Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Jun. 30, 2021 | Aug. 27, 2021 | Dec. 31, 2020 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Jun. 30, 2021 | ||
Current Fiscal Year End Date | --06-30 | ||
Document Fiscal Year Focus | 2021 | ||
Document Fiscal Period Focus | FY | ||
Entity Registrant Name | CHARLES & COLVARD LTD | ||
Entity Central Index Key | 0001015155 | ||
Entity Address, State or Province | NC | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 31,375,932 | ||
Entity Common Stock, Shares Outstanding | 29,913,095 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2021 | Jun. 30, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 21,302,317 | $ 13,993,032 |
Restricted cash | 144,634 | 624,202 |
Accounts receivable, net | 1,662,074 | 670,718 |
Inventory, net | 11,450,141 | 7,443,257 |
Note receivable | 250,000 | 0 |
Prepaid expenses and other assets | 952,065 | 1,177,860 |
Total current assets | 35,761,231 | 23,909,069 |
Long-term assets: | ||
Inventory, net | 17,722,579 | 23,190,702 |
Property and equipment, net | 875,897 | 999,061 |
Intangible assets, net | 209,658 | 170,151 |
Operating lease right-of-use assets | 3,952,146 | 584,143 |
Deferred income taxes, net | 6,350,830 | 0 |
Other assets | 49,658 | 51,461 |
Total long-term assets | 29,160,768 | 24,995,518 |
TOTAL ASSETS | 64,921,999 | 48,904,587 |
Current liabilities: | ||
Accounts payable | 2,774,373 | 3,748,235 |
Operating lease liabilities, current portion | 566,083 | 622,493 |
Current maturity of long-term debt | 0 | 193,000 |
Accrued expenses and other liabilities | 2,281,807 | 1,922,332 |
Total current liabilities | 5,622,263 | 6,486,060 |
Long-term liabilities: | ||
Long-term debt, net | 0 | 772,000 |
Noncurrent operating lease liabilities | 3,600,842 | 203,003 |
Accrued income taxes | 9,878 | 7,947 |
Total long-term liabilities | 3,610,720 | 982,950 |
Total liabilities | 9,232,983 | 7,469,010 |
Commitments and contingencies (Note 10) | ||
Shareholders' equity: | ||
Common stock, no par value; 50,000,000 shares authorized; 29,913,095 and 28,949,410 shares issued and outstanding at June 30, 2021 and 2020, respectively | 56,057,109 | 54,342,864 |
Additional paid-in capital | 25,608,593 | 25,880,165 |
Accumulated deficit | (25,976,686) | (38,787,452) |
Total shareholders' equity | 55,689,016 | 41,435,577 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 64,921,999 | $ 48,904,587 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2021 | Jun. 30, 2020 |
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) | 29,913,095 | 28,949,410 |
Common stock, shares outstanding (in shares) | 29,913,095 | 28,949,410 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract] | ||
Net sales | $ 39,235,839 | $ 29,189,020 |
Costs and expenses: | ||
Cost of goods sold | 20,809,690 | 21,200,207 |
Sales and marketing | 8,476,716 | 9,443,244 |
General and administrative | 4,441,441 | 4,861,297 |
Total costs and expenses | 33,727,847 | 35,504,748 |
Income (Loss) from operations | 5,507,992 | (6,315,728) |
Other income (expense): | ||
Gain on extinguishment of debt | 974,328 | 0 |
Interest income | 5,581 | 158,091 |
Interest expense | (8,953) | (884) |
Loss on foreign currency exchange | (603) | (1,829) |
Total other income (expense), net | 970,353 | 155,378 |
Income (Loss) before income taxes | 6,478,345 | (6,160,350) |
Income tax benefit (expense) | 6,332,421 | (1,733) |
Net income (loss) | $ 12,810,766 | $ (6,162,083) |
Net income (loss) per common share: | ||
Basic (in dollars per share) | $ 0.44 | $ (0.22) |
Diluted (in dollars per share) | $ 0.42 | $ (0.22) |
Weighted average number of shares used in computing net income (loss) per common share: | ||
Basic (in shares) | 29,144,820 | 28,644,133 |
Diluted (in shares) | 30,232,567 | 28,644,133 |
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, 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 (in shares) | (33,659) | |||
Net income (loss) | $ 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 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||
Stock-based compensation | $ 0 | 352,583 | 0 | 352,583 |
Issuance of restricted stock | $ 0 | 0 | 0 | 0 |
Issuance of restricted stock (in shares) | 178,750 | |||
Retirement of restricted stock | $ 0 | 0 | 0 | 0 |
Retirement of restricted stock (in shares) | (162,500) | |||
Stock option exercises | $ 1,714,245 | (624,155) | 0 | 1,090,090 |
Stock option exercises (in shares) | 947,435 | |||
Net income (loss) | $ 0 | 0 | 12,810,766 | 12,810,766 |
Balance at Jun. 30, 2021 | $ 56,057,109 | $ 25,608,593 | $ (25,976,686) | $ 55,689,016 |
Balance (in shares) at Jun. 30, 2021 | 29,913,095 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ 12,810,766 | $ (6,162,083) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 567,122 | 490,235 |
Stock-based compensation | 352,583 | 459,538 |
Provision for uncollectible accounts | 2,030 | 8,788 |
Recovery of sales returns | (29,000) | (42,000) |
Inventory write-downs | 150,000 | 5,863,991 |
(Recovery of) Provision for accounts receivable discounts | (9,153) | 3,751 |
Gain on extinguishment of debt | (974,328) | 0 |
Benefit for deferred income taxes, net | (6,350,830) | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (955,233) | 1,321,214 |
Inventory | 1,311,239 | (2,764,230) |
Prepaid expenses and other assets, net | (3,140,405) | 490,438 |
Accounts payable | (973,862) | 468,687 |
Accrued income taxes | 1,931 | 1,733 |
Accrued expenses and other liabilities | 3,710,232 | 109,123 |
Net cash provided by operating activities | 6,473,092 | 249,185 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | (437,069) | (458,854) |
Payment to fund note receivable | (250,000) | 0 |
Payments for intangible assets | (46,396) | (77,122) |
Net cash used in investing activities | (733,465) | (535,976) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Stock option exercises | 1,090,090 | 0 |
Proceeds from long-term debt | 0 | 965,000 |
Issuance of common stock, net of offering costs | 0 | 932,480 |
Net cash provided by financing activities | 1,090,090 | 1,897,480 |
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 6,829,717 | 1,610,689 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF YEAR | 14,617,234 | 13,006,545 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF YEAR | 21,446,951 | 14,617,234 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Additions to right-of-use assets obtained from new operating lease liabilities | 3,908,249 | 0 |
Forgiveness of PPP Loan principal | 965,000 | 0 |
Supplemental disclosure of cash flow information: | ||
Cash paid during the year for interest | 0 | 884 |
Cash paid during the year for income taxes | $ 14,704 | $ 2,050 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 12 Months Ended |
Jun. 30, 2021 | |
DESCRIPTION OF BUSINESS [Abstract] | |
DESCRIPTION OF BUSINESS | 1. DESCRIPTION OF BUSINESS Charles & Colvard, Ltd. (the “Company”), a North Carolina corporation, was founded in 1995. The Company manufactures, markets, and distributes Charles & Colvard Created Moissanite ® Forever One ™ Caydia ® The Company sells loose moissanite jewels, loose lab grown diamonds, and finished jewelry featuring both moissanite and lab grown diamonds at wholesale prices to distributors, manufacturers, retailers, and designers, including some of the largest distributors and jewelry manufacturers in the world. The Company’s finished jewelry and loose moissanite jewels and lab grown diamonds that are mounted into fine jewelry by other manufacturers are sold at retail outlets and via the Internet. The Company sells at retail prices to end-consumers through its wholly owned operating subsidiary, charlesandcolvard.com, LLC, third-party online marketplaces, drop-ship, and other pure-play, exclusively e-commerce outlets. The Company also sells at discount retail prices to end-consumers on its own transactional website, moissaniteoutlet.com, through charlesandcolvard.com, LLC. |
BASIS OF PRESENTATION AND SIGNI
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Jun. 30, 2021 | |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation – The accompanying consolidated financial statements as of and for the fiscal years ended June 30, 2021 and 2020, include the accounts of the Company and its wholly owned subsidiaries charlesandcolvard.com, LLC; Charles & Colvard Direct, LLC; and Charles & Colvard (HK) Ltd., the Company’s Hong Kong subsidiary, which was entered into dormancy as of September 30, 2020 following its re-activation in December 2017. Charles & Colvard (HK) Ltd. previously became dormant in the second quarter of 2009 and has had no operating activity since 2008. Charles & Colvard Direct, LLC, had no operating activity during the fiscal years ended June 30, 2021 or 2020. All intercompany accounts have been eliminated . 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 he preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ( “ ” Changes in Accounting Policy – The adoption of the new accounting standard did not have a material impact on the Company’s financial position or results of operations and the Company did not record a cumulative-effect adjustment to retained earnings. The Company amended its allowance for credit losses policy, as set forth below, for the implementation of the new accounting standard. The Company records an allowance for credit losses, which includes a provision for expected losses based on historical write-offs, adjusted for current conditions as deemed necessary, reasonable and supportable forecasts about future conditions and the related allowance recorded previously Effective July 1, 2020, the Company also adopted the new accounting standard in connection with accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. The new standard provides guidance to determine the accounting for fees paid in connection with a cloud computing arrangement that may include a software license. The adoption of this new accounting standard did not have a material impact on the Company’s financial position or results of operations. Cash and Cash Equivalents – All highly liquid investments with an original maturity of three months or less from the date of purchase are considered to be cash equivalents. The Company’s cash and cash equivalents include cash on deposit and a money market fund. See the Restricted Cash Restricted Cash – In accordance with cash management process requirements related to the Company’s asset-based revolving credit facility from White Oak Commercial Finance, LLC (“White Oak”) For additional information regarding termination of the Company’s asset-based revolving credit facility with White Oak, see Note 11, “Debt.” In accordance with the terms of the Company’s cash collateralized $5.00 million credit facility from JPMorgan Chase Bank, N.A. (“JPMorgan Chase”), which the Company entered into on July 12, 2021, the Company is required to keep $5.05 million in a cash deposit account held by JPMorgan Chase from JPMorgan Chase JPMorgan Chase For additional information regarding the Company’s cash collateralized credit facility with JPMorgan Chase 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, 2021 2020 Cash and cash equivalents $ 21,302,317 $ 13,993,032 Restricted cash 144,634 624,202 Total cash, cash equivalents, and restricted cash $ 21,446,951 $ 14,617,234 Concentration of Credit Risk – Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash on deposit and cash equivalents held with one bank and trade accounts receivable. At times, cash and cash equivalents balances may exceed the Federal Deposit Insurance Corporation (“FDIC”) insurable limits. The Company’s money market fund investment account (recognized as cash and cash equivalents) is with what the Company believes to be a high-quality issuer. The Company has never experienced any losses related to these balances. Non-interest-bearing amounts on deposit in excess of FDIC insurable limits at June 30, 2021 and 2020 approximated $10.32 million and $2.01 million, respectively. Interest-bearing amounts on deposit in excess of FDIC insurable limits at June 30, 2021 and 2020 approximated $10.64 million and $11.64 million, respectively. Trade receivables potentially subject the Company to credit risk. Payment terms on trade receivables for the Company’s Traditional segment customers are generally between 30 and 90 days, though it may offer extended terms with specific customers and on significant orders from time to time. The Company extends credit to its customers based upon a number of factors, including an evaluation of the customer’s financial condition and credit history that is verified through trade association reference services, the customer’s payment history with the Company, the customer’s reputation in the trade, and/or an evaluation of the Company’s opportunity to introduce its moissanite jewels or finished jewelry featuring moissanite to new or expanded markets. Collateral is not generally required from customers. The need for an allowance for doubtful accounts is determined based upon factors surrounding the credit risk of specific customers, historical trends, and other information. See Note 14, “Major Customers and Concentration of Credit Risk”, for further discussion of credit risk within trade accounts receivable. Accounts Receivable Reserves – Estimates are used to determine the amount of two reserves against trade accounts receivable. The first reserve is an allowance for sales returns. At the time revenue is recognized, the Company estimates future returns using a historical return rate that is reviewed quarterly with consideration of any contractual return privileges granted to customers, including any current extenuating economic conditions resulting from the COVID-19 pandemic, and it reduces sales and trade accounts receivable by this estimated amount. The Company’s allowance for sales returns was $675,000 and $704,000 at June 30, 2021 and 2020, respectively. The following are reconciliations of the allowance for sales returns balances as of the periods presented: Year Ended June 30, 2021 2020 Balance, beginning of year $ 704,000 $ 746,000 Additions charged to operations 5,631,415 4,710,943 Sales returns (5,660,415 ) (4,752,943 ) Balance, end of year $ 675,000 $ 704,000 The second reserve is an allowance for uncollectible accounts for the measurement of estimated credit 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. reasonable and supportable forecasts about future conditions, and the related allowance recorded previously The Company generally uses internal collection efforts, which may include its sales personnel as it deems appropriate. After all internal collection efforts have been exhausted, the Company generally writes-off the underlying account receivable. Any accounts with significant balances are reviewed separately to determine an appropriate allowance based on the facts and circumstances of the specific underlying customer account. During its review for the fiscal years ended June 30, 2021 and 2020, the Company determined no additional reserves were necessary for specific accounts. Based on these criteria, management determined that allowances for uncollectible accounts receivable of $71,000 and $79,000 at June 30, 2021 and 2020, The following are reconciliations of the allowance for uncollectible accounts balances as of the periods presented: Year Ended June 30, 2021 2020 Balance, beginning of year $ 79,000 $ 249,000 Additions charged to operations 2,030 8,788 Write-offs, net of recoveries (10,030 ) (178,788 ) Balance, end of year $ 71,000 $ 79,000 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, which would result in increased expense in the period in which such determination is made. Inventories - Inventories are stated at the lower of cost or net realizable value on an average cost basis. Inventory costs include direct material and labor, inbound freight, purchasing and receiving costs, inspection costs, and warehousing costs. 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 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 lease term Intangible Assets – Impairment of Long-Lived Assets – The Company evaluates the recoverability of its long-lived assets by reviewing them for possible impairment 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. As of June 30, 2021, 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 ) identification of a contract with a customer; ( ii ) identification of any separate performance obligations; ( iii ) determination of the transaction price; ( iv ) allocation of the transaction price to the performance obligations in the contract; and ( v ) recognition of revenue when the Company has satisfied the underlying performance obligations. The Company recognizes substantially all of its revenue at a point in time when control of the Company’s goods has passed to the customer with the exception of consigned goods. The Company considers its sole performance obligation related to the shipment of goods satisfied at the time this control is transferred. Customer payment terms for these shipments typically range between 30- and 90-days. Customers purchasing items through the Company’s websites pay amounts in advance of the Company transferring control of the goods. Amounts received in advance of the transfer of control are included in deferred revenue within accrued expenses and other liabilities on the consolidated balance sheets until the time of the transfer of control of the goods. The Company has elected to treat shipping and handling performed after control has transferred to customers as a fulfillment activity, and additionally, has elected the practical expedient to report sales taxes on a net basis. The Company records shipping and handling expense related to product sales as cost of sales. 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. Customers in both of the Company’s charlesandcolvard.com and moissaniteoutlet.com websites may generally return purchases within 60 days in accordance with the Company’s returns policies as disclosed on its charlesandcolvard.com 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, 2021 and 2020, the Company’s refund liabilities balances were $675,000 and $704,000, respectively, and are included as allowances for sales returns within accounts receivable, net, in the accompanying consolidated balance sheets. As of June 30, 2021 and 2020, the Company’s returns asset balances were $252,000 and $289,000, respectively, and are included within prepaid expenses and other assets in the accompanying consolidated balance sheets . Cost of Goods Sold – Cost of goods sold is primarily composed of inventory sold during the period; inventory written-off during the period due to ongoing quality and obsolescence reviews; salaries and payroll-related expenses for personnel involved in preparing and shipping product to customers; an allocation of shared expenses such as rent, utilities, communication expenses, and depreciation related to preparing and shipping product to customers; and outbound freight charges. Advertising Costs – Advertising production costs are expensed as incurred. Media placement costs are expensed the first time the underlying advertising appears. 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, 2021 and 2020, these approximate amounts were $380,000 and $491,000, respectively, and are included as a component of sales and marketing expenses. Because the Company receives a distinct good or service in exchange for consideration and the fair value of the benefit can be reasonably estimated, these transactions are reflected as sales and marketing expenses Advertising expenses, inclusive of the cooperative advertising program, for the fiscal years ended June 30, 2021 and 2020, were approximately $4.25 million and $3.96 million, respectively. Sales and Marketing – Sales and marketing costs are expensed as incurred. These costs include all expenses of promoting and selling the Company’s products and include such items as the salaries, payroll-related expenses, and travel of sales and marketing personnel; digital marketing; advertising; trade shows; market research; sales commissions; and an allocation of overhead expenses attributable to these activities. Except for an allocation to general and administrative expenses, these costs also include the operating expenses of charlesandcolvard.com, LLC, wholly owned operating subsidiary. General and Administrative – General and administrative costs are expensed as incurred. These costs include the salaries and payroll-related expenses of executive, finance, information technology, and administrative personnel; legal, investor relations, and professional fees; general office and administrative expenses; Board of Directors fees; rent; bad debts; and insurance. Stock-Based Compensation – The Company recognizes compensation expense for stock-based awards based on estimated fair values on the date of grant. The Company uses the Black-Scholes-Merton option pricing model to determine the fair value of stock options. The fair value of other stock-based compensation awards is determined by the market price of the Company’s common stock on the date of grant. The expense associated with stock-based compensation is recognized on a straight-line basis over the requisite service period of each award. 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. Although the Company issued dividends in prior years, a dividend yield of zero is used due to the lack of recent dividend payments and the uncertainty of future dividend payments; 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. The Company estimates expected volatility giving primary consideration to the historical volatility of its common stock ; Risk-Free Interest Rate. The risk-free interest rate is based on the published yield available on U.S. Treasury issues with an equivalent term remaining equal to the expected life of the stock option; and Expected Lives. The expected lives of the issued stock options represent the estimated period of time until exercise or forfeiture and are based on the simplified method of using the mid-point between the vesting term and the original contractual term . The simplified method is used because the Company does not have sufficient historical option exercise experience . The assumptions used in calculating the fair value of stock-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 analyzes its historical forfeiture rates. 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 – 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. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount that is more likely than not to be realized. Net Income (Loss) per Common Share – Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the periods. Diluted net income (loss) per common share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the periods. Common equivalent shares consist of stock options and unvested restricted shares that are computed using the treasury stock method. Anti-dilutive stock awards consist of stock options that would have been anti-dilutive in the application of the treasury stock method. As of the dates presented, t he following table reconciles the differences between the basic and diluted net income (loss) per share presentations: Year Ended June 30, 2021 2020 Numerator: Net income (loss) $ 12,810,766 $ (6,162,083 ) Denominator: Weighted average common shares outstanding: Basic 29,144,820 28,644,133 Effect of dilutive securities 1,087,747 - Diluted 30,232,567 28,644,133 Net income (loss) per common share: Basic $ 0.44 $ (0.22 ) Diluted $ 0.42 $ (0.22 ) For the fiscal year ended June 30, 2021, stock options to purchase approximately 1.24 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. 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. The quantity of 162,500 shares of un Recently Issued Accounting Pronouncements – 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 11, “Debt”, borrowings under the Company’s line of credit would have been based on a rate equal to the one-month LIBOR. As of June 30, 2021, 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, 2021. |
SEGMENT INFORMATION AND GEOGRAP
SEGMENT INFORMATION AND GEOGRAPHIC DATA | 12 Months Ended |
Jun. 30, 2021 | |
SEGMENT INFORMATION AND GEOGRAPHIC DATA [Abstract] | |
SEGMENT INFORMATION AND GEOGRAPHIC DATA | 3. SEGMENT INFORMATION AND GEOGRAPHIC DATA The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making operating decisions and assessing performance as the source of the Company’s operating and reportable segments. The Company manages its business through two operating and reportable segments based on its distribution channels to sell its product lines, loose jewels and finished jewelry: its “Online Channels” segment, which consists of e-commerce outlets including charlesandcolvard.com, moissaniteoutlet.com, third-party online marketplaces, drop-ship retail, and other pure-play, exclusively e-commerce outlets; and its “Traditional” segment, which consists of wholesale and retail customers. The accounting policies of the Online Channels segment and Traditional segment are the same as those described in Note 2, “Basis of Presentation and Significant Accounting Policies.” The Company evaluates the financial performance of its segments based on net sales; product line gross profit, or the excess of product line sales over product line cost of goods sold; and operating income. The Company’s product line cost of goods sold is defined as product cost of goods sold, excluding non-capitalized expenses from the Company’s manufacturing and production control departments, comprising personnel costs, depreciation, leases, utilities, and corporate overhead allocations; freight out; inventory write-downs; and other inventory adjustments, comprising costs of quality issues, and damaged goods. The Company allocates certain general and administrative expenses between its Online Channels segment and its Traditional segment based on net sales and number of employees to arrive at segment operating income (loss). Unallocated expenses remain in its Traditional segment. Summary financial information by reportable segment for the periods presented is as follows: Year Ended June 30, 2021 Online Channels Traditional Total Net sales Finished jewelry $ 19,905,199 $ 4,496,347 $ 24,401,546 Loose jewels 3,304,439 11,529,854 14,834,293 Total $ 23,209,638 $ 16,026,201 $ 39,235,839 Product line cost of goods sold Finished jewelry $ 8,235,797 $ 3,036,215 $ 11,272,012 Loose jewels 1,216,942 5,640,813 6,857,755 Total $ 9,452,739 $ 8,677,028 $ 18,129,767 Product line gross profit Finished jewelry $ 11,669,402 $ 1,460,132 $ 13,129,534 Loose jewels 2,087,497 5,889,041 7,976,538 Total $ 13,756,899 $ 7,349,173 $ 21,106,072 Operating income $ 3,739,553 $ 1,768,439 $ 5,507,992 Depreciation and amortization $ 248,995 $ 318,127 $ 567,122 Capital expenditures $ 253,935 $ 183,134 $ 437,069 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 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, 2021 2020 Product line cost of goods sold $ 18,129,767 $ 13,531,976 Non-capitalized manufacturing and production control expenses 1,591,114 1,443,698 Freight out 1,013,275 510,612 Inventory write-downs 150,000 5,863,991 Other inventory adjustments (74,466 ) (150,070 ) Cost of goods sold $ 20,809,690 $ 21,200,207 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 websites, charlesandcolvard.com and moissaniteoutlet.com, are included in international sales for financial reporting purposes. 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, 2021 and 2020, 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, 2021 2020 Net sales United States $ 37,225,519 $ 26,814,024 International 2,010,320 2,374,996 Total $ 39,235,839 $ 29,189,020 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Jun. 30, 2021 | |
FAIR VALUE MEASUREMENTS [Abstract] | |
FAIR VALUE MEASUREMENTS | 4. FAIR VALUE MEASUREMENTS Under U.S. GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are obtained from independent sources and can be validated by a third party, whereas unobservable inputs reflect assumptions regarding what a third party would use in pricing an asset or liability. The fair value hierarchy consists of three levels based on the reliability of inputs, as follows: Level 1. Quoted prices in active markets for identical assets and liabilities; Level 2. Inputs other than Level 1 quoted prices that are directly or indirectly observable; and Level 3. Unobservable inputs that are not corroborated by market data. 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, cash equivalents, and restricted cash, notes receivable, 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. As of June 30, 2021 and 2020, no assets were identified for impairment. |
NOTE RECEIVABLE
NOTE RECEIVABLE | 12 Months Ended |
Jun. 30, 2021 | |
NOTE RECEIVABLE [Abstract] | |
NOTE RECEIVABLE | 5. NOTE RECEIVABLE On March 5, 2021, the Company entered into a $250,000 convertible promissory note agreement (the “ Convertible Promissory Not e”) with an unrelated third-party strategic marketing partner. The Convertible Promissory Note is unsecured and matures on March 5, 2022 (the “Maturity Date”). Convertible is accrued at a simple rate of 0.14% per annum and will accrue until the Convertible Promissory Note is converted in accordance with the conversion privileges contained within the Convertible Promissory Note or is repaid. Convertible Promissory Note . Subject to the borrower’s completion of a specified equity financing transaction (an “Equity Financing”) on or prior to the Maturity Date, the unpaid principal amount, including accrued and unpaid interest, automatically converts into equity units of the most senior class of equity securities issued to investors in the Equity Financing at Unless converted as provided in the Convertible Promissory Note, the principal amount, including accrued and unpaid interest, will, on the Maturity Date, at the Company’s option either ( i ) become due and payable to the Company, or ( ii ) convert into equity units at the specified conversion price in accordance with the terms of the Convertible Promissory Note . |
INVENTORIES
INVENTORIES | 12 Months Ended |
Jun. 30, 2021 | |
INVENTORIES [Abstract] | |
INVENTORIES | 6. INVENTORIES The Company’s total inventories, net of reserves, consisted of the following as of the dates presented: June 30, 2021 2020 Finished jewelry: Raw materials $ 1,476,514 $ 821,536 Work-in-process 779,593 602,390 Finished goods 8,025,816 6,019,985 Finished goods on consignment 2,050,372 2,297,907 Total finished jewelry 12,332,295 9,741,818 Loose jewels: Raw materials 1,775,505 3,526,399 Work-in-process 9,893,443 10,453,586 Finished goods 4,942,192 6,619,487 Finished goods on consignment 154,968 204,635 Total loose jewels 16,766,108 20,804,107 Total supplies inventory 74,317 88,034 Total inventory $ 29,172,720 $ 30,633,959 As of the dates presented, the Company’s total inventories, net of reserves, are classified as follows: June 30, 2021 2020 Short-term portion $ 11,450,141 $ 7,443,257 Long-term portion 17,722,579 23,190,702 Total inventory $ 29,172,720 $ 30,633,959 The Company’s moissanite and lab grown diamond 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 and lab grown diamonds. Relative to loose moissanite jewels and lab grown diamonds, 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 and lab grown diamonds 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 the Company uses 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 , including the effect of market factors and sales trends . . As a result of the deterioration of marketability of the Company’s legacy inventory during the fiscal year ended June 30, 2020, management determined that this segment of the Company’s inventory had lost its revenue-generating ability and its net realizable value fell below that of its historical carrying cost. Accordingly, the Company recognized a loss in net realizable value in the quarterly period ended March 31, 2020, for its legacy material inventory, i.e ., raw materials, or boules , 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, was 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. Total inventory write-downs were $150,000 and $5.86 million for the fiscal years ended June 30, 2021 and 2020, respectively. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Jun. 30, 2021 | |
PROPERTY AND EQUIPMENT [Abstract] | |
PROPERTY AND EQUIPMENT | 7. PROPERTY AND EQUIPMENT Property and equipment, net, consists of the following as of the dates presented: June 30, 2021 2020 Computer software $ 2,015,548 $ 1,827,581 Machinery and equipment 1,250,345 1,145,525 Computer hardware 1,274,561 1,158,559 Leasehold improvements 1,162,995 1,158,807 Furniture and fixtures 371,883 347,872 Total 6,075,332 5,638,344 Less accumulated depreciation ( 5,199,435 ) (4,639,283 ) Property and equipment, net $ 875,897 $ 999,061 Depreciation expense for the fiscal years ended June 30, 2021 and 2020 was approximately $560,000 and $486,000, respectively. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Jun. 30, 2021 | |
INTANGIBLE ASSETS [Abstract] | |
INTANGIBLE ASSETS | 8. INTANGIBLE ASSETS Intangible assets, net, consist of the following as of the dates presented: June 30, Weighted Average Remaining Amortization Period 2021 2020 (in Years) Patents $ 1,017,007 $ 1,024,267 13.6 Trademarks 214,339 160,683 12.9 License rights 6,718 6,718 - Total 1,238,064 1,191,668 Less accumulated amortization (1,028,406 ) (1,021,517 ) Intangible assets, net $ 209,658 $ 170,151 Amortization expense for the fiscal years ended June 30, 2021 and 2020 was approximately $7,000 and $4,000, respectively. Amortization expense on existing intangible assets is estimated to be approximately $17,000 for each of the fiscal years ending June 30, 2022 and 2023 and approximately $16,000 for each of the fiscal years ending June 30, 2024, 2025, and 2026. |
ACCRUED EXPENSES AND OTHER LIAB
ACCRUED EXPENSES AND OTHER LIABILITIES | 12 Months Ended |
Jun. 30, 2021 | |
ACCRUED EXPENSES AND OTHER LIABILITIES [Abstract] | |
ACCRUED EXPENSES AND OTHER LIABILITIES | 9. ACCRUED EXPENSES AND OTHER LIABILITIES Total accrued expenses and other liabilities consist of the following as of the dates presented: June 30, 2021 2020 Accrued compensation and related benefits $ 866,705 $ 395,006 Deferred revenue 774,891 794,740 Accrued sales tax 555,547 295,651 Accrued cooperative advertising 68,185 89,517 Accrued income taxes 16,478 - Accrued severance - 338,355 Other 1 9,063 Accrued expenses and other liabilities $ 2,281,807 $ 1,922,332 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Jun. 30, 2021 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 10. COMMITMENTS AND CONTINGENCIES Lease Arrangements On December 9, 2013, the Company entered into a Lease Agreement, as amended on December 23, 2013, April 15, 2014, and January 29, 2021 (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 expiration date of the base term of the Lease Agreement in effect as of June 30, 2021 is October 31, 2026 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 an option to extend the lease term for a period of five years. 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 option is exercised, the monthly minimum rent for the extended term will be adjusted to the then-prevailing fair market rate. The renewal option was not assumed to be exercised for purposes of calculating the lease term and the related operating lease liability. 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. Upon execution of the third amendment to the Lease Agreement (the “Lease Amendment”) on January 29, 2021, the Lease Amendment included a rent abatement in the amount of approximately $214,000, which is reflected in the rent payments used in the calculation of the right-of-use (“ROU”) asset and lease liability once remeasured upon the execution of the Lease Amendment to extend the lease term. The Lease Amendment also included an allowance for leasehold improvements offered by the landlord in an amount not to exceed approximately $545,000. Once such costs have been incurred, the Company will be reimbursed for qualified costs by the landlord and the Company will reduce the remaining ROU asset and lease liability by the amount of the reimbursement. Such reductions of the ROU asset and lease liability will be recognized prospectively by the Company over the remaining term of the lease. As of June 30, 2021, the Company’s balance sheet classifications of its leases are as follows: Operating Leases: Noncurrent operating lease ROU assets $ 3,952,146 Current operating lease liabilities $ 566,083 Noncurrent operating lease liabilities 3,600,842 Total operating lease liabilities $ 4,166,925 The Company’s total operating lease cost was approximately $610,000 and $469,000 for the fiscal years ended June 30, 2021 and 2020. As of June 30, 2021, the Company’s estimated incremental borrowing rate used and assumed discount rate with respect to operating leases was 2.81% and the remaining operating lease term was 5.33 years. As of June 30, 2021, the Company’s remaining future payments under operating leases for each fiscal year ending June 30 are as follows: 2022 $ 575,591 2023 869,742 2024 893,660 2025 918,236 2026 943,487 2027 317,327 Total lease payments 4,518,043 Less: imputed interest 351,118 Present value of lease payments 4,166,925 Less: current lease liability 566,083 Total long-term lease liability $ 3,600,842 The Company makes cash payments for amounts included in the measurement of its lease liabilities. During the fiscal year ended June 30, 2021 and 2020, cash paid for operating leases was approximately $688,000 and $668,000, respectively. Upon the execution of the Lease Amendment, the Company recorded additional ROU assets in the amount of approximately $3.9 million obtained in exchange for the additional operating lease liability during the fiscal year ended June 30, 2021. Purchase Commitments On December 12, 2014, the Company entered into an exclusive supply agreement (the “Supply Agreement”) with Cree, Inc. (“Cree”). Under the Supply Agreement, subject to certain terms and conditions, the Company agreed to exclusively purchase from Cree, and Cree agreed to exclusively supply, 100% of the Company’s required SiC materials in quarterly installments that must equal or exceed a set minimum order quantity. The initial term of the Supply Agreement was scheduled to expire on June 24, 2018, unless extended by the parties. Effective June 22, 2018, the Supply Agreement was amended to extend the expiration date to June 25, 2023. The Supply Agreement was also amended to ( i ii iii Effective June 30, 2020, the Supply Agreement was further amended to extend the expiration date to June 29, 2025, which may be extended again by mutual agreement of the parties. The Supply Agreement was also amended to, among other things, ( i ii iii The Company’s total purchase commitment under the Supply Agreement, as amended, until June 2025 is approximately $52.95 million, of which approximately $32.85 remains to be purchased as of June 30, 2021. 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 . During the fiscal years ended June 30, 2021 and 2020, the Company purchased approximately $3.78 million and $7.47 million, respectively, of SiC crystals from Cree. COVID-19 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 continued to negatively affect the U.S. and global economies. In response to the 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. While some of these measures have been lifted or eased in certain jurisdictions, other jurisdictions have seen increases in new COVID-19 cases, resulting in restrictions being reinstated or new restrictions being imposed. The Company has continued taking measures to protect the health and safety of its employees, including updating the Company’s return-to-work policies, as necessary, working with its customers and suppliers to minimize disruptions, and supporting its community in addressing the challenges posed by this ongoing global pandemic. During Fiscal 2021, the Company experienced impacts in its business related to COVID-19 , primarily in continued increased coronavirus-related costs, interruptions in supplier deliveries, impacts of travel and delivery restrictions, site access and quarantine restrictions, and the impacts of remote work and adjusted work schedules. The COVID-19 pandemic continues to present business challenges and the Company expects these to continue into Fiscal 2022. The Company’s management has executed plans to reintroduce employees to the workplace as vaccine rates increase and COVID-19 cases decrease. Although, in light of the recent increase in infections due to evolving viral variants, the Company has not yet returned to pre-pandemic workforce levels in its workplace and is experiencing stabilization of employee attendance in its operations and distribution facilities and throughout its supply chain. A segment of the Company’s corporate staff continues working a blend of remote and in-person work schedules and management is taking measures to facilitate the provision of vaccines to the Company’s employees in line with state and local guidelines. The Company also continues working with its customers and suppliers to minimize disruptions, including at times accelerating payments to key suppliers that are due by their terms in future periods. The Company expects to continue accelerating payments to its suppliers in some cases into Fiscal 2022. T he ultimate impact of COVID-19 on the Company’s operations and financial performance in future periods, including management’s ability to execute its strategic initiatives in the expected timeframes, remains uncertain and will depend on future pandemic related developments, including the duration of the pandemic, any potential subsequent waves of COVID-19 and its variant viral infections, the effectiveness, distribution and acceptance of COVID-19 vaccines, and related government actions to prevent and manage disease spread, all of which are uncertain and cannot be predicted. The Company cannot at this time predict the full impact of the COVID-19 pandemic, but the Company anticipates that the COVID-19 pandemic is likely to continue to impact its business, financial condition, results of operations and/or cash flows in the fiscal year ending June 30, 2022. At the onset of the pandemic, the Company Paycheck Protection Program under the CARES Act”), as administered by the U.S. Small Business Administration (the “SBA”). The Company’s PPP Loan in the principal amount of $965,000 was disbursed by Newtek Small Business Finance, LLC, (its “Lender”), a nationally licensed lender under the SBA, pursuant to a promissory note issued by the Company on June 15, 2020 In accordance with applicable provisions of the CARES Act, effective June 23, 2021, the Company’s PPP Loan forgiveness was approved and processed by the SBA for the full principal of the PPP Loan in the amount of $965,000 . The full amount of the gain in connection with the extinguishment of the underlying debt, including the forgiveness of accrued and unpaid interest, was recognized by the Company in the The Company took advantage of available COVID-19 related payroll tax credits for certain wages and paid leave provided by us during the pandemic. A portion of these eligible tax credits are determined by qualified emergency paid sick and expanded family and medical leave wages pursuant to the Families First Coronavirus Response Act (“FFCRA”) . CARES Act The Company believes that it qualifies for certain employer-related tax benefits pursuant to the ERC and expects to amend its applicable federal payroll tax returns for such benefit. Accordingly, the Company will recognize any payroll tax credits related to these federal and state legislative actions in the period such benefits are received. |
DEBT
DEBT | 12 Months Ended |
Jun. 30, 2021 | |
DEBT [Abstract] | |
DEBT | 11. DEBT Paycheck Protection Program Loan On June 18, 2020, the Company received the proceeds from its PPP Loan. The loan in the principal amount of $965,000 was disbursed by the Lender pursuant to a promissory note issued by the Company (the “Promissory Note”) on June 15, 2020. Pursuant to its terms, the Promissory Note was scheduled to mature on June 18, 2022. However, on June 14, 2021, in accordance with applicable provisions of the CARES Act the Company filed its PPP Loan forgiveness application with the Lender for forgiveness of the full amount of the PPP Loan proceeds and the related accrued and unpaid interest . Effective June 23, 2021, the Company’s PPP Loan forgiveness was approved and processed by the SBA for the full principal of the PPP Loan in the amount of $965,000 . Accordingly, the full amount of the gain in connection with the extinguishment of this debt was recognized in the In accordance with the terms of the Promissory Note, during the period of time the principal of the PPP Loan was outstanding, interest was accrued by the Company at a fixed rate of 1% per annum. In connection with the Company’s PPP Loan forgiveness, the SBA also approved forgiveness of accrued interest amounts that would have been otherwise payable by the Company to the Lender. Accordingly, the benefit from the forgiveness of the inception to-date interest expense in the amount of approximately $9,000 was recognized and included within the gain on extinguishment of debt in the consolidated statement of operations for the fiscal year ended June 30, 2021. For financial reporting purposes, during the period the principal of the PPP Loan was outstanding, the classification of the current maturity of long-term debt assumed there would have been no principal forgiveness. In accordance with the terms of the Promissory Note, as amended by the Paycheck Protection Program Flexibility Act, principal repayment for the full outstanding principal amount of the PPP Loan was assumed to have been spread in equal monthly installments over the period from October 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 the Lender when it obtained the PPP Loan. The Promissory Note provided for customary events of default, which did not occur during the period of time the PPP Loan was outstanding, including, among others, those relating to failure to make payment and breaches of representations. Line of Credit Effective July 7, 2021, the Company obtained from JPMorgan Chase Bank, N.A. (“JPMorgan Chase”) a $5.00 million cash collateralized line of credit facility (the “JPMorgan Chase Credit Facility”). The JPMorgan Chase Credit Facility may be used for general corporate and working capital purposes, including permitted acquisitions and certain additional indebtedness for obligations under capital and operating leases. JPMorgan Chase Credit Facility is secured by a cash deposit in the amount of $5.05 million held by JPMorgan Chase as collateral for the . Each advance accrues interest at a rate equal to JPMorgan Chase’s monthly LIBOR rate multiplied by a statutory reserve rate for eurocurrency funding JPMorgan Chase calculated monthly on an actual/360 day basis and payable monthly in arrears. Principal outstanding during an event of default, at JPMorgan Chase’s option, accrues interest at a rate of 3% per annum in excess of the above rate. Any advance may be prepaid in whole or in part without penalty at any time. The JPMorgan Chase Credit Facility is evidenced by a credit agreement between JPMorgan Chase and the Company (the “JPMorgan Chase Credit Agreement”), dated as of July 12, 2021, and customary ancillary documents, in the principal amount not to exceed $5.00 million at any one time outstanding and a line of credit note (the “ JPMorgan Chase Line of Credit Note”) in which the Company promises to pay on or before July 31, 2022, the amount of $5.00 million JPMorgan Chase Credit Facility. JPMorgan Chase Credit Agreement and ancillary documents contain customary covenants, representations, fees, debt, contingent obligations, liens, loans, leases, investments, mergers, acquisitions, divestitures, subsidiaries, affiliate transactions, and changes in control. In connection with the JPMorgan Chase Credit Facility, the Company incurred a non-refundable origination fee in the amount of $10,000 that was paid in full to JPMorgan Chase upon execution of the JPMorgan Chase Credit Facility on July 12, 2021. The Company also agreed to maintain its primary banking depository and disbursement relationship with JPMorgan Chase. Events of default under the JPMorgan Chase Credit Facility include, without limitation, a default, event of default, or event that would constitute a default or event of default (pending giving notice or lapse of time or both), of any provision of the JPMorgan Chase Credit Agreement, the JPMorgan Chase Line of Credit Note, or any other instrument or document executed in connection with the JPMorgan Chase Credit Agreement or with any of the indebtedness, liabilities, and obligations of the Company to JPMorgan Chase or would result from the extension of credit by JPMorgan Chase to the Company. On July 12, 2021, upon its execution, the Company did not request any advances pursuant to the terms of the JPMorgan Chase Credit Facility. Prior to obtaining the JPMorgan Chase Credit Facility, the Company and its wholly owned subsidiary, charlesandcolvard.com, LLC (collectively, the “Borrowers”), had a $5.00 million asset-based revolving credit facility (the “White Oak Credit Facility”) from White Oak Commercial Finance, LLC (“White Oak”), which was terminated by the Company in accordance with its terms as of July 9, 2021. The effective date of the White Oak Credit Facility was July 13, 2018, and it was scheduled to mature on July 13, 2021. The White Oak Credit Facility was available for general corporate and working capital purposes, including permitted acquisitions and was 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 were required to maintain at least $500,000 in excess availability at all times. The White Oak Credit Facility contained no other financial covenants. Advances under the White Oak Credit Facility were limited to a borrowing base, which was 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. Eligible inventory would have been further limited to 60% of the net borrowing base, while precious metal jewelry components were limited to $500,000. Available advances could have been in the form of either revolving or non-revolving. Non-revolving advances were limited to $1.00 million in aggregate principal amount outstanding and would have been required to be repaid on each January 15 (which could have been effected by conversion to revolving advances, absent an event of default, which did not occur during the term of the White Oak ). There were no other mandatory prepayments or line reductions. The Company was able to prepay any advances in whole or in part at any time without penalty. In addition, the White Oak Credit Facility could have been 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 execution of the White Oak Credit Facility, the Company incurred a non-refundable origination fee in the total amount of $125,000 that was 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, the second installment in the amount of $41,667 was paid on July 15, 2019, and 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, any 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 any non-revolving advances would have accrued interest at such LIBOR rate plus 4.75%. Thereafter, the interest margins would have been reduced upon the Company’s achievement of a specified fixed charge coverage ratio during the period of any outstanding advances. However, any advances were in all cases subject to a minimum interest rate of 5.50% and interest would have been calculated on an actual/360 basis and payable monthly in arrears. Principal outstanding during an event of default, which again did not occur during the term of the White Oak would have accrued interest at a rate 2% in excess of the rate that would have been otherwise applicable. The White Oak Credit Facility was secured by a lien on substantially all assets of the Borrowers, each of which was jointly and severally liable for all obligations thereunder. White Oak’s security interest in certain SiC materials was 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 was subordinate to its landlord’s security interest in such tangible personal property. The White Oak Credit Facility was 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 contained 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 included, 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 would have believed may have impaired the prospect of repayment. If an event of default had occurred, White Oak would have been entitled to take enforcement action, including acceleration of any amounts that would have been due under the White Oak Credit Facility, and to foreclose upon collateral. The White Oak Credit Facility also contained other customary terms, that included indemnity, collateral monitoring fee, minimum interest charge, expense reimbursement, yield protection, and certain confidentiality provisions. The Company had not borrowed against the White Oak Credit Facility as of July 9, 2021, the date upon which the White Oak Credit Facility was terminated by the Company in accordance with its terms. |
SHAREHOLDERS' EQUITY AND STOCK-
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION | 12 Months Ended |
Jun. 30, 2021 | |
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION [Abstract] | |
SHAREHOLDERS' EQUITY | 12. 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, 2021 and 2020, it had 29,913,095 and 28,949,410 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, 2021. Dividends The Company paid no cash dividends during the fiscal years ended June 30, 2021 and 2020. 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 Accordingly, 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, 2021 and 2020, there were 1,151,935 and 790,407 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, 2021 and 2020, there were 1,083,351 and 2,018,688 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 income (loss) for the periods presented: Year Ended June 30, 2021 2020 Employee stock options $ 234,947 $ 309,999 Restricted stock awards 117,636 149,539 Total $ 352,583 $ 459,538 No stock-based compensation was capitalized as a cost of inventory during the fiscal years ended June 30, 2021 and 2020. Stock Options The following is a summary of the stock option activity for the fiscal years ended June 30, 2021 and 2020: Shares Weighted Average Exercise Price 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 $ 1.19 Granted 438,533 $ 1.05 Exercised (947,435 ) 0.95 Forfeited (7,000 ) $ 1.23 Expired (57,907 ) $ 1.95 Outstanding at June 30, 2021 2,235,286 $ 1.24 The weighted average grant date fair value of stock options granted during the fiscal year ended June 30, 2021 and 2020 was $0.54 and $0.50, respectively. The total fair value of stock options that vested during the fiscal year ended June 30, 2021 and 2020 was approximately $650,000 and $282,000, 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, 2021 2020 Dividend yield 0.0 % 0.0 % Expected volatility 61.7 % 63.2 % Risk-free interest rate 0.36 % 0.82 % Expected lives (years) 4.9 5.2 The following tables summarize information in connection with stock options outstanding at June 30, 2021: Options Outstanding Options Exercisable Options Vested or Expected to Vest Balance as of 6/30/2021 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Balance as of 6/30/2021 Weighted Average Contractual Life (Years) Weighted Average Exercise Price Balance as of 6/30/2021 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price 2,235,286 6.47 $ 1.24 1,696,003 5.62 $ 1.31 2,166,723 6.39 $ 1.25 As of June 30, 2021, the unrecognized stock-based compensation expense related to unvested stock options was approximately $192,000, which is expected to be recognized over a weighted average period of approximately 19 months. The aggregate intrinsic value of stock options outstanding, and vested or expected to vest at June 30, 2021 was approximately $3.77 million. These amounts are before applicable income taxes and represent the closing market price of the Company’s common stock at June 30, 2021, 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. The aggregate intrinsic value of stock options exercised during the fiscal year ended June 30, 2021 was approximately $1.24 million. The total tax benefit associated with stock options exercised during the fiscal year ended June 30, 2021, was approximately $147,000. Restricted Stock The following is a summary of the restricted stock activity for the fiscal years ended June 30, 2021 and 2020: Shares Weighted Average Grant Date Fair Value 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 Granted 178,750 $ 0.72 Canceled (162,500 ) $ 1.57 Unvested at June 30, 2021 178,750 $ 0.72 The unvested restricted shares as of June 30, 2021 are all performance-based restricted shares that are scheduled to vest, subject to achievement of the underlying performance goals, in July 2021. As of June 30, 2021, the estimated unrecognized stock-based compensation expense related to unvested restricted shares subject to achievement of performance goals was approximately $11,000 , all of which is expected to be recognized over a weighted average period of approximately one month |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Jun. 30, 2021 | |
INCOME TAXES [Abstract] | |
INCOME TAXES | 13. INCOME TAXES The Company accounts for income taxes under the liability method. Under the liability method, deferred income taxes are recognized for the income tax consequences of “temporary differences” by applying enacted statutory income tax rates applicable to future years to differences between the financial statement carrying amounts and the income tax bases of existing assets and liabilities. The Company’s income tax net benefit (expense) for the periods presented comprises the following: Year Ended June 30, 2021 2020 Current: Federal $ - $ - State (18,409 ) (1,733 ) Total current expense (18,409 ) (1,733 ) Deferred: Federal 6,062,222 - State 288,608 - Total deferred benefit (expense) 6,350,830 - Income tax net benefit (expense) $ 6,332,421 $ (1,733 ) Significant components of the Company’s noncurrent deferred tax assets, net as of the dates presented are as follows: June 30, 2021 2020 Deferred tax assets: Reversals and accruals $ 454,846 $ 476,666 Federal net operating loss (“NOL”) carryforwards 3,989,278 4,980,513 State NOL carryforwards 585,563 663,918 Hong Kong NOL carryforwards 995,566 995,566 Federal benefit on state taxes under uncertain tax positions 2,073 1,668 Stock-based compensation 149,047 177,508 Section 263A adjustment 122,562 215,416 Research tax credit - 252 Contributions carryforward - 7,184 Inventory valuation reserve 1,605,871 1,594,795 Operating lease liabilities 942,471 185,422 Loss on impairment of long-lived assets - 32,749 Valuation allowance (1,452,296 ) (8,988,696 ) Noncurrent deferred tax assets, net 7,394,981 342,961 Deferred tax liabilities: Prepaid expenses (44,890 ) (39,943 ) Depreciation (105,369 ) (172,010 ) Operating lease right-of-use assets (893,892 ) (131,008 ) Noncurrent deferred tax liabilities (1,044,151 ) (342,961 ) Total noncurrent $ 6,350,830 $ - 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 benefit (expense) for the periods presented: Year Ended June 30, 2021 2020 Anticipated income tax (expense) benefit at statutory rate $ (1,360,452 ) $ 1,293,673 State income tax (expense) benefit, net of federal tax effect (84,288 ) 64,034 Income tax effect of uncertain tax positions (1,468 ) 17,508 Return to provision adjustments (45 ) 1 Stock-based compensation 38,197 (31,195 ) PPP Loan forgiveness 202,729 - Other changes in deferred income tax assets, net 1,348 (114,288 ) Decrease (Increase) in valuation allowance 7,536,400 (1,231,466 ) Income tax net benefit (expense) $ 6,332,421 $ (1,733 ) The Company’s statutory tax rate as of June 30, 2021 is 22.24% and consisted of the federal income tax rate of 21% and a blended state income tax rate of 1.24%, net of the federal benefit. The Company’s statutory tax rate as of the fiscal year ended June 30, 2020 was 22.11% and consisted of the federal income tax rate of 21% and a blended state income tax rate of 1.11%, 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 available deferred tax assets. As of the fiscal year ended June 30, 2020, the Company did not recognize an income tax benefit for any of its deferred tax assets, primarily related to net operating loss carryforwards and inventory valuation reserves, because management determined that sufficient negative evidence continued to exist to conclude it was uncertain that the Company would have sufficient future taxable income to utilize its deferred tax assets . However, as of June 30, 2021, cumulative positive taxable income over the last three tax years had been generated in the U.S., as compared to the negative evidence of cumulative losses in previous years. The Company’s management also determined that its expectations of future taxable income in upcoming tax years, including estimated growth rates applied to future expected taxable income that includes significant management estimates and assumptions , would be sufficient to result in full utilization of the Company’s federal net operating loss carryforwards and certain of the deferred tax assets prior to any statutory expiration the Company’s management determined that sufficient positive evidence exists as of June 30, 2021, to conclude that it is more likely than not deferred tax assets of approximately $6.35 million are realizable, and it reduced the Company’s valuation allowance accordingly. The reduction of the valuation allowances against these deferred tax assets was the main driver of the income tax benefit during the fiscal year ended June 30, 2021 of approximately $6.33 million. A valuation allowance remains against certain deferred tax assets primarily relating to state net operating loss carryforwards from the Company’s e-commerce subsidiary due to the timing uncertainty of when it will generate positive taxable income to utilize the associated deferred tax assets. In addition, as detailed below, a valuation allowance also remains against certain deferred tax assets relating to operating loss carryforwards relating to the Company’s dormant subsidiary located in Hong Kong . As of June 30, 2021, all of the Company’s remaining federal income tax credits had expired or been utilized, and therefore, are not available to be carried forward to offset future income taxes. As of June 30, 2021 and 2020, the Company had federal tax net operating loss carryforwards of approximately $19.00 million and $23.72 million, respectively, expiring between 2034 and 2037, or that have no expiration, which can be used to offset against future federal taxable income; North Carolina tax net operating loss carryforwards of approximately $19.87 million and $20.12 million, respectively, expiring between 2023 and 2035; and various other state tax net operating loss carryforwards expiring between 2023 and 2040, which can be used to offset against future state taxable income. As of each of June 30, 2021 and 2020, 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, 2021 and 2020, 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, was entered into dormancy as of September 30, 2020, following its re-activation in December 2017. Charles & Colvard (HK) Ltd. previously became dormant in the second quarter of 2009 and has had no operating activity since 2008. 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. Pursuant to provisions of t he CARES Act, existing AMT credit carryforwards were eligible for acceleration and refundable AMT credits were to be completely refunded to companies for taxable years beginning in 2019, or by election, taxable years beginning in 2018. Accordingly, during the fiscal year ended June 30, 2020, the Company elected to have its AMT credit in the amount of approximately $270,000 refunded and filed a refund claim with the IRS for the remaining AMT tax credit. Consequently, the full amount of the Company’s AMT credit refund was refunded by the IRS during the fiscal year ended June 30, 2021. The Company continues to monitor future developments and interpretations of the CARES Act and other federal and state legislative actions Uncertain Tax Positions The gross liability for income taxes associated with uncertain tax positions at June 30, 2021 and June 30, 2020, was approximately $10,000 and $8,000, 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 of interest and penalties associated with uncertain tax positions for each of the fiscal years ended June 30, 2021 and 2020. Including the interest and penalties recorded for uncertain tax positions, there is a total of approximately $7,000 and $5,000 of interest and penalties included in the accrued income tax liability for uncertain tax positions as of June 30, 2021 and 2020, 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, 2016 through June 30, 2020. 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. |
MAJOR CUSTOMERS AND CONCENTRATI
MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK | 12 Months Ended |
Jun. 30, 2021 | |
MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK [Abstract] | |
MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK | 14. 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, 2021 2020 Customer A 30 % 26 % Customer B 22 % 14 % Customer C 14 % 13 % 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, 2021 2020 Customer A 13 % 12 % Customer B 12 % 13 % 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, 2021 | |
EMPLOYEE BENEFIT PLAN [Abstract] | |
EMPLOYEE BENEFIT PLAN | 15. 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 $72,000 and $82,000 to its employee benefit defined contribution plan during the fiscal years ended June 30, 2021 and 2020, respectively. |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 12 Months Ended |
Jun. 30, 2021 | |
SUBSEQUENT EVENT [Abstract] | |
SUBSEQUENT EVENT | 16. SUBSEQUENT EVENT On July 12, 2021, the Company obtained a cash collateralized $5.00 million line of credit facility with JPMorgan Chase Bank, N.A. See Note 11, “Debt”, for a more detailed description of the Company’s credit facility. |
BASIS OF PRESENTATION AND SIG_2
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Jun. 30, 2021 | |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation – The accompanying consolidated financial statements as of and for the fiscal years ended June 30, 2021 and 2020, include the accounts of the Company and its wholly owned subsidiaries charlesandcolvard.com, LLC; Charles & Colvard Direct, LLC; and Charles & Colvard (HK) Ltd., the Company’s Hong Kong subsidiary, which was entered into dormancy as of September 30, 2020 following its re-activation in December 2017. Charles & Colvard (HK) Ltd. previously became dormant in the second quarter of 2009 and has had no operating activity since 2008. Charles & Colvard Direct, LLC, had no operating activity during the fiscal years ended June 30, 2021 or 2020. All intercompany accounts have been eliminated . |
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 he preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ( “ ” |
Credit Losses on Financial Instruments | Effective July 1, 2020, the Company adopted the new accounting standard related to the measurement and disclosure of credit losses on financial instruments. The new guidance includes a current expected credit loss (“CECL”) model that requires an entity to estimate credit losses expected over the life of an exposure or pool of exposures based on historical information, current conditions, and supportable forecasts at the time the asset is recognized and is measured at each reporting period. The new guidance principally aligns the Company’s accounting for its trade accounts receivable with the economics of extending credit and improves its financial reporting by requiring timelier recording of related credit losses. The adoption of the new accounting standard did not have a material impact on the Company’s financial position or results of operations and the Company did not record a cumulative-effect adjustment to retained earnings. The Company amended its allowance for credit losses policy, as set forth below, for the implementation of the new accounting standard. The Company records an allowance for credit losses, which includes a provision for expected losses based on historical write-offs, adjusted for current conditions as deemed necessary, reasonable and supportable forecasts about future conditions and the related allowance recorded previously |
Cloud Computing Arrangement Implementation Costs | Effective July 1, 2020, the Company also adopted the new accounting standard in connection with accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. The new standard provides guidance to determine the accounting for fees paid in connection with a cloud computing arrangement that may include a software license. The adoption of this new accounting standard did not have a material impact on the Company’s financial position or results of operations. |
Cash and Cash Equivalents | Cash and Cash Equivalents – All highly liquid investments with an original maturity of three months or less from the date of purchase are considered to be cash equivalents. The Company’s cash and cash equivalents include cash on deposit and a money market fund. See the Restricted Cash |
Restricted Cash | Restricted Cash – In accordance with cash management process requirements related to the Company’s asset-based revolving credit facility from White Oak Commercial Finance, LLC (“White Oak”) For additional information regarding termination of the Company’s asset-based revolving credit facility with White Oak, see Note 11, “Debt.” In accordance with the terms of the Company’s cash collateralized $5.00 million credit facility from JPMorgan Chase Bank, N.A. (“JPMorgan Chase”), which the Company entered into on July 12, 2021, the Company is required to keep $5.05 million in a cash deposit account held by JPMorgan Chase from JPMorgan Chase JPMorgan Chase For additional information regarding the Company’s cash collateralized credit facility with JPMorgan Chase 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, 2021 2020 Cash and cash equivalents $ 21,302,317 $ 13,993,032 Restricted cash 144,634 624,202 Total cash, cash equivalents, and restricted cash $ 21,446,951 $ 14,617,234 |
Concentration of Credit Risk | Concentration of Credit Risk – Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash on deposit and cash equivalents held with one bank and trade accounts receivable. At times, cash and cash equivalents balances may exceed the Federal Deposit Insurance Corporation (“FDIC”) insurable limits. The Company’s money market fund investment account (recognized as cash and cash equivalents) is with what the Company believes to be a high-quality issuer. The Company has never experienced any losses related to these balances. Non-interest-bearing amounts on deposit in excess of FDIC insurable limits at June 30, 2021 and 2020 approximated $10.32 million and $2.01 million, respectively. Interest-bearing amounts on deposit in excess of FDIC insurable limits at June 30, 2021 and 2020 approximated $10.64 million and $11.64 million, respectively. Trade receivables potentially subject the Company to credit risk. Payment terms on trade receivables for the Company’s Traditional segment customers are generally between 30 and 90 days, though it may offer extended terms with specific customers and on significant orders from time to time. The Company extends credit to its customers based upon a number of factors, including an evaluation of the customer’s financial condition and credit history that is verified through trade association reference services, the customer’s payment history with the Company, the customer’s reputation in the trade, and/or an evaluation of the Company’s opportunity to introduce its moissanite jewels or finished jewelry featuring moissanite to new or expanded markets. Collateral is not generally required from customers. The need for an allowance for doubtful accounts is determined based upon factors surrounding the credit risk of specific customers, historical trends, and other information. See Note 14, “Major Customers and Concentration of Credit Risk”, for further discussion of credit risk within trade accounts receivable. |
Accounts Receivable Reserves | Accounts Receivable Reserves – Estimates are used to determine the amount of two reserves against trade accounts receivable. The first reserve is an allowance for sales returns. At the time revenue is recognized, the Company estimates future returns using a historical return rate that is reviewed quarterly with consideration of any contractual return privileges granted to customers, including any current extenuating economic conditions resulting from the COVID-19 pandemic, and it reduces sales and trade accounts receivable by this estimated amount. The Company’s allowance for sales returns was $675,000 and $704,000 at June 30, 2021 and 2020, respectively. The following are reconciliations of the allowance for sales returns balances as of the periods presented: Year Ended June 30, 2021 2020 Balance, beginning of year $ 704,000 $ 746,000 Additions charged to operations 5,631,415 4,710,943 Sales returns (5,660,415 ) (4,752,943 ) Balance, end of year $ 675,000 $ 704,000 The second reserve is an allowance for uncollectible accounts for the measurement of estimated credit 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. reasonable and supportable forecasts about future conditions, and the related allowance recorded previously The Company generally uses internal collection efforts, which may include its sales personnel as it deems appropriate. After all internal collection efforts have been exhausted, the Company generally writes-off the underlying account receivable. Any accounts with significant balances are reviewed separately to determine an appropriate allowance based on the facts and circumstances of the specific underlying customer account. During its review for the fiscal years ended June 30, 2021 and 2020, the Company determined no additional reserves were necessary for specific accounts. Based on these criteria, management determined that allowances for uncollectible accounts receivable of $71,000 and $79,000 at June 30, 2021 and 2020, The following are reconciliations of the allowance for uncollectible accounts balances as of the periods presented: Year Ended June 30, 2021 2020 Balance, beginning of year $ 79,000 $ 249,000 Additions charged to operations 2,030 8,788 Write-offs, net of recoveries (10,030 ) (178,788 ) Balance, end of year $ 71,000 $ 79,000 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, which would result in increased expense in the period in which such determination is made. |
Inventories | Inventories - Inventories are stated at the lower of cost or net realizable value on an average cost basis. Inventory costs include direct material and labor, inbound freight, purchasing and receiving costs, inspection costs, and warehousing costs. 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 – 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 lease term |
Intangible Assets | Intangible Assets – |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets – The Company evaluates the recoverability of its long-lived assets by reviewing them for possible impairment 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. As of June 30, 2021, 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 ) identification of a contract with a customer; ( ii ) identification of any separate performance obligations; ( iii ) determination of the transaction price; ( iv ) allocation of the transaction price to the performance obligations in the contract; and ( v ) recognition of revenue when the Company has satisfied the underlying performance obligations. The Company recognizes substantially all of its revenue at a point in time when control of the Company’s goods has passed to the customer with the exception of consigned goods. The Company considers its sole performance obligation related to the shipment of goods satisfied at the time this control is transferred. Customer payment terms for these shipments typically range between 30- and 90-days. Customers purchasing items through the Company’s websites pay amounts in advance of the Company transferring control of the goods. Amounts received in advance of the transfer of control are included in deferred revenue within accrued expenses and other liabilities on the consolidated balance sheets until the time of the transfer of control of the goods. The Company has elected to treat shipping and handling performed after control has transferred to customers as a fulfillment activity, and additionally, has elected the practical expedient to report sales taxes on a net basis. The Company records shipping and handling expense related to product sales as cost of sales. 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. Customers in both of the Company’s charlesandcolvard.com and moissaniteoutlet.com websites may generally return purchases within 60 days in accordance with the Company’s returns policies as disclosed on its charlesandcolvard.com 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, 2021 and 2020, the Company’s refund liabilities balances were $675,000 and $704,000, respectively, and are included as allowances for sales returns within accounts receivable, net, in the accompanying consolidated balance sheets. As of June 30, 2021 and 2020, the Company’s returns asset balances were $252,000 and $289,000, respectively, and are included within prepaid expenses and other assets in the accompanying consolidated balance sheets . |
Cost of Goods Sold | Cost of Goods Sold – Cost of goods sold is primarily composed of inventory sold during the period; inventory written-off during the period due to ongoing quality and obsolescence reviews; salaries and payroll-related expenses for personnel involved in preparing and shipping product to customers; an allocation of shared expenses such as rent, utilities, communication expenses, and depreciation related to preparing and shipping product to customers; and outbound freight charges. |
Advertising Costs | Advertising Costs – Advertising production costs are expensed as incurred. Media placement costs are expensed the first time the underlying advertising appears. 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, 2021 and 2020, these approximate amounts were $380,000 and $491,000, respectively, and are included as a component of sales and marketing expenses. Because the Company receives a distinct good or service in exchange for consideration and the fair value of the benefit can be reasonably estimated, these transactions are reflected as sales and marketing expenses Advertising expenses, inclusive of the cooperative advertising program, for the fiscal years ended June 30, 2021 and 2020, were approximately $4.25 million and $3.96 million, respectively. |
Sales and Marketing | Sales and Marketing – Sales and marketing costs are expensed as incurred. These costs include all expenses of promoting and selling the Company’s products and include such items as the salaries, payroll-related expenses, and travel of sales and marketing personnel; digital marketing; advertising; trade shows; market research; sales commissions; and an allocation of overhead expenses attributable to these activities. Except for an allocation to general and administrative expenses, these costs also include the operating expenses of charlesandcolvard.com, LLC, wholly owned operating subsidiary. |
General and Administrative | General and Administrative – General and administrative costs are expensed as incurred. These costs include the salaries and payroll-related expenses of executive, finance, information technology, and administrative personnel; legal, investor relations, and professional fees; general office and administrative expenses; Board of Directors fees; rent; bad debts; and insurance. |
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. The Company uses the Black-Scholes-Merton option pricing model to determine the fair value of stock options. The fair value of other stock-based compensation awards is determined by the market price of the Company’s common stock on the date of grant. The expense associated with stock-based compensation is recognized on a straight-line basis over the requisite service period of each award. 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. Although the Company issued dividends in prior years, a dividend yield of zero is used due to the lack of recent dividend payments and the uncertainty of future dividend payments; 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. The Company estimates expected volatility giving primary consideration to the historical volatility of its common stock ; Risk-Free Interest Rate. The risk-free interest rate is based on the published yield available on U.S. Treasury issues with an equivalent term remaining equal to the expected life of the stock option; and Expected Lives. The expected lives of the issued stock options represent the estimated period of time until exercise or forfeiture and are based on the simplified method of using the mid-point between the vesting term and the original contractual term . The simplified method is used because the Company does not have sufficient historical option exercise experience . The assumptions used in calculating the fair value of stock-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 analyzes its historical forfeiture rates. 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 – 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. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount that is more likely than not to be realized. |
Net Income (Loss) per Common Share | Net Income (Loss) per Common Share – Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the periods. Diluted net income (loss) per common share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the periods. Common equivalent shares consist of stock options and unvested restricted shares that are computed using the treasury stock method. Anti-dilutive stock awards consist of stock options that would have been anti-dilutive in the application of the treasury stock method. As of the dates presented, t he following table reconciles the differences between the basic and diluted net income (loss) per share presentations: Year Ended June 30, 2021 2020 Numerator: Net income (loss) $ 12,810,766 $ (6,162,083 ) Denominator: Weighted average common shares outstanding: Basic 29,144,820 28,644,133 Effect of dilutive securities 1,087,747 - Diluted 30,232,567 28,644,133 Net income (loss) per common share: Basic $ 0.44 $ (0.22 ) Diluted $ 0.42 $ (0.22 ) For the fiscal year ended June 30, 2021, stock options to purchase approximately 1.24 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. 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. The quantity of 162,500 shares of un |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements – 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 11, “Debt”, borrowings under the Company’s line of credit would have been based on a rate equal to the one-month LIBOR. As of June 30, 2021, 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, 2021. |
BASIS OF PRESENTATION AND SIG_3
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
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, 2021 2020 Cash and cash equivalents $ 21,302,317 $ 13,993,032 Restricted cash 144,634 624,202 Total cash, cash equivalents, and restricted cash $ 21,446,951 $ 14,617,234 |
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, 2021 2020 Balance, beginning of year $ 704,000 $ 746,000 Additions charged to operations 5,631,415 4,710,943 Sales returns (5,660,415 ) (4,752,943 ) Balance, end of year $ 675,000 $ 704,000 |
Reconciliation of Allowance for Uncollectible Accounts | The following are reconciliations of the allowance for uncollectible accounts balances as of the periods presented: Year Ended June 30, 2021 2020 Balance, beginning of year $ 79,000 $ 249,000 Additions charged to operations 2,030 8,788 Write-offs, net of recoveries (10,030 ) (178,788 ) Balance, end of year $ 71,000 $ 79,000 |
Estimated Useful Lives of Property 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 lease term |
Basic and Diluted Net Income (Loss) Per Share | As of the dates presented, t he following table reconciles the differences between the basic and diluted net income (loss) per share presentations: Year Ended June 30, 2021 2020 Numerator: Net income (loss) $ 12,810,766 $ (6,162,083 ) Denominator: Weighted average common shares outstanding: Basic 29,144,820 28,644,133 Effect of dilutive securities 1,087,747 - Diluted 30,232,567 28,644,133 Net income (loss) per common share: Basic $ 0.44 $ (0.22 ) Diluted $ 0.42 $ (0.22 ) |
SEGMENT INFORMATION AND GEOGR_2
SEGMENT INFORMATION AND GEOGRAPHIC DATA (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
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, 2021 Online Channels Traditional Total Net sales Finished jewelry $ 19,905,199 $ 4,496,347 $ 24,401,546 Loose jewels 3,304,439 11,529,854 14,834,293 Total $ 23,209,638 $ 16,026,201 $ 39,235,839 Product line cost of goods sold Finished jewelry $ 8,235,797 $ 3,036,215 $ 11,272,012 Loose jewels 1,216,942 5,640,813 6,857,755 Total $ 9,452,739 $ 8,677,028 $ 18,129,767 Product line gross profit Finished jewelry $ 11,669,402 $ 1,460,132 $ 13,129,534 Loose jewels 2,087,497 5,889,041 7,976,538 Total $ 13,756,899 $ 7,349,173 $ 21,106,072 Operating income $ 3,739,553 $ 1,768,439 $ 5,507,992 Depreciation and amortization $ 248,995 $ 318,127 $ 567,122 Capital expenditures $ 253,935 $ 183,134 $ 437,069 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 |
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, 2021 2020 Product line cost of goods sold $ 18,129,767 $ 13,531,976 Non-capitalized manufacturing and production control expenses 1,591,114 1,443,698 Freight out 1,013,275 510,612 Inventory write-downs 150,000 5,863,991 Other inventory adjustments (74,466 ) (150,070 ) Cost of goods sold $ 20,809,690 $ 21,200,207 |
Net Sales by Geographic Area | The following presents net sales data by geographic area for the periods presented: Year Ended June 30, 2021 2020 Net sales United States $ 37,225,519 $ 26,814,024 International 2,010,320 2,374,996 Total $ 39,235,839 $ 29,189,020 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
INVENTORIES [Abstract] | |
Inventories | The Company’s total inventories, net of reserves, consisted of the following as of the dates presented: June 30, 2021 2020 Finished jewelry: Raw materials $ 1,476,514 $ 821,536 Work-in-process 779,593 602,390 Finished goods 8,025,816 6,019,985 Finished goods on consignment 2,050,372 2,297,907 Total finished jewelry 12,332,295 9,741,818 Loose jewels: Raw materials 1,775,505 3,526,399 Work-in-process 9,893,443 10,453,586 Finished goods 4,942,192 6,619,487 Finished goods on consignment 154,968 204,635 Total loose jewels 16,766,108 20,804,107 Total supplies inventory 74,317 88,034 Total inventory $ 29,172,720 $ 30,633,959 As of the dates presented, the Company’s total inventories, net of reserves, are classified as follows: June 30, 2021 2020 Short-term portion $ 11,450,141 $ 7,443,257 Long-term portion 17,722,579 23,190,702 Total inventory $ 29,172,720 $ 30,633,959 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
PROPERTY AND EQUIPMENT [Abstract] | |
Property and Equipment, Net | Property and equipment, net, consists of the following as of the dates presented: June 30, 2021 2020 Computer software $ 2,015,548 $ 1,827,581 Machinery and equipment 1,250,345 1,145,525 Computer hardware 1,274,561 1,158,559 Leasehold improvements 1,162,995 1,158,807 Furniture and fixtures 371,883 347,872 Total 6,075,332 5,638,344 Less accumulated depreciation ( 5,199,435 ) (4,639,283 ) Property and equipment, net $ 875,897 $ 999,061 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
INTANGIBLE ASSETS [Abstract] | |
Intangible Assets, Net | Intangible assets, net, consist of the following as of the dates presented: June 30, Weighted Average Remaining Amortization Period 2021 2020 (in Years) Patents $ 1,017,007 $ 1,024,267 13.6 Trademarks 214,339 160,683 12.9 License rights 6,718 6,718 - Total 1,238,064 1,191,668 Less accumulated amortization (1,028,406 ) (1,021,517 ) Intangible assets, net $ 209,658 $ 170,151 |
ACCRUED EXPENSES AND OTHER LI_2
ACCRUED EXPENSES AND OTHER LIABILITIES (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
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, 2021 2020 Accrued compensation and related benefits $ 866,705 $ 395,006 Deferred revenue 774,891 794,740 Accrued sales tax 555,547 295,651 Accrued cooperative advertising 68,185 89,517 Accrued income taxes 16,478 - Accrued severance - 338,355 Other 1 9,063 Accrued expenses and other liabilities $ 2,281,807 $ 1,922,332 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
Balance Sheet Classifications of Leases | As of June 30, 2021, the Company’s balance sheet classifications of its leases are as follows: Operating Leases: Noncurrent operating lease ROU assets $ 3,952,146 Current operating lease liabilities $ 566,083 Noncurrent operating lease liabilities 3,600,842 Total operating lease liabilities $ 4,166,925 |
Remaining Future Payments Under Operating Leases | As of June 30, 2021, the Company’s remaining future payments under operating leases for each fiscal year ending June 30 are as follows: 2022 $ 575,591 2023 869,742 2024 893,660 2025 918,236 2026 943,487 2027 317,327 Total lease payments 4,518,043 Less: imputed interest 351,118 Present value of lease payments 4,166,925 Less: current lease liability 566,083 Total long-term lease liability $ 3,600,842 |
SHAREHOLDERS' EQUITY AND STOC_2
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
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 income (loss) for the periods presented: Year Ended June 30, 2021 2020 Employee stock options $ 234,947 $ 309,999 Restricted stock awards 117,636 149,539 Total $ 352,583 $ 459,538 |
Stock Option Activity | The following is a summary of the stock option activity for the fiscal years ended June 30, 2021 and 2020: Shares Weighted Average Exercise Price 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 $ 1.19 Granted 438,533 $ 1.05 Exercised (947,435 ) 0.95 Forfeited (7,000 ) $ 1.23 Expired (57,907 ) $ 1.95 Outstanding at June 30, 2021 2,235,286 $ 1.24 |
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, 2021 2020 Dividend yield 0.0 % 0.0 % Expected volatility 61.7 % 63.2 % Risk-free interest rate 0.36 % 0.82 % Expected lives (years) 4.9 5.2 |
Stock Options Outstanding | The following tables summarize information in connection with stock options outstanding at June 30, 2021: Options Outstanding Options Exercisable Options Vested or Expected to Vest Balance as of 6/30/2021 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Balance as of 6/30/2021 Weighted Average Contractual Life (Years) Weighted Average Exercise Price Balance as of 6/30/2021 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price 2,235,286 6.47 $ 1.24 1,696,003 5.62 $ 1.31 2,166,723 6.39 $ 1.25 |
Restricted Stock Activity | The following is a summary of the restricted stock activity for the fiscal years ended June 30, 2021 and 2020: Shares Weighted Average Grant Date Fair Value 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 Granted 178,750 $ 0.72 Canceled (162,500 ) $ 1.57 Unvested at June 30, 2021 178,750 $ 0.72 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
INCOME TAXES [Abstract] | |
Income Tax Net Benefit (Expense) | The Company’s income tax net benefit (expense) for the periods presented comprises the following: Year Ended June 30, 2021 2020 Current: Federal $ - $ - State (18,409 ) (1,733 ) Total current expense (18,409 ) (1,733 ) Deferred: Federal 6,062,222 - State 288,608 - Total deferred benefit (expense) 6,350,830 - Income tax net benefit (expense) $ 6,332,421 $ (1,733 ) |
Noncurrent Deferred Tax Assets, Net | Significant components of the Company’s noncurrent deferred tax assets, net as of the dates presented are as follows: June 30, 2021 2020 Deferred tax assets: Reversals and accruals $ 454,846 $ 476,666 Federal net operating loss (“NOL”) carryforwards 3,989,278 4,980,513 State NOL carryforwards 585,563 663,918 Hong Kong NOL carryforwards 995,566 995,566 Federal benefit on state taxes under uncertain tax positions 2,073 1,668 Stock-based compensation 149,047 177,508 Section 263A adjustment 122,562 215,416 Research tax credit - 252 Contributions carryforward - 7,184 Inventory valuation reserve 1,605,871 1,594,795 Operating lease liabilities 942,471 185,422 Loss on impairment of long-lived assets - 32,749 Valuation allowance (1,452,296 ) (8,988,696 ) Noncurrent deferred tax assets, net 7,394,981 342,961 Deferred tax liabilities: Prepaid expenses (44,890 ) (39,943 ) Depreciation (105,369 ) (172,010 ) Operating lease right-of-use assets (893,892 ) (131,008 ) Noncurrent deferred tax liabilities (1,044,151 ) (342,961 ) Total noncurrent $ 6,350,830 $ - |
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 benefit (expense) for the periods presented: Year Ended June 30, 2021 2020 Anticipated income tax (expense) benefit at statutory rate $ (1,360,452 ) $ 1,293,673 State income tax (expense) benefit, net of federal tax effect (84,288 ) 64,034 Income tax effect of uncertain tax positions (1,468 ) 17,508 Return to provision adjustments (45 ) 1 Stock-based compensation 38,197 (31,195 ) PPP Loan forgiveness 202,729 - Other changes in deferred income tax assets, net 1,348 (114,288 ) Decrease (Increase) in valuation allowance 7,536,400 (1,231,466 ) Income tax net benefit (expense) $ 6,332,421 $ (1,733 ) |
MAJOR CUSTOMERS AND CONCENTRA_2
MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK (Tables) | 12 Months Ended |
Jun. 30, 2021 | |
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, 2021 2020 Customer A 30 % 26 % Customer B 22 % 14 % Customer C 14 % 13 % 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, 2021 2020 Customer A 13 % 12 % Customer B 12 % 13 % |
BASIS OF PRESENTATION AND SIG_4
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Restricted Cash (Details) - USD ($) | 12 Months Ended | |||
Jun. 30, 2021 | Jul. 12, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Cash, Cash Equivalents and Restricted Cash [Abstract] | ||||
Cash and cash equivalents | $ 21,302,317 | $ 13,993,032 | ||
Restricted cash | 144,634 | 624,202 | ||
Total cash, cash equivalents, and restricted cash | 21,446,951 | $ 14,617,234 | $ 13,006,545 | |
White Oak Credit Facility [Member] | ||||
Restricted Cash [Abstract] | ||||
Borrowing capacity | $ 5,000,000 | |||
White Oak Credit Facility [Member] | Maximum [Member] | ||||
Restricted Cash [Abstract] | ||||
Restriction period on access and usage of certain cash deposit balances | 2 days | |||
JPMorgan Chase Credit Facility [Member] | Subsequent Event [Member] | ||||
Restricted Cash [Abstract] | ||||
Borrowing capacity | $ 5,000,000 | |||
Cash deposit | $ 5,050,000 |
BASIS OF PRESENTATION AND SIG_5
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Concentration of Credit Risk (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
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 | $ 10,320 | $ 2,010 |
Interest-bearing Deposits [Member] | ||
Concentration of Credit Risk [Abstract] | ||
Amounts on deposit in excess of FDIC insurable limits | $ 10,640 | $ 11,640 |
BASIS OF PRESENTATION AND SIG_6
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Accounts Receivable Reserves (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Allowance for Sales Returns [Member] | ||
Accounts Receivable Reserves [Roll Forward] | ||
Balance, beginning of year | $ 704,000 | $ 746,000 |
Additions charged to operations | 5,631,415 | 4,710,943 |
Sales returns | (5,660,415) | (4,752,943) |
Balance, end of year | 675,000 | 704,000 |
Allowance for Uncollectible Accounts [Member] | ||
Accounts Receivable Reserves [Roll Forward] | ||
Balance, beginning of year | 79,000 | 249,000 |
Additions charged to operations | 2,030 | 8,788 |
Write-offs, net of recoveries | (10,030) | (178,788) |
Balance, end of year | $ 71,000 | $ 79,000 |
BASIS OF PRESENTATION AND SIG_7
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Property and Equipment (Details) | 12 Months Ended |
Jun. 30, 2021 | |
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 lease term |
BASIS OF PRESENTATION AND SIG_8
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Intangible Assets (Details) | 12 Months Ended |
Jun. 30, 2021 | |
Patent [Member] | |
Intangible Assets [Abstract] | |
Useful life | 15 years |
BASIS OF PRESENTATION AND SIG_9
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Revenue Recognition (Details) | 12 Months Ended |
Jun. 30, 2021 | |
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] | |
Customer payment terms on consignment shipments | 60 days |
charlesandcolvard.com [Member] | |
Revenue Recognition [Abstract] | |
Return period for credit | 30 days |
moissaniteoutlet.com [Member] | |
Revenue Recognition [Abstract] | |
Return period for credit | 60 days |
BASIS OF PRESENTATION AND SI_10
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Returns Asset and Refund Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Jun. 30, 2020 |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ||
Refund liabilities | $ 675 | $ 704 |
Asset returns | $ 252 | $ 289 |
BASIS OF PRESENTATION AND SI_11
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Advertising Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Advertising Costs [Abstract] | ||
Cooperative advertising expenses | $ 380 | $ 491 |
Advertising expenses | $ 4,250 | $ 3,960 |
BASIS OF PRESENTATION AND SI_12
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Net Income (Loss) per Common Share (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Numerator [Abstract] | ||
Net income (loss) | $ 12,810,766 | $ (6,162,083) |
Denominator [Abstract] | ||
Weighted average common shares outstanding, Basic (in shares) | 29,144,820 | 28,644,133 |
Effect of dilutive securities (in shares) | 1,087,747 | 0 |
Weighted average common shares outstanding, Diluted (in shares) | 30,232,567 | 28,644,133 |
Net income (loss) per common share [Abstract] | ||
Basic (in dollars per share) | $ 0.44 | $ (0.22) |
Diluted (in dollars per share) | $ 0.42 | $ (0.22) |
Stock Options [Member] | ||
Net Income (Loss) per Common Share [Abstract] | ||
Shares excluded from the computation of diluted net income (loss) per common share (in shares) | 1,240,000 | 2,810,000 |
Restricted Stock [Member] | ||
Net Income (Loss) per Common Share [Abstract] | ||
Shares excluded from the computation of diluted net income (loss) per common share (in shares) | 0 | 162,500 |
BASIS OF PRESENTATION AND SI_13
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Recently Issued Accounting Pronouncements (Details) | 12 Months Ended |
Jun. 30, 2021USD ($) | |
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, 2021USD ($)Segment | Jun. 30, 2020USD ($) | |
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 | $ 39,235,839 | $ 29,189,020 |
Product line cost of goods sold | 20,809,690 | 21,200,207 |
Operating income (loss) | 5,507,992 | (6,315,728) |
Depreciation and amortization | 567,122 | 490,235 |
Capital expenditures | 437,069 | 458,854 |
Product Line [Member] | ||
Summary Information by Reportable Segment [Abstract] | ||
Product line cost of goods sold | 18,129,767 | 13,531,976 |
Product line gross profit | 21,106,072 | 15,657,044 |
Finished Jewelry [Member] | ||
Summary Information by Reportable Segment [Abstract] | ||
Net sales | 24,401,546 | 16,777,628 |
Product line cost of goods sold | 11,272,012 | 7,469,790 |
Product line gross profit | 13,129,534 | 9,307,838 |
Loose Jewels [Member] | ||
Summary Information by Reportable Segment [Abstract] | ||
Net sales | 14,834,293 | 12,411,392 |
Product line cost of goods sold | 6,857,755 | 6,062,186 |
Product line gross profit | 7,976,538 | 6,349,206 |
Operating and Reportable Segments [Member] | Online Channels [Member] | ||
Summary Information by Reportable Segment [Abstract] | ||
Net sales | 23,209,638 | 16,624,540 |
Product line cost of goods sold | 9,452,739 | 6,958,688 |
Product line gross profit | 13,756,899 | 9,665,852 |
Operating income (loss) | 3,739,553 | (249,016) |
Depreciation and amortization | 248,995 | 177,703 |
Capital expenditures | 253,935 | 305,570 |
Operating and Reportable Segments [Member] | Online Channels [Member] | Finished Jewelry [Member] | ||
Summary Information by Reportable Segment [Abstract] | ||
Net sales | 19,905,199 | 13,680,440 |
Product line cost of goods sold | 8,235,797 | 5,760,413 |
Product line gross profit | 11,669,402 | 7,920,027 |
Operating and Reportable Segments [Member] | Online Channels [Member] | Loose Jewels [Member] | ||
Summary Information by Reportable Segment [Abstract] | ||
Net sales | 3,304,439 | 2,944,100 |
Product line cost of goods sold | 1,216,942 | 1,198,275 |
Product line gross profit | 2,087,497 | 1,745,825 |
Operating and Reportable Segments [Member] | Traditional [Member] | ||
Summary Information by Reportable Segment [Abstract] | ||
Net sales | 16,026,201 | 12,564,480 |
Product line cost of goods sold | 8,677,028 | 6,573,288 |
Product line gross profit | 7,349,173 | 5,991,192 |
Operating income (loss) | 1,768,439 | (6,066,712) |
Depreciation and amortization | 318,127 | 312,532 |
Capital expenditures | 183,134 | 153,284 |
Operating and Reportable Segments [Member] | Traditional [Member] | Finished Jewelry [Member] | ||
Summary Information by Reportable Segment [Abstract] | ||
Net sales | 4,496,347 | 3,097,188 |
Product line cost of goods sold | 3,036,215 | 1,709,377 |
Product line gross profit | 1,460,132 | 1,387,811 |
Operating and Reportable Segments [Member] | Traditional [Member] | Loose Jewels [Member] | ||
Summary Information by Reportable Segment [Abstract] | ||
Net sales | 11,529,854 | 9,467,292 |
Product line cost of goods sold | 5,640,813 | 4,863,911 |
Product line gross profit | $ 5,889,041 | $ 4,603,381 |
SEGMENT INFORMATION AND GEOGR_4
SEGMENT INFORMATION AND GEOGRAPHIC DATA, Reconciliation of Cost of Goods Sold (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Reconciliation of Cost of Goods Sold [Abstract] | ||
Cost of goods sold | $ 20,809,690 | $ 21,200,207 |
Inventory write-downs | 150,000 | 5,863,991 |
Product Line [Member] | ||
Reconciliation of Cost of Goods Sold [Abstract] | ||
Cost of goods sold | 18,129,767 | 13,531,976 |
Segment Reconciling Item [Member] | ||
Reconciliation of Cost of Goods Sold [Abstract] | ||
Non-capitalized manufacturing and production control expenses | 1,591,114 | 1,443,698 |
Freight out | 1,013,275 | 510,612 |
Inventory write-downs | 150,000 | 5,863,991 |
Other inventory adjustments | $ (74,466) | $ (150,070) |
SEGMENT INFORMATION AND GEOGR_5
SEGMENT INFORMATION AND GEOGRAPHIC DATA, Net Sales by Geographic Area (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Net Sales by Geographic Area [Abstract] | ||
Net sales | $ 39,235,839 | $ 29,189,020 |
Reportable Geographical Component [Member] | United States [Member] | ||
Net Sales by Geographic Area [Abstract] | ||
Net sales | 37,225,519 | 26,814,024 |
Reportable Geographical Component [Member] | International [Member] | ||
Net Sales by Geographic Area [Abstract] | ||
Net sales | $ 2,010,320 | $ 2,374,996 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
FAIR VALUE MEASUREMENTS [Abstract] | ||
Asset impairment | $ 0 | $ 0 |
NOTE RECEIVABLE (Details)
NOTE RECEIVABLE (Details) - Convertible Promissory Note [Member] - USD ($) | Jun. 30, 2021 | Mar. 05, 2021 |
Note Receivable [Abstract] | ||
Note receivable | $ 250,000 | |
Interest rate | 0.14% | |
Interest rate during event of default | 5.00% | |
Percentage of per unit price of units purchased by investors | 80.00% | |
Value used to compute equity securities received upon conversion | $ 33,500,000 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Mar. 31, 2020 | |
Inventories [Abstract] | |||
Total supplies inventory | $ 74,317 | $ 88,034 | |
Total inventory | 29,172,720 | 30,633,959 | |
Short-term portion | 11,450,141 | 7,443,257 | |
Long-term portion | 17,722,579 | 23,190,702 | |
Work-in-process inventories issued to active production jobs | 2,230,000 | 1,340,000 | |
Inventory write-off | 150,000 | 5,863,991 | |
Finished Jewelry [Member] | |||
Inventories [Abstract] | |||
Raw materials | 1,476,514 | 821,536 | |
Work-in-process | 779,593 | 602,390 | |
Finished goods | 8,025,816 | 6,019,985 | |
Finished goods on consignment | 2,050,372 | 2,297,907 | |
Total | 12,332,295 | 9,741,818 | |
Loose Jewels [Member] | |||
Inventories [Abstract] | |||
Raw materials | 1,775,505 | 3,526,399 | |
Work-in-process | 9,893,443 | 10,453,586 | |
Finished goods | 4,942,192 | 6,619,487 | |
Finished goods on consignment | 154,968 | 204,635 | |
Total | $ 16,766,108 | 20,804,107 | |
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, 2021 | Jun. 30, 2020 | |
Property and Equipment [Abstract] | ||
Property and equipment | $ 6,075,332 | $ 5,638,344 |
Less accumulated depreciation | (5,199,435) | (4,639,283) |
Property and equipment, net | 875,897 | 999,061 |
Depreciation expense | 560,000 | 486,000 |
Computer Software [Member] | ||
Property and Equipment [Abstract] | ||
Property and equipment | 2,015,548 | 1,827,581 |
Machinery and Equipment [Member] | ||
Property and Equipment [Abstract] | ||
Property and equipment | 1,250,345 | 1,145,525 |
Computer Hardware [Member] | ||
Property and Equipment [Abstract] | ||
Property and equipment | 1,274,561 | 1,158,559 |
Leasehold Improvements [Member] | ||
Property and Equipment [Abstract] | ||
Property and equipment | 1,162,995 | 1,158,807 |
Furniture and Fixtures [Member] | ||
Property and Equipment [Abstract] | ||
Property and equipment | $ 371,883 | $ 347,872 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Intangible assets [Abstract] | ||
Intangible assets | $ 1,238,064 | $ 1,191,668 |
Less accumulated amortization | (1,028,406) | (1,021,517) |
Intangible assets, net | 209,658 | 170,151 |
Amortization Expense [Abstract] | ||
Amortization expense | 7,000 | 4,000 |
2022 | 17,000 | |
2023 | 17,000 | |
2024 | 16,000 | |
2025 | 16,000 | |
2026 | 16,000 | |
Patents [Member] | ||
Intangible assets [Abstract] | ||
Intangible assets | $ 1,017,007 | 1,024,267 |
Weighted average amortization period | 13 years 7 months 6 days | |
Trademarks [Member] | ||
Intangible assets [Abstract] | ||
Intangible assets | $ 214,339 | 160,683 |
Weighted average amortization period | 12 years 10 months 24 days | |
License Rights [Member] | ||
Intangible assets [Abstract] | ||
Intangible assets | $ 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, 2021 | Jun. 30, 2020 |
ACCRUED EXPENSES AND OTHER LIABILITIES [Abstract] | ||
Accrued compensation and related benefits | $ 866,705 | $ 395,006 |
Deferred revenue | 774,891 | 794,740 |
Accrued sales tax | 555,547 | 295,651 |
Accrued cooperative advertising | 68,185 | 89,517 |
Accrued income taxes | 16,478 | 0 |
Accrued severance | 0 | 338,355 |
Other | 1 | 9,063 |
Accrued expenses and other liabilities | $ 2,281,807 | $ 1,922,332 |
COMMITMENTS AND CONTINGENCIES,
COMMITMENTS AND CONTINGENCIES, Lease Arrangements (Details) | Jan. 29, 2021USD ($) | Jun. 30, 2021USD ($)ft² | Jun. 30, 2020USD ($) |
COMMITMENTS AND CONTINGENCIES [Abstract] | |||
Area leased under operating lease | ft² | 36,350 | ||
Period of extension on option | 5 years | ||
Minimum notice period for extension of lease term | 270 days | ||
Rent abatement | $ 214,000 | ||
Allowance for leasehold improvements | $ 545,000 | ||
Balance Sheet Classifications of Leases [Abstract] | |||
Noncurrent operating lease ROU assets | $ 3,952,146 | $ 584,143 | |
Operating Lease Liabilities [Abstract] | |||
Current operating lease liabilities | 566,083 | 622,493 | |
Noncurrent operating lease liabilities | 3,600,842 | 203,003 | |
Total operating lease liabilities | 4,166,925 | ||
Operating lease cost | $ 610,000 | 469,000 | |
Assumed discount rate | 2.81% | ||
Remaining operating lease term | 5 years 3 months 29 days | ||
Future Lease Payments Under Operating Leases [Abstract] | |||
2022 | $ 575,591 | ||
2023 | 869,742 | ||
2024 | 893,660 | ||
2025 | 918,236 | ||
2026 | 943,487 | ||
2027 | 317,327 | ||
Total lease payments | 4,518,043 | ||
Less: imputed interest | 351,118 | ||
Total operating lease liabilities | 4,166,925 | ||
Less: current lease liability | 566,083 | 622,493 | |
Total long-term lease liability | 3,600,842 | 203,003 | |
Cash paid for operating leases | 668,000 | 668,000 | |
ROU assets obtained in exchange for new operating lease liabilities | $ 3,908,249 | $ 0 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES, Purchase Commitments (Details) - SiC Materials [Member] $ in Thousands | 12 Months Ended | |
Jun. 30, 2021USD ($)Option | Jun. 30, 2020USD ($) | |
Purchase Commitments [Abstract] | ||
Percentage of materials committed to be purchased | 100.00% | |
Number of options to extend term of exclusive supply agreement | Option | 1 | |
Extension period of exclusive supply agreement | 2 years | |
Total purchase commitment | $ 52,950 | |
Remaining purchase commitment | 32,850 | |
Purchases | 3,780 | $ 7,470 |
Minimum [Member] | ||
Purchase Commitments [Abstract] | ||
Future minimum annual purchase commitments | 4,000 | |
Maximum [Member] | ||
Purchase Commitments [Abstract] | ||
Future minimum annual purchase commitments | $ 10,000 |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES, COVID-19 (Details) - PPP Loan [Member] - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 18, 2020 | |
COVID-19 [Abstract] | ||
Principal amount | $ 965,000 | |
Forgiveness of loan principal amount | $ 965,000 |
DEBT, Paycheck Protection Progr
DEBT, Paycheck Protection Program Loan (Details) - PPP Loan [Member] - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 18, 2020 | |
Paycheck Protection Program Loan [Abstract] | ||
Principal amount | $ 965,000 | |
Forgiveness of loan principal amount | $ 965,000 | |
Interest rate | 1.00% | |
Gain on Extinguishment of Debt [Member] | ||
Paycheck Protection Program Loan [Abstract] | ||
Forgiveness of inception-to-date interest expense | $ 9,000 |
DEBT, JPMorgan Chase Credit Fac
DEBT, JPMorgan Chase Credit Facility (Details) - JPMorgan Chase Credit Facility [Member] - Subsequent Event [Member] | Jul. 12, 2021USD ($) |
Line of Credit [Abstract] | |
Borrowing capacity | $ 5,000,000 |
Cash deposit | $ 5,050,000 |
Interest rate premium in excess of rate otherwise applicable charged during an event of default | 3.00% |
Non-refundable origination fee | $ 10,000 |
Maximum [Member] | |
Line of Credit [Abstract] | |
Excess availability | $ 5,000,000 |
LIBOR [Member] | |
Line of Credit [Abstract] | |
Basis spread on variable rate | 1.25% |
DEBT, White Oak Credit Facility
DEBT, White Oak Credit Facility (Details) | Aug. 14, 2020USD ($) | Jul. 15, 2019USD ($) | Jul. 13, 2018USD ($) | Jun. 30, 2021USD ($)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 | |||
Maximum 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 | $ 41,666 | $ 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] | 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% | |||
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% | |||
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% |
SHAREHOLDERS' EQUITY AND STOC_3
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Common and Preferred Stock (Details) | 12 Months Ended | |
Jun. 30, 2021shares$ / shares | Jun. 30, 2020$ / sharesshares | |
Common Stock [Abstract] | ||
Common stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock, par value (in dollars per share) | $ / shares | $ 0 | $ 0 |
Common stock, shares outstanding (in shares) | 29,913,095 | 28,949,410 |
Common stock, votes per share | 1 | |
Preferred Stock [Abstract] | ||
Preferred stock, shares authorized (in shares) | 10,000,000 | |
Preferred stock, par value (in dollars per share) | $ / shares | $ 0 | |
Preferred stock, shares issued (in shares) | 0 |
SHAREHOLDERS' EQUITY AND STOC_4
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Dividends (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Dividends [Abstract] | ||
Cash dividends | $ 0 | $ 0 |
SHAREHOLDERS' EQUITY AND STOC_5
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Shelf Registration Statement (Details) - USD ($) | Jul. 03, 2019 | Jun. 11, 2019 | Jul. 03, 2019 | Jun. 30, 2021 | Jun. 30, 2020 |
Shelf Registration Statement [Abstract] | |||||
Shelf registration statement | $ 25,000,000 | ||||
Issuance of common stock, net of offering costs (in shares) | 6,250,000 | 6,880,500 | |||
Share price (in dollars per share) | $ 1.60 | $ 1.60 | $ 1.60 | ||
Net proceeds from issuance of common stock | $ 9,060,000 | $ 0 | $ 932,480 | ||
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, net of offering costs (in shares) | 630,500 | ||||
Share price (in dollars per share) | $ 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 (in shares) | 937,500 |
SHAREHOLDERS' EQUITY AND STOC_6
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Equity Compensation Plans (Details) - shares | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Stock Options [Member] | |||
Equity Compensation Plans [Abstract] | |||
Options outstanding (in shares) | 2,235,286 | 2,809,095 | 2,523,638 |
2018 Equity Incentive Plan [Member] | |||
Equity Compensation Plans [Abstract] | |||
Number of shares authorized (in shares) | 3,300,000 | ||
Options outstanding (in shares) | 1,151,935 | 790,407 | |
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 [Member] | Employees [Member] | Maximum [Member] | |||
Equity Compensation Plans [Abstract] | |||
Vesting period | 4 years | ||
2018 Equity Incentive Plan [Member] | Restricted Stock [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 (in shares) | 1,083,351 | 2,018,688 | |
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 [Member] | Employees [Member] | Maximum [Member] | |||
Equity Compensation Plans [Abstract] | |||
Vesting period | 4 years | ||
2008 Stock Incentive Plan [Member] | Restricted Stock [Member] | Independent Contractors [Member] | Maximum [Member] | |||
Equity Compensation Plans [Abstract] | |||
Vesting period | 4 years |
SHAREHOLDERS' EQUITY AND STOC_7
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Stock-Based Compensation (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Stock-Based Compensation [Abstract] | ||
Employee stock options | $ 234,947 | $ 309,999 |
Restricted stock awards | 117,636 | 149,539 |
Total | 352,583 | 459,538 |
Stock-based compensation capitalized as a cost of inventory | $ 0 | $ 0 |
SHAREHOLDERS' EQUITY AND STOC_8
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Stock Option Activity (Details) - Stock Options [Member] - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Stock Option Activity [Roll Forward] | ||
Outstanding, beginning balance (in shares) | 2,809,095 | 2,523,638 |
Granted (in shares) | 438,533 | 605,387 |
Exercised (in shares) | (947,435) | 0 |
Forfeited (in shares) | (7,000) | (125,005) |
Expired (in shares) | (57,907) | (194,925) |
Outstanding, ending balance (in shares) | 2,235,286 | 2,809,095 |
Weighted Average Exercise Price [Roll Forward] | ||
Outstanding, beginning balance (in dollars per share) | $ 1.19 | $ 1.39 |
Granted (in dollars per share) | 1.05 | 0.95 |
Exercised (in dollars per share) | 0.95 | |
Forfeited (in dollars per share) | 1.23 | 1.02 |
Expired (in dollars per share) | 1.95 | 1.18 |
Outstanding, ending balance (in dollars per share) | 1.24 | 1.19 |
Fair Value of Stock Options [Abstract] | ||
Fair value of stock options (in dollars per share) | $ 0.54 | $ 0.50 |
Fair value of stock options vested | $ 650 | $ 282 |
SHAREHOLDERS' EQUITY AND STOC_9
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Weighted Average Assumptions for Stock Options Granted (Details) - Stock Options [Member] | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Weighted Average Assumptions for Stock Options Granted [Abstract] | ||
Dividend yield | 0.00% | 0.00% |
Expected volatility | 61.70% | 63.20% |
Risk-free interest rate | 0.36% | 0.82% |
Expected lives | 4 years 10 months 24 days | 5 years 2 months 12 days |
SHAREHOLDERS' EQUITY AND STO_10
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Stock Options Outstanding (Details) - Stock Options [Member] - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2019 | |
Stock Options Outstanding and Exercisable [Abstract] | |||
Options outstanding (in shares) | 2,235,286 | 2,809,095 | 2,523,638 |
Options outstanding, weighted average remaining contractual life | 6 years 5 months 19 days | ||
Options outstanding, weighted average exercise price (in dollars per share) | $ 1.24 | $ 1.19 | $ 1.39 |
Options exercisable (in shares) | 1,696,003 | ||
Options exercisable, weighted average remaining contractual life | 5 years 7 months 13 days | ||
Options exercisable, weighted average exercise price (in dollars per share) | $ 1.31 | ||
Options Vested or Expected to Vest [Abstract] | |||
Options vested or expected to vest (in shares) | 2,166,723 | ||
Options vested or expected to vest, weighted average remaining contractual life | 6 years 4 months 20 days | ||
Options vested or expected to vest, weighted average exercise price (in dollars per share) | $ 1.25 | ||
Unrecognized Stock-Based Compensation Expense [Abstract] | |||
Unrecognized stock-based compensation expense | $ 192 | ||
Unrecognized stock-based compensation expense, period for recognition | 19 months | ||
Options outstanding, aggregate intrinsic value | $ 3,770 | ||
Options vested or expected to vest, aggregate intrinsic value | 3,770 | ||
Options exercised, aggregate intrinsic value | 1,240 | ||
Tax benefit associated with stock options exercised | $ 147 | ||
Stock option exercises (in shares) | 947,435 | 0 |
SHAREHOLDERS' EQUITY AND STO_11
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Restricted Stock (Details) - Restricted Stock [Member] - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Restricted Stock Activity [Roll Forward] | ||
Unvested, beginning balance (in shares) | 162,500 | 129,500 |
Granted (in shares) | 178,750 | 325,000 |
Vested (in shares) | (258,341) | |
Canceled (in shares) | (162,500) | (33,659) |
Unvested, ending balance (in shares) | 178,750 | 162,500 |
Weighted Average Grant Date Fair Value [Roll Forward] | ||
Unvested, beginning balance (in dollars per share) | $ 1.57 | $ 1.08 |
Granted (in dollars per share) | 0.72 | 1.57 |
Vested (in dollars per share) | 1.07 | |
Canceled (in dollars per share) | 1.57 | 1.07 |
Unvested, ending balance (in dollars per share) | $ 0.72 | $ 1.57 |
Unrecognized Stock-Based Compensation Expense [Abstract] | ||
Unrecognized stock-based compensation expense | $ 11 | |
Unrecognized stock-based compensation expense, period for recognition | 1 month |
INCOME TAXES, Income Tax Net Be
INCOME TAXES, Income Tax Net Benefit (Expense) (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Current [Abstract] | ||
Federal | $ 0 | $ 0 |
State | (18,409) | (1,733) |
Total current expense | (18,409) | (1,733) |
Deferred [Abstract] | ||
Federal | 6,062,222 | 0 |
State | 288,608 | 0 |
Total deferred benefit (expense) | 6,350,830 | 0 |
Income tax net benefit (expense) | $ 6,332,421 | $ (1,733) |
INCOME TAXES, Noncurrent Deferr
INCOME TAXES, Noncurrent Deferred Tax Assets, Net (Details) - USD ($) | Jun. 30, 2021 | Jun. 30, 2020 |
Deferred Tax Assets [Abstract] | ||
Reversals and accruals | $ 454,846 | $ 476,666 |
Federal net operating loss ("NOL") carryforwards | 3,989,278 | 4,980,513 |
State NOL carryforwards | 585,563 | 663,918 |
Hong Kong NOL carryforwards | 995,566 | 995,566 |
Federal benefit on state taxes under uncertain tax positions | 2,073 | 1,668 |
Stock-based compensation | 149,047 | 177,508 |
Section 263A adjustment | 122,562 | 215,416 |
Research tax credit | 0 | 252 |
Contributions carryforward | 0 | 7,184 |
Inventory valuation reserve | 1,605,871 | 1,594,795 |
Operating lease liabilities | 942,471 | 185,422 |
Loss on impairment of long-lived assets | 0 | 32,749 |
Valuation allowance | (1,452,296) | (8,988,696) |
Noncurrent deferred tax assets, net | 7,394,981 | 342,961 |
Deferred Tax Liabilities [Abstract] | ||
Prepaid expenses | (44,890) | (39,943) |
Depreciation | (105,369) | (172,010) |
Operating lease right-of-use assets | (893,892) | (131,008) |
Noncurrent deferred tax liabilities | (1,044,151) | (342,961) |
Total noncurrent deferred tax assets, net | $ 6,350,830 | $ 0 |
INCOME TAXES, Effective Income
INCOME TAXES, Effective Income Tax Rate Reconciliation (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Effective Income Tax Tate Reconciliation [Abstract] | ||
Anticipated income tax (expense) benefit at statutory rate | $ (1,360,452) | $ 1,293,673 |
State income tax (expense) benefit, net of federal tax effect | (84,288) | 64,034 |
Income tax effect of uncertain tax positions | (1,468) | 17,508 |
Return to provision adjustments | (45) | 1 |
Stock-based compensation | 38,197 | (31,195) |
PPP Loan forgiveness | 202,729 | 0 |
Other changes in deferred income tax assets, net | 1,348 | (114,288) |
Decrease (Increase) in valuation allowance | 7,536,400 | (1,231,466) |
Income tax net benefit (expense) | $ 6,332,421 | $ (1,733) |
Statutory tax rate | 22.24% | 22.11% |
Federal income tax rate | 21.00% | 21.00% |
State income tax rate | 1.24% | 1.11% |
INCOME TAXES, Tax Credits and N
INCOME TAXES, Tax Credits and Net Operating Loss Carryforwards (Details) - USD ($) | Jun. 30, 2021 | Jun. 30, 2020 |
Income Taxes [Abstract] | ||
Valuation allowance | $ 1,452,296 | $ 8,988,696 |
AMT credit refund receivable, current | 270,000 | |
Federal [Member] | ||
Income Taxes [Abstract] | ||
Net operating loss carryforwards | 19,000,000 | 23,720,000 |
North Carolina [Member] | ||
Income Taxes [Abstract] | ||
Net operating loss carryforwards | 19,870,000 | 20,120,000 |
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 ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Uncertain Tax Positions [Abstract] | ||
Uncertain tax positions that will favorably impact effective tax rate | $ 10 | $ 8 |
Interest and penalties associated with uncertain tax positions | 2 | 2 |
Accrued interest and penalties associated with uncertain tax positions | $ 7 | $ 5 |
MAJOR CUSTOMERS AND CONCENTRA_3
MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK (Details) - Customer Concentration Risk [Member] | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Accounts Receivable [Member] | Customer A [Member] | ||
Major Customers and Concentration of Credit Risk [Abstract] | ||
Concentration risk, percentage | 30.00% | 26.00% |
Accounts Receivable [Member] | Customer B [Member] | ||
Major Customers and Concentration of Credit Risk [Abstract] | ||
Concentration risk, percentage | 22.00% | 14.00% |
Accounts Receivable [Member] | Customer C [Member] | ||
Major Customers and Concentration of Credit Risk [Abstract] | ||
Concentration risk, percentage | 14.00% | 13.00% |
Net Sales [Member] | Customer A [Member] | ||
Major Customers and Concentration of Credit Risk [Abstract] | ||
Concentration risk, percentage | 13.00% | 12.00% |
Net Sales [Member] | Customer B [Member] | ||
Major Customers and Concentration of Credit Risk [Abstract] | ||
Concentration risk, percentage | 12.00% | 13.00% |
EMPLOYEE BENEFIT PLAN (Details)
EMPLOYEE BENEFIT PLAN (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
EMPLOYEE BENEFIT PLAN [Abstract] | ||
Company contributions to 401(k) Plan | $ 72 | $ 82 |
SUBSEQUENT EVENT (Details)
SUBSEQUENT EVENT (Details) $ in Thousands | Jul. 12, 2021USD ($) |
Subsequent Event [Member] | JPMorgan Chase Credit Facility [Member] | |
Subsequent Event [Abstract] | |
Borrowing capacity | $ 5,000 |