Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Jun. 30, 2022 | Aug. 26, 2022 | Dec. 31, 2021 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Annual Report | true | ||
Document Period End Date | Jun. 30, 2022 | ||
Current Fiscal Year End Date | --06-30 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Document Transition Report | false | ||
Entity File Number | 000-23329 | ||
Entity Registrant Name | Charles & Colvard, Ltd. | ||
Entity Central Index Key | 0001015155 | ||
Entity Incorporation, State or Country Code | NC | ||
Entity Tax Identification Number | 56-1928817 | ||
Entity Address, Address Line One | 170 Southport Drive | ||
Entity Address, City or Town | Morrisville | ||
Entity Address, State or Province | NC | ||
Entity Address, Postal Zip Code | 27560 | ||
City Area Code | 919 | ||
Local Phone Number | 468-0399 | ||
Title of 12(b) Security | Common Stock, no par value per share | ||
Trading Symbol | CTHR | ||
Security Exchange Name | NASDAQ | ||
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 | $ 74,131,032 | ||
Entity Common Stock, Shares Outstanding | 30,517,520 | ||
Auditor Name | BDO USA, LLP | ||
Auditor Location | Raleigh, North Carolina | ||
Auditor Firm ID | 243 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2022 | Jun. 30, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 15,668,361 | $ 21,302,317 |
Restricted cash | 5,510,979 | 144,634 |
Accounts receivable, net | 2,220,816 | 1,662,074 |
Inventory, net | 11,024,276 | 11,450,141 |
Note receivable | 250,000 | 250,000 |
Prepaid expenses and other assets | 1,190,012 | 952,065 |
Total current assets | 35,864,444 | 35,761,231 |
Long-term assets: | ||
Inventory, net | 22,488,524 | 17,722,579 |
Property and equipment, net | 1,901,176 | 875,897 |
Intangible assets, net | 265,730 | 209,658 |
Operating lease right-of-use assets | 2,787,419 | 3,952,146 |
Deferred income taxes, net | 5,851,904 | 6,350,830 |
Other assets | 49,658 | 49,658 |
Total long-term assets | 33,344,411 | 29,160,768 |
TOTAL ASSETS | 69,208,855 | 64,921,999 |
Current liabilities: | ||
Accounts payable | 4,401,229 | 2,774,373 |
Operating lease liabilities, current portion | 856,571 | 566,083 |
Accrued expenses and other liabilities | 1,546,483 | 2,281,807 |
Total current liabilities | 6,804,283 | 5,622,263 |
Long-term liabilities: | ||
Noncurrent operating lease liabilities | 2,846,805 | 3,600,842 |
Accrued income taxes | 0 | 9,878 |
Total long-term liabilities | 2,846,805 | 3,610,720 |
Total liabilities | 9,651,088 | 9,232,983 |
Commitments and contingencies (Note 10) | ||
Shareholders' equity: | ||
Common stock, no par value; 50,000,000 shares authorized; 30,778,046 shares issued and 30,747,759 shares outstanding at June 30, 2022 and 29,913,095 shares issued and outstanding at June 30, 2021 | 57,242,211 | 56,057,109 |
Additional paid-in capital | 25,956,491 | 25,608,593 |
Treasury stock, at cost, 30,287 shares and 0 shares at June 30, 2022 and 2021, respectively | (38,164) | 0 |
Accumulated deficit | (23,602,771) | (25,976,686) |
Total shareholders' equity | 59,557,767 | 55,689,016 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 69,208,855 | $ 64,921,999 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2022 | Jun. 30, 2021 |
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) | 30,778,046 | 29,913,095 |
Common stock, shares outstanding (in shares) | 30,747,759 | 29,913,095 |
Treasury stock (in shares) | 30,287 | 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract] | ||
Net sales | $ 43,089,024 | $ 39,235,839 |
Costs and expenses: | ||
Cost of goods sold | 22,845,702 | 20,809,690 |
Sales and marketing | 12,421,138 | 8,476,716 |
General and administrative | 4,948,980 | 4,441,441 |
Total costs and expenses | 40,215,820 | 33,727,847 |
Income from operations | 2,873,204 | 5,507,992 |
Other income (expense): | ||
Gain on extinguishment of debt | 0 | 974,328 |
Interest income | 19,277 | 5,581 |
Interest expense | 0 | (8,953) |
Loss on foreign currency exchange | (34) | (603) |
Total other income (expense), net | 19,243 | 970,353 |
Income before income taxes | 2,892,447 | 6,478,345 |
Income tax (expense) benefit | (518,532) | 6,332,421 |
Net income | $ 2,373,915 | $ 12,810,766 |
Net income per common share: | ||
Basic (in dollars per share) | $ 0.08 | $ 0.44 |
Diluted (in dollars per share) | $ 0.08 | $ 0.42 |
Weighted average number of shares used in computing net income per common share: | ||
Basic (in shares) | 30,363,076 | 29,144,820 |
Diluted (in shares) | 31,316,028 | 30,232,567 |
CONSOLIDATED STATEMENTS OF SHAR
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Treasury Stock [Member] | Accumulated Deficit [Member] | Total |
Balance at Jun. 30, 2020 | $ 54,342,864 | $ 25,880,165 | $ 0 | $ (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 | 0 | $ 352,583 |
Issuance of restricted stock | $ 0 | 0 | 0 | 0 | 0 |
Issuance of restricted stock (in shares) | 178,750 | ||||
Retirement of restricted stock | $ 0 | 0 | 0 | 0 | 0 |
Retirement of restricted stock (in shares) | (162,500) | ||||
Stock option exercises | $ 1,714,245 | (624,155) | 0 | 0 | $ 1,090,090 |
Stock option exercises (in shares) | 947,435 | ||||
Repurchases of common stock (in shares) | 0 | ||||
Net income | $ 0 | 0 | 0 | 12,810,766 | $ 12,810,766 |
Balance at Jun. 30, 2021 | 56,057,109 | 25,608,593 | 0 | (25,976,686) | $ 55,689,016 |
Balance (in shares) at Jun. 30, 2021 | 29,913,095 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation | 0 | 774,341 | 0 | 0 | $ 774,341 |
Issuance of restricted stock | $ 0 | 0 | 0 | 0 | 0 |
Issuance of restricted stock (in shares) | 242,725 | ||||
Stock option exercises | $ 1,185,102 | (426,443) | 0 | 0 | 758,659 |
Stock option exercises (in shares) | 622,226 | ||||
Repurchases of common stock | $ 0 | 0 | $ (38,164) | 0 | $ (38,164) |
Repurchases of common stock (in shares) | (30,287) | (30,287) | |||
Net income | 0 | 0 | $ 0 | 2,373,915 | $ 2,373,915 |
Balance at Jun. 30, 2022 | $ 57,242,211 | $ 25,956,491 | $ (38,164) | $ (23,602,771) | $ 59,557,767 |
Balance (in shares) at Jun. 30, 2022 | 30,747,759 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 2,373,915 | $ 12,810,766 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 479,308 | 567,122 |
Stock-based compensation | 774,341 | 352,583 |
Provision for uncollectible accounts | 14,000 | 2,030 |
Recovery of sales returns | (84,000) | (29,000) |
Inventory write-downs | 195,000 | 150,000 |
Recovery of accounts receivable discounts | (4,285) | (9,153) |
Gain on extinguishment of debt | 0 | (974,328) |
Deferred income taxes | 498,926 | (6,350,830) |
Changes in operating assets and liabilities: | ||
Accounts receivable | (484,457) | (955,233) |
Inventory | (4,535,080) | 1,311,239 |
Prepaid expenses and other assets, net | 926,780 | (3,140,405) |
Accounts payable | 1,626,856 | (973,862) |
Accrued income taxes | (9,878) | 1,931 |
Accrued expenses and other liabilities | (1,198,873) | 3,710,232 |
Net cash provided by operating activities | 572,553 | 6,473,092 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | (1,496,471) | (437,069) |
Payment to fund note receivable | 0 | (250,000) |
Payments for intangible assets | (64,188) | (46,396) |
Net cash used in investing activities | (1,560,659) | (733,465) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Stock option exercises | 758,659 | 1,090,090 |
Repurchases of common stock | (38,164) | 0 |
Net cash provided by financing activities | 720,495 | 1,090,090 |
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (267,611) | 6,829,717 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF YEAR | 21,446,951 | 14,617,234 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF YEAR | 21,179,340 | 21,446,951 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Additions to right-of-use assets obtained from new operating lease liabilities | 0 | 3,908,249 |
Forgiveness of PPP Loan principal | 0 | 965,000 |
Supplemental disclosure of cash flow information: | ||
Cash paid during the year for income taxes | $ 0 | $ 14,704 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 12 Months Ended |
Jun. 30, 2022 | |
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, drop-ship retail partners, and a third-party online marketplace through moissaniteoutlet.com, LLC, a wholly owned operating subsidiary of charlesandcolvard.com, LLC. |
BASIS OF PRESENTATION AND SIGNI
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Jun. 30, 2022 | |
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 and include the accounts of the Company and its wholly owned subsidiaries charlesandcolvard.com, LLC; including its wholly-owned subsidiary, moissaniteoulet.com, LLC, which was formed and incorporated as of February ; Charles & Colvard Direct, LLC; and Charles & Colvard (HK) Ltd., the Company’s Hong Kong subsidiary, which was entered into dormancy as of September following its re-activation in December Charles & Colvard (HK) Ltd. previously became dormant in the quarter of and has had no operating activity since Charles & Colvard Direct, LLC, had no operating activity during the fiscal years ended June or All intercompany accounts have been eliminated . Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. As future events and their effects, including the impact of the COVID- pandemic and the related responses, cannot be fully determined with precision, actual results of operations, cash flow, and financial position could differ significantly from estimates. The most significant estimates impacting the Company’s condensed consolidated financial statements relate to valuation and classification of inventories, accounts receivable reserves, deferred tax assets, stock-based compensation, and revenue recognition. Changes in estimates are reflected in the condensed consolidated financial statements in the period in which the change in estimate occurs Recently Issued Accounting Pronouncements – Effective July the Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) - Income Taxes: Simplifying the Accounting for Income Taxes (“ASU - ”) that provides guidance for the simplification of the accounting for income taxes that is intended to reduce the complexity while maintaining or improving the usefulness of tax disclosure information in an entity’s financial statements. The resulting impact of ASU - did not have a material impact on the Company’s consolidated financial statements In March and as updated in January 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 ASU - Reference Rate Reform (Topic 848) (“ASU - ”), which provides guidance to ease the burden in accounting for or recognizing the effects of referenced interest rate reform on financial reporting. ASU - is elective and may be applied as of March through December As described in more detail in Note “Debt”, borrowings under the Company’s line of credit during the fiscal year ended June would have been based on a rate equal to the LIBOR. As of June the Company had not borrowed against its line of credit, and therefore, has not elected to apply ASU - as of or for the fiscal year ended June Cash and Cash Equivalents – Restricted Cash Restricted Cash – In accordance with the terms of the Company’s cash collateralized credit facility from JPMorgan Chase Bank, N.A. (“JPMorgan Chase”), which the Company entered into on July and as amended on July the Company is required to keep in a cash deposit account held by JPMorgan Chase. Such amount was held as security for the Company’s credit facility from JPMorgan Chase. Accordingly, during the term of the JPMorgan Chase credit facility, the cash deposit held by JPMorgan Chase is classified as restricted cash for financial reporting purposes on the Company’s Consolidated Balance Sheets For additional information regarding the Company’s cash collateralized credit facility with JPMorgan Chase, see Note “Debt” and Note “Subsequent Event.” Pursuant to the terms and conditions of the Company’s broker-dealer agreement with Oppenheimer & Co., Inc. (“Oppenheimer”), with whom the Company has engaged to transact common stock share repurchases in connection with its stock repurchase program, the Company is required to maintain a funded liquid margin account held by Oppenheimer for the benefit of the Company. The purpose of this account is to fund the Company’s common stock purchases and any underlying transaction costs and fees. Depending upon the level and timing of stock repurchase activity, the funded margin account cash balance will fluctuate from time to time. At June cash in the amount of approximately ,000 was held by Oppenheimer. Such cash amount held by Oppenheimer was classified as restricted cash for financial reporting purposes on the Company’s Consolidated Balance Sheets. For additional information regarding the Company’s stock repurchase program, see Note “Shareholders’ Equity and Stock-Based Compensation.” In accordance with cash management process requirements related to the Company’s former asset-based revolving credit facility from White Oak Commercial Finance, LLC (“White Oak”), which was terminated by the Company on July in accordance with its terms, such credit facility contained access and usage restrictions on certain cash deposit balances for periods of up to two business days during which time the deposits were held by White Oak for the benefit of the Company. During the period these cash deposits were held by White Oak, such amounts were classified as restricted cash for financial reporting purposes on the Company’s Consolidated Balance Sheets. For additional information regarding termination of the Company’s asset-based revolving credit facility with White Oak, see Note “Debt.” 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, 2022 2021 Cash and cash equivalents $ 15,668,361 $ 21,302,317 Restricted cash 5,510,979 144,634 Total cash, cash equivalents, and restricted cash $ 21,179,340 $ 21,446,951 Concentration of Credit Risk – Trade receivables potentially subject the Company to credit risk. Payment terms on trade receivables for the Company’s Traditional segment customers are generally between 30 and 90 days, 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 – The following are reconciliations of the allowance for sales returns balances for the periods presented: Year Ended June 30, 2022 2021 Balance, beginning of year $ 675,000 $ 704,000 Additions charged to operations 6,012,069 5,631,415 Sales returns (6,096,069 ) (5,660,415 ) Balance, end of year $ 591,000 $ 675,000 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. 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. on these criteria, management determined that allowances for uncollectible accounts receivable of $85,000 and $71,000 at June 30, 2022 and 2021, The following are reconciliations of the allowance for uncollectible accounts balances as of the periods presented: Year Ended June 30, 2022 2021 Balance, beginning of year $ 71,000 $ 79,000 Additions charged to operations 14,000 2,030 Write-offs, net of recoveries - (10,030 ) Balance, end of year $ 85,000 $ 71,000 Although the Company believes that its reserves are adequate, if the financial condition of its customers deteriorates, resulting in an impairment of their ability to make payments, or if it underestimates the allowances required, additional allowances may be necessary, Inventories - Inventory costs include direct material and labor, inbound freight, purchasing and receiving costs, inspection costs, and warehousing costs. Each accounting period, the Company evaluates the valuation and classification of inventories including the need for potential adjustments to inventory-related reserves, which also include significant estimates by management. The Company’s inventory-related valuation allowances are recorded in the aggregate rather than an individual item approach for each obsolescence, rework, and shrinkage valuation allowance. Property and Equipment – 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 – whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying value 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 value exceeds the fair value and such amount is recognized as an operating expense in the period in which the determination is made. As of June 30, 2022, 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 would result in increased depreciation and amortization expense in the current period in which 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. 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 Traditional segment customers, the returns policy generally allows for the return of jewels and finished jewelry with a valid reason for credit within 30 days of shipment. Online Channels segment customers in both of the Company’s transactional websites, charlesandcolvard.com may also generally return purchases within 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, 2022 and 2021, the Company’s refund liabilities balances were $591,000 and $675,000, respectively, and are included as allowances for sales returns within accounts receivable, net, in the accompanying consolidated balance sheets. As of June 30, 2022 and 2021, the Company’s returns asset balances were $260,000 and $252,000, respectively, and are included within prepaid expenses and other assets in the accompanying consolidated balance sheets Cost of Goods Sold – Advertising Costs – The Company also offers a cooperative advertising program to certain of its distributor and retail partners that reimburses, via a credit towards future purchases, a portion of their marketing costs based on the customers’ net purchases from the Company and is subject to the customer providing documentation of all advertising performed that includes the Company’s products. For the fiscal years ended June 30, 2022 and 2021, these approximate amounts were $792,000 and $380,000, 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, 2022 and 2021, were approximately $7.38 million and $4.25 million, respectively. Sales and Marketing – charlesandcolvard.com, LLC, wholly owned operating subsidiary . General and Administrative – Stock-Based Compensation – The Company recognizes compensation expense for stock-based awards based on estimated fair values on the date of grant. Fair value of stock options using the Black-Scholes-Merton option pricing model is estimated on the date of grant utilizing certain assumptions for dividend yield, expected volatility, risk-free interest rate, and expected lives of the awards, as follows: Dividend Yield. Expected Volatility. Volatility is a measure of the amount by which a financial variable such as share price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. ; Risk-Free Interest Rate. Expected Lives. The 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 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 – Net Income per Common Share – As of the dates presented, t he following table reconciles the differences between the basic and diluted net income per share presentations: Year Ended June 30, 2022 2021 Numerator: Net income $ 2,373,915 $ 12,810,766 Denominator: Weighted average common shares outstanding: Basic 30,363,076 29,144,820 Effect of dilutive securities 952,952 1,087,747 Diluted 31,316,028 30,232,567 Net income per common share: Basic $ 0.08 $ 0.44 Diluted $ 0.08 $ 0.42 F or the fiscal years ended June and stock options to purchase approximately shares and shares, respectively, 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. Approximately 45,000 shares of unvested restricted stock were excluded from the computation of diluted net loss per common share as of June because the shares were performance-based and the underlying conditions had not been met as of the year presented. There are no such performance-based shares of unvested restricted stock excluded from the computation of basic and diluted net income per common share as of June because the underlying performance conditions for these restricted stock shares were met as of June |
SEGMENT INFORMATION AND GEOGRAP
SEGMENT INFORMATION AND GEOGRAPHIC DATA | 12 Months Ended |
Jun. 30, 2022 | |
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. Unallocated expenses remain in its Traditional segment. Summary financial information by reportable segment for the periods presented is as follows: Year Ended June 30, 2022 Online Channels Traditional Total Net sales Finished jewelry $ 23,539,347 $ 6,172,883 $ 29,712,230 Loose jewels 3,240,702 10,136,092 13,376,794 Total $ 26,780,049 $ 16,308,975 $ 43,089,024 Product line cost of goods sold Finished jewelry $ 9,837,830 $ 4,094,870 $ 13,932,700 Loose jewels 1,209,832 4,959,958 6,169,790 Total $ 11,047,662 $ 9,054,828 $ 20,102,490 Product line gross profit Finished jewelry $ 13,701,517 $ 2,078,013 $ 15,779,530 Loose jewels 2,030,870 5,176,134 7,207,004 Total $ 15,732,387 $ 7,254,147 $ 22,986,534 Operating income $ 2,550,991 $ 322,213 $ 2,873,204 Depreciation and amortization $ 235,643 $ 243,665 $ 479,308 Capital expenditures $ 305,586 $ 1,190,885 $ 1,496,471 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 The Company does not allocate any assets to the reportable segments, and, therefore, no asset information is reported to the chief operating decision maker or disclosed in the financial information for each segment. A reconciliation of the Company’s product line cost of goods sold to cost of goods sold as reported in the consolidated financial statements is as follows: Year Ended June 30, 2022 2021 Product line cost of goods sold $ 20,102,490 $ 18,129,767 Non-capitalized manufacturing and production control expenses 1,661,207 1,591,114 Freight out 1,195,062 1,013,275 Inventory write-downs 195,000 150,000 Other inventory adjustments (308,057 ) (74,466 ) Cost of goods sold $ 22,845,702 $ 20,809,690 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, 2022 and 2021, 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, 2022 2021 Net sales United States $ 41,138,538 $ 37,225,519 International 1,950,486 2,010,320 Total $ 43,089,024 $ 39,235,839 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Jun. 30, 2022 | |
FAIR VALUE MEASUREMENTS [Abstract] | |
FAIR VALUE MEASUREMENTS | 4. FAIR VALUE MEASUREMENTS Under U.S. GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are obtained from independent sources and can be validated by a third party, whereas unobservable inputs reflect assumptions regarding what a third party would use in pricing an asset or liability. The fair value hierarchy consists of three levels based on the reliability of inputs, as follows: Level 1. Level 2. Level 3. The Company evaluates assets and liabilities subject to fair value measurements on a recurring and non-recurring basis to determine the appropriate level to classify them for each reporting period. This determination requires significant judgments to be made by management of the Company. The financial instruments identified as subject to fair value measurements on a recurring basis are cash, 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. |
NOTE RECEIVABLE
NOTE RECEIVABLE | 12 Months Ended |
Jun. 30, 2022 | |
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 Note”), with an unrelated third-party strategic marketing partner. The Convertible Promissory Note is unsecured and was scheduled originally to mature on Mar ch 5, 2022 . In February 2022, the Company entered into an amendment to the Convertible Promissory Note that was effective as of December 9, 2021 and changed the maturity date to September 30, 2022 (the “Maturity Date”). The Company has accounted for the Convertible Promissory Note as a current note receiv 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, 2022 | |
INVENTORIES [Abstract] | |
INVENTORIES | 6. INVENTORIES The Company’s total inventories, net of reserves, consisted of the following as of the dates presented: June 30, 2022 2021 Finished jewelry: Raw materials $ 1,697,361 $ 1,476,514 Work-in-process 1,260,728 779,593 Finished goods 12,100,910 8,025,816 Finished goods on consignment 2,135,856 2,050,372 Total finished jewelry 17,194,855 12,332,295 Loose jewels: Raw materials 1,985,355 1,775,505 Work-in-process 8,485,713 9,893,443 Finished goods 5,454,266 4,942,192 Finished goods on consignment 303,491 154,968 Total loose jewels 16,228,825 16,766,108 Total supplies inventory 89,120 74,317 Total inventory $ 33,512,800 $ 29,172,720 As of the dates presented, the Company’s total inventories, net of reserves, are classified as follows: June 30, 2022 2021 Short-term portion $ 11,024,276 $ 11,450,141 Long-term portion 22,488,524 17,722,579 Total inventory $ 33,512,800 $ 29,172,720 The Company’s work-in-process inventories include raw SiC crystals on which processing costs, such as labor and sawing, have been incurred; and components, such as metal castings and finished good moissanite jewels, that have been issued to jobs in the manufacture of finished jewelry. The Company’s moissanite jewel manufacturing process involves the production of intermediary shapes, called “preforms,” that vary depending upon the expected size and shape of the finished jewel. To maximize manufacturing efficiencies, preforms may be made in advance of current finished inventory needs but remain in work-in-process inventories. As of June 30, 2022 and 2021, work-in-process inventories issued to active production jobs approximated $2.76 million and $2.23 million, respectively. 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, approximately one-half 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 include significant estimates by management . . |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Jun. 30, 2022 | |
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, 2022 2021 Computer software $ 2,392,465 $ 2,015,548 Machinery and equipment 1,182,171 1,250,345 Computer hardware 1,621,198 1,274,561 Leasehold improvements 1,847,227 1,162,995 Furniture and fixtures 528,742 371,883 Total 7,571,803 6,075,332 Less accumulated depreciation (5,670,627 ) (5,199,435 ) Property and equipment, net $ 1,901,176 $ 875,897 Depreciation expense for the fiscal years ended June 30, 2022 and 2021 was approximately $471,000 and $560,000, respectively. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Jun. 30, 2022 | |
INTANGIBLE ASSETS [Abstract] | |
INTANGIBLE ASSETS | 8. INTANGIBLE ASSETS Intangible assets, net, consist of the following as of the dates presented: Weighted Average Remaining June 30, Amortization Period 2022 2021 (in Years) Patents $ 1,017,007 $ 1,017,007 12.6 Trademarks 242,342 214,339 13.5 License rights 6,718 6,718 - Total 1,266,067 1,238,064 Less accumulated amortization (1,000,337 ) (1,028,406 ) Intangible assets, net $ 265,730 $ 209,658 Amortization expense for the fiscal years ended June 30, 2022 and 2021 was approximately $8,000 and $7,000, respectively. Amortization expense on existing intangible assets is estimated to be approximately $21,000 for the fiscal years ending June 30, 2023 and 2024 and approximately $20,000 for each of the fiscal years ending June 30, 2025, 2026, and 2027. The amortization expense for the remaining unamortized balance of the total intangible assets, net, will be recognized in fiscal years ending after June 30, 2027. |
ACCRUED EXPENSES AND OTHER LIAB
ACCRUED EXPENSES AND OTHER LIABILITIES | 12 Months Ended |
Jun. 30, 2022 | |
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, 2022 2021 Accrued compensation and related benefits $ 614,443 $ 866,705 Deferred revenue 452,866 774,891 Accrued sales tax 295,743 555,547 Accrued cooperative advertising 137,467 68,185 Accrued franchise taxes 45,963 16,478 Other accrued expenses 1 1 Accrued expenses and other liabilities $ 1,546,483 $ 2,281,807 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Jun. 30, 2022 | |
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, 2022 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 each of the extended terms will be adjusted to the then prevailing fair market rate. The Company took possession of the leased property on May 23, 2014, once certain improvements to the leased space were completed and did not have access to the property before this date. 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. During the fiscal year ended June 30, 2022, the Company was reimbursed approximately $506,000 by the landlord for qualified leasehold improvements in accordance with the terms of the Lease Amendment. This reimbursement by the landlord reduced the remaining ROU asset by the same amount and will be recognized prospectively over the remaining term of the lease. The Company has no other material operating leases and is not party to leases that would qualify for classification as a finance lease, variable lease, or short-term lease. As of June 30, 2022, the Company’s balance sheet classifications of its leases are as follows: Operating Leases: Noncurrent operating lease ROU assets $ 2,787,419 Current operating lease liabilities $ 856,571 Noncurrent operating lease liabilities 2,846,805 Total operating lease liabilities $ 3,703,376 The Company’s total operating lease cost was approximately $596,000 and $610,000 for the fiscal years ended June 30, 2022 and 2021, respectively. As of June 30, 2022, 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 4.33 years. As of June 30, 2022, the Company’s remaining future payments under operating leases for each fiscal year ending June 30 are as follows: 2023 $ 869,742 2024 893,660 2025 918,236 2026 943,487 2027 317,327 Total lease payments 3,942,452 Less: imputed interest 239,076 Present value of lease payments 3,703,376 Less: current lease liability 856,571 Total long-term lease liability $ 2,846,805 The Company makes cash payments for amounts included in the measurement of its lease liabilities. During the fiscal year ended June 30, 2022 and 2021, cash paid for operating leases was approximately $550,000 and $688,000, respectively. Upon the execution of the Lease Amendment, the Company recorded additional ROU assets in the amount of approximately $3.91 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 Wolfspeed, Inc. (“ Wolfspeed”), formerly known as Cree, Inc. Under the Supply Agreement, subject to certain terms and conditions, the Company agreed to exclusively purchase from Wolfspeed, and Wolfspeed agreed to exclusively supply, 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 $26.55 million remains to be purchased as of June 30, 2022. Over the life of the Supply Agreement, as amended, the Company’s future minimum annual purchase commitments of SiC crystals range from approximately $4.00 million to $10.00 million each year . During the fiscal years ended June 30, 2022 and 2021, the Company purchased approximately $6.29 million and $3.78 million, respectively, of SiC crystals from Wolfspeed. 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 substantially all these measures have been lifted or eased in most jurisdictions, other jurisdictions have seen recent increases in new COVID-19 cases, resulting in restrictions being reinstated or new restrictions being imposed. The Company expects the imposition of such measures in various jurisdictions around the world to fluctuate into Fiscal 2023 as the pandemic continues to evolve. 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 2022, 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 2023. The Company’s management has reintroduced employees to the workplace, including in some cases permitting a hybrid blend of remote and onsite work for certain sectors of the workforce, as vaccine and related booster shot rates have increased and COVID-19 infection levels have decreased. The Company 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 2023. The 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 cash flows in the fiscal year ending June 30, 2023. |
DEBT
DEBT | 12 Months Ended |
Jun. 30, 2022 | |
DEBT [Abstract] | |
DEBT | 11. DEBT Line of Credit Effective July 7, 2021, the Company obtained from 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 borrowed money, installment obligations, and obligations under capital and operating leases. The 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 line of credit facility and was scheduled to mature on July 31, Effective July the JPMorgan Chase Credit Facility was amended to, among other things, extend the maturity date to July 31, 2023 and append the Company’s obligations under the JPMorgan Chase Credit Facility to be guaranteed by the Company’s wholly owned subsidiaries, Charles & Colvard Direct, LLC, charlesandcolvard.com, LLC, and moissaniteoutlet.com, LLC. Each advance under the JPMorgan Chase Credit Facility, as amended, accrues interest at a rate equal to the sum of JPMorgan Chase’s monthly secured overnight financing rate (“SOFR rate”) to which JPMorgan Chase is subject with respect to the adjusted SOFR rate as established by the U.S. Federal Reserve Board, plus a margin of 1.25% per annum and an unsecured to secured interest rate adjustment of 0.10% per annum. Prior to its amendment, each advance under the JPMorgan Chase Credit Facility would have accrued interest at a rate equal to JPMorgan Chase’s monthly LIBOR rate multiplied by a statutory reserve rate for eurocurrency funding to which JPMorgan Chase is subject with respect to the adjusted LIBOR rate as established by the U.S. Federal Reserve Board, plus a margin of 1.25% per annum. Interest is 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, as amended, between JPMorgan Chase and the Company (the “JPMorgan Chase Credit Agreement”), dated as of July 26, 2022, 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, 2023, the amount of $5.00 million or so much thereof as may be advanced and outstanding. In the event of default, JPMorgan Chase, at its option, may accelerate the maturity of advances outstanding under the JPMorgan Chase Credit Facility. The 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, changes in control, as well as indemnity, expense reimbursement, and confidentiality provisions. In connection with the JPMorgan Chase Credit Facility, effective July 7, 2021, 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. No origination fee was paid to JPMorgan Chase in connection with the amended JPMorgan Chase Credit Facility, dated July 28, 2022. 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 that would result from the extension of credit by JPMorgan Chase to the Company. As of June 30, 2022, the Company had not borrowed against 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 “White Oak 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 White Oak 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 White Oak 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 Credit Facility). 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 Credit Facility, 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 White Oak 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, now known as Wolfspeed’s, security interest in such materials pursuant to the Company’s Supply Agreement and an Intercreditor Agreement by and among the White Oak 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 White Oak Borrowers or Guarantor in excess of $250,000, a material adverse change in the business of the White Oak 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. Paycheck Protection Program Loan On June 18, 2020, the Company received the proceeds from its Paycheck Protection Program Loan (“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. During the period of time that the principal under the Promissory Note was outstanding, the Company accounted for the Promissory Note as debt within the accompanying consolidated financial statements. 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 Coronavirus Aid, Relief, and Economic Security Act (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 U.S. Small Business Administration (the “SBA”) for the full principal of the PPP Loan in the amount of $965,000 and the related accrued and unpaid interest. Accordingly, the full amount of the gain in connection with the extinguishment of this debt was recognized in the fiscal year ended June 30, 2021. 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. The Company had no outstanding debt during the fiscal year ended June 30, 2022. |
SHAREHOLDERS' EQUITY AND STOCK-
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION | 12 Months Ended |
Jun. 30, 2022 | |
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, 2022 and 2021, it had 30,747,759 and 29,913,095 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, 2022. Repurchases of Common Stock Pursuant to authority granted by the Company’s Board of Directors on April 29, 2022, the Company can repurchase up to approximately $5.00 million in shares outstanding of the Company’s common stock over the three-year period ending April 29, 2025. Pursuant to the terms of the repurchase authorization, the common stock share repurchases are generally at the discretion of the Company’s management. As the Company repurchases its common shares, which have no par value, the Company reports such shares held as treasury stock on the accompanying consolidated balance sheets as of June 30, 2022 and 2021, with the purchase price recorded within treasury stock. During the fiscal year ended June 30, 2022, the Company repurchased 30,287 shares of the Company’s common stock for an aggregate price of $38,164 pursuant to the repurchase authorization. The Company repurchased no shares of its common stock during the fiscal year ended June 30, 2021. Dividends The Company paid no cash dividends during the fiscal years ended June 30, 2022 and 2021. 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 . |
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, 2022 and 2021, there were 1,101,211 and 1,151,935 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, 2022 and 2021, there were 557,592 and 1,083,351 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 for the periods presented: Year Ended June 30, 2022 2021 Employee stock options $ 243,576 $ 234,947 Restricted stock awards 530,765 117,636 Total $ 774,341 $ 352,583 No stock-based compensation was capitalized as a cost of inventory during the fiscal years ended June 30, 2022 and 2021. Stock Options The following is a summary of the stock option activity for the fiscal years ended June 30, 2022 and 2021: Shares Weighted Average Exercise Price 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 Granted 289,793 $ 2.47 Exercised (622,226 ) $ 1.15 Forfeited (24,753 ) $ 1.04 Expired (219,297 ) $ 2.57 Outstanding at June 30, 2022 1,658,803 $ 1.32 The weighted average grant date fair value of stock options granted during the fiscal year ended June and 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, 2022 2021 Dividend yield 0.0 % 0.0 % Expected volatility 61.6 % 61.7 % Risk-free interest rate 1.46 % 0.36 % Expected lives (years) 4.5 4.9 The following tables summarize information in connection with stock options outstanding at June 30, 2022: Options Outstanding Options Exercisable Options Vested or Expected to Vest Balance as of 6/30/2022 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Balance as of 6/30/2022 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Balance as of 6/30/2022 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price 1,658,803 6.90 $ 1.32 1,239,820 6.18 $ 1.10 1,602,784 6.83 $ 1.30 As of June 30, 2022, the unrecognized stock-based compensation expense related to unvested stock options was approximately $303,000, which is expected to be recognized over a weighted average period of approximately 25 months. The aggregate intrinsic value of stock options outstanding, and vested or expected to vest at June 30, 2022 was approximately $410,000. These amounts are before applicable income taxes and represent the closing market price of the Company’s common stock at June 30, 2022, 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, 2022 was approximately $886,000. During the fiscal years ended June 30, 2022 and 2021, the total estimated tax benefit associated with certain stock options that were exercised during each period was approximately $89,000 and $147,000, respectively. Restricted Stock The following is a summary of the restricted stock activity for the fiscal years ended June 30, 2022 and 2021: Shares Weighted Average Grant Date Fair Value 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 Granted 242,725 $ 2.75 Vested (242,725 ) $ 1.25 Unvested at June 30, 2022 178,750 $ 2.75 The unvested restricted shares as of June 30, 2022 are all , none of which is expected to be recognized |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Jun. 30, 2022 | |
INCOME TAXES [Abstract] | |
INCOME TAXES | 13. INCOME TAXES The Company accounts for income taxes under the asset and liability method. Under the asset and liability method, deferred income taxes are recognized for the income tax consequences of “temporary differences” by applying enacted statutory income tax rates applicable to future years to differences between the financial statement carrying amounts and the income tax bases of existing assets and liabilities. The Company’s income tax net (expense) benefit for the periods presented comprises the following: Year Ended June 30, 2022 2021 Current: Federal $ - $ - State (19,606 ) (18,409 ) Total current expense (19,606 ) (18,409 ) Deferred: Federal (493,910 ) 6,062,222 State (5,016 ) 288,608 Total deferred (expense) benefit (498,926 ) 6,350,830 Income tax net (expense) benefit $ (518,532 ) $ 6,332,421 Significant components of the Company’s noncurrent deferred tax assets, net, as of the dates presented are as follows: June 30, 2022 2021 Deferred tax assets: Reversals and accruals $ 487,333 $ 454,846 Federal net operating loss (“NOL”) carryforwards 3,471,594 3,989,278 State NOL carryforwards 532,300 585,563 Hong Kong NOL carryforwards 995,566 995,566 Federal benefit on state taxes under uncertain tax positions - 2,073 Stock-based compensation 155,139 149,047 Section 263A adjustment 118,916 122,562 Inventory valuation reserve 1,631,339 1,605,871 Operating lease liabilities 850,910 942,471 Valuation allowance (1,442,213 ) (1,452,296 ) Noncurrent deferred tax assets, net 6,800,884 7,394,981 Deferred tax liabilities: Prepaid expenses (52,792 ) (44,890 ) Depreciation (255,734 ) (105,369 ) Operating lease right-of-use assets (640,454 ) (893,892 ) Noncurrent deferred tax liabilities (948,980 ) (1,044,151 ) Total noncurrent deferred tax assets, net $ 5,851,904 $ 6,350,830 The following are reconciliations between expected income taxes, computed at the applicable statutory federal income tax rate applied to pretax accounting income, and the income tax net (expense) benefit for the periods presented: Year Ended June 30, 2022 2021 Anticipated income tax expense at the statutory rate $ (607,414 ) $ (1,360,452 ) State income tax expense, net of federal tax effect (36,928 ) (84,288 ) Income tax effect of uncertain tax positions 7,804 (1,468 ) Return to provision adjustments 405 (45 ) Stock-based compensation 131,898 38,197 PPP Loan forgiveness - 202,729 Other changes in deferred income tax assets, net (24,380 ) 1,348 Decrease in valuation allowance 10,083 7,536,400 Income tax net (expense) benefit $ (518,532 ) $ 6,332,421 The Company’s statutory tax rate as of June 30, 2022 is 22.45% and consisted of the federal income tax rate of 21.00% and a blended state income tax rate of 1.45%, net of the federal benefit. The Company’s statutory tax rate as of the fiscal year ended June 30, 2021 was 22.24% and consisted of the federal income tax rate of 21.00% and a blended state income tax rate of 1.24%, net of the federal benefit. For the fiscal year ended June 30, 2022, the Company’s effective income tax rate was 17.93%. The Company’s effective income tax rate reflects the effect of federal and state income taxes on earnings and the impact of differences in book and tax accounting arising primarily from the permanent tax benefits associated with stock-based compensation transactions during the accounting period then ended. The Company recognized a net income tax expense of approximately $519,000 for the fiscal year ended June 30, 2022, compared with a net income tax benefit of approximately $6.33 million for the fiscal year ended June 30, 2021. As of each reporting date, the Company’s management considers new evidence, both positive and negative, that could impact its view with regard to future realization of deferred tax assets. As of June 30, 2021, cumulative positive taxable income over the preceding 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 included 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. As a result, the Company’s management determined that sufficient positive evidence existed as of June 30, 2021, to conclude that it was more likely than not deferred tax assets of approximately $6.35 million would be 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. With the reduction of its valuation allowance during the fiscal year ended June 30, 2021, the Company recognized deferred income tax expense during the fiscal year ended June 30, 2022 in the amount of approximately $499,000 compared to a deferred income tax benefit during the year ended June 30, 2021 in the amount of approximately $6.35 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, 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, 2022, the Company’s management 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 continue to be sufficient to result in full utilization of the Company’s remaining federal net operating loss carryforwards and certain of the deferred tax assets prior to any statutory expiration. As a result, the Company’s management determined that sufficient positive evidence existed as of June 30, 2022, to conclude that it is more likely than not deferred tax assets of approximately $5.85 million remain realizable. Conversely, the Company’s management further determined that sufficient negative evidence continued to exist to conclude it was uncertain that the Company would have sufficient future taxable income to utilize certain of its deferred tax assets. Therefore, the Company continued to maintain a valuation allowance against the deferred tax assets relating to certain 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, a valuation allowance 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, 2022, 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, 2022 and 2021, the Company had federal tax net operating loss carryforwards of approximately $16.53 million and $19.00 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 $19.77 million and $19.87 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, 2022 and 2021, 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, 2022 and 2021, 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. |
MAJOR CUSTOMERS AND CONCENTRATI
MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK | 12 Months Ended |
Jun. 30, 2022 | |
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 10% or more of total gross accounts receivable as of the dates presented: June 30, 2022 2021 Customer A 29 % 22 % Customer B 20 % 30 % Customer C 13 % * % Customer D ** % 14 % * Customer C did not have individual balances that represented 10% or more of total gross accounts receivable as of June 30, 2021. ** Customer D did not have individual balances that represented 10% or more of total gross accounts receivable as of June 30, 2022. 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, 2022 2021 Customer A * % 12 % Customer B 14 % 13 % * Customer A did not have net sales that represented 10% or more of total net sales for the year ended June 30, 2022. 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, 2022 | |
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 $76,000 and $72,000 to its employee benefit defined contribution plan during the fiscal years ended June 30, 2022 and 2021, respectively. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Jun. 30, 2022 | |
SUBSEQUENT EVENTS [Abstract] | |
SUBSEQUENT EVENTS | 16. SUBSEQUENT EVENTS On July 28, 2022, the Company renewed its 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. Subsequent to June 30, 2022, and through August 26, 2022, the Company repurchased 273,257 shares of the Company’s common stock for an aggregate price of $356,120 pursuant to its share repurchase authorization as discussed in Note 12, “Shareholders’ Equity and Stock-Based Compensation”. |
BASIS OF PRESENTATION AND SIG_2
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Jun. 30, 2022 | |
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 and include the accounts of the Company and its wholly owned subsidiaries charlesandcolvard.com, LLC; including its wholly-owned subsidiary, moissaniteoulet.com, LLC, which was formed and incorporated as of February ; Charles & Colvard Direct, LLC; and Charles & Colvard (HK) Ltd., the Company’s Hong Kong subsidiary, which was entered into dormancy as of September following its re-activation in December Charles & Colvard (HK) Ltd. previously became dormant in the quarter of and has had no operating activity since Charles & Colvard Direct, LLC, had no operating activity during the fiscal years ended June or All intercompany accounts have been eliminated . |
Use of Estimates | Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. As future events and their effects, including the impact of the COVID- pandemic and the related responses, cannot be fully determined with precision, actual results of operations, cash flow, and financial position could differ significantly from estimates. The most significant estimates impacting the Company’s condensed consolidated financial statements relate to valuation and classification of inventories, accounts receivable reserves, deferred tax assets, stock-based compensation, and revenue recognition. Changes in estimates are reflected in the condensed consolidated financial statements in the period in which the change in estimate occurs |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements – Effective July the Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) - Income Taxes: Simplifying the Accounting for Income Taxes (“ASU - ”) that provides guidance for the simplification of the accounting for income taxes that is intended to reduce the complexity while maintaining or improving the usefulness of tax disclosure information in an entity’s financial statements. The resulting impact of ASU - did not have a material impact on the Company’s consolidated financial statements In March and as updated in January 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 ASU - Reference Rate Reform (Topic 848) (“ASU - ”), which provides guidance to ease the burden in accounting for or recognizing the effects of referenced interest rate reform on financial reporting. ASU - is elective and may be applied as of March through December As described in more detail in Note “Debt”, borrowings under the Company’s line of credit during the fiscal year ended June would have been based on a rate equal to the LIBOR. As of June the Company had not borrowed against its line of credit, and therefore, has not elected to apply ASU - as of or for the fiscal year ended June |
Cash and Cash Equivalents | Cash and Cash Equivalents – Restricted Cash |
Restricted Cash | Restricted Cash – In accordance with the terms of the Company’s cash collateralized credit facility from JPMorgan Chase Bank, N.A. (“JPMorgan Chase”), which the Company entered into on July and as amended on July the Company is required to keep in a cash deposit account held by JPMorgan Chase. Such amount was held as security for the Company’s credit facility from JPMorgan Chase. Accordingly, during the term of the JPMorgan Chase credit facility, the cash deposit held by JPMorgan Chase is classified as restricted cash for financial reporting purposes on the Company’s Consolidated Balance Sheets For additional information regarding the Company’s cash collateralized credit facility with JPMorgan Chase, see Note “Debt” and Note “Subsequent Event.” Pursuant to the terms and conditions of the Company’s broker-dealer agreement with Oppenheimer & Co., Inc. (“Oppenheimer”), with whom the Company has engaged to transact common stock share repurchases in connection with its stock repurchase program, the Company is required to maintain a funded liquid margin account held by Oppenheimer for the benefit of the Company. The purpose of this account is to fund the Company’s common stock purchases and any underlying transaction costs and fees. Depending upon the level and timing of stock repurchase activity, the funded margin account cash balance will fluctuate from time to time. At June cash in the amount of approximately ,000 was held by Oppenheimer. Such cash amount held by Oppenheimer was classified as restricted cash for financial reporting purposes on the Company’s Consolidated Balance Sheets. For additional information regarding the Company’s stock repurchase program, see Note “Shareholders’ Equity and Stock-Based Compensation.” In accordance with cash management process requirements related to the Company’s former asset-based revolving credit facility from White Oak Commercial Finance, LLC (“White Oak”), which was terminated by the Company on July in accordance with its terms, such credit facility contained access and usage restrictions on certain cash deposit balances for periods of up to two business days during which time the deposits were held by White Oak for the benefit of the Company. During the period these cash deposits were held by White Oak, such amounts were classified as restricted cash for financial reporting purposes on the Company’s Consolidated Balance Sheets. For additional information regarding termination of the Company’s asset-based revolving credit facility with White Oak, see Note “Debt.” 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, 2022 2021 Cash and cash equivalents $ 15,668,361 $ 21,302,317 Restricted cash 5,510,979 144,634 Total cash, cash equivalents, and restricted cash $ 21,179,340 $ 21,446,951 |
Concentration of Credit Risk | Concentration of Credit Risk – Trade receivables potentially subject the Company to credit risk. Payment terms on trade receivables for the Company’s Traditional segment customers are generally between 30 and 90 days, 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 – The following are reconciliations of the allowance for sales returns balances for the periods presented: Year Ended June 30, 2022 2021 Balance, beginning of year $ 675,000 $ 704,000 Additions charged to operations 6,012,069 5,631,415 Sales returns (6,096,069 ) (5,660,415 ) Balance, end of year $ 591,000 $ 675,000 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. 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. on these criteria, management determined that allowances for uncollectible accounts receivable of $85,000 and $71,000 at June 30, 2022 and 2021, The following are reconciliations of the allowance for uncollectible accounts balances as of the periods presented: Year Ended June 30, 2022 2021 Balance, beginning of year $ 71,000 $ 79,000 Additions charged to operations 14,000 2,030 Write-offs, net of recoveries - (10,030 ) Balance, end of year $ 85,000 $ 71,000 Although the Company believes that its reserves are adequate, if the financial condition of its customers deteriorates, resulting in an impairment of their ability to make payments, or if it underestimates the allowances required, additional allowances may be necessary, |
Inventories | Inventories - Inventory costs include direct material and labor, inbound freight, purchasing and receiving costs, inspection costs, and warehousing costs. Each accounting period, the Company evaluates the valuation and classification of inventories including the need for potential adjustments to inventory-related reserves, which also include significant estimates by management. The Company’s inventory-related valuation allowances are recorded in the aggregate rather than an individual item approach for each obsolescence, rework, and shrinkage valuation allowance. |
Property and Equipment | Property and Equipment – 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 – whenever events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying value 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 value exceeds the fair value and such amount is recognized as an operating expense in the period in which the determination is made. As of June 30, 2022, 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 would result in increased depreciation and amortization expense in the current period in which 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. 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 Traditional segment customers, the returns policy generally allows for the return of jewels and finished jewelry with a valid reason for credit within 30 days of shipment. Online Channels segment customers in both of the Company’s transactional websites, charlesandcolvard.com may also generally return purchases within 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, 2022 and 2021, the Company’s refund liabilities balances were $591,000 and $675,000, respectively, and are included as allowances for sales returns within accounts receivable, net, in the accompanying consolidated balance sheets. As of June 30, 2022 and 2021, the Company’s returns asset balances were $260,000 and $252,000, respectively, and are included within prepaid expenses and other assets in the accompanying consolidated balance sheets |
Cost of Goods Sold | Cost of Goods Sold – |
Advertising Costs | Advertising Costs – The Company also offers a cooperative advertising program to certain of its distributor and retail partners that reimburses, via a credit towards future purchases, a portion of their marketing costs based on the customers’ net purchases from the Company and is subject to the customer providing documentation of all advertising performed that includes the Company’s products. For the fiscal years ended June 30, 2022 and 2021, these approximate amounts were $792,000 and $380,000, 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, 2022 and 2021, were approximately $7.38 million and $4.25 million, respectively. |
Sales and Marketing | Sales and Marketing – charlesandcolvard.com, LLC, wholly owned operating subsidiary . |
General and Administrative | General and Administrative – |
Stock-Based Compensation | Stock-Based Compensation – The Company recognizes compensation expense for stock-based awards based on estimated fair values on the date of grant. Fair value of stock options using the Black-Scholes-Merton option pricing model is estimated on the date of grant utilizing certain assumptions for dividend yield, expected volatility, risk-free interest rate, and expected lives of the awards, as follows: Dividend Yield. Expected Volatility. Volatility is a measure of the amount by which a financial variable such as share price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. ; Risk-Free Interest Rate. Expected Lives. The 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 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 – |
Net Income per Common Share | Net Income per Common Share – As of the dates presented, t he following table reconciles the differences between the basic and diluted net income per share presentations: Year Ended June 30, 2022 2021 Numerator: Net income $ 2,373,915 $ 12,810,766 Denominator: Weighted average common shares outstanding: Basic 30,363,076 29,144,820 Effect of dilutive securities 952,952 1,087,747 Diluted 31,316,028 30,232,567 Net income per common share: Basic $ 0.08 $ 0.44 Diluted $ 0.08 $ 0.42 F or the fiscal years ended June and stock options to purchase approximately shares and shares, respectively, 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. Approximately 45,000 shares of unvested restricted stock were excluded from the computation of diluted net loss per common share as of June because the shares were performance-based and the underlying conditions had not been met as of the year presented. There are no such performance-based shares of unvested restricted stock excluded from the computation of basic and diluted net income per common share as of June because the underlying performance conditions for these restricted stock shares were met as of June |
BASIS OF PRESENTATION AND SIG_3
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Jun. 30, 2022 | |
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, 2022 2021 Cash and cash equivalents $ 15,668,361 $ 21,302,317 Restricted cash 5,510,979 144,634 Total cash, cash equivalents, and restricted cash $ 21,179,340 $ 21,446,951 |
Reconciliation of Allowance for Sales Returns | The following are reconciliations of the allowance for sales returns balances for the periods presented: Year Ended June 30, 2022 2021 Balance, beginning of year $ 675,000 $ 704,000 Additions charged to operations 6,012,069 5,631,415 Sales returns (6,096,069 ) (5,660,415 ) Balance, end of year $ 591,000 $ 675,000 |
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, 2022 2021 Balance, beginning of year $ 71,000 $ 79,000 Additions charged to operations 14,000 2,030 Write-offs, net of recoveries - (10,030 ) Balance, end of year $ 85,000 $ 71,000 |
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 per Share | As of the dates presented, t he following table reconciles the differences between the basic and diluted net income per share presentations: Year Ended June 30, 2022 2021 Numerator: Net income $ 2,373,915 $ 12,810,766 Denominator: Weighted average common shares outstanding: Basic 30,363,076 29,144,820 Effect of dilutive securities 952,952 1,087,747 Diluted 31,316,028 30,232,567 Net income per common share: Basic $ 0.08 $ 0.44 Diluted $ 0.08 $ 0.42 |
SEGMENT INFORMATION AND GEOGR_2
SEGMENT INFORMATION AND GEOGRAPHIC DATA (Tables) | 12 Months Ended |
Jun. 30, 2022 | |
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, 2022 Online Channels Traditional Total Net sales Finished jewelry $ 23,539,347 $ 6,172,883 $ 29,712,230 Loose jewels 3,240,702 10,136,092 13,376,794 Total $ 26,780,049 $ 16,308,975 $ 43,089,024 Product line cost of goods sold Finished jewelry $ 9,837,830 $ 4,094,870 $ 13,932,700 Loose jewels 1,209,832 4,959,958 6,169,790 Total $ 11,047,662 $ 9,054,828 $ 20,102,490 Product line gross profit Finished jewelry $ 13,701,517 $ 2,078,013 $ 15,779,530 Loose jewels 2,030,870 5,176,134 7,207,004 Total $ 15,732,387 $ 7,254,147 $ 22,986,534 Operating income $ 2,550,991 $ 322,213 $ 2,873,204 Depreciation and amortization $ 235,643 $ 243,665 $ 479,308 Capital expenditures $ 305,586 $ 1,190,885 $ 1,496,471 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 |
Reconciliation of Product Line Cost of Goods Sold | A reconciliation of the Company’s product line cost of goods sold to cost of goods sold as reported in the consolidated financial statements is as follows: Year Ended June 30, 2022 2021 Product line cost of goods sold $ 20,102,490 $ 18,129,767 Non-capitalized manufacturing and production control expenses 1,661,207 1,591,114 Freight out 1,195,062 1,013,275 Inventory write-downs 195,000 150,000 Other inventory adjustments (308,057 ) (74,466 ) Cost of goods sold $ 22,845,702 $ 20,809,690 |
Net Sales by Geographic Area | The following presents net sales data by geographic area for the periods presented: Year Ended June 30, 2022 2021 Net sales United States $ 41,138,538 $ 37,225,519 International 1,950,486 2,010,320 Total $ 43,089,024 $ 39,235,839 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Jun. 30, 2022 | |
INVENTORIES [Abstract] | |
Inventories | The Company’s total inventories, net of reserves, consisted of the following as of the dates presented: June 30, 2022 2021 Finished jewelry: Raw materials $ 1,697,361 $ 1,476,514 Work-in-process 1,260,728 779,593 Finished goods 12,100,910 8,025,816 Finished goods on consignment 2,135,856 2,050,372 Total finished jewelry 17,194,855 12,332,295 Loose jewels: Raw materials 1,985,355 1,775,505 Work-in-process 8,485,713 9,893,443 Finished goods 5,454,266 4,942,192 Finished goods on consignment 303,491 154,968 Total loose jewels 16,228,825 16,766,108 Total supplies inventory 89,120 74,317 Total inventory $ 33,512,800 $ 29,172,720 As of the dates presented, the Company’s total inventories, net of reserves, are classified as follows: June 30, 2022 2021 Short-term portion $ 11,024,276 $ 11,450,141 Long-term portion 22,488,524 17,722,579 Total inventory $ 33,512,800 $ 29,172,720 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Jun. 30, 2022 | |
PROPERTY AND EQUIPMENT [Abstract] | |
Property and Equipment, Net | Property and equipment, net, consists of the following as of the dates presented: June 30, 2022 2021 Computer software $ 2,392,465 $ 2,015,548 Machinery and equipment 1,182,171 1,250,345 Computer hardware 1,621,198 1,274,561 Leasehold improvements 1,847,227 1,162,995 Furniture and fixtures 528,742 371,883 Total 7,571,803 6,075,332 Less accumulated depreciation (5,670,627 ) (5,199,435 ) Property and equipment, net $ 1,901,176 $ 875,897 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Jun. 30, 2022 | |
INTANGIBLE ASSETS [Abstract] | |
Intangible Assets, Net | Intangible assets, net, consist of the following as of the dates presented: Weighted Average Remaining June 30, Amortization Period 2022 2021 (in Years) Patents $ 1,017,007 $ 1,017,007 12.6 Trademarks 242,342 214,339 13.5 License rights 6,718 6,718 - Total 1,266,067 1,238,064 Less accumulated amortization (1,000,337 ) (1,028,406 ) Intangible assets, net $ 265,730 $ 209,658 |
ACCRUED EXPENSES AND OTHER LI_2
ACCRUED EXPENSES AND OTHER LIABILITIES (Tables) | 12 Months Ended |
Jun. 30, 2022 | |
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, 2022 2021 Accrued compensation and related benefits $ 614,443 $ 866,705 Deferred revenue 452,866 774,891 Accrued sales tax 295,743 555,547 Accrued cooperative advertising 137,467 68,185 Accrued franchise taxes 45,963 16,478 Other accrued expenses 1 1 Accrued expenses and other liabilities $ 1,546,483 $ 2,281,807 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Jun. 30, 2022 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
Balance Sheet Classifications of Leases | As of June 30, 2022, the Company’s balance sheet classifications of its leases are as follows: Operating Leases: Noncurrent operating lease ROU assets $ 2,787,419 Current operating lease liabilities $ 856,571 Noncurrent operating lease liabilities 2,846,805 Total operating lease liabilities $ 3,703,376 |
Remaining Future Payments Under Operating Leases | As of June 30, 2022, the Company’s remaining future payments under operating leases for each fiscal year ending June 30 are as follows: 2023 $ 869,742 2024 893,660 2025 918,236 2026 943,487 2027 317,327 Total lease payments 3,942,452 Less: imputed interest 239,076 Present value of lease payments 3,703,376 Less: current lease liability 856,571 Total long-term lease liability $ 2,846,805 |
SHAREHOLDERS' EQUITY AND STOC_2
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Jun. 30, 2022 | |
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 for the periods presented: Year Ended June 30, 2022 2021 Employee stock options $ 243,576 $ 234,947 Restricted stock awards 530,765 117,636 Total $ 774,341 $ 352,583 |
Stock Option Activity | The following is a summary of the stock option activity for the fiscal years ended June 30, 2022 and 2021: Shares Weighted Average Exercise Price 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 Granted 289,793 $ 2.47 Exercised (622,226 ) $ 1.15 Forfeited (24,753 ) $ 1.04 Expired (219,297 ) $ 2.57 Outstanding at June 30, 2022 1,658,803 $ 1.32 |
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, 2022 2021 Dividend yield 0.0 % 0.0 % Expected volatility 61.6 % 61.7 % Risk-free interest rate 1.46 % 0.36 % Expected lives (years) 4.5 4.9 |
Stock Options Outstanding | The following tables summarize information in connection with stock options outstanding at June 30, 2022: Options Outstanding Options Exercisable Options Vested or Expected to Vest Balance as of 6/30/2022 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Balance as of 6/30/2022 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Balance as of 6/30/2022 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price 1,658,803 6.90 $ 1.32 1,239,820 6.18 $ 1.10 1,602,784 6.83 $ 1.30 |
Restricted Stock Activity | The following is a summary of the restricted stock activity for the fiscal years ended June 30, 2022 and 2021: Shares Weighted Average Grant Date Fair Value 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 Granted 242,725 $ 2.75 Vested (242,725 ) $ 1.25 Unvested at June 30, 2022 178,750 $ 2.75 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Jun. 30, 2022 | |
INCOME TAXES [Abstract] | |
Income Tax Net (Expense) Benefit | The Company’s income tax net (expense) benefit for the periods presented comprises the following: Year Ended June 30, 2022 2021 Current: Federal $ - $ - State (19,606 ) (18,409 ) Total current expense (19,606 ) (18,409 ) Deferred: Federal (493,910 ) 6,062,222 State (5,016 ) 288,608 Total deferred (expense) benefit (498,926 ) 6,350,830 Income tax net (expense) benefit $ (518,532 ) $ 6,332,421 |
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, 2022 2021 Deferred tax assets: Reversals and accruals $ 487,333 $ 454,846 Federal net operating loss (“NOL”) carryforwards 3,471,594 3,989,278 State NOL carryforwards 532,300 585,563 Hong Kong NOL carryforwards 995,566 995,566 Federal benefit on state taxes under uncertain tax positions - 2,073 Stock-based compensation 155,139 149,047 Section 263A adjustment 118,916 122,562 Inventory valuation reserve 1,631,339 1,605,871 Operating lease liabilities 850,910 942,471 Valuation allowance (1,442,213 ) (1,452,296 ) Noncurrent deferred tax assets, net 6,800,884 7,394,981 Deferred tax liabilities: Prepaid expenses (52,792 ) (44,890 ) Depreciation (255,734 ) (105,369 ) Operating lease right-of-use assets (640,454 ) (893,892 ) Noncurrent deferred tax liabilities (948,980 ) (1,044,151 ) Total noncurrent deferred tax assets, net $ 5,851,904 $ 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 income, and the income tax net (expense) benefit for the periods presented: Year Ended June 30, 2022 2021 Anticipated income tax expense at the statutory rate $ (607,414 ) $ (1,360,452 ) State income tax expense, net of federal tax effect (36,928 ) (84,288 ) Income tax effect of uncertain tax positions 7,804 (1,468 ) Return to provision adjustments 405 (45 ) Stock-based compensation 131,898 38,197 PPP Loan forgiveness - 202,729 Other changes in deferred income tax assets, net (24,380 ) 1,348 Decrease in valuation allowance 10,083 7,536,400 Income tax net (expense) benefit $ (518,532 ) $ 6,332,421 |
MAJOR CUSTOMERS AND CONCENTRA_2
MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK (Tables) | 12 Months Ended |
Jun. 30, 2022 | |
MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK [Abstract] | |
Major Customers | The following is a summary of customers that represent 10% or more of total gross accounts receivable as of the dates presented: June 30, 2022 2021 Customer A 29 % 22 % Customer B 20 % 30 % Customer C 13 % * % Customer D ** % 14 % * Customer C did not have individual balances that represented 10% or more of total gross accounts receivable as of June 30, 2021. ** Customer D did not have individual balances that represented 10% or more of total gross accounts receivable as of June 30, 2022. 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, 2022 2021 Customer A * % 12 % Customer B 14 % 13 % * Customer A did not have net sales that represented 10% or more of total net sales for the year ended June 30, 2022. |
BASIS OF PRESENTATION AND SIG_4
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Recently Issued Accounting Pronouncements (Details) | 12 Months Ended |
Jun. 30, 2022 USD ($) | |
Recently Issued Accounting Pronouncements [Abstract] | |
Borrowings against line of credit | $ 0 |
LIBOR [Member] | |
Recently Issued Accounting Pronouncements [Abstract] | |
Term of variable rate | 1 month |
BASIS OF PRESENTATION AND SIG_5
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Restricted Cash (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2020 | |
Restricted Cash [Abstract] | |||
Funded liquid margin account | $ 461,000 | ||
Cash, Cash Equivalents and Restricted Cash [Abstract] | |||
Cash and cash equivalents | 15,668,361 | $ 21,302,317 | |
Restricted cash | 5,510,979 | 144,634 | |
Total cash, cash equivalents, and restricted cash | $ 21,179,340 | 21,446,951 | $ 14,617,234 |
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] | |||
Restricted Cash [Abstract] | |||
Borrowing capacity | $ 5,000,000 | ||
Cash deposit | $ 5,050,000 |
BASIS OF PRESENTATION AND SIG_6
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Concentration of Credit Risk (Details) | 12 Months Ended |
Jun. 30, 2022 | |
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 |
BASIS OF PRESENTATION AND SIG_7
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Accounts Receivable Reserves (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Allowance for Sales Returns [Member] | ||
Accounts Receivable Reserves [Roll Forward] | ||
Balance, beginning of year | $ 675,000 | $ 704,000 |
Additions charged to operations | 6,012,069 | 5,631,415 |
Sales returns | (6,096,069) | (5,660,415) |
Balance, end of year | 591,000 | 675,000 |
Allowance for Uncollectible Accounts [Member] | ||
Accounts Receivable Reserves [Roll Forward] | ||
Balance, beginning of year | 71,000 | 79,000 |
Additions charged to operations | 14,000 | 2,030 |
Write-offs, net of recoveries | 0 | (10,030) |
Balance, end of year | $ 85,000 | $ 71,000 |
BASIS OF PRESENTATION AND SIG_8
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Property and Equipment (Details) | 12 Months Ended |
Jun. 30, 2022 | |
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_9
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Intangible Assets (Details) | 12 Months Ended |
Jun. 30, 2022 | |
Patent [Member] | |
Intangible Assets [Abstract] | |
Useful life | 15 years |
BASIS OF PRESENTATION AND SI_10
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Revenue Recognition (Details) | 12 Months Ended |
Jun. 30, 2022 | |
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] | Maximum [Member] | |
Revenue Recognition [Abstract] | |
Return period for credit | 30 days |
moissaniteoutlet.com [Member] | Maximum [Member] | |
Revenue Recognition [Abstract] | |
Return period for credit | 30 days |
BASIS OF PRESENTATION AND SI_11
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Returns Asset and Refund Liabilities (Details) - USD ($) | Jun. 30, 2022 | Jun. 30, 2021 |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ||
Refund liabilities | $ 591,000 | $ 675,000 |
Asset returns | $ 260,000 | $ 252,000 |
BASIS OF PRESENTATION AND SI_12
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Advertising Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Advertising Costs [Abstract] | ||
Cooperative advertising expenses | $ 792 | $ 380 |
Advertising expenses | $ 7,380 | $ 4,250 |
BASIS OF PRESENTATION AND SI_13
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Net Income per Common Share (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Numerator [Abstract] | ||
Net income | $ 2,373,915 | $ 12,810,766 |
Denominator [Abstract] | ||
Weighted average common shares outstanding, Basic (in shares) | 30,363,076 | 29,144,820 |
Effect of dilutive securities (in shares) | 952,952 | 1,087,747 |
Weighted average common shares outstanding, Diluted (in shares) | 31,316,028 | 30,232,567 |
Net Income per Common Share [Abstract] | ||
Basic (in dollars per share) | $ 0.08 | $ 0.44 |
Diluted (in dollars per share) | $ 0.08 | $ 0.42 |
Stock Options [Member] | ||
Net Income per Common Share [Abstract] | ||
Shares excluded from the computation of diluted net income per common share (in shares) | 758,000 | 1,240,000 |
Restricted Stock [Member] | ||
Net Income per Common Share [Abstract] | ||
Shares excluded from the computation of diluted net income per common share (in shares) | 45,000 | 0 |
SEGMENT INFORMATION AND GEOGR_3
SEGMENT INFORMATION AND GEOGRAPHIC DATA, Summary Financial Information by Reportable Segment (Details) | 12 Months Ended | |
Jun. 30, 2022 USD ($) Segment | Jun. 30, 2021 USD ($) | |
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 | $ 43,089,024 | $ 39,235,839 |
Product line cost of goods sold | 22,845,702 | 20,809,690 |
Operating income | 2,873,204 | 5,507,992 |
Depreciation and amortization | 479,308 | 567,122 |
Capital expenditures | 1,496,471 | 437,069 |
Product Line [Member] | ||
Summary Information by Reportable Segment [Abstract] | ||
Product line cost of goods sold | 20,102,490 | 18,129,767 |
Product line gross profit | 22,986,534 | 21,106,072 |
Finished Jewelry [Member] | ||
Summary Information by Reportable Segment [Abstract] | ||
Net sales | 29,712,230 | 24,401,546 |
Product line cost of goods sold | 13,932,700 | 11,272,012 |
Product line gross profit | 15,779,530 | 13,129,534 |
Loose Jewels [Member] | ||
Summary Information by Reportable Segment [Abstract] | ||
Net sales | 13,376,794 | 14,834,293 |
Product line cost of goods sold | 6,169,790 | 6,857,755 |
Product line gross profit | 7,207,004 | 7,976,538 |
Operating and Reportable Segments [Member] | Online Channels [Member] | ||
Summary Information by Reportable Segment [Abstract] | ||
Net sales | 26,780,049 | 23,209,638 |
Product line cost of goods sold | 11,047,662 | 9,452,739 |
Product line gross profit | 15,732,387 | 13,756,899 |
Operating income | 2,550,991 | 3,739,553 |
Depreciation and amortization | 235,643 | 248,995 |
Capital expenditures | 305,586 | 253,935 |
Operating and Reportable Segments [Member] | Online Channels [Member] | Finished Jewelry [Member] | ||
Summary Information by Reportable Segment [Abstract] | ||
Net sales | 23,539,347 | 19,905,199 |
Product line cost of goods sold | 9,837,830 | 8,235,797 |
Product line gross profit | 13,701,517 | 11,669,402 |
Operating and Reportable Segments [Member] | Online Channels [Member] | Loose Jewels [Member] | ||
Summary Information by Reportable Segment [Abstract] | ||
Net sales | 3,240,702 | 3,304,439 |
Product line cost of goods sold | 1,209,832 | 1,216,942 |
Product line gross profit | 2,030,870 | 2,087,497 |
Operating and Reportable Segments [Member] | Traditional [Member] | ||
Summary Information by Reportable Segment [Abstract] | ||
Net sales | 16,308,975 | 16,026,201 |
Product line cost of goods sold | 9,054,828 | 8,677,028 |
Product line gross profit | 7,254,147 | 7,349,173 |
Operating income | 322,213 | 1,768,439 |
Depreciation and amortization | 243,665 | 318,127 |
Capital expenditures | 1,190,885 | 183,134 |
Operating and Reportable Segments [Member] | Traditional [Member] | Finished Jewelry [Member] | ||
Summary Information by Reportable Segment [Abstract] | ||
Net sales | 6,172,883 | 4,496,347 |
Product line cost of goods sold | 4,094,870 | 3,036,215 |
Product line gross profit | 2,078,013 | 1,460,132 |
Operating and Reportable Segments [Member] | Traditional [Member] | Loose Jewels [Member] | ||
Summary Information by Reportable Segment [Abstract] | ||
Net sales | 10,136,092 | 11,529,854 |
Product line cost of goods sold | 4,959,958 | 5,640,813 |
Product line gross profit | $ 5,176,134 | $ 5,889,041 |
SEGMENT INFORMATION AND GEOGR_4
SEGMENT INFORMATION AND GEOGRAPHIC DATA, Reconciliation of Cost of Goods Sold (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Reconciliation of Cost of Goods Sold [Abstract] | ||
Cost of goods sold | $ 22,845,702 | $ 20,809,690 |
Inventory write-downs | 195,000 | 150,000 |
Product Line [Member] | ||
Reconciliation of Cost of Goods Sold [Abstract] | ||
Cost of goods sold | 20,102,490 | 18,129,767 |
Segment Reconciling Item [Member] | ||
Reconciliation of Cost of Goods Sold [Abstract] | ||
Non-capitalized manufacturing and production control expenses | 1,661,207 | 1,591,114 |
Freight out | 1,195,062 | 1,013,275 |
Inventory write-downs | 195,000 | 150,000 |
Other inventory adjustments | $ (308,057) | $ (74,466) |
SEGMENT INFORMATION AND GEOGR_5
SEGMENT INFORMATION AND GEOGRAPHIC DATA, Net Sales by Geographic Area (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Net Sales by Geographic Area [Abstract] | ||
Net sales | $ 43,089,024 | $ 39,235,839 |
Reportable Geographical Component [Member] | United States [Member] | ||
Net Sales by Geographic Area [Abstract] | ||
Net sales | 41,138,538 | 37,225,519 |
Reportable Geographical Component [Member] | International [Member] | ||
Net Sales by Geographic Area [Abstract] | ||
Net sales | $ 1,950,486 | $ 2,010,320 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
FAIR VALUE MEASUREMENTS [Abstract] | ||
Asset impairment | $ 0 | $ 0 |
NOTE RECEIVABLE (Details)
NOTE RECEIVABLE (Details) - Convertible Promissory Note [Member] - USD ($) | Jun. 30, 2022 | Mar. 05, 2021 |
Note Receivable [Abstract] | ||
Note receivable | $ 250,000 | |
Interest rate | 0.14% | |
Interest rate during event of default | 5% | |
Percentage of per unit price of units purchased by investors | 80% | |
Value used to compute equity securities received upon conversion | $ 33,500,000 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Inventories [Abstract] | ||
Total supplies inventory | $ 89,120 | $ 74,317 |
Total inventory | 33,512,800 | 29,172,720 |
Short-term portion | 11,024,276 | 11,450,141 |
Long-term portion | 22,488,524 | 17,722,579 |
Work-in-process inventories issued to active production jobs | $ 2,760,000 | 2,230,000 |
Percentage of jewel inventory not mounted in finished jewelry settings | 50% | |
Finished Jewelry [Member] | ||
Inventories [Abstract] | ||
Raw materials | $ 1,697,361 | 1,476,514 |
Work-in-process | 1,260,728 | 779,593 |
Finished goods | 12,100,910 | 8,025,816 |
Finished goods on consignment | 2,135,856 | 2,050,372 |
Total | 17,194,855 | 12,332,295 |
Loose Jewels [Member] | ||
Inventories [Abstract] | ||
Raw materials | 1,985,355 | 1,775,505 |
Work-in-process | 8,485,713 | 9,893,443 |
Finished goods | 5,454,266 | 4,942,192 |
Finished goods on consignment | 303,491 | 154,968 |
Total | $ 16,228,825 | $ 16,766,108 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Property and Equipment [Abstract] | ||
Property and equipment | $ 7,571,803 | $ 6,075,332 |
Less accumulated depreciation | (5,670,627) | (5,199,435) |
Property and equipment, net | 1,901,176 | 875,897 |
Depreciation expense | 471,000 | 560,000 |
Computer Software [Member] | ||
Property and Equipment [Abstract] | ||
Property and equipment | 2,392,465 | 2,015,548 |
Machinery and Equipment [Member] | ||
Property and Equipment [Abstract] | ||
Property and equipment | 1,182,171 | 1,250,345 |
Computer Hardware [Member] | ||
Property and Equipment [Abstract] | ||
Property and equipment | 1,621,198 | 1,274,561 |
Leasehold Improvements [Member] | ||
Property and Equipment [Abstract] | ||
Property and equipment | 1,847,227 | 1,162,995 |
Furniture and Fixtures [Member] | ||
Property and Equipment [Abstract] | ||
Property and equipment | $ 528,742 | $ 371,883 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Intangible assets [Abstract] | ||
Intangible assets | $ 1,266,067 | $ 1,238,064 |
Less accumulated amortization | (1,000,337) | (1,028,406) |
Intangible assets, net | 265,730 | 209,658 |
Amortization Expense [Abstract] | ||
Amortization expense | 8,000 | 7,000 |
2023 | 21,000 | |
2024 | 21,000 | |
2025 | 20,000 | |
2026 | 20,000 | |
2027 | 20,000 | |
Patents [Member] | ||
Intangible assets [Abstract] | ||
Intangible assets | $ 1,017,007 | 1,017,007 |
Weighted average remaining amortization period | 12 years 7 months 6 days | |
Trademarks [Member] | ||
Intangible assets [Abstract] | ||
Intangible assets | $ 242,342 | 214,339 |
Weighted average remaining amortization period | 13 years 6 months | |
License Rights [Member] | ||
Intangible assets [Abstract] | ||
Intangible assets | $ 6,718 | $ 6,718 |
ACCRUED EXPENSES AND OTHER LI_3
ACCRUED EXPENSES AND OTHER LIABILITIES (Details) - USD ($) | Jun. 30, 2022 | Jun. 30, 2021 |
ACCRUED EXPENSES AND OTHER LIABILITIES [Abstract] | ||
Accrued compensation and related benefits | $ 614,443 | $ 866,705 |
Deferred revenue | 452,866 | 774,891 |
Accrued sales tax | 295,743 | 555,547 |
Accrued cooperative advertising | 137,467 | 68,185 |
Accrued franchise taxes | 45,963 | 16,478 |
Other accrued expenses | 1 | 1 |
Accrued expenses and other liabilities | $ 1,546,483 | $ 2,281,807 |
COMMITMENTS AND CONTINGENCIES,
COMMITMENTS AND CONTINGENCIES, Lease Arrangements (Details) | 12 Months Ended | ||
Jan. 29, 2021 USD ($) | Jun. 30, 2022 USD ($) ft² | Jun. 30, 2021 USD ($) | |
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 | ||
Reimbursed leasehold improvements | $ 506,000 | ||
Balance Sheet Classifications of Leases [Abstract] | |||
Noncurrent operating lease ROU assets | 2,787,419 | $ 3,952,146 | |
Operating Lease Liabilities [Abstract] | |||
Current operating lease liabilities | 856,571 | 566,083 | |
Noncurrent operating lease liabilities | 2,846,805 | 3,600,842 | |
Total operating lease liabilities | 3,703,376 | ||
Operating lease cost | $ 596,000 | 610,000 | |
Assumed discount rate | 2.81% | ||
Remaining operating lease term | 4 years 3 months 29 days | ||
Future Lease Payments Under Operating Leases [Abstract] | |||
2023 | $ 869,742 | ||
2024 | 893,660 | ||
2025 | 918,236 | ||
2026 | 943,487 | ||
2027 | 317,327 | ||
Total lease payments | 3,942,452 | ||
Less: imputed interest | 239,076 | ||
Total operating lease liabilities | 3,703,376 | ||
Less: current lease liability | 856,571 | 566,083 | |
Total long-term lease liability | 2,846,805 | 3,600,842 | |
Cash paid for operating leases | 550,000 | 688,000 | |
ROU assets obtained in exchange for new operating lease liabilities | $ 0 | $ 3,908,249 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES, Purchase Commitments (Details) - SiC Materials [Member] $ in Thousands | 12 Months Ended | |
Jun. 30, 2022 USD ($) Option | Jun. 30, 2021 USD ($) | |
Purchase Commitments [Abstract] | ||
Percentage of materials committed to be purchased | 100% | |
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 | 26,550 | |
Purchases | 6,290 | $ 3,780 |
Minimum [Member] | ||
Purchase Commitments [Abstract] | ||
Future minimum annual purchase commitments | 4,000 | |
Maximum [Member] | ||
Purchase Commitments [Abstract] | ||
Future minimum annual purchase commitments | $ 10,000 |
DEBT, JPMorgan Chase Credit Fac
DEBT, JPMorgan Chase Credit Facility (Details) - JPMorgan Chase Credit Facility [Member] - USD ($) | 12 Months Ended | ||
Jul. 28, 2022 | Jul. 12, 2021 | Jun. 30, 2022 | |
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% | ||
Non-refundable origination fee | $ 10,000 | ||
Credit facility outstanding | $ 0 | ||
Subsequent Event [Member] | |||
Line of Credit [Abstract] | |||
Borrowing capacity | $ 5,000,000 | ||
Non-refundable origination fee | $ 0 | ||
Maximum [Member] | |||
Line of Credit [Abstract] | |||
Excess availability | $ 5,000,000 | ||
SOFR Rate [Member] | Subsequent Event [Member] | |||
Line of Credit [Abstract] | |||
Basis spread on variable rate | 1.25% | ||
Interest rate adjustment | 0.10% | ||
LIBOR [Member] | |||
Line of Credit [Abstract] | |||
Basis spread on variable rate | 1.25% |
DEBT, White Oak Credit Facility
DEBT, White Oak Credit Facility (Details) | 12 Months Ended | |||||
Aug. 14, 2020 USD ($) | Jul. 15, 2019 USD ($) | Jul. 13, 2018 USD ($) | Jun. 30, 2022 | Jun. 30, 2021 USD ($) Installment | Jul. 09, 2021 USD ($) | |
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% | |||||
Indebtedness to be maintained in event of default to avoid triggering of default terms | $ 250,000 | |||||
Credit facility outstanding | $ 0 | |||||
White Oak Credit Facility [Member] | Maximum [Member] | ||||||
Line of Credit [Abstract] | ||||||
Percentage of net borrowing base available for eligible inventory | 60% | |||||
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% |
DEBT, Paycheck Protection Progr
DEBT, Paycheck Protection Program Loan (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2022 | Jun. 18, 2020 | |
Paycheck Protection Program Loan [Abstract] | |||
Long-term debt | $ 0 | ||
PPP Loan [Member] | |||
Paycheck Protection Program Loan [Abstract] | |||
Principal amount | $ 965,000 | ||
Forgiveness of loan principal amount | $ 965,000 | ||
Interest rate | 1% | ||
PPP Loan [Member] | Gain on Extinguishment of Debt [Member] | |||
Paycheck Protection Program Loan [Abstract] | |||
Forgiveness of inception-to-date interest expense | $ 9,000 |
SHAREHOLDERS' EQUITY AND STOC_3
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Common and Preferred Stock (Details) | 12 Months Ended | |
Jun. 30, 2022 shares $ / shares | Jun. 30, 2021 $ / shares shares | |
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) | 30,747,759 | 29,913,095 |
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, Repurchases of Common Stock (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Apr. 29, 2022 | |
Repurchases of Common Stock [Abstract] | |||
Period over which common stock can be repurchased | 3 years | ||
Common stock, par value (in dollars per share) | $ 0 | $ 0 | |
Repurchases of common stock (in shares) | 30,287 | 0 | |
Repurchases of common stock | $ 38,164 | ||
Maximum [Member] | |||
Repurchases of Common Stock [Abstract] | |||
Authorized amount of common stock that can be repurchased | $ 5,000,000 |
SHAREHOLDERS' EQUITY AND STOC_5
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Dividends (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Dividends [Abstract] | ||
Cash dividends | $ 0 | $ 0 |
SHAREHOLDERS' EQUITY AND STOC_6
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Shelf Registration Statement (Details) $ in Thousands | Jun. 30, 2022 USD ($) |
Shelf Registration Statement [Abstract] | |
Shelf registration statement | $ 25,000 |
SHAREHOLDERS' EQUITY AND STOC_7
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Equity Compensation Plans (Details) - shares | 12 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2020 | |
Stock Options [Member] | |||
Equity Compensation Plans [Abstract] | |||
Options outstanding (in shares) | 1,658,803 | 2,235,286 | 2,809,095 |
2018 Equity Incentive Plan [Member] | |||
Equity Compensation Plans [Abstract] | |||
Number of shares authorized (in shares) | 3,300,000 | ||
Options outstanding (in shares) | 1,101,211 | 1,151,935 | |
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) | 557,592 | 1,083,351 | |
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_8
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Stock-Based Compensation (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Stock-Based Compensation [Abstract] | ||
Employee stock options | $ 243,576 | $ 234,947 |
Restricted stock awards | 530,765 | 117,636 |
Total | 774,341 | 352,583 |
Stock-based compensation capitalized as a cost of inventory | $ 0 | $ 0 |
SHAREHOLDERS' EQUITY AND STOC_9
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Stock Option Activity (Details) - Stock Options [Member] - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Stock Option Activity [Roll Forward] | ||
Outstanding, beginning balance (in shares) | 2,235,286 | 2,809,095 |
Granted (in shares) | 289,793 | 438,533 |
Exercised (in shares) | (622,226) | (947,435) |
Forfeited (in shares) | (24,753) | (7,000) |
Expired (in shares) | (219,297) | (57,907) |
Outstanding, ending balance (in shares) | 1,658,803 | 2,235,286 |
Weighted Average Exercise Price [Roll Forward] | ||
Outstanding, beginning balance (in dollars per share) | $ 1.24 | $ 1.19 |
Granted (in dollars per share) | 2.47 | 1.05 |
Exercised (in dollars per share) | 1.15 | 0.95 |
Forfeited (in dollars per share) | 1.04 | 1.23 |
Expired (in dollars per share) | 2.57 | 1.95 |
Outstanding, ending balance (in dollars per share) | 1.32 | 1.24 |
Fair Value of Stock Options [Abstract] | ||
Fair value of stock options (in dollars per share) | $ 1.27 | $ 0.54 |
Fair value of stock options vested | $ 222 | $ 650 |
SHAREHOLDERS' EQUITY AND STO_10
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Weighted Average Assumptions for Stock Options Granted (Details) - Stock Options [Member] | 12 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Weighted Average Assumptions for Stock Options Granted [Abstract] | ||
Dividend yield | 0% | 0% |
Expected volatility | 61.60% | 61.70% |
Risk-free interest rate | 1.46% | 0.36% |
Expected lives | 4 years 6 months | 4 years 10 months 24 days |
SHAREHOLDERS' EQUITY AND STO_11
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Stock Options Outstanding (Details) - Stock Options [Member] - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Jun. 30, 2022 | Jun. 30, 2021 | Jun. 30, 2020 | |
Stock Options Outstanding and Exercisable [Abstract] | |||
Options outstanding (in shares) | 1,658,803 | 2,235,286 | 2,809,095 |
Options outstanding, weighted average remaining contractual life | 6 years 10 months 24 days | ||
Options outstanding, weighted average exercise price (in dollars per share) | $ 1.32 | $ 1.24 | $ 1.19 |
Options exercisable (in shares) | 1,239,820 | ||
Options exercisable, weighted average remaining contractual life | 6 years 2 months 4 days | ||
Options exercisable, weighted average exercise price (in dollars per share) | $ 1.10 | ||
Options Vested or Expected to Vest [Abstract] | |||
Options vested or expected to vest (in shares) | 1,602,784 | ||
Options vested or expected to vest, weighted average remaining contractual life | 6 years 9 months 29 days | ||
Options vested or expected to vest, weighted average exercise price (in dollars per share) | $ 1.30 | ||
Unrecognized Stock-Based Compensation Expense [Abstract] | |||
Unrecognized stock-based compensation expense | $ 303 | ||
Unrecognized stock-based compensation expense, period for recognition | 25 months | ||
Options outstanding, aggregate intrinsic value | $ 410 | ||
Options vested or expected to vest, aggregate intrinsic value | 410 | ||
Options exercised, aggregate intrinsic value | 886 | ||
Tax benefit associated with stock options exercised | $ 89 | $ 147 | |
Stock option exercises (in shares) | 622,226 | 947,435 |
SHAREHOLDERS' EQUITY AND STO_12
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Restricted Stock (Details) - Restricted Stock [Member] - USD ($) | 12 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Restricted Stock Activity [Roll Forward] | ||
Unvested, beginning balance (in shares) | 178,750 | 162,500 |
Granted (in shares) | 242,725 | 178,750 |
Vested (in shares) | (242,725) | |
Canceled (in shares) | (162,500) | |
Unvested, ending balance (in shares) | 178,750 | 178,750 |
Weighted Average Grant Date Fair Value [Roll Forward] | ||
Unvested, beginning balance (in dollars per share) | $ 0.72 | $ 1.57 |
Granted (in dollars per share) | 2.75 | 0.72 |
Vested (in dollars per share) | 1.25 | |
Canceled (in dollars per share) | 1.57 | |
Unvested, ending balance (in dollars per share) | $ 2.75 | $ 0.72 |
Unrecognized Stock-Based Compensation Expense [Abstract] | ||
Unrecognized stock-based compensation expense | $ 48,000 |
INCOME TAXES, Income Tax Net (E
INCOME TAXES, Income Tax Net (Expense) Benefit (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Current [Abstract] | ||
Federal | $ 0 | $ 0 |
State | (19,606) | (18,409) |
Total current expense | (19,606) | (18,409) |
Deferred [Abstract] | ||
Federal | (493,910) | 6,062,222 |
State | (5,016) | 288,608 |
Total deferred (expense) benefit | (498,926) | 6,350,830 |
Income tax net (expense) benefit | $ (518,532) | $ 6,332,421 |
INCOME TAXES, Noncurrent Deferr
INCOME TAXES, Noncurrent Deferred Tax Assets, Net (Details) - USD ($) | Jun. 30, 2022 | Jun. 30, 2021 |
Deferred Tax Assets [Abstract] | ||
Reversals and accruals | $ 487,333 | $ 454,846 |
Federal net operating loss ("NOL") carryforwards | 3,471,594 | 3,989,278 |
State NOL carryforwards | 532,300 | 585,563 |
Hong Kong NOL carryforwards | 995,566 | 995,566 |
Federal benefit on state taxes under uncertain tax positions | 0 | 2,073 |
Stock-based compensation | 155,139 | 149,047 |
Section 263A adjustment | 118,916 | 122,562 |
Inventory valuation reserve | 1,631,339 | 1,605,871 |
Operating lease liabilities | 850,910 | 942,471 |
Valuation allowance | (1,442,213) | (1,452,296) |
Noncurrent deferred tax assets, net | 6,800,884 | 7,394,981 |
Deferred Tax Liabilities [Abstract] | ||
Prepaid expenses | (52,792) | (44,890) |
Depreciation | (255,734) | (105,369) |
Operating lease right-of-use assets | (640,454) | (893,892) |
Noncurrent deferred tax liabilities | (948,980) | (1,044,151) |
Total noncurrent deferred tax assets, net | $ 5,851,904 | $ 6,350,830 |
INCOME TAXES, Effective Income
INCOME TAXES, Effective Income Tax Rate Reconciliation (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Effective Income Tax Rate Reconciliation [Abstract] | ||
Anticipated income tax expense at the statutory rate | $ (607,414) | $ (1,360,452) |
State income tax expense, net of federal tax effect | (36,928) | (84,288) |
Income tax effect of uncertain tax positions | 7,804 | (1,468) |
Return to provision adjustments | 405 | (45) |
Stock-based compensation | 131,898 | 38,197 |
PPP Loan forgiveness | 0 | 202,729 |
Other changes in deferred income tax assets, net | (24,380) | 1,348 |
Decrease in valuation allowance | 10,083 | 7,536,400 |
Income tax net (expense) benefit | $ (518,532) | $ 6,332,421 |
Combined federal and state statutory tax rate | 22.45% | 22.24% |
Federal income tax rate | 21% | 21% |
State income tax rate | 1.45% | 1.24% |
Effective tax rate | 17.93% |
INCOME TAXES, Tax Credits and N
INCOME TAXES, Tax Credits and Net Operating Loss Carryforwards (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
Income Taxes [Abstract] | ||
Deferred tax assets | $ 5,851,904 | $ 6,350,830 |
Income tax (expense) benefit | (518,532) | 6,332,421 |
Deferred (expense) benefit | (498,926) | 6,350,830 |
Valuation allowance | 1,442,213 | 1,452,296 |
Federal [Member] | ||
Income Taxes [Abstract] | ||
Net operating loss carryforwards | 16,530,000 | 19,000,000 |
North Carolina [Member] | ||
Income Taxes [Abstract] | ||
Net operating loss carryforwards | 19,770,000 | 19,870,000 |
Hong Kong [Member] | ||
Income Taxes [Abstract] | ||
Net operating loss carryforwards | 6,030,000 | 6,030,000 |
Valuation allowance | $ 996,000 | $ 996,000 |
MAJOR CUSTOMERS AND CONCENTRA_3
MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK (Details) - Customer Concentration Risk [Member] | 12 Months Ended | |||
Jun. 30, 2022 | Jun. 30, 2021 | |||
Accounts Receivable [Member] | Customer A [Member] | ||||
Major Customers and Concentration of Credit Risk [Abstract] | ||||
Concentration risk, percentage | 29% | 22% | ||
Accounts Receivable [Member] | Customer B [Member] | ||||
Major Customers and Concentration of Credit Risk [Abstract] | ||||
Concentration risk, percentage | 20% | 30% | ||
Accounts Receivable [Member] | Customer C [Member] | ||||
Major Customers and Concentration of Credit Risk [Abstract] | ||||
Concentration risk, percentage | 13% | [1] | ||
Accounts Receivable [Member] | Customer D [Member] | ||||
Major Customers and Concentration of Credit Risk [Abstract] | ||||
Concentration risk, percentage | [2] | 14% | ||
Net Sales [Member] | Customer A [Member] | ||||
Major Customers and Concentration of Credit Risk [Abstract] | ||||
Concentration risk, percentage | [3] | 12% | ||
Net Sales [Member] | Customer B [Member] | ||||
Major Customers and Concentration of Credit Risk [Abstract] | ||||
Concentration risk, percentage | 14% | 13% | ||
[1]Customer C did not have individual balances that represented 10% or more of total gross accounts receivable as of June 30, 2021.[2]Customer D did not have individual balances that represented 10% or more of total gross accounts receivable as of June 30, 2022.[3]Customer A did not have net sales that represented 10% or more of total net sales for the year ended June 30, 2022. |
EMPLOYEE BENEFIT PLAN (Details)
EMPLOYEE BENEFIT PLAN (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2022 | Jun. 30, 2021 | |
EMPLOYEE BENEFIT PLAN [Abstract] | ||
Company contributions to 401(k) Plan | $ 76 | $ 72 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) | 2 Months Ended | 12 Months Ended | ||
Aug. 26, 2022 | Jun. 30, 2022 | Jun. 30, 2021 | Jul. 28, 2022 | |
Subsequent Events [Abstract] | ||||
Repurchases of common stock (in shares) | 30,287 | 0 | ||
Repurchases of common stock | $ 38,164 | |||
JPMorgan Chase Credit Facility [Member] | ||||
Subsequent Events [Abstract] | ||||
Borrowing capacity | $ 5,000,000 | |||
Subsequent Event [Member] | ||||
Subsequent Events [Abstract] | ||||
Repurchases of common stock (in shares) | 273,257 | |||
Repurchases of common stock | $ 356,120 | |||
Subsequent Event [Member] | JPMorgan Chase Credit Facility [Member] | ||||
Subsequent Events [Abstract] | ||||
Borrowing capacity | $ 5,000,000 |