Charles & Colvard (CTHR) 10-K 4 Sep 20 2020 FY Annual report Financial data

Document and Entity Information

Document and Entity Information - USD ($)	12 Months Ended
	Jun. 30, 2020	Aug. 28, 2020	Dec. 31, 2019
Cover [Abstract]
Entity Registrant Name	CHARLES & COLVARD LTD
Entity Central Index Key	0001015155
Current Fiscal Year End Date	--06-30
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
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 Public Float			$ 36,362,504
Entity Common Stock, Shares Outstanding		28,965,660
Document Type	10-K
Amendment Flag	false
Document Period End Date	Jun. 30, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	FY
Entity Address, State or Province	NC

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($)	Jun. 30, 2020	Jun. 30, 2019
Current assets:
Cash and cash equivalents	$ 13,993,032	$ 12,465,483
Restricted cash	624,202	541,062
Accounts receivable, net	670,718	1,962,471
Inventory, net	7,443,257	11,909,792
Prepaid expenses and other assets	1,177,860	989,559
Total current assets	23,909,069	27,868,367
Long-term assets:
Inventory, net	23,190,702	21,823,928
Property and equipment, net	999,061	1,026,098
Intangible assets, net	170,151	97,373
Operating lease right-of-use assets	584,143	0
Other assets	51,461	330,615
Total long-term assets	24,995,518	23,278,014
TOTAL ASSETS	48,904,587	51,146,381
Current liabilities:
Accounts payable	3,748,235	3,279,548
Operating lease liabilities	622,493	0
Current maturity of long-term debt	193,000	0
Accrued expenses and other liabilities	1,922,332	1,418,232
Total current liabilities	6,486,060	4,697,780
Long-term liabilities:
Long-term debt, net	772,000	0
Noncurrent operating lease liabilities	203,003	0
Deferred rent	0	236,745
Accrued income taxes	7,947	6,214
Total long-term liabilities	982,950	242,959
Total liabilities	7,469,010	4,940,739
Commitments and contingencies (Note 9)
Shareholders' equity:
Common stock, no par value; 50,000,000 shares authorized; 28,949,410 and 28,027,569 shares issued and outstanding at June 30, 2020 and 2019, respectively	54,342,864	54,342,864
Additional paid-in capital	25,880,165	24,488,147
Accumulated deficit	(38,787,452)	(32,625,369)
Total shareholders' equity	41,435,577	46,205,642
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 48,904,587	$ 51,146,381

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Jun. 30, 2020	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)	28,949,410	28,027,569
Common stock, shares outstanding (in shares)	28,949,410	28,027,569

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract]
Net sales	$ 29,189,020	$ 32,244,109
Costs and expenses:
Cost of goods sold	21,200,207	17,352,167
Sales and marketing	9,443,244	7,983,506
General and administrative	4,861,297	4,640,810
Research and development	0	2,069
Total costs and expenses	35,504,748	29,978,552
(Loss) Income from operations	(6,315,728)	2,265,557
Other income (expense):
Interest income	158,091	11,022
Interest expense	(884)	(2,198)
Loss on foreign currency exchange	(1,829)	(344)
Other expense	0	(13)
Total other income, net	155,378	8,467
(Loss) Income before income taxes	(6,160,350)	2,274,024
Income tax (expense) benefit	(1,733)	1,443
Net (loss) income	$ (6,162,083)	$ 2,275,467
Net (loss) income per common share:
Basic (in dollars per share)	$ (0.22)	$ 0.10
Diluted (in dollars per share)	$ (0.22)	$ 0.10
Weighted average number of shares used in computing net (loss) income per common share:
Basic (in shares)	28,644,133	21,860,699
Diluted (in shares)	28,644,133	22,111,223

CONSOLIDATED STATEMENTS OF SHAR

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - 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]
Issuance of common stock, net of offering costs	$ 0	9,058,568	0	9,058,568
Issuance of common stock, net of offering costs (in shares)	6,250,000
Stock-based compensation	$ 0	502,805	0	502,805
Issuance of restricted stock	$ 0	0	0	0
Issuance of restricted stock (in shares)	19,896
Stock option exercises	$ 99,048	(35,297)	0	63,751
Stock option exercises (in shares)	52,500
Net (loss) income	$ 0	0	2,275,467	2,275,467
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	459,538	0	459,538
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)	(33,659)
Net (loss) income	$ 0	0	(6,162,083)	(6,162,083)
Balance at Jun. 30, 2020	$ 54,342,864	$ 25,880,165	$ (38,787,452)	$ 41,435,577
Balance (in shares) at Jun. 30, 2020	28,949,410

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$ (6,162,083)	$ 2,275,467
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	490,235	481,319
Stock-based compensation	459,538	502,805
Provision for uncollectible accounts	8,788	27,056
(Recovery of) Provision for sales returns	(42,000)	98,000
Inventory write-off	5,863,991	393,000
Provision for accounts receivable discounts	3,751	6,275
Changes in operating assets and liabilities:
Accounts receivable	1,321,214	(328,080)
Inventory	(2,764,230)	(2,298,182)
Prepaid expenses and other assets, net	490,438	(14,144)
Accounts payable	468,687	(891,404)
Deferred rent	0	(156,306)
Accrued income taxes	1,733	21,706
Accrued expenses and other liabilities	109,123	799,287
Net cash provided by operating activities	249,185	916,799
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(458,854)	(361,440)
Payments for intangible assets	(77,122)	(64,319)
Net cash used in investing activities	(535,976)	(425,759)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt	965,000	0
Issuance of common stock, net of offering costs	932,480	9,058,568
Stock option exercises	0	63,751
Net cash provided by financing activities	1,897,480	9,122,319
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	1,610,689	9,613,359
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF YEAR	13,006,545	3,393,186
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF YEAR	14,617,234	13,006,545
Supplemental disclosure of cash flow information:
Cash paid during the year for interest	884	2,198
Cash paid during the year for income taxes	$ 2,050	$ 5,764

DESCRIPTION OF BUSINESS

DESCRIPTION OF BUSINESS	12 Months Ended
	Jun. 30, 2020
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	12 Months Ended
	Jun. 30, 2020
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 – . Use of Estimates – The future effects of the COVID-19 pandemic on the Company’s results of operations, cash flows, and financial position continue to remain unclear. T “ ” Reclassifications – Changes in Accounting Policy – 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. For purposes of adopting this new guidance, the Company’s most appropriate option for an incremental borrowing rate assumption was to assume that it would be based on the underlying fully-collateralized borrowing rate in effect within the Company’s credit facility with White Oak Commercial Finance, LLC (“White Oak”). Pursuant to the terms of the Company’s credit facility with White Oak (the “White Oak Credit Facility”), as of July 1, 2019, the Company’s incremental borrowing rate for funds in the form of non-revolving advances would have been White Oak’s one-month LIBOR (2.3878%) plus 4.75%, or 7.1378%. Management believes that this rate represents the incremental borrowing rate that would have been in effect if the Company had borrowed such funds from its White Oak Credit Facility on 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 consolidated statement of operations or 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.” Cash and Cash Equivalents – Restricted Cash Restricted Cash – White Oak 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 Consolidated Statements of Cash Flows, consists of the following as of the dates presented: June 30, 2020 2019 Cash and cash equivalents $ 13,993,032 $ 12,465,483 Restricted cash 624,202 541,062 Total cash, cash equivalents, and restricted cash $ 14,617,234 $ 13,006,545 Concentration of Credit Risk – 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, . The Company extends credit to its customers based upon a number of factors, including an evaluation of the customer’s financial condition and credit history that is verified through trade association reference services, the customer’s payment history with the Company, the customer’s reputation in the trade, and/or an evaluation of the Company’s opportunity to introduce its moissanite jewels or finished jewelry featuring moissanite to new or expanded markets. See Note 13, “Major Customers and Concentration of Credit Risk”, for further discussion of credit risk within trade accounts receivable. Accounts Receivable Reserves – The following are reconciliations of the allowance for sales returns balances as of the periods presented: Year Ended June 30, 2020 2019 Balance, beginning of year $ 746,000 $ 648,000 Additions charged to operations 4,710,943 4,533,077 Sales returns (4,752,943 ) (4,435,077 ) Balance, end of year $ 704,000 $ 746,000 The second reserve is an allowance for doubtful accounts for estimated losses resulting from the failure of the Company’s customers to make required payments. This allowance reduces trade accounts receivable to an amount expected to be collected. The Company generally uses an internal collection effort, which may include its sales personnel as it deems appropriate. After all internal collection efforts have been exhausted, the Company generally writes off the account receivable. Any accounts with significant balances are reviewed separately to determine an appropriate allowance based on the facts and circumstances of the specific account. on these criteria, management determined that allowances for doubtful accounts receivable of $79,000 and $249,000 at June 30, 2020 and 2019, The following are reconciliations of the allowance for doubtful accounts balances as of the periods presented: Year Ended June 30, 2020 2019 Balance, beginning of year $ 249,000 $ 233,000 Additions charged to operations 8,788 27,056 Write-offs, net of recoveries (178,788 ) (11,056 ) Balance, end of year $ 79,000 $ 249,000 Although the Company believes that its reserves are adequate, if the financial condition of its customers deteriorates, resulting in an impairment of their ability to make payments, or if it underestimates the allowances required, additional allowances may be necessary, Inventories - Inventory costs include direct material and labor, inbound freight, purchasing and receiving costs, inspection costs, and warehousing costs. Each accounting period, the Company evaluates the valuation and classification of inventories including the need for potential adjustments to inventory-related reserves, which also include significant estimates by management. The Company’s inventory-related valuation allowances are recorded in the aggregate rather than an individual item approach for each obsolescence, rework, and shrinkage valuation allowance. Property and Equipment – Machinery and equipment 5 to 12 years Computer hardware 3 to 5 years Computer software 3 years Furniture and fixtures 5 to 10 years Leasehold improvements Shorter of the estimated useful life or the lease term Intangible Assets – Impairment of Long-Lived Assets – whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount of the asset to future net undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment is measured as the amount by which the carrying amount exceeds the fair value and is recognized as an operating expense in the period in which the determination is made. Assets to be disposed are reported at the lower of the carrying amount or fair value less costs to sell once the held-for-sale criteria are met. As of June 30, 2020, the Company did not identify any indicators of long-lived asset impairment. In addition to the recoverability assessment, the Company routinely reviews the remaining estimated useful lives of its long-lived assets. Any reduction in the useful-life assumption will result in increased depreciation and amortization expense in the period when such determination is made, as well as in subsequent periods. Revenue Recognition – Revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. To achieve this principle, the Company performs the following five steps: (i) (ii) (iii) (iv) (v) The Company has a variable consideration element related to most of its contracts in the form of product return rights. At the time revenue is recognized, an allowance for estimated returns is established and any change in the allowance for returns is charged against net sales in the current period. For the Company’s customers (excluding those of charlesandcolvard.com), the returns policy generally allows for the return of jewels and finished jewelry with a valid reason for credit within 30 days of shipment. The Company’s charlesandcolvard.com customers can return purchases for any reason within 60 days of such purchase in accordance with the Company’s returns policy as disclosed on the charlesandcolvard.com website. Periodically, the Company ships loose jewel goods and finished goods to Traditional segment customers on consignment terms. Under these consignment terms, the customer assumes the risk of loss and has an absolute right of return for a specified period that typically ranges from six months to one year. The Company’s Online Channels segment and Traditional segment customers are generally required to make payments on consignment shipments within 30 to 60 days upon the customer informing the Company that it will keep the inventory. Accordingly, the Company does not recognize revenue on these consignment transactions until the earlier of (i) (ii) (iii) The Company presents disaggregated net sales by its Online Channels segment and its Traditional segment for both finished jewelry and loose jewels product lines. The Company also presents disaggregated net sales by geographic area between the United States and international locations. For financial reporting purposes, disaggregated net sales amounts are presented in Note 3, “Segment Information and Geographic Data.” Returns Asset and Refund Liabilities The Company maintains 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 June 30, 2020 and 2019, the Company’s refund liabilities balances were $704,000 and $746,000, respectively, and are included as allowances for sales returns within accounts receivable, net, in the accompanying consolidated balance sheets. As of June 30, 2020 and 2019, the Company’s returns asset balances were $289,000 and $279,000, respectively, and are included within prepaid expenses and other assets in the accompanying consolidated balance sheets Cost of Goods Sold – Advertising Costs – The Company also offers a cooperative advertising program to certain of its distributor and retail partners that reimburses, via a credit towards future purchases, a portion of their marketing costs based on the customers’ net purchases from the Company and is subject to the customer providing documentation of all advertising performed that includes the Company’s products. For the fiscal years ended June 30, 2020 and 2019, these approximate amounts were $491,000 and $381,000, respectively, and are included as a component of sales and marketing expenses. Advertising expenses, inclusive of the cooperative advertising program, for the fiscal years ended June 30, 2020 and 2019, were approximately $3.96 million and $2.82 million, respectively. Sales and Marketing – charlesandcolvard.com, LLC, wholly owned operating subsidiary. General and Administrative – Research and Development – Stock-Based Compensation – The Company recognizes compensation expense for stock-based awards based on estimated fair values on the date of grant. Fair value of stock options using the Black-Scholes-Merton option pricing model is estimated on the date of grant utilizing certain assumptions for dividend yield, expected volatility, risk-free interest rate, and expected lives of the awards, as follows: Dividend Yield. Expected Volatility. Volatility is a measure of the amount by which a financial variable such as share price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. ; Risk-Free Interest Rate. Expected Lives. The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and the Company uses different assumptions, the Company’s stock-based compensation expense could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rates of stock-based awards and only recognize expense for those shares expected to vest. In estimating the Company’s forfeiture rates, the Company analyzed its historical forfeiture rates, the remaining lives of unvested stock-based awards, and the number of vested awards as a percentage of total awards outstanding. If the Company’s actual forfeiture rates are materially different from its estimates, or if the Company re-evaluates the forfeiture rates in the future, the stock-based compensation expense could be significantly different from what the Company has recorded in the current period. Income Taxes – The Net (Loss) Income per Common Share – The following table reconciles the differences between the basic and diluted net (loss) income per share presentations: Year Ended June 30, 2020 2019 Numerator: Net (loss) income $ (6,162,083 ) $ 2,275,467 Denominator: Weighted average common shares outstanding: Basic 28,644,133 21,860,699 Effect of dilutive securities - 250,524 Diluted 28,644,133 22,111,223 Net (loss) income per common share: Basic $ (0.22 ) $ 0.10 Diluted $ (0.22 ) $ 0.10 For the fiscal year ended June 30, 2020, stock options to purchase approximately 2.81 million shares were excluded from the computation of diluted net loss per common share because the effect of inclusion of such amounts would be anti-dilutive to net loss per common share. For the fiscal year ended June 30, 2019, stock options to purchase approximately 2.33 million were excluded from the computation of diluted net income per common share because the exercise price of the stock options was greater than the average market price of the common shares or the effect of inclusion of such amounts would be anti-dilutive to net income per common share. The quantity of 162,500 shares of un Immaterial Correction of an Error de minimis Related balances within Note 12, “Income Taxes”, associated with the federal tax benefit on state income taxes under uncertain tax positions and the related valuation allowance have also been recast Recently Issued Accounting Pronouncements – In June 2016, the FASB issued guidance related to the measurement of credit losses on financial instruments to provide more information in financial statements about expected credit losses on financial instruments and other commitments to extend credit. The new guidance is effective for fiscal years beginning after December 15, 2019. In December 2019, the FASB issued guidance on simplifying the accounting for income taxes that is intended to reduce the complexity while maintaining or improving the usefulness of tax disclosure information in financial statements. In March 2020, in response to concerns about structural risks of interbank offered rates (“IBORs”), and, particularly, the risk of cessation of the London Interbank Offered Rate (“LIBOR”), the FASB issued new guidance to ease the burden in accounting for or recognizing the effects of referenced interest rate reform on financial reporting. The new guidance is effective as of March 12, 2020 through December 31, 2022. As described in more detail in Note 10, “Line of Credit”, borrowings under the Company’s line of credit are based on a rate equal to the one-month LIBOR. As of June 30, 2020, the Company had not borrowed against its line of credit, and therefore, is not subject to recognizing or disclosing any effect of referenced rate reform as of its fiscal year ended June 30, 2020.

SEGMENT INFORMATION AND GEOGRAP

SEGMENT INFORMATION AND GEOGRAPHIC DATA	12 Months Ended
	Jun. 30, 2020
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 – finished jewelry and loose jewels: its “Online Channels” segment, which consists of e-commerce outlets including charlesandcolvard.com, third-party online marketplaces, drop-ship, 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.” 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 (loss) 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, rent, utilities, and corporate overhead allocations; freight out; inventory valuation allowance adjustments; and other inventory adjustments, comprising costs of quality issues, damaged goods, and inventory write-downs. The Company allocates certain general and administrative expenses between its Online Channels segment and its Traditional segment based on net sales and number of employees to arrive at segment operating (loss) income. Unallocated expenses remain in its Traditional segment. Summary financial information by reportable segment for the periods presented is as follows: Year Ended June 30, 2020 Online Channels Traditional Total Net sales Finished jewelry $ 13,680,440 $ 3,097,188 $ 16,777,628 Loose jewels 2,944,100 9,467,292 12,411,392 Total $ 16,624,540 $ 12,564,480 $ 29,189,020 Product line cost of goods sold Finished jewelry $ 5,760,413 $ 1,709,377 $ 7,469,790 Loose jewels 1,198,275 4,863,911 6,062,186 Total $ 6,958,688 $ 6,573,288 $ 13,531,976 Product line gross profit Finished jewelry $ 7,920,027 $ 1,387,811 $ 9,307,838 Loose jewels 1,745,825 4,603,381 6,349,206 Total $ 9,665,852 $ 5,991,192 $ 15,657,044 Operating loss $ (249,016 ) $ (6,066,712 ) $ (6,315,728 ) Depreciation and amortization $ 177,703 $ 312,532 $ 490,235 Capital expenditures $ 305,570 $ 153,284 $ 458,854 Year Ended June 30, 2019 Online Channels Traditional Total Net sales Finished jewelry $ 12,641,687 $ 2,815,656 $ 15,457,343 Loose jewels 3,697,069 13,089,697 16,786,766 Total $ 16,338,756 $ 15,905,353 $ 32,244,109 Product line cost of goods sold Finished jewelry $ 5,220,551 $ 1,638,561 $ 6,859,112 Loose jewels 1,583,404 6,659,426 8,242,830 Total $ 6,803,955 $ 8,297,987 $ 15,101,942 Product line gross profit Finished jewelry $ 7,421,136 $ 1,177,095 $ 8,598,231 Loose jewels 2,113,665 6,430,271 8,543,936 Total $ 9,534,801 $ 7,607,366 $ 17,142,167 Operating income $ 1,643,552 $ 622,005 $ 2,265,557 Depreciation and amortization $ 172,819 $ 308,500 $ 481,319 Capital expenditures $ 69,975 $ 291,465 $ 361,440 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. The reconciliations of the Company’s product line cost of goods sold to cost of goods sold, as reported in the consolidated financial statements for the periods presented, are as follows: Year Ended June 30, 2020 2019 Product line cost of goods sold $ 13,531,976 $ 15,101,942 Non-capitalized manufacturing and production control expenses 1,443,698 1,442,446 Freight out 510,612 578,772 Inventory write-off 5,863,991 393,000 Other inventory adjustments (150,070 ) (163,993 ) Cost of goods sold $ 21,200,207 $ 17,352,167 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 June 30, 2020 and 2019, are held and located in the United States. The following presents net sales data by geographic area for the periods presented: Year Ended June 30, 2020 2019 Net sales United States $ 26,814,024 $ 27,979,835 International 2,374,996 4,264,274 Total $ 29,189,020 $ 32,244,109

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	12 Months Ended
	Jun. 30, 2020
FAIR VALUE MEASUREMENTS [Abstract]
FAIR VALUE MEASUREMENTS	4. FAIR VALUE MEASUREMENTS U The fair value hierarchy consists of three levels based on the reliability of inputs, as follows: Level 1. Level 2. Level 3. The Company evaluates assets and liabilities subject to fair value measurements on a recurring and non-recurring basis to determine the appropriate level to classify them for each reporting period. This determination requires significant judgments to be made by management of the Company. The financial instruments identified as subject to fair value measurements on a recurring basis are cash and cash equivalents, trade accounts receivable, and trade accounts payable. All financial instruments are reflected in the consolidated balance sheets at carrying value, which approximates fair value due to the short-term nature of these financial instruments. Assets that are measured at fair value on a non-recurring basis include property and equipment, leasehold improvements, and intangible assets, comprising patents, license rights, and trademarks. These items are recognized at fair value when they are considered to be impaired.

INVENTORIES

INVENTORIES	12 Months Ended
	Jun. 30, 2020
INVENTORIES [Abstract]
INVENTORIES	5. INVENTORIES The Company’s total inventories, net of reserves, consisted of the following as of the dates presented: June 30, 2020 2019 Finished jewelry: Raw materials $ 821,536 $ 643,797 Work-in-process 602,390 487,680 Finished goods 6,019,985 6,332,533 Finished goods on consignment 2,297,907 1,867,549 Total finished jewelry 9,741,818 9,331,559 Loose jewels: Raw materials 3,526,399 3,806,681 Work-in-process 10,453,586 10,384,143 Finished goods 6,619,487 9,878,691 Finished goods on consignment 204,635 203,535 Total loose jewels 20,804,107 24,273,050 Total supplies inventory 88,034 129,111 Total inventory $ 30,633,959 $ 33,733,720 As of the dates presented, the Company’s total inventories, net of reserves, are classified as follows: June 30, 2020 2019 Short-term portion $ 7,443,257 $ 11,909,792 Long-term portion 23,190,702 21,823,928 Total inventory $ 30,633,959 $ 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 June 30, 2020 and 2019, work-in-process inventories issued to active production jobs approximated $1.34 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 inventories are stated at the lower of cost or net realizable value on an average cost basis. Each accounting period the Company evaluates the valuation and classification of inventories including the need for potential adjustments to inventory-related reserves, which also include significant estimates by management. As a result of the deterioration of marketability of the Company’s legacy inventory, management determined that the inventory has lost its revenue-generating ability and the net realizable value of this inventory has fallen below that of its historical carrying cost. The Company recognized a loss in net realizable value in the quarterly period ended March 31, 2020, for its legacy material inventory, i.e ., , preforms, work-in-process gemstones, finished gemstones, and gemstones set in finished jewelry, the carrying cost of which was approximately $5.26 million. Included in cost of goods sold during the fiscal year ended June 30, 2020, is the above-referenced write-off of approximately $5.26 million representing the carrying value of the Company’s legacy loose jewel inventory and finished jewelry inventory set with these legacy gemstones. The legacy inventory raw materials were purchased and finished gemstone products were Forever Classic TM Forever Brilliant ® 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. Total inventory write-downs were $5.86 million and $393,000 for the years ended June 30, 2020 and 2019, respectively.

PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT	12 Months Ended
	Jun. 30, 2020
PROPERTY AND EQUIPMENT [Abstract]
PROPERTY AND EQUIPMENT	6. PROPERTY AND EQUIPMENT Property and equipment consists of the following as of the dates presented: June 30, 2020 2019 Computer software $ 1,827,581 $ 1,512,533 Machinery and equipment 1,145,525 1,100,629 Computer hardware 1,158,559 1,064,302 Leasehold improvements 1,158,807 1,158,218 Furniture and fixtures 347,872 343,808 Total 5,638,344 5,179,490 Less accumulated depreciation ( 4,639,283 ) (4,153,392 ) Property and equipment, net $ 999,061 $ 1,026,098 Depreciation expense for the fiscal years ended June 30, 2020 and 2019 was approximately $486,000 and $480,000, respectively.

INTANGIBLE ASSETS

INTANGIBLE ASSETS	12 Months Ended
	Jun. 30, 2020
INTANGIBLE ASSETS [Abstract]
INTANGIBLE ASSETS	7. INTANGIBLE ASSETS Intangible assets consist of the following as of the dates presented: June 30, Weighted Average Remaining Amortization Period 2020 2019 (in Years) Patents $ 1,024,267 $ 1,007,497 14.6 Trademarks 160,683 100,331 9.7 License rights 6,718 6,718 - Total 1,191,668 1,114,546 Less accumulated amortization (1,021,517 ) (1,017,173 ) Intangible assets, net $ 170,151 $ 97,373 Amortization expense for the fiscal years ended June 30, 2020 and 2019 was approximately $4,000 and $2,000, respectively. Amortization expense on existing intangible assets is estimated to be approximately $16,000 for the fiscal year ending June 30, 2021 and $15,000 for each of the fiscal years ending June 30, 2022, 2023, 2024 and 2025. The amortization expense for the remaining unamortized balance of the total intangible assets, net, will be recognized in fiscal years ending after June 30, 2025.

ACCRUED EXPENSES AND OTHER LIAB

ACCRUED EXPENSES AND OTHER LIABILITIES	12 Months Ended
	Jun. 30, 2020
ACCRUED EXPENSES AND OTHER LIABILITIES [Abstract]
ACCRUED EXPENSES AND OTHER LIABILITIES	8. ACCRUED EXPENSES AND OTHER LIABILITIES Total accrued expenses and other liabilities consist of the following as of the dates presented: June 30, 2020 2019 Deferred revenue $ 794,740 $ 100,088 Accrued compensation and related benefits 395,006 760,324 Accrued severance 338,355 - Accrued sales tax 295,651 286,864 Deferred rent - 156,306 Accrued cooperative advertising 89,517 73,033 Other 9,063 41,617 Accrued expenses and other liabilities $ 1,922,332 $ 1,418,232

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	12 Months Ended
	Jun. 30, 2020
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, 2021 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 June 30, 2020, the Company’s balance sheet classifications of its leases are as follows: Operating Leases: Noncurrent operating lease ROU assets $ 584,143 Current operating lease liabilities $ 622,493 Noncurrent operating lease liabilities 203,003 Total operating lease liabilities $ 825,496 The Company’s total operating lease cost was approximately $469,000 for the fiscal year ended June 30, 2020. As of June 30, 2020, 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 1.33 years. As of June 30, 2020, the Company’s remaining future payments under operating leases for each fiscal year ending June 30 are as follows: 2021 $ 642,997 2022 219,723 Total lease payments 862,720 Less: imputed interest (37,224 ) Present value of lease payments 825,496 Less: current lease obligations 622,493 Total long-term lease obligations $ 203,003 The Company makes cash payments for amounts included in the measurement of its lease liabilities. During the fiscal year ended June 30, 2020, cash paid for operating leases was approximately $668,000 and, except for the ROU assets recorded upon adoption of the new lease accounting standard as of July 1, 2019, there were no 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 including a security interest as defined, 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) (ii) (iii) The Company’s total purchase commitment under the Supply Agreement until June 2023 is approximately $52.95 million, of which approximately $36.60 million remains to be purchased as of June 30, 2020. Over the life of the Supply Agreement, as amended, the Company’s future minimum annual purchase commitments of SiC crystals range from approximately $9 million to $12 million each year. During the fiscal year ended June 30, 2020 and 2019, the Company purchased approximately $7.47 million and $8.91 million, respectively, of SiC crystals from Cree. See Note 15, “Subsequent Event”, for details in connection with the second amendment to the Supply Agreement executed on August 26, 2020. Amendments to the Supply Agreement include, among other things, changes to the expiration date and an extension of the period over which the Company must fulfill the total purchase commitment, which remains unchanged under the Supply Agreement, as amended. COVID-19 Update In March 2020, the novel strain of coronavirus, known as COVID-19, was declared a pandemic by the World Health Organization and declared a national emergency by the U.S. Government , and has negatively affected the U.S. and global economies. In response to this pandemic, federal, state, county, and local governments and public health organizations and authorities around the world have implemented a variety of measures intended to control the spread of the virus, including quarantines, “stay-at-home” orders, travel restrictions, school closures, business limitations and closures, social distancing, and hygiene requirements. These measures have adversely affected workforces, customers, economies, and global supply chains, and resulted in significant travel and transport restrictions – all of which have combined to lead to an economic downturn. It has also disrupted the normal operations of many businesses, including that of the Company’s . In early 2020 in the Asia Pacific region and during our quarter ended March 31, 2020 globally, the pandemic and related governmental and business responses began to have an adverse effect on the Company’s operations, supply chains, distribution channels, and consumer buying behaviors. Cumulatively, these things also impacted the net realizable value and marketability of the Company’s legacy inventory, which was subsequently written-off. The overall impacts of the COVID-19 pandemic include the following: • Across the Company’s supply chain, it experienced instances of suppliers temporarily closing their operations, delaying order fulfillment, or limiting their production. Where applicable, the Company utilized alternative supply arrangements with partners whose businesses are not under stay-at-home orders or whose production came back online. During the quarter ended June 30, 2020, many of the Company’s suppliers began returning to normal operating and production levels. However, the Company and its suppliers remain subject to ongoing changes to governmental closure requirements that may have a long-term impact on the Company’s supply chain and ability to produce gemstones and finished jewelry for sale. • In the Company’s Online Channels segment, its transactional website charlesandcolvard.com remained open under restricted fulfillment capabilities. However, a quickly rising unemployment rate combined with consumer uncertainty and lack of confidence began reducing website traffic and conversions in March 2020. Beginning in March 2020, the Company maintained limited shipping functions with support from third-party production and fulfillment partners. The Company was also able to support only a certain level of active products on marketplaces and drop-ship partner websites such as Macys.com, Helzberg.com, Overstock.com, ShopHQ.com, and more. This ongoing e-commerce presence was restricted to available stock and the limited production capacity of functioning suppliers. During the quarter ended June 30, 2020, the Company began seeing orders in our transactional website, along with orders in our marketplaces and drop-ship partner websites, increase as consumer confidence strengthened and the Company’s operating and shipping functions began to return to normal activity levels. However, until business resumes to pre-pandemic levels across our entire supply chain, the Company’s Online Channels segment is expected to continue to be adversely impacted by the pandemic. • In the Company’s Traditional segment, brick and mortar customers began closing their stores to foot traffic in March 2020, with tentative plans to re-open on a rolling schedule that may lead into the fall timeframe or later. The Company also experienced instances of distributors, whose businesses rely on sales into retail organizations, reducing or closing their operations. These adverse effects impacted the Company’s ability to maintain significant levels of sales through our wholesale customers. In addition, trade shows and industry events have been preemptively cancelled for the critical production season leading up to the calendar year-end 2020 holiday season. As a result, the Company’s selling activities in its Traditional segment were significantly modified, and its ability to convert those activities into sales have been adversely impacted by the pandemic. Consistent with the trends the Company is experiencing in its Online Channels segment, it has begun seeing business strengthen with its brick and mortar customers as these customers begin to move forward with their re-opening plans following their closures in March 2020, but until business resumes to pre-pandemic levels, the Company’s Traditional segment is expected to continue to be adversely impacted by the pandemic. • As global and U.S economic activity slowed in response to the COVID-19 pandemic, the Company experienced and anticipates ongoing constraints on its cash and working capital, including experiencing potential liquidity challenges. The impact of the pandemic has had – and is expected to continue having – an adverse effect on the Company’s operations and financial condition as revenues declined and, despite the Company’s cost-saving efforts, many business and operating expenses remained flat or continued to rise. Cash flow scrutiny will be crucial for the Company’s The COVID-19 pandemic has had a significant adverse impact on the Company’s business, results of operations, financial condition, and liquidity during Fiscal 2020. The full extent of the impact of the COVID-19 pandemic on the Company’s operational and financial performance is currently uncertain and will depend on many factors outside of its control, including, without limitation, the timing, extent, trajectory and duration of the pandemic, the development and availability of effective treatments and vaccines, the imposition of protective public safety measures, and the impact of the pandemic on the global economy and demand for consumer and wholesaler products Since the onset of the pandemic domestically, the Company has implemented the following measures: • The Company deployed a work-from-home option for its employees on March 13, 2020, and effective March 27, 2020, instituted a mandatory work-from-home policy for all, but essential, employees due to mandated stay-at-home orders by the State of North Carolina and local governmental authorities; • The Company temporarily suspended all hiring of employees starting April 13, 2020 and returned to full-time status as it moved forward with its phased reopening plans • The Company extended new benefits to assist employees who participate in its 401(k) plan with additional distribution and new borrowing terms; • The Company implemented temporary salary and wage reductions for all employees, including a 25% reduction in salary for the President and Chief Executive Officer and a 15% reduction for each of the Chief Financial Officer and Chief Operating Officer. All employee salaries and wages were returned to pre-reduction levels in July 2020; • The Company • The Company instituted a temporary 50% reduction in fees paid to its Board of Directors for the quarterly period ended June 30, 2020, which were also returned to pre-reduction levels in July 2020; • The Company a loan pursuant to the Paycheck Protection Program under the CARES Act, as administered by the SBA. The loan in the principal amount of $965,000 was disbursed by Newtek Small Business Finance, LLC, a nationally licensed lender under the SBA, on June 18, 2020 pursuant to a Promissory Note issued by us on June 15, 2020. As provided under the CARES Act, the Company intends to use the proceeds from this loan to enhance cash flow, to help maintain operations and fund current payroll requirements, and to assist the Company with the reopening phase of its business as it navigates the COVID-19 pandemic recovery efforts. There can be no assurance that such PPP loan will be forgiven; and • The Company reduced non-payroll operating expenses, including decreased digital marketing spend and significantly reduced product development investments and travel expenditures. The Company is continuing to take the following steps to further address the impact of the COVID-19 pandemic: • The Company is actively renegotiating contracts with vendors and suppliers to amend commitments to size its supply with current demand and delivery terms with others to reduce its cost of goods and services; • The Company is negotiating extended payment terms with select partners; • The Company is continuing to align variable expenses to match current sales trends as it continues to move forward with its phased reopening; and • The Company is currently continuing to offer the flexibility of a work-from-home option for its employees who are able to perform full-time duties effectively from home as the State of North Carolina continues to reopen through its predetermined phased reopening plan.

DEBT

DEBT	12 Months Ended
	Jun. 30, 2020
DEBT [Abstract]
DEBT	10. DEBT Paycheck Protection Program Loan The Company received a loan pursuant to the Paycheck Protection Program under the CARES Act, as administered by the U.S. Small Business Administration (the “SBA”). on June 18, 2020 pursuant to a promissory note issued by the Company (the “Promissory Note”) on June 15, 2020. The Promissory Note matures June 18, 2022 and may be extended with the consent of the Lender under the provisions of the CARES Act. The Promissory Note bears interest at a fixed rate of 1% per annum. Pursuant to the terms of the Promissory Note, monthly principal and interest payments in the amount of approximately $41,000 will commence on April 1, 2021. For financial reporting purposes, as of June 30, 2020, the classification of the current maturity of long-term debt assumes there will be no principal forgiveness and principal repayment for the full outstanding principal amount of the PPP Loan are assumed to be spread in equal monthly installments over the period from April 1, 2021 through the maturity date of the Promissory Note. The Company did not provide any collateral or guarantees for the PPP Loan, nor did the Company pay any facility charge to obtain the PPP Loan. The Promissory Note provides for customary events of default, including, among others, those relating to failure to make payment and breaches of representations. The Company may prepay the principal of the PPP Loan at any time without incurring any prepayment charges. Under the CARES Act and the Promissory Note, loan forgiveness is available for the sum of documented payroll costs, covered rent payments, and covered utilities during the 24-week period beginning on the date of first disbursement of the PPP Loan. For purposes of the CARES Act, payroll costs exclude cash compensation of an individual employee in excess of $100,000, prorated annually. Not more than 40% of the forgiven amount can be attributable to non-payroll costs. Although the Company currently believes that its use of the PPP Loan will meet the conditions for forgiveness of the PPP Loan, the Company cannot assure its future adherence to the forgiveness criteria and that the PPP Loan will be forgiven, in whole or in part. 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 Commercial Finance, LLC (“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 (the “Guarantor”). 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 are limited to a borrowing base, which is computed by applying specified advance rates to the value of the Borrowers’ eligible accounts receivable and inventory, plus the value of precious metal jewelry components, less reserves. The inclusion of inventory and precious metal jewelry components in the borrowing base was subject to the completion of an inventory appraisal, which was completed subsequent to the execution of the White Oak Credit Facility. Eligible inventory is further limited to 60% of the net borrowing base, while precious metal jewelry components are limited to $500,000. Advances may be either revolving or non-revolving. Non-revolving advances are limited to $1.00 million in aggregate principal amount outstanding and must be repaid on each January 15 (which may be effected by conversion to revolving advances, absent an event of default). There are no other mandatory prepayments or line reductions. The Company may elect to prepay advances in whole or in part at any time without penalty. In addition, the White Oak Credit Facility may be terminated by the Company at any time, subject to a $100,000 fee in the first year of the term of the White Oak Credit Facility, a $50,000 fee in the second year, and no fee thereafter. In connection with the White Oak Credit Facility, the Company incurred a non-refundable origination fee in the total amount of $125,000 that is due and payable to White Oak in three installments. The first installment in the amount of $41,667 was paid upon execution of the White Oak Credit Facility on July 13, 2018 and the second installment in the amount of $41,667 was paid on July 15, 2019. The third and final installment in the amount of $41,666 was paid on August 14, 2020. During the first year of the term of the White Oak Credit Facility, revolving advances would have accrued interest at a rate equal to one-month LIBOR (reset monthly, and subject to a 1.25% floor) plus 3.75%, and non-revolving advances will accrue interest at such LIBOR rate plus 4.75%. Thereafter, the interest margins will reduce upon the Company’s achievement of a specified fixed charge coverage ratio. However, advances are in all cases subject to a minimum interest rate of 5.50%. Interest is calculated on an actual/360 basis and payable monthly in arrears. Principal outstanding during an event of default accrues interest at a rate 2% in excess of the rate otherwise applicable. The White Oak Credit Facility is secured by a lien on substantially all assets of the Borrowers, each of which is jointly and severally liable for all obligations thereunder. White Oak’s security interest in certain SiC materials is subordinate to Cree’s security interest in such materials pursuant to the Company’s Supply Agreement and an Intercreditor Agreement by and among the Borrowers and the Guarantor with White Oak. In addition, White Oak’s security interest in certain tangible personal property of the Company is subordinate to its landlord’s security interest in such tangible personal property. The White Oak Credit Facility is evidenced by a credit agreement, dated as of July 13, 2018 (the “Credit Agreement”), a security agreement, dated as of July 13, 2018 (the “Security Agreement”), and customary ancillary documents. The Credit Agreement, Security Agreement, and ancillary documents contain customary covenants, representations, fees, and cash dominion provisions, including a financial reporting covenant and limitations on dividends, distributions, debt, liens, loans, investments, mergers, acquisitions, divestitures, and affiliate transactions. Events of default under the White Oak Credit Facility include, without limitation, a change in control, an event of default under other indebtedness of the Borrowers or Guarantor in excess of $250,000, a material adverse change in the business of the Borrowers or Guarantor or in their ability to perform their obligations under the White Oak Credit Facility, and other defined circumstances that White Oak believes may impair the prospect of repayment. If an event of default occurs, White Oak is entitled to take enforcement action, including acceleration of amounts due under the White Oak Credit Facility and foreclosure upon collateral. The White Oak Credit Facility contains other customary terms, that include indemnity, collateral monitoring fee, minimum interest charge, expense reimbursement, yield protection, and confidentiality provisions. As of June 30, 2020, the Company had not borrowed against the White Oak Credit Facility. As a result of the Company’s diminished borrowing base, which is tied to its accounts receivable, its ability to draw down funds from the White Oak Credit Facility is currently restricted.

SHAREHOLDERS' EQUITY AND STOCK-

SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION	12 Months Ended
	Jun. 30, 2020
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION [Abstract]
SHAREHOLDERS' EQUITY	11. SHAREHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION Common Stock The Company is authorized to issue 50,000,000 shares of common stock, no par value. As of June 30, 2020 and 2019, it had 28,949,410 and 28,027,569 shares of common stock outstanding, respectively. Holders of the Company’s common stock are entitled to one vote for each share held. Preferred Stock The Board of Directors is authorized, without further shareholder approval, to issue up to 10,000,000 shares of preferred stock, no par value. The preferred stock may be issued from time to time in one or more series. No shares of preferred stock had been issued as of June 30, 2020. Dividends The Company has paid no cash dividends during the fiscal years ended June 30, 2020 and 2019. Shelf Registration Statement The Company has an effective shelf registration statement on Form S-3 on file with the 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 . 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 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	Equity Compensation Plans 2018 Equity Incentive Plan On November 21, 2018, the shareholders of the Company approved the adoption of the Charles & Colvard, Ltd. 2018 Equity Incentive Plan, (the “2018 Plan”). The 2018 Plan will expire by its terms on September 20, 2028. The 2018 Plan provides for the grant of equity-based awards to selected employees, directors, and consultants of the Company and its affiliates. The aggregate number of shares of the Company’s common stock that could be issued pursuant to awards granted under the 2018 Plan are not to exceed the sum of 3,300,000 plus the number of shares of common stock underlying any award granted under any stock incentive plan maintained by the Company prior to the 2018 Plan (each, a “2018 Prior Plan”) that expires, terminates or is canceled or forfeited under the terms of the 2018 Prior Plans. Stock options granted to employees under the 2018 Plan generally vest over four years and have terms of up to 10 years. The vesting schedules and terms of stock options granted to independent contractors vary depending on the specific grant, but the terms are no longer than 10 years. Stock option awards granted to members of the Board of Directors generally vest at the end of one year from the date of the grant. The vesting schedules of restricted stock awards granted to employees or independent contractors vary depending on the specific grant but are generally four years or less. Only stock options and restricted stock have been granted under the 2018 Plan. As of June 30, 2020 and 2019, there were 790,407 and 285,025 stock options outstanding under the 2018 Plan, respectively. 2008 Stock Incentive Plan In May 2008, the shareholders of the Company approved the adoption of the Charles & Colvard, Ltd. 2008 Stock Incentive Plan, as amended on March 31, 2015 and approved by the shareholders of the Company on May 20, 2015 and further amended on March 15, 2016 and approved by the shareholders of the Company on May 18, 2016 The 2008 Plan authorized the Company to grant stock options, stock appreciation rights, restricted stock, and other equity awards to selected employees, directors, and independent contractors. The aggregate number of shares of the Company’s common stock that could be issued pursuant to awards granted under the 2008 Plan were not to exceed the sum of 6,000,000 plus any shares of common stock subject to an award granted under any stock incentive plan maintained by the Company prior to the 2008 Plan (each, a “2008 Prior Plan”) that is forfeited, cancelled, terminated, expires, or lapses for any reason without the issuance of shares pursuant to the award, or shares subject to an award granted under a 2008 Prior Plan which shares are forfeited to, or repurchased or reacquired by, the Company. Stock options granted to employees under the 2008 Plan generally vest over four years and have terms of up to 10 years. The vesting schedules and terms of stock options granted to independent contractors vary depending on the specific grant, but the terms are no longer than 10 years. Stock option awards granted to members of the Board of Directors generally vest at the end of one year from the date of the grant. The vesting schedules of restricted stock awards granted to employees or independent contractors vary depending on the specific grant but are generally four years or less. Only stock options and restricted stock had been granted under the 2008 Plan. As of June 30, 2020 and 2019, there were 2,018,688 and 2,238,613 stock options outstanding under the 2008 Plan, respectively. Stock-Based Compensation The following table summarizes the components of the Company’s stock-based compensation included in net (loss) income for the periods presented: Year Ended June 30, 2020 2019 Employee stock options $ 309,999 $ 235,984 Restricted stock awards 149,539 266,821 Total $ 459,538 $ 502,805 Due to the Company’s valuation allowance against deferred tax assets as discussed further in Note 12, “Income Taxes”, any income tax benefits associated with these grants and awards for the fiscal years ended June 30, 2020 and 2019 were fully reserved. No stock-based compensation was capitalized as a cost of inventory during the fiscal years ended June 30, 2020 and 2019. Stock Options The following is a summary of the stock option activity for the fiscal years ended June 30, 2020 and 2019: Shares Weighted Average Exercise Price Outstanding at June 30, 2018 2,388,169 $ 1.46 Granted 285,025 $ 1.00 Exercised (52,500 ) $ 1.21 Forfeited (30,000 ) $ 1.20 Expired (67,056 ) $ 1.71 Outstanding at June 30, 2019 2,523,638 $ 1.39 Granted 605,387 $ 0.95 Forfeited (125,005 ) $ 1.02 Expired (194,925 ) $ 1.18 Outstanding at June 30, 2020 2,809,095 $ 1.33 The weighted average grant date fair value of stock options granted during the fiscal year ended June 30, 2020 and 2019 was $0.50 and $0.57, respectively. The total fair value of stock options that vested during the fiscal year ended June 30, 2020 and 2019 was approximately $282,000 and $176,000, respectively. The fair value of each stock option is estimated on the date of grant using the Black-Scholes-Merton option pricing model with the following weighted average assumptions for stock options granted during the periods presented: Year Ended June 30, 2020 2019 Dividend yield 0.0 % 0.0 % Expected volatility 63.2 % 61.0 % Risk-free interest rate 0.82 % 3.09 % Expected lives (years) 5.2 5.5 The following tables summarize information in connection with stock options outstanding at June 30, 2020: Options Outstanding Options Exercisable Options Vested or Expected to Vest Balance as of 6/30/2020 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Balance as of 6/30/2020 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Balance as of 6/30/2020 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price 2,809,095 5.74 $ 1.33 2,396,208 5.11 $ 1.37 2,743,077 5.66 $ 1.34 As of June 30, 2020, the unrecognized stock-based compensation expense related to unvested stock options was approximately $155,000, which is expected to be recognized over a weighted average period of approximately 17 months. The aggregate intrinsic value of stock options outstanding, exercisable, and vested or expected to vest at June 30, 2020 was approximately $500. These amounts are before applicable income taxes and represent the closing market price of the Company’s common stock at June 30, 2020, less the grant price, multiplied by the number of stock options that had a grant price that is less than the closing market price. These amounts represent the amounts that would have been received by the optionees had these stock options been exercised on those dates. No stock options were exercised during the fiscal year ended June 30, 2020. The aggregate intrinsic value of stock options exercised during the fiscal year ended June 30, 2019 was approximately $51,000. Restricted Stock The following is a summary of the restricted stock activity for the fiscal years ended June 30, 2020 and 2019: Shares Weighted Average Grant Date Fair Value Unvested at June 30, 2018 264,000 $ 1.25 Granted 129,500 $ 1.07 Vested (154,396 ) $ 1.20 Canceled (109,604 ) $ 1.31 Unvested at June 30, 2019 129,500 $ 1.08 Granted 325,000 $ 1.57 Vested (258,341 ) $ 1.07 Canceled (33,659 ) $ 1.07 Unvested at June 30, 2020 162,500 $ 1.57 The unvested restricted shares as of June 30, 2020 are all

INCOME TAXES

INCOME TAXES	12 Months Ended
	Jun. 30, 2020
INCOME TAXES [Abstract]
INCOME TAXES	12. INCOME TAXES In connection with filing its 2017 U.S. corporate income tax return in June 2018, the Company’s management analyzed the income tax effects of the Tax Cuts and Jobs Act (the “Tax Act”), enacted in December 2017, In January 2019, the Internal Revenue Service (the “IRS”) announced that refund payments and refund offset transactions due to refundable minimum tax credits associated with the repeal of the corporate AMT as part of the Tax Act would not be subject to sequestration. Accordingly, in January 2019 the Company recognized the additional available underlying tax benefit in the amount of approximately $23,000 relating to the sequestered portion of its AMT credit. This amount, net of amounts received, was also included in other long-term assets in the accompanying consolidated balance sheet as of June 30, 2019. The Company received installment refunds in May 2019 and April 2020 of approximately $75,000 and $6,000, respectively, from the IRS in accordance with the AMT refundability schedule as set forth in the Tax Act. Pursuant to provisions of t The Company continues to monitor future developments and interpretations of the CARES Act for any material impacts on its future results of operations, financial position, and liquidity. Pursuant to provisions of the State of North Carolina General Assembly Senate Bill 704: COVID-19 Recovery Act, enacted in May 2020, the Company will receive a tax credit towards its contribution to the North Carolina Unemployment Insurance Fund (the “Fund”) that is equal to the amount of the Company’s contribution to the Fund for the calendar quarter ended March 31, 2020. Accordingly, in June 2020 the Company recognized the available tax benefit in the amount of approximately $7,000 and such amount is included in prepaid expenses and other current assets in the accompanying consolidated balance sheet as of June 30, 2020. The Company accounts for income taxes under the liability method. Under the liability method, deferred income taxes are recognized for the income tax consequences of “temporary differences” by applying enacted statutory income tax rates applicable to future years to differences between the financial statement carrying amounts and the income tax bases of existing assets and liabilities. The Company’s income tax net (expense) benefit for the periods presented Year Ended June 30, 2020 2019 Current: Federal $ - $ 23,149 State (1,733 ) (21,706 ) Total current (expense) benefit (1,733 ) 1,443 Deferred: Federal - - State - - Total deferred (expense) benefit - - Income tax net (expense) benefit $ (1,733 ) $ 1,443 Significant components of the Company’s deferred income tax assets as of the dates presented are as follows: June 30, 2020 2019 Reversals and accruals $ 476,666 $ 970,516 Prepaid expenses (39,943 ) (38,552 ) Federal NOL carryforwards 4,980,513 4,911,437 State NOL carryforwards 663,918 674,522 Hong Kong NOL carryforwards 995,566 995,566 Federal benefit on state taxes under uncertain tax positions 1,668 1,304 Stock-based compensation 392,924 194,524 Research tax credit 252 83,315 Contributions carryforward 7,184 - Depreciation (172,010 ) (157,310 ) Inventory valuation reserve 1,594,795 - Operating lease liabilities 185,422 - Operating lease right-of-use assets (131,008 ) - Accrued rent - 88,923 Loss on impairment of long-lived assets 32,749 32,985 Valuation allowance (8,988,696 ) (7,757,230 ) Total deferred income tax assets, net $ - $ - The following are reconciliations between expected income taxes, computed at the applicable statutory federal income tax rate applied to pretax accounting loss, and the income tax net (expense) benefit for the periods presented: Year Ended June 30, 2020 2019 Anticipated income tax benefit (expense) at statutory rate $ 1,293,673 $ (477,545 ) State income tax benefit (expense), net of federal tax effect 64,034 (42,334 ) Income tax effect of uncertain tax positions 17,508 17,494 Return to provision adjustments 1 126 Stock-based compensation (31,195 ) (3,929 ) Other changes in deferred income tax assets, net (114,288 ) (280,066 ) (Increase) Decrease in valuation allowance (1,231,466 ) 787,697 Income tax net (expense) benefit $ (1,733 ) $ 1,443 The Company’s statutory tax rate as of the fiscal year ended June 30, 2020 is 22.11% and consists of the federal income tax rate of 21% and a blended state income tax rate of 1.11%, net of the federal benefit. The Company’s statutory tax rate as of June 30, 2019 was 22.16% and consisted of the federal income tax rate of 21% and a blended state income tax rate of 1.16%, net of the federal benefit. As of each reporting date, management considers new evidence, both positive and negative, that could impact its view with regard to future realization of deferred tax assets. As of June 30, 2020 and 2019, the Company had approximately $309 and $102,000, respectively, of remaining federal income tax credits all of which expire in 2021 and can be carried forward to offset future income taxes. As of June 30, 2020 and 2019, the Company also had federal tax net operating loss carryforwards of approximately $23.72 million and $23.39 million, respectively, expiring between 2022 and 2037, which can be used to offset against future federal taxable income; North Carolina tax net operating loss carryforwards of approximately $20.12 million and $20.20 million, respectively, expiring between 2023 and 2033; and various other state tax net operating loss carryforwards expiring between 2021 and 2040, which can be used to offset against future state taxable income. As of each of June 30, 2020 and 2019, there was approximately $6.03 million in net operating loss carryforwards in Hong Kong. In accordance with the Hong Kong tax code, these amounts can be carried forward indefinitely to offset future taxable income in Hong Kong. The Company’s deferred tax assets in Hong Kong were fully reserved with a valuation allowance of $996,000 as of each of June 30, 2020 and 2019, and had been fully reserved in all prior fiscal periods due to the uncertainty of future taxable income in this jurisdiction to utilize the deferred tax assets. Charles & Colvard (HK) Ltd., the Company’s Hong Kong subsidiary, which was re-activated in December 2017, but had no operating activity during the fiscal years ended June 30, 2020 and 2019, previously ceased operations during 2008 and became a dormant entity during 2009. If the Company uses any portion of its deferred tax assets in future periods, the valuation allowance would need to be reversed and may impact the Company’s future operating results. Uncertain Tax Positions The gross liability for income taxes associated with uncertain tax positions at June 30, 2020 and June 30, 2019, was approximately $8,000 and $6,000, respectively. The gross liability, if recognized, would favorably affect the Company’s effective tax rate. The Company’s policy for recording interest and penalties associated with tax audits is to record such items as a component of the provision for income taxes. The Company accrued approximately $2,000 and $1,000 of interest and penalties associated with uncertain tax positions for the fiscal years ended June 30, 2020 and 2019, respectively. Including the interest and penalties recorded for uncertain tax positions, there is a total of approximately $5,000 and $4,000 of interest and penalties included in the accrued income tax liability for uncertain tax positions as of June 30, 2020 and 2019, respectively. To the extent interest and penalties are not ultimately incurred with respect to uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision. In all significant federal and state jurisdictions where it is required to file income tax returns, the Company has analyzed filing positions for all tax years in which the statute of limitations is open. The only periods subject to examination by the major tax jurisdictions where the Company does business are the tax years ended December 31, 2015 through June 30, 2019. The Company does not believe that the outcome of any examination will have a material impact on its consolidated financial statements and does not expect settlement on any uncertain tax positions within the next 12 months. Beginning with the transition period ended June 30, 2018, the Company’s tax year conforms with its fiscal accounting period year ending on June 30 of each year. The following table summarizes the activity related to the Company’s accrued gross income tax liability for uncertain tax positions for the two-year period ended June 30, 2020: Balance at June 30, 2018 $ 4,891 Increases related to prior fiscal year tax positions 1,323 Balance at June 30, 2019 6,214 Increases related to prior fiscal year tax positions 1,733 Balance at June 30, 2020 $ 7,947 For information regarding the Company’s decision during the fiscal year ended June 30, 2020 to reduce its accrued gross income tax liability for uncertain tax positions that should have been derecognized in prior years Immaterial Correction of an Error section in

MAJOR CUSTOMERS AND CONCENTRATI

MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK	12 Months Ended
	Jun. 30, 2020
MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK [Abstract]
MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK	13. MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK At times, a portion of the Company’s accounts receivable will be due from customers that have individual balances of 10% or more of the Company’s total gross accounts receivable. The following is a summary of customers that represent greater than or equal to 10% of total gross accounts receivable as of the dates presented: June 30, 2020 2019 Customer A 26 % 13 % Customer B 14 % 25 % Customer C 13 % * % Customer D ** % 15 % * Customer C did not have individual balances that represented 10% or more of total gross accounts receivable as of June 30, 2019. ** Customer D did not have individual balances that represented 10% or more of total gross accounts receivable as of June 30, 2020. 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: Year Ended June 30, 2020 2019 Customer A 12 % 10 % Customer B 13 % 14 % The Company records its sales returns allowance at the corporate level based on several factors including historical sales return activity and specific allowances for known customer returns.

EMPLOYEE BENEFIT PLAN

EMPLOYEE BENEFIT PLAN	12 Months Ended
	Jun. 30, 2020
EMPLOYEE BENEFIT PLAN [Abstract]
EMPLOYEE BENEFIT PLAN	14. EMPLOYEE BENEFIT PLAN All full-time employees who meet certain length of service requirements are eligible to participate in and receive benefits from the Company’s 401(k) Plan. This plan provides for matching contributions by the Company in such amounts as the Board of Directors may annually determine, as well as a 401(k) option under which eligible participants may defer a portion of their salaries. The Company contributed a total of $82,000 and $67,000 to this employee benefit plan during the fiscal years ended June 30, 2020 and 2019, respectively.

SUBSEQUENT EVENT

SUBSEQUENT EVENT	12 Months Ended
	Jun. 30, 2020
SUBSEQUENT EVENT [Abstract]
SUBSEQUENT EVENT	15. SUBSEQUENT EVENT On August 26, 2020, the Supply Agreement was amended, effective June 30, 2020, to extend the expiration date to June 29, 2025, which may be further extended by mutual agreement of the parties. The Supply Agreement was also amended to, among other things, ( i ii iii Over the life of the Supply Agreement, as amended, the Company’s future minimum annual purchase commitments of SiC crystals range from approximately $4 million to $10 million each year.

BASIS OF PRESENTATION AND SIG_2

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)	12 Months Ended
	Jun. 30, 2020
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract]
Basis of Presentation and Principles of Consolidation	Basis of Presentation and Principles of Consolidation – .
Use of Estimates	Use of Estimates – The future effects of the COVID-19 pandemic on the Company’s results of operations, cash flows, and financial position continue to remain unclear. T “ ”
Reclassifications	Reclassifications –
Change in Accounting Policy	Changes in Accounting Policy – 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. For purposes of adopting this new guidance, the Company’s most appropriate option for an incremental borrowing rate assumption was to assume that it would be based on the underlying fully-collateralized borrowing rate in effect within the Company’s credit facility with White Oak Commercial Finance, LLC (“White Oak”). Pursuant to the terms of the Company’s credit facility with White Oak (the “White Oak Credit Facility”), as of July 1, 2019, the Company’s incremental borrowing rate for funds in the form of non-revolving advances would have been White Oak’s one-month LIBOR (2.3878%) plus 4.75%, or 7.1378%. Management believes that this rate represents the incremental borrowing rate that would have been in effect if the Company had borrowed such funds from its White Oak Credit Facility on 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 consolidated statement of operations or 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.”
Cash and Cash Equivalents	Cash and Cash Equivalents – Restricted Cash
Restricted Cash	Restricted Cash – White Oak 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 Consolidated Statements of Cash Flows, consists of the following as of the dates presented: June 30, 2020 2019 Cash and cash equivalents $ 13,993,032 $ 12,465,483 Restricted cash 624,202 541,062 Total cash, cash equivalents, and restricted cash $ 14,617,234 $ 13,006,545
Concentration of Credit Risk	Concentration of Credit Risk – 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, . The Company extends credit to its customers based upon a number of factors, including an evaluation of the customer’s financial condition and credit history that is verified through trade association reference services, the customer’s payment history with the Company, the customer’s reputation in the trade, and/or an evaluation of the Company’s opportunity to introduce its moissanite jewels or finished jewelry featuring moissanite to new or expanded markets. See Note 13, “Major Customers and Concentration of Credit Risk”, for further discussion of credit risk within trade accounts receivable.
Accounts Receivable Reserves	Accounts Receivable Reserves – The following are reconciliations of the allowance for sales returns balances as of the periods presented: Year Ended June 30, 2020 2019 Balance, beginning of year $ 746,000 $ 648,000 Additions charged to operations 4,710,943 4,533,077 Sales returns (4,752,943 ) (4,435,077 ) Balance, end of year $ 704,000 $ 746,000 The second reserve is an allowance for doubtful accounts for estimated losses resulting from the failure of the Company’s customers to make required payments. This allowance reduces trade accounts receivable to an amount expected to be collected. The Company generally uses an internal collection effort, which may include its sales personnel as it deems appropriate. After all internal collection efforts have been exhausted, the Company generally writes off the account receivable. Any accounts with significant balances are reviewed separately to determine an appropriate allowance based on the facts and circumstances of the specific account. on these criteria, management determined that allowances for doubtful accounts receivable of $79,000 and $249,000 at June 30, 2020 and 2019, The following are reconciliations of the allowance for doubtful accounts balances as of the periods presented: Year Ended June 30, 2020 2019 Balance, beginning of year $ 249,000 $ 233,000 Additions charged to operations 8,788 27,056 Write-offs, net of recoveries (178,788 ) (11,056 ) Balance, end of year $ 79,000 $ 249,000 Although the Company believes that its reserves are adequate, if the financial condition of its customers deteriorates, resulting in an impairment of their ability to make payments, or if it underestimates the allowances required, additional allowances may be necessary,
Inventories	Inventories - Inventory costs include direct material and labor, inbound freight, purchasing and receiving costs, inspection costs, and warehousing costs. Each accounting period, the Company evaluates the valuation and classification of inventories including the need for potential adjustments to inventory-related reserves, which also include significant estimates by management. The Company’s inventory-related valuation allowances are recorded in the aggregate rather than an individual item approach for each obsolescence, rework, and shrinkage valuation allowance.
Property and Equipment	Property and Equipment – Machinery and equipment 5 to 12 years Computer hardware 3 to 5 years Computer software 3 years Furniture and fixtures 5 to 10 years Leasehold improvements Shorter of the estimated useful life or the lease term
Intangible Assets	Intangible Assets –
Impairment of Long-Lived Assets	Impairment of Long-Lived Assets – whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount of the asset to future net undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment is measured as the amount by which the carrying amount exceeds the fair value and is recognized as an operating expense in the period in which the determination is made. Assets to be disposed are reported at the lower of the carrying amount or fair value less costs to sell once the held-for-sale criteria are met. As of June 30, 2020, the Company did not identify any indicators of long-lived asset impairment. In addition to the recoverability assessment, the Company routinely reviews the remaining estimated useful lives of its long-lived assets. Any reduction in the useful-life assumption will result in increased depreciation and amortization expense in the period when such determination is made, as well as in subsequent periods.
Revenue Recognition	Revenue Recognition – Revenue is recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. To achieve this principle, the Company performs the following five steps: (i) (ii) (iii) (iv) (v) The Company has a variable consideration element related to most of its contracts in the form of product return rights. At the time revenue is recognized, an allowance for estimated returns is established and any change in the allowance for returns is charged against net sales in the current period. For the Company’s customers (excluding those of charlesandcolvard.com), the returns policy generally allows for the return of jewels and finished jewelry with a valid reason for credit within 30 days of shipment. The Company’s charlesandcolvard.com customers can return purchases for any reason within 60 days of such purchase in accordance with the Company’s returns policy as disclosed on the charlesandcolvard.com website. Periodically, the Company ships loose jewel goods and finished goods to Traditional segment customers on consignment terms. Under these consignment terms, the customer assumes the risk of loss and has an absolute right of return for a specified period that typically ranges from six months to one year. The Company’s Online Channels segment and Traditional segment customers are generally required to make payments on consignment shipments within 30 to 60 days upon the customer informing the Company that it will keep the inventory. Accordingly, the Company does not recognize revenue on these consignment transactions until the earlier of (i) (ii) (iii) The Company presents disaggregated net sales by its Online Channels segment and its Traditional segment for both finished jewelry and loose jewels product lines. The Company also presents disaggregated net sales by geographic area between the United States and international locations. For financial reporting purposes, disaggregated net sales amounts are presented in Note 3, “Segment Information and Geographic Data.”
Returns Asset and Refund Liabilities	Returns Asset and Refund Liabilities The Company maintains 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 June 30, 2020 and 2019, the Company’s refund liabilities balances were $704,000 and $746,000, respectively, and are included as allowances for sales returns within accounts receivable, net, in the accompanying consolidated balance sheets. As of June 30, 2020 and 2019, the Company’s returns asset balances were $289,000 and $279,000, respectively, and are included within prepaid expenses and other assets in the accompanying consolidated balance sheets
Cost of Goods Sold	Cost of Goods Sold –
Advertising Costs	Advertising Costs – The Company also offers a cooperative advertising program to certain of its distributor and retail partners that reimburses, via a credit towards future purchases, a portion of their marketing costs based on the customers’ net purchases from the Company and is subject to the customer providing documentation of all advertising performed that includes the Company’s products. For the fiscal years ended June 30, 2020 and 2019, these approximate amounts were $491,000 and $381,000, respectively, and are included as a component of sales and marketing expenses. Advertising expenses, inclusive of the cooperative advertising program, for the fiscal years ended June 30, 2020 and 2019, were approximately $3.96 million and $2.82 million, respectively.
Sales and Marketing	Sales and Marketing – charlesandcolvard.com, LLC, wholly owned operating subsidiary.
General and Administrative	General and Administrative –
Research and Development	Research and Development –
Stock-Based Compensation	Stock-Based Compensation – The Company recognizes compensation expense for stock-based awards based on estimated fair values on the date of grant. Fair value of stock options using the Black-Scholes-Merton option pricing model is estimated on the date of grant utilizing certain assumptions for dividend yield, expected volatility, risk-free interest rate, and expected lives of the awards, as follows: Dividend Yield. Expected Volatility. Volatility is a measure of the amount by which a financial variable such as share price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. ; Risk-Free Interest Rate. Expected Lives. The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and the Company uses different assumptions, the Company’s stock-based compensation expense could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rates of stock-based awards and only recognize expense for those shares expected to vest. In estimating the Company’s forfeiture rates, the Company analyzed its historical forfeiture rates, the remaining lives of unvested stock-based awards, and the number of vested awards as a percentage of total awards outstanding. If the Company’s actual forfeiture rates are materially different from its estimates, or if the Company re-evaluates the forfeiture rates in the future, the stock-based compensation expense could be significantly different from what the Company has recorded in the current period.
Income Taxes	Income Taxes – The
Net (Loss) Income per Common Share	Net (Loss) Income per Common Share – The following table reconciles the differences between the basic and diluted net (loss) income per share presentations: Year Ended June 30, 2020 2019 Numerator: Net (loss) income $ (6,162,083 ) $ 2,275,467 Denominator: Weighted average common shares outstanding: Basic 28,644,133 21,860,699 Effect of dilutive securities - 250,524 Diluted 28,644,133 22,111,223 Net (loss) income per common share: Basic $ (0.22 ) $ 0.10 Diluted $ (0.22 ) $ 0.10 For the fiscal year ended June 30, 2020, stock options to purchase approximately 2.81 million shares were excluded from the computation of diluted net loss per common share because the effect of inclusion of such amounts would be anti-dilutive to net loss per common share. For the fiscal year ended June 30, 2019, stock options to purchase approximately 2.33 million were excluded from the computation of diluted net income per common share because the exercise price of the stock options was greater than the average market price of the common shares or the effect of inclusion of such amounts would be anti-dilutive to net income per common share. The quantity of 162,500 shares of un
Immaterial Correction of an Error	Immaterial Correction of an Error de minimis Related balances within Note 12, “Income Taxes”, associated with the federal tax benefit on state income taxes under uncertain tax positions and the related valuation allowance have also been recast
Recently Issued Accounting Pronouncements	Recently Issued Accounting Pronouncements – In June 2016, the FASB issued guidance related to the measurement of credit losses on financial instruments to provide more information in financial statements about expected credit losses on financial instruments and other commitments to extend credit. The new guidance is effective for fiscal years beginning after December 15, 2019. In December 2019, the FASB issued guidance on simplifying the accounting for income taxes that is intended to reduce the complexity while maintaining or improving the usefulness of tax disclosure information in financial statements. In March 2020, in response to concerns about structural risks of interbank offered rates (“IBORs”), and, particularly, the risk of cessation of the London Interbank Offered Rate (“LIBOR”), the FASB issued new guidance to ease the burden in accounting for or recognizing the effects of referenced interest rate reform on financial reporting. The new guidance is effective as of March 12, 2020 through December 31, 2022. As described in more detail in Note 10, “Line of Credit”, borrowings under the Company’s line of credit are based on a rate equal to the one-month LIBOR. As of June 30, 2020, the Company had not borrowed against its line of credit, and therefore, is not subject to recognizing or disclosing any effect of referenced rate reform as of its fiscal year ended June 30, 2020.

BASIS OF PRESENTATION AND SIG_3

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables)	12 Months Ended
	Jun. 30, 2020
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 Consolidated Statements of Cash Flows, consists of the following as of the dates presented: June 30, 2020 2019 Cash and cash equivalents $ 13,993,032 $ 12,465,483 Restricted cash 624,202 541,062 Total cash, cash equivalents, and restricted cash $ 14,617,234 $ 13,006,545
Reconciliation of Allowance for Sales Returns	The following are reconciliations of the allowance for sales returns balances as of the periods presented: Year Ended June 30, 2020 2019 Balance, beginning of year $ 746,000 $ 648,000 Additions charged to operations 4,710,943 4,533,077 Sales returns (4,752,943 ) (4,435,077 ) Balance, end of year $ 704,000 $ 746,000
Reconciliation of Allowance for Doubtful Accounts	The following are reconciliations of the allowance for doubtful accounts balances as of the periods presented: Year Ended June 30, 2020 2019 Balance, beginning of year $ 249,000 $ 233,000 Additions charged to operations 8,788 27,056 Write-offs, net of recoveries (178,788 ) (11,056 ) Balance, end of year $ 79,000 $ 249,000
Estimated Useful Life of Property, Plant and Equipment	Property and equipment are stated at cost and are depreciated over their estimated useful lives using the straight-line method as follows: Machinery and equipment 5 to 12 years Computer hardware 3 to 5 years Computer software 3 years Furniture and fixtures 5 to 10 years Leasehold improvements Shorter of the estimated useful life or the lease term
Basic and Diluted Net (Loss) Income Per Share	The following table reconciles the differences between the basic and diluted net (loss) income per share presentations: Year Ended June 30, 2020 2019 Numerator: Net (loss) income $ (6,162,083 ) $ 2,275,467 Denominator: Weighted average common shares outstanding: Basic 28,644,133 21,860,699 Effect of dilutive securities - 250,524 Diluted 28,644,133 22,111,223 Net (loss) income per common share: Basic $ (0.22 ) $ 0.10 Diluted $ (0.22 ) $ 0.10

SEGMENT INFORMATION AND GEOGR_2

SEGMENT INFORMATION AND GEOGRAPHIC DATA (Tables)	12 Months Ended
	Jun. 30, 2020
SEGMENT INFORMATION AND GEOGRAPHIC DATA [Abstract]
Summary Financial Information by Reportable Segment	Summary financial information by reportable segment for the periods presented is as follows: Year Ended June 30, 2020 Online Channels Traditional Total Net sales Finished jewelry $ 13,680,440 $ 3,097,188 $ 16,777,628 Loose jewels 2,944,100 9,467,292 12,411,392 Total $ 16,624,540 $ 12,564,480 $ 29,189,020 Product line cost of goods sold Finished jewelry $ 5,760,413 $ 1,709,377 $ 7,469,790 Loose jewels 1,198,275 4,863,911 6,062,186 Total $ 6,958,688 $ 6,573,288 $ 13,531,976 Product line gross profit Finished jewelry $ 7,920,027 $ 1,387,811 $ 9,307,838 Loose jewels 1,745,825 4,603,381 6,349,206 Total $ 9,665,852 $ 5,991,192 $ 15,657,044 Operating loss $ (249,016 ) $ (6,066,712 ) $ (6,315,728 ) Depreciation and amortization $ 177,703 $ 312,532 $ 490,235 Capital expenditures $ 305,570 $ 153,284 $ 458,854 Year Ended June 30, 2019 Online Channels Traditional Total Net sales Finished jewelry $ 12,641,687 $ 2,815,656 $ 15,457,343 Loose jewels 3,697,069 13,089,697 16,786,766 Total $ 16,338,756 $ 15,905,353 $ 32,244,109 Product line cost of goods sold Finished jewelry $ 5,220,551 $ 1,638,561 $ 6,859,112 Loose jewels 1,583,404 6,659,426 8,242,830 Total $ 6,803,955 $ 8,297,987 $ 15,101,942 Product line gross profit Finished jewelry $ 7,421,136 $ 1,177,095 $ 8,598,231 Loose jewels 2,113,665 6,430,271 8,543,936 Total $ 9,534,801 $ 7,607,366 $ 17,142,167 Operating income $ 1,643,552 $ 622,005 $ 2,265,557 Depreciation and amortization $ 172,819 $ 308,500 $ 481,319 Capital expenditures $ 69,975 $ 291,465 $ 361,440
Reconciliation of Cost of Goods Sold	The reconciliations of the Company’s product line cost of goods sold to cost of goods sold, as reported in the consolidated financial statements for the periods presented, are as follows: Year Ended June 30, 2020 2019 Product line cost of goods sold $ 13,531,976 $ 15,101,942 Non-capitalized manufacturing and production control expenses 1,443,698 1,442,446 Freight out 510,612 578,772 Inventory write-off 5,863,991 393,000 Other inventory adjustments (150,070 ) (163,993 ) Cost of goods sold $ 21,200,207 $ 17,352,167
Net Sales by Geographic Area	The following presents net sales data by geographic area for the periods presented: Year Ended June 30, 2020 2019 Net sales United States $ 26,814,024 $ 27,979,835 International 2,374,996 4,264,274 Total $ 29,189,020 $ 32,244,109

INVENTORIES (Tables)

INVENTORIES (Tables)	12 Months Ended
	Jun. 30, 2020
INVENTORIES [Abstract]
Inventories	The Company’s total inventories, net of reserves, consisted of the following as of the dates presented: June 30, 2020 2019 Finished jewelry: Raw materials $ 821,536 $ 643,797 Work-in-process 602,390 487,680 Finished goods 6,019,985 6,332,533 Finished goods on consignment 2,297,907 1,867,549 Total finished jewelry 9,741,818 9,331,559 Loose jewels: Raw materials 3,526,399 3,806,681 Work-in-process 10,453,586 10,384,143 Finished goods 6,619,487 9,878,691 Finished goods on consignment 204,635 203,535 Total loose jewels 20,804,107 24,273,050 Total supplies inventory 88,034 129,111 Total inventory $ 30,633,959 $ 33,733,720 As of the dates presented, the Company’s total inventories, net of reserves, are classified as follows: June 30, 2020 2019 Short-term portion $ 7,443,257 $ 11,909,792 Long-term portion 23,190,702 21,823,928 Total inventory $ 30,633,959 $ 33,733,720

PROPERTY AND EQUIPMENT (Tables)

PROPERTY AND EQUIPMENT (Tables)	12 Months Ended
	Jun. 30, 2020
PROPERTY AND EQUIPMENT [Abstract]
Property and Equipment	Property and equipment consists of the following as of the dates presented: June 30, 2020 2019 Computer software $ 1,827,581 $ 1,512,533 Machinery and equipment 1,145,525 1,100,629 Computer hardware 1,158,559 1,064,302 Leasehold improvements 1,158,807 1,158,218 Furniture and fixtures 347,872 343,808 Total 5,638,344 5,179,490 Less accumulated depreciation ( 4,639,283 ) (4,153,392 ) Property and equipment, net $ 999,061 $ 1,026,098

INTANGIBLE ASSETS (Tables)

INTANGIBLE ASSETS (Tables)	12 Months Ended
	Jun. 30, 2020
INTANGIBLE ASSETS [Abstract]
Intangible Assets	Intangible assets consist of the following as of the dates presented: June 30, Weighted Average Remaining Amortization Period 2020 2019 (in Years) Patents $ 1,024,267 $ 1,007,497 14.6 Trademarks 160,683 100,331 9.7 License rights 6,718 6,718 - Total 1,191,668 1,114,546 Less accumulated amortization (1,021,517 ) (1,017,173 ) Intangible assets, net $ 170,151 $ 97,373

ACCRUED EXPENSES AND OTHER LI_2

ACCRUED EXPENSES AND OTHER LIABILITIES (Tables)	12 Months Ended
	Jun. 30, 2020
ACCRUED EXPENSES AND OTHER LIABILITIES [Abstract]
Accrued Expenses and Other Liabilities	Total accrued expenses and other liabilities consist of the following as of the dates presented: June 30, 2020 2019 Deferred revenue $ 794,740 $ 100,088 Accrued compensation and related benefits 395,006 760,324 Accrued severance 338,355 - Accrued sales tax 295,651 286,864 Deferred rent - 156,306 Accrued cooperative advertising 89,517 73,033 Other 9,063 41,617 Accrued expenses and other liabilities $ 1,922,332 $ 1,418,232

COMMITMENTS AND CONTINGENCIES (

COMMITMENTS AND CONTINGENCIES (Tables)	12 Months Ended
	Jun. 30, 2020
COMMITMENTS AND CONTINGENCIES [Abstract]
Balance Sheet Classifications of Leases	As of June 30, 2020, the Company’s balance sheet classifications of its leases are as follows: Operating Leases: Noncurrent operating lease ROU assets $ 584,143 Current operating lease liabilities $ 622,493 Noncurrent operating lease liabilities 203,003 Total operating lease liabilities $ 825,496
Remaining Future Payments Under Operating Leases	As of June 30, 2020, the Company’s remaining future payments under operating leases for each fiscal year ending June 30 are as follows: 2021 $ 642,997 2022 219,723 Total lease payments 862,720 Less: imputed interest (37,224 ) Present value of lease payments 825,496 Less: current lease obligations 622,493 Total long-term lease obligations $ 203,003
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)	12 Months Ended
	Jun. 30, 2020
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION [Abstract]
Stock-Based Compensation	The following table summarizes the components of the Company’s stock-based compensation included in net (loss) income for the periods presented: Year Ended June 30, 2020 2019 Employee stock options $ 309,999 $ 235,984 Restricted stock awards 149,539 266,821 Total $ 459,538 $ 502,805
Stock Option Activity	The following is a summary of the stock option activity for the fiscal years ended June 30, 2020 and 2019: Shares Weighted Average Exercise Price Outstanding at June 30, 2018 2,388,169 $ 1.46 Granted 285,025 $ 1.00 Exercised (52,500 ) $ 1.21 Forfeited (30,000 ) $ 1.20 Expired (67,056 ) $ 1.71 Outstanding at June 30, 2019 2,523,638 $ 1.39 Granted 605,387 $ 0.95 Forfeited (125,005 ) $ 1.02 Expired (194,925 ) $ 1.18 Outstanding at June 30, 2020 2,809,095 $ 1.33
Weighted Average Assumptions for Stock Options Granted	The fair value of each stock option is estimated on the date of grant using the Black-Scholes-Merton option pricing model with the following weighted average assumptions for stock options granted during the periods presented: Year Ended June 30, 2020 2019 Dividend yield 0.0 % 0.0 % Expected volatility 63.2 % 61.0 % Risk-free interest rate 0.82 % 3.09 % Expected lives (years) 5.2 5.5
Stock Options Outstanding	The following tables summarize information in connection with stock options outstanding at June 30, 2020: Options Outstanding Options Exercisable Options Vested or Expected to Vest Balance as of 6/30/2020 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Balance as of 6/30/2020 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Balance as of 6/30/2020 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price 2,809,095 5.74 $ 1.33 2,396,208 5.11 $ 1.37 2,743,077 5.66 $ 1.34
Restricted Stock Activity	The following is a summary of the restricted stock activity for the fiscal years ended June 30, 2020 and 2019: Shares Weighted Average Grant Date Fair Value Unvested at June 30, 2018 264,000 $ 1.25 Granted 129,500 $ 1.07 Vested (154,396 ) $ 1.20 Canceled (109,604 ) $ 1.31 Unvested at June 30, 2019 129,500 $ 1.08 Granted 325,000 $ 1.57 Vested (258,341 ) $ 1.07 Canceled (33,659 ) $ 1.07 Unvested at June 30, 2020 162,500 $ 1.57

INCOME TAXES (Tables)

INCOME TAXES (Tables)	12 Months Ended
	Jun. 30, 2020
INCOME TAXES [Abstract]
Income Tax Net (Expense) Benefit	The Company’s income tax net (expense) benefit for the periods presented Year Ended June 30, 2020 2019 Current: Federal $ - $ 23,149 State (1,733 ) (21,706 ) Total current (expense) benefit (1,733 ) 1,443 Deferred: Federal - - State - - Total deferred (expense) benefit - - Income tax net (expense) benefit $ (1,733 ) $ 1,443
Deferred Income Tax Assets	Significant components of the Company’s deferred income tax assets as of the dates presented are as follows: June 30, 2020 2019 Reversals and accruals $ 476,666 $ 970,516 Prepaid expenses (39,943 ) (38,552 ) Federal NOL carryforwards 4,980,513 4,911,437 State NOL carryforwards 663,918 674,522 Hong Kong NOL carryforwards 995,566 995,566 Federal benefit on state taxes under uncertain tax positions 1,668 1,304 Stock-based compensation 392,924 194,524 Research tax credit 252 83,315 Contributions carryforward 7,184 - Depreciation (172,010 ) (157,310 ) Inventory valuation reserve 1,594,795 - Operating lease liabilities 185,422 - Operating lease right-of-use assets (131,008 ) - Accrued rent - 88,923 Loss on impairment of long-lived assets 32,749 32,985 Valuation allowance (8,988,696 ) (7,757,230 ) Total deferred income tax assets, net $ - $ -
Effective Income Tax Rate Reconciliation	The following are reconciliations between expected income taxes, computed at the applicable statutory federal income tax rate applied to pretax accounting loss, and the income tax net (expense) benefit for the periods presented: Year Ended June 30, 2020 2019 Anticipated income tax benefit (expense) at statutory rate $ 1,293,673 $ (477,545 ) State income tax benefit (expense), net of federal tax effect 64,034 (42,334 ) Income tax effect of uncertain tax positions 17,508 17,494 Return to provision adjustments 1 126 Stock-based compensation (31,195 ) (3,929 ) Other changes in deferred income tax assets, net (114,288 ) (280,066 ) (Increase) Decrease in valuation allowance (1,231,466 ) 787,697 Income tax net (expense) benefit $ (1,733 ) $ 1,443
Uncertain Tax Positions	The following table summarizes the activity related to the Company’s accrued gross income tax liability for uncertain tax positions for the two-year period ended June 30, 2020: Balance at June 30, 2018 $ 4,891 Increases related to prior fiscal year tax positions 1,323 Balance at June 30, 2019 6,214 Increases related to prior fiscal year tax positions 1,733 Balance at June 30, 2020 $ 7,947

MAJOR CUSTOMERS AND CONCENTRA_2

MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK (Tables)	12 Months Ended
	Jun. 30, 2020
MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK [Abstract]
Major Customers	The following is a summary of customers that represent greater than or equal to 10% of total gross accounts receivable as of the dates presented: June 30, 2020 2019 Customer A 26 % 13 % Customer B 14 % 25 % Customer C 13 % * % Customer D ** % 15 % * Customer C did not have individual balances that represented 10% or more of total gross accounts receivable as of June 30, 2019. ** Customer D did not have individual balances that represented 10% or more of total gross accounts receivable as of June 30, 2020. 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: Year Ended June 30, 2020 2019 Customer A 12 % 10 % Customer B 13 % 14 %

BASIS OF PRESENTATION AND SIG_4

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Reclassifications (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019
Reclassifications [Abstract]
Accounts payable	$ 3,748,235	$ 3,279,548
Accrued expenses and other liabilities	$ 1,922,332	1,418,232
Reclassification [Member]
Reclassifications [Abstract]
Accounts payable		(93,000)
Accrued expenses and other liabilities		$ 93,000

BASIS OF PRESENTATION AND SIG_5

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Changes in Accounting Policy (Details) - USD ($)	Jul. 01, 2019	Jun. 30, 2020	Jun. 30, 2019
Changes in Accounting Policy [Abstract]
Operating lease ROU assets		$ 584,143	$ 0
Operating lease liabilities		$ 825,496
LIBOR [Member]
Changes in Accounting Policy [Abstract]
Term of variable rate		1 month
White Oak Credit Facility [Member]
Changes in Accounting Policy [Abstract]
Variable interest rate	7.1378%
White Oak Credit Facility [Member] | LIBOR [Member]
Changes in Accounting Policy [Abstract]
Term of variable rate		1 month
Variable interest rate	2.3878%
Basis spread on variable rate	4.75%
ASU 2016-02 [Member]
Changes in Accounting Policy [Abstract]
Operating lease ROU assets			983,000
Operating lease liabilities			$ 1,380,000

BASIS OF PRESENTATION AND SIG_6

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Restricted Cash (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2018
Cash, Cash Equivalents and Restricted Cash [Abstract]
Cash and cash equivalents	$ 13,993,032	$ 12,465,483
Restricted cash	624,202	541,062
Total cash, cash equivalents, and restricted cash	$ 14,617,234	$ 13,006,545	$ 3,393,186

BASIS OF PRESENTATION AND SIG_7

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Concentration of Credit Risk (Details) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Minimum [Member]
Concentration of Credit Risk [Abstract]
Customer payment terms	30 days
Maximum [Member]
Concentration of Credit Risk [Abstract]
Customer payment terms	90 days
Traditional [Member] | Minimum [Member]
Concentration of Credit Risk [Abstract]
Customer payment terms	30 days
Traditional [Member] | Maximum [Member]
Concentration of Credit Risk [Abstract]
Customer payment terms	90 days
Non-Interest-bearing Deposits [Member]
Concentration of Credit Risk [Abstract]
Amounts on deposit in excess of FDIC insurable limits	$ 2,010	$ 2,120
Interest-bearing Deposits [Member]
Concentration of Credit Risk [Abstract]
Amounts on deposit in excess of FDIC insurable limits	$ 11,640	$ 10,010

BASIS OF PRESENTATION AND SIG_8

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Accounts Receivable Reserves (Details) - USD ($)	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Allowance for Sales Returns [Member]
Accounts Receivable Reserves [Roll Forward]
Balance, beginning of year	$ 746,000	$ 648,000
Additions charged to operations	4,710,943	4,533,077
Sales returns	(4,752,943)	(4,435,077)
Balance, end of year	704,000	746,000
Allowance for Doubtful Accounts [Member]
Accounts Receivable Reserves [Roll Forward]
Balance, beginning of year	249,000	233,000
Additions charged to operations	8,788	27,056
Write-offs, net of recoveries	(178,788)	(11,056)
Balance, end of year	$ 79,000	$ 249,000

BASIS OF PRESENTATION AND SIG_9

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Property and Equipment (Details)	12 Months Ended
	Jun. 30, 2020
Machinery and Equipment [Member] | Minimum [Member]
Property and Equipment [Abstract]
Estimated useful life	5 years
Machinery and Equipment [Member] | Maximum [Member]
Property and Equipment [Abstract]
Estimated useful life	12 years
Computer Hardware [Member] | Minimum [Member]
Property and Equipment [Abstract]
Estimated useful life	3 years
Computer Hardware [Member] | Maximum [Member]
Property and Equipment [Abstract]
Estimated useful life	5 years
Computer Software [Member]
Property and Equipment [Abstract]
Estimated useful life	3 years
Furniture and Fixtures [Member] | Minimum [Member]
Property and Equipment [Abstract]
Estimated useful life	5 years
Furniture and Fixtures [Member] | Maximum [Member]
Property and Equipment [Abstract]
Estimated useful life	10 years
Leasehold Improvements [Member]
Property and Equipment [Abstract]
Estimated useful life	Shorter of the estimated useful life or the lease term

BASIS OF PRESENTATION AND SI_10

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Intangible Assets (Details)	12 Months Ended
	Jun. 30, 2020
Patent [Member]
Intangible Assets [Abstract]
Useful life	14 years 7 months 6 days

BASIS OF PRESENTATION AND SI_11

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Revenue Recognition (Details)	12 Months Ended
	Jun. 30, 2020
Minimum [Member]
Revenue Recognition [Abstract]
Customer payment terms	30 days
Maximum [Member]
Revenue Recognition [Abstract]
Customer payment terms	90 days
Traditional [Member] | Minimum [Member]
Revenue Recognition [Abstract]
Customer payment terms	30 days
Absolute right of return period	6 months
Customer payment terms on consignment shipments	30 days
Traditional [Member] | Maximum [Member]
Revenue Recognition [Abstract]
Customer payment terms	90 days
Return period for credit	30 days
Absolute right of return period	1 year
Customer payment terms on consignment shipments	60 days
Online Channels [Member] | Minimum [Member]
Revenue Recognition [Abstract]
Customer payment terms on consignment shipments	30 days
Online Channels [Member] | Maximum [Member]
Revenue Recognition [Abstract]
Return period for credit	60 days
Customer payment terms on consignment shipments	60 days

BASIS OF PRESENTATION AND SI_12

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Returns Asset and Refund Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Jun. 30, 2019
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract]
Refund liabilities	$ 704	$ 746
Asset returns	$ 289	$ 279

BASIS OF PRESENTATION AND SI_13

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Advertising Costs (Details) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Advertising Costs [Abstract]
Cooperative advertising expenses	$ 491	$ 381
Advertising expenses	$ 3,960	$ 2,820

BASIS OF PRESENTATION AND SI_14

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Net (Loss) Income per Common Share (Details) - USD ($)	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Numerator [Abstract]
Net (loss) income	$ (6,162,083)	$ 2,275,467
Denominator [Abstract]
Weighted average common shares outstanding, Basic (in shares)	28,644,133	21,860,699
Effect of dilutive securities (in shares)	0	250,524
Weighted average common shares outstanding, Diluted (in shares)	28,644,133	22,111,223
Net (Loss) Income per Common Share [Abstract]
Basic (in dollars per share)	$ (0.22)	$ 0.10
Diluted (in dollars per share)	$ (0.22)	$ 0.10
Stock Options [Member]
Net (Loss) Income per Common Share [Abstract]
Shares excluded from the computation of diluted net income (loss) per common share (in shares)	2,810,000	2,330,000
Restricted Shares [Member]
Net (Loss) Income per Common Share [Abstract]
Shares excluded from the computation of diluted net income (loss) per common share (in shares)	162,500

BASIS OF PRESENTATION AND SI_15

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Immaterial Correction of an Error (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019
Immaterial Correction of an Error [Abstract]
Accrued income taxes	$ 7,947	$ 6,214
Accumulated deficit	$ (38,787,452)	(32,625,369)
Derecognition of Accrued Income Tax Liability for Uncertain Tax Positions [Member]
Immaterial Correction of an Error [Abstract]
Accrued income taxes		(492,000)
Accumulated deficit		$ 492,000

BASIS OF PRESENTATION AND SI_16

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Recently Issued Accounting Pronouncements (Details)	12 Months Ended
	Jun. 30, 2020USD ($)
Recently Issued Accounting Pronouncements [Abstract]
Borrowings against line of credit	$ 0
LIBOR [Member]
Recently Issued Accounting Pronouncements [Abstract]
Term of variable rate	1 month

SEGMENT INFORMATION AND GEOGR_3

SEGMENT INFORMATION AND GEOGRAPHIC DATA, Summary Financial Information by Reportable Segment (Details)	12 Months Ended
	Jun. 30, 2020USD ($)Segment	Jun. 30, 2019USD ($)
SEGMENT INFORMATION AND GEOGRAPHIC DATA [Abstract]
Number of operating segments | Segment	2
Number of reportable segments | Segment	2
Summary Information by Reportable Segment [Abstract]
Net sales	$ 29,189,020	$ 32,244,109
Product line cost of goods sold	21,200,207	17,352,167
Operating income (loss)	(6,315,728)	2,265,557
Depreciation and amortization	490,235	481,319
Capital expenditures	458,854	361,440
Product Line [Member]
Summary Information by Reportable Segment [Abstract]
Product line cost of goods sold	13,531,976	15,101,942
Product line gross profit	15,657,044	17,142,167
Finished Jewelry [Member]
Summary Information by Reportable Segment [Abstract]
Net sales	16,777,628	15,457,343
Product line cost of goods sold	7,469,790	6,859,112
Product line gross profit	9,307,838	8,598,231
Loose Jewels [Member]
Summary Information by Reportable Segment [Abstract]
Net sales	12,411,392	16,786,766
Product line cost of goods sold	6,062,186	8,242,830
Product line gross profit	6,349,206	8,543,936
Operating and Reportable Segments [Member] | Online Channels [Member]
Summary Information by Reportable Segment [Abstract]
Net sales	16,624,540	16,338,756
Product line cost of goods sold	6,958,688	6,803,955
Product line gross profit	9,665,852	9,534,801
Operating income (loss)	(249,016)	1,643,552
Depreciation and amortization	177,703	172,819
Capital expenditures	305,570	69,975
Operating and Reportable Segments [Member] | Online Channels [Member] | Finished Jewelry [Member]
Summary Information by Reportable Segment [Abstract]
Net sales	13,680,440	12,641,687
Product line cost of goods sold	5,760,413	5,220,551
Product line gross profit	7,920,027	7,421,136
Operating and Reportable Segments [Member] | Online Channels [Member] | Loose Jewels [Member]
Summary Information by Reportable Segment [Abstract]
Net sales	2,944,100	3,697,069
Product line cost of goods sold	1,198,275	1,583,404
Product line gross profit	1,745,825	2,113,665
Operating and Reportable Segments [Member] | Traditional [Member]
Summary Information by Reportable Segment [Abstract]
Net sales	12,564,480	15,905,353
Product line cost of goods sold	6,573,288	8,297,987
Product line gross profit	5,991,192	7,607,366
Operating income (loss)	(6,066,712)	622,005
Depreciation and amortization	312,532	308,500
Capital expenditures	153,284	291,465
Operating and Reportable Segments [Member] | Traditional [Member] | Finished Jewelry [Member]
Summary Information by Reportable Segment [Abstract]
Net sales	3,097,188	2,815,656
Product line cost of goods sold	1,709,377	1,638,561
Product line gross profit	1,387,811	1,177,095
Operating and Reportable Segments [Member] | Traditional [Member] | Loose Jewels [Member]
Summary Information by Reportable Segment [Abstract]
Net sales	9,467,292	13,089,697
Product line cost of goods sold	4,863,911	6,659,426
Product line gross profit	$ 4,603,381	$ 6,430,271

SEGMENT INFORMATION AND GEOGR_4

SEGMENT INFORMATION AND GEOGRAPHIC DATA, Reconciliation of Cost of Goods Sold (Details) - USD ($)	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Reconciliation of Cost of Goods Sold [Abstract]
Cost of goods sold	$ 21,200,207	$ 17,352,167
Inventory write-off	5,863,991	393,000
Product Line [Member]
Reconciliation of Cost of Goods Sold [Abstract]
Cost of goods sold	13,531,976	15,101,942
Segment Reconciling Item [Member]
Reconciliation of Cost of Goods Sold [Abstract]
Non-capitalized manufacturing and production control expenses	1,443,698	1,442,446
Freight out	510,612	578,772
Inventory write-off	5,863,991	393,000
Other inventory adjustments	$ (150,070)	$ (163,993)

SEGMENT INFORMATION AND GEOGR_5

SEGMENT INFORMATION AND GEOGRAPHIC DATA, Net Sales by Geographic Area (Details) - USD ($)	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Net Sales by Geographic Area [Abstract]
Net sales	$ 29,189,020	$ 32,244,109
Reportable Geographical Component [Member] | United States [Member]
Net Sales by Geographic Area [Abstract]
Net sales	26,814,024	27,979,835
Reportable Geographical Component [Member] | International [Member]
Net Sales by Geographic Area [Abstract]
Net sales	$ 2,374,996	$ 4,264,274

INVENTORIES (Details)

INVENTORIES (Details) - USD ($)	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Mar. 31, 2020
Inventories [Abstract]
Total supplies inventory	$ 88,034	$ 129,111
Total inventory	30,633,959	33,733,720
Short-term portion	7,443,257	11,909,792
Long-term portion	23,190,702	21,823,928
Work-in-process inventories issued to active production jobs	1,340,000	1,230,000
Inventory write-off	5,863,991	393,000
Finished Jewelry [Member]
Inventories [Abstract]
Raw materials	821,536	643,797
Work-in-process	602,390	487,680
Finished goods	6,019,985	6,332,533
Finished goods on consignment	2,297,907	1,867,549
Total	9,741,818	9,331,559
Loose Jewels [Member]
Inventories [Abstract]
Raw materials	3,526,399	3,806,681
Work-in-process	10,453,586	10,384,143
Finished goods	6,619,487	9,878,691
Finished goods on consignment	204,635	203,535
Total	20,804,107	$ 24,273,050
Legacy Material Inventory [Member]
Inventories [Abstract]
Total			$ 5,260,000
Inventory write-off	$ 5,260,000

PROPERTY AND EQUIPMENT (Details

PROPERTY AND EQUIPMENT (Details) - USD ($)	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Property and Equipment [Abstract]
Property and equipment, gross	$ 5,638,344	$ 5,179,490
Less accumulated depreciation	(4,639,283)	(4,153,392)
Property and equipment, net	999,061	1,026,098
Depreciation expense	486,000	480,000
Computer Software [Member]
Property and Equipment [Abstract]
Property and equipment, gross	1,827,581	1,512,533
Machinery and Equipment [Member]
Property and Equipment [Abstract]
Property and equipment, gross	1,145,525	1,100,629
Computer Hardware [Member]
Property and Equipment [Abstract]
Property and equipment, gross	1,158,559	1,064,302
Leasehold Improvements [Member]
Property and Equipment [Abstract]
Property and equipment, gross	1,158,807	1,158,218
Furniture and Fixtures [Member]
Property and Equipment [Abstract]
Property and equipment, gross	$ 347,872	$ 343,808

INTANGIBLE ASSETS (Details)

INTANGIBLE ASSETS (Details) - USD ($)	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Intangible assets [Abstract]
Intangible assets, gross	$ 1,191,668	$ 1,114,546
Less accumulated amortization	(1,021,517)	(1,017,173)
Intangible assets, net	170,151	97,373
Amortization Expense [Abstract]
Amortization expense	4,000	2,000
2021	16,000
2022	15,000
2023	15,000
2024	15,000
2025	15,000
Patents [Member]
Intangible assets [Abstract]
Intangible assets, gross	$ 1,024,267	1,007,497
Weighted average amortization period	14 years 7 months 6 days
Trademarks [Member]
Intangible assets [Abstract]
Intangible assets, gross	$ 160,683	100,331
Weighted average amortization period	9 years 8 months 12 days
License Rights [Member]
Intangible assets [Abstract]
Intangible assets, gross	$ 6,718	$ 6,718
Weighted average amortization period	0 years

ACCRUED EXPENSES AND OTHER LI_3

ACCRUED EXPENSES AND OTHER LIABILITIES (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019
ACCRUED EXPENSES AND OTHER LIABILITIES [Abstract]
Deferred revenue	$ 794,740	$ 100,088
Accrued compensation and related benefits	395,006	760,324
Accrued severance	338,355	0
Accrued sales tax	295,651	286,864
Deferred rent	0	156,306
Accrued cooperative advertising	89,517	73,033
Other	9,063	41,617
Accrued expenses and other liabilities	$ 1,922,332	$ 1,418,232

COMMITMENTS AND CONTINGENCIES,

COMMITMENTS AND CONTINGENCIES, Lease Arrangements (Details)	12 Months Ended
	Jun. 30, 2020USD ($)ft²Option	Jun. 30, 2019USD ($)	May 23, 2014USD ($)
COMMITMENTS AND CONTINGENCIES [Abstract]
Area leased under operating lease | ft²	36,350
Number of options to extend lease term | Option	2
Period of extension on each options	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
Balance Sheet Classifications of Leases [Abstract]
Noncurrent operating lease ROU assets	$ 584,143	0
Operating Lease Liabilities [Abstract]
Current operating lease liabilities	622,493	0
Noncurrent operating lease liabilities	203,003	0
Total operating lease liabilities	825,496
Operating lease cost	$ 469,000
Assumed discount rate	7.14%
Remaining operating lease term	1 year 3 months 29 days
Future Lease Payments Under Operating Leases [Abstract]
2021	$ 642,997
2022	219,723
Total lease payments	862,720
Less: imputed interest	(37,224)
Total operating lease liabilities	825,496
Less: current lease obligations	622,493	0
Total long-term lease obligations	203,003	0
Cash paid for operating leases	668,000
ROU assets obtained in exchange for new operating lease liabilities	0
Rent expense		$ 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) - SiC Materials [Member] - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Purchase Commitments [Abstract]
Percentage of materials committed to be purchased	100.00%
Extension period of exclusive supply agreement	2 years
Total purchase commitment	$ 52,950
Remaining purchase commitment	36,600
Purchases	7,470	$ 8,910
Minimum [Member]
Purchase Commitments [Abstract]
Future minimum annual purchase commitments	9,000
Maximum [Member]
Purchase Commitments [Abstract]
Future minimum annual purchase commitments	$ 12,000

COMMITMENTS AND CONTINGENCIES_3

COMMITMENTS AND CONTINGENCIES, COVID-19 (Details) - USD ($)	3 Months Ended
	Jun. 30, 2020	Jun. 18, 2020	Apr. 13, 2020	Jun. 30, 2019
COVID-19 [Abstract]
Severance-related expenses	$ 427,000
Accrued severance	$ 338,355			$ 0
PPP Loan [Member]
COVID-19 [Abstract]
Principal amount		$ 965,000
COVID-19 [Member]
COVID-19 [Abstract]
Percentage of workforce furloughed			50.00%
Percentage reduction in active workforce	25.00%
Percentage reduction in fees paid to Board of Directors	50.00%
COVID-19 [Member] | President and Chief Executive Officer [Member]
COVID-19 [Abstract]
Percentage reduction in salary	25.00%
COVID-19 [Member] | Chief Financial Officer [Member]
COVID-19 [Abstract]
Percentage reduction in salary	15.00%
COVID-19 [Member] | Chief Operating Officer [Member]
COVID-19 [Abstract]
Percentage reduction in salary	15.00%

DEBT, Paycheck Protection Progr

DEBT, Paycheck Protection Program Loan (Details) - USD ($)	12 Months Ended
	Jun. 30, 2020	Jun. 18, 2020	Jun. 30, 2019
Paycheck Protection Program Loan [Abstract]
Principal expected to be paid during year ended June 30, 2021	$ 193,000		$ 0
Principal expected to be paid during year ended June 30, 2022	$ 772,000		$ 0
PPP Loan [Member]
Paycheck Protection Program Loan [Abstract]
Principal amount		$ 965,000
Fixed interest rate	1.00%
Monthly principal and interest payment	$ 41,000
Principal expected to be paid during year ended June 30, 2021	193,000
Principal expected to be paid during year ended June 30, 2022	$ 772,000

DEBT, Line of Credit (Details)

DEBT, Line of Credit (Details)	Aug. 14, 2020USD ($)	Jul. 15, 2019USD ($)	Jul. 13, 2018USD ($)	Jun. 30, 2020USD ($)Installment
LIBOR [Member]
Line of Credit [Abstract]
Term of variable rate				1 month
White Oak Credit Facility [Member]
Line of Credit [Abstract]
Borrowing capacity				$ 5,000,000
Maturity date				Jul. 13, 2021
Maximim precious metal jewelry components included in borrowing base				$ 500,000
Termination fee, first year of term				100,000
Termination fee. second year of term				50,000
Termination fee, thereafter				0
Non-refundable origination fee				$ 125,000
Number of installments for payment of non-refundable origination fee | Installment				3
Installment payment of non-refundable origination fee		$ 41,667	$ 41,667
Interest rate premium in excess of rate otherwise applicable charged during an event of default				2.00%
Indebtedness to be maintained in event of default to avoid triggering of default terms				$ 250,000
White Oak Credit Facility [Member] | Subsequent Event [Member]
Line of Credit [Abstract]
Installment payment of non-refundable origination fee	$ 41,666
White Oak Credit Facility [Member] | Maximum [Member]
Line of Credit [Abstract]
Percentage of net borrowing base available for eligible inventory				60.00%
White Oak Credit Facility [Member] | Minimum [Member]
Line of Credit [Abstract]
Excess availability				$ 500,000
Interest rate				5.50%
Non-Revolving Advances [Member]
Line of Credit [Abstract]
Borrowing capacity				$ 1,000,000
Non-Revolving Advances [Member] | LIBOR [Member]
Line of Credit [Abstract]
Basis spread on variable rate				4.75%
Revolving Advances [Member]
Line of Credit [Abstract]
Interest rate floor				1.25%
Revolving Advances [Member] | LIBOR [Member]
Line of Credit [Abstract]
Term of variable rate				1 month
Basis spread on variable rate				3.75%

SHAREHOLDERS' EQUITY AND STOC_3

SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Shareholders' Equity (Details)	Jul. 03, 2019USD ($)$ / sharesshares	Jun. 11, 2019USD ($)$ / sharesshares	Jul. 03, 2019USD ($)$ / sharesshares	Jun. 30, 2020USD ($)Vote$ / sharesshares	Jun. 30, 2019USD ($)$ / sharesshares
Common Stock [Abstract]
Common stock, shares authorized (in shares) | shares				50,000,000	50,000,000
Common stock, par value (in dollars per share) | $ / shares				$ 0	$ 0
Common stock, shares outstanding (in shares) | shares				28,949,410	28,027,569
Common stock, votes per share | Vote				1
Preferred Stock [Abstract]
Preferred stock, shares authorized (in shares) | shares				10,000,000
Preferred stock, par value (in dollars per share) | $ / shares				$ 0
Preferred stock, shares issued (in shares) | shares				0
Dividends [Abstract]
Cash dividends				$ 0	$ 0
Shelf Registration Statement [Abstract]
Shelf registration statement				25,000,000
Available amount under shelf registration statement				13,990,000
Issuance of common stock (in shares) | shares		6,250,000	6,880,500
Share price (in dollars per share) | $ / shares	$ 1.60	$ 1.60	$ 1.60
Net proceeds from issuance of common stock		$ 9,060,000		$ 932,480	$ 9,058,568
Underwriting discount, fees and expenses		$ 941,000	$ 1,020,000
Gross proceeds from issuance of common stock			$ 11,010,000
Over-Allotment [Member]
Shelf Registration Statement [Abstract]
Issuance of common stock (in shares) | shares	630,500
Share price (in dollars per share) | $ / shares	$ 1.60		$ 1.60
Net proceeds from issuance of common stock	$ 932,000
Underwriting discount, fees and expenses	$ 77,000
Term of option to purchase shares to cover over-allotments				30 days
Number of shares available for purchase to cover over-allotments | shares		937,500

SHAREHOLDERS' EQUITY AND STOC_4

SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Equity Compensation Plans (Details) - USD ($)	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2018
Equity Compensation Plans [Abstract]
Stock-based compensation capitalized as a cost of inventory	$ 0	$ 0
Stock Options [Member]
Equity Compensation Plans [Abstract]
Options outstanding, ending balance (in shares)	2,809,095	2,523,638	2,388,169
2018 Equity Incentive Plan [Member]
Equity Compensation Plans [Abstract]
Number of shares authorized (in shares)	3,300,000
Options outstanding, ending balance (in shares)	790,407	285,025
2018 Equity Incentive Plan [Member] | Stock Options [Member] | Employees [Member]
Equity Compensation Plans [Abstract]
Vesting period	4 years
2018 Equity Incentive Plan [Member] | Stock Options [Member] | Employees [Member] | Maximum [Member]
Equity Compensation Plans [Abstract]
Term	10 years
2018 Equity Incentive Plan [Member] | Stock Options [Member] | Independent Contractors [Member] | Maximum [Member]
Equity Compensation Plans [Abstract]
Term	10 years
2018 Equity Incentive Plan [Member] | Stock Options [Member] | Board of Directors [Member]
Equity Compensation Plans [Abstract]
Vesting period	1 year
2018 Equity Incentive Plan [Member] | Restricted Stock Awards [Member] | Employees [Member] | Maximum [Member]
Equity Compensation Plans [Abstract]
Vesting period	4 years
2018 Equity Incentive Plan [Member] | Restricted Stock Awards [Member] | Independent Contractors [Member] | Maximum [Member]
Equity Compensation Plans [Abstract]
Vesting period	4 years
2008 Stock Incentive Plan [Member]
Equity Compensation Plans [Abstract]
Number of shares authorized (in shares)	6,000,000
Options outstanding, ending balance (in shares)	2,018,688	2,238,613
2008 Stock Incentive Plan [Member] | Stock Options [Member] | Employees [Member]
Equity Compensation Plans [Abstract]
Vesting period	4 years
2008 Stock Incentive Plan [Member] | Stock Options [Member] | Employees [Member] | Maximum [Member]
Equity Compensation Plans [Abstract]
Term	10 years
2008 Stock Incentive Plan [Member] | Stock Options [Member] | Independent Contractors [Member] | Maximum [Member]
Equity Compensation Plans [Abstract]
Term	10 years
2008 Stock Incentive Plan [Member] | Stock Options [Member] | Board of Directors [Member]
Equity Compensation Plans [Abstract]
Vesting period	1 year
2008 Stock Incentive Plan [Member] | Restricted Stock Awards [Member] | Employees [Member] | Maximum [Member]
Equity Compensation Plans [Abstract]
Vesting period	4 years
2008 Stock Incentive Plan [Member] | Restricted Stock Awards [Member] | Independent Contractors [Member] | Maximum [Member]
Equity Compensation Plans [Abstract]
Vesting period	4 years

SHAREHOLDERS' EQUITY AND STOC_5

SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Stock-Based Compensation (Details) - USD ($)	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Stock-Based Compensation [Abstract]
Employee stock options	$ 309,999	$ 235,984
Restricted stock awards	149,539	266,821
Total	459,538	502,805
Stock-based compensation capitalized as a cost of inventory	$ 0	$ 0

SHAREHOLDERS' EQUITY AND STOC_6

SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Stock Option Activity (Details) - Stock Options [Member] - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Stock Option Activity [Roll Forward]
Outstanding, beginning balance (in shares)	2,523,638	2,388,169
Granted (in shares)	605,387	285,025
Exercised (in shares)	0	(52,500)
Forfeited (in shares)	(125,005)	(30,000)
Expired (in shares)	(194,925)	(67,056)
Outstanding, ending balance (in shares)	2,809,095	2,523,638
Weighted Average Exercise Price [Roll Forward]
Outstanding, beginning balance (in dollars per share)	$ 1.39	$ 1.46
Granted (in dollars per share)	0.95	1
Exercised (in dollars per share)		1.21
Forfeited (in dollars per share)	1.02	1.20
Expired (in dollars per share)	1.18	1.71
Outstanding, ending balance (in dollars per share)	1.33	1.39
Fair Value of Stock Options [Abstract]
Fair value of stock options (in dollars per share)	$ 0.50	$ 0.57
Fair value of stock options vested	$ 282	$ 176

SHAREHOLDERS' EQUITY AND STOC_7

SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Weighted Average Assumptions for Stock Options Granted (Details) - Stock Options [Member]	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Weighted Average Assumptions for Stock Options Granted [Abstract]
Dividend yield	0.00%	0.00%
Expected volatility	63.20%	61.00%
Risk-free interest rate	0.82%	3.09%
Expected lives	5 years 2 months 12 days	5 years 6 months

SHAREHOLDERS' EQUITY AND STOC_8

SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Stock Options Outstanding (Details) - Stock Options [Member] - USD ($)	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2018
Stock Options Outstanding [Abstract]
Options outstanding, balance as of end of period (in shares)	2,809,095	2,523,638	2,388,169
Options outstanding, weighted average remaining contractual life	5 years 8 months 26 days
Options outstanding, weighted average exercise price (in dollars per share)	$ 1.33	$ 1.39	$ 1.46
Options exercisable, balance as of end of period (in shares)	2,396,208
Options exercisable, weighted average remaining contractual life	5 years 1 month 10 days
Options exercisable, weighted average exercise price (in dollars per share)	$ 1.37
Options Vested or Expected to Vest [Abstract]
Options vested or expected to vest, balance as of end of period (in shares)	2,743,077
Options vested or expected to vest, weighted average remaining contractual life	5 years 7 months 28 days
Options vested or expected to vest, weighted average exercise price (in dollars per share)	$ 1.34
Unrecognized Stock-Based Compensation Expense [Abstract]
Unrecognized stock-based compensation expense	$ 155,000
Unrecognized stock-based compensation expense, period for recognition	17 months
Options outstanding, aggregate intrinsic value	$ 500
Options exercisable, aggregate intrinsic value	500
Options vested or expected to vest, aggregate intrinsic value	$ 500
Options exercised (in shares)	0	52,500
Options exercised, aggregate intrinsic value	$ 0	$ 51,000

SHAREHOLDERS' EQUITY AND STOC_9

SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Restricted Stock (Details) - Restricted Stock [Member] - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Restricted Stock Activity [Roll Forward]
Unvested, beginning balance (in shares)	129,500	264,000
Granted (in shares)	325,000	129,500
Vested (in shares)	(258,341)	(154,396)
Canceled (in shares)	(33,659)	(109,604)
Unvested, ending balance (in shares)	162,500	129,500
Weighted Average Grant Date Fair Value [Roll Forward]
Unvested, beginning balance (in dollars per share)	$ 1.08	$ 1.25
Granted (in dollars per share)	1.57	1.07
Vested (in dollars per share)	1.07	1.20
Canceled (in dollars per share)	1.07	1.31
Unvested, ending balance (in dollars per share)	$ 1.57	$ 1.08
Unrecognized Stock-Based Compensation Expense [Abstract]
Unrecognized stock-based compensation expense	$ 255

INCOME TAXES, Income Tax Net (E

INCOME TAXES, Income Tax Net (Expense) Benefit (Details) - USD ($)	1 Months Ended				12 Months Ended
	Jun. 30, 2020	Apr. 30, 2020	May 31, 2019	Jan. 31, 2019	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2018
INCOME TAXES [Abstract]
AMT credit refund receivable, noncurrent							$ 328,000
Additional AMT credit refund recognized				$ 23,000
AMT credit refund received		$ 6,000	$ 75,000
AMT credit refund receivable, current	$ 270,000				$ 270,000
North Carolina Unemployment tax benefit recognized	$ 7,000
Current [Abstract]
Federal					0	$ 23,149
State					(1,733)	(21,706)
Total current (expense) benefit					(1,733)	1,443
Deferred [Abstract]
Federal					0	0
State					0	0
Total deferred (expense) benefit					0	0
Income tax net (expense) benefit					$ (1,733)	$ 1,443

INCOME TAXES, Deferred Income T

INCOME TAXES, Deferred Income Tax Assets (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019
Deferred Income Tax Assets [Abstract]
Reversals and accruals	$ 476,666	$ 970,516
Prepaid expenses	(39,943)	(38,552)
Federal NOL carryforwards	4,980,513	4,911,437
State NOL carryforwards	663,918	674,522
Hong Kong NOL carryforwards	995,566	995,566
Federal benefit on state taxes under uncertain tax positions	1,668	1,304
Stock-based compensation	392,924	194,524
Research tax credit	252	83,315
Contributions carryforward	7,184	0
Depreciation	(172,010)	(157,310)
Inventory valuation reserve	1,594,795	0
Operating lease liabilities	185,422	0
Operating lease right-of-use assets	(131,008)	0
Accrued rent	0	88,923
Loss on impairment of long-lived assets	32,749	32,985
Valuation allowance	(8,988,696)	(7,757,230)
Total deferred income tax assets, net	$ 0	$ 0

INCOME TAXES, Effective Income

INCOME TAXES, Effective Income Tax Rate Reconciliation (Details) - USD ($)	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Effective Income Tax Tate Reconciliation [Abstract]
Anticipated income tax benefit (expense) at statutory rate	$ 1,293,673	$ (477,545)
State income tax benefit (expense), net of federal tax effect	64,034	(42,334)
Income tax effect of uncertain tax positions	17,508	17,494
Return to provision adjustments	1	126
Stock-based compensation	(31,195)	(3,929)
Other changes in deferred income tax assets, net	(114,288)	(280,066)
(Increase) Decrease in valuation allowance	(1,231,466)	787,697
Income tax net (expense) benefit	$ (1,733)	$ 1,443
Statutory tax rate	22.11%	22.16%
Federal income tax rate	21.00%	21.00%
State income tax rate	1.11%	1.16%

INCOME TAXES, Tax Credits and N

INCOME TAXES, Tax Credits and Net Operating Loss Carryforwards (Details) - USD ($)	Jun. 30, 2020	Jun. 30, 2019
Income Taxes [Abstract]
Valuation allowance	$ 8,988,696	$ 7,757,230
Federal [Member]
Income Taxes [Abstract]
Income tax credits	309	102,000
Federal [Member]
Income Taxes [Abstract]
Net operating loss carryforwards	23,720,000	23,390,000
North Carolina [Member]
Income Taxes [Abstract]
Net operating loss carryforwards	20,120,000	20,200,000
Hong Kong [Member]
Income Taxes [Abstract]
Net operating loss carryforwards	6,030,000	6,030,000
Valuation allowance	$ 996,000	$ 996,000

INCOME TAXES, Uncertain Tax Pos

INCOME TAXES, Uncertain Tax Positions (Details) - USD ($)	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Uncertain Tax Positions [Abstract]
Uncertain tax positions that will favorably impact effective tax rate	$ 8,000	$ 6,000
Interest and penalties associated with uncertain tax positions	2,000	1,000
Accrued interest and penalties associated with uncertain tax positions	5,000	4,000
Uncertain Tax Positions [Roll Forward]
Beginning balance	6,214	4,891
Increases related to prior fiscal year tax positions	1,733	1,323
Ending balance	$ 7,947	$ 6,214

MAJOR CUSTOMERS AND CONCENTRA_3

MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK (Details) - Customer Concentration Risk [Member]	12 Months Ended
	Jun. 30, 2020		Jun. 30, 2019
Accounts Receivable [Member] | Customer A [Member]
Major Customers and Concentration of Credit Risk [Abstract]
Concentration risk, percentage	26.00%		13.00%
Accounts Receivable [Member] | Customer B [Member]
Major Customers and Concentration of Credit Risk [Abstract]
Concentration risk, percentage	14.00%		25.00%
Accounts Receivable [Member] | Customer C [Member]
Major Customers and Concentration of Credit Risk [Abstract]
Concentration risk, percentage	13.00%			[1]
Accounts Receivable [Member] | Customer D [Member]
Major Customers and Concentration of Credit Risk [Abstract]
Concentration risk, percentage		[2]	15.00%
Net Sales [Member] | Customer A [Member]
Major Customers and Concentration of Credit Risk [Abstract]
Concentration risk, percentage	12.00%		10.00%
Net Sales [Member] | Customer B [Member]
Major Customers and Concentration of Credit Risk [Abstract]
Concentration risk, percentage	13.00%		14.00%
[1]	Customer C did not have individual balances that represented 10% or more of total gross accounts receivable as of June 30, 2019.
[2]	Customer D did not have individual balances that represented 10% or more of total gross accounts receivable as of June 30, 2020.

EMPLOYEE BENEFIT PLAN (Details)

EMPLOYEE BENEFIT PLAN (Details) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
EMPLOYEE BENEFIT PLAN [Abstract]
Company contributions to 401(k) Plan	$ 82	$ 67

SUBSEQUENT EVENT (Details)

SUBSEQUENT EVENT (Details) - SiC Materials [Member] - USD ($) $ in Thousands	Aug. 26, 2020	Jun. 30, 2020
Subsequent Event [Abstract]
Total purchase commitment		$ 52,950
Remaining purchase commitment		36,600
Minimum [Member]
Subsequent Event [Abstract]
Future minimum annual purchase commitments		9,000
Maximum [Member]
Subsequent Event [Abstract]
Future minimum annual purchase commitments		$ 12,000
Subsequent Event [Member]
Subsequent Event [Abstract]
Total purchase commitment	$ 52,950
Subsequent Event [Member] | Minimum [Member]
Subsequent Event [Abstract]
Future minimum annual purchase commitments	4,000
Subsequent Event [Member] | Maximum [Member]
Subsequent Event [Abstract]
Future minimum annual purchase commitments	$ 10,000