014 Raw materials $ 6,932,139 $ 4,917,399 Work-in-process 6,031,745 6,292,679 Finished goods 20,441,535 27,985,067 Finished goods on consignment 293,001 677,484 Less inventory reserves (1,370,000 ) (934,000 ) Total $ 32,328,420 $ 38,938,629 Short-term portion $ 10,739,798 $ 13,320,639 Long-term portion 21,588,622 25,617,990 Total $ 32,328,420 $ 38,938,629

PROPERTY AND EQUIPMENT (Tables)

PROPERTY AND EQUIPMENT (Tables)	12 Months Ended
	Dec. 31, 2015
PROPERTY AND EQUIPMENT [Abstract]
Property and equipment	Property and equipment consists of the following: December 31, 2015 2014 Computer software $ 1,771,102 $ 1,622,806 Machinery and equipment 922,532 818,362 Computer hardware 855,348 750,776 Leasehold improvements 1,030,423 1,002,357 Furniture and fixtures 302,064 259,944 Total 4,881,469 4,454,245 Less accumulated depreciation (3,265,786 ) (2,594,890 ) Property and equipment, net $ 1,615,683 $ 1,859,355

INTANGIBLE ASSETS (Tables)

INTANGIBLE ASSETS (Tables)	12 Months Ended
	Dec. 31, 2015
INTANGIBLE ASSETS [Abstract]
Schedule of intangible assets	Intangible assets consist of the following: December 31, Weighted Average Amortization Period 2015 2014 (in Years) Patents $ 958,604 $ 912,862 0.4 Trademarks 50,208 50,208 1.8 License rights 6,718 6,718 0.0 Total 1,015,530 969,788 Less accumulated amortization (944,444 ) (752,841 ) Intangible assets, net $ 71,086 $ 216,947

COMMITMENTS AND CONTINGENCIES (

COMMITMENTS AND CONTINGENCIES (Tables)	12 Months Ended
	Dec. 31, 2015
COMMITMENTS AND CONTINGENCIES [Abstract]
Future minimum payments under operating lease	As of December 31, 2015, the Company’s future minimum payments under the operating leases were as follows: 2016 $ 569,138 2017 584,789 2018 600,871 2019 617,395 2020 634,373 Thereafter 541,957 Total $ 3,548,523

SHAREHOLDERS' EQUITY AND STOC28

SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION (Tables)	12 Months Ended
	Dec. 31, 2015
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION [Abstract]
Schedule for components of stock based compensation	The following table summarizes the components of the Company’s stock-based compensation included in net loss: Year Ended December 31, 2015 2014 Employee stock options $ 697,269 $ 840,568 Consultant stock options 257,342 - Restricted stock awards 816,286 846,955 Total $ 1,770,897 $ 1,687,523
Summary of the stock option activity	The following is a summary of the stock option activity for the years ended December 31, 2015 and 2014: Shares Weighted Average Exercise Price Outstanding, December 31, 2013 1,204,297 $ 3.14 Granted 535,000 $ 2.49 Exercised - $ - Forfeited (30,775 ) $ 2.51 Expired (42,576 ) $ 3.64 Outstanding, December 31, 2014 1,665,946 $ 2.93 Granted 1,413,765 $ 1.28 Exercised (241,752 ) $ 0.71 Forfeited (132,731 ) $ 3.08 Expired (492,528 ) $ 3.17 Outstanding, December 31, 2015 2,212,700 $ 2.06
Weighted average assumptions for stock options granted	The fair value of each stock option is estimated on the date of grant using the Black-Scholes-Merton option pricing model with the following weighted average assumptions for stock options granted during the years ended December 31, 2015 and 2014: Year Ended December 31, 2015 2014 Dividend yield 0.0 % 0.0 % Expected volatility 63.8 % 81.1 % Risk-free interest rate 1.64 % 1.77 % Expected lives (years) 5.7 5.8
Information about stock options outstanding	The following table summarizes information about stock options outstanding at December 31, 2015: Options Outstanding Options Exercisable Options Vested or Expected to Vest Balance as of 12/31/2015 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Balance as of 12/31/2015 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Balance as of 12/31/2015 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price 2,212,700 8.26 $ 2.06 1,008,577 7.03 $ 2.47 2,113,395 8.21 $ 2.08
Restricted stock activity	The following is a summary of the restricted stock activity for the years ended December 31, 2015 and 2014: Shares Weighted Average Grant Date Fair Value Unvested, December 31, 2013 350,903 $ 4.26 Granted 185,032 $ 2.09 Vested (248,929 ) $ 3.77 Canceled - $ - Unvested, December 31, 2014 287,006 $ 3.29 Granted 487,500 $ 1.38 Vested (349,506 ) $ 2.36 Canceled - $ - Unvested, December 31, 2015 425,000 $ 1.87

INCOME TAXES (Tables)

INCOME TAXES (Tables)	12 Months Ended
	Dec. 31, 2015
INCOME TAXES [Abstract]
Income tax net (expense) benefit	Income tax net expense Year Ended December 31, 2015 2014 Current: Federal $ - $ - State (12,821 ) (7,749 ) Total (12,821 ) (7,749 ) Deferred: Federal - (3,691,163 ) State - (353,051 ) Total - (4,044,214 ) Income tax net expense $ (12,821 ) $ (4,051,963 )
Significant components of deferred income tax assets	Significant components of the Company’s deferred income tax assets are as follows: December 31, 2015 2014 Reserves and accruals $ 1,578,374 $ 1,472,997 Prepaid expenses (50,966 ) (48,427 ) Federal NOL carryforwards 6,762,537 4,185,179 State NOL carryforwards 583,651 616,655 Hong Kong NOL carryforwards 995,566 995,566 Federal benefit on state taxes under uncertain tax positions 132,385 128,026 Stock-based compensation 481,917 189,045 Investment loss - 9,373 Research tax credit 434,637 434,637 Alternative minimum tax credit 348,264 348,264 Contributions carryforward 33,582 3,929 Depreciation (312,023 ) (418,154 ) Accrued rent 254,404 297,362 Loss on impairment of long-lived assets 52,226 53,533 Valuation allowance (11,294,554 ) (8,267,985 ) Total - - Total deferred income tax assets, net $ - $ -
Schedule of effective income tax rate reconciliation	A reconciliation between expected income taxes, computed at the statutory federal income tax rate of 34% applied to pretax accounting loss, and the income tax net expense included in the consolidated statements of operations for the years ended December 31, 2015 and 2014 is as follows: Year Ended December 31, 2015 2014 Anticipated income tax benefit at statutory rate $ 3,315,420 $ 3,075,321 State income tax benefit, net of federal tax effect 35,814 215,109 Capital loss carryforward expiration (9,227 ) - Income tax effect of uncertain tax positions (8,461 ) (8,080 ) Return to provision adjustments (82,341 ) (2,751 ) Stock-based compensation (215,030 ) (279,985 ) Other changes in deferred income tax assets, net (22,414 ) 25,493 Increase in valuation allowance (3,026,582 ) (7,077,070 ) Income tax net expense $ (12,821 ) $ (4,051,963 )
Summary of gross liability for uncertain tax positions	The following summarizes the activity related to the Company ’ Balance as of January 1, 2014 $ 494,222 Increases related to prior year tax positions 12,241 Balance as of December 31, 2014 506,463 Increases related to prior year tax positions 12,821 Balance as of December 31, 2015 $ 519,284

MAJOR CUSTOMERS AND CONCENTRA30

MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK (Tables)	12 Months Ended
	Dec. 31, 2015
MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK [Abstract]
Summary of customers that represent greater than or equal to 10% of total gross sales	The following is a summary of customers that represent greater than or equal to 10% of total net accounts receivable as of December 31, 2015 and 2014: Year Ended December 31, 2015 2014 Customer A 17 % 28 % Customer B 14 % 10 % Customer C 11 % * Customer D 10 % * *Customers C and D did not have individual balances that represented a significant portion of total net accounts receivable as of December 31, 2014. The following is a summary of customers that represent greater than or equal to 10% of total gross sales: Year Ended December 31, 2015 2014 Customer A 21 % 28 % Customer B -1 % 10 %

DESCRIPTION OF BUSINESS (Detail

DESCRIPTION OF BUSINESS (Details)	Mar. 04, 2016USD ($)
Subsequent Event [Member] | Yanbal USA Inc. [Member]
Subsequent Event [Line Items]
Purchase price for transferred assets	$ 500,000

BASIS OF PRESENTATION AND SIG32

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details)	12 Months Ended
	Dec. 31, 2015USD ($)Subsidiary$ / sharesshares	Dec. 31, 2014USD ($)$ / sharesshares
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract]
Interest bearing amounts on deposit in excess of FDIC insurable limits	$ 4,920,000
Customer payment term for trade receivables, minimum	30 days
Customer payment term for trade receivables, maximum	90 days
Increase in allowance for doubtful accounts	$ 815,000
Allowance for sales returns [Roll Forward]
Balance, beginning of period	910,000	$ 1,186,000
Additions charged to operations	3,651,741	1,942,191
Sales returns	(3,830,741)	(2,218,191)
Balance, end of period	731,000	910,000
Allowance for doubtful accounts receivable [Roll Forward]
Balance, beginning of period	1,074,000	522,000
Additions charged to operations	89,462	734,243
Write-offs, net of recoveries	(26,462)	(182,243)
Balance, end of period	1,137,000	1,074,000
Inventories issued to active production	3,020,000	2,050,000
Sale of slow moving loose jewel inventory of less desirable quality	2,280,000
Lower of cost or market reserve	352,000
Obsolescence reserve for certain fashion finished jewelry inventory	164,000	250,000
Carrying value of inventory reserve for obsolescence of moissanite	225,000	31,000
Scrap reserve	4,000	101,000
Inventory reserves for shrinkage, recuts, and repairs	$ 625,000	552,000
Property, Plant and Equipment [Line Items]
Amortized life of patent	17 years
Increase in depreciation expense		74,000
Maximum period for return of jewels and finished jewelry for credit	30 days
Customer payment period on consignment shipment	60 days
Other sales and marketing expenses	$ (4,000)	321,000
Advertising expense	$ 1,760,000	1,840,000
Number of wholly owned operating subsidiaries | Subsidiary	2
Dividend yield	0.00%
Numerator [Abstract]
Net loss	$ (9,573,059)	$ (13,097,023)
Weighted average common shares outstanding [Abstract]
Basic (in shares) | shares	20,407,764	20,295,618
Stock options (in shares) | shares	0	0
Diluted (in shares) | shares	20,407,764	20,295,618
Net loss per common share [Abstract]
Basic (in dollars per share) | $ / shares	$ (0.47)	$ (0.65)
Diluted (in dollars per share) | $ / shares	$ (0.47)	$ (0.65)
Computer Software [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives	3 years
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Description of useful life, property, plant and equipment	Shorter of the estimated useful life or the lease term
Minimum [Member] | Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives	5 years
Minimum [Member] | Computer Hardware [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives	3 years
Minimum [Member] | Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives	5 years
Maximum [Member] | Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives	12 years
Maximum [Member] | Computer Hardware [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives	5 years
Maximum [Member] | Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives	10 years
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded from the computation of diluted net loss per common share (in shares) | shares	2,210,000	1,670,000
Restricted Shares [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded from the computation of diluted net loss per common share (in shares) | shares	425,000

SEGMENT INFORMATION AND GEOGR33

SEGMENT INFORMATION AND GEOGRAPHIC DATA (Details)	12 Months Ended
	Dec. 31, 2015USD ($)Segment	Dec. 31, 2014USD ($)
SEGMENT INFORMATION AND GEOGRAPHIC DATA [Abstract]
Number of operating segments | Segment	3
Number of reportable segments | Segment	3
Summary information by segment [Abstract]
Net sales	$ 30,767,117	$ 25,640,649
Product line cost of goods sold	20,552,707	18,013,335
Product line gross profit	13,768,506	9,645,638
Operating loss	(9,550,015)	(9,044,224)
Depreciation and amortization	863,353	1,107,955
Total assets	44,140,838	51,426,397
Capital expenditures	428,128	1,095,703
Inventories, net [Abstract]
Raw materials	6,932,139	4,917,399
Work-in-process	6,031,745	6,292,679
Supplies inventories	38,000	51,000
Product Line Cost of Goods Sold [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	16,998,611	15,995,011
Non-Capitalized Manufacturing and Production Control Expenses [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	1,388,567	949,385
Freight Out [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	698,840	284,944
Inventory Valuation allowances [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	436,000	295,000
Other Inventory Adjustments [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	1,030,689	488,995
Loose Jewels [Member]
Summary information by segment [Abstract]
Net sales	15,113,204	12,926,370
Product line gross profit	5,653,980	5,359,541
Inventories, net [Abstract]
Raw materials	6,741,712	4,658,692
Work-in-process	5,516,799	5,752,103
Finished goods	15,877,436	21,495,873
Finished goods on consignment	55,388	46,284
Total	28,191,335	31,952,952
Loose Jewels [Member] | Product Line Cost of Goods Sold [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	9,459,224	7,566,829
Finished Jewelry [Member]
Summary information by segment [Abstract]
Net sales	15,653,913	12,714,279
Product line gross profit	8,114,526	4,286,097
Inventories, net [Abstract]
Raw materials	190,427	258,707
Work-in-process	514,946	540,576
Finished goods	3,193,569	5,557,417
Finished goods on consignment	200,613	578,200
Total	4,099,555	6,934,900
Finished Jewelry [Member] | Product Line Cost of Goods Sold [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	7,539,387	8,428,182
Operating and Reporting Segments [Member] | Wholesale [Member]
Summary information by segment [Abstract]
Net sales	20,265,032	20,776,845
Product line gross profit	7,022,757	6,733,553
Operating loss	(3,736,111)	(4,802,435)
Depreciation and amortization	652,326	887,287
Total assets	43,881,011	51,183,888
Capital expenditures	291,372	1,093,055
Operating and Reporting Segments [Member] | Wholesale [Member] | Product Line Cost of Goods Sold [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	13,242,275	14,043,292
Operating and Reporting Segments [Member] | Wholesale [Member] | Loose Jewels [Member]
Summary information by segment [Abstract]
Net sales	14,581,554	12,324,045
Product line gross profit	5,206,359	4,865,690
Operating and Reporting Segments [Member] | Wholesale [Member] | Loose Jewels [Member] | Product Line Cost of Goods Sold [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	9,375,195	7,458,355
Operating and Reporting Segments [Member] | Wholesale [Member] | Finished Jewelry [Member]
Summary information by segment [Abstract]
Net sales	5,683,478	8,452,800
Product line gross profit	1,816,398	1,867,863
Operating and Reporting Segments [Member] | Wholesale [Member] | Finished Jewelry [Member] | Product Line Cost of Goods Sold [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	3,867,080	6,584,937
Operating and Reporting Segments [Member] | Moissanite.com [Member]
Summary information by segment [Abstract]
Net sales	5,428,260	3,412,663	[1]
Product line gross profit	2,914,612	1,940,756	[1]
Operating loss	(1,328,117)	(1,265,035)	[1]
Depreciation and amortization	106,461	174,562	[1]
Total assets	174,899	128,049	[1]
Capital expenditures	116,080	1,386	[1]
Operating and Reporting Segments [Member] | Moissanite.com [Member] | Product Line Cost of Goods Sold [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	2,513,648	1,471,907	[1]
Operating and Reporting Segments [Member] | Moissanite.com [Member] | Loose Jewels [Member]
Summary information by segment [Abstract]
Net sales	531,695	600,505	[1]
Product line gross profit	447,731	499,654	[1]
Operating and Reporting Segments [Member] | Moissanite.com [Member] | Loose Jewels [Member] | Product Line Cost of Goods Sold [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	83,964	100,851	[1]
Operating and Reporting Segments [Member] | Moissanite.com [Member] | Finished Jewelry [Member]
Summary information by segment [Abstract]
Net sales	4,896,565	2,812,158	[1]
Product line gross profit	2,466,881	1,441,102	[1]
Operating and Reporting Segments [Member] | Moissanite.com [Member] | Finished Jewelry [Member] | Product Line Cost of Goods Sold [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	2,429,684	1,371,056	[1]
Operating and Reporting Segments [Member] | Charles & Colvard Direct [Member]
Summary information by segment [Abstract]
Net sales	5,073,825	1,451,141	[1]
Product line gross profit	3,831,137	971,329	[1]
Operating loss	(4,485,787)	(2,976,754)	[1]
Depreciation and amortization	104,566	46,106	[1]
Total assets	84,928	114,460	[1]
Capital expenditures	20,676	1,262	[1]
Operating and Reporting Segments [Member] | Charles & Colvard Direct [Member] | Product Line Cost of Goods Sold [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	1,242,688	479,812	[1]
Operating and Reporting Segments [Member] | Charles & Colvard Direct [Member] | Loose Jewels [Member]
Summary information by segment [Abstract]
Net sales	(45)	1,820	[1]
Product line gross profit	(110)	(5,803)	[1]
Operating and Reporting Segments [Member] | Charles & Colvard Direct [Member] | Loose Jewels [Member] | Product Line Cost of Goods Sold [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	65	7,623	[1]
Operating and Reporting Segments [Member] | Charles & Colvard Direct [Member] | Finished Jewelry [Member]
Summary information by segment [Abstract]
Net sales	5,073,870	1,449,321	[1]
Product line gross profit	3,831,247	977,132	[1]
Operating and Reporting Segments [Member] | Charles & Colvard Direct [Member] | Finished Jewelry [Member] | Product Line Cost of Goods Sold [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	$ 1,242,623	$ 472,189	[1]
[1]	Direct-to-consumer operations commenced in August 2011.

SEGMENT INFORMATION AND GEOGR34

SEGMENT INFORMATION AND GEOGRAPHIC DATA, Data by Geographic Area (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Net sales [Abstract]
Net sales	$ 30,767,117	$ 25,640,649
Property and Equipment, Net [Member]
Assets by geographical area [Abstract]
Total	1,615,683	1,859,355
Intangible Assets, Net [Member]
Assets by geographical area [Abstract]
Total	71,086	216,947
Reportable Geographical Components [Member] | United States [Member]
Net sales [Abstract]
Net sales	27,297,901	22,101,974
Reportable Geographical Components [Member] | United States [Member] | Property and Equipment, Net [Member]
Assets by geographical area [Abstract]
Total	1,615,683	1,859,355
Reportable Geographical Components [Member] | United States [Member] | Intangible Assets, Net [Member]
Assets by geographical area [Abstract]
Total	15,362	39,050
Reportable Geographical Components [Member] | International [Member]
Net sales [Abstract]
Net sales	3,469,216	3,538,675
Reportable Geographical Components [Member] | International [Member] | Property and Equipment, Net [Member]
Assets by geographical area [Abstract]
Total	0	0
Reportable Geographical Components [Member] | International [Member] | Intangible Assets, Net [Member]
Assets by geographical area [Abstract]
Total	$ 55,724	$ 177,897

INVENTORIES (Details)

INVENTORIES (Details) - USD ($)	Dec. 31, 2015	Dec. 31, 2014
Total inventories, net of reserves [Abstract]
Raw materials	$ 6,932,139	$ 4,917,399
Work-in-process	6,031,745	6,292,679
Finished goods	20,441,535	27,985,067
Finished goods on consignment	293,001	677,484
Less inventory reserves	(1,370,000)	(934,000)
Total	32,328,420	38,938,629
Short-term portion	10,739,798	13,320,639
Long-term portion	21,588,622	25,617,990
Shrinkage reserve for finished goods on consignment	37,000	53,000
Inventory of net loose jewels	28,190,000	31,950,000
Inventory reserve for shrinkage of loose jewels	50,000	17,000
Inventory reserve for shrinkage of loose jewels on consignment	10,000	17,000
Inventory reserve for recuts	449,000	216,000
Sale of slow moving loose jewel inventory of less desirable quality	2,280,000
Lower of cost or market value	352,000
Inventory of net jewelry	4,100,000	6,930,000
Scrap reserve	4,000	101,000
Inventory reserve for shrinkage of finished jewelry	95,000	192,000
Inventory reserve for shrinkage of finished jewelry on consignment	27,000	36,000
Inventory reserve for shrinkage of finished jewelry on repairs	$ 31,000	$ 127,000

PROPERTY AND EQUIPMENT (Details

PROPERTY AND EQUIPMENT (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Property, Plant and Equipment [Line Items]
Total	$ 4,881,469	$ 4,454,245
Less accumulated depreciation	(3,265,786)	(2,594,890)
Property and equipment, net	1,615,683	1,859,355
Depreciation expense	672,000	946,000
Computer Software [Member]
Property, Plant and Equipment [Line Items]
Total	1,771,102	1,622,806
Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Total	922,532	818,362
Computer Hardware [Member]
Property, Plant and Equipment [Line Items]
Total	855,348	750,776
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Total	1,030,423	1,002,357
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Total	$ 302,064	$ 259,944

INTANGIBLE ASSETS (Details)

INTANGIBLE ASSETS (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Intangible assets [Abstract]
Total	$ 1,015,530	$ 969,788
Less accumulated amortization	(944,444)	(752,841)
Intangible assets, net	$ 71,086	216,947
Weighted average amortization period	17 years
Amortization expense	$ 192,000	162,000
Estimated amortization expenses [Abstract]
2,016	63,000
2,017	8,000
Patents [Member]
Intangible assets [Abstract]
Total	$ 958,604	912,862
Weighted average amortization period	4 months 24 days
Trademarks [Member]
Intangible assets [Abstract]
Total	$ 50,208	50,208
Weighted average amortization period	1 year 9 months 18 days
License Rights [Member]
Intangible assets [Abstract]
Total	$ 6,718	$ 6,718
Weighted average amortization period	0 years

COMMITMENTS AND CONTINGENCIES38

COMMITMENTS AND CONTINGENCIES (Details)	Dec. 12, 2014USD ($)Option	Dec. 09, 2013ft²	Dec. 31, 2015USD ($)ft²RentHoliday	Dec. 31, 2014USD ($)	May. 23, 2014USD ($)	Oct. 31, 2013USD ($)
Lease Commitments [Abstract]
Period of lease			7 years
Land subject to leases (in square feet) | ft²		36,350	16,500
Number of rent holidays | RentHoliday			2
Percentage of rent abatement			50.00%
Period for which rent is abated		7 months	12 months
Annual rent escalations			3.00%
Cost to terminate lease						$ 112,000
Number of months included in costs to terminate lease			2 months
Leasehold improvements offered by landlord					$ 550,000
Lease signing and moving incentives offered by landlord					$ 73,000
Future minimum payments under operating lease [Abstract]
2,016			$ 569,138
2,017			584,789
2,018			600,871
2,019			617,395
2,020			634,373
Thereafter			541,957
Total			3,548,523
Rent expense			$ 504,000	$ 373,000
Purchase Commitments [Abstract]
Period of exclusive supply agreement	2 years		10 years
Percentage committed to be purchased	100.00%		50.00%
Number of option to unilaterally extend the term | Option	1
Minimum purchase commitment in initial new order	$ 29,600,000		$ 4,000,000
Maximum purchase commitment in initial new order	$ 31,500,000
Minimum purchase commitment under the amendment			7,640,000
Maximum purchase commitment under amendment			18,560,000
Actual purchases under purchase amendment			$ 6,860,000	$ 5,840,000

LINE OF CREDIT (Details)

LINE OF CREDIT (Details) - USD ($)	Jun. 25, 2014	Sep. 20, 2013	Dec. 31, 2015
PNC Bank [Member] | Line of Credit Note [Member]
Line of Credit Facility [Line Items]
Revolving line of credit		$ 10,000,000
Line of credit maturity date		Jun. 15, 2015
Line of credit, description of variable rate basis		1-month LIBOR
PNC Bank [Member] | Line of Credit Note [Member] | LIBOR [Member]
Line of Credit Facility [Line Items]
Line of credit, spread on variable rate		1.50%
Wells Fargo [Member] | Line of Credit [Member]
Line of Credit Facility [Line Items]
Revolving line of credit	$ 10,000,000
Line of credit maturity date	Jun. 25, 2017
Line of credit, description of variable rate basis			Wells Fargo’s 3-month LIBOR rate
Legal fees	$ 19,000
Line of credit facility, sublimit for letter of credit	$ 1,000,000
Line of credit facility, sublimit for advances			$ 5,000,000
Percentage of advances, guaranteed by bank			90.00%
Maximum advances against inventory			$ 3,000,000
Minimum excess availability of inventory at all times required for advances			$ 1,000,000
Interest rate in event of default in excess of standard rate			3.00%
Prepaid advance fee for reduction in first year after closing			2.00%
Prepaid advance fee for reduction in second year after closing			1.00%
Prepaid advance fee for reduction, thereafter			0.00%
Number of business day within which guaranteed advances to be repaid			2 days
Maximum indebtedness to be maintained in the event of default to avoid triggering of default terms			$ 200,000
Advances against line of credit			$ 0
Wells Fargo [Member] | Line of Credit [Member] | LIBOR [Member]
Line of Credit Facility [Line Items]
Line of credit, spread on variable rate			2.50%

SHAREHOLDERS' EQUITY AND STOC40

SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2015	Dec. 31, 2014
Common Stock [Abstract]
Common stock, shares authorized (in shares)			50,000,000	50,000,000
Common stock, par value (in dollars per share)			$ 0	$ 0
Common stock, shares outstanding (in shares)			21,111,585	20,382,333
Common stock voting rights	common stock are entitled to one vote for each share held
Number of shares authorized to repurchase (in shares)			1,000,000
Extension period authorized under stock repurchase program	12 months
Preferred Stock [Abstract]
Preferred stock, shares authorized (in shares)			10,000,000
Preferred stock, par value (in dollars per share)			$ 0
Preferred stock, shares issued (in shares)			0
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares repurchased (in shares)				0
Components of the Company's stock based compensation included in net income [Abstract]
Total	$ 1,770,897	$ 1,687,523
Weighted average assumptions for stock options [Abstract]
Dividend yield	0.00%
1997 Omnibus Stock Plan [Member]
Equity Compensation Plans [Abstract]
Vesting period	3 years
Share based payment award expiration term	10 years
Stock options outstanding (in shares)	11,776	11,776	540	11,776
Shares [Roll Forward]
Outstanding, beginning balance (in shares)	11,776
Outstanding, ending balance (in shares)	540	11,776
Options Outstanding [Abstract]
Balance as of 12/31/2015 (in shares)	11,776	11,776	540	11,776
1997 Omnibus Stock Plan [Member] | Board of Directors [Member]
Equity Compensation Plans [Abstract]
Vesting period	1 year
1997 Omnibus Stock Plan [Member] | Independent Contractors [Member] | Maximum [Member]
Equity Compensation Plans [Abstract]
Share based payment award expiration term	10 years
2008 Stock Incentive Plan [Member]
Equity Compensation Plans [Abstract]
Share-based payment award, number of shares authorized (in shares)			4,500,000
Vesting period	3 years
Share based payment award expiration term	10 years
Stock options outstanding (in shares)	1,654,170	1,654,170	2,212,160	1,654,170
Shares [Roll Forward]
Outstanding, beginning balance (in shares)	1,654,170
Outstanding, ending balance (in shares)	2,212,160	1,654,170
Options Outstanding [Abstract]
Balance as of 12/31/2015 (in shares)	1,654,170	1,654,170	2,212,160	1,654,170
2008 Stock Incentive Plan [Member] | Board of Directors [Member]
Equity Compensation Plans [Abstract]
Vesting period	1 year
2008 Stock Incentive Plan [Member] | Independent Contractors [Member] | Maximum [Member]
Equity Compensation Plans [Abstract]
Share based payment award expiration term	10 years
Executive Compensation Plan [Member]
Equity Compensation Plans [Abstract]
Vesting period	3 years
Stock Options [Member]
Equity Compensation Plans [Abstract]
Stock options outstanding (in shares)	1,665,946	1,204,297	2,212,700	1,665,946
Components of the Company's stock based compensation included in net income [Abstract]
Allocated share-based compensation expense	$ 697,269	$ 840,568
Stock-based compensation capitalized as a cost of inventory	$ 0	$ 0
Shares [Roll Forward]
Outstanding, beginning balance (in shares)	1,665,946	1,204,297
Granted (in shares)	1,413,765	535,000
Exercised (in shares)	(241,752)	0
Forfeited (in shares)	(132,731)	(30,775)
Expired (in shares)	(492,528)	(42,576)
Outstanding, ending balance (in shares)	2,212,700	1,665,946
Weighted Average Exercise Price [Roll Forward]
Outstanding, beginning balance (in dollars per share)	$ 2.93	$ 3.14
Granted (in dollars per share)	1.28	2.49
Exercised (in dollars per share)	0.71	0
Forfeited (in dollars per share)	3.08	2.51
Expired (in dollars per share)	3.17	3.64
Outstanding, ending balance (in dollars per share)	2.06	2.93
Fair value of stock options (in dollars per share)	$ 0.72	$ 1.67
Fair value of stock options vested	$ 862,000	$ 805,000
Weighted average assumptions for stock options [Abstract]
Dividend yield	0.00%	0.00%
Expected volatility	63.80%	81.10%
Risk-free interest rate	1.64%	1.77%
Expected lives	5 years 8 months 12 days	5 years 9 months 18 days
Options Outstanding [Abstract]
Balance as of 12/31/2015 (in shares)	1,665,946	1,204,297	2,212,700	1,665,946
Weighted average remaining contractual life	8 years 3 months 4 days
Weighted average exercise price (in dollars per share)	$ 2.93	$ 3.14	$ 2.06	$ 2.93
Options Exercisable [Abstract]
Balance as of 12/31/2015 (in shares)			1,008,577
Weighted average remaining contractual life	7 years 11 days
Weighted average exercise price (in dollars per share)			$ 2.47
Options Vested or Expected to Vest [Abstract]
Balance as of 12/31/2015 (in shares)			2,113,395
Weighted average remaining contractual life	8 years 2 months 16 days
Weighted average exercise price (in dollars per share)			$ 2.08
Unrecognized stock-based compensation expense related to unvested awards			$ 891,000
Total compensation cost not yet recognized, period for recognition	20 months
Aggregate intrinsic value of stock options outstanding			13,000
Aggregate intrinsic value of stock options exercisable			13,000
Aggregate intrinsic value of stock options vested and expected to vest			13,000
Aggregate intrinsic value of stock options exercised	$ 167,000	$ 0
Consultant Stock Options [Member]
Components of the Company's stock based compensation included in net income [Abstract]
Allocated share-based compensation expense	257,342	0
Restricted Stock [Member]
Components of the Company's stock based compensation included in net income [Abstract]
Allocated share-based compensation expense	$ 816,286	$ 846,955
Options Vested or Expected to Vest [Abstract]
Unrecognized stock-based compensation expense related to unvested awards			$ 295,000
Total compensation cost not yet recognized, period for recognition	4 months
Shares [Roll Forward]
Unvested, beginning balance (in shares)	287,006	350,903
Granted (in shares)	487,500	185,032
Vested (in shares)	(349,506)	(248,929)
Canceled (in shares)	0	0
Unvested, ending balance (in shares)	425,000	287,006
Weighted Average Grant Date Fair Value [Roll Forward]
Unvested, beginning balance (in dollars per share)	$ 3.29	$ 4.26
Granted (in dollars per share)	1.38	2.09
Vested (in dollars per share)	2.36	3.77
Canceled (in dollars per share)	0	0
Unvested, ending balance (in dollars per share)	$ 1.87	$ 3.29
Restricted Stock [Member] | Maximum [Member]
Equity Compensation Plans [Abstract]
Vesting period	3 years

INCOME TAXES (Details)

INCOME TAXES (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Current [Abstract]
Federal	$ 0	$ 0
State	(12,821)	(7,749)
Total	(12,821)	(7,749)
Deferred [Abstract]
Federal	0	(3,691,163)
State	0	(353,051)
Total	0	(4,044,214)
Income tax net expense	(12,821)	(4,051,963)
Deferred income tax assets [Abstract]
Reserves and accruals	1,578,374	1,472,997
Prepaid expenses	(50,966)	(48,427)
Federal NOL carryforwards	6,762,537	4,185,179
State NOL carryforwards	583,651	616,655
Hong Kong NOL carryforwards	995,566	995,566
Federal benefit on state taxes under uncertain tax positions	132,385	128,026
Stock-based compensation	481,917	189,045
Investment loss	0	9,373
Research tax credit	434,637	434,637
Alternative minimum tax credit	348,264	348,264
Contributions carryforward	33,582	3,929
Depreciation	(312,023)	(418,154)
Accrued rent	254,404	297,362
Loss on impairment of long-lived assets	52,226	53,533
Valuation allowance	(11,294,554)	(8,267,985)
Total	0	0
Total deferred income tax assets, net	$ 0	0
Federal statutory income tax rate	34.00%
Effective income tax rate reconciliation [Abstract]
Anticipated income tax benefit at statutory rate	$ 3,315,420	3,075,321
State income tax benefit, net of federal tax effect	35,814	215,109
Capital loss carryforward expiration	(9,227)	0
Income tax effect of uncertain tax positions	(8,461)	(8,080)
Return to provision adjustments	(82,341)	(2,751)
Stock-based compensation	(215,030)	(279,985)
Other changes in deferred income tax assets, net	(22,414)	25,493
Increase in valuation allowance	(3,026,582)	(7,077,070)
Income tax net expense	(12,821)	(4,051,963)
Federal income tax credits	882,000
Remaining balance of federal income tax expire between 2018 and 2021	533,000
Operating Loss Carryforwards [Line Items]
Valuation allowance	11,294,554	8,267,985
Gross liability for income taxes, uncertain tax positions	519,000
Direct reduction to associated deferred tax asset	98,000
Interest and penalties associated with uncertain tax positions	13,000	12,000
Accrued Income tax expense for estimated tax, penalties, and interest for other uncertain tax positions	$ 152,000	139,000
Period for settlement of uncertain tax positions	12 months
Activities related to gross liability for uncertain tax positions [Roll Forward]
Beginning balance	$ 506,463	494,222
Increases related to prior year tax positions	12,821	12,241
Ending balance	519,284	506,463
Federal [Member]
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	$ 19,890,000
Federal [Member] | Minimum [Member]
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, expiration dates	Dec. 31, 2020
Federal [Member] | Maximum [Member]
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, expiration dates	Dec. 31, 2035
North Carolina [Member]
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	$ 18,050,000
North Carolina [Member] | Minimum [Member]
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, expiration dates	Dec. 31, 2023
North Carolina [Member] | Maximum [Member]
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, expiration dates	Dec. 31, 2030
Other State [Member] | Minimum [Member]
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, expiration dates	Dec. 31, 2016
Other State [Member] | Maximum [Member]
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, expiration dates	Dec. 31, 2035
Hong Kong Tax Code [Member]
Deferred income tax assets [Abstract]
Valuation allowance	$ (996,000)	(996,000)
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	6,030,000
Valuation allowance	$ 996,000	$ 996,000

MAJOR CUSTOMERS AND CONCENTRA42

MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK (Details) - Customer Concentration Risk [Member]	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
Trade Accounts Receivable [Member] | Customer A [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	17.00%	28.00%
Trade Accounts Receivable [Member] | Customer B [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	14.00%	10.00%
Trade Accounts Receivable [Member] | Customer C [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	11.00%		[1]
Trade Accounts Receivable [Member] | Customer D [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	10.00%		[1]
Total Gross Sales [Member] | Customer A [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	21.00%	28.00%
Total Gross Sales [Member] | Customer B [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	(1.00%)	10.00%
[1]	Customers C and D did not have individual balances that represented a significant portion of total net accounts receivable as of December 31, 2014.

EMPLOYEE BENEFIT PLAN (Details)

EMPLOYEE BENEFIT PLAN (Details) - USD ($)	12 Months Ended
	Dec. 31, 2015	Dec. 31, 2014
EMPLOYEE BENEFIT PLAN [Abstract]
Company contribution, cost recognized	$ 120,000	$ 129,000

SUBSEQUENT EVENTS (Details)

SUBSEQUENT EVENTS (Details) - Subsequent Events [Member] - Yanbal USA Inc. [Member]	Mar. 04, 2016USD ($)
Subsequent Event [Line Items]
Inventory credit	$ 250,000
Purchase price of transferred assets	$ 500,000