Charles & Colvard (CTHR) 10-Q9 May 182018 Q1 Quarterly reportFinancial data

Company Profile

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2018	May 03, 2018
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		21,575,673
Document Fiscal Year Focus	2,018
Document Fiscal Period Focus	Q1
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2018

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 4,494,729	$ 4,594,007
Accounts receivable, net	2,536,377	3,377,451
Inventory, net	10,932,050	11,208,658
Prepaid expenses and other assets	771,034	969,857
Total current assets	18,734,190	20,149,973
Long-term assets:
Inventory, net	20,010,266	19,764,959
Property and equipment, net	1,189,871	1,242,200
Intangible assets, net	15,367	8,597
Other assets	63,626	64,978
Total long-term assets	21,279,130	21,080,734
TOTAL ASSETS	40,013,320	41,230,707
Current liabilities:
Accounts payable	3,971,232	4,466,163
Accrued expenses and other liabilities	668,614	980,800
Total current liabilities	4,639,846	5,446,963
Long-term liabilities:
Deferred rent	428,985	463,526
Accrued income taxes	466,359	461,592
Total long-term liabilities	895,344	925,118
Total liabilities	5,535,190	6,372,081
Commitments and contingencies (Note 8)
Shareholders' equity:
Common stock, no par value; 50,000,000 shares authorized; 21,575,673 and 21,580,102 shares issued and outstanding at March 31, 2018 and December 31, 2017, respectively	54,243,816	54,243,816
Additional paid-in capital	14,923,996	14,726,438
Accumulated deficit	(34,689,682)	(34,111,628)
Total shareholders' equity	34,478,130	34,858,626
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 40,013,320	$ 41,230,707

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - $ / shares	Mar. 31, 2018	Dec. 31, 2017
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)	21,575,673	21,580,102
Common stock, shares outstanding (in shares)	21,575,673	21,580,102

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) [Abstract]
Net sales	$ 6,762,750	$ 5,645,382
Costs and expenses:
Cost of goods sold	4,115,548	3,220,615
Sales and marketing	1,865,940	1,915,335
General and administrative	1,354,410	1,054,171
Research and development	0	819
Total costs and expenses	7,335,898	6,190,940
Loss from operations	(573,148)	(545,558)
Other expense:
Interest expense	(139)	0
Total other expense	(139)	0
Loss before income taxes	(573,287)	(545,558)
Income tax expense	(4,767)	(14,088)
Net loss	$ (578,054)	$ (559,646)
Net loss per common share:
Basic (in dollars per share)	$ (0.03)	$ (0.03)
Diluted (in dollars per share)	$ (0.03)	$ (0.03)
Weighted average number of shares used in computing net loss per common share:
Basic (in shares)	21,371,416	21,118,335
Diluted (in shares)	21,371,416	21,118,335

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (578,054)	$ (559,646)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	123,123	107,656
Stock-based compensation	197,558	32,293
Provision for uncollectible accounts	(11,000)	9,000
Provision for sales returns	67,000	80,000
Provision for inventory reserves	(248,000)	(266,000)
Provision for accounts receivable discounts	33,520	0
Changes in assets and liabilities:
Accounts receivable	751,554	471,140
Inventory	279,301	(528,145)
Prepaid expenses and other assets, net	200,175	64,866
Accounts payable	(494,931)	(76,486)
Deferred rent	(34,541)	(30,476)
Accrued income taxes	4,767	14,088
Accrued expenses and other liabilities	(312,186)	82,969
Net cash used in operating activities	(21,714)	(598,741)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(69,710)	(197,953)
Intangible assets	(7,854)	(992)
Net cash used in investing activities	(77,564)	(198,945)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(99,278)	(797,686)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	4,594,007	7,427,273
CASH AND CASH EQUIVALENTS, END OF PERIOD	4,494,729	6,629,587
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$ 139	$ 0

DESCRIPTION OF BUSINESS

DESCRIPTION OF BUSINESS	3 Months Ended
DESCRIPTION OF BUSINESS	Mar. 31, 2018
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 ®

BASIS OF PRESENTATION AND SIGNI

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES	3 Months Ended
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES	Mar. 31, 2018
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 months ended March 31, 2018 and 2017 included in this Quarterly Report on Form 10-Q are unaudited. The balance sheet as of December 31, 2017 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, 2017 filed with the SEC on March 9, 2018 (the “2017 Annual Report”). The accompanying condensed consolidated financial statements as of and for the three months ended March 31, 2018 and 2017 include the accounts of the Company and its wholly owned subsidiaries charlesandcolvard.com, LLC, formed in 2011; Charles & Colvard Direct, LLC, formed in 2011; and Charles & Colvard (HK) Ltd., the Company’s Hong Kong subsidiary, which was re-activated in December 2017. Charles & Colvard Direct, LLC and Charles & Colvard (HK) Ltd. had no operating activity during the three-month period ended March 31, 2018 and the year ended December 31, 2017. Charles & Colvard (HK) Ltd. previously became dormant in the second quarter of 2009 after its operations ceased in 2008. All intercompany accounts have been eliminated. Change in Fiscal Year-End Significant Accounting Policies - Use of Estimates Reclassifications - Change in Accounting Policy - The Company applied the new accounting standard using the modified retrospective approach. Based on the Company’s analysis, the timing and measurement of revenues under the new revenue recognition guidance is consistent with the Company’s prior policies. Accordingly, no adjustment was required to the Company’s opening balance of equity as of January 1, 2018. Except for required disclosures of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, the changes resulting from the adoption of the new accounting standard did not have a material effect on the Company’s condensed consolidated financial statements. Comparative prior period information has not been adjusted and continues to be reported under the accounting guidance in effect prior to the change of accounting. Revenue Recognition The Company has a variable consideration element related to most of its contracts in the form of product return rights. At the time revenue is recognized, an allowance for estimated returns is established and any change in the allowance for returns is charged against net sales in the current period. For the Company’s Traditional segment and Online Channels segment customers (excluding those of charlesandcolvard.com), the return policy generally allows for the return of jewels and finished jewelry with a valid reason for credit within 30 days of shipment. The Company’s charlesandcolvard.com customers can return purchases for any reason within 60 days in accordance with the Company’s returns policy as disclosed on the charlesandcolvard.com website. Periodically, the Company ships loose jewel goods and finished goods to Traditional segment customers on consignment terms. Under these consignment terms, the customer assumes the risk of loss and has an absolute right of return for a specified period that typically ranges from six months to one year. The Company’s Online Channels segment and Traditional segment customers are generally required to make payments on consignment shipments within 60 days upon the customer informing the Company that it will keep the inventory. Accordingly, the Company does not recognize revenue on these consignment transactions until the earlier of (i) the customer informing the Company that it will keep the inventory; (ii) the expiration of the right of return period; or (iii) the customer informing the Company that the inventory has been sold. The Company presents disaggregated net sales by its Traditional segment and its Online Channels segment for both loose jewels and finished jewelry product lines. The Company also presents disaggregated net sales by geographic area between the United States and international locations. For financial reporting purposes, disaggregated net sales amounts are presented in Note 3, “Segment Information and Geographic Data”. Returns Asset and Refund Liabilities In connection with the adoption of the new revenue recognition accounting standard, the Company has established a returns asset account and a refund liabilities account to record the effects of its estimated product returns and sales returns allowance. The Company’s returns asset and refund liabilities are updated at the end of each financial reporting period and the effect of such changes are accounted for in the period in which such changes occur. The Company estimates anticipated product returns in the form of a refund liability based on historical return percentages and current period sales levels. The Company also accrues a related returns asset for goods expected to be returned in salable condition, less any expected costs to recover such goods, including return shipping costs that the Company may incur. As of March 31, 2018 and December 31, 2017, the Company’s refund liabilities balances were $604,000 and $537,000, respectively, and are included within accounts receivable, net, in the accompanying condensed consolidated balance sheets. As of March 31, 2018 and December 31, 2017, the Company’s returns asset balances were $227,000 and $0, respectively, and are included within prepaid expenses and other assets in the accompanying condensed consolidated balance sheets. Prior to the adoption of the new revenue recognition accounting standard, the Company reported the net effect of its estimated returns asset as an adjustment to its inventory balances. Impacts on Financial Statements The following information summarizes the impacts of the adoption of the new revenue recognition accounting standard on the accompanying condensed consolidated financial statements: Condensed Consolidated Balance Sheet As of March 31, 2018 As Reported Adjustments Without Adoption Cash and cash equivalents $ 4,494,729 $ - $ 4,494,729 Accounts receivable, net 2,536,377 - 2,536,377 Prepaid expenses and other assets 771,034 (227,000 ) 544,034 Total inventory, net 30,942,316 227,000 31,169,316 Total other long-term assets 1,268,864 - 1,268,864 Total assets $ 40,013,320 $ - $ 40,013,320 Accounts payable $ 3,971,232 $ - $ 3,971,232 Accrued expenses and other liabilities 668,614 - 668,614 Total long-term liabilities 895,344 - 895,344 Total liabilities 5,535,190 - 5,535,190 Total shareholders’ equity 34,478,130 - 34,478,130 Total liabilities and shareholders’ equity $ 40,013,320 $ - $ 40,013,320 Condensed Consolidated Statement of Operations Three Months Ended March 31, 2018 As Reported Adjustments Without Adoption Net sales $ 6,762,750 $ - $ 6,762,750 Costs of goods sold 4,115,548 - 4,115,548 Other costs and expenses 3,220,489 - 3,220,489 Income tax expense 4,767 - 4,767 Net loss $ (578,054 ) $ - $ (578,054 ) The timing and measurement of revenues under the new revenue recognition guidance are consistent with the Company’s policies in effect prior to the adoption of the new accounting standard. Accordingly, there are no adjustments affecting the Company’s results of operations resulting from application of the new standard in the period presented. Condensed Consolidated Statement of Cash Flows Three Months Ended March 31, 2018 As Reported Adjustments Without Adoption Net loss $ (578,054 ) $ - $ (578,054 ) Adjustments to reconcile net loss to net cash used in operating activities, net 162,201 - 162,201 Changes in assets and liabilities: Accounts receivable 751,554 - 751,554 Inventory 279,301 227,000 506,301 Prepaid expenses and other assets, net 200,175 (227,000 ) (26,825 ) Accounts payable (494,931 ) - (494,931 ) Deferred rent (34,541 ) - (34,541 ) Accrued income taxes 4,767 - 4,767 Accrued expenses and other liabilities (312,186 ) - (312,186 ) Net cash used in operating activities (21,714 ) - (21,714 ) Purchases of property and equipment (69,710 ) - (69,710 ) Intangible assets (7,854 ) - (7,854 ) Net cash used in investing activities (77,564 ) - (77,564 ) Net decrease in cash and cash equivalents (99,278 ) - (99,278 ) Cash and cash equivalents, beginning of period 4,594,007 - 4,594,007 Cash and cash equivalents, end of period $ 4,494,729 $ - $ 4,494,729 Recently Adopted/Issued Accounting Pronouncements

SEGMENT INFORMATION AND GEOGRAP

SEGMENT INFORMATION AND GEOGRAPHIC DATA	3 Months Ended
SEGMENT INFORMATION AND GEOGRAPHIC DATA	Mar. 31, 2018
SEGMENT INFORMATION AND GEOGRAPHIC DATA [Abstract]
SEGMENT INFORMATION AND GEOGRAPHIC DATA	3. SEGMENT INFORMATION AND GEOGRAPHIC DATA The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making operating decisions and assessing performance as the source of the Company’s operating and reportable segments. The Company manages its business through two operating and reportable segments based on its distribution channels to sell its product lines, loose jewels and finished jewelry: its “Traditional” segment, which consists of wholesale, retail, and television customers; and its “Online Channels” segment, which consists of e-commerce outlets including charlesandcolvard.com, marketplaces, drop-ship, and other pure-play, exclusively e-commerce outlets. The accounting policies of the Traditional segment and Online Channels segment are the same as those described in Note 2, “Basis of Presentation and Significant Accounting Policies” of this Quarterly Report on Form 10-Q and in the Notes to the Consolidated Financial Statements in the 2017 Annual Report. The Company evaluates the financial performance of its segments based on net sales; product line gross profit, or the excess of product line sales over product line cost of goods sold; and operating income (loss). The Company’s product line cost of goods sold is defined as product cost of goods sold, excluding non-capitalized expenses from the Company’s manufacturing and production control departments, comprising personnel costs, depreciation, rent, utilities, and corporate overhead allocations; freight out; inventory valuation allowance adjustments; and other inventory adjustments, comprising costs of quality issues, damaged goods, and inventory write-downs. The Company allocates certain general and administrative expenses from its Traditional segment to its Online Channels 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 its Traditional segment. Summary financial information by reportable segment is as follows: Three Months Ended March 31, 2018 Traditional Online Channels Total Net sales Loose jewels $ 2,652,956 $ 864,468 $ 3,517,424 Finished jewelry 1,087,823 2,157,503 3,245,326 Total $ 3,740,779 $ 3,021,971 $ 6,762,750 Product line cost of goods sold Loose jewels $ 1,412,983 $ 474,910 $ 1,887,893 Finished jewelry 1,049,192 985,209 2,034,401 Total $ 2,462,175 $ 1,460,119 $ 3,922,294 Product line gross profit Loose jewels $ 1,239,973 $ 389,558 $ 1,629,531 Finished jewelry 38,631 1,172,294 1,210,925 Total $ 1,278,604 $ 1,561,852 $ 2,840,456 Operating loss $ (362,075 ) $ (211,073 ) $ (573,148 ) Depreciation and amortization $ 92,218 $ 30,905 $ 123,123 Capital expenditures $ 66,421 $ 3,289 $ 69,710 Three Months Ended March 31, 2017 Traditional Online Channels Total Net sales Loose jewels $ 3,212,216 $ 717,504 $ 3,929,720 Finished jewelry 276,777 1,438,885 1,715,662 Total $ 3,488,993 $ 2,156,389 $ 5,645,382 Product line cost of goods sold Loose jewels $ 1,673,661 $ 316,469 $ 1,990,130 Finished jewelry 249,552 564,660 814,212 Total $ 1,923,213 $ 881,129 $ 2,804,342 Product line gross profit Loose jewels $ 1,538,555 $ 401,035 $ 1,939,590 Finished jewelry 27,225 874,225 901,450 Total $ 1,565,780 $ 1,275,260 $ 2,841,040 Operating loss $ (448,998 ) $ (96,560 ) $ (545,558 ) Depreciation and amortization $ 79,381 $ 28,275 $ 107,656 Capital expenditures $ 194,332 $ 3,621 $ 197,953 The Company does not allocate any assets to the reportable segments, and therefore, no asset information is reported to the chief operating decision maker and disclosed in the financial information for each segment. A reconciliation of the Company’s product line cost of goods sold to cost of goods sold as reported in the condensed consolidated financial statements is as follows: Three Months Ended March 31, 2018 2017 Product line cost of goods sold $ 3,922,294 $ 2,804,342 Non-capitalized manufacturing and production control expenses 452,460 367,749 Freight out 129,182 70,797 Inventory valuation allowances (248,000 ) (266,000 ) Other inventory adjustments (140,388 ) 243,727 Cost of goods sold $ 4,115,548 $ 3,220,615 The Company recognizes sales by geographic area based on the country in which the customer is based. A portion of the Company’s Traditional segment sales made to international wholesale distributors represents products sold internationally that may be re-imported to U.S. retailers. Sales to international end consumers made by the Company’s Online Channels segment 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. All intangible assets, as well as property and equipment, as of March 31, 2018 and March 31, 2017, are held and located in the United States. The following presents net sales data by geographic area: Three Months Ended March 31, 2018 2017 Net sales United States $ 6,321,849 $ 5,242,341 International 440,901 403,041 Total $ 6,762,750 $ 5,645,382

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	3 Months Ended
FAIR VALUE MEASUREMENTS	Mar. 31, 2018
FAIR VALUE MEASUREMENTS [Abstract]
FAIR VALUE MEASUREMENTS	4. FAIR VALUE MEASUREMENTS Under U.S. GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are obtained from independent sources and can be validated by a third party, whereas unobservable inputs reflect assumptions regarding what a third party would use in pricing an asset or liability. The fair value hierarchy consists of three levels based on the reliability of inputs, as follows: · 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 condensed 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. For the three months ended March 31, 2018 and 2017, no impairment was recorded.

INVENTORIES

INVENTORIES	3 Months Ended
INVENTORIES	Mar. 31, 2018
INVENTORIES [Abstract]
INVENTORIES	5. INVENTORIES The Company’s total inventories, net of reserves, consisted of the following as of the dates presented: March 31, 2018 December 31, 2017 Raw materials $ 4,998,446 $ 4,853,049 Work-in-process 9,848,005 9,219,383 Finished goods 17,062,266 17,896,992 Finished goods on consignment 867,859 1,093,752 Supplies inventory 82,740 75,441 Less inventory reserves (1,917,000 ) (2,165,000 ) Total $ 30,942,316 $ 30,973,617 Short-term portion $ 10,932,050 $ 11,208,658 Long-term portion 20,010,266 19,764,959 Total $ 30,942,316 $ 30,973,617 Inventories are stated at the lower of cost or net realizable value on an average cost basis. Inventory costs include direct material and labor, inbound freight, purchasing and receiving costs, inspection costs, and warehousing costs. Any inventory on hand at the measurement date in excess of the Company’s current requirements, which are based on historical and anticipated levels of sales for the 12-month go-forward period, is classified as long-term on the Company’s condensed consolidated balance sheets. The Company’s classification of its inventory as either short- or long-term inventory requires management to estimate the portion of on-hand inventory that can be realized over the next 12 months and does not include precious metal, labor, and other inventory purchases expected to be both purchased and realized in cost of goods sold over the next 12 months. 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 March 31, 2018 and December 31, 2017, work-in-process inventories issued to active production jobs approximated $3.45 million and $2.99 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. 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. 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 over time. The majority of the Company’s finished jewelry featuring moissanite is held in inventory for resale and largely consists of such core 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 holds smaller quantities of designer-inspired and trend moissanite fashion jewelry that is available for resale through retail companies and through its Online Channels segment. The Company also carries a limited amount of inventory as part of its sample line that is used in the selling process to its customers. The Company’s operating subsidiary carries no net inventories, and inventory is transferred without intercompany markup from the Company’s Traditional segment as product line cost of goods sold when sold to the end consumer. The Company’s total inventories, net of reserves, consisted of the following as of the dates presented: March 31, 2018 December 31, 2017 Loose jewels: Raw materials $ 4,445,916 $ 4,288,360 Work-in-process 8,923,877 8,328,719 Finished goods 9,477,595 9,487,245 Finished goods on consignment 55,823 26,281 Total loose jewels $ 22,903,211 $ 22,130,605 Finished jewelry: Raw materials $ 552,530 $ 564,689 Work-in-process 924,128 890,664 Finished goods 5,683,671 6,304,747 Finished goods on consignment 796,036 1,007,471 Total finished jewelry 7,956,365 8,767,571 Total supplies inventory 82,740 75,441 Total inventory $ 30,942,316 $ 30,973,617 Total net loose jewel inventories at March 31, 2018 and December 31, 2017 including inventory on consignment net of reserves, were $22.90 million and $22.13 million, respectively. Total net finished jewelry inventories at March 31, 2018 and December 31, 2017, including inventory on consignment net of reserves and finished jewelry featuring moissanite manufactured by the Company, were $7.96 million and $8.77 million, respectively. As of March 31, 2018 and December 31, 2017, management established an obsolescence reserve of $1,301,000 and $1,417,000, respectively. Typically, in the jewelry industry, slow-moving or discontinued lines are sold as closeouts, liquidated in alternative sales channels or melted down for liquidation. Regularly, management reviews the legacy loose jewel inventory for any lower of cost or net realizable value and obsolescence issues. Accordingly, based on demand during the three months ended March 31, 2018, and ongoing feedback from customers on the value of some of these goods, management identified some of the remaining inventory of these lower quality goods that could not be sold at its current carrying value and increased the lower of cost or net realizable value reserve on this remaining inventory to approximately $1,244,000 as of March 31, 2018 from $1,326,000 as of December 31, 2017. As of March 31, 2018 and December 31, 2017, management identified certain finished jewelry that was obsolete due to damage and other factors that indicate the finished jewelry is unsaleable, and established an obsolescence reserve of $57,000 and $91,000, respectively, for the carrying costs in excess of any estimated scrap values. Management reviews the finished jewelry inventory on an ongoing basis for any lower of cost or net realizable value and obsolescence issues. As of March 31, 2018 and December 31, 2017 management established a rework reserve for recut and repairs of $523,000 and $557,000, respectively. Loose jewel inventories at March 31, 2018 and December 31, 2017 included recut reserves of $432,000 and $468,000, respectively. The finished jewelry inventories at March 31, 2018 and December 31, 2017 include a repairs reserve of $91,000 and $89,000, respectively. As of March 31, 2018 and December 31, 2017 management established a shrinkage reserve of $93,000 and $191,000, respectively. The loose jewel inventories at March 31, 2018 and December 31, 2017 include shrinkage reserves of $16,000 and $18,000, respectively. The finished jewelry inventories at March 31, 2018 and December 31, 2017 include shrinkage reserves of $77,000 and $173,000, respectively. The need for adjustments to inventory reserves is evaluated on a period-by-period basis. Periodically, the Company ships finished goods inventory to certain Traditional segment 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. Included in the total shrinkage reserve is the shrinkage reserve for finished goods on consignment of $16,000 and $60,000 as of March 31, 2018 and December 31, 2017, respectively, to allow for certain loose jewels and finished jewelry on consignment with certain Traditional segment customers that may not be returned or may be returned in a condition that does not meet the Company’s current grading or quality standards. The loose jewel inventories on consignment at March 31, 2018 and December 31, 2017 include shrinkage reserves of $10,000 and $5,000, respectively. The finished jewelry inventories on consignment at March 31, 2018 and December 31, 2017 include shrinkage reserves of $6,000 and $55,000, respectively.

ACCRUED EXPENSES AND OTHER LIAB

ACCRUED EXPENSES AND OTHER LIABILITIES	3 Months Ended
ACCRUED EXPENSES AND OTHER LIABILITIES	Mar. 31, 2018
ACCRUED EXPENSES AND OTHER LIABILITIES [Abstract]
ACCRUED EXPENSES AND OTHER LIABILITIES	6. ACCRUED EXPENSES AND OTHER LIABILITIES Accrued expenses and other liabilities, current, consist of the following as of the dates presented: March 31, 2018 December 31, 2017 Accrued compensation and related benefits $ 451,405 $ 652,177 Deferred rent 135,455 131,389 Accrued cooperative advertising 58,324 134,018 Accrued sales tax 9,503 20,844 Other 13,927 42,372 Total accrued expenses and other liabilities $ 668,614 $ 980,800

INCOME TAXES

INCOME TAXES	3 Months Ended
INCOME TAXES	Mar. 31, 2018
INCOME TAXES [Abstract]
INCOME TAXES	7. INCOME TAXES As a result of the effects of the Tax Cuts and Jobs Act (the “Tax Act”), the Company wrote down its net deferred tax assets as of December 31, 2017 by approximately $519,000 driven principally by the lower U.S. corporate income tax rate from 35% to that of 21% effective January 1, 2018. Likewise, the Company recorded a corresponding net adjustment to its valuation allowance related to the re-measurement of certain net deferred tax assets using the lower U.S. corporate income tax. The Company substantially completed its provisional analysis of the income tax effects of the Tax Act as of the year ended December 31, 2017. As provided under specific guidance issued by the SEC staff, the Company estimated the tax impacts related to the changes in its deferred tax assets and liabilities as a result of the Tax Act and included a reasonable estimate of those amounts in its consolidated financial statements as of and for the year ended December 31, 2017, on a provisional basis. However, the Tax Act repealed the corporate alternative minimum tax (“AMT”) regime, including claiming a refund and full realization of remaining AMT credits. At year-end, the Company was not able to make a reasonable estimate with respect to the realization of its existing AMT credit carryforwards. Therefore, it continued to apply the income tax-related guidance that was in effect immediately prior to the enactment of the Tax Act and maintained a full valuation allowance against its AMT-related deferred tax asset. As of March 31, 2018, the Company continues to analyze the nature, validity and recoverability of its AMT-related deferred tax credit carryforwards in order to record the underlying appropriate tax benefit. Accordingly, the ultimate impact related to the Tax Act may differ, possibly materially, due to, among other things, completing the Company’s analysis of the realization of available AMT credit refunds, further refinement of the Company’s calculations, changes in interpretations and assumptions that the Company made, additional guidance that may be issued by the U.S. Government, and actions and related accounting policy decisions that the Company may take as a result of the Tax Act. The Company expects its analysis to be complete when the Company’s 2017 U.S. corporate income tax return is filed in 2018. The Company recognized an income tax net expense for estimated tax, penalties, and interest associated with uncertain tax positions of approximately $5,000 and $14,000 for the three months ended March 31, 2018 and 2017, respectively. 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 March 31, 2018 and December 31, 2017, the Company’s management determined that sufficient negative evidence continued to exist to conclude it was uncertain that the Company would have sufficient future taxable income to utilize its deferred tax assets. Therefore, as set forth above, notwithstanding the possible effects on its deferred tax assets as a result of the Tax Act, the Company continued to maintain a full valuation allowance against its deferred tax assets as of March 31, 2018 and December 31, 2017.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	3 Months Ended
COMMITMENTS AND CONTINGENCIES	Mar. 31, 2018
COMMITMENTS AND CONTINGENCIES [Abstract]
COMMITMENTS AND CONTINGENCIES	8. COMMITMENTS AND CONTINGENCIES Purchase Commitments On December 12, 2014, the Company entered into a new exclusive supply agreement (the “Supply Agreement”) with Cree, Inc. (“Cree”). Under the 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 Supply Agreement will expire on June 24, 2018, unless extended by the parties. Accordingly, the Company is reviewing various alternatives with respect to its purchase of SiC material, including whether to exercise its unilateral option, subject to certain conditions, to renew the Supply Agreement for an additional two-year period. The Company’s total purchase commitment under the Supply Agreement until June 2018 is dependent upon the size of the SiC material and ranges between approximately $29.60 million and approximately $31.50 million. As of March 31, 2018, the Company’s remaining purchase commitment through June 2018 under the Supply Agreement ranges from approximately $2.66 million to approximately $4.56 million. During the three months ended March 31, 2018 and 2017, the Company purchased $2.49 million and $2.21 million, respectively, of SiC crystals from Cree.

LINE OF CREDIT

LINE OF CREDIT	3 Months Ended
LINE OF CREDIT	Mar. 31, 2018
LINE OF CREDIT [Abstract]
LINE OF CREDIT	9. LINE OF CREDIT On June 25, 2014, the Company and its wholly owned subsidiaries, Charles & Colvard Direct, LLC, and charlesandcolvard.com, LLC) (collectively, the “Borrowers”), obtained a $10.00 million asset-based revolving credit facility (the “Credit Facility”) from 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 $1.00 million sublimit. The Credit Facility was scheduled to mature on June 25, 2017. Effective June 22, 2017, the Credit Facility was amended to extend the maturity date to June 25, 2018. The Credit Facility was also amended to reduce the interest rate payable on advances under the Credit Facility to a rate equal to Wells Fargo’s daily three-month LIBOR rate plus 2.00%, calculated on an actual/360 basis and payable monthly in arrears. In addition, the Credit Facility was amended further to include the addition of an EBITDA covenant, whereby the Borrowers were required to maintain a specified minimum monthly EBITDA through December 2017 if the cash position for the Borrowers’ demand deposit account maintained at Wells Fargo falls below $3.00 million or the Borrowers draw upon the Credit Facility. In connection with this amendment, the Company paid a 3% facility fee in the amount of $150,000 that is being amortized over the life of the underlying term of the Credit Facility amendment. The Credit Facility includes a $5.00 million 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 $3.00 million maximum. The Borrowers must maintain a minimum of $1.00 million in excess availability at all times. Each advance accrues interest at a rate equal to either (i) Wells Fargo’s three-month LIBOR rate plus 2.00%, or (ii) Wells Fargo’s Prime Rate plus 1%, each 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. 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 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 (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, (i) any impairment of the Export-Import Bank guaranty, unless the guaranteed advances are repaid within two business days, (ii) an event of default under any other indebtedness of the Borrowers in excess of $200,000, and (iii) 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. Since the Credit Facility matures on June 25, 2018, the Company is currently reviewing various credit facility alternatives. As of March 31, 2018, the Company had not borrowed against the Credit Facility.

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION	3 Months Ended
STOCK-BASED COMPENSATION	Mar. 31, 2018
STOCK-BASED COMPENSATION [Abstract]
STOCK-BASED COMPENSATION	10. STOCK-BASED COMPENSATION The following table summarizes the components of the Company’s stock-based compensation included in net loss: Three Months Ended March 31, 2018 2017 Employee stock options $ 77,261 $ 71,323 Restricted stock awards 120,297 (39,030 ) Totals $ 197,558 $ 32,293 No stock-based compensation was capitalized as a cost of inventory during the three months ended March 31, 2018 or 2017. Stock Options – Shares Weighted Average Exercise Price Outstanding, December 31, 2017 2,377,265 $ 1.46 Granted 42,500 $ 1.31 Forfeited (50,000 ) $ 1.04 Expired (29,503 ) $ 2.17 Outstanding, March 31, 2018 2,340,262 $ 1.45 The weighted average grant date fair value of stock options granted during the three months ended March 31, 2018 was $0.75. The total fair value of stock options that vested during the three months ended March 31, 2018 was approximately $56,000. 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 three months ended March 31, 2018: Dividend yield 0.0 % Expected volatility 61.9 % Risk-free interest rate 2.54 % Expected lives (years) 5.6 The following table summarizes information about stock options outstanding at March 31, 2018: Options Outstanding Options Exercisable Options Vested or Expected to Vest Balance as of 3/31/2018 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Balance as of 3/31/2018 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Balance as of 3/31/2018 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price 2,340,262 7.66 $ 1.45 1,561,847 6.94 $ 1.68 2,181,387 7.55 $ 1.48 As of March 31, 2018, the unrecognized stock-based compensation expense related to unvested stock options was approximately $280,000, which is expected to be recognized over a weighted average period of approximately 29 months. The aggregate intrinsic value of stock options outstanding, exercisable, and vested or expected to vest at March 31, 2018 was approximately $452,000. This amount is before applicable income taxes and represents the closing market price of the Company’s common stock at March 31, 2018 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. No stock options were exercised during the three months ended March 31, 2018 or 2017. Restricted Stock – Shares Weighted Average Grant Date Fair Value Unvested, December 31, 2017 355,417 $ 1.11 Granted 134,500 $ 1.31 Vested (274,614 ) $ 1.11 Canceled (80,803 ) $ 1.11 Unvested, March 31, 2018 134,500 $ 1.31 As of March 31, 2018, the estimated unrecognized stock-based compensation expense related to unvested restricted shares subject to achievement of performance goals was approximately $125,000, all of which is expected to be recognized over a weighted average period of approximately four months. Dividends

NET LOSS PER COMMON SHARE

NET LOSS PER COMMON SHARE	3 Months Ended
NET LOSS PER COMMON SHARE	Mar. 31, 2018
NET LOSS PER COMMON SHARE [Abstract]
NET LOSS PER COMMON SHARE	11. 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 from operations 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. The following table reconciles the differences between the basic and diluted net loss per share presentations: Three Months Ended March 31, 2018 2017 Numerator: Net loss $ (578,054 ) $ (559,646 ) Denominator: Weighted average common shares outstanding: Basic 21,371,416 21,118,335 Stock options - - Diluted 21,371,416 21,118,335 Net loss per common share: Basic $ (0.03 ) $ (0.03 ) Diluted $ (0.03 ) $ (0.03 ) For the three months ended March 31, 2018 and 2017, stock options to purchase approximately 2.34 and 1.82 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 three months ended March 31, 2018 and 2017, approximately 135,000 and 416,000 restricted shares, respectively, that have been issued but not yet vested have been excluded from the computation of diluted net loss per common share.

MAJOR CUSTOMERS AND CONCENTRATI

MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK	3 Months Ended
MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK	Mar. 31, 2018
MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK [Abstract]
MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK	12. 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 (the “FDIC”) insurable limits of $250,000 per depositor at each financial institution. The Company has never experienced any losses related to these balances. Non-interest-bearing amounts on deposit in excess of FDIC insurable limits at March 31, 2018 approximated $4.22 million. Trade receivables potentially subject the Company to credit risk. Payment terms on trade receivables for the Company’s Traditional segment customers are generally between 30 and 120 days, though it may offer extended terms with specific customers and on significant orders from time to time. The Company believes its competitors and other vendors in the wholesale jewelry industry have also expanded their use of extended payment terms and, in aggregate, the Company believes that by expanding its use of extended payment terms, it has provided a competitive response in its market and that its net sales have been favorably impacted. The Company is unable to estimate the impact of this program on its net sales, but if it ceased providing extended payment terms in select instances, the Company believes it would not be competitive for some Traditional segment customers in the marketplace and that its net sales and profits would likely decrease. 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. Collateral is not generally required from customers. The need for an allowance for doubtful accounts is determined based upon factors surrounding the credit risk of specific customers, historical trends, and other information. During the three months ended March 31, 2018 and 2017, the Company has not experienced significant accounts receivable write-offs related to revenue arrangements with extended payment terms. 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 gross accounts receivable. The following is a summary of customers that represent 10% or more of total gross accounts receivable: March 31, 2018 December 31, 2017 Customer A 29 % 18 % Customer B 12 % * % Customer C ** % 12 % * Customer B did not have an individual balance that represented 10% or more of the total gross accounts receivable as of December 31, 2017. *Customer C did not have an individual balance that represented 10% or more of the total gross accounts receivable as of March 31, 2018. 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 net sales: Three Months Ended March 31, 2018 2017 Customer A 16 % % Customer B ** % 10 % Customer D 12 % 25 % Customer A did not have net sales that represented 10% or more of total net sales for the three months ended March 31, 2017. *Customer B did not have net sales that represented 10% or more of total net sales for the three months ended March 31, 2018.

BASIS OF PRESENTATION AND SIG18

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)	3 Months Ended
	Mar. 31, 2018
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 months ended March 31, 2018 and 2017 included in this Quarterly Report on Form 10-Q are unaudited. The balance sheet as of December 31, 2017 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, 2017 filed with the SEC on March 9, 2018 (the “2017 Annual Report”). The accompanying condensed consolidated financial statements as of and for the three months ended March 31, 2018 and 2017 include the accounts of the Company and its wholly owned subsidiaries charlesandcolvard.com, LLC, formed in 2011; Charles & Colvard Direct, LLC, formed in 2011; and Charles & Colvard (HK) Ltd., the Company’s Hong Kong subsidiary, which was re-activated in December 2017. Charles & Colvard Direct, LLC and Charles & Colvard (HK) Ltd. had no operating activity during the three-month period ended March 31, 2018 and the year ended December 31, 2017. Charles & Colvard (HK) Ltd. previously became dormant in the second quarter of 2009 after its operations ceased in 2008. All intercompany accounts have been eliminated.
Change in Fiscal Year-End	Change in Fiscal Year-End
Significant Accounting Policies	Significant Accounting Policies -
Use of Estimates	Use of Estimates
Reclassifications	Reclassifications -
Change in Accounting Policy	Change in Accounting Policy - The Company applied the new accounting standard using the modified retrospective approach. Based on the Company’s analysis, the timing and measurement of revenues under the new revenue recognition guidance is consistent with the Company’s prior policies. Accordingly, no adjustment was required to the Company’s opening balance of equity as of January 1, 2018. Except for required disclosures of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, the changes resulting from the adoption of the new accounting standard did not have a material effect on the Company’s condensed consolidated financial statements. Comparative prior period information has not been adjusted and continues to be reported under the accounting guidance in effect prior to the change of accounting.
Revenue Recognition	Revenue Recognition The Company has a variable consideration element related to most of its contracts in the form of product return rights. At the time revenue is recognized, an allowance for estimated returns is established and any change in the allowance for returns is charged against net sales in the current period. For the Company’s Traditional segment and Online Channels segment customers (excluding those of charlesandcolvard.com), the return policy generally allows for the return of jewels and finished jewelry with a valid reason for credit within 30 days of shipment. The Company’s charlesandcolvard.com customers can return purchases for any reason within 60 days in accordance with the Company’s returns policy as disclosed on the charlesandcolvard.com website. Periodically, the Company ships loose jewel goods and finished goods to Traditional segment customers on consignment terms. Under these consignment terms, the customer assumes the risk of loss and has an absolute right of return for a specified period that typically ranges from six months to one year. The Company’s Online Channels segment and Traditional segment customers are generally required to make payments on consignment shipments within 60 days upon the customer informing the Company that it will keep the inventory. Accordingly, the Company does not recognize revenue on these consignment transactions until the earlier of (i) the customer informing the Company that it will keep the inventory; (ii) the expiration of the right of return period; or (iii) the customer informing the Company that the inventory has been sold. The Company presents disaggregated net sales by its Traditional segment and its Online Channels segment for both loose jewels and finished jewelry product lines. The Company also presents disaggregated net sales by geographic area between the United States and international locations. For financial reporting purposes, disaggregated net sales amounts are presented in Note 3, “Segment Information and Geographic Data”. Returns Asset and Refund Liabilities In connection with the adoption of the new revenue recognition accounting standard, the Company has established a returns asset account and a refund liabilities account to record the effects of its estimated product returns and sales returns allowance. The Company’s returns asset and refund liabilities are updated at the end of each financial reporting period and the effect of such changes are accounted for in the period in which such changes occur. The Company estimates anticipated product returns in the form of a refund liability based on historical return percentages and current period sales levels. The Company also accrues a related returns asset for goods expected to be returned in salable condition, less any expected costs to recover such goods, including return shipping costs that the Company may incur. As of March 31, 2018 and December 31, 2017, the Company’s refund liabilities balances were $604,000 and $537,000, respectively, and are included within accounts receivable, net, in the accompanying condensed consolidated balance sheets. As of March 31, 2018 and December 31, 2017, the Company’s returns asset balances were $227,000 and $0, respectively, and are included within prepaid expenses and other assets in the accompanying condensed consolidated balance sheets. Prior to the adoption of the new revenue recognition accounting standard, the Company reported the net effect of its estimated returns asset as an adjustment to its inventory balances. Impacts on Financial Statements The following information summarizes the impacts of the adoption of the new revenue recognition accounting standard on the accompanying condensed consolidated financial statements: Condensed Consolidated Balance Sheet As of March 31, 2018 As Reported Adjustments Without Adoption Cash and cash equivalents $ 4,494,729 $ - $ 4,494,729 Accounts receivable, net 2,536,377 - 2,536,377 Prepaid expenses and other assets 771,034 (227,000 ) 544,034 Total inventory, net 30,942,316 227,000 31,169,316 Total other long-term assets 1,268,864 - 1,268,864 Total assets $ 40,013,320 $ - $ 40,013,320 Accounts payable $ 3,971,232 $ - $ 3,971,232 Accrued expenses and other liabilities 668,614 - 668,614 Total long-term liabilities 895,344 - 895,344 Total liabilities 5,535,190 - 5,535,190 Total shareholders’ equity 34,478,130 - 34,478,130 Total liabilities and shareholders’ equity $ 40,013,320 $ - $ 40,013,320 Condensed Consolidated Statement of Operations Three Months Ended March 31, 2018 As Reported Adjustments Without Adoption Net sales $ 6,762,750 $ - $ 6,762,750 Costs of goods sold 4,115,548 - 4,115,548 Other costs and expenses 3,220,489 - 3,220,489 Income tax expense 4,767 - 4,767 Net loss $ (578,054 ) $ - $ (578,054 ) The timing and measurement of revenues under the new revenue recognition guidance are consistent with the Company’s policies in effect prior to the adoption of the new accounting standard. Accordingly, there are no adjustments affecting the Company’s results of operations resulting from application of the new standard in the period presented. Condensed Consolidated Statement of Cash Flows Three Months Ended March 31, 2018 As Reported Adjustments Without Adoption Net loss $ (578,054 ) $ - $ (578,054 ) Adjustments to reconcile net loss to net cash used in operating activities, net 162,201 - 162,201 Changes in assets and liabilities: Accounts receivable 751,554 - 751,554 Inventory 279,301 227,000 506,301 Prepaid expenses and other assets, net 200,175 (227,000 ) (26,825 ) Accounts payable (494,931 ) - (494,931 ) Deferred rent (34,541 ) - (34,541 ) Accrued income taxes 4,767 - 4,767 Accrued expenses and other liabilities (312,186 ) - (312,186 ) Net cash used in operating activities (21,714 ) - (21,714 ) Purchases of property and equipment (69,710 ) - (69,710 ) Intangible assets (7,854 ) - (7,854 ) Net cash used in investing activities (77,564 ) - (77,564 ) Net decrease in cash and cash equivalents (99,278 ) - (99,278 ) Cash and cash equivalents, beginning of period 4,594,007 - 4,594,007 Cash and cash equivalents, end of period $ 4,494,729 $ - $ 4,494,729
Recently Adopted/Issued Accounting Pronouncements	Recently Adopted/Issued Accounting Pronouncements

BASIS OF PRESENTATION AND SIG19

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables)	3 Months Ended
	Mar. 31, 2018
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract]
Impacts on Financial Statements	The following information summarizes the impacts of the adoption of the new revenue recognition accounting standard on the accompanying condensed consolidated financial statements: Condensed Consolidated Balance Sheet As of March 31, 2018 As Reported Adjustments Without Adoption Cash and cash equivalents $ 4,494,729 $ - $ 4,494,729 Accounts receivable, net 2,536,377 - 2,536,377 Prepaid expenses and other assets 771,034 (227,000 ) 544,034 Total inventory, net 30,942,316 227,000 31,169,316 Total other long-term assets 1,268,864 - 1,268,864 Total assets $ 40,013,320 $ - $ 40,013,320 Accounts payable $ 3,971,232 $ - $ 3,971,232 Accrued expenses and other liabilities 668,614 - 668,614 Total long-term liabilities 895,344 - 895,344 Total liabilities 5,535,190 - 5,535,190 Total shareholders’ equity 34,478,130 - 34,478,130 Total liabilities and shareholders’ equity $ 40,013,320 $ - $ 40,013,320 Condensed Consolidated Statement of Operations Three Months Ended March 31, 2018 As Reported Adjustments Without Adoption Net sales $ 6,762,750 $ - $ 6,762,750 Costs of goods sold 4,115,548 - 4,115,548 Other costs and expenses 3,220,489 - 3,220,489 Income tax expense 4,767 - 4,767 Net loss $ (578,054 ) $ - $ (578,054 ) Condensed Consolidated Statement of Cash Flows Three Months Ended March 31, 2018 As Reported Adjustments Without Adoption Net loss $ (578,054 ) $ - $ (578,054 ) Adjustments to reconcile net loss to net cash used in operating activities, net 162,201 - 162,201 Changes in assets and liabilities: Accounts receivable 751,554 - 751,554 Inventory 279,301 227,000 506,301 Prepaid expenses and other assets, net 200,175 (227,000 ) (26,825 ) Accounts payable (494,931 ) - (494,931 ) Deferred rent (34,541 ) - (34,541 ) Accrued income taxes 4,767 - 4,767 Accrued expenses and other liabilities (312,186 ) - (312,186 ) Net cash used in operating activities (21,714 ) - (21,714 ) Purchases of property and equipment (69,710 ) - (69,710 ) Intangible assets (7,854 ) - (7,854 ) Net cash used in investing activities (77,564 ) - (77,564 ) Net decrease in cash and cash equivalents (99,278 ) - (99,278 ) Cash and cash equivalents, beginning of period 4,594,007 - 4,594,007 Cash and cash equivalents, end of period $ 4,494,729 $ - $ 4,494,729

SEGMENT INFORMATION AND GEOGR20

SEGMENT INFORMATION AND GEOGRAPHIC DATA (Tables)	3 Months Ended
SEGMENT INFORMATION AND GEOGRAPHIC DATA (Tables)	Mar. 31, 2018
SEGMENT INFORMATION AND GEOGRAPHIC DATA [Abstract]
Summary information by reportable segment	Summary financial information by reportable segment is as follows: Three Months Ended March 31, 2018 Traditional Online Channels Total Net sales Loose jewels $ 2,652,956 $ 864,468 $ 3,517,424 Finished jewelry 1,087,823 2,157,503 3,245,326 Total $ 3,740,779 $ 3,021,971 $ 6,762,750 Product line cost of goods sold Loose jewels $ 1,412,983 $ 474,910 $ 1,887,893 Finished jewelry 1,049,192 985,209 2,034,401 Total $ 2,462,175 $ 1,460,119 $ 3,922,294 Product line gross profit Loose jewels $ 1,239,973 $ 389,558 $ 1,629,531 Finished jewelry 38,631 1,172,294 1,210,925 Total $ 1,278,604 $ 1,561,852 $ 2,840,456 Operating loss $ (362,075 ) $ (211,073 ) $ (573,148 ) Depreciation and amortization $ 92,218 $ 30,905 $ 123,123 Capital expenditures $ 66,421 $ 3,289 $ 69,710 Three Months Ended March 31, 2017 Traditional Online Channels Total Net sales Loose jewels $ 3,212,216 $ 717,504 $ 3,929,720 Finished jewelry 276,777 1,438,885 1,715,662 Total $ 3,488,993 $ 2,156,389 $ 5,645,382 Product line cost of goods sold Loose jewels $ 1,673,661 $ 316,469 $ 1,990,130 Finished jewelry 249,552 564,660 814,212 Total $ 1,923,213 $ 881,129 $ 2,804,342 Product line gross profit Loose jewels $ 1,538,555 $ 401,035 $ 1,939,590 Finished jewelry 27,225 874,225 901,450 Total $ 1,565,780 $ 1,275,260 $ 2,841,040 Operating loss $ (448,998 ) $ (96,560 ) $ (545,558 ) Depreciation and amortization $ 79,381 $ 28,275 $ 107,656 Capital expenditures $ 194,332 $ 3,621 $ 197,953
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 March 31, 2018 2017 Product line cost of goods sold $ 3,922,294 $ 2,804,342 Non-capitalized manufacturing and production control expenses 452,460 367,749 Freight out 129,182 70,797 Inventory valuation allowances (248,000 ) (266,000 ) Other inventory adjustments (140,388 ) 243,727 Cost of goods sold $ 4,115,548 $ 3,220,615
Net sales by geographic area	The following presents net sales data by geographic area: Three Months Ended March 31, 2018 2017 Net sales United States $ 6,321,849 $ 5,242,341 International 440,901 403,041 Total $ 6,762,750 $ 5,645,382

INVENTORIES (Tables)

INVENTORIES (Tables)	3 Months Ended
INVENTORIES (Tables)	Mar. 31, 2018
INVENTORIES [Abstract]
Schedule of inventory, net of reserves	The Company’s total inventories, net of reserves, consisted of the following as of the dates presented: March 31, 2018 December 31, 2017 Raw materials $ 4,998,446 $ 4,853,049 Work-in-process 9,848,005 9,219,383 Finished goods 17,062,266 17,896,992 Finished goods on consignment 867,859 1,093,752 Supplies inventory 82,740 75,441 Less inventory reserves (1,917,000 ) (2,165,000 ) Total $ 30,942,316 $ 30,973,617 Short-term portion $ 10,932,050 $ 11,208,658 Long-term portion 20,010,266 19,764,959 Total $ 30,942,316 $ 30,973,617
Schedule of inventories by product line maintained in its wholesale distribution segment	The Company’s total inventories, net of reserves, consisted of the following as of the dates presented: March 31, 2018 December 31, 2017 Loose jewels: Raw materials $ 4,445,916 $ 4,288,360 Work-in-process 8,923,877 8,328,719 Finished goods 9,477,595 9,487,245 Finished goods on consignment 55,823 26,281 Total loose jewels $ 22,903,211 $ 22,130,605 Finished jewelry: Raw materials $ 552,530 $ 564,689 Work-in-process 924,128 890,664 Finished goods 5,683,671 6,304,747 Finished goods on consignment 796,036 1,007,471 Total finished jewelry 7,956,365 8,767,571 Total supplies inventory 82,740 75,441 Total inventory $ 30,942,316 $ 30,973,617

ACCRUED EXPENSES AND OTHER LI22

ACCRUED EXPENSES AND OTHER LIABILITIES (Tables)	3 Months Ended
ACCRUED EXPENSES AND OTHER LIABILITIES (Tables)	Mar. 31, 2018
ACCRUED EXPENSES AND OTHER LIABILITIES [Abstract]
Accrued expenses and other liabilities	Accrued expenses and other liabilities, current, consist of the following as of the dates presented: March 31, 2018 December 31, 2017 Accrued compensation and related benefits $ 451,405 $ 652,177 Deferred rent 135,455 131,389 Accrued cooperative advertising 58,324 134,018 Accrued sales tax 9,503 20,844 Other 13,927 42,372 Total accrued expenses and other liabilities $ 668,614 $ 980,800

STOCK-BASED COMPENSATION (Table

STOCK-BASED COMPENSATION (Tables)	3 Months Ended
STOCK-BASED COMPENSATION (Tables)	Mar. 31, 2018
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 March 31, 2018 2017 Employee stock options $ 77,261 $ 71,323 Restricted stock awards 120,297 (39,030 ) Totals $ 197,558 $ 32,293
Summary of the stock option activity	The following is a summary of the stock option activity for the three months ended March 31, 2018: Shares Weighted Average Exercise Price Outstanding, December 31, 2017 2,377,265 $ 1.46 Granted 42,500 $ 1.31 Forfeited (50,000 ) $ 1.04 Expired (29,503 ) $ 2.17 Outstanding, March 31, 2018 2,340,262 $ 1.45
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 three months ended March 31, 2018: Dividend yield 0.0 % Expected volatility 61.9 % Risk-free interest rate 2.54 % Expected lives (years) 5.6
Information about stock options outstanding	The following table summarizes information about stock options outstanding at March 31, 2018: Options Outstanding Options Exercisable Options Vested or Expected to Vest Balance as of 3/31/2018 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Balance as of 3/31/2018 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Balance as of 3/31/2018 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price 2,340,262 7.66 $ 1.45 1,561,847 6.94 $ 1.68 2,181,387 7.55 $ 1.48
Restricted stock activity	The following is a summary of the restricted stock activity for the three months ended March 31, 2018: Shares Weighted Average Grant Date Fair Value Unvested, December 31, 2017 355,417 $ 1.11 Granted 134,500 $ 1.31 Vested (274,614 ) $ 1.11 Canceled (80,803 ) $ 1.11 Unvested, March 31, 2018 134,500 $ 1.31

NET LOSS PER COMMON SHARE (Tabl

NET LOSS PER COMMON SHARE (Tables)	3 Months Ended
NET LOSS PER COMMON SHARE (Tables)	Mar. 31, 2018
NET LOSS PER COMMON SHARE [Abstract]
Reconciliation of basic and diluted net loss per share	The following table reconciles the differences between the basic and diluted net loss per share presentations: Three Months Ended March 31, 2018 2017 Numerator: Net loss $ (578,054 ) $ (559,646 ) Denominator: Weighted average common shares outstanding: Basic 21,371,416 21,118,335 Stock options - - Diluted 21,371,416 21,118,335 Net loss per common share: Basic $ (0.03 ) $ (0.03 ) Diluted $ (0.03 ) $ (0.03 )

MAJOR CUSTOMERS AND CONCENTRA25

MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK (Tables)	3 Months Ended
MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK (Tables)	Mar. 31, 2018
MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK [Abstract]
Summary of customers that represent greater than or equal to 10% of total net sales and receivables	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 gross accounts receivable. The following is a summary of customers that represent 10% or more of total gross accounts receivable: March 31, 2018 December 31, 2017 Customer A 29 % 18 % Customer B 12 % * % Customer C ** % 12 % * Customer B did not have an individual balance that represented 10% or more of the total gross accounts receivable as of December 31, 2017. *Customer C did not have an individual balance that represented 10% or more of the total gross accounts receivable as of March 31, 2018. 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 net sales: Three Months Ended March 31, 2018 2017 Customer A 16 % % Customer B ** % 10 % Customer D 12 % 25 % Customer A did not have net sales that represented 10% or more of total net sales for the three months ended March 31, 2017. *Customer B did not have net sales that represented 10% or more of total net sales for the three months ended March 31, 2018.

BASIS OF PRESENTATION AND SIG26

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Returns Asset and Refund Liabilities (Details) - USD ($)	3 Months Ended
	Mar. 31, 2018	Dec. 31, 2017
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract]
Refund liabilities	$ 604,000	$ 537,000
Asset returns	$ 227,000	$ 0
Minimum [Member]
Disaggregation of Revenue [Line Items]
Number of days for customer to make payment after being invoiced	30 days
Maximum [Member]
Disaggregation of Revenue [Line Items]
Number of days for customer to make payment after being invoiced	90 days

BASIS OF PRESENTATION AND SIG27

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Balance Sheet (Details) - USD ($)	Mar. 31, 2018	Dec. 31, 2017	Mar. 31, 2017	Dec. 31, 2016
Condensed Consolidated Balance Sheet [Abstract]
Cash and cash equivalents	$ 4,494,729	$ 4,594,007	$ 6,629,587	$ 7,427,273
Accounts receivable, net	2,536,377	3,377,451
Prepaid expenses and other assets	771,034	969,857
Total inventory, net	30,942,316
Total other long-term assets	1,268,864
TOTAL ASSETS	40,013,320	41,230,707
Accounts payable	3,971,232	4,466,163
Accrued expenses and other liabilities	668,614
Total long-term liabilities	895,344	925,118
Total liabilities	5,535,190	6,372,081
Total shareholders' equity	34,478,130	34,858,626
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	40,013,320	41,230,707
Adjustments [Member] \| ASC 606 [Member]
Condensed Consolidated Balance Sheet [Abstract]
Cash and cash equivalents	0	0
Accounts receivable, net	0
Prepaid expenses and other assets	(227,000)
Total inventory, net	227,000
Total other long-term assets	0
TOTAL ASSETS	0
Accounts payable	0
Accrued expenses and other liabilities	0
Total long-term liabilities	0
Total liabilities	0
Total shareholders' equity	0
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	0
Without Adoption [Member] \| ASC 606 [Member]
Condensed Consolidated Balance Sheet [Abstract]
Cash and cash equivalents	4,494,729	$ 4,594,007
Accounts receivable, net	2,536,377
Prepaid expenses and other assets	544,034
Total inventory, net	31,169,316
Total other long-term assets	1,268,864
TOTAL ASSETS	40,013,320
Accounts payable	3,971,232
Accrued expenses and other liabilities	668,614
Total long-term liabilities	895,344
Total liabilities	5,535,190
Total shareholders' equity	34,478,130
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 40,013,320

BASIS OF PRESENTATION AND SIG28

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Statement of Operations (Details) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Condensed Consolidated Statement of Operations [Abstract]
Net sales	$ 6,762,750	$ 5,645,382
Cost of goods sold	4,115,548	3,220,615
Other costs and expenses	3,220,489
Income tax expense	4,767	14,088
Net loss	(578,054)	$ (559,646)
Adjustments [Member] \| ASC 606 [Member]
Condensed Consolidated Statement of Operations [Abstract]
Net sales	0
Cost of goods sold	0
Other costs and expenses	0
Income tax expense	0
Net loss	0
Without Adoption [Member] \| ASC 606 [Member]
Condensed Consolidated Statement of Operations [Abstract]
Net sales	6,762,750
Cost of goods sold	4,115,548
Other costs and expenses	3,220,489
Income tax expense	4,767
Net loss	$ (578,054)

BASIS OF PRESENTATION AND SIG29

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Cash Flows (Details) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Condensed Consolidated Statement of Cash Flows [Abstract]
Net loss	$ (578,054)	$ (559,646)
Adjustments to reconcile net loss to net cash used in operating activities, net	162,201
Changes in assets and liabilities [Abstract]
Accounts receivable	751,554	471,140
Inventory	279,301	(528,145)
Prepaid expenses and other assets, net	200,175	64,866
Accounts payable	(494,931)	(76,486)
Deferred rent	(34,541)	(30,476)
Accrued income taxes	4,767	14,088
Accrued expenses and other liabilities	(312,186)	82,969
Net cash used in operating activities	(21,714)	(598,741)
Purchases of property and equipment	(69,710)	(197,953)
Intangible assets	(7,854)	(992)
Net cash used in investing activities	(77,564)	(198,945)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(99,278)	(797,686)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	4,594,007	7,427,273
CASH AND CASH EQUIVALENTS, END OF PERIOD	4,494,729	$ 6,629,587
Adjustments [Member] \| ASC 606 [Member]
Condensed Consolidated Statement of Cash Flows [Abstract]
Net loss	0
Adjustments to reconcile net loss to net cash used in operating activities, net	0
Changes in assets and liabilities [Abstract]
Accounts receivable	0
Inventory	227,000
Prepaid expenses and other assets, net	(227,000)
Accounts payable	0
Deferred rent	0
Accrued income taxes	0
Accrued expenses and other liabilities	0
Net cash used in operating activities	0
Purchases of property and equipment	0
Intangible assets	0
Net cash used in investing activities	0
NET DECREASE IN CASH AND CASH EQUIVALENTS	0
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	0
CASH AND CASH EQUIVALENTS, END OF PERIOD	0
Without Adoption [Member] \| ASC 606 [Member]
Condensed Consolidated Statement of Cash Flows [Abstract]
Net loss	(578,054)
Adjustments to reconcile net loss to net cash used in operating activities, net	162,201
Changes in assets and liabilities [Abstract]
Accounts receivable	751,554
Inventory	506,301
Prepaid expenses and other assets, net	(26,825)
Accounts payable	(494,931)
Deferred rent	(34,541)
Accrued income taxes	4,767
Accrued expenses and other liabilities	(312,186)
Net cash used in operating activities	(21,714)
Purchases of property and equipment	(69,710)
Intangible assets	(7,854)
Net cash used in investing activities	(77,564)
NET DECREASE IN CASH AND CASH EQUIVALENTS	(99,278)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	4,594,007
CASH AND CASH EQUIVALENTS, END OF PERIOD	$ 4,494,729

SEGMENT INFORMATION AND GEOGR30

SEGMENT INFORMATION AND GEOGRAPHIC DATA, Product Line (Details)	3 Months Ended
	Mar. 31, 2018USD ($)Segment	Mar. 31, 2017USD ($)
SEGMENT INFORMATION AND GEOGRAPHIC DATA [Abstract]
Number of operating segments \| Segment	2
Number of reportable segments \| Segment	2
Summary information by segment [Abstract]
Net sales	$ 6,762,750	$ 5,645,382
Product line cost of goods sold	4,115,548	3,220,615
Operating loss	(573,148)	(545,558)
Depreciation and amortization	123,123	107,656
Capital expenditures	69,710	197,953
Continuing Operations [Member]
Summary information by segment [Abstract]
Net sales	6,762,750	5,645,382
Product line cost of goods sold	3,922,294	2,804,342
Product line gross profit	2,840,456	2,841,040
Operating loss	(573,148)	(545,558)
Depreciation and amortization	123,123	107,656
Capital expenditures	69,710	197,953
Continuing Operations [Member] \| Loose Jewels [Member]
Summary information by segment [Abstract]
Net sales	3,517,424	3,929,720
Product line cost of goods sold	1,887,893	1,990,130
Product line gross profit	1,629,531	1,939,590
Continuing Operations [Member] \| Finished Jewelry [Member]
Summary information by segment [Abstract]
Net sales	3,245,326	1,715,662
Product line cost of goods sold	2,034,401	814,212
Product line gross profit	1,210,925	901,450
Operating and Reportable Segments [Member] \| Continuing Operations [Member] \| Traditional [Member]
Summary information by segment [Abstract]
Net sales	3,740,779	3,488,993
Product line cost of goods sold	2,462,175	1,923,213
Product line gross profit	1,278,604	1,565,780
Operating loss	(362,075)	(448,998)
Depreciation and amortization	92,218	79,381
Capital expenditures	66,421	194,332
Operating and Reportable Segments [Member] \| Continuing Operations [Member] \| Traditional [Member] \| Loose Jewels [Member]
Summary information by segment [Abstract]
Net sales	2,652,956	3,212,216
Product line cost of goods sold	1,412,983	1,673,661
Product line gross profit	1,239,973	1,538,555
Operating and Reportable Segments [Member] \| Continuing Operations [Member] \| Traditional [Member] \| Finished Jewelry [Member]
Summary information by segment [Abstract]
Net sales	1,087,823	276,777
Product line cost of goods sold	1,049,192	249,552
Product line gross profit	38,631	27,225
Operating and Reportable Segments [Member] \| Continuing Operations [Member] \| Online Channels [Member]
Summary information by segment [Abstract]
Net sales	3,021,971	2,156,389
Product line cost of goods sold	1,460,119	881,129
Product line gross profit	1,561,852	1,275,260
Operating loss	(211,073)	(96,560)
Depreciation and amortization	30,905	28,275
Capital expenditures	3,289	3,621
Operating and Reportable Segments [Member] \| Continuing Operations [Member] \| Online Channels [Member] \| Loose Jewels [Member]
Summary information by segment [Abstract]
Net sales	864,468	717,504
Product line cost of goods sold	474,910	316,469
Product line gross profit	389,558	401,035
Operating and Reportable Segments [Member] \| Continuing Operations [Member] \| Online Channels [Member] \| Finished Jewelry [Member]
Summary information by segment [Abstract]
Net sales	2,157,503	1,438,885
Product line cost of goods sold	985,209	564,660
Product line gross profit	1,172,294	874,225
Segment Reconciling Items [Member] \| Continuing Operations [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	4,115,548	3,220,615
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	3,922,294	2,804,342
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	452,460	367,749
Segment Reconciling Items [Member] \| Continuing Operations [Member] \| Freight Out [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	129,182	70,797
Segment Reconciling Items [Member] \| Continuing Operations [Member] \| Inventory Valuation Allowances [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	(248,000)	(266,000)
Segment Reconciling Items [Member] \| Continuing Operations [Member] \| Other Inventory Adjustments [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	$ (140,388)	$ 243,727

SEGMENT INFORMATION AND GEOGR31

SEGMENT INFORMATION AND GEOGRAPHIC DATA, Data by Geographic Area (Details) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Net sales [Abstract]
Net sales	$ 6,762,750	$ 5,645,382
Continuing Operations [Member]
Net sales [Abstract]
Net sales	6,762,750	5,645,382
Reportable Geographical Components [Member] \| Continuing Operations [Member] \| United States [Member]
Net sales [Abstract]
Net sales	6,321,849	5,242,341
Reportable Geographical Components [Member] \| Continuing Operations [Member] \| International [Member]
Net sales [Abstract]
Net sales	$ 440,901	$ 403,041

FAIR VALUE MEASUREMENTS (Detail

FAIR VALUE MEASUREMENTS (Details) - USD ($)	3 Months Ended
FAIR VALUE MEASUREMENTS (Details) - USD ($)	Mar. 31, 2018	Mar. 31, 2017
FAIR VALUE MEASUREMENTS [Abstract]
Asset impairment	$ 0	$ 0

INVENTORIES (Details)

INVENTORIES (Details) - USD ($)	3 Months Ended
INVENTORIES (Details) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Total inventories, net of reserves [Abstract]
Raw materials	$ 4,998,446	$ 4,853,049
Work-in-process	9,848,005	9,219,383
Finished goods	17,062,266	17,896,992
Finished goods on consignment	867,859	1,093,752
Total supplies inventory	82,740	75,441
Less inventory reserves	(1,917,000)	(2,165,000)
Total	30,942,316	30,973,617
Short-term portion	10,932,050	11,208,658
Long-term portion	$ 20,010,266	19,764,959
Period considered for classification of long term inventory	12 months
Inventories issued to active production	$ 3,450,000	2,990,000
Inventory of net loose jewels	22,900,000	22,130,000
Inventory of net jewelry	7,960,000	8,770,000
Inventory reserve for obsolescence	1,301,000	1,417,000
Lower of cost or market value	1,244,000	1,326,000
Carrying value of inventory reserve for obsolescence of finished jewelry	57,000	91,000
Inventory rework reserve for recut	523,000	557,000
Inventory reserve for recut	432,000	468,000
Inventory reserve for shrinkage of finished jewelry on repairs	91,000	89,000
Inventory reserve for shrinkage	93,000	191,000
Inventory reserve for shrinkage of loose jewels	16,000	18,000
Inventory reserve for shrinkage of finished jewelry	77,000	173,000
Shrinkage reserve for finished goods on consignment	16,000	60,000
Inventory reserve for shrinkage of loose jewels on consignment	10,000	5,000
Inventory reserve for shrinkage of finished jewelry on consignment	6,000	55,000
Loose Jewels [Member]
Total inventories, net of reserves [Abstract]
Raw materials	4,445,916	4,288,360
Work-in-process	8,923,877	8,328,719
Finished goods	9,477,595	9,487,245
Finished goods on consignment	55,823	26,281
Total	22,903,211	22,130,605
Finished Jewelry [Member]
Total inventories, net of reserves [Abstract]
Raw materials	552,530	564,689
Work-in-process	924,128	890,664
Finished goods	5,683,671	6,304,747
Finished goods on consignment	796,036	1,007,471
Total	$ 7,956,365	$ 8,767,571

ACCRUED EXPENSES AND OTHER LI34

ACCRUED EXPENSES AND OTHER LIABILITIES (Details) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
ACCRUED EXPENSES AND OTHER LIABILITIES [Abstract]
Accrued compensation and related benefits	$ 451,405	$ 652,177
Deferred rent	135,455	131,389
Accrued cooperative advertising	58,324	134,018
Accrued sales tax	9,503	20,844
Other	13,927	42,372
Total accrued expenses and other liabilities	$ 668,614	$ 980,800

INCOME TAXES (Details)

INCOME TAXES (Details) - USD ($)	3 Months Ended		12 Months Ended
INCOME TAXES (Details) - USD ($)	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
INCOME TAXES [Abstract]
Tax effect of remeasurement of deferred tax assets			$ 519,000
Federal statutory income tax rate	21.00%		35.00%
Income tax expense for estimated tax, penalties, and interest for other uncertain tax positions	$ 5,000	$ 14,000

COMMITMENTS AND CONTINGENCIES (

COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Long-term Purchase Commitment [Line Items]
Percentage committed to be purchased	100.00%
Period of exclusive supply agreement	2 years
Actual purchases under purchase amendment	$ 2,490	$ 2,210
Minimum [Member]
Long-term Purchase Commitment [Line Items]
Purchase commitment in initial new order	29,600
Remaining purchase commitment	2,660
Maximum [Member]
Long-term Purchase Commitment [Line Items]
Purchase commitment in initial new order	31,500
Remaining purchase commitment	$ 4,560

LINE OF CREDIT (Details)

LINE OF CREDIT (Details) - Wells Fargo [Member] - Line of Credit [Member] - USD ($)	Jun. 22, 2017	Mar. 31, 2018
Line of Credit Facility [Line Items]
Revolving line of credit		$ 10,000,000
Line of credit maturity date		Jun. 25, 2018
Line of credit facility, sublimit for advances		$ 5,000,000
Percentage of advances, guaranteed by bank		90.00%
Percentage of facility fee		3.00%
Facility fee		$ 150,000
Interest rate in event of default in excess of standard rate		3.00%
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]
Line of credit facility, sublimit for letter of credit		1,000,000
Advances against inventory		3,000,000
Borrowers' demand deposit account to be maintained		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	2.00%	2.00%
Line of credit, description of variable rate basis	Wells Fargo’s three-month LIBOR rate	Wells Fargo’s three-month LIBOR rate
Debt instrument, term of variable rate	3 months	3 months
Prime Rate [Member]
Line of Credit Facility [Line Items]
Line of credit, spread on variable rate		1.00%
Line of credit, description of variable rate basis		Wells Fargo’s Prime Rate

STOCK-BASED COMPENSATION (Detai

STOCK-BASED COMPENSATION (Details) - USD ($)	3 Months Ended
STOCK-BASED COMPENSATION (Details) - USD ($)	Mar. 31, 2018	Mar. 31, 2017	Mar. 31, 2018
Components of the Company's stock based compensation included in net income [Abstract]
Share-based compensation expense	$ 197,558	$ 32,293
Additional Disclosures [Abstract]
Stock-based compensation capitalized as a cost of inventory	0	0
Employee Stock Options [Member]
Components of the Company's stock based compensation included in net income [Abstract]
Share-based compensation expense	$ 77,261	71,323
Stock Option Activity [Roll Forward]
Outstanding, beginning balance (in shares)	2,377,265
Granted (in shares)	42,500
Forfeited (in shares)	(50,000)
Expired (in shares)	(29,503)
Outstanding, ending balance (in shares)	2,340,262
Weighted Average Exercise Price [Roll Forward]
Outstanding, beginning balance (in dollars per share)	$ 1.46
Granted (in dollars per share)	1.31
Forfeited (in dollars per share)	1.04
Expired (in dollars per share)	2.17
Outstanding, ending balance (in dollars per share)	$ 1.45
Weighted average assumptions for stock options [Abstract]
Dividend yield	0.00%
Expected volatility	61.90%
Risk-free interest rate	2.54%
Expected lives	5 years 7 months 6 days
Options Outstanding [Abstract]
Balance as of end of period (in shares)	2,377,265		2,340,262
Weighted average remaining contractual life	7 years 7 months 28 days
Weighted average exercise price (in dollars per share)	$ 1.46		$ 1.45
Options Exercisable [Abstract]
Balance as of end of period (in shares)			1,561,847
Weighted average remaining contractual life	6 years 11 months 8 days
Weighted average exercise price (in dollars per share)			$ 1.68
Options Vested or Expected to Vest [Abstract]
Balance as of end of period (in shares)			2,181,387
Weighted average remaining contractual life	7 years 6 months 18 days
Weighted average exercise price (in dollars per share)			$ 1.48
Additional Disclosures [Abstract]
Fair value of stock options (in dollars per share)	$ 0.75
Fair value of stock options vested	$ 56,000
Unrecognized stock-based compensation expense related to unvested awards			$ 280,000
Total compensation cost not yet recognized, period for recognition	29 months
Aggregate intrinsic value of stock options outstanding			452,000
Aggregate intrinsic value of stock options exercisable			452,000
Aggregate intrinsic value of stock options vested or expected to vest			452,000
Aggregate intrinsic value of stock options exercised	$ 0	0
Restricted Stock Awards [Member]
Components of the Company's stock based compensation included in net income [Abstract]
Share-based compensation expense	$ 120,297	$ (39,030)
Additional Disclosures [Abstract]
Unrecognized stock-based compensation expense related to unvested awards			$ 125,000
Total compensation cost not yet recognized, period for recognition	4 months
Restricted Stock Activity [Roll Forward]
Unvested, beginning balance (in shares)	355,417
Granted (in shares)	134,500
Vested (in shares)	(274,614)
Canceled (in shares)	(80,803)
Unvested, ending balance (in shares)	134,500
Weighted Average Grant Date Fair Value [Roll Forward]
Unvested, beginning balance (in dollars per share)	$ 1.11
Granted (in dollars per share)	1.31
Vested (in dollars per share)	1.11
Canceled (in dollars per share)	1.11
Unvested, ending balance (in dollars per share)	$ 1.31

NET LOSS PER COMMON SHARE (Deta

NET LOSS PER COMMON SHARE (Details) - USD ($)	3 Months Ended
NET LOSS PER COMMON SHARE (Details) - USD ($)	Mar. 31, 2018	Mar. 31, 2017
Numerator [Abstract]
Net loss	$ (578,054)	$ (559,646)
Weighted average common shares outstanding [Abstract]
Basic (in shares)	21,371,416	21,118,335
Stock options (in shares)	0	0
Diluted (in shares)	21,371,416	21,118,335
Net loss per common share [Abstract]
Basic (in dollars per share)	$ (0.03)	$ (0.03)
Diluted (in dollars per share)	$ (0.03)	$ (0.03)
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)	2,340,000	1,820,000
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)	135,000	146,000

MAJOR CUSTOMERS AND CONCENTRA40

MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK (Details) - USD ($)	3 Months Ended				12 Months Ended
	Mar. 31, 2018		Mar. 31, 2017		Dec. 31, 2017
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	$ 4,220,000
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	120 days
Trade Accounts Receivable [Member] \| Customer Concentration Risk [Member] \| Customer A [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	29.00%				18.00%
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]			12.00%
Total Gross Sales [Member] \| Customer Concentration Risk [Member] \| Customer A [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	16.00%			[3]
Total Gross Sales [Member] \| Customer Concentration Risk [Member] \| Customer B [Member]
Concentration Risk [Line Items]
Concentration risk, percentage		[4]	10.00%
Total Gross Sales [Member] \| Customer Concentration Risk [Member] \| Customer D [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	12.00%		25.00%

[1]	Customer B did not have an individual balance that represented 10% or more of the total gross accounts receivable as of December 31, 2017.
[2]	Customer C did not have an individual balance that represented 10% or more of the total gross accounts receivable as of March 31, 2018.
[3]	Customer A did not have net sales that represented 10% or more of total net sales for the three months ended March 31, 2017.
[4]	Customer B did not have net sales that represented 10% or more of total net sales for the three months ended March 31, 2018.