Charles & Colvard (CTHR) 10-Q 4 Nov 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Oct. 31, 2016
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 Common Stock, Shares Outstanding		21,444,885
Document Fiscal Year Focus	2,016
Document Fiscal Period Focus	Q3
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2016

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 9,678,329	$ 5,274,305
Accounts receivable, net	1,946,026	3,852,651
Inventory, net	10,070,966	10,739,798
Prepaid expenses and other assets	839,100	701,105
Assets related to discontinued operations	0	83,000
Total current assets	22,534,421	20,650,859
Long-term assets:
Inventory, net	17,111,073	21,588,622
Property and equipment, net	1,493,287	1,615,683
Intangible assets, net	5,989	71,086
Other assets	163,664	214,588
Total long-term assets	18,774,013	23,489,979
TOTAL ASSETS	41,308,434	44,140,838
Current liabilities:
Accounts payable	3,604,625	3,323,148
Accrued cooperative advertising	9,000	58,000
Accrued expenses and other liabilities	824,948	891,187
Liabilities related to discontinued operations	2,100	349,000
Total current liabilities	4,440,673	4,621,335
Long-term liabilities:
Accrued expenses and other liabilities	625,391	710,223
Accrued income taxes	430,571	420,503
Total long-term liabilities	1,055,962	1,130,726
Total liabilities	5,496,635	5,752,061
Commitments and contingencies (Note 7)
Shareholders' equity:
Common stock, no par value; 50,000,000 shares authorized; 21,444,885 and 21,111,585 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively	54,243,816	54,240,247
Additional paid-in capital	14,153,203	13,280,920
Accumulated deficit	(32,585,220)	(29,132,390)
Total shareholders' equity	35,811,799	38,388,777
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 41,308,434	$ 44,140,838

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - $ / shares	Sep. 30, 2016	Dec. 31, 2015
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)	21,444,885	21,111,585
Common stock, shares outstanding (in shares)	21,444,885	21,111,585

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) [Abstract]
Net sales	$ 5,212,973	$ 5,100,152	$ 23,133,248	$ 18,299,773
Costs and expenses:
Cost of goods sold	3,221,007	3,349,062	16,278,989	13,870,543
Sales and marketing	1,891,162	1,166,707	5,222,757	4,312,581
General and administrative	1,244,400	1,162,015	4,380,218	4,219,257
Research and development	0	6,352	2,848	15,456
Total costs and expenses	6,356,569	5,684,136	25,884,812	22,417,837
Loss from operations	(1,143,596)	(583,984)	(2,751,564)	(4,118,064)
Other income (expense):
Interest income	0	0	0	11
Interest expense	(36)	(17)	(1,548)	(801)
Loss on abandonment of property and equipment	(473)	0	(116,021)	0
Gain on sale of long-term assets	0	0	0	125
Total other expense, net	(509)	(17)	(117,569)	(665)
Loss before income taxes from continuing operations	(1,144,105)	(584,001)	(2,869,133)	(4,118,729)
Income tax net expense from continuing operations	(3,325)	(3,243)	(10,068)	(9,579)
Net loss from continuing operations	(1,147,430)	(587,244)	(2,879,201)	(4,128,308)
Discontinued operations:
Loss from discontinued operations	(6,949)	(1,378,837)	(586,027)	(3,564,760)
(Loss) gain on sale of assets from discontinued operations	(3,065)	0	12,398	0
Net loss from discontinued operations	(10,014)	(1,378,837)	(573,629)	(3,564,760)
Net loss	$ (1,157,444)	$ (1,966,081)	$ (3,452,830)	$ (7,693,068)
Net loss per common share:
Basic - continuing operations (in dollars per share)	$ (0.06)	$ (0.03)	$ (0.14)	$ (0.20)
Basic - discontinued operations (in dollars per share)	0	(0.07)	(0.03)	(0.18)
Basic - total (in dollars per share)	(0.06)	(0.10)	(0.17)	(0.38)
Diluted - continuing operations (in dollars per share)	(0.06)	(0.03)	(0.14)	(0.20)
Diluted - discontinued operations (in dollars per share)	0	(0.07)	(0.03)	(0.18)
Diluted - total (in dollars per share)	$ (0.06)	$ (0.10)	$ (0.17)	$ (0.38)
Weighted average number of shares used in computing net loss per common share:
Basic (in shares)	20,997,686	20,571,340	20,898,484	20,336,839
Diluted (in shares)	20,997,686	20,571,340	20,898,484	20,336,839

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (2,879,201)	$ (4,128,308)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	445,576	582,291
Stock-based compensation	829,381	1,090,779
Provision for uncollectible accounts	(60,300)	29,000
Provision for sales returns	(430,000)	(505,000)
Provision for inventory reserves	54,000	213,000
Loss on abandonment of property and equipment	116,021	0
Gain on sale of long-term assets	0	(125)
Changes in operating assets and liabilities:
Accounts receivable	2,396,925	3,126,654
Inventory	5,092,381	4,732,476
Prepaid expenses and other assets, net	(87,071)	(424,879)
Accounts payable	281,477	26,869
Accrued cooperative advertising	(49,000)	(192,000)
Accrued income taxes	10,068	9,579
Accrued expenses and other liabilities	(151,071)	186,931
Net cash provided by operating activities of continuing operations	5,569,186	4,747,267
Net cash used in operating activities of discontinued operations	(1,123,381)	(3,074,095)
Net cash provided by operating activities	4,445,805	1,673,172
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(410,306)	(188,410)
Patent, license rights, and trademark costs	(2,446)	(45,742)
Proceeds from sale of long-term assets	0	175
Net cash used in investing activities of continuing operations	(412,752)	(233,977)
Net cash provided by (used in) investing activities of discontinued operations	368,671	(17,041)
Net cash used in investing activities	(44,081)	(251,018)
CASH FLOWS FROM FINANCING ACTIVITIES:
Stock option exercises	2,300	172,766
Net cash provided by financing activities of continuing operations	2,300	172,766
NET INCREASE IN CASH AND CASH EQUIVALENTS	4,404,024	1,594,920
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	5,274,305	4,007,341
CASH AND CASH EQUIVALENTS, END OF PERIOD	9,678,329	5,602,261
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	1,548	801
Cash paid during the period for income taxes	$ 0	$ 0

DESCRIPTION OF BUSINESS

DESCRIPTION OF BUSINESS	9 Months Ended
	Sep. 30, 2016
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, retailers, TV shopping networks, and designers and at retail to end consumers through its wholly owned operating subsidiaries, charlesandcolvard.com, LLC (formerly Moissanite.com, LLC) and Charles & Colvard Direct, LLC (until March 2016), and through third-party marketplaces. As of September 30, 2016, the Company changed the name of its wholly owned subsidiary Moissanite.com, LLC to charlesandcolvard.com, LLC. In February 2016, the Company Lulu Avenue ® Note 12, “Discontinued Operations.”

BASIS OF PRESENTATION AND SIGNI

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Sep. 30, 2016
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 - The condensed consolidated financial statements as of and for the three and nine months ended September 30, 2016 and 2015 included in this Quarterly Report on Form 10-Q are unaudited. The balance sheet as of December 31, 2015 is derived from the audited financial statements as of that date. The accompanying statements should be read in conjunction with the audited financial statements and related notes, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on March 8, 2016 (the “2015 Annual Report”). The accompanying condensed consolidated financial statements as of and for the three and nine months ended September 30, 2016 and 2015 include the accounts of the Company and its wholly owned subsidiaries charlesandcolvard.com, LLC (formerly Moissanite.com, LLC), formed in 2011; Charles & Colvard Direct, LLC, formed in 2011; and Charles & Colvard (HK) Ltd., the Company’s Hong Kong subsidiary that became a dormant entity in the second quarter of 2009 and the operations of which ceased in 2008. All intercompany accounts have been eliminated. Significant Accounting Policies - Use of Estimates - T Reclassifications - 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 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 does not anticipate a material impact 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. 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. In March 2016, the FASB issued updated guidance that changes how companies account for certain aspects of share-based payment awards to employees, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as the classification of related matters in the statement of cash flows. The update is effective for the Company in the first quarter of 2017. The Company is currently evaluating this guidance and the impact it will have 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	9 Months Ended
	Sep. 30, 2016
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. As of September 30, 2016, the Company changed the name of its wholly owned subsidiary Moissanite.com, LLC to charlesandcolvard.com, LLC. Previously, the Company ® T The Company allocates certain general and administrative expenses from its parent entity to its direct-to-consumer distribution segment 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: Three Months Ended September 30, 2016 Wholesale charlesandcolvard.com Total Net sales Loose jewels $ 3,447,266 $ 150,213 $ 3,597,479 Finished jewelry 735,293 880,201 1,615,494 Total $ 4,182,559 $ 1,030,414 $ 5,212,973 Product line cost of goods sold Loose jewels $ 1,782,742 $ 26,237 $ 1,808,979 Finished jewelry 342,820 363,359 706,179 Total $ 2,125,562 $ 389,596 $ 2,515,158 Product line gross profit Loose jewels $ 1,664,524 $ 123,976 $ 1,788,500 Finished jewelry 392,473 516,842 909,315 Total $ 2,056,997 $ 640,818 $ 2,697,815 Operating loss $ (391,513 ) $ (752,083 ) $ (1,143,596 ) Depreciation and amortization $ 100,720 $ 14,709 $ 115,429 Capital expenditures $ 58,695 $ 233,178 $ 291,873 Three Months Ended September 30, 2015 Wholesale charlesandcolvard.com Total Net sales Loose jewels $ 2,734,545 $ 132,809 $ 2,867,354 Finished jewelry 1,167,883 1,064,915 2,232,798 Total $ 3,902,428 $ 1,197,724 $ 5,100,152 Product line cost of goods sold Loose jewels $ 1,468,123 $ 21,874 $ 1,489,997 Finished jewelry 877,869 519,740 1,397,609 Total $ 2,345,992 $ 541,614 $ 2,887,606 Product line gross profit Loose jewels $ 1,266,422 $ 110,935 $ 1,377,357 Finished jewelry 290,014 545,175 835,189 Total $ 1,556,436 $ 656,110 $ 2,212,546 Operating loss $ (271,269 ) $ (312,715 ) $ (583,984 ) Depreciation and amortization $ 166,971 $ 27,776 $ 194,747 Capital expenditures $ 42,677 $ - $ 42,677 Nine Months Ended September 30, 2016 Wholesale charlesandcolvard.com Total Net sales Loose jewels $ 17,798,745 $ 396,625 $ 18,195,370 Finished jewelry 1,816,292 3,121,586 4,937,878 Total $ 19,615,037 $ 3,518,211 $ 23,133,248 Product line cost of goods sold Loose jewels $ 11,941,576 $ 51,286 $ 11,992,862 Finished jewelry 1,362,702 1,304,258 2,666,960 Total $ 13,304,278 $ 1,355,544 $ 14,659,822 Product line gross profit Loose jewels $ 5,857,169 $ 345,339 $ 6,202,508 Finished jewelry 453,590 1,817,328 2,270,918 Total $ 6,310,759 $ 2,162,667 $ 8,473,426 Operating loss $ (1,189,070 ) $ (1,562,494 ) $ (2,751,564 ) Depreciation and amortization $ 400,321 $ 45,255 $ 445,576 Capital expenditures $ 147,246 $ 263,060 $ 410,306 Nine Months Ended September 30, 2015 Wholesale charlesandcolvard.com Total Net sales Loose jewels $ 10,050,497 $ 404,213 $ 10,454,710 Finished jewelry 4,686,747 3,158,316 7,845,063 Total $ 14,737,244 $ 3,562,529 $ 18,299,773 Product line cost of goods sold Loose jewels $ 6,710,697 $ 62,693 $ 6,773,390 Finished jewelry 3,309,852 1,533,759 4,843,611 Total $ 10,020,549 $ 1,596,452 $ 11,617,001 Product line gross profit Loose jewels $ 3,339,800 $ 341,520 $ 3,681,320 Finished jewelry 1,376,895 1,624,557 3,001,452 Total $ 4,716,695 $ 1,966,077 $ 6,682,772 Operating loss $ (3,123,326 ) $ (994,738 ) $ (4,118,064 ) Depreciation and amortization $ 490,821 $ 91,470 $ 582,291 Capital expenditures $ 187,877 $ 533 $ 188,410 September 30, 2016 Wholesale charlesandcolvard.com Total Total assets $ 40,794,260 $ 514,174 $ 41,308,434 December 31, 2015 Wholesale charlesandcolvard.com Total Total assets $ 43,882,939 $ 174,899 $ 44,057,838 A reconciliation of the Company’s product line cost of goods sold to cost of goods sold as reported in the condensed consolidated financial statements is as follows: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Product line cost of goods sold $ 2,515,158 $ 2,887,606 $ 14,659,822 $ 11,617,001 Non-capitalized manufacturing and production control expenses 448,038 386,571 1,190,321 1,034,143 Freight out 105,616 64,887 268,705 212,885 Inventory valuation allowances (1,000 ) (402,000 ) 54,000 213,000 Other inventory adjustments 153,195 411,998 106,141 793,514 Cost of goods sold $ 3,221,007 $ 3,349,062 $ 16,278,989 $ 13,870,543 The Company’s net inventories by product line maintained in the parent entity’s wholesale distribution segment are as follows: September 30, 2016 December 31, 2015 Loose jewels Raw materials $ 4,143,698 $ 6,741,712 Work-in-process 8,716,244 5,516,799 Finished goods 9,283,820 15,877,436 Finished goods on consignment 14,671 55,388 Total $ 22,158,433 $ 28,191,335 Finished jewelry Raw materials $ 369,062 $ 190,427 Work-in-process 651,218 514,946 Finished goods 3,672,144 3,193,569 Finished goods on consignment 291,973 200,613 Total $ 4,984,397 $ 4,099,555 Supplies inventories of approximately $39,000 and $38,000 at September 30, 2016 and December 31, 2015, respectively, included in finished goods inventories in the condensed 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 continuing operating subsidiary carries 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 United States (“U.S.”) retailers. Sales to international end consumers made by the Company’s segment, charlesandcolvard.com LLC, is 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: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Net sales United States $ 4,590,299 $ 4,181,333 $ 20,682,341 $ 16,245,633 International 622,674 918,819 2,450,907 2,054,140 Total $ 5,212,973 $ 5,100,152 $ 23,133,248 $ 18,299,773 September 30, 2016 December 31, 2015 Property and equipment, net United States $ 1,493,287 $ 1,615,683 International - - Total $ 1,493,287 $ 1,615,683 September 30, 2016 December 31, 2015 Intangible assets, net United States $ 5,989 $ 15,362 International - 55,724 Total $ 5,989 $ 71,086

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	9 Months Ended
	Sep. 30, 2016
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 instruments. Assets that are measured at fair value on a non-recurring basis include property and equipment, leasehold improvements, and intangible assets, comprising patents and trademarks. These items are recognized at fair value when they are considered to be impaired.

INVENTORIES

INVENTORIES	9 Months Ended
	Sep. 30, 2016
INVENTORIES [Abstract]
INVENTORIES	5. INVENTORIES The Company’s total inventories, net of reserves, consisted of the following as of September 30, 2016 and December 31, 2015: September 30, 2016 December 31, 2015 Raw materials $ 4,512,760 $ 6,932,139 Work-in-process 9,367,462 6,031,745 Finished goods 14,368,173 20,441,535 Finished goods on consignment 354,644 293,001 Less inventory reserves (1,421,000 ) (1,370,000 ) Total $ 27,182,039 $ 32,328,420 Current portion $ 10,070,966 $ 10,739,798 Long-term portion 17,111,073 21,588,622 Total $ 27,182,039 $ 32,328,420 Inventories are stated at the lower of cost or market on an average cost basis. 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 September 30, 2016 and December 31, 2015, work-in-process inventories issued to active production jobs approximated $5.75 million and $3.02 million, respectively. 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. Presently, 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 had the exclusive right in many other countries into the third quarter of 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 $528,000 and $352,000 as of September 30, 2016 and December 31, 2015, respectively, was required on some of the remaining inventory of these lower quality goods. 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 ® 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 September 30, 2016 and December 31, 2015, including inventory on consignment net of reserves, were $22.16 million and $28.19 million, respectively. The loose jewel inventories at September 30, 2016 and December 31, 2015 include shrinkage reserves of $101,000 and $50,000, respectively, which includes $9,000 and $10,000 of shrinkage reserves on inventory on consignment at September 30, 2016 and December 31, 2015, respectively. Loose jewel inventories at September 30, 2016 and December 31, 2015 also include recut reserves of $409,000 and $449,000, respectively. Total net jewelry inventories at September 30, 2016 and December 31, 2015, including inventory on consignment net of reserves, finished jewelry featuring moissanite manufactured by the Company, and fashion finished jewelry purchased and owned by the Company which was made for sale through Lulu Avenue ® The need for adjustments to inventory reserves is evaluated on a period-by-period basis.

INCOME TAXES

INCOME TAXES	9 Months Ended
	Sep. 30, 2016
INCOME TAXES [Abstract]
INCOME TAXES	6. INCOME TAXES The Company recognized an income tax net expense of approximately $3,000 for each of the three-month periods ended September 30, 2016 and 2015, and $10,000 for each of the nine-month periods ended September 30, 2016 and 2015, for estimated tax, penalties, and interest associated with uncertain tax positions. As of each reporting date, the Company’s management considers new evidence, both positive and negative, that could impact its view with regard to future realization of deferred tax assets.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Sep. 30, 2016
COMMITMENTS AND CONTINGENCIES [Abstract]
COMMITMENTS AND CONTINGENCIES	7. COMMITMENTS AND CONTINGENCIES Lease Commitments On December 9, 2013, the Company entered into a Lease Agreement, as amended on December 23, 2013 and April 15, 2014 (the “Lease Agreement”), for a new corporate headquarters, which occupies approximately 36,350 square feet of office, storage, and light manufacturing space. The Company took possession of the leased property on May 23, 2014 once certain improvements to the leased space were completed, and did not have access to the property before this date. These improvements and other lease signing and moving incentives offered by the landlord totaled approximately $550,000 and $73,000, respectively, which will be amortized over the life of the lease until October 31, 2021. Included in the Lease Agreement is a seven-month rent abatement period effective June 2014 through December 2014. The Company recognizes rent expense on a straight-line basis, giving consideration to the rent holidays and escalations, the lease signing and moving allowance paid to the Company, and the rent abatement. As of September 30, 2016, the Company’s future minimum payments under the operating leases were as follows: 2016 $ 143,889 2017 584,789 2018 600,871 2019 617,395 2020 634,373 Thereafter 541,957 Total $ 3,123,274 Rent expense for the three-month periods ended September 30, 2016 and 2015 was approximately $132,000 and $124,000, respectively. Rent expense for the nine-month periods ended September 30, 2016 and 2015 was approximately $408,000 and $379,000, respectively. Included in total rent expense are approximately $5,000 and $17,000 for the three-month periods ended September 30, 2016 and 2015, respectively, related to discontinued operations. Included in total rent expense are approximately $40,000 and $49,000 for the nine-month periods ended September 30, 2016 and 2015, respectively, related to discontinued operations. Purchase Commitments On December 12, 2014, the Company entered into a new exclusive supply agreement (the “Supply Agreement”) with Cree , Inc. (“Cree”), its SiC raw materials supplier During the nine months ended September 30, 2016 and 2015, the Company purchased approximately $6.01 million and $4.95 million, respectively, of SiC crystals from Cree.

LINE OF CREDIT

LINE OF CREDIT	9 Months Ended
	Sep. 30, 2016
LINE OF CREDIT [Abstract]
LINE OF CREDIT	8. LINE OF CREDIT On June 25, 2014, the Company and its wholly owned subsidiaries, Charles & Colvard Direct, LLC, and Moissanite.com, LLC (now charlesandcolvard.com, LLC) (collectively, the “Borrowers”), obtained a $10,000,000 asset-based revolving credit facility (the “Credit Facility”) from Wells Fargo Bank, National Association (“Wells Fargo”). The Credit Facility may 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 the security interest in such materials pursuant to the 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 as amended (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 September 30, 2016, the Company had not borrowed against the Credit Facility.

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION	9 Months Ended
	Sep. 30, 2016
STOCK-BASED COMPENSATION [Abstract]
STOCK-BASED COMPENSATION	9. STOCK-BASED COMPENSATION The following table summarizes the components of the Company’s stock-based compensation included in net loss: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Employee stock options $ 94,715 $ 207,722 $ 339,441 $ 514,183 Consultant stock options 39,143 46,394 136,253 87,842 Restricted stock awards 100,796 248,827 397,859 674,260 Totals $ 234,654 $ 502,943 $ 873,553 $ 1,276,285 No stock-based compensation was capitalized as a cost of inventory during the three- and nine-month periods ended September 30, 2016 and 2015. Included in total stock-based compensation are approximately $0 and $89,000 for the three-month periods ended September 30, 2016 and 2015, respectively, related to discontinued operations. Included in total stock-based compensation are approximately $44,000 and $185,000 for the nine-month periods ended September 30, 2016 and 2015, respectively, related to discontinued operations. Stock Options - Shares Weighted Average Exercise Price Outstanding, December 31, 2015 2,441,077 $ 2.11 Granted 561,005 $ 1.15 Exercised (2,500 ) $ 0.92 Forfeited (386,247 ) $ 1.40 Expired (382,562 ) $ 2.08 Outstanding, September 30, 2016 2,230,773 $ 2.00 The weighted average grant-date fair value of stock options granted during the nine-month period ended September 30, 2016 was $0.64. The total fair value of stock options that vested during the nine-month period ended September 30, 2016 was approximately $702,000. 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 nine-month period ended September 30, 2016: Dividend yield 0.0 % Expected volatility 62.4 % Risk-free interest rate 1.41 % Expected lives (years) 5.54 Although the Company issued dividends in prior years, a dividend yield of zero was used due to the uncertainty of future dividend payments. 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. . The expected lives of the stock options issued since 2014 represent the estimated period of time until exercise or forfeiture and are based on the simplified method of using the mid-point between the vesting term and the original contractual term. Stock . Expected forfeitures are based on the historical forfeiture rates by employee class. The following table summarizes information about stock options outstanding at September 30, 2016: Options Outstanding Options Exercisable Options Vested or Expected to Vest Balance as of 9/30/2016 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Balance as of 9/30/2016 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Balance as of 9/30/2016 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price 2,230,773 7.39 $ 2.00 1,435,519 6.37 $ 2.37 2,167,552 7.33 $ 2.02 As of September 30, 2016, the unrecognized stock-based compensation expense related to unvested stock options was approximately $448,000, 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 September 30, 2016 were each approximately $35,000. This amount is before applicable income taxes and represents the closing market price of the Company’s common stock at September 30, 2016 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 each of the three- and nine-month periods ended September 30, 2016, the aggregate intrinsic value of stock options exercised was approximately $250. During the three- and nine-month periods ended September 30, 2015, the aggregate intrinsic value of stock options exercised was approximately $0 and $167,000, respectively. Restricted Stock - Shares Weighted Average Grant Date Fair Value Unvested, December 31, 2015 425,000 $ 1.87 Granted 509,250 $ 0.93 Vested (318,269 ) $ 2.01 Canceled (178,450 ) $ 1.29 Unvested, September 30, 2016 437,531 $ 0.91 As of September 30, 2016, the unrecognized stock-based compensation expense related to unvested restricted stock was approximately $197,000, which is expected to be recognized over a weighted average period of approximately five months. Dividends

NET LOSS PER COMMON SHARE

NET LOSS PER COMMON SHARE	9 Months Ended
	Sep. 30, 2016
NET LOSS PER COMMON SHARE [Abstract]
NET LOSS PER COMMON SHARE	10. NET LOSS PER COMMON SHARE Basic net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the periods. Diluted net loss per common share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the periods. Common equivalent shares consist of stock options that are computed using the treasury stock method. Antidilutive stock awards consist of stock options and unvested restricted shares that would have been antidilutive in the application of the treasury stock method in accordance with the “Earnings Per Share” topic of the FASB Accounting Standards Codification. The following table reconciles the differences between the basic and diluted earnings per share presentations: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Numerator: Net loss from continuing operations $ (1,147,430 ) $ (587,244 ) $ (2,879,201 ) $ (4,128,308 ) Net loss from discontinued operations (10,014 ) (1,378,837 ) (573,629 ) (3,564,760 ) Net loss $ (1,157,444 ) $ (1,966,081 ) $ (3,452,830 ) $ (7,693,068 ) Denominator: Weighted average common shares outstanding: Basic 20,997,686 20,571,340 20,898,484 20,336,839 Stock options and restricted stock - - - - Diluted 20,997,686 20,571,340 20,898,484 20,336,839 Net loss per common share: Basic – continuing operations $ (0.06 ) $ (0.03 ) $ (0.14 ) $ (0.20 ) Basic – discontinued operations (0.00 ) (0.07 ) (0.03 ) (0.18 ) Basic – total $ (0.06 ) $ (0.10 ) $ (0.17 ) $ (0.38 ) Diluted – continuing operations $ (0.06 ) $ (0.03 ) $ (0.14 ) $ (0.20 ) Diluted – discontinued operations (0.00 ) (0.07 ) (0.03 ) (0.18 ) Diluted – total $ (0.06 ) $ (0.10 ) $ (0.17 ) $ (0.38 ) For each of the three and nine month periods ended September 30, 2016, stock options to purchase approximately 2.23 million shares 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 each of the corresponding periods ended September 30, 2015, stock options to purchase approximately 1.89 million shares were excluded. For each of the three- and nine-month periods ended September 30, 2016, approximately 438,000 unvested restricted shares were excluded because the inclusion of such amounts would be anti-dilutive to net loss per common share. For each of the corresponding periods ended September 30, 2015, 528,000 unvested restricted shares were excluded.

MAJOR CUSTOMERS AND CONCENTRATI

MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK	9 Months Ended
	Sep. 30, 2016
MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK [Abstract]
MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK	11. MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and trade accounts receivable. At times, cash balances may exceed the Federal Deposit Insurance Corporation (“FDIC”) insurable limits of $250,000 per depositor at each financial institution. Amounts on deposit in excess of FDIC insurable limits at September 30, 2016 and December 31, 2015 approximated $9.15 million and $4.92 million, respectively. 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. At times, a portion of the Company’s accounts receivable will be due from customers that have individual balances of 10% or more of the Company’s total net accounts receivable. The following is a summary of customers that represent 10% or more of total net accounts receivable: September 30, 2016 December 31, 2015 Customer A 21 % ** % Customer B 12 % ** % Customer C * % 17 % Customer D * % 14 % Customer E * % 11 % Customer F * % 10 % * Customers C, D, E, and F did not have individual balances that represented 10% or more of total net accounts receivable as of September 30, 2016. ** Customers A and B did not have individual balances that represented 10% or more of the total net accounts receivable as of December 31, 2015. A significant portion of sales is derived from certain customer relationships. The following is a summary of customers that represent 10% or more of total gross sales from continuing operations: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Customer A 27 % 3 % 17 % 9 % Customer C * % 14 % 29 % 32 % *Customer C did not represent 10% or more of sales for the three- month period ended September 30, 2016.

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS	9 Months Ended
	Sep. 30, 2016
DISCONTINUED OPERATIONS [Abstract]
DISCONTINUED OPERATIONS	12. DISCONTINUED OPERATIONS On March 4, 2016, the Company and Charles & Colvard Direct, LLC (“Direct”) a wholly-owned subsidiary of the Company, entered into an asset purchase agreement (the “Purchase Agreement”) with Yanbal, pursuant to which Yanbal agreed to purchase certain assets of Direct (the “Transferred Assets”). The transactions contemplated by the Purchase Agreement also closed on March 4, 2016 (the “Closing Date”). The Company determined that the sale of these assets represented a strategic shift that will have a major effect on the Company’s operations and financial results. The Company made the decision to divest of these assets after careful analysis of the Company’s core competencies, go-to-market strategies, and intent to advance toward profitability. Pursuant to the terms of the 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 Direct’s current jewelry offered under the “Lulu Avenue” trademarks, (ii) all existing marketing collateral such as packaging and catalogs for Direct’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 Direct and used solely in connection with the operation of Direct’s direct-to-consumer home party business for 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 expired on July 31, 2016. After the Closing Date, the Company and Direct 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 had also agreed to provide to Yanbal certain transition services, which services ended August 31, 2016. The purchase price for the Transferred Assets was $500,000 with selling expenses of approximately $131,000, resulting in a net purchase price of approximately $369,000. The Company recorded a liability associated with $35,000 of expense related to certain style advisor incentives and reduced prepaid expenses by $60,000 related to contracts acquired by Yanbal. The following table presents the major classes of line items constituting assets and liabilities related to discontinued operations: September 30, 2016 December 31, 2015 Prepaid expenses and other assets $ - $ 83,000 Total assets $ - $ 83,000 Accounts payable $ - $ 140,000 Accrued expenses and other liabilities 2,100 209,000 Total liabilities $ 2,100 $ 349,000 The following table presents the major classes of line items constituting pretax loss from discontinued operations: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Net sales $ 29,850 $ 1,417,913 $ 804,585 $ 4,072,228 Costs and expenses: Cost of goods sold 7,188 541,729 276,100 1,325,688 Sales and marketing 29,611 1,842,133 940,592 5,187,493 General and administrative - 412,888 173,909 1,123,807 Interest expense - - 11 - Total costs and expenses 36,799 2,796,750 1,390,612 7,636,988 Loss from discontinued operations (6,949 ) (1,378,837 ) (586,027 ) (3,564,760 ) Other (expense) income: (Loss) gain on sale of long-term assets (3,065 ) - 12,398 - Total other (expense) income, net (3,065 ) - 12,398 - Pretax loss from discontinued operations $ (10,014 ) $ (1,378,837 ) $ (573,629 ) $ (3,564,760 )

BASIS OF PRESENTATION AND SIG18

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 30, 2016
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract]
Basis of Presentation and Principles of Consolidation	Basis of Presentation and Principles of Consolidation - The condensed consolidated financial statements as of and for the three and nine months ended September 30, 2016 and 2015 included in this Quarterly Report on Form 10-Q are unaudited. The balance sheet as of December 31, 2015 is derived from the audited financial statements as of that date. The accompanying statements should be read in conjunction with the audited financial statements and related notes, together with Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on March 8, 2016 (the “2015 Annual Report”). The accompanying condensed consolidated financial statements as of and for the three and nine months ended September 30, 2016 and 2015 include the accounts of the Company and its wholly owned subsidiaries charlesandcolvard.com, LLC (formerly Moissanite.com, LLC), formed in 2011; Charles & Colvard Direct, LLC, formed in 2011; and Charles & Colvard (HK) Ltd., the Company’s Hong Kong subsidiary that became a dormant entity in the second quarter of 2009 and the operations of which ceased in 2008. All intercompany accounts have been eliminated.
Significant Accounting Policies	Significant Accounting Policies -
Use of Estimates	Use of Estimates - T
Reclassifications	Reclassifications -
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 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 does not anticipate a material impact 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. 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. In March 2016, the FASB issued updated guidance that changes how companies account for certain aspects of share-based payment awards to employees, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as the classification of related matters in the statement of cash flows. The update is effective for the Company in the first quarter of 2017. The Company is currently evaluating this guidance and the impact it will have 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 GEOGR19

SEGMENT INFORMATION AND GEOGRAPHIC DATA (Tables)	9 Months Ended
	Sep. 30, 2016
SEGMENT INFORMATION AND GEOGRAPHIC DATA [Abstract]
Summary information by segment	Summary financial information by reportable segment is as follows: Three Months Ended September 30, 2016 Wholesale charlesandcolvard.com Total Net sales Loose jewels $ 3,447,266 $ 150,213 $ 3,597,479 Finished jewelry 735,293 880,201 1,615,494 Total $ 4,182,559 $ 1,030,414 $ 5,212,973 Product line cost of goods sold Loose jewels $ 1,782,742 $ 26,237 $ 1,808,979 Finished jewelry 342,820 363,359 706,179 Total $ 2,125,562 $ 389,596 $ 2,515,158 Product line gross profit Loose jewels $ 1,664,524 $ 123,976 $ 1,788,500 Finished jewelry 392,473 516,842 909,315 Total $ 2,056,997 $ 640,818 $ 2,697,815 Operating loss $ (391,513 ) $ (752,083 ) $ (1,143,596 ) Depreciation and amortization $ 100,720 $ 14,709 $ 115,429 Capital expenditures $ 58,695 $ 233,178 $ 291,873 Three Months Ended September 30, 2015 Wholesale charlesandcolvard.com Total Net sales Loose jewels $ 2,734,545 $ 132,809 $ 2,867,354 Finished jewelry 1,167,883 1,064,915 2,232,798 Total $ 3,902,428 $ 1,197,724 $ 5,100,152 Product line cost of goods sold Loose jewels $ 1,468,123 $ 21,874 $ 1,489,997 Finished jewelry 877,869 519,740 1,397,609 Total $ 2,345,992 $ 541,614 $ 2,887,606 Product line gross profit Loose jewels $ 1,266,422 $ 110,935 $ 1,377,357 Finished jewelry 290,014 545,175 835,189 Total $ 1,556,436 $ 656,110 $ 2,212,546 Operating loss $ (271,269 ) $ (312,715 ) $ (583,984 ) Depreciation and amortization $ 166,971 $ 27,776 $ 194,747 Capital expenditures $ 42,677 $ - $ 42,677 Nine Months Ended September 30, 2016 Wholesale charlesandcolvard.com Total Net sales Loose jewels $ 17,798,745 $ 396,625 $ 18,195,370 Finished jewelry 1,816,292 3,121,586 4,937,878 Total $ 19,615,037 $ 3,518,211 $ 23,133,248 Product line cost of goods sold Loose jewels $ 11,941,576 $ 51,286 $ 11,992,862 Finished jewelry 1,362,702 1,304,258 2,666,960 Total $ 13,304,278 $ 1,355,544 $ 14,659,822 Product line gross profit Loose jewels $ 5,857,169 $ 345,339 $ 6,202,508 Finished jewelry 453,590 1,817,328 2,270,918 Total $ 6,310,759 $ 2,162,667 $ 8,473,426 Operating loss $ (1,189,070 ) $ (1,562,494 ) $ (2,751,564 ) Depreciation and amortization $ 400,321 $ 45,255 $ 445,576 Capital expenditures $ 147,246 $ 263,060 $ 410,306 Nine Months Ended September 30, 2015 Wholesale charlesandcolvard.com Total Net sales Loose jewels $ 10,050,497 $ 404,213 $ 10,454,710 Finished jewelry 4,686,747 3,158,316 7,845,063 Total $ 14,737,244 $ 3,562,529 $ 18,299,773 Product line cost of goods sold Loose jewels $ 6,710,697 $ 62,693 $ 6,773,390 Finished jewelry 3,309,852 1,533,759 4,843,611 Total $ 10,020,549 $ 1,596,452 $ 11,617,001 Product line gross profit Loose jewels $ 3,339,800 $ 341,520 $ 3,681,320 Finished jewelry 1,376,895 1,624,557 3,001,452 Total $ 4,716,695 $ 1,966,077 $ 6,682,772 Operating loss $ (3,123,326 ) $ (994,738 ) $ (4,118,064 ) Depreciation and amortization $ 490,821 $ 91,470 $ 582,291 Capital expenditures $ 187,877 $ 533 $ 188,410 September 30, 2016 Wholesale charlesandcolvard.com Total Total assets $ 40,794,260 $ 514,174 $ 41,308,434 December 31, 2015 Wholesale charlesandcolvard.com Total Total assets $ 43,882,939 $ 174,899 $ 44,057,838
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 condensed consolidated financial statements is as follows: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Product line cost of goods sold $ 2,515,158 $ 2,887,606 $ 14,659,822 $ 11,617,001 Non-capitalized manufacturing and production control expenses 448,038 386,571 1,190,321 1,034,143 Freight out 105,616 64,887 268,705 212,885 Inventory valuation allowances (1,000 ) (402,000 ) 54,000 213,000 Other inventory adjustments 153,195 411,998 106,141 793,514 Cost of goods sold $ 3,221,007 $ 3,349,062 $ 16,278,989 $ 13,870,543
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: September 30, 2016 December 31, 2015 Loose jewels Raw materials $ 4,143,698 $ 6,741,712 Work-in-process 8,716,244 5,516,799 Finished goods 9,283,820 15,877,436 Finished goods on consignment 14,671 55,388 Total $ 22,158,433 $ 28,191,335 Finished jewelry Raw materials $ 369,062 $ 190,427 Work-in-process 651,218 514,946 Finished goods 3,672,144 3,193,569 Finished goods on consignment 291,973 200,613 Total $ 4,984,397 $ 4,099,555
Data by geographic area	The following presents certain data by geographic area: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Net sales United States $ 4,590,299 $ 4,181,333 $ 20,682,341 $ 16,245,633 International 622,674 918,819 2,450,907 2,054,140 Total $ 5,212,973 $ 5,100,152 $ 23,133,248 $ 18,299,773 September 30, 2016 December 31, 2015 Property and equipment, net United States $ 1,493,287 $ 1,615,683 International - - Total $ 1,493,287 $ 1,615,683 September 30, 2016 December 31, 2015 Intangible assets, net United States $ 5,989 $ 15,362 International - 55,724 Total $ 5,989 $ 71,086

INVENTORIES (Tables)

INVENTORIES (Tables)	9 Months Ended
	Sep. 30, 2016
INVENTORIES [Abstract]
Schedule of inventory, net of reserves	The Company’s total inventories, net of reserves, consisted of the following as of September 30, 2016 and December 31, 2015: September 30, 2016 December 31, 2015 Raw materials $ 4,512,760 $ 6,932,139 Work-in-process 9,367,462 6,031,745 Finished goods 14,368,173 20,441,535 Finished goods on consignment 354,644 293,001 Less inventory reserves (1,421,000 ) (1,370,000 ) Total $ 27,182,039 $ 32,328,420 Current portion $ 10,070,966 $ 10,739,798 Long-term portion 17,111,073 21,588,622 Total $ 27,182,039 $ 32,328,420

COMMITMENTS AND CONTINGENCIES (

COMMITMENTS AND CONTINGENCIES (Tables)	9 Months Ended
	Sep. 30, 2016
COMMITMENTS AND CONTINGENCIES [Abstract]
Future minimum payments under operating lease	As of September 30, 2016, the Company’s future minimum payments under the operating leases were as follows: 2016 $ 143,889 2017 584,789 2018 600,871 2019 617,395 2020 634,373 Thereafter 541,957 Total $ 3,123,274

STOCK-BASED COMPENSATION (Table

STOCK-BASED COMPENSATION (Tables)	9 Months Ended
	Sep. 30, 2016
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: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Employee stock options $ 94,715 $ 207,722 $ 339,441 $ 514,183 Consultant stock options 39,143 46,394 136,253 87,842 Restricted stock awards 100,796 248,827 397,859 674,260 Totals $ 234,654 $ 502,943 $ 873,553 $ 1,276,285
Summary of the stock option activity	The following is a summary of the stock option activity for the nine-month period ended September 30, 2016: Shares Weighted Average Exercise Price Outstanding, December 31, 2015 2,441,077 $ 2.11 Granted 561,005 $ 1.15 Exercised (2,500 ) $ 0.92 Forfeited (386,247 ) $ 1.40 Expired (382,562 ) $ 2.08 Outstanding, September 30, 2016 2,230,773 $ 2.00
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 nine-month period ended September 30, 2016: Dividend yield 0.0 % Expected volatility 62.4 % Risk-free interest rate 1.41 % Expected lives (years) 5.54
Information about stock options outstanding	The following table summarizes information about stock options outstanding at September 30, 2016: Options Outstanding Options Exercisable Options Vested or Expected to Vest Balance as of 9/30/2016 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Balance as of 9/30/2016 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Balance as of 9/30/2016 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price 2,230,773 7.39 $ 2.00 1,435,519 6.37 $ 2.37 2,167,552 7.33 $ 2.02
Restricted stock activity	The following is a summary of the restricted stock activity for the nine-month period ended September 30, 2016: Shares Weighted Average Grant Date Fair Value Unvested, December 31, 2015 425,000 $ 1.87 Granted 509,250 $ 0.93 Vested (318,269 ) $ 2.01 Canceled (178,450 ) $ 1.29 Unvested, September 30, 2016 437,531 $ 0.91

NET LOSS PER COMMON SHARE (Tabl

NET LOSS PER COMMON SHARE (Tables)	9 Months Ended
	Sep. 30, 2016
NET LOSS PER COMMON SHARE [Abstract]
Reconciliation of the differences between the basic and fully diluted earnings per share	The following table reconciles the differences between the basic and diluted earnings per share presentations: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Numerator: Net loss from continuing operations $ (1,147,430 ) $ (587,244 ) $ (2,879,201 ) $ (4,128,308 ) Net loss from discontinued operations (10,014 ) (1,378,837 ) (573,629 ) (3,564,760 ) Net loss $ (1,157,444 ) $ (1,966,081 ) $ (3,452,830 ) $ (7,693,068 ) Denominator: Weighted average common shares outstanding: Basic 20,997,686 20,571,340 20,898,484 20,336,839 Stock options and restricted stock - - - - Diluted 20,997,686 20,571,340 20,898,484 20,336,839 Net loss per common share: Basic – continuing operations $ (0.06 ) $ (0.03 ) $ (0.14 ) $ (0.20 ) Basic – discontinued operations (0.00 ) (0.07 ) (0.03 ) (0.18 ) Basic – total $ (0.06 ) $ (0.10 ) $ (0.17 ) $ (0.38 ) Diluted – continuing operations $ (0.06 ) $ (0.03 ) $ (0.14 ) $ (0.20 ) Diluted – discontinued operations (0.00 ) (0.07 ) (0.03 ) (0.18 ) Diluted – total $ (0.06 ) $ (0.10 ) $ (0.17 ) $ (0.38 )

MAJOR CUSTOMERS AND CONCENTRA24

MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK (Tables)	9 Months Ended
	Sep. 30, 2016
MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK [Abstract]
Summary of customers that represent greater than or equal to 10% of total gross sales and receivables	The following is a summary of customers that represent 10% or more of total net accounts receivable: September 30, 2016 December 31, 2015 Customer A 21 % ** % Customer B 12 % ** % Customer C * % 17 % Customer D * % 14 % Customer E * % 11 % Customer F * % 10 % * Customers C, D, E, and F did not have individual balances that represented 10% or more of total net accounts receivable as of September 30, 2016. ** Customers A and B did not have individual balances that represented 10% or more of the total net accounts receivable as of December 31, 2015. A significant portion of sales is derived from certain customer relationships. The following is a summary of customers that represent 10% or more of total gross sales from continuing operations: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Customer A 27 % 3 % 17 % 9 % Customer C * % 14 % 29 % 32 % *Customer C did not represent 10% or more of sales for the three- month period ended September 30, 2016.

DISCONTINUED OPERATIONS (Tables

DISCONTINUED OPERATIONS (Tables)	9 Months Ended
	Sep. 30, 2016
DISCONTINUED OPERATIONS [Abstract]
Summary of discontinued operations	The following table presents the major classes of line items constituting assets and liabilities related to discontinued operations: September 30, 2016 December 31, 2015 Prepaid expenses and other assets $ - $ 83,000 Total assets $ - $ 83,000 Accounts payable $ - $ 140,000 Accrued expenses and other liabilities 2,100 209,000 Total liabilities $ 2,100 $ 349,000 The following table presents the major classes of line items constituting pretax loss from discontinued operations: Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 Net sales $ 29,850 $ 1,417,913 $ 804,585 $ 4,072,228 Costs and expenses: Cost of goods sold 7,188 541,729 276,100 1,325,688 Sales and marketing 29,611 1,842,133 940,592 5,187,493 General and administrative - 412,888 173,909 1,123,807 Interest expense - - 11 - Total costs and expenses 36,799 2,796,750 1,390,612 7,636,988 Loss from discontinued operations (6,949 ) (1,378,837 ) (586,027 ) (3,564,760 ) Other (expense) income: (Loss) gain on sale of long-term assets (3,065 ) - 12,398 - Total other (expense) income, net (3,065 ) - 12,398 - Pretax loss from discontinued operations $ (10,014 ) $ (1,378,837 ) $ (573,629 ) $ (3,564,760 )

DESCRIPTION OF BUSINESS (Detail

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

SEGMENT INFORMATION AND GEOGR27

SEGMENT INFORMATION AND GEOGRAPHIC DATA (Details)	2 Months Ended	3 Months Ended		9 Months Ended
	Mar. 03, 2016Segment	Sep. 30, 2016USD ($)	Sep. 30, 2015USD ($)	Sep. 30, 2016USD ($)Segment	Sep. 30, 2015USD ($)	Dec. 31, 2015USD ($)
SEGMENT INFORMATION AND GEOGRAPHIC DATA [Abstract]
Number of operating segments | Segment	3			2
Number of reportable segments | Segment	3			2
Summary information by segment [Abstract]
Net sales		$ 5,212,973	$ 5,100,152	$ 23,133,248	$ 18,299,773
Operating loss		(1,143,596)	(583,984)	(2,751,564)	(4,118,064)
Depreciation and amortization				445,576	582,291
Capital expenditures				410,306	188,410
Total assets		41,308,434		41,308,434		$ 44,140,838
Cost of goods sold		3,221,007	3,349,062	16,278,989	13,870,543
Inventories, net [Abstract]
Raw materials		4,512,760		4,512,760		6,932,139
Work-in-process		9,367,462		9,367,462		6,031,745
Supplies inventories		39,000		39,000		38,000
Continuing Operations [Member]
Summary information by segment [Abstract]
Net sales		5,212,973	5,100,152	23,133,248	18,299,773
Product line cost of goods sold		2,515,158	2,887,606	14,659,822	11,617,001
Product line gross profit		2,697,815	2,212,546	8,473,426	6,682,772
Operating loss		(1,143,596)	(583,984)	(2,751,564)	(4,118,064)
Depreciation and amortization		115,429	194,747	445,576	582,291
Capital expenditures		291,873	42,677	410,306	188,410
Total assets		41,308,434		41,308,434		44,057,838
Cost of goods sold		3,221,007	3,349,062	16,278,989	13,870,543
Continuing Operations [Member] | Loose Jewels [Member]
Summary information by segment [Abstract]
Net sales		3,597,479	2,867,354	18,195,370	10,454,710
Product line cost of goods sold		1,808,979	1,489,997	11,992,862	6,773,390
Product line gross profit		1,788,500	1,377,357	6,202,508	3,681,320
Inventories, net [Abstract]
Raw materials		4,143,698		4,143,698		6,741,712
Work-in-process		8,716,244		8,716,244		5,516,799
Finished goods		9,283,820		9,283,820		15,877,436
Finished goods on consignment		14,671		14,671		55,388
Total		22,158,433		22,158,433		28,191,335
Continuing Operations [Member] | Finished Jewelry [Member]
Summary information by segment [Abstract]
Net sales		1,615,494	2,232,798	4,937,878	7,845,063
Product line cost of goods sold		706,179	1,397,609	2,666,960	4,843,611
Product line gross profit		909,315	835,189	2,270,918	3,001,452
Inventories, net [Abstract]
Raw materials		369,062		369,062		190,427
Work-in-process		651,218		651,218		514,946
Finished goods		3,672,144		3,672,144		3,193,569
Finished goods on consignment		291,973		291,973		200,613
Total		4,984,397		4,984,397		4,099,555
Operating and Reporting Segments [Member] | Continuing Operations [Member] | Wholesale [Member]
Summary information by segment [Abstract]
Net sales		4,182,559	3,902,428	19,615,037	14,737,244
Product line cost of goods sold		2,125,562	2,345,992	13,304,278	10,020,549
Product line gross profit		2,056,997	1,556,436	6,310,759	4,716,695
Operating loss		(391,513)	(271,269)	(1,189,070)	(3,123,326)
Depreciation and amortization		100,720	166,971	400,321	490,821
Capital expenditures		58,695	42,677	147,246	187,877
Total assets		40,794,260		40,794,260		43,882,939
Operating and Reporting Segments [Member] | Continuing Operations [Member] | Wholesale [Member] | Loose Jewels [Member]
Summary information by segment [Abstract]
Net sales		3,447,266	2,734,545	17,798,745	10,050,497
Product line cost of goods sold		1,782,742	1,468,123	11,941,576	6,710,697
Product line gross profit		1,664,524	1,266,422	5,857,169	3,339,800
Operating and Reporting Segments [Member] | Continuing Operations [Member] | Wholesale [Member] | Finished Jewelry [Member]
Summary information by segment [Abstract]
Net sales		735,293	1,167,883	1,816,292	4,686,747
Product line cost of goods sold		342,820	877,869	1,362,702	3,309,852
Product line gross profit		392,473	290,014	453,590	1,376,895
Operating and Reporting Segments [Member] | Continuing Operations [Member] | charlesandcolvard.com [Member]
Summary information by segment [Abstract]
Net sales		1,030,414	1,197,724	3,518,211	3,562,529
Product line cost of goods sold		389,596	541,614	1,355,544	1,596,452
Product line gross profit		640,818	656,110	2,162,667	1,966,077
Operating loss		(752,083)	(312,715)	(1,562,494)	(994,738)
Depreciation and amortization		14,709	27,776	45,255	91,470
Capital expenditures		233,178	0	263,060	533
Total assets		514,174		514,174		$ 174,899
Operating and Reporting Segments [Member] | Continuing Operations [Member] | charlesandcolvard.com [Member] | Loose Jewels [Member]
Summary information by segment [Abstract]
Net sales		150,213	132,809	396,625	404,213
Product line cost of goods sold		26,237	21,874	51,286	62,693
Product line gross profit		123,976	110,935	345,339	341,520
Operating and Reporting Segments [Member] | Continuing Operations [Member] | charlesandcolvard.com [Member] | Finished Jewelry [Member]
Summary information by segment [Abstract]
Net sales		880,201	1,064,915	3,121,586	3,158,316
Product line cost of goods sold		363,359	519,740	1,304,258	1,533,759
Product line gross profit		516,842	545,175	1,817,328	1,624,557
Segment Reconciling Items [Member] | Continuing Operations [Member] | Product Line Cost of Goods Sold [Member]
Summary information by segment [Abstract]
Product line cost of goods sold		2,515,158	2,887,606	14,659,822	11,617,001
Segment Reconciling Items [Member] | Continuing Operations [Member] | Non-Capitalized Manufacturing and Production Control Expenses [Member]
Summary information by segment [Abstract]
Product line cost of goods sold		448,038	386,571	1,190,321	1,034,143
Segment Reconciling Items [Member] | Continuing Operations [Member] | Freight Out [Member]
Summary information by segment [Abstract]
Product line cost of goods sold		105,616	64,887	268,705	212,885
Segment Reconciling Items [Member] | Continuing Operations [Member] | Inventory Valuation allowances [Member]
Summary information by segment [Abstract]
Product line cost of goods sold		(1,000)	(402,000)	54,000	213,000
Segment Reconciling Items [Member] | Continuing Operations [Member] | Other Inventory Adjustments [Member]
Summary information by segment [Abstract]
Product line cost of goods sold		$ 153,195	$ 411,998	$ 106,141	$ 793,514

SEGMENT INFORMATION AND GEOGR28

SEGMENT INFORMATION AND GEOGRAPHIC DATA, Data by Geographic Area (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Net sales [Abstract]
Net sales	$ 5,212,973	$ 5,100,152	$ 23,133,248	$ 18,299,773
Continuing Operations [Member]
Net sales [Abstract]
Net sales	5,212,973	5,100,152	23,133,248	18,299,773
Continuing Operations [Member] | Property and Equipment, Net [Member]
Assets by geographical area [Abstract]
Total	1,493,287		1,493,287		$ 1,615,683
Continuing Operations [Member] | Intangible Assets, Net [Member]
Assets by geographical area [Abstract]
Total	5,989		5,989		71,086
Reportable Geographical Components [Member] | Continuing Operations [Member] | United States [Member]
Net sales [Abstract]
Net sales	4,590,299	4,181,333	20,682,341	16,245,633
Reportable Geographical Components [Member] | Continuing Operations [Member] | United States [Member] | Property and Equipment, Net [Member]
Assets by geographical area [Abstract]
Total	1,493,287		1,493,287		1,615,683
Reportable Geographical Components [Member] | Continuing Operations [Member] | United States [Member] | Intangible Assets, Net [Member]
Assets by geographical area [Abstract]
Total	5,989		5,989		15,362
Reportable Geographical Components [Member] | Continuing Operations [Member] | International [Member]
Net sales [Abstract]
Net sales	622,674	$ 918,819	2,450,907	$ 2,054,140
Reportable Geographical Components [Member] | Continuing Operations [Member] | International [Member] | Property and Equipment, Net [Member]
Assets by geographical area [Abstract]
Total	0		0		0
Reportable Geographical Components [Member] | Continuing Operations [Member] | International [Member] | Intangible Assets, Net [Member]
Assets by geographical area [Abstract]
Total	$ 0		$ 0		$ 55,724

INVENTORIES (Details)

INVENTORIES (Details) - USD ($)	9 Months Ended
	Sep. 30, 2016	Dec. 31, 2015
Total inventories, net of reserves [Abstract]
Raw materials	$ 4,512,760	$ 6,932,139
Work-in-process	9,367,462	6,031,745
Finished goods	14,368,173	20,441,535
Finished goods on consignment	354,644	293,001
Less inventory reserves	(1,421,000)	(1,370,000)
Total	27,182,039	32,328,420
Current portion	10,070,966	10,739,798
Long-term portion	$ 17,111,073	21,588,622
Period considered for classification of long term inventory	12 months
Work-in-process inventories issued to active production jobs	$ 5,750,000	3,020,000
Sale of slow moving loose jewel inventory of less desirable quality		2,280,000
Lower of cost or market reserve	528,000	352,000
Inventory reserve for obsolescence	232,000	164,000
Carrying value of inventory reserve for obsolescence of moissanite	60,000	225,000
Shrinkage reserve for finished goods on consignment	49,000	37,000
Inventory of net loose jewels	22,160,000	28,190,000
Inventory reserve for shrinkage of loose jewels	101,000	50,000
Inventory reserve for shrinkage of loose jewels on consignment	9,000	10,000
Inventory reserve for recut	409,000	449,000
Inventory of net jewelry	4,980,000	4,100,000
Inventory reserve for shrinkage of finished jewelry	79,000	95,000
Inventory reserve for shrinkage of finished jewelry on consignment	40,000	27,000
Inventory reserve for shrinkage of finished jewelry on repairs	$ 12,000	$ 31,000

INCOME TAXES (Details)

INCOME TAXES (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
INCOME TAXES [Abstract]
Income tax expense for estimated tax, penalties, and interest for other uncertain tax positions	$ 3,000	$ 3,000	$ 10,000	$ 10,000
Income tax expense (benefit)	$ (3,325)	$ (3,243)	$ (10,068)	$ (9,579)

COMMITMENTS AND CONTINGENCIES31

COMMITMENTS AND CONTINGENCIES (Details)	Dec. 09, 2013	Sep. 30, 2016USD ($)ft²	Sep. 30, 2015USD ($)	Sep. 30, 2016USD ($)ft²Option	Sep. 30, 2015USD ($)	May 23, 2014USD ($)
Lease Commitments [Abstract]
Land subject to leases | ft²		36,350		36,350
Leasehold improvements offered by landlord						$ 550,000
Lease signing and moving incentives offered by landlord						$ 73,000
Period for which rent is abated	7 months
Future minimum payments under operating lease [Abstract]
2,016		$ 143,889		$ 143,889
2,017		584,789		584,789
2,018		600,871		600,871
2,019		617,395		617,395
2,020		634,373		634,373
Thereafter		541,957		541,957
Total		3,123,274		3,123,274
Rent expense		132,000	$ 124,000	408,000	$ 379,000
Rent expense related to discontinued operation		$ 5,000	$ 17,000	$ 40,000	49,000
Purchase Commitments [Line Items]
Period of exclusive supply agreement				2 years
Percentage committed to be purchased				100.00%
Number of option to unilaterally extend the term | Option				1
Actual purchases under purchase amendment				$ 6,010,000	$ 4,950,000
Minimum [Member]
Purchase Commitments [Line Items]
Purchase commitment in initial new order				29,600,000
Remaining purchase commitment				16,740,000
Maximum [Member]
Purchase Commitments [Line Items]
Purchase commitment in initial new order				31,500,000
Remaining purchase commitment				$ 18,640,000

LINE OF CREDIT (Details)

LINE OF CREDIT (Details) - Wells Fargo [Member] - Line of Credit [Member]	9 Months Ended
	Sep. 30, 2016USD ($)
Line of Credit Facility [Line Items]
Revolving line of credit	$ 10,000,000
Line of credit facility, sublimit for letter of credit	$ 1,000,000
Line of credit maturity date	Jun. 25, 2017
Line of credit facility, sublimit for advances	$ 5,000,000
Percentage of advances, guaranteed by bank	90.00%
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
Advances against line of credit	$ 0
Maximum [Member]
Line of Credit Facility [Line Items]
Advances against inventory	3,000,000
Indebtedness to be maintained in the event of default to avoid triggering of default terms	200,000
Minimum [Member]
Line of Credit Facility [Line Items]
Excess availability of inventory at all times required for advances	$ 1,000,000
LIBOR [Member]
Line of Credit Facility [Line Items]
Line of credit, spread on variable rate	2.50%
Line of credit, description of variable rate basis	Wells Fargo’s 3-month LIBOR rate

STOCK-BASED COMPENSATION (Detai

STOCK-BASED COMPENSATION (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016
Components of the Company's stock based compensation included in net income [Abstract]
Totals	$ 234,654	$ 502,943	$ 873,553	$ 1,276,285
Employee Stock Options [Member]
Components of the Company's stock based compensation included in net income [Abstract]
Allocated share-based compensation expense	$ 94,715	207,722	$ 339,441	514,183
Stock Option Activity [Roll Forward]
Outstanding, beginning balance (in shares)			2,441,077
Granted (in shares)			561,005
Exercised (in shares)			(2,500)
Forfeited (in shares)			(386,247)
Expired (in shares)			(382,562)
Outstanding, ending balance (in shares)	2,230,773		2,230,773
Weighted Average Exercise Price [Roll Forward]
Outstanding, beginning balance (in dollars per share)			$ 2.11
Granted (in dollars per share)			1.15
Exercised (in dollars per share)			0.92
Forfeited (in dollars per share)			1.40
Expired (in dollars per share)			2.08
Outstanding, ending balance (in dollars per share)	$ 2		$ 2
Weighted average assumptions for stock options [Abstract]
Dividend yield			0.00%
Expected volatility			62.40%
Risk-free interest rate			1.41%
Expected lives			5 years 6 months 14 days
Options Outstanding [Abstract]
Balance as of end of period (in shares)	2,230,773		2,441,077		2,230,773
Weighted average remaining contractual life			7 years 4 months 20 days
Weighted average exercise price (in dollars per share)	$ 2		$ 2.11		$ 2
Options Exercisable [Abstract]
Balance as of end of period (in shares)					1,435,519
Weighted average remaining contractual life			6 years 4 months 13 days
Weighted average exercise price (in dollars per share)					$ 2.37
Options Vested or Expected to Vest [Abstract]
Balance as of end of period (in shares)					2,167,552
Weighted average remaining contractual life			7 years 3 months 29 days
Weighted average exercise price (in dollars per share)					$ 2.02
Additional Disclosures [Abstract]
Stock-based compensation capitalized as a cost of inventory	$ 0	0	$ 0	0
Fair value of stock options (in dollars per share)			$ 0.64
Fair value of stock options vested			$ 702,000
Unrecognized stock-based compensation expense related to unvested awards					$ 448,000
Total compensation cost not yet recognized, period for recognition			20 months
Aggregate intrinsic value of stock options outstanding					35,000
Aggregate intrinsic value of stock options exercisable					35,000
Aggregate intrinsic value of stock options vested or expected to vest					35,000
Aggregate intrinsic value of stock options exercised	250	0	$ 250	167,000
Employee Stock Options [Member] | Discontinued Operations [Member]
Components of the Company's stock based compensation included in net income [Abstract]
Allocated share-based compensation expense	0	89,000	44,000	185,000
Consultant Stock Options [Member]
Components of the Company's stock based compensation included in net income [Abstract]
Allocated share-based compensation expense	39,143	46,394	136,253	87,842
Restricted Stock Awards [Member]
Components of the Company's stock based compensation included in net income [Abstract]
Allocated share-based compensation expense	$ 100,796	$ 248,827	$ 397,859	$ 674,260
Additional Disclosures [Abstract]
Unrecognized stock-based compensation expense related to unvested awards					$ 197,000
Total compensation cost not yet recognized, period for recognition			5 months
Restricted Stock Activity [Roll Forward]
Unvested, beginning balance (in shares)			425,000
Granted (in shares)			509,250
Vested (in shares)			(318,269)
Canceled (in shares)			(178,450)
Unvested, ending balance (in shares)	437,531		437,531
Weighted Average Grant Date Fair Value [Roll Forward]
Unvested, beginning balance (in dollars per share)			$ 1.87
Granted (in dollars per share)			0.93
Vested (in dollars per share)			2.01
Canceled (in dollars per share)			1.29
Unvested, ending balance (in dollars per share)	$ 0.91		$ 0.91

NET LOSS PER COMMON SHARE (Deta

NET LOSS PER COMMON SHARE (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Numerator [Abstract]
Net loss from continuing operations	$ (1,147,430)	$ (587,244)	$ (2,879,201)	$ (4,128,308)
Net loss from discontinued operations	(10,014)	(1,378,837)	(573,629)	(3,564,760)
Net loss	$ (1,157,444)	$ (1,966,081)	$ (3,452,830)	$ (7,693,068)
Weighted average common shares outstanding [Abstract]
Basic (in shares)	20,997,686	20,571,340	20,898,484	20,336,839
Stock options and restricted stock (in shares)	0	0	0	0
Diluted (in shares)	20,997,686	20,571,340	20,898,484	20,336,839
Net loss per common share [Abstract]
Basic - continuing operations (in dollars per share)	$ (0.06)	$ (0.03)	$ (0.14)	$ (0.20)
Basic - discontinued operations (in dollars per share)	0	(0.07)	(0.03)	(0.18)
Basic - total (in dollars per share)	(0.06)	(0.10)	(0.17)	(0.38)
Diluted - continuing operations (in dollars per share)	(0.06)	(0.03)	(0.14)	(0.20)
Diluted - discontinued operations (in dollars per share)	0	(0.07)	(0.03)	(0.18)
Diluted - total (in dollars per share)	$ (0.06)	$ (0.10)	$ (0.17)	$ (0.38)
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Stock options to purchase shares and non vested restricted shares (in shares)	2,230,000	1,890,000	2,230,000	1,890,000
Restricted Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Stock options to purchase shares and non vested restricted shares (in shares)	438,000	528,000	438,000	52,800

MAJOR CUSTOMERS AND CONCENTRA35

MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK (Details) - USD ($)	3 Months Ended			9 Months Ended			12 Months Ended
	Sep. 30, 2016		Sep. 30, 2015	Sep. 30, 2016		Sep. 30, 2015	Dec. 31, 2015
Concentration Risk [Line Items]
Insurance coverage per depositor at each financial institution				$ 250,000
Interest-bearing amounts on deposit in excess of FDIC insurable limits	$ 9,150,000			$ 9,150,000			$ 4,920,000
Write-off of accounts receivable related to customer	$ 815,000
Minimum [Member]
Concentration Risk [Line Items]
Period of customer payments on trade receivables				30 days
Maximum [Member]
Concentration Risk [Line Items]
Period of customer payments on trade receivables				90 days
Trade Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer A [Member]
Concentration Risk [Line Items]
Concentration risk, percentage				21.00%				[1]
Trade Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer B [Member]
Concentration Risk [Line Items]
Concentration risk, percentage				12.00%				[1]
Trade Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer C [Member]
Concentration Risk [Line Items]
Concentration risk, percentage					[2]		17.00%
Trade Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer D [Member]
Concentration Risk [Line Items]
Concentration risk, percentage					[2]		14.00%
Trade Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer E [Member]
Concentration Risk [Line Items]
Concentration risk, percentage					[2]		11.00%
Trade Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer F [Member]
Concentration Risk [Line Items]
Concentration risk, percentage					[2]		10.00%
Total Gross Sales [Member] | Customer Concentration Risk [Member] | Customer A [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	27.00%		3.00%	17.00%		9.00%
Total Gross Sales [Member] | Customer Concentration Risk [Member] | Customer C [Member]
Concentration Risk [Line Items]
Concentration risk, percentage		[3]	14.00%	29.00%		32.00%
[1]	Customers A and B did not have individual balances that represented 10% or more of the total net accounts receivable as of December 31, 2015.
[2]	Customers C, D, E and F did not have individual balances that represented 10% or more of total net accounts receivable as of September 30, 2016.
[3]	Customer C did not represent 10% or more of sales for the three- month period ended September 30, 2016.

DISCONTINUED OPERATIONS (Detail

DISCONTINUED OPERATIONS (Details) - USD ($)	Mar. 04, 2016	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Inventory credit		$ 232,000		$ 232,000		$ 164,000
Assets Related to Discontinued Operations [Abstract]
Total assets		0		0		83,000
Total liabilities		2,100		2,100		349,000
Other (expense) income [Abstract]
(Loss) gain on sale of long-term assets		(3,065)	$ 0	12,398	$ 0
Pretax loss from discontinued operations		(6,949)	(1,378,837)	(586,027)	(3,564,760)
Yanbal USA Inc. [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Inventory credit	$ 250,000
Discontinued operations, purchase price for transferred assets, gross	500,000
Discontinued operations, purchase agreement selling expenses	131,000
Discontinued operations, purchase price for transferred assets, net	369,000
Discontinued operations, expense related to certain style advisor incentives	35,000
Discontinued operations, reduction in prepaid expenses	$ 60,000
Assets Related to Discontinued Operations [Abstract]
Prepaid expenses and other assets		0		0		83,000
Total assets		0		0		83,000
Accounts payable		0		0		140,000
Accrued expenses and other liabilities		2,100		2,100		209,000
Total liabilities		2,100		2,100		$ 349,000
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract]
Net sales		29,850	1,417,913	804,585	4,072,228
Costs and expenses [Abstract]
Cost of goods sold		7,188	541,729	276,100	1,325,688
Sales and marketing		29,611	1,842,133	940,592	5,187,493
General and administrative		0	412,888	173,909	1,123,807
Interest expense		0	0	11	0
Total costs and expenses		36,799	2,796,750	1,390,612	7,636,988
Loss from discontinued operations		(6,949)	(1,378,837)	(586,027)	(3,564,760)
Other (expense) income [Abstract]
(Loss) gain on sale of long-term assets		(3,065)	0	12,398	0
Total other (expense) income, net		(3,065)	0	12,398	0
Pretax loss from discontinued operations		$ (10,014)	$ (1,378,837)	$ (573,629)	$ (3,564,760)