Charles & Colvard (CTHR) 10-Q 7 Feb 20 2020 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Dec. 31, 2019	Jan. 31, 2020
Cover [Abstract]
Entity Registrant Name	CHARLES & COLVARD LTD
Entity Central Index Key	0001015155
Current Fiscal Year End Date	--06-30
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Shell Company	false
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		28,981,910
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Dec. 31, 2019
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Entity Address, State or Province	NC

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($)	Dec. 31, 2019	Jun. 30, 2019
Current assets:
Cash and cash equivalents	$ 12,687,976	$ 12,465,483
Restricted cash	656,887	541,062
Accounts receivable, net	3,088,083	1,962,471
Inventory, net	10,695,379	11,909,792
Prepaid expenses and other assets	1,388,852	989,559
Total current assets	28,517,177	27,868,367
Long-term assets:
Inventory, net	25,096,555	21,823,928
Property and equipment, net	1,112,612	1,026,098
Intangible assets, net	133,081	97,373
Operating lease right-of-use assets	783,935	0
Other assets	327,879	330,615
Total long-term assets	27,454,062	23,278,014
TOTAL ASSETS	55,971,239	51,146,381
Current liabilities:
Accounts payable	4,823,857	3,372,172
Operating lease liabilities	614,144	0
Accrued expenses and other liabilities	1,515,729	1,325,608
Total current liabilities	6,953,730	4,697,780
Long-term liabilities:
Noncurrent operating lease liabilities	491,952	0
Deferred rent	0	236,745
Accrued income taxes	6,961	6,214
Total long-term liabilities	498,913	242,959
Total liabilities	7,452,643	4,940,739
Commitments and contingencies (Note 9)
Shareholders' equity:
Common stock, no par value; 50,000,000 shares authorized; 28,981,910 and 28,027,569 shares issued and outstanding at December 31, 2019 and June 30, 2019, respectively	54,342,864	54,342,864
Additional paid-in capital	25,779,732	24,488,147
Accumulated deficit	(31,604,000)	(32,625,369)
Total shareholders' equity	48,518,596	46,205,642
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 55,971,239	$ 51,146,381

CONDENSED CONSOLIDATED BALANC_2

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - $ / shares	Dec. 31, 2019	Jun. 30, 2019
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)	28,981,910	28,027,569
Common stock, shares outstanding (in shares)	28,981,910	28,027,569

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) [Abstract]
Net sales	$ 10,659,090	$ 10,139,461	$ 18,267,511	$ 16,734,167
Costs and expenses:
Cost of goods sold	5,530,514	5,346,207	9,407,138	8,959,956
Sales and marketing	3,160,965	2,346,893	5,390,556	3,988,017
General and administrative	1,203,686	1,250,181	2,553,187	2,474,956
Research and development	0	1,422	0	1,422
Total costs and expenses	9,895,165	8,944,703	17,530,881	15,424,351
Income from operations	763,925	1,194,758	916,630	1,309,816
Other income (expense):
Interest income	45,379	0	106,758	0
Interest expense	(277)	(352)	(419)	(698)
Loss on foreign currency exchange	(314)	(74)	(853)	(102)
Other expense	0	0	0	(13)
Total other income (expense), net	44,788	(426)	105,486	(813)
Income before income taxes	808,713	1,194,332	1,022,116	1,309,003
Income tax benefit (expense)	5,337	(4,767)	(747)	(9,534)
Net income	$ 814,050	$ 1,189,565	$ 1,021,369	$ 1,299,469
Net income per common share:
Basic (in dollars per share)	$ 0.03	$ 0.06	$ 0.04	$ 0.06
Diluted (in dollars per share)	$ 0.03	$ 0.05	$ 0.03	$ 0.06
Weighted average number of shares used in computing net income per common share:
Basic (in shares)	28,656,910	21,468,569	28,610,299	21,461,773
Diluted (in shares)	29,246,571	21,681,484	29,199,876	21,623,967

CONDENSED CONSOLIDATED STATEM_2

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Total
Balance at Jun. 30, 2018	$ 54,243,816	$ 14,962,071	$ (34,900,836)	$ 34,305,051
Balance (in shares) at Jun. 30, 2018	21,705,173
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	$ 0	71,176	0	71,176
Retirement of restricted stock	$ 0	0	0	0
Retirement of restricted stock (in shares)	(109,604)
Stock option exercises	$ 3,480	(1,229)	0	2,251
Stock option exercises (in shares)	2,500
Net income	$ 0	0	109,904	109,904
Balance at Sep. 30, 2018	$ 54,247,296	15,032,018	(34,790,932)	34,488,382
Balance (in shares) at Sep. 30, 2018	21,598,069
Balance at Jun. 30, 2018	$ 54,243,816	14,962,071	(34,900,836)	34,305,051
Balance (in shares) at Jun. 30, 2018	21,705,173
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income				1,299,469
Balance at Dec. 31, 2018	$ 54,247,296	15,203,924	(33,601,367)	35,849,853
Balance (in shares) at Dec. 31, 2018	21,598,069
Balance at Sep. 30, 2018	$ 54,247,296	15,032,018	(34,790,932)	34,488,382
Balance (in shares) at Sep. 30, 2018	21,598,069
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	$ 0	171,906	0	171,906
Net income	0	0	1,189,565	1,189,565
Balance at Dec. 31, 2018	$ 54,247,296	15,203,924	(33,601,367)	35,849,853
Balance (in shares) at Dec. 31, 2018	21,598,069
Balance at Jun. 30, 2019	$ 54,342,864	24,488,147	(32,625,369)	46,205,642
Balance (in shares) at Jun. 30, 2019	28,027,569
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock, net of offering costs	$ 0	932,480	0	932,480
Issuance of common stock, net of offering costs (in shares)	630,500
Stock-based compensation	$ 0	212,380	0	212,380
Issuance of restricted stock	$ 0	0	0	0
Issuance of restricted stock (in shares)	325,000
Retirement of restricted stock	$ 0	0	0	0
Retirement of restricted stock (in shares)	(1,159)
Net income	$ 0	0	207,319	207,319
Balance at Sep. 30, 2019	$ 54,342,864	25,633,007	(32,418,050)	47,557,821
Balance (in shares) at Sep. 30, 2019	28,981,910
Balance at Jun. 30, 2019	$ 54,342,864	24,488,147	(32,625,369)	46,205,642
Balance (in shares) at Jun. 30, 2019	28,027,569
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income				1,021,369
Balance at Dec. 31, 2019	$ 54,342,864	25,779,732	(31,604,000)	48,518,596
Balance (in shares) at Dec. 31, 2019	28,981,910
Balance at Sep. 30, 2019	$ 54,342,864	25,633,007	(32,418,050)	47,557,821
Balance (in shares) at Sep. 30, 2019	28,981,910
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	$ 0	146,725	0	146,725
Net income	0	0	814,050	814,050
Balance at Dec. 31, 2019	$ 54,342,864	$ 25,779,732	$ (31,604,000)	$ 48,518,596
Balance (in shares) at Dec. 31, 2019	28,981,910

CONDENSED CONSOLIDATED STATEM_3

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($)	6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 1,021,369	$ 1,299,469
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	234,303	230,013
Stock-based compensation	359,105	243,082
(Recovery of) Provision for uncollectible accounts	(10,000)	8,056
Provision for sales returns	299,000	635,000
Provision for inventory reserves	149,000	52,000
Provision for accounts receivable discounts	39,706	38,788
Changes in operating assets and liabilities:
Accounts receivable	(1,454,318)	(1,888,444)
Inventory	(2,207,214)	(1,016,209)
Prepaid expenses and other assets, net	(196,764)	(386,254)
Accounts payable	1,451,685	296,185
Deferred rent	0	(77,438)
Accrued income taxes	747	9,534
Accrued expenses and other liabilities	75,744	506,536
Net cash used in operating activities	(237,637)	(49,682)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(319,728)	(285,377)
Payments for intangible assets	(36,797)	(55,676)
Net cash used in investing activities	(356,525)	(341,053)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock, net of offering costs	932,480	0
Stock option exercises	0	2,251
Net cash provided by financing activities	932,480	2,251
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	338,318	(388,484)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD	13,006,545	3,393,186
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD	13,344,863	3,004,702
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	277	698
Cash paid during the period for income taxes	$ 2,050	$ 5,065

DESCRIPTION OF BUSINESS

DESCRIPTION OF BUSINESS	6 Months Ended
	Dec. 31, 2019
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	6 Months Ended
	Dec. 31, 2019
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract]
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES	2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The condensed consolidated financial statements as of and for the three and six months ended December 31, 2019 and 2018 included in this Quarterly Report on Form 10-Q are unaudited. The balance sheet as of June 30, 2019 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 (the “2019 Annual Report”) for the fiscal year ended June 30, 2019 filed with the SEC on September 6, 2019. The accompanying condensed consolidated financial statements as of and for the three and six months ended December 31, 2019 and 2018, and as of the fiscal year ended June 30, 2019, include the accounts of the Company and its wholly owned subsidiaries charlesandcolvard.com, LLC; Charles & Colvard Direct, LLC; and Charles & Colvard (HK) Ltd., the Company’s Hong Kong subsidiary, which was re-activated in December 2017. Charles & Colvard Direct, LLC, had no operating activity during the six-month period ended December 31, 2019 or 2018. Charles & Colvard (HK) Ltd. previously became dormant in the second quarter of 2009 and has had no operating activity since 2008. All intercompany accounts have been eliminated. Significant Accounting Policies – Use of Estimates Cash and Cash Equivalents Restricted Cash The Company has full access to its cash balances without restriction following the period of time such cash is held by White Oak. For additional information regarding the Company’s asset-based revolving credit facility, see Note 10, “Line of Credit.” The reconciliation of cash, cash equivalents, and restricted cash, as presented on the Condensed Consolidated Statements of Cash Flows, consists of the following as of the dates presented: December 31, 2019 June 30, 2019 Cash and cash equivalents $ 12,687,976 $ 12,465,483 Restricted cash 656,887 541,062 Total cash, cash equivalents, and restricted cash $ 13,344,863 $ 13,006,545 Immaterial Correction of an Error – An immaterial error correction was made within the Company’s Form 10-Q for the quarterly period ended December 31, 2019. During the six months ended December 31, 2019, the Company determined that an accrued income tax liability for uncertain tax positions should have been derecognized in the prior years. Specifically, the Company had a liability of approximately $492,000 relating to uncertain tax positions that should have been derecognized between the fiscal years ended December 31, 2012 and December 31, 2015. The Company evaluated the effect of this error and concluded it was not material to any of its previously issued consolidated financial statements. Upon revision, the Company recorded a reduction to the accrued income tax liability and related accumulated deficit balance of approximately $492,000 which has been reflected in the June 30, 2019 condensed consolidated balance sheet presented in this quarterly report on Form 10-Q for the quarterly period ended December 31, 2019. The impact of this error on the condensed consolidated statement of operations for the three and six months ended December 31, 2019 and 2018 was de minimus and had no impact on the condensed consolidated statements of cash flows for the six months ended December 31, 2019 and 2018. Recently Adopted/Issued Accounting Pronouncements – The new standard provides a number of practical expedients for transition and policy elections for ongoing accounting. The Company elected the “package of practical expedients”, which permits the Company to not reassess its prior conclusions about lease identification, lease classification, and initial direct costs. The standard provides policy election options for recognition exemption for short-term leases and separation of lease and non-lease components. The Company elected the “short-term lease recognition” exemption and elected not to separate lease and non-lease components for all underlying asset classes. The Company determines lease and non-lease components based on observable information, including terms provided by the lessor. The adoption of the new accounting standard resulted in the recognition of ROU assets and lease liabilities of approximately $983,000 and $1.38 million, respectively, for operating leases as of July 1, 2019. Currently, the Company has no other material leases that qualify as finance, variable, or short-term leases. The adoption did not have a material impact on the Company’s condensed consolidated statement of operations or condensed consolidated statement of cash flows. Subsequent to the date of adoption, the Company determines if a contract is or contains a lease at inception of the agreement. Operating leases are recognized as ROU assets and the related obligations are recognized as current or noncurrent liabilities on the Company’s consolidated balance sheet. Leases with an initial lease term of one year or less are not recorded on the balance sheet. ROU assets, which represent the Company’s right to use an underlying asset, and lease liabilities, which represent the Company’s obligation to make lease payments arising from the lease, are recognized based on the present value of the future lease payments over the lease term at the commencement date. The ROU asset also includes any lease payments made at or before the commencement date and any initial direct costs incurred and excludes lease incentives. Certain of the Company’s leases contain renewal and/or termination options. The Company recognizes renewal or termination options as part of its ROU assets and lease liabilities when the Company has the unilateral right to renew or terminate and it is reasonably certain these options will be exercised. The Company determines the present value of lease payments based on the implicit rate, which may be explicitly stated in the lease if available or the Company’s estimated collateralized incremental borrowing rate based on the term of the lease. For operating leases, lease expense is recognized on a straight-line basis over the lease term. Some leases could require the Company to pay non-lease components, which may include taxes, maintenance, insurance and certain other expenses applicable to the leased property, and are primarily considered variable costs. When applicable, such costs are expensed as incurred. For additional information regarding the Company’s accounting for lease arrangements, see Note 9, “Commitments and Contingencies.” In August 2018, the Financial Accounting Standards Board issued additional guidance in connection with accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. The updated guidance is effective for fiscal years beginning after December 15, 2019. The Company continues to conduct its analysis, but currently believes the effect of the adoption of this new pronouncement is not expected to be material to the Company’s financial statements.

SEGMENT INFORMATION AND GEOGRAP

SEGMENT INFORMATION AND GEOGRAPHIC DATA	6 Months Ended
	Dec. 31, 2019
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 “Online Channels” segment, which consists of e-commerce outlets including charlesandcolvard.com, third-party online marketplaces, drop-ship retail, and other pure-play, exclusively e-commerce outlets; and its “Traditional” segment, which consists of wholesale and retail customers. The accounting policies of the Online Channels segment and Traditional 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 2019 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. 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, leases, 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 between its Online Channels segment and its Traditional segment based on net sales and number of employees to arrive at segment operating income. Unallocated expenses remain in its Traditional segment. Summary financial information by reportable segment is as follows: Three Months Ended December 31, 2019 Online Channels Traditional Total Net sales Finished jewelry $ 5,144,320 $ 1,294,027 $ 6,438,347 Loose jewels 940,434 3,280,309 4,220,743 Total $ 6,084,754 $ 4,574,336 $ 10,659,090 Product line cost of goods sold Finished jewelry $ 2,239,750 $ 724,364 $ 2,964,114 Loose jewels 405,869 1,675,785 2,081,654 Total $ 2,645,619 $ 2,400,149 $ 5,045,768 Product line gross profit Finished jewelry $ 2,904,570 $ 569,663 $ 3,474,233 Loose jewels 534,565 1,604,524 2,139,089 Total $ 3,439,135 $ 2,174,187 $ 5,613,322 Operating income $ 349,762 $ 414,163 $ 763,925 Depreciation and amortization $ 32,773 $ 76,892 $ 109,665 Capital expenditures $ 137,200 $ 71,211 $ 208,411 Three Months Ended December 31, 2018 Online Channels Traditional Total Net sales Finished jewelry $ 4,357,713 $ 839,543 $ 5,197,256 Loose jewels 1,098,452 3,843,753 4,942,205 Total $ 5,456,165 $ 4,683,296 $ 10,139,461 Product line cost of goods sold Finished jewelry $ 1,913,201 $ 558,427 $ 2,471,628 Loose jewels 433,749 2,036,665 2,470,414 Total $ 2,346,950 $ 2,595,092 $ 4,942,042 Product line gross profit Finished jewelry $ 2,444,512 $ 281,116 $ 2,725,628 Loose jewels 664,703 1,807,088 2,471,791 Total $ 3,109,215 $ 2,088,204 $ 5,197,419 Operating income $ 806,591 $ 388,167 $ 1,194,758 Depreciation and amortization $ 43,063 $ 78,734 $ 121,797 Capital expenditures $ 61,600 $ 59,678 $ 121,278 Six Months Ended December 31, 2019 Online Channels Traditional Total Net sales Finished jewelry $ 8,121,667 $ 2,174,675 $ 10,296,342 Loose jewels 1,668,716 6,302,453 7,971,169 Total $ 9,790,383 $ 8,477,128 $ 18,267,511 Product line cost of goods sold Finished jewelry $ 3,452,623 $ 1,214,401 $ 4,667,024 Loose jewels 671,063 3,210,043 3,881,106 Total $ 4,123,686 $ 4,424,444 $ 8,548,130 Product line gross profit Finished jewelry $ 4,669,044 $ 960,274 $ 5,629,318 Loose jewels 997,653 3,092,410 4,090,063 Total $ 5,666,697 $ 4,052,684 $ 9,719,381 Operating income $ 395,427 $ 521,203 $ 916,630 Depreciation and amortization $ 82,023 $ 152,280 $ 234,303 Capital expenditures $ 210,925 $ 108,803 $ 319,728 Six Months Ended December 31, 2018 Online Channels Traditional Total Net sales Finished jewelry $ 6,473,653 $ 1,278,240 $ 7,751,893 Loose jewels 2,065,612 6,916,662 8,982,274 Total $ 8,539,265 $ 8,194,902 $ 16,734,167 Product line cost of goods sold Finished jewelry $ 2,746,591 $ 781,076 $ 3,527,667 Loose jewels 922,034 3,597,144 4,519,178 Total $ 3,668,625 $ 4,378,220 $ 8,046,845 Product line gross profit Finished jewelry $ 3,727,062 $ 497,164 $ 4,224,226 Loose jewels 1,143,578 3,319,518 4,463,096 Total $ 4,870,640 $ 3,816,682 $ 8,687,322 Operating income $ 890,338 $ 419,478 $ 1,309,816 Depreciation and amortization $ 71,139 $ 158,874 $ 230,013 Capital expenditures $ 62,850 $ 222,527 $ 285,377 The Company does not allocate any assets to the reportable segments, and, therefore, no asset information is reported to the chief operating decision maker or 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 December 31, Six Months Ended December 31, 2019 2018 2019 2018 Product line cost of goods sold $ 5,045,768 $ 4,942,042 $ 8,548,130 $ 8,046,845 Non-capitalized manufacturing and production control expenses 427,643 307,164 817,519 653,768 Freight out 141,233 203,669 272,352 302,789 Inventory valuation allowances 126,000 3,000 149,000 52,000 Other inventory adjustments (210,130 ) (109,668 ) (379,863 ) (95,446 ) Cost of goods sold $ 5,530,514 $ 5,346,207 $ 9,407,138 $ 8,959,956 The Company recognizes sales by geographic area based on the country in which the customer is based. Sales to international end consumers made through the Company’s transactional website, charlesandcolvard.com, are included in international sales for financial reporting purposes. During periods prior to the quarter ended December 31, 2018, sales to international end consumers made through charlesandcolvard.com were included in U.S. sales because during those prior periods products were shipped and invoiced to a U.S.-based intermediary that assumed all international shipping and credit risks. Currently, sales to international end consumers are made directly by the Company’s own transactional website. 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. All intangible assets, as well as property and equipment, as of December 31, 2019 and June 30, 2019, are held and located in the United States. The following presents net sales by geographic area: Three Months Ended December 31, Six Months Ended December 31, 2019 2018 2019 2018 Net sales United States $ 9,643,311 $ 8,870,317 $ 16,407,187 $ 14,693,186 International 1,015,779 1,269,144 1,860,324 2,040,981 Total $ 10,659,090 $ 10,139,461 $ 18,267,511 $ 16,734,167

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	6 Months Ended
	Dec. 31, 2019
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. 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 six months ended December 31, 2019 and 2018, no impairment was recorded.

INVENTORIES

INVENTORIES	6 Months Ended
	Dec. 31, 2019
INVENTORIES [Abstract]
INVENTORIES	5. INVENTORIES The Company’s total inventories, net of reserves, consisted of the following as of the dates presented: December 31, 2019 June 30, 2019 Raw materials $ 4,495,344 $ 4,450,478 Work-in-process 12,288,209 10,871,823 Finished goods 18,623,815 18,557,224 Finished goods on consignment 2,806,980 2,086,084 Supplies inventory 87,586 129,111 Less: inventory reserves (2,510,000 ) (2,361,000 ) Total $ 35,791,934 $ 33,733,720 Short-term portion $ 10,695,379 $ 11,909,792 Long-term portion 25,096,555 21,823,928 Total $ 35,791,934 $ 33,733,720 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 expected size and shape of the finished jewel. To maximize manufacturing efficiencies, preforms may be made in advance of current finished inventory needs but remain in work-in-process inventories. As of December 31, 2019 and June 30, 2019, work-in-process inventories issued to active production jobs approximated $1.52 million and $1.23 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, and product obsolescence is closely monitored and reviewed by management as of and for each financial reporting period. 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 generally 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 continuing operating subsidiaries carry no net inventories, and inventory is transferred without intercompany markup from the parent entity 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: December 31, 2019 June 30, 2019 Finished jewelry: Raw materials $ 763,789 $ 643,797 Work-in-process 617,415 487,680 Finished goods 6,494,177 6,332,533 Finished goods on consignment 2,564,737 1,867,549 Total finished jewelry $ 10,440,118 $ 9,331,559 Loose jewels: Raw materials $ 3,731,555 $ 3,806,681 Work-in-process 11,670,794 10,384,143 Finished goods 9,633,638 9,878,691 Finished goods on consignment 228,243 203,535 Total loose jewels 25,264,230 24,273,050 Total supplies inventory 87,586 129,111 Total inventory $ 35,791,934 $ 33,733,720 Total net finished jewelry inventories at December 31, 2019 and June 30, 2019, including inventory on consignment net of reserves and finished jewelry featuring moissanite manufactured by the Company, were $10.44 million and $9.33 million, respectively. Total net loose jewel inventories at December 31, 2019 and June 30, 2019, including inventory on consignment net of reserves, were $25.26 million and $24.27 million, respectively. As of December 31, 2019 and June 30, 2019, management established an obsolescence reserve of $1.99 million and $1.79 million, respectively. Typically, in the jewelry industry, slow-moving or discontinued lines are sold as closeouts or liquidated in sales channels. Regularly, management reviews the legacy loose jewel inventory for any lower of cost or net realizable value and obsolescence issues. Accordingly, as of December 31, 2019 and June 30, 2019, 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 $174,000 and $19,000, respectively, for the carrying costs in excess of any estimated scrap values. Likewise, with respect to the Company’s loose jewels inventory, based on current period demand, and ongoing feedback from distribution 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. Accordingly, as of December 31, 2019, the Company maintained a lower of cost or net realizable value reserve on this remaining inventory of approximately $1.82 million as of December 31, 2019 and $1.77 million as of June 30, 2019. As of December 31, 2019 and June 30, 2019 management established a rework reserve for recut and repairs of loose jewel inventories of $381,000 and $460,000, respectively. As of December 31, 2019 and June 30, 2019 management established a shrinkage reserve of $139,000 and $112,000, respectively. Finished jewelry inventories at December 31, 2019 and June 30, 2019 include shrinkage reserves of $125,000 and $105,000, respectively. The loose jewel inventories at December 31, 2019 and June 30, 2019 include shrinkage reserves of $14,000 and $7,000, respectively. 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 $14,000 and $15,000 as of December 31, 2019 and June 30, 2019, respectively, to allow for certain finished jewelry and loose jewels 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. Finished jewelry inventories on consignment at December 31, 2019 and June 30, 2019 include shrinkage reserves of $13,000 and $14,000, respectively. The loose jewel inventories on consignment at each December 31, 2019 and June 30, 2019 include shrinkage reserves of $1,000. The need for adjustments to inventory-related reserves and valuation allowances is evaluated on a period-by-period basis. Changes to the Company’s inventory reserves and allowances are accounted for in the current accounting period in which a change in such reserves and allowances is observed and deemed appropriate, including changes in management’s estimates used in the process to determine such reserves and valuation allowances.

RETURNS ASSET AND REFUND LIABIL

RETURNS ASSET AND REFUND LIABILITIES	6 Months Ended
	Dec. 31, 2019
RETURNS ASSET AND REFUND LIABILITIES [Abstract]
RETURNS ASSET AND REFUND LIABILITIES	6. RETURNS ASSET AND REFUND LIABILITIES In connection with the Company’s adoption of the he Company 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 December 31, 2019 and June 30, 2019, the Company’s refund liabilities balances were $1.05 million and $746,000, respectively, and are included as allowances for sales returns within accounts receivable, net, in the accompanying condensed consolidated balance sheets. As of December 31, 2019 and June 30, 2019, the Company’s returns asset balances were $501,000 and $279,000, respectively, and are included within prepaid expenses and other assets in the accompanying condensed consolidated balance sheets

ACCRUED EXPENSES AND OTHER LIAB

ACCRUED EXPENSES AND OTHER LIABILITIES	6 Months Ended
	Dec. 31, 2019
ACCRUED EXPENSES AND OTHER LIABILITIES [Abstract]
ACCRUED EXPENSES AND OTHER LIABILITIES	7. ACCRUED EXPENSES AND OTHER LIABILITIES Accrued expenses and other liabilities, current, consist of the following as of the dates presented: December 31, 2019 June 30, 2019 Accrued compensation and related benefits $ 703,360 $ 760,324 Accrued sales tax 370,953 286,864 Deferred rent - 156,306 Accrued cooperative advertising 348,471 73,033 Other 92,945 49,081 Total accrued expenses and other liabilities $ 1,515,729 $ 1,325,608

INCOME TAXES

INCOME TAXES	6 Months Ended
	Dec. 31, 2019
INCOME TAXES [Abstract]
INCOME TAXES	8. INCOME TAXES The Company recognized a net income tax net benefit of approximately $5,000 and a net income tax expense of approximately $5,000, respectively, related to estimated taxes, penalties, and interest associated with uncertain tax positions for the three months ended December 31, 2019 and 2018, and a net income tax expense of approximately $1,000 and $10,000, respectively, also related to estimated taxes, penalties, and interest associated with uncertain tax positions for the six months ended December 31, 2019 and 2018. As of each reporting date, the Company’s management considers new evidence, both positive and negative, that could impact its view with regard to future realization of deferred tax assets. As of December 31, 2019 and June 30, 2019, 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, the Company continued to maintain a full valuation allowance against its deferred tax assets as of December 31, 2019 and June 30, 2019.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	6 Months Ended
	Dec. 31, 2019
COMMITMENTS AND CONTINGENCIES [Abstract]
COMMITMENTS AND CONTINGENCIES	9. COMMITMENTS AND CONTINGENCIES Lease Arrangements On December 9, 2013, the Company entered into a Lease Agreement, as amended on December 23, 2013 and April 15, 2014 (the “Lease Agreement”), for its corporate headquarters, which occupies approximately 36,350 square feet of office, storage and light manufacturing space and is classified as an operating lease for financial reporting purposes. The base term of the Lease Agreement expires on October 31, 2022 and the terms of the Lease Agreement contain no early termination provisions. Provided there is no outstanding uncured event of default under the Lease Agreement, the Company has two options to extend the lease term for a period of five years under each option. The Company’s option to extend the term of the Lease Agreement must be exercised in writing on or before 270 days prior to expiration of the then-current term. If the options are exercised, the monthly minimum rent for each of the extended terms will be adjusted to the then prevailing fair market rate. The Company took possession of the leased property on May 23, 2014, once certain improvements to the leased space were completed and did not have access to the property before this date. These improvements and other lease related incentives offered by the landlord totaled approximately $623,000, of which approximately $393,000 was unamortized as of July 1, 2019, the effective date upon which the Company adopted the new lease accounting standard as described in more detail in Note 2, “Basis of Presentation and Significant Accounting Policies.” The Company has no other material operating leases and is not party to leases that would qualify for classification as a finance lease, variable lease or short-term lease. As of December 31, 2019, the Company’s balance sheet classifications of its leases are as follows: Operating Leases: Noncurrent operating lease ROU assets $ 783,935 Current operating lease liabilities $ 614,144 Noncurrent operating lease liabilities 491,952 Total operating lease liabilities $ 1,106,096 The Company’s total operating lease cost was approximately $117,000 and $235,000, respectively, for the three- and six-month periods ended December 31, 2019. The Company’s total rent expense was approximately $128,000 and $256,000, respectively, for the three- and six-month periods ended December 31, 2019. As of December 31, 2019, the Company’s estimated incremental borrowing rate used and assumed discount rate with respect to operating leases was 7.14% and the remaining operating lease term was 1.83 years. As of December 31, 2019, the Company’s remaining future payments under operating leases for each fiscal year ending June 30 are as follows: 2020 $ 313,610 2021 642,997 2022 219,723 Total lease payments 1,176,330 Less: imputed interest (70,234 ) Present value of lease payments 1,106,096 Less: current lease obligations 614,144 Total long-term lease obligations $ 491,952 The Company makes cash payments for amounts included in the measurement of its lease liabilities. During the three and six months ended December 31, 2019, cash paid for operating leases was approximately $164,000 and $328,000, respectively, and there were no new ROU assets obtained in exchange for new operating lease liabilities. Lease Disclosures for the fiscal year ended June 30, 2019, as reported The Company recognized rent expense on a straight-line basis, having given consideration to the rent holidays and escalations, the lease signing and moving allowance paid to the Company, and the rent abatement. The Company’s total rent expense for operating leases was approximately $528,000 for the fiscal year ended June 30, 2019. The Company also had future minimum payments as of June 30, 2019 under its operating leases for each fiscal year ending June 30 that were as follows: 2020 $ 625,788 2021 642,997 2022 219,723 Total $ 1,488,508 Purchase Commitments On December 12, 2014, the Company entered into an 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 was scheduled to expire on June 24, 2018, unless extended by the parties. Effective June 22, 2018, the Supply Agreement was amended to extend the expiration date to June 25, 2023. The Supply Agreement was also amended to (i) provide the Company with one option, subject to certain conditions, to unilaterally extend the term of the Supply Agreement for an additional two-year period following expiration of the initial term; (ii) establish a process by which Cree may begin producing alternate SiC material based on the Company’s specifications that will give the Company the flexibility to use the materials in a broader variety of its products; and (iii) permit the Company to purchase certain amounts of SiC materials from third parties under limited conditions. The Company’s total purchase commitment under the Supply Agreement until June 2023 is approximately $52.95 million, of which approximately $39.00 million remains to be purchased as of December 31, 2019. Over the life of the Supply Agreement, as amended, the Company’s future minimum annual purchase commitments of SiC crystals range from approximately $10 million to $12 million each year. During the six months ended December 31, 2019, the Company purchased approximately $4.98 million of SiC crystals from Cree pursuant to the terms of the Supply Agreement, as amended. During the six months ended December 31, 2018, the Company purchased approximately $4.43 million of SiC crystals from Cree.

LINE OF CREDIT

LINE OF CREDIT	6 Months Ended
	Dec. 31, 2019
LINE OF CREDIT [Abstract]
LINE OF CREDIT	10. LINE OF CREDIT On July 13, 2018, the Company and its wholly-owned subsidiary, charlesandcolvard.com, LLC (collectively, the “Borrowers”), obtained a $5.00 million asset-based revolving credit facility (the “White Oak Credit Facility”) from White Oak. The White Oak Credit Facility may be used for general corporate and working capital purposes, including permitted acquisitions. The White Oak Credit Facility, which matures on July 13, 2021, is guaranteed by Charles & Colvard Direct, LLC, a wholly-owned subsidiary of the Company. Under the terms of the White Oak Credit Facility, the Borrowers must maintain at least $500,000 in excess availability at all times. The White Oak Credit Facility contains no other financial covenants. Advances under the White Oak Credit Facility may be either revolving or non-revolving. As of December 31, 2019, the Company had not borrowed against the White Oak Credit Facility.

SHAREHOLDERS' EQUITY AND STOCK-

SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION	6 Months Ended
	Dec. 31, 2019
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION [Abstract]
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION	11. SHAREHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION Shelf Registration Statement The Company has an effective shelf registration statement on Form S-3 on file with the SEC which allows it to periodically offer and sell, individually or in any combination, shares of common stock, shares of preferred stock, warrants to purchase shares of common stock or preferred stock, and units consisting of any combination of the foregoing types of securities, up to a total of $25.00 million, of which approximately $13.99 million remains available after giving effect to the Company’s June 2019 public offering, including the impact of the partial exercise of the underwriters’ over-allotment option, as described below. The Company’s ability to issue equity securities under its effective shelf registration statement is subject to market conditions. On June 11, 2019, the Company completed an underwritten public offering of 6,250,000 newly issued shares of common stock, at a price to the public of $1.60 per share, pursuant to its effective shelf registration statement on Form S-3. Net proceeds from the offering were approximately $9.06 million, net of the underwriting discount and fees and expenses in the amount of approximately $941,000. Pursuant to the terms of the underwriting agreement entered in connection with this offering, the underwriters were granted a 30-day option to buy up to an additional 937,500 shares of the Company’s common stock to cover over-allotments. Pursuant to the partial exercise of the underwriters’ over-allotment option, o issued an additional 630,500 shares of its common stock . After giving effect to the partial exercise of the over-allotment option, the Company sold an aggregate of 6,880,500 shares of its common stock at a price of $1.60 per share with total gross proceeds of approximately $11.01 million, before deducting the total underwriting discount and fees and expenses of approximately $1.02 million. Stock-Based Compensation The following table summarizes the components of the Company’s stock-based compensation included in net income for the periods presented: Three Months Ended December 31, Six Months Ended December 31, 2019 2018 2019 2018 Employee stock options $ 48,189 $ 56,575 $ 112,064 $ 114,747 Restricted stock awards 98,535 115,331 247,041 128,335 Totals $ 146,724 $ 171,906 $ 359,105 $ 243,082 No stock-based compensation was capitalized as a cost of inventory during the three and six months ended December 31, 2019 and 2018. Stock Options The following is a summary of the stock option activity for the six months ended December 31, 2019: Shares Weighted Average Exercise Price Outstanding, June 30, 2019 2,523,638 $ 1.39 Granted 225,387 $ 1.39 Expired (27,100 ) $ 0.46 Outstanding, December 31, 2019 2,721,925 $ 1.40 The total fair value of stock options that vested during the six months ended December 31, 2019 was approximately $185,000. The following table summarizes information about stock options outstanding at December 31, 2019: Options Outstanding Options Exercisable Options Vested or Expected to Vest Balance as of 12/31/2019 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Balance as of 12/31/2019 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Balance as of 12/31/2019 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price 2,721,925 6.76 $ 1.40 2,346,538 6.42 $ 1.42 2,654,230 6.71 $ 1.40 As of December 31, 2019, the unrecognized stock-based compensation expense related to unvested stock options was approximately $217,000, which is expected to be recognized over a weighted average period of approximately 18 months. The aggregate intrinsic value of stock options outstanding, exercisable, and vested or expected to vest at December 31, 2019 was approximately $667,000. This amount is before applicable income taxes and represents the closing market price of the Company’s common stock at December 31, 2019 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 six months ended December 31, 2019. Restricted Stock The following is a summary of the restricted stock activity for the six months ended December 31, 2019: Shares Weighted Average Grant Date Fair Value Unvested, June 30, 2019 129,500 $ 1.07 Granted 325,000 $ 1.57 Vested (128,341 ) $ 1.07 Canceled (1,159 ) $ 1.07 Unvested, December 31, 2019 325,000 $ 1.57 The unvested restricted shares as of December 31, 2019 are all performance-based restricted shares that are scheduled to vest, subject to achievement of the underlying performance goals, in July 2020. As of December 31, 2019, the estimated unrecognized stock-based compensation expense related to unvested restricted shares subject to achievement of performance goals was approximately $322,000, all of which is expected to be recognized over a weighted average period of approximately six months. Dividends The Company has paid no cash dividends during the current fiscal year through December 31, 2019.

NET INCOME PER COMMON SHARE

NET INCOME PER COMMON SHARE	6 Months Ended
	Dec. 31, 2019
NET INCOME PER COMMON SHARE [Abstract]
NET INCOME PER COMMON SHARE	12. NET INCOME PER COMMON SHARE Basic net income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the periods. Diluted net income 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 and unvested restricted shares that are computed using the treasury stock method. Anti-dilutive stock awards consist of stock options that would have been anti-dilutive in the application of the treasury stock method. The following table reconciles the differences between the basic and diluted net income per share presentations: Three Months Ended December 31, Six Months Ended December 31, 2019 2018 2019 2018 Numerator: Net income $ 814,050 $ 1,189,565 $ 1,021,369 $ 1,299,469 Denominator: Weighted average common shares outstanding: Basic 28,656,910 21,468,569 28,610,299 21,461,773 Effect of dilutive securities 589,661 212,915 589,577 162,194 Diluted 29,246,571 21,681,484 29,199,876 21,623,967 Net income per common share: Basic $ 0.03 $ 0.06 $ 0.04 $ 0.06 Diluted $ 0.03 $ 0.05 $ 0.03 $ 0.06 For each of the three and six months ended December 31, 2019, stock options to purchase approximately 2.13 million shares and for the three and six months ended December 31, 2018 stock options to purchase approximately 2.44 million and 2.45 million shares, respectively,

MAJOR CUSTOMERS AND CONCENTRATI

MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK	6 Months Ended
	Dec. 31, 2019
MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK [Abstract]
MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK	13. MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, and restricted cash and trade accounts receivable. At times, cash balances may exceed the Federal Deposit Insurance Corporation (“FDIC”) insurable limits of $250,000 per depositor at each financial institution. The Company has never experienced any losses related to these balances. There were no non-interest-bearing amounts on deposit in excess of FDIC insurable limits at December 31, 2019. Interest-bearing amounts on deposit in excess of FDIC insurable limits at December 31, 2019 approximated $12.31 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 90 days, though it may offer extended terms with specific customers and on significant orders from time to time. 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. 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 as of the dates presented: December 31, 2019 June 30, 2019 Customer A 25 % 13 % Customer B 16 % 25 % Customer C * % 15 % * Customer C did not have individual balances that represented 10% or more of total gross accounts receivable as of December 31, 2019. A significant portion of sales is derived from certain customer relationships. The following is a summary of customers that represent greater than or equal to 10% of total net sales for the periods presented: Three Months Ended December 31, Six Months Ended December 31, 2019 2018 2019 2018 Customer A 13 % 13 % 13 % 11 % Customer B 13 % 15 % 13 % 14 %

BASIS OF PRESENTATION AND SIG_2

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)	6 Months Ended
	Dec. 31, 2019
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract]
Basis of Presentation and Principles of Consolidation	Basis of Presentation and Principles of Consolidation The condensed consolidated financial statements as of and for the three and six months ended December 31, 2019 and 2018 included in this Quarterly Report on Form 10-Q are unaudited. The balance sheet as of June 30, 2019 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 (the “2019 Annual Report”) for the fiscal year ended June 30, 2019 filed with the SEC on September 6, 2019. The accompanying condensed consolidated financial statements as of and for the three and six months ended December 31, 2019 and 2018, and as of the fiscal year ended June 30, 2019, include the accounts of the Company and its wholly owned subsidiaries charlesandcolvard.com, LLC; Charles & Colvard Direct, LLC; and Charles & Colvard (HK) Ltd., the Company’s Hong Kong subsidiary, which was re-activated in December 2017. Charles & Colvard Direct, LLC, had no operating activity during the six-month period ended December 31, 2019 or 2018. Charles & Colvard (HK) Ltd. previously became dormant in the second quarter of 2009 and has had no operating activity since 2008. All intercompany accounts have been eliminated.
Significant Accounting Policies	Significant Accounting Policies –
Use of Estimates	Use of Estimates
Cash and Cash Equivalents	Cash and Cash Equivalents
Restricted Cash	Restricted Cash The Company has full access to its cash balances without restriction following the period of time such cash is held by White Oak. For additional information regarding the Company’s asset-based revolving credit facility, see Note 10, “Line of Credit.”
Immaterial Correction of an Error	Immaterial Correction of an Error – An immaterial error correction was made within the Company’s Form 10-Q for the quarterly period ended December 31, 2019. During the six months ended December 31, 2019, the Company determined that an accrued income tax liability for uncertain tax positions should have been derecognized in the prior years. Specifically, the Company had a liability of approximately $492,000 relating to uncertain tax positions that should have been derecognized between the fiscal years ended December 31, 2012 and December 31, 2015. The Company evaluated the effect of this error and concluded it was not material to any of its previously issued consolidated financial statements. Upon revision, the Company recorded a reduction to the accrued income tax liability and related accumulated deficit balance of approximately $492,000 which has been reflected in the June 30, 2019 condensed consolidated balance sheet presented in this quarterly report on Form 10-Q for the quarterly period ended December 31, 2019. The impact of this error on the condensed consolidated statement of operations for the three and six months ended December 31, 2019 and 2018 was de minimus and had no impact on the condensed consolidated statements of cash flows for the six months ended December 31, 2019 and 2018.
Recently Adopted/Issued Accounting Pronouncements	Recently Adopted/Issued Accounting Pronouncements – The new standard provides a number of practical expedients for transition and policy elections for ongoing accounting. The Company elected the “package of practical expedients”, which permits the Company to not reassess its prior conclusions about lease identification, lease classification, and initial direct costs. The standard provides policy election options for recognition exemption for short-term leases and separation of lease and non-lease components. The Company elected the “short-term lease recognition” exemption and elected not to separate lease and non-lease components for all underlying asset classes. The Company determines lease and non-lease components based on observable information, including terms provided by the lessor. The adoption of the new accounting standard resulted in the recognition of ROU assets and lease liabilities of approximately $983,000 and $1.38 million, respectively, for operating leases as of July 1, 2019. Currently, the Company has no other material leases that qualify as finance, variable, or short-term leases. The adoption did not have a material impact on the Company’s condensed consolidated statement of operations or condensed consolidated statement of cash flows. Subsequent to the date of adoption, the Company determines if a contract is or contains a lease at inception of the agreement. Operating leases are recognized as ROU assets and the related obligations are recognized as current or noncurrent liabilities on the Company’s consolidated balance sheet. Leases with an initial lease term of one year or less are not recorded on the balance sheet. ROU assets, which represent the Company’s right to use an underlying asset, and lease liabilities, which represent the Company’s obligation to make lease payments arising from the lease, are recognized based on the present value of the future lease payments over the lease term at the commencement date. The ROU asset also includes any lease payments made at or before the commencement date and any initial direct costs incurred and excludes lease incentives. Certain of the Company’s leases contain renewal and/or termination options. The Company recognizes renewal or termination options as part of its ROU assets and lease liabilities when the Company has the unilateral right to renew or terminate and it is reasonably certain these options will be exercised. The Company determines the present value of lease payments based on the implicit rate, which may be explicitly stated in the lease if available or the Company’s estimated collateralized incremental borrowing rate based on the term of the lease. For operating leases, lease expense is recognized on a straight-line basis over the lease term. Some leases could require the Company to pay non-lease components, which may include taxes, maintenance, insurance and certain other expenses applicable to the leased property, and are primarily considered variable costs. When applicable, such costs are expensed as incurred. For additional information regarding the Company’s accounting for lease arrangements, see Note 9, “Commitments and Contingencies.” In August 2018, the Financial Accounting Standards Board issued additional guidance in connection with accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. The updated guidance is effective for fiscal years beginning after December 15, 2019. The Company continues to conduct its analysis, but currently believes the effect of the adoption of this new pronouncement is not expected to be material to the Company’s financial statements.

BASIS OF PRESENTATION AND SIG_3

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables)	6 Months Ended
	Dec. 31, 2019
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract]
Cash, Cash Equivalents and Restricted Cash	The reconciliation of cash, cash equivalents, and restricted cash, as presented on the Condensed Consolidated Statements of Cash Flows, consists of the following as of the dates presented: December 31, 2019 June 30, 2019 Cash and cash equivalents $ 12,687,976 $ 12,465,483 Restricted cash 656,887 541,062 Total cash, cash equivalents, and restricted cash $ 13,344,863 $ 13,006,545

SEGMENT INFORMATION AND GEOGR_2

SEGMENT INFORMATION AND GEOGRAPHIC DATA (Tables)	6 Months Ended
	Dec. 31, 2019
SEGMENT INFORMATION AND GEOGRAPHIC DATA [Abstract]
Financial Information by Reportable Segment	Summary financial information by reportable segment is as follows: Three Months Ended December 31, 2019 Online Channels Traditional Total Net sales Finished jewelry $ 5,144,320 $ 1,294,027 $ 6,438,347 Loose jewels 940,434 3,280,309 4,220,743 Total $ 6,084,754 $ 4,574,336 $ 10,659,090 Product line cost of goods sold Finished jewelry $ 2,239,750 $ 724,364 $ 2,964,114 Loose jewels 405,869 1,675,785 2,081,654 Total $ 2,645,619 $ 2,400,149 $ 5,045,768 Product line gross profit Finished jewelry $ 2,904,570 $ 569,663 $ 3,474,233 Loose jewels 534,565 1,604,524 2,139,089 Total $ 3,439,135 $ 2,174,187 $ 5,613,322 Operating income $ 349,762 $ 414,163 $ 763,925 Depreciation and amortization $ 32,773 $ 76,892 $ 109,665 Capital expenditures $ 137,200 $ 71,211 $ 208,411 Three Months Ended December 31, 2018 Online Channels Traditional Total Net sales Finished jewelry $ 4,357,713 $ 839,543 $ 5,197,256 Loose jewels 1,098,452 3,843,753 4,942,205 Total $ 5,456,165 $ 4,683,296 $ 10,139,461 Product line cost of goods sold Finished jewelry $ 1,913,201 $ 558,427 $ 2,471,628 Loose jewels 433,749 2,036,665 2,470,414 Total $ 2,346,950 $ 2,595,092 $ 4,942,042 Product line gross profit Finished jewelry $ 2,444,512 $ 281,116 $ 2,725,628 Loose jewels 664,703 1,807,088 2,471,791 Total $ 3,109,215 $ 2,088,204 $ 5,197,419 Operating income $ 806,591 $ 388,167 $ 1,194,758 Depreciation and amortization $ 43,063 $ 78,734 $ 121,797 Capital expenditures $ 61,600 $ 59,678 $ 121,278 Six Months Ended December 31, 2019 Online Channels Traditional Total Net sales Finished jewelry $ 8,121,667 $ 2,174,675 $ 10,296,342 Loose jewels 1,668,716 6,302,453 7,971,169 Total $ 9,790,383 $ 8,477,128 $ 18,267,511 Product line cost of goods sold Finished jewelry $ 3,452,623 $ 1,214,401 $ 4,667,024 Loose jewels 671,063 3,210,043 3,881,106 Total $ 4,123,686 $ 4,424,444 $ 8,548,130 Product line gross profit Finished jewelry $ 4,669,044 $ 960,274 $ 5,629,318 Loose jewels 997,653 3,092,410 4,090,063 Total $ 5,666,697 $ 4,052,684 $ 9,719,381 Operating income $ 395,427 $ 521,203 $ 916,630 Depreciation and amortization $ 82,023 $ 152,280 $ 234,303 Capital expenditures $ 210,925 $ 108,803 $ 319,728 Six Months Ended December 31, 2018 Online Channels Traditional Total Net sales Finished jewelry $ 6,473,653 $ 1,278,240 $ 7,751,893 Loose jewels 2,065,612 6,916,662 8,982,274 Total $ 8,539,265 $ 8,194,902 $ 16,734,167 Product line cost of goods sold Finished jewelry $ 2,746,591 $ 781,076 $ 3,527,667 Loose jewels 922,034 3,597,144 4,519,178 Total $ 3,668,625 $ 4,378,220 $ 8,046,845 Product line gross profit Finished jewelry $ 3,727,062 $ 497,164 $ 4,224,226 Loose jewels 1,143,578 3,319,518 4,463,096 Total $ 4,870,640 $ 3,816,682 $ 8,687,322 Operating income $ 890,338 $ 419,478 $ 1,309,816 Depreciation and amortization $ 71,139 $ 158,874 $ 230,013 Capital expenditures $ 62,850 $ 222,527 $ 285,377
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 December 31, Six Months Ended December 31, 2019 2018 2019 2018 Product line cost of goods sold $ 5,045,768 $ 4,942,042 $ 8,548,130 $ 8,046,845 Non-capitalized manufacturing and production control expenses 427,643 307,164 817,519 653,768 Freight out 141,233 203,669 272,352 302,789 Inventory valuation allowances 126,000 3,000 149,000 52,000 Other inventory adjustments (210,130 ) (109,668 ) (379,863 ) (95,446 ) Cost of goods sold $ 5,530,514 $ 5,346,207 $ 9,407,138 $ 8,959,956
Net Sales by Geographic Area	The following presents net sales by geographic area: Three Months Ended December 31, Six Months Ended December 31, 2019 2018 2019 2018 Net sales United States $ 9,643,311 $ 8,870,317 $ 16,407,187 $ 14,693,186 International 1,015,779 1,269,144 1,860,324 2,040,981 Total $ 10,659,090 $ 10,139,461 $ 18,267,511 $ 16,734,167

INVENTORIES (Tables)

INVENTORIES (Tables)	6 Months Ended
	Dec. 31, 2019
INVENTORIES [Abstract]
Inventory, Net of Reserves	The Company’s total inventories, net of reserves, consisted of the following as of the dates presented: December 31, 2019 June 30, 2019 Raw materials $ 4,495,344 $ 4,450,478 Work-in-process 12,288,209 10,871,823 Finished goods 18,623,815 18,557,224 Finished goods on consignment 2,806,980 2,086,084 Supplies inventory 87,586 129,111 Less: inventory reserves (2,510,000 ) (2,361,000 ) Total $ 35,791,934 $ 33,733,720 Short-term portion $ 10,695,379 $ 11,909,792 Long-term portion 25,096,555 21,823,928 Total $ 35,791,934 $ 33,733,720
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: December 31, 2019 June 30, 2019 Finished jewelry: Raw materials $ 763,789 $ 643,797 Work-in-process 617,415 487,680 Finished goods 6,494,177 6,332,533 Finished goods on consignment 2,564,737 1,867,549 Total finished jewelry $ 10,440,118 $ 9,331,559 Loose jewels: Raw materials $ 3,731,555 $ 3,806,681 Work-in-process 11,670,794 10,384,143 Finished goods 9,633,638 9,878,691 Finished goods on consignment 228,243 203,535 Total loose jewels 25,264,230 24,273,050 Total supplies inventory 87,586 129,111 Total inventory $ 35,791,934 $ 33,733,720

ACCRUED EXPENSES AND OTHER LI_2

ACCRUED EXPENSES AND OTHER LIABILITIES (Tables)	6 Months Ended
	Dec. 31, 2019
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: December 31, 2019 June 30, 2019 Accrued compensation and related benefits $ 703,360 $ 760,324 Accrued sales tax 370,953 286,864 Deferred rent - 156,306 Accrued cooperative advertising 348,471 73,033 Other 92,945 49,081 Total accrued expenses and other liabilities $ 1,515,729 $ 1,325,608

COMMITMENTS AND CONTINGENCIES (

COMMITMENTS AND CONTINGENCIES (Tables)	6 Months Ended
	Dec. 31, 2019
COMMITMENTS AND CONTINGENCIES [Abstract]
Balance Sheet Classifications of Leases	As of December 31, 2019, the Company’s balance sheet classifications of its leases are as follows: Operating Leases: Noncurrent operating lease ROU assets $ 783,935 Current operating lease liabilities $ 614,144 Noncurrent operating lease liabilities 491,952 Total operating lease liabilities $ 1,106,096
Remaining Future Payments Under Operating Leases	As of December 31, 2019, the Company’s remaining future payments under operating leases for each fiscal year ending June 30 are as follows: 2020 $ 313,610 2021 642,997 2022 219,723 Total lease payments 1,176,330 Less: imputed interest (70,234 ) Present value of lease payments 1,106,096 Less: current lease obligations 614,144 Total long-term lease obligations $ 491,952
Future Minimum Payments Under Operating Leases	The Company also had future minimum payments as of June 30, 2019 under its operating leases for each fiscal year ending June 30 that were as follows: 2020 $ 625,788 2021 642,997 2022 219,723 Total $ 1,488,508

SHAREHOLDERS' EQUITY AND STOC_2

SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION (Tables)	6 Months Ended
	Dec. 31, 2019
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION [Abstract]
Stock Based Compensation	Stock-Based Compensation The following table summarizes the components of the Company’s stock-based compensation included in net income for the periods presented: Three Months Ended December 31, Six Months Ended December 31, 2019 2018 2019 2018 Employee stock options $ 48,189 $ 56,575 $ 112,064 $ 114,747 Restricted stock awards 98,535 115,331 247,041 128,335 Totals $ 146,724 $ 171,906 $ 359,105 $ 243,082
Stock Option Activity	The following is a summary of the stock option activity for the six months ended December 31, 2019: Shares Weighted Average Exercise Price Outstanding, June 30, 2019 2,523,638 $ 1.39 Granted 225,387 $ 1.39 Expired (27,100 ) $ 0.46 Outstanding, December 31, 2019 2,721,925 $ 1.40
Information About Stock Options Outstanding	The following table summarizes information about stock options outstanding at December 31, 2019: Options Outstanding Options Exercisable Options Vested or Expected to Vest Balance as of 12/31/2019 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Balance as of 12/31/2019 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Balance as of 12/31/2019 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price 2,721,925 6.76 $ 1.40 2,346,538 6.42 $ 1.42 2,654,230 6.71 $ 1.40
Restricted Stock Activity	The following is a summary of the restricted stock activity for the six months ended December 31, 2019: Shares Weighted Average Grant Date Fair Value Unvested, June 30, 2019 129,500 $ 1.07 Granted 325,000 $ 1.57 Vested (128,341 ) $ 1.07 Canceled (1,159 ) $ 1.07 Unvested, December 31, 2019 325,000 $ 1.57

NET INCOME PER COMMON SHARE (Ta

NET INCOME PER COMMON SHARE (Tables)	6 Months Ended
	Dec. 31, 2019
NET INCOME PER COMMON SHARE [Abstract]
Reconciliation of Basic and Diluted Net Income Per Share	The following table reconciles the differences between the basic and diluted net income per share presentations: Three Months Ended December 31, Six Months Ended December 31, 2019 2018 2019 2018 Numerator: Net income $ 814,050 $ 1,189,565 $ 1,021,369 $ 1,299,469 Denominator: Weighted average common shares outstanding: Basic 28,656,910 21,468,569 28,610,299 21,461,773 Effect of dilutive securities 589,661 212,915 589,577 162,194 Diluted 29,246,571 21,681,484 29,199,876 21,623,967 Net income per common share: Basic $ 0.03 $ 0.06 $ 0.04 $ 0.06 Diluted $ 0.03 $ 0.05 $ 0.03 $ 0.06

MAJOR CUSTOMERS AND CONCENTRA_2

MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK (Tables)	6 Months Ended
	Dec. 31, 2019
MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK [Abstract]
Customers That Represent Greater Than or Equal to 10% of Total Net Sales and Receivables	The following is a summary of customers that represent 10% or more of total gross accounts receivable as of the dates presented: December 31, 2019 June 30, 2019 Customer A 25 % 13 % Customer B 16 % 25 % Customer C * % 15 % * Customer C did not have individual balances that represented 10% or more of total gross accounts receivable as of December 31, 2019. A significant portion of sales is derived from certain customer relationships. The following is a summary of customers that represent greater than or equal to 10% of total net sales for the periods presented: Three Months Ended December 31, Six Months Ended December 31, 2019 2018 2019 2018 Customer A 13 % 13 % 13 % 11 % Customer B 13 % 15 % 13 % 14 %

BASIS OF PRESENTATION AND SIG_4

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2019	Jun. 30, 2019	Dec. 31, 2018
Cash, Cash Equivalents and Restricted Cash [Abstract]
Cash and cash equivalents		$ 12,687,976	$ 12,465,483
Restricted cash		656,887	541,062
Total cash, cash equivalents, and restricted cash	$ 3,393,186	13,344,863	13,006,545	$ 3,004,702
Recently Adopted/Issued Accounting Pronouncements [Abstract]
Operating lease ROU assets		783,935	0
Operating lease liabilities		$ 1,106,096
Accrued Liability for Uncertain Tax Positions [Member]
Immaterial Correction of an Error [Abstract]
Correction of error in current period	$ 492,000
ASU 2016-02 [Member]
Recently Adopted/Issued Accounting Pronouncements [Abstract]
Operating lease ROU assets			983,000
Operating lease liabilities			$ 1,380,000

SEGMENT INFORMATION AND GEOGR_3

SEGMENT INFORMATION AND GEOGRAPHIC DATA, Product Line (Details)	3 Months Ended		6 Months Ended
	Dec. 31, 2019USD ($)	Dec. 31, 2018USD ($)	Dec. 31, 2019USD ($)Segment	Dec. 31, 2018USD ($)
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	$ 10,659,090	$ 10,139,461	$ 18,267,511	$ 16,734,167
Product line cost of goods sold	5,530,514	5,346,207	9,407,138	8,959,956
Operating income	763,925	1,194,758	916,630	1,309,816
Depreciation and amortization			234,303	230,013
Capital expenditures			319,728	285,377
Continuing Operations [Member]
Summary information by segment [Abstract]
Net sales	10,659,090	10,139,461	18,267,511	16,734,167
Product line cost of goods sold	5,045,768	4,942,042	8,548,130	8,046,845
Product line gross profit	5,613,322	5,197,419	9,719,381	8,687,322
Operating income	763,925	1,194,758	916,630	1,309,816
Depreciation and amortization	109,665	121,797	234,303	230,013
Capital expenditures	208,411	121,278	319,728	285,377
Continuing Operations [Member] | Finished Jewelry [Member]
Summary information by segment [Abstract]
Net sales	6,438,347	5,197,256	10,296,342	7,751,893
Product line cost of goods sold	2,964,114	2,471,628	4,667,024	3,527,667
Product line gross profit	3,474,233	2,725,628	5,629,318	4,224,226
Continuing Operations [Member] | Loose Jewels [Member]
Summary information by segment [Abstract]
Net sales	4,220,743	4,942,205	7,971,169	8,982,274
Product line cost of goods sold	2,081,654	2,470,414	3,881,106	4,519,178
Product line gross profit	2,139,089	2,471,791	4,090,063	4,463,096
Operating and Reportable Segments [Member] | Continuing Operations [Member] | Online Channels [Member]
Summary information by segment [Abstract]
Net sales	6,084,754	5,456,165	9,790,383	8,539,265
Product line cost of goods sold	2,645,619	2,346,950	4,123,686	3,668,625
Product line gross profit	3,439,135	3,109,215	5,666,697	4,870,640
Operating income	349,762	806,591	395,427	890,338
Depreciation and amortization	32,773	43,063	82,023	71,139
Capital expenditures	137,200	61,600	210,925	62,850
Operating and Reportable Segments [Member] | Continuing Operations [Member] | Online Channels [Member] | Finished Jewelry [Member]
Summary information by segment [Abstract]
Net sales	5,144,320	4,357,713	8,121,667	6,473,653
Product line cost of goods sold	2,239,750	1,913,201	3,452,623	2,746,591
Product line gross profit	2,904,570	2,444,512	4,669,044	3,727,062
Operating and Reportable Segments [Member] | Continuing Operations [Member] | Online Channels [Member] | Loose Jewels [Member]
Summary information by segment [Abstract]
Net sales	940,434	1,098,452	1,668,716	2,065,612
Product line cost of goods sold	405,869	433,749	671,063	922,034
Product line gross profit	534,565	664,703	997,653	1,143,578
Operating and Reportable Segments [Member] | Continuing Operations [Member] | Traditional [Member]
Summary information by segment [Abstract]
Net sales	4,574,336	4,683,296	8,477,128	8,194,902
Product line cost of goods sold	2,400,149	2,595,092	4,424,444	4,378,220
Product line gross profit	2,174,187	2,088,204	4,052,684	3,816,682
Operating income	414,163	388,167	521,203	419,478
Depreciation and amortization	76,892	78,734	152,280	158,874
Capital expenditures	71,211	59,678	108,803	222,527
Operating and Reportable Segments [Member] | Continuing Operations [Member] | Traditional [Member] | Finished Jewelry [Member]
Summary information by segment [Abstract]
Net sales	1,294,027	839,543	2,174,675	1,278,240
Product line cost of goods sold	724,364	558,427	1,214,401	781,076
Product line gross profit	569,663	281,116	960,274	497,164
Operating and Reportable Segments [Member] | Continuing Operations [Member] | Traditional [Member] | Loose Jewels [Member]
Summary information by segment [Abstract]
Net sales	3,280,309	3,843,753	6,302,453	6,916,662
Product line cost of goods sold	1,675,785	2,036,665	3,210,043	3,597,144
Product line gross profit	1,604,524	1,807,088	3,092,410	3,319,518
Segment Reconciling Items [Member] | Continuing Operations [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	5,530,514	5,346,207	9,407,138	8,959,956
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	5,045,768	4,942,042	8,548,130	8,046,845
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	427,643	307,164	817,519	653,768
Segment Reconciling Items [Member] | Continuing Operations [Member] | Freight Out [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	141,233	203,669	272,352	302,789
Segment Reconciling Items [Member] | Continuing Operations [Member] | Inventory Valuation Allowances [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	126,000	3,000	149,000	52,000
Segment Reconciling Items [Member] | Continuing Operations [Member] | Other Inventory Adjustments [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	$ (210,130)	$ (109,668)	$ (379,863)	$ (95,446)

SEGMENT INFORMATION AND GEOGR_4

SEGMENT INFORMATION AND GEOGRAPHIC DATA, Data by Geographic Area (Details) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
Net sales [Abstract]
Net sales	$ 10,659,090	$ 10,139,461	$ 18,267,511	$ 16,734,167
Continuing Operations [Member]
Net sales [Abstract]
Net sales	10,659,090	10,139,461	18,267,511	16,734,167
Reportable Geographical Components [Member] | Continuing Operations [Member] | United States [Member]
Net sales [Abstract]
Net sales	9,643,311	8,870,317	16,407,187	14,693,186
Reportable Geographical Components [Member] | Continuing Operations [Member] | International [Member]
Net sales [Abstract]
Net sales	$ 1,015,779	$ 1,269,144	$ 1,860,324	$ 2,040,981

FAIR VALUE MEASUREMENTS (Detail

FAIR VALUE MEASUREMENTS (Details) - USD ($)	6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
FAIR VALUE MEASUREMENTS [Abstract]
Asset impairment	$ 0	$ 0

INVENTORIES (Details)

INVENTORIES (Details) - USD ($)	Dec. 31, 2019	Jun. 30, 2019
Total inventories, net of reserves [Abstract]
Raw materials	$ 4,495,344	$ 4,450,478
Work-in-process	12,288,209	10,871,823
Finished goods	18,623,815	18,557,224
Finished goods on consignment	2,806,980	2,086,084
Total supplies inventory	87,586	129,111
Less: inventory reserves	(2,510,000)	(2,361,000)
Total inventory	35,791,934	33,733,720
Short-term portion	10,695,379	11,909,792
Long-term portion	25,096,555	21,823,928
Inventories issued to active production	1,520,000	1,230,000
Inventory of net jewelry	10,440,000	9,330,000
Inventory of net loose jewels	25,260,000	24,270,000
Inventory reserve for obsolescence	1,990,000	1,790,000
Carrying value of inventory reserve for obsolescence of finished jewelry	174,000	19,000
Lower of cost or market value	1,820,000	1,770,000
Inventory rework reserve for recut of loose jewel	381,000	460,000
Inventory reserve for shrinkage	139,000	112,000
Inventory reserve for shrinkage of finished jewelry	125,000	105,000
Inventory reserve for shrinkage of loose jewels	14,000	7,000
Shrinkage reserve for finished goods on consignment	14,000	15,000
Inventory reserve for shrinkage of finished jewelry on consignment	13,000	14,000
Inventory reserve for shrinkage of loose jewels on consignment	1,000	1,000
Finished Jewelry [Member]
Total inventories, net of reserves [Abstract]
Raw materials	763,789	643,797
Work-in-process	617,415	487,680
Finished goods	6,494,177	6,332,533
Finished goods on consignment	2,564,737	1,867,549
Total	10,440,118	9,331,559
Loose Jewels [Member]
Total inventories, net of reserves [Abstract]
Raw materials	3,731,555	3,806,681
Work-in-process	11,670,794	10,384,143
Finished goods	9,633,638	9,878,691
Finished goods on consignment	228,243	203,535
Total	$ 25,264,230	$ 24,273,050

RETURNS ASSET AND REFUND LIAB_2

RETURNS ASSET AND REFUND LIABILITIES (Details) - USD ($)	Dec. 31, 2019	Jun. 30, 2019
RETURNS ASSET AND REFUND LIABILITIES [Abstract]
Refund liabilities	$ 1,050,000	$ 746,000
Asset returns	$ 501,000	$ 279,000

ACCRUED EXPENSES AND OTHER LI_3

ACCRUED EXPENSES AND OTHER LIABILITIES (Details) - USD ($)	Dec. 31, 2019	Jun. 30, 2019
ACCRUED EXPENSES AND OTHER LIABILITIES [Abstract]
Accrued compensation and related benefits	$ 703,360	$ 760,324
Accrued sales tax	370,953	286,864
Deferred rent	0	156,306
Accrued cooperative advertising	348,471	73,033
Other	92,945	49,081
Total accrued expenses and other liabilities	$ 1,515,729	$ 1,325,608

INCOME TAXES (Details)

INCOME TAXES (Details) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
INCOME TAXES [Abstract]
Income tax expense for estimated tax, penalties, and interest for other uncertain tax positions	$ (5,000)	$ 5,000	$ 1,000	$ 10,000

COMMITMENTS AND CONTINGENCIES,

COMMITMENTS AND CONTINGENCIES, Lease Arrangements (Details)	3 Months Ended	6 Months Ended	12 Months Ended
	Dec. 31, 2019USD ($)ft²	Dec. 31, 2019USD ($)ft²Option	Jun. 30, 2019USD ($)	May 23, 2014USD ($)
COMMITMENTS AND CONTINGENCIES [Abstract]
Land subject to leases | ft²	36,350	36,350
Number of options to extend lease term | Option		2
Period of extension on each options	5 years	5 years
Minimum notice period for extension of lease term		270 days
Leasehold improvements and other lease related incentives offered by landlord				$ 623,000
Unamortized lease assets			$ 393,000
Operating Leases [Abstract]
Noncurrent operating lease ROU assets	$ 783,935	$ 783,935	0
Current operating lease liabilities	614,144	614,144	0
Noncurrent operating lease liabilities	491,952	491,952	0
Total operating lease liabilities	1,106,096	1,106,096
Operating lease cost	$ 117,000	$ 235,000
Assumed discount rate	7.14%	7.14%
Remaining operating lease term	1 year 9 months 29 days	1 year 9 months 29 days
Future Lease Payments Under Operating Leases [Abstract]
2020	$ 313,610	$ 313,610
2021	642,997	642,997
2022	219,723	219,723
Total lease payments	1,176,330	1,176,330
Less: imputed interest	(70,234)	(70,234)
Total operating lease liabilities	1,106,096	1,106,096
Less: current lease obligations	614,144	614,144	0
Total long-term lease obligations	491,952	491,952	0
Cash paid for operating leases	164,000	328,000
Rent expense	$ 128,000	$ 256,000	528,000
Future Minimum Payments Under Operating Leases [Abstract]
2020			625,788
2021			642,997
2022			219,723
Total			$ 1,488,508

COMMITMENTS AND CONTINGENCIES_2

COMMITMENTS AND CONTINGENCIES, Purchase Commitments (Details) - USD ($) $ in Thousands	6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Purchase Commitment [Abstract]
Percentage committed to be purchased	100.00%
Period of exclusive supply agreement	2 years
Purchase commitment in initial new order	$ 52,950
Remaining purchase commitment	39,000
Actual purchases under purchase amendment	4,980	$ 4,430
Minimum [Member]
Purchase Commitment [Abstract]
Future minimum annual purchase commitments	10,000
Maximum [Member]
Purchase Commitment [Abstract]
Future minimum annual purchase commitments	$ 12,000

LINE OF CREDIT (Details)

LINE OF CREDIT (Details) - White Oak Commercial Finance LLC [Member]	6 Months Ended
	Dec. 31, 2019USD ($)
Revolving Credit Facility [Member]
Line of Credit Facility Disclosure [Abstract]
Revolving line of credit	$ 5,000,000
Line of credit maturity date	Jul. 13, 2021
Interest rate in event of default in excess of standard rate	2.00%
Credit facility outstanding	$ 0
Revolving Credit Facility [Member] | Minimum [Member]
Line of Credit Facility Disclosure [Abstract]
Excess availability covenant	$ 500,000
Debt instrument effective percentage	5.50%
Revolving Credit Facility [Member] | LIBOR [Member]
Line of Credit Facility Disclosure [Abstract]
Debt instrument, term of variable rate	1 month
Line of credit, spread on variable rate	3.75%
Line of credit, description of variable rate basis	one-month LIBOR
Revolving Credit Facility [Member] | Floor Rate [Member]
Line of Credit Facility Disclosure [Abstract]
Line of credit, spread on variable rate	1.25%
Non-Revolving Credit Facility [Member] | LIBOR [Member]
Line of Credit Facility Disclosure [Abstract]
Line of credit, spread on variable rate	4.75%

SHAREHOLDERS' EQUITY AND STOC_3

SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Shelf Registration Statement (Details) - USD ($)	Jul. 03, 2019	Jun. 11, 2019	Dec. 31, 2019	Dec. 31, 2019	Dec. 31, 2018
Shelf Registration Statement [Abstract]
Aggregate value of shares and warrants remaining available for future issuance			$ 13,990,000	$ 13,990,000
Issuance of common stock, , net of offering costs (in shares)	6,880,500	6,250,000
Share price (in dollars per share)	$ 1.60	$ 1.60
Net proceeds from issuance of common stock		$ 9,060,000		932,480	$ 0
Underwriting discount, fees and expenses	$ 1,020,000	$ 941,000
Gross proceeds from issuance of common stock	$ 11,010,000
Maximum [Member]
Shelf Registration Statement [Abstract]
Aggregate value of shares and warrants authorized for future issuance			$ 25,000,000	$ 25,000,000
Over-Allotment [Member]
Shelf Registration Statement [Abstract]
Issuance of common stock, , net of offering costs (in shares)	630,500
Share price (in dollars per share)	$ 1.60
Net proceeds from issuance of common stock	$ 932,480
Underwriting discount, fees and expenses	$ 76,000
Option buying period			30 days
Number of shares available for purchase, Option buying period (in shares)		937,500

SHAREHOLDERS' EQUITY AND STOC_4

SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Stock-Based Compensation (Details) - USD ($)	3 Months Ended		6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019	Dec. 31, 2018
Stock-Based Compensation [Abstract]
Stock-based compensation	$ 146,724	$ 171,906	$ 359,105	$ 243,082
Employee Stock Options [Member]
Stock-Based Compensation [Abstract]
Stock-based compensation	48,189	56,575	112,064	114,747
Stock-based compensation capitalized as a cost of inventory	0	0	0	0
Restricted Stock Awards [Member]
Stock-Based Compensation [Abstract]
Stock-based compensation	$ 98,535	$ 115,331	$ 247,041	$ 128,335

SHAREHOLDERS' EQUITY AND STOC_5

SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Stock Options (Details) - Stock Options [Member] - USD ($)	6 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019
Stock Option Activity [Roll Forward]
Outstanding, beginning balance (in shares)	2,523,638
Granted (in shares)	225,387
Expired (in shares)	(27,100)
Outstanding, ending balance (in shares)	2,721,925
Weighted Average Exercise Price [Roll Forward]
Outstanding, beginning balance (in dollars per share)	$ 1.39
Granted (in dollars per share)	1.39
Expired (in dollars per share)	0.46
Outstanding, ending balance (in dollars per share)	$ 1.40
Fair value of stock options vested	$ 185,000
Options Outstanding [Abstract]
Balance as of end of period (in shares)	2,721,925		2,721,925
Weighted average remaining contractual life	6 years 9 months 4 days
Weighted average exercise price (in dollars per share)	$ 1.40		$ 1.40
Options Exercisable [Abstract]
Balance as of end of period (in shares)			2,346,538
Weighted average remaining contractual life	6 years 5 months 1 day
Weighted average exercise price (in dollars per share)			$ 1.42
Options Vested or Expected to Vest [Abstract]
Balance as of end of period (in shares)			2,654,230
Weighted average remaining contractual life	6 years 8 months 16 days
Weighted average exercise price (in dollars per share)			$ 1.40
Additional Disclosures [Abstract]
Unrecognized stock-based compensation expense related to unvested awards			$ 217,000
Total compensation cost not yet recognized, period for recognition	18 months
Aggregate intrinsic value of stock options outstanding			667,000
Aggregate intrinsic value of stock options exercisable			667,000
Aggregate intrinsic value of stock options vested or expected to vest			$ 667,000
Exercised (in shares)	0
Aggregate intrinsic value of stock options exercised		$ 300

SHAREHOLDERS' EQUITY AND STOC_6

SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Restricted Stock (Details)	6 Months Ended
	Dec. 31, 2019USD ($)$ / sharesshares
Dividends [Abstract]
Cash dividends | $	$ 0
Restricted Stock [Member]
Restricted Stock Activity [Roll Forward]
Unvested, beginning balance (in shares) | shares	129,500
Granted (in shares) | shares	325,000
Vested (in shares) | shares	(128,341)
Canceled (in shares) | shares	(1,159)
Unvested, ending balance (in shares) | shares	325,000
Weighted Average Grant Date Fair Value [Roll Forward]
Unvested, beginning balance (in dollars per share) | $ / shares	$ 1.07
Granted (in dollars per share) | $ / shares	1.57
Vested (in dollars per share) | $ / shares	1.07
Canceled (in dollars per share) | $ / shares	1.07
Unvested, ending balance (in dollars per share) | $ / shares	$ 1.57
Additional Disclosures [Abstract]
Unrecognized stock-based compensation expense related to unvested awards | $	$ 322,000
Total compensation cost not yet recognized, period for recognition	6 months

NET INCOME PER COMMON SHARE (De

NET INCOME PER COMMON SHARE (Details) - USD ($)	3 Months Ended				6 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Dec. 31, 2019	Dec. 31, 2018
Numerator [Abstract]
Net income	$ 814,050	$ 207,319	$ 1,189,565	$ 109,904	$ 1,021,369	$ 1,299,469
Weighted average common shares outstanding [Abstract]
Basic (in shares)	28,656,910		21,468,569		28,610,299	21,461,773
Effect of dilutive securities (in shares)	589,661		212,915		589,577	162,194
Diluted (in shares)	29,246,571		21,681,484		29,199,876	21,623,967
Net income per common share:
Basic (in dollars per share)	$ 0.03		$ 0.06		$ 0.04	$ 0.06
Diluted (in dollars per share)	$ 0.03		$ 0.05		$ 0.03	$ 0.06
Stock Options [Member]
Antidilutive Securities [Abstract]
Shares excluded from the computation of diluted net income per common share (in shares)	2,130,000		2,440,000		2,130,000	2,450,000

MAJOR CUSTOMERS AND CONCENTRA_3

MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK (Details) - USD ($)	3 Months Ended		6 Months Ended			12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2019		Dec. 31, 2018	Jun. 30, 2019
Concentration of Credit Risk [Abstract]
Interest bearing amounts on deposit in excess of FDIC insurable limits	$ 250,000		$ 250,000
Non-interest-bearing amounts on deposit in excess of FDIC insurable limits	0		0
Interest-bearing amounts on deposit in excess of FDIC insurable limits	$ 12,310,000		$ 12,310,000
Minimum [Member]
Concentration of Credit Risk [Abstract]
Period of customer payments on trade receivables			30 days
Maximum [Member]
Concentration of Credit Risk [Abstract]
Period of customer payments on trade receivables			90 days
Trade Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer A [Member]
Concentration of Credit Risk [Abstract]
Concentration risk, percentage			25.00%			13.00%
Trade Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer B [Member]
Concentration of Credit Risk [Abstract]
Concentration risk, percentage			16.00%			25.00%
Trade Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer C [Member]
Concentration of Credit Risk [Abstract]
Concentration risk, percentage				[1]		15.00%
Total Net Sales [Member] | Customer Concentration Risk [Member] | Customer A [Member]
Concentration of Credit Risk [Abstract]
Concentration risk, percentage	13.00%	13.00%	13.00%		11.00%
Total Net Sales [Member] | Customer Concentration Risk [Member] | Customer B [Member]
Concentration of Credit Risk [Abstract]
Concentration risk, percentage	13.00%	15.00%	13.00%		14.00%
[1]	Customer C did not have individual balances that represented 10% or more of total gross accounts receivable as of December 31, 2019.