Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Jun. 30, 2023 | Oct. 06, 2023 | Dec. 31, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Annual Report | true | ||
Document Period End Date | Jun. 30, 2023 | ||
Current Fiscal Year End Date | --06-30 | ||
Document Fiscal Year Focus | 2023 | ||
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 | ||
Document Financial Statement Error Correction [Flag] | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 20,668,921 | ||
Entity Common Stock, Shares Outstanding | 30,523,705 | ||
Auditor Firm ID | 243 | ||
Auditor Name | BDO USA, P.C. | ||
Auditor Location | Raleigh, North Carolina |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2023 | Jun. 30, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 10,446,532 | $ 15,668,361 |
Restricted cash | 5,122,379 | 5,510,979 |
Accounts receivable, net | 380,085 | 2,220,816 |
Inventory, net | 7,476,046 | 11,024,276 |
Note receivable | 250,000 | 250,000 |
Prepaid expenses and other assets | 901,354 | 1,190,012 |
Total current assets | 24,576,396 | 35,864,444 |
Long-term assets: | ||
Inventory, net | 19,277,530 | 22,488,524 |
Property and equipment, net | 2,491,569 | 1,901,176 |
Intangible assets, net | 305,703 | 265,730 |
Operating lease right-of-use assets | 2,183,232 | 2,787,419 |
Deferred income taxes, net | 0 | 5,851,904 |
Other assets | 49,658 | 49,658 |
Total long-term assets | 24,307,692 | 33,344,411 |
TOTAL ASSETS | 48,884,088 | 69,208,855 |
Current liabilities: | ||
Accounts payable | 4,786,155 | 4,401,229 |
Operating lease liabilities, current portion | 880,126 | 856,571 |
Accrued expenses and other liabilities | 1,395,479 | 1,546,483 |
Total current liabilities | 7,061,760 | 6,804,283 |
Long-term liabilities: | ||
Noncurrent operating lease liabilities | 2,047,742 | 2,846,805 |
Total long-term liabilities | 2,047,742 | 2,846,805 |
Total liabilities | 9,109,502 | 9,651,088 |
Commitments and contingencies (Note 10) | ||
Shareholders' equity: | ||
Common stock, no par value; 50,000,000 shares authorized; 30,912,108 shares issued and 30,523,705 shares outstanding at June 30, 2023 and 30,778,046 shares issued and 30,747,759 shares outstanding at June 30, 2022 | 57,242,211 | 57,242,211 |
Additional paid-in capital | 26,205,919 | 25,956,491 |
Treasury stock, at cost, 388,403 shares and 30,287 shares at June 30, 2023 and 2022, respectively | (489,979) | (38,164) |
Accumulated deficit | (43,183,565) | (23,602,771) |
Total shareholders' equity | 39,774,586 | 59,557,767 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 48,884,088 | $ 69,208,855 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2023 | Jun. 30, 2022 |
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) | 30,912,108 | 30,778,046 |
Common stock, shares outstanding (in shares) | 30,523,705 | 30,747,759 |
Treasury stock (in shares) | 388,403 | 30,287 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract] | ||
Net sales | $ 29,946,234 | $ 43,089,024 |
Costs and expenses: | ||
Cost of goods sold | 25,212,383 | 22,845,702 |
Sales and marketing | 13,686,049 | 12,421,138 |
General and administrative | 5,023,822 | 4,948,980 |
Total costs and expenses | 43,922,254 | 40,215,820 |
(Loss) Income from operations | (13,976,020) | 2,873,204 |
Other income (expense): | ||
Interest income | 297,262 | 19,277 |
Loss on foreign currency exchange | 0 | (34) |
Total other income, net | 297,262 | 19,243 |
(Loss) Income before income taxes | (13,678,758) | 2,892,447 |
Income tax expense | (5,902,036) | (518,532) |
Net (loss) income | $ (19,580,794) | $ 2,373,915 |
Net (loss) income per common share: | ||
Basic (in dollars per share) | $ (0.64) | $ 0.08 |
Diluted (in dollars per share) | $ (0.64) | $ 0.08 |
Weighted average number of shares used in computing net (loss) income per common share: | ||
Basic (in shares) | 30,376,745 | 30,363,076 |
Diluted (in shares) | 30,376,745 | 31,316,028 |
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, 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 (loss) 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 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Stock-based compensation | 0 | 249,428 | 0 | 0 | $ 249,428 |
Issuance of restricted stock | $ 0 | 0 | 0 | 0 | 0 |
Issuance of restricted stock (in shares) | 178,750 | ||||
Cancellation of restricted stock | $ 0 | 0 | 0 | 0 | 0 |
Cancellation of restricted stock (in shares) | (44,688) | ||||
Repurchases of common stock | $ 0 | 0 | $ (451,815) | 0 | $ (451,815) |
Repurchases of common stock (in shares) | (358,116) | (358,116) | |||
Net (loss) income | 0 | 0 | $ 0 | (19,580,794) | $ (19,580,794) |
Balance at Jun. 30, 2023 | $ 57,242,211 | $ 26,205,919 | $ (489,979) | $ (43,183,565) | $ 39,774,586 |
Balance (in shares) at Jun. 30, 2023 | 30,523,705 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net (loss) income | $ (19,580,794) | $ 2,373,915 |
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 653,157 | 479,308 |
Stock-based compensation | 249,428 | 774,341 |
Provision for uncollectible accounts | 98,000 | 14,000 |
Recovery of sales returns | (23,000) | (84,000) |
Inventory write-downs | 6,004,000 | 195,000 |
Recovery of accounts receivable discounts | (4,496) | (4,285) |
Deferred income taxes | 5,851,904 | 498,926 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,770,227 | (484,457) |
Inventory | 755,224 | (4,535,080) |
Prepaid expenses and other assets, net | 892,845 | 926,780 |
Accounts payable | 384,926 | 1,626,856 |
Accrued income taxes | 0 | (9,878) |
Accrued expenses and other liabilities | (926,512) | (1,198,873) |
Net cash (used in) provided by operating activities | (3,875,091) | 572,553 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | (1,229,571) | (1,496,471) |
Payments for intangible assets | (53,952) | (64,188) |
Net cash used in investing activities | (1,283,523) | (1,560,659) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Repurchases of common stock | (451,815) | (38,164) |
Stock option exercises | 0 | 758,659 |
Net cash (used in) provided by financing activities | (451,815) | 720,495 |
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | (5,610,429) | (267,611) |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF YEAR | 21,179,340 | 21,446,951 |
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, END OF YEAR | 15,568,911 | 21,179,340 |
Supplemental disclosure of cash flow information: | ||
Cash paid during the year for income taxes | $ 5,900 | $ 0 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 12 Months Ended |
Jun. 30, 2023 | |
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. In addition, In May 2023, the Company launched charlesandcolvarddirect.com, a direct-to-wholesaler sales portal, which is a gemstone product disposition wholesale outlet. The Company sells at retail prices to end-consumers through its own Charles & Colvard Signature Showroom , and third-party online marketplaces |
BASIS OF PRESENTATION AND SIGNI
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Jun. 30, 2023 | |
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 organized 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 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 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 consolidated financial statements relate to valuation and classification of inventories, accounts receivable reserves, stock-based compensation, and revenue recognition. Changes in estimates are reflected in the consolidated financial statements in the period in which the change in estimate occurs Reclassification – Certain amounts in the Company’s consolidated financial statements for the fiscal year ended June 30, 2022 have been reclassified to conform to current presentation, principally amounts presented in Note 9, “Accrued Expenses and Other Liabilities”, relating to the combination of accrued sales tax and accrued franchise taxes, which had previously been presented separately. These reclassifications had no impact on the Company’s consolidated financial position or consolidated results of operations as of or for the fiscal years ended June 30, 2023 and 2022. Cash and Cash Equivalents – 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 as amended July and amended further effective June 21, 2023 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”. 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 repurchases 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 $30 and ,000, respectively, 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.” 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, 2023 2022 Cash and cash equivalents $ 10,446,532 $ 15,668,361 Restricted cash 5,122,379 5,510,979 Total cash, cash equivalents, and restricted cash $ 15,568,911 $ 21,179,340 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 uncollectible 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, 2023 2022 Balance, beginning of year $ 591,000 $ 675,000 Additions charged to operations 5,405,613 6,012,069 Sales returns (5,428,613 ) (6,096,069 ) Balance, end of year $ 568,000 $ 591,000 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 $183,000 and $85,000 at June 30, 2023 and 2022, The following are reconciliations of the allowance for uncollectible accounts balances as of the periods presented: Year Ended June 30, 2023 2022 Balance, beginning of year $ 85,000 $ 71,000 Additions charged to operations 98,000 14,000 Balance, end of year $ 183,000 $ 85,000 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 inventory write-downs, 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. The 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, 2023, 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 which is typically upon shipment but may be upon delivery depending on the contractual arrangement with the customer The amounts included in deferred revenue of $452,866 and $774,891 at June 30, 2022 and June 30, 2021, respectively, were recorded in net sales during the fiscal years ended June 30, 2023 and June 30, 2022, respectively. The opening accounts receivable, net balance as of July 1, 2021 was $1,662,074 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, 2023 and 2022, the Company’s refund liabilities balances were $568,000 and $591,000, respectively, and are included as allowances for sales returns within accounts receivable, net, in the accompanying consolidated balance sheets. As of June 30, 2023 and 2022, the Company’s returns asset balances were $290,000 and $260,000, 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, 2023 and 2022, these approximate amounts were $606,000 and $792,000, 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, 2023 and 2022, were approximately $7.89 million and $7.38 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 (Loss) Income per Common Share – As of the dates presented, t he following table reconciles the differences between the basic and diluted net (loss) income per share presentations: Year Ended June 30, 2023 2022 Numerator: Net (loss) income $ (19,580,794 ) $ 2,373,915 Denominator: Weighted average common shares outstanding: Basic 30,376,745 30,363,076 Effect of dilutive securities - 952,952 Diluted 30,376,745 31,316,028 Net (loss) income per common share: Basic $ (0.64 ) $ 0.08 Diluted $ (0.64 ) $ 0.08 F or the fiscal year ended June 30, 2023, stock options to purchase approximately 1.82 million shares were excluded from the computation of diluted net loss per common share because the effect of inclusion of such amounts would be anti-dilutive to net loss per common share. For the fiscal year ended June 30, 2022, stock options to purchase approximately 758,000 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 179,000 shares of un vested restricted stock are excluded from the computation of diluted net loss per common share as of June 30, 2023 because the shares are performance-based, and the underlying conditions have not been met as of the period presented and the effects of the inclusion of such shares would be anti-dilutive to net loss per common share. Approximately 45,000 shares of un vested restricted stock were excluded from the computation of diluted net income per common share as of June 30, 2022 because the shares were performance-based, and the underlying conditions had not been met as of June 30, 2022 |
SEGMENT INFORMATION AND GEOGRAP
SEGMENT INFORMATION AND GEOGRAPHIC DATA | 12 Months Ended |
Jun. 30, 2023 | |
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, including its own Charles & Colvard Signature Showroom and charlesandcolvarddirect.com . The Company evaluates the financial performance of its segments based on net sales and product line gross profit, or the excess of product line sales over product line cost of goods sold. 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. Summary financial information by reportable segment for the periods presented is as follows: Year Ended June 30, 2023 Online Channels Traditional Total Net sales Finished jewelry $ 19,607,941 $ 4,377,673 $ 23,985,614 Loose jewels 1,884,939 4,075,681 5,960,620 Total $ 21,492,880 $ 8,453,354 $ 29,946,234 Product line cost of goods sold Finished jewelry $ 9,214,749 $ 3,182,342 $ 12,397,091 Loose jewels 705,576 2,039,401 2,744,977 Total $ 9,920,325 $ 5,221,743 $ 15,142,068 Product line gross profit Finished jewelry $ 10,393,192 $ 1,195,331 $ 11,588,523 Loose jewels 1,179,363 2,036,280 3,215,643 Total $ 11,572,555 $ 3,231,611 $ 14,804,166 Depreciation and amortization $ 215,978 $ 437,179 $ 653,157 Capital expenditures $ 423,150 $ 806,421 $ 1,229,571 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 Depreciation and amortization $ 235,643 $ 243,665 $ 479,308 Capital expenditures $ 305,586 $ 1,190,885 $ 1,496,471 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, 2023 2022 Product line cost of goods sold $ 15,142,068 $ 20,102,490 Non-capitalized manufacturing and production control expenses 2,210,494 1,661,207 Freight out 1,068,437 1,195,062 Inventory write-downs 6,004,000 195,000 Other inventory adjustments 787,384 (308,057 ) Cost of goods sold $ 25,212,383 $ 22,845,702 A reconciliation of the Company’s consolidated product line gross profit to the Company’s consolidated net (loss) income before income taxes is as follows: Year Ended June 30, 2023 2022 Product line gross profit $ 14,804,166 $ 22,986,534 Non-allocated cost of goods sold (10,070,315 ) (2,743,212 ) Sales and marketing (13,686,049 ) (12,421,138 ) General and administrative (5,023,822 ) (4,948,980 ) Total other income, net 297,262 19,243 (Loss) Income before income taxes $ (13,678,758 ) $ 2,892,447 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, charlesandcolvarddirect.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, 2023 and 2022, 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, 2023 2022 Net sales United States $ 29,056,696 $ 41,138,538 International 889,538 1,950,486 Total $ 29,946,234 $ 43,089,024 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Jun. 30, 2023 | |
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 the Company’s management. 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. There were no assets measured at fair value on a non-recurring basis as of June 30, 2023 or 2022 |
NOTE RECEIVABLE
NOTE RECEIVABLE | 12 Months Ended |
Jun. 30, 2023 | |
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 March 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. Effective September 26, 2022, the Company further amended the Convertible Promissory Note (the “September 2022 Amendment”) and changed the maturity date to June 20, 2024 (the “Maturity Date”). In accordance with the terms of the September 2022 Amendment, the note receivable is classified as a current note receivable within the accompanying consolidated financial statements as of June 30, 2023. Interest is accrued at a simple rate of 0.14% per annum and will continue to 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, 2023 | |
INVENTORIES [Abstract] | |
INVENTORIES | 6. INVENTORIES The Company’s total inventories, net consisted of the following as of the dates presented: June 30, 2023 2022 Finished jewelry: Raw materials $ 1,288,906 $ 1,697,361 Work-in-process 1,223,670 1,260,728 Finished goods 12,772,611 12,100,910 Finished goods on consignment 2,039,506 2,135,856 Total finished jewelry 17,324,693 17,194,855 Loose jewels: Raw materials 421,603 1,985,355 Work-in-process 6,131,853 8,485,713 Finished goods 2,294,270 5,454,266 Finished goods on consignment 254,323 303,491 Total loose jewels 9,102,049 16,228,825 Total supplies inventory 326,834 89,120 Total inventory $ 26,753,576 $ 33,512,800 As of the dates presented, the Company’s total inventories, are classified as follows: June 30, 2023 2022 Short-term portion $ 7,476,046 $ 11,024,276 Long-term portion 19,277,530 22,488,524 Total inventory $ 26,753,576 $ 33,512,800 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 goods set with 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, 2023 and 2022, work-in-process inventories issued to active production jobs approximated $1.99 million and $2.76 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 inventory write-downs, which also include significant estimates by management. As a result of the deterioration of marketability of certain of the Company’s loose jewels inventory, management determined that the inventory has lost certain of its revenue-generating ability and the net realizable value of this inventory has fallen below that of its historical carrying cost. The multiple grades of the Company’s Moissanite by Charles & Colvard Included in cost of goods sold during the quarter and year ended June 30, 2023, is the write-down of approximately $5.9 million of a portion of the Company’s non- Forever One Forever One |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Jun. 30, 2023 | |
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, 2023 2022 Computer software $ 2,865,994 $ 2,392,465 Machinery and equipment 1,203,585 1,182,171 Computer hardware 1,841,972 1,621,198 Leasehold improvements 2,213,330 1,847,227 Furniture and fixtures 676,014 528,742 Total 8,800,895 7,571,803 Less accumulated depreciation (6,309,326 ) (5,670,627 ) Property and equipment, net $ 2,491,569 $ 1,901,176 Depreciation expense for the fiscal years ended June 30, 2023 and 2022 was approximately $639,000 and $471,000, respectively. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Jun. 30, 2023 | |
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 2023 2022 (in Years) Patents $ 1,017,007 $ 1,017,007 11.6 Trademarks 296,294 242,342 9.0 License rights 6,718 6,718 - Total 1,320,019 1,266,067 Less accumulated amortization (1,014,316 ) (1,000,337 ) Intangible assets, net $ 305,703 $ 265,730 Amortization expense for the fiscal years ended June 30, 2023 and 2022 was approximately $14,000 and $8,000, respectively. Amortization expense on existing intangible assets is estimated to be approximately $28,000 for the fiscal year ending June 30, 2024, approximately $27,000 for each of the fiscal years ending June 30, 2025, 2026, and 2027, and approximately $26,000 for the fiscal year ending June 30, 2028. The amortization expense for the remaining unamortized balance of the total intangible assets, net, will be recognized in fiscal years ending after June 30, 2028. |
ACCRUED EXPENSES AND OTHER LIAB
ACCRUED EXPENSES AND OTHER LIABILITIES | 12 Months Ended |
Jun. 30, 2023 | |
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, 2023 2022 Deferred revenue $ 566,896 $ 452,866 Accrued compensation and related benefits 382,630 614,443 Accrued cooperative advertising 243,861 137,467 Accrued sales tax and franchise taxes 202,091 341,706 Other accrued expenses 1 1 Accrued expenses and other liabilities $ 1,395,479 $ 1,546,483 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Jun. 30, 2023 | |
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 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. The Company has been 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 is being 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, 2023, the Company’s balance sheet classifications of its leases are as follows: Operating Leases: Noncurrent operating lease ROU assets $ 2,183,232 Current operating lease liabilities $ 880,126 Noncurrent operating lease liabilities 2,047,742 Total operating lease liabilities $ 2,927,868 The Company’s total operating lease cost was approximately $698,000 and $596,000 for the fiscal years ended June 30, 2023 and 2022, respectively. 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 3.33 years. As of June 30, 2023, the Company’s remaining future payments under operating leases for each fiscal year ending June 30 are as follows: 2024 $ 893,660 2025 918,236 2026 943,487 2027 317,327 Total lease payments 3,072,710 Less: imputed interest 144,842 Present value of lease payments 2,927,868 Less: current lease liability 880,126 Total long-term lease liability $ 2,047,742 The Company makes cash payments for amounts included in the measurement of its lease liabilities. During the fiscal years ended June 30, 2023 and 2022, cash paid for operating leases was approximately $916,000 and $550,000, respectively. 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 $24.75 million remains to be purchased as of June 30, 2023. 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, 2023 and 2022, the Company purchased approximately $1.80 million and $6.29 million, respectively, of SiC crystals from Wolfspeed. The Company has made no purchases of SiC crystals during the nine-month period ended June 30, 2023 while in discussions regarding the terms of the Supply Agreement. On July 28, 2023, Wolfspeed initiated a confidential arbitration against the Company for breach of contract claiming damages, plus interest, costs, and attorneys’ fees. Wolfspeed has alleged that the Company failed to satisfy the purchase obligations provided in the Supply Agreement for Fiscal 2023 in the amount of $4.25 million and failed to pay for $3.30 million of SiC crystals Wolfspeed delivered to the Company. Wolfspeed further alleges that the Company intends to breach its remaining purchase obligations under the Supply Agreement, representing an additional $18.5 million in alleged damages. While the Company is evaluating Wolfspeed’s claims, the Company disputes the amount sought, and intends to vigorously defend its position, including by asserting rights and defenses that the Company may have under the Supply Agreement at law and in equity. A hearing has not yet been scheduled. The final determinations of liability arising from this matter will only be made following comprehensive investigations, discovery and arbitration processes. |
DEBT
DEBT | 12 Months Ended |
Jun. 30, 2023 | |
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 $5.1 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. Effective, June 21, 2023, the JPMorgan Chase Credit Facility was amended further to extend the maturity date to July 31, 2024. 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 the July 31, 2022 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”), effective as of June 21, 2023, 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, 2024, 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 amending 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, 2023, the Company had not borrowed against the JPMorgan Chase Credit Facility. The Company had no outstanding debt during the fiscal year ended June 30, 2023. |
SHAREHOLDERS' EQUITY AND STOCK-
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION | 12 Months Ended |
Jun. 30, 2023 | |
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, 2023 and 2022, it had 30,523,705 and 30,747,759 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, 2023. 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, 2023 and 2022, with the purchase price recorded within treasury stock. During the fiscal years ended June 30, 2023 and 2022, the Company repurchased 358,116 shares and 30,287 shares, respectively, of the Company’s common stock for an aggregate price of $451,815 and $38,164, respectively, pursuant to the repurchase authorization. Dividends The Company paid no cash dividends during the fiscal years ended June 30, 2023 and 2022. 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, 2023 and 2022, there were 1,261,331 and 1,101,211 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, 2023 and 2022, there were 556,334 and 557,592 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, 2023 2022 Employee stock options $ 225,694 $ 243,576 Restricted stock awards 23,734 530,765 Total $ 249,428 $ 774,341 No stock-based compensation was capitalized as a cost of inventory during the fiscal years ended June 30, 2023 and 2022. Stock Options The following is a summary of the stock option activity for the fiscal years ended June 30, 2023 and 2022: Shares Weighted Average Exercise Price 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 Granted 270,787 $ 1.02 Forfeited (65,765 ) $ 1.99 Expired (46,160 ) $ 1.76 Outstanding at June 30, 2023 1,817,665 $ 1.24 The weighted average grant date fair value of stock options granted during the fiscal years 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, 2023 2022 Dividend yield 0.0 % 0.0 % Expected volatility 61.0 % 61.6 % Risk-free interest rate 3.75 % 1.46 % Expected lives (years) 5.4 4.5 The following tables summarize information in connection with stock options outstanding at June 30, 2023: Options Outstanding Options Exercisable Options Vested or Expected to Vest Balance as of June 30, 2023 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Balance as of June 30, 2023 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Balance as of June 30, 2023 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price 1,817,665 6.27 $ 1.24 1,405,916 5.50 $ 1.22 1,789,617 6.23 $ 1.23 As of June 30, 2023, the unrecognized stock-based compensation expense related to unvested stock options was approximately $171,000, which is expected to be recognized over a weighted average period of approximately 15 months. The aggregate intrinsic value of stock options outstanding and vested or expected to vest at June 30, 2023 and 2022 was approximately $127,000 and $410,000, respectively. These amounts are before applicable income taxes and represent the closing market price of the Company’s common stock at June 30, 2023 and 2022, respectively, 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 year ended June 30, 2022, the total estimated tax benefit associated with certain stock options that were exercised during each period was approximately $89,000. There were no stock options exercised during the fiscal year ended June 30, 2023. Restricted Stock The following is a summary of the restricted stock activity for the fiscal years ended June 30, 2023 and 2022: Shares Weighted Average Grant Date Fair Value 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 Granted 178,750 $ 0.97 Vested (134,063 ) $ 2.75 Cancelled (44,687 ) $ 2.75 Unvested at June 30, 2023 178,750 $ 0.97 The unvested restricted shares as of June 30, 2023 are all , none of which is expected to be recognized. The performance-based restricted shares expired, as the performance conditions were not met |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Jun. 30, 2023 | |
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 for the periods presented comprises the following: Year Ended June 30, 2023 2022 Current: Federal $ - $ - State (50,132 ) (19,606 ) Total current (expense) benefit (50,132 ) (19,606 ) Deferred: Federal (5,568,311 ) (493,910 ) State (283,593 ) (5,016 ) Total deferred (expense) benefit (5,851,904 ) (498,926 ) Income tax net (expense) benefit $ (5,902,036 ) $ (518,532 ) Significant components of the Company’s noncurrent deferred tax assets, net, as of the dates presented are as follows: June 30, 2023 2022 Deferred tax assets: Reversals and accruals $ 183,907 $ 487,333 Federal net operating loss (“NOL”) carryforwards 5,198,460 3,471,594 State NOL carryforwards 743,287 532,300 Hong Kong NOL carryforwards 995,566 995,566 Section 263A adjustment 120,078 118,916 Stock-based compensation 107,842 155,139 Inventory valuation & obsolescence reserve 3,465,024 1,631,339 Operating lease liabilities 703,254 850,910 Noncurrent deferred tax assets 11,517,418 8,243,097 Valuation allowance (10,562,696 ) (1,442,213 ) Noncurrent deferred tax assets, net 954,722 6,800,884 Deferred tax liabilities: Prepaid expenses (15,770 ) (52,792 ) Depreciation (414,555 ) (255,734 ) Operating lease right-of-use assets (524,397 ) (640,454 ) Noncurrent deferred tax liabilities (954,722 ) (948,980 ) Total noncurrent deferred tax assets, net $ - $ 5,851,904 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 for the periods presented: Year Ended June 30, 2023 2022 Anticipated income tax benefit (expense) at the statutory rate $ 2,872,539 $ (607,414 ) State income tax benefit (expense), net of federal tax effect 430,355 (36,928 ) Income tax effect of uncertain tax positions - 7,804 Return to provision adjustments - 405 Stock-based compensation (67,627 ) 131,898 Other changes in deferred income tax assets, net (16,820 ) (24,380 ) (Increase) Decrease in valuation allowance (9,120,483 ) 10,083 Income tax net (expense) benefit $ (5,902,036 ) $ (518,532 ) The Company’s statutory tax rate as of June 30, 2023 is 22.94% and consisted of the federal income tax rate of 21.00% and a blended state income tax rate of 1.94%, net of the federal benefit. The Company’s statutory tax rate as of the fiscal year ended June 30, 2022 was 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 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. Driven by the establishment of the valuation allowance during the year ended June 30, 2023, the Company’s effective tax rate for the fiscal year ended June 30, 2023 was a negative 43.15%. For the fiscal year ended June 30, 2022, the Company’s effective income tax rate was 17.93%. As of each reporting date, management considers new evidence, both positive and negative, that could impact the Company’s view with regard to future realization of deferred tax assets. During the three months ended March 31, 2023, management determined that due to the worsening global macro-economic conditions and heightened levels of inflation, including fears of recession, coupled with the effects from worldwide political unrest and the ongoing economic impact from the COVID pandemic, the risks associated with these conditions led management to conclude that it was not more likely than not the Company would have sufficient future taxable income to utilize its deferred tax assets. Additionally, the Company’s management determined that the positive evidence was no longer sufficient to offset available negative evidence, primarily as a result of the pre-tax operating losses incurred during the three- and nine-month periods ended March 31, 2023. Consequently, management established a full valuation allowance against the Company’s deferred tax assets. As of June 30, 2023, the Company’s management determined that sufficient negative evidence continued to exist to conclude it was uncertain that the Company would have sufficient future taxable income to utilize its deferred tax assets, and therefore, the Company maintained a full valuation allowance against its deferred tax assets. Conversely, as of June 30, 2022, the Company’s management determined at that time 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 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 was more likely than not deferred tax assets of approximately $5.85 million remained realizable. However, 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 would generate positive taxable income to utilize the associated deferred tax assets. In addition, a valuation allowance remained 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, 2023 and 2022, the Company had federal tax net operating loss carryforwards of approximately $24.76 million and $16.53 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 $20.01 million and $19.77 million, respectively, expiring between 2023 and 2035; and various other state tax net operating loss carryforwards expiring between 2027 and 2040, which can be used to offset against future state taxable income. As of each of June 30, 2023 and 2022, 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, 2023 and 2022, 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, 2023 | |
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, 2023 2022 Customer A 24 % * % Customer B 14 % * % Customer C 14 % * % Customer D ** % 29 % Customer E ** % 20 % Customer F ** % 13 % * Customers A, B, and C did not have individual balances that represented 10% or more of total gross accounts receivable as of June 30, 2022. ** Customers D, E, and F did not have individual balances that represented 10% or more of total gross accounts receivable as of June 30, 2023. 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, 2023 2022 Customer E 14 % 14 % The customer above is included in the Company’s Traditional segment. 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, 2023 | |
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 approximately $171,000 and $76,000 to its employee benefit defined contribution plan during the fiscal years ended June 30, 2023 and 2022, respectively. |
BASIS OF PRESENTATION AND SIG_2
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Jun. 30, 2023 | |
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 organized 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 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 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 consolidated financial statements relate to valuation and classification of inventories, accounts receivable reserves, stock-based compensation, and revenue recognition. Changes in estimates are reflected in the consolidated financial statements in the period in which the change in estimate occurs |
Reclassification | Reclassification – Certain amounts in the Company’s consolidated financial statements for the fiscal year ended June 30, 2022 have been reclassified to conform to current presentation, principally amounts presented in Note 9, “Accrued Expenses and Other Liabilities”, relating to the combination of accrued sales tax and accrued franchise taxes, which had previously been presented separately. These reclassifications had no impact on the Company’s consolidated financial position or consolidated results of operations as of or for the fiscal years ended June 30, 2023 and 2022. |
Cash and Cash Equivalents | 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 as amended July and amended further effective June 21, 2023 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”. 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 repurchases 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 $30 and ,000, respectively, 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.” 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, 2023 2022 Cash and cash equivalents $ 10,446,532 $ 15,668,361 Restricted cash 5,122,379 5,510,979 Total cash, cash equivalents, and restricted cash $ 15,568,911 $ 21,179,340 |
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 uncollectible 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, 2023 2022 Balance, beginning of year $ 591,000 $ 675,000 Additions charged to operations 5,405,613 6,012,069 Sales returns (5,428,613 ) (6,096,069 ) Balance, end of year $ 568,000 $ 591,000 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 $183,000 and $85,000 at June 30, 2023 and 2022, The following are reconciliations of the allowance for uncollectible accounts balances as of the periods presented: Year Ended June 30, 2023 2022 Balance, beginning of year $ 85,000 $ 71,000 Additions charged to operations 98,000 14,000 Balance, end of year $ 183,000 $ 85,000 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 inventory write-downs, 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. The 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, 2023, 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 which is typically upon shipment but may be upon delivery depending on the contractual arrangement with the customer The amounts included in deferred revenue of $452,866 and $774,891 at June 30, 2022 and June 30, 2021, respectively, were recorded in net sales during the fiscal years ended June 30, 2023 and June 30, 2022, respectively. The opening accounts receivable, net balance as of July 1, 2021 was $1,662,074 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, 2023 and 2022, the Company’s refund liabilities balances were $568,000 and $591,000, respectively, and are included as allowances for sales returns within accounts receivable, net, in the accompanying consolidated balance sheets. As of June 30, 2023 and 2022, the Company’s returns asset balances were $290,000 and $260,000, 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, 2023 and 2022, these approximate amounts were $606,000 and $792,000, 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, 2023 and 2022, were approximately $7.89 million and $7.38 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 (Loss) Income per Common Share | Net (Loss) Income per Common Share – As of the dates presented, t he following table reconciles the differences between the basic and diluted net (loss) income per share presentations: Year Ended June 30, 2023 2022 Numerator: Net (loss) income $ (19,580,794 ) $ 2,373,915 Denominator: Weighted average common shares outstanding: Basic 30,376,745 30,363,076 Effect of dilutive securities - 952,952 Diluted 30,376,745 31,316,028 Net (loss) income per common share: Basic $ (0.64 ) $ 0.08 Diluted $ (0.64 ) $ 0.08 F or the fiscal year ended June 30, 2023, stock options to purchase approximately 1.82 million shares were excluded from the computation of diluted net loss per common share because the effect of inclusion of such amounts would be anti-dilutive to net loss per common share. For the fiscal year ended June 30, 2022, stock options to purchase approximately 758,000 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 179,000 shares of un vested restricted stock are excluded from the computation of diluted net loss per common share as of June 30, 2023 because the shares are performance-based, and the underlying conditions have not been met as of the period presented and the effects of the inclusion of such shares would be anti-dilutive to net loss per common share. Approximately 45,000 shares of un vested restricted stock were excluded from the computation of diluted net income per common share as of June 30, 2022 because the shares were performance-based, and the underlying conditions had not been met as of June 30, 2022 |
BASIS OF PRESENTATION AND SIG_3
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
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, 2023 2022 Cash and cash equivalents $ 10,446,532 $ 15,668,361 Restricted cash 5,122,379 5,510,979 Total cash, cash equivalents, and restricted cash $ 15,568,911 $ 21,179,340 |
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, 2023 2022 Balance, beginning of year $ 591,000 $ 675,000 Additions charged to operations 5,405,613 6,012,069 Sales returns (5,428,613 ) (6,096,069 ) Balance, end of year $ 568,000 $ 591,000 |
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, 2023 2022 Balance, beginning of year $ 85,000 $ 71,000 Additions charged to operations 98,000 14,000 Balance, end of year $ 183,000 $ 85,000 |
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 (Loss) Income per Share | As of the dates presented, t he following table reconciles the differences between the basic and diluted net (loss) income per share presentations: Year Ended June 30, 2023 2022 Numerator: Net (loss) income $ (19,580,794 ) $ 2,373,915 Denominator: Weighted average common shares outstanding: Basic 30,376,745 30,363,076 Effect of dilutive securities - 952,952 Diluted 30,376,745 31,316,028 Net (loss) income per common share: Basic $ (0.64 ) $ 0.08 Diluted $ (0.64 ) $ 0.08 |
SEGMENT INFORMATION AND GEOGR_2
SEGMENT INFORMATION AND GEOGRAPHIC DATA (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
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, 2023 Online Channels Traditional Total Net sales Finished jewelry $ 19,607,941 $ 4,377,673 $ 23,985,614 Loose jewels 1,884,939 4,075,681 5,960,620 Total $ 21,492,880 $ 8,453,354 $ 29,946,234 Product line cost of goods sold Finished jewelry $ 9,214,749 $ 3,182,342 $ 12,397,091 Loose jewels 705,576 2,039,401 2,744,977 Total $ 9,920,325 $ 5,221,743 $ 15,142,068 Product line gross profit Finished jewelry $ 10,393,192 $ 1,195,331 $ 11,588,523 Loose jewels 1,179,363 2,036,280 3,215,643 Total $ 11,572,555 $ 3,231,611 $ 14,804,166 Depreciation and amortization $ 215,978 $ 437,179 $ 653,157 Capital expenditures $ 423,150 $ 806,421 $ 1,229,571 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 Depreciation and amortization $ 235,643 $ 243,665 $ 479,308 Capital expenditures $ 305,586 $ 1,190,885 $ 1,496,471 |
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, 2023 2022 Product line cost of goods sold $ 15,142,068 $ 20,102,490 Non-capitalized manufacturing and production control expenses 2,210,494 1,661,207 Freight out 1,068,437 1,195,062 Inventory write-downs 6,004,000 195,000 Other inventory adjustments 787,384 (308,057 ) Cost of goods sold $ 25,212,383 $ 22,845,702 |
Reconciliation of Product Line Gross Profit | A reconciliation of the Company’s consolidated product line gross profit to the Company’s consolidated net (loss) income before income taxes is as follows: Year Ended June 30, 2023 2022 Product line gross profit $ 14,804,166 $ 22,986,534 Non-allocated cost of goods sold (10,070,315 ) (2,743,212 ) Sales and marketing (13,686,049 ) (12,421,138 ) General and administrative (5,023,822 ) (4,948,980 ) Total other income, net 297,262 19,243 (Loss) Income before income taxes $ (13,678,758 ) $ 2,892,447 |
Net Sales by Geographic Area | The following presents net sales data by geographic area for the periods presented: Year Ended June 30, 2023 2022 Net sales United States $ 29,056,696 $ 41,138,538 International 889,538 1,950,486 Total $ 29,946,234 $ 43,089,024 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
INVENTORIES [Abstract] | |
Inventories | The Company’s total inventories, net consisted of the following as of the dates presented: June 30, 2023 2022 Finished jewelry: Raw materials $ 1,288,906 $ 1,697,361 Work-in-process 1,223,670 1,260,728 Finished goods 12,772,611 12,100,910 Finished goods on consignment 2,039,506 2,135,856 Total finished jewelry 17,324,693 17,194,855 Loose jewels: Raw materials 421,603 1,985,355 Work-in-process 6,131,853 8,485,713 Finished goods 2,294,270 5,454,266 Finished goods on consignment 254,323 303,491 Total loose jewels 9,102,049 16,228,825 Total supplies inventory 326,834 89,120 Total inventory $ 26,753,576 $ 33,512,800 As of the dates presented, the Company’s total inventories, are classified as follows: June 30, 2023 2022 Short-term portion $ 7,476,046 $ 11,024,276 Long-term portion 19,277,530 22,488,524 Total inventory $ 26,753,576 $ 33,512,800 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
PROPERTY AND EQUIPMENT [Abstract] | |
Property and Equipment, Net | Property and equipment, net, consists of the following as of the dates presented: June 30, 2023 2022 Computer software $ 2,865,994 $ 2,392,465 Machinery and equipment 1,203,585 1,182,171 Computer hardware 1,841,972 1,621,198 Leasehold improvements 2,213,330 1,847,227 Furniture and fixtures 676,014 528,742 Total 8,800,895 7,571,803 Less accumulated depreciation (6,309,326 ) (5,670,627 ) Property and equipment, net $ 2,491,569 $ 1,901,176 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
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 2023 2022 (in Years) Patents $ 1,017,007 $ 1,017,007 11.6 Trademarks 296,294 242,342 9.0 License rights 6,718 6,718 - Total 1,320,019 1,266,067 Less accumulated amortization (1,014,316 ) (1,000,337 ) Intangible assets, net $ 305,703 $ 265,730 |
ACCRUED EXPENSES AND OTHER LI_2
ACCRUED EXPENSES AND OTHER LIABILITIES (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
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, 2023 2022 Deferred revenue $ 566,896 $ 452,866 Accrued compensation and related benefits 382,630 614,443 Accrued cooperative advertising 243,861 137,467 Accrued sales tax and franchise taxes 202,091 341,706 Other accrued expenses 1 1 Accrued expenses and other liabilities $ 1,395,479 $ 1,546,483 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
Balance Sheet Classifications of Leases | As of June 30, 2023, the Company’s balance sheet classifications of its leases are as follows: Operating Leases: Noncurrent operating lease ROU assets $ 2,183,232 Current operating lease liabilities $ 880,126 Noncurrent operating lease liabilities 2,047,742 Total operating lease liabilities $ 2,927,868 |
Remaining Future Payments Under Operating Leases | As of June 30, 2023, the Company’s remaining future payments under operating leases for each fiscal year ending June 30 are as follows: 2024 $ 893,660 2025 918,236 2026 943,487 2027 317,327 Total lease payments 3,072,710 Less: imputed interest 144,842 Present value of lease payments 2,927,868 Less: current lease liability 880,126 Total long-term lease liability $ 2,047,742 |
SHAREHOLDERS' EQUITY AND STOC_2
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
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, 2023 2022 Employee stock options $ 225,694 $ 243,576 Restricted stock awards 23,734 530,765 Total $ 249,428 $ 774,341 |
Stock Option Activity | The following is a summary of the stock option activity for the fiscal years ended June 30, 2023 and 2022: Shares Weighted Average Exercise Price 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 Granted 270,787 $ 1.02 Forfeited (65,765 ) $ 1.99 Expired (46,160 ) $ 1.76 Outstanding at June 30, 2023 1,817,665 $ 1.24 |
Weighted Average Assumptions for Stock Options Granted | The fair value of each stock option is estimated on the date of grant using the Black-Scholes-Merton option pricing model with the following weighted average assumptions for stock options granted during the periods presented: Year Ended June 30, 2023 2022 Dividend yield 0.0 % 0.0 % Expected volatility 61.0 % 61.6 % Risk-free interest rate 3.75 % 1.46 % Expected lives (years) 5.4 4.5 |
Stock Options Outstanding | The following tables summarize information in connection with stock options outstanding at June 30, 2023: Options Outstanding Options Exercisable Options Vested or Expected to Vest Balance as of June 30, 2023 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Balance as of June 30, 2023 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price Balance as of June 30, 2023 Weighted Average Remaining Contractual Life (Years) Weighted Average Exercise Price 1,817,665 6.27 $ 1.24 1,405,916 5.50 $ 1.22 1,789,617 6.23 $ 1.23 |
Restricted Stock Activity | The following is a summary of the restricted stock activity for the fiscal years ended June 30, 2023 and 2022: Shares Weighted Average Grant Date Fair Value 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 Granted 178,750 $ 0.97 Vested (134,063 ) $ 2.75 Cancelled (44,687 ) $ 2.75 Unvested at June 30, 2023 178,750 $ 0.97 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
INCOME TAXES [Abstract] | |
Income Tax Net Expense | The Company’s income tax net expense for the periods presented comprises the following: Year Ended June 30, 2023 2022 Current: Federal $ - $ - State (50,132 ) (19,606 ) Total current (expense) benefit (50,132 ) (19,606 ) Deferred: Federal (5,568,311 ) (493,910 ) State (283,593 ) (5,016 ) Total deferred (expense) benefit (5,851,904 ) (498,926 ) Income tax net (expense) benefit $ (5,902,036 ) $ (518,532 ) |
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, 2023 2022 Deferred tax assets: Reversals and accruals $ 183,907 $ 487,333 Federal net operating loss (“NOL”) carryforwards 5,198,460 3,471,594 State NOL carryforwards 743,287 532,300 Hong Kong NOL carryforwards 995,566 995,566 Section 263A adjustment 120,078 118,916 Stock-based compensation 107,842 155,139 Inventory valuation & obsolescence reserve 3,465,024 1,631,339 Operating lease liabilities 703,254 850,910 Noncurrent deferred tax assets 11,517,418 8,243,097 Valuation allowance (10,562,696 ) (1,442,213 ) Noncurrent deferred tax assets, net 954,722 6,800,884 Deferred tax liabilities: Prepaid expenses (15,770 ) (52,792 ) Depreciation (414,555 ) (255,734 ) Operating lease right-of-use assets (524,397 ) (640,454 ) Noncurrent deferred tax liabilities (954,722 ) (948,980 ) Total noncurrent deferred tax assets, net $ - $ 5,851,904 |
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 for the periods presented: Year Ended June 30, 2023 2022 Anticipated income tax benefit (expense) at the statutory rate $ 2,872,539 $ (607,414 ) State income tax benefit (expense), net of federal tax effect 430,355 (36,928 ) Income tax effect of uncertain tax positions - 7,804 Return to provision adjustments - 405 Stock-based compensation (67,627 ) 131,898 Other changes in deferred income tax assets, net (16,820 ) (24,380 ) (Increase) Decrease in valuation allowance (9,120,483 ) 10,083 Income tax net (expense) benefit $ (5,902,036 ) $ (518,532 ) |
MAJOR CUSTOMERS AND CONCENTRA_2
MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
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, 2023 2022 Customer A 24 % * % Customer B 14 % * % Customer C 14 % * % Customer D ** % 29 % Customer E ** % 20 % Customer F ** % 13 % * Customers A, B, and C did not have individual balances that represented 10% or more of total gross accounts receivable as of June 30, 2022. ** Customers D, E, and F did not have individual balances that represented 10% or more of total gross accounts receivable as of June 30, 2023. 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, 2023 2022 Customer E 14 % 14 % |
BASIS OF PRESENTATION AND SIG_4
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Restricted Cash (Details) - USD ($) | Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 |
Restricted Cash [Abstract] | |||
Funded liquid margin account | $ 30 | $ 461,000 | |
Cash, Cash Equivalents and Restricted Cash [Abstract] | |||
Cash and cash equivalents | 10,446,532 | 15,668,361 | |
Restricted cash | 5,122,379 | 5,510,979 | |
Total cash, cash equivalents, and restricted cash | 15,568,911 | $ 21,179,340 | $ 21,446,951 |
JPMorgan Chase Credit Facility [Member] | |||
Restricted Cash [Abstract] | |||
Borrowing capacity | 5,000,000 | ||
Cash deposit | $ 5,100,000 |
BASIS OF PRESENTATION AND SIG_5
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Concentration of Credit Risk (Details) | 12 Months Ended |
Jun. 30, 2023 | |
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_6
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Accounts Receivable Reserves (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Allowance for Sales Returns [Member] | ||
Accounts Receivable Reserves [Roll Forward] | ||
Balance, beginning of year | $ 591,000 | $ 675,000 |
Additions charged to operations | 5,405,613 | 6,012,069 |
Sales returns | (5,428,613) | (6,096,069) |
Balance, end of year | 568,000 | 591,000 |
Allowance for Uncollectible Accounts [Member] | ||
Accounts Receivable Reserves [Roll Forward] | ||
Balance, beginning of year | 85,000 | 71,000 |
Additions charged to operations | 98,000 | 14,000 |
Balance, end of year | $ 183,000 | $ 85,000 |
BASIS OF PRESENTATION AND SIG_7
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Property and Equipment (Details) | Jun. 30, 2023 |
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] | |
Property, Plant, and Equipment, Useful Life, Term, Description [Extensible Enumeration] | us-gaap:UsefulLifeShorterOfTermOfLeaseOrAssetUtilityMember |
BASIS OF PRESENTATION AND SIG_8
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Intangible Assets (Details) | Jun. 30, 2023 |
Patent [Member] | |
Intangible Assets [Abstract] | |
Useful life | 15 years |
BASIS OF PRESENTATION AND SIG_9
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Revenue Recognition (Details) - USD ($) | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Revenue Recognition [Abstract] | |||
Deferred revenue | $ 566,896 | $ 452,866 | $ 774,891 |
Accounts receivable, net | $ 380,085 | $ 2,220,816 | $ 1,662,074 |
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_10
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Returns Asset and Refund Liabilities (Details) - USD ($) | Jun. 30, 2023 | Jun. 30, 2022 |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ||
Refund liabilities | $ 568,000 | $ 591,000 |
Asset returns | $ 290,000 | $ 260,000 |
BASIS OF PRESENTATION AND SI_11
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Advertising Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Advertising Costs [Abstract] | ||
Cooperative advertising expenses | $ 606 | $ 792 |
Advertising expenses | $ 7,890 | $ 7,380 |
BASIS OF PRESENTATION AND SI_12
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES, Net (Loss) Income per Common Share (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Numerator [Abstract] | ||
Net (loss) income | $ (19,580,794) | $ 2,373,915 |
Denominator [Abstract] | ||
Weighted average common shares outstanding, Basic (in shares) | 30,376,745 | 30,363,076 |
Effect of dilutive securities (in shares) | 0 | 952,952 |
Weighted average common shares outstanding, Diluted (in shares) | 30,376,745 | 31,316,028 |
Net (Loss) Income per Common Share [Abstract] | ||
Basic (in dollars per share) | $ (0.64) | $ 0.08 |
Diluted (in dollars per share) | $ (0.64) | $ 0.08 |
Stock Options [Member] | ||
Net (Loss) Income per Common Share [Abstract] | ||
Shares excluded from the computation of diluted net income per common share (in shares) | 1,820,000 | 758,000 |
Restricted Stock [Member] | ||
Net (Loss) Income per Common Share [Abstract] | ||
Shares excluded from the computation of diluted net income per common share (in shares) | 179,000 | 45,000 |
SEGMENT INFORMATION AND GEOGR_3
SEGMENT INFORMATION AND GEOGRAPHIC DATA, Summary Financial Information by Reportable Segment (Details) | 12 Months Ended | |
Jun. 30, 2023 USD ($) Segment | Jun. 30, 2022 USD ($) | |
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 | $ 29,946,234 | $ 43,089,024 |
Product line cost of goods sold | 25,212,383 | 22,845,702 |
Depreciation and amortization | 653,157 | 479,308 |
Capital expenditures | 1,229,571 | 1,496,471 |
Product Line [Member] | ||
Summary Information by Reportable Segment [Abstract] | ||
Product line cost of goods sold | 15,142,068 | 20,102,490 |
Product line gross profit | 14,804,166 | 22,986,534 |
Finished Jewelry [Member] | ||
Summary Information by Reportable Segment [Abstract] | ||
Net sales | 23,985,614 | 29,712,230 |
Product line cost of goods sold | 12,397,091 | 13,932,700 |
Product line gross profit | 11,588,523 | 15,779,530 |
Loose Jewels [Member] | ||
Summary Information by Reportable Segment [Abstract] | ||
Net sales | 5,960,620 | 13,376,794 |
Product line cost of goods sold | 2,744,977 | 6,169,790 |
Product line gross profit | 3,215,643 | 7,207,004 |
Operating and Reportable Segments [Member] | Online Channels [Member] | ||
Summary Information by Reportable Segment [Abstract] | ||
Net sales | 21,492,880 | 26,780,049 |
Product line cost of goods sold | 9,920,325 | 11,047,662 |
Product line gross profit | 11,572,555 | 15,732,387 |
Depreciation and amortization | 215,978 | 235,643 |
Capital expenditures | 423,150 | 305,586 |
Operating and Reportable Segments [Member] | Online Channels [Member] | Finished Jewelry [Member] | ||
Summary Information by Reportable Segment [Abstract] | ||
Net sales | 19,607,941 | 23,539,347 |
Product line cost of goods sold | 9,214,749 | 9,837,830 |
Product line gross profit | 10,393,192 | 13,701,517 |
Operating and Reportable Segments [Member] | Online Channels [Member] | Loose Jewels [Member] | ||
Summary Information by Reportable Segment [Abstract] | ||
Net sales | 1,884,939 | 3,240,702 |
Product line cost of goods sold | 705,576 | 1,209,832 |
Product line gross profit | 1,179,363 | 2,030,870 |
Operating and Reportable Segments [Member] | Traditional [Member] | ||
Summary Information by Reportable Segment [Abstract] | ||
Net sales | 8,453,354 | 16,308,975 |
Product line cost of goods sold | 5,221,743 | 9,054,828 |
Product line gross profit | 3,231,611 | 7,254,147 |
Depreciation and amortization | 437,179 | 243,665 |
Capital expenditures | 806,421 | 1,190,885 |
Operating and Reportable Segments [Member] | Traditional [Member] | Finished Jewelry [Member] | ||
Summary Information by Reportable Segment [Abstract] | ||
Net sales | 4,377,673 | 6,172,883 |
Product line cost of goods sold | 3,182,342 | 4,094,870 |
Product line gross profit | 1,195,331 | 2,078,013 |
Operating and Reportable Segments [Member] | Traditional [Member] | Loose Jewels [Member] | ||
Summary Information by Reportable Segment [Abstract] | ||
Net sales | 4,075,681 | 10,136,092 |
Product line cost of goods sold | 2,039,401 | 4,959,958 |
Product line gross profit | $ 2,036,280 | $ 5,176,134 |
SEGMENT INFORMATION AND GEOGR_4
SEGMENT INFORMATION AND GEOGRAPHIC DATA, Reconciliation of Cost of Goods Sold (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Reconciliation of Cost of Goods Sold [Abstract] | ||
Cost of goods sold | $ 25,212,383 | $ 22,845,702 |
Inventory write-downs | 6,004,000 | 195,000 |
Product Line [Member] | ||
Reconciliation of Cost of Goods Sold [Abstract] | ||
Cost of goods sold | 15,142,068 | 20,102,490 |
Segment Reconciling Item [Member] | ||
Reconciliation of Cost of Goods Sold [Abstract] | ||
Cost of goods sold | 10,070,315 | 2,743,212 |
Non-capitalized manufacturing and production control expenses | 2,210,494 | 1,661,207 |
Freight out | 1,068,437 | 1,195,062 |
Inventory write-downs | 6,004,000 | 195,000 |
Other inventory adjustments | $ 787,384 | $ (308,057) |
SEGMENT INFORMATION AND GEOGR_5
SEGMENT INFORMATION AND GEOGRAPHIC DATA, Reconciliation of Gross Profit (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Reconciliation of Gross Profit [Abstract] | ||
Non-allocated cost of goods sold | $ (25,212,383) | $ (22,845,702) |
Sales and marketing | (13,686,049) | (12,421,138) |
General and administrative | (5,023,822) | (4,948,980) |
Total other income, net | 297,262 | 19,243 |
(Loss) Income before income taxes | (13,678,758) | 2,892,447 |
Product [Member] | ||
Reconciliation of Gross Profit [Abstract] | ||
Product line gross profit | 14,804,166 | 22,986,534 |
Non-allocated cost of goods sold | (15,142,068) | (20,102,490) |
Segment Reconciling Item [Member] | ||
Reconciliation of Gross Profit [Abstract] | ||
Non-allocated cost of goods sold | (10,070,315) | (2,743,212) |
Sales and marketing | (13,686,049) | (12,421,138) |
General and administrative | (5,023,822) | (4,948,980) |
Total other income, net | $ 297,262 | $ 19,243 |
SEGMENT INFORMATION AND GEOGR_6
SEGMENT INFORMATION AND GEOGRAPHIC DATA, Net Sales by Geographic Area (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Net Sales by Geographic Area [Abstract] | ||
Net sales | $ 29,946,234 | $ 43,089,024 |
Reportable Geographical Component [Member] | United States [Member] | ||
Net Sales by Geographic Area [Abstract] | ||
Net sales | 29,056,696 | 41,138,538 |
Reportable Geographical Component [Member] | International [Member] | ||
Net Sales by Geographic Area [Abstract] | ||
Net sales | $ 889,538 | $ 1,950,486 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) | Jun. 30, 2023 | Jun. 30, 2022 |
Non-Recurring [Member] | ||
Fair Value Measurements [Abstract] | ||
Assets | $ 0 | $ 0 |
NOTE RECEIVABLE (Details)
NOTE RECEIVABLE (Details) - Convertible Promissory Note [Member] - USD ($) | Jun. 30, 2023 | 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 ($) | 3 Months Ended | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | |
Inventories [Abstract] | |||
Total supplies inventory | $ 326,834 | $ 326,834 | $ 89,120 |
Total inventory | 26,753,576 | 26,753,576 | 33,512,800 |
Short-term portion | 7,476,046 | 7,476,046 | 11,024,276 |
Long-term portion | 19,277,530 | 19,277,530 | 22,488,524 |
Work-in-process inventories issued to active production jobs | 1,990,000 | $ 1,990,000 | 2,760,000 |
Percentage of jewel inventory not mounted in finished jewelry settings | 50% | ||
Inventory write-down | $ 6,004,000 | 195,000 | |
Finished Jewelry [Member] | |||
Inventories [Abstract] | |||
Raw materials | 1,288,906 | 1,288,906 | 1,697,361 |
Work-in-process | 1,223,670 | 1,223,670 | 1,260,728 |
Finished goods | 12,772,611 | 12,772,611 | 12,100,910 |
Finished goods on consignment | 2,039,506 | 2,039,506 | 2,135,856 |
Total | 17,324,693 | 17,324,693 | 17,194,855 |
Loose Jewels [Member] | |||
Inventories [Abstract] | |||
Raw materials | 421,603 | 421,603 | 1,985,355 |
Work-in-process | 6,131,853 | 6,131,853 | 8,485,713 |
Finished goods | 2,294,270 | 2,294,270 | 5,454,266 |
Finished goods on consignment | 254,323 | 254,323 | 303,491 |
Total | 9,102,049 | 9,102,049 | $ 16,228,825 |
Non-Forever One Loose Jewels Inventory [Member] | |||
Inventories [Abstract] | |||
Inventory write-down | $ 5,900,000 | $ 5,900,000 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Property and Equipment [Abstract] | ||
Property and equipment | $ 8,800,895 | $ 7,571,803 |
Less accumulated depreciation | (6,309,326) | (5,670,627) |
Property and equipment, net | 2,491,569 | 1,901,176 |
Depreciation expense | 639,000 | 471,000 |
Computer Software [Member] | ||
Property and Equipment [Abstract] | ||
Property and equipment | 2,865,994 | 2,392,465 |
Machinery and Equipment [Member] | ||
Property and Equipment [Abstract] | ||
Property and equipment | 1,203,585 | 1,182,171 |
Computer Hardware [Member] | ||
Property and Equipment [Abstract] | ||
Property and equipment | 1,841,972 | 1,621,198 |
Leasehold Improvements [Member] | ||
Property and Equipment [Abstract] | ||
Property and equipment | 2,213,330 | 1,847,227 |
Furniture and Fixtures [Member] | ||
Property and Equipment [Abstract] | ||
Property and equipment | $ 676,014 | $ 528,742 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Intangible assets [Abstract] | ||
Intangible assets | $ 1,320,019 | $ 1,266,067 |
Less accumulated amortization | (1,014,316) | (1,000,337) |
Intangible assets, net | 305,703 | 265,730 |
Amortization Expense [Abstract] | ||
Amortization expense | 14,000 | 8,000 |
2024 | 28,000 | |
2025 | 27,000 | |
2026 | 27,000 | |
2027 | 27,000 | |
2028 | 26,000 | |
Patents [Member] | ||
Intangible assets [Abstract] | ||
Intangible assets | $ 1,017,007 | 1,017,007 |
Weighted average remaining amortization period | 11 years 7 months 6 days | |
Trademarks [Member] | ||
Intangible assets [Abstract] | ||
Intangible assets | $ 296,294 | 242,342 |
Weighted average remaining amortization period | 9 years | |
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, 2023 | Jun. 30, 2022 | Jun. 30, 2021 |
ACCRUED EXPENSES AND OTHER LIABILITIES [Abstract] | |||
Deferred revenue | $ 566,896 | $ 452,866 | $ 774,891 |
Accrued compensation and related benefits | 382,630 | 614,443 | |
Accrued cooperative advertising | 243,861 | 137,467 | |
Accrued sales tax and franchise taxes | 202,091 | 341,706 | |
Other accrued expenses | 1 | 1 | |
Accrued expenses and other liabilities | $ 1,395,479 | $ 1,546,483 |
COMMITMENTS AND CONTINGENCIES,
COMMITMENTS AND CONTINGENCIES, Lease Arrangements (Details) | 12 Months Ended | ||
Jan. 29, 2021 USD ($) | Jun. 30, 2023 USD ($) ft² | Jun. 30, 2022 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 | 2,183,232 | $ 2,787,419 | |
Operating Lease Liabilities [Abstract] | |||
Current operating lease liabilities | 880,126 | 856,571 | |
Noncurrent operating lease liabilities | 2,047,742 | 2,846,805 | |
Total operating lease liabilities | 2,927,868 | ||
Operating lease cost | $ 698,000 | 596,000 | |
Assumed discount rate | 2.81% | ||
Remaining operating lease term | 3 years 3 months 29 days | ||
Future Lease Payments Under Operating Leases [Abstract] | |||
2024 | $ 893,660 | ||
2025 | 918,236 | ||
2026 | 943,487 | ||
2027 | 317,327 | ||
Total lease payments | 3,072,710 | ||
Less: imputed interest | 144,842 | ||
Total operating lease liabilities | 2,927,868 | ||
Less: current lease obligations | 880,126 | 856,571 | |
Total long-term lease obligations | 2,047,742 | 2,846,805 | |
Cash paid for operating leases | $ 916,000 | $ 550,000 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES, Purchase Commitments (Details) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 USD ($) | Jun. 30, 2023 USD ($) Option | Jun. 30, 2022 USD ($) | Jul. 28, 2023 USD ($) | |
Breach of Contract for Purchase of SiC Materials [Member] | ||||
Purchase Commitments [Abstract] | ||||
Alleged unpaid purchases | $ 3,300 | $ 3,300 | ||
Breach of Contract for Purchase of SiC Materials [Member] | Subsequent Event [Member] | ||||
Purchase Commitments [Abstract] | ||||
Alleged damages | $ 18,500 | |||
SiC Materials [Member] | ||||
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 | $ 52,950 | ||
Remaining purchase commitment | 24,750 | 24,750 | ||
Minimum annual purchase commitments | 4,250 | 4,250 | ||
Purchases | 0 | 1,800 | $ 6,290 | |
SiC Materials [Member] | Minimum [Member] | ||||
Purchase Commitments [Abstract] | ||||
Minimum annual purchase commitments | 4,000 | 4,000 | ||
SiC Materials [Member] | Maximum [Member] | ||||
Purchase Commitments [Abstract] | ||||
Minimum annual purchase commitments | $ 10,000 | $ 10,000 |
DEBT (Details)
DEBT (Details) - USD ($) | 12 Months Ended | |||
Jun. 21, 2023 | Jul. 28, 2022 | Jul. 12, 2021 | Jun. 30, 2023 | |
Line of Credit [Abstract] | ||||
Long-term debt | $ 0 | |||
JPMorgan Chase Credit Facility [Member] | ||||
Line of Credit [Abstract] | ||||
Borrowing capacity | 5,000,000 | |||
Cash deposit | $ 5,100,000 | |||
Interest rate premium in excess of rate otherwise applicable charged during an event of default | 3% | |||
Non-refundable origination fee | $ 0 | $ 0 | $ 10,000 | |
Credit facility outstanding | $ 0 | |||
JPMorgan Chase Credit Facility [Member] | Maximum [Member] | ||||
Line of Credit [Abstract] | ||||
Excess availability | $ 5,000,000 | |||
JPMorgan Chase Credit Facility [Member] | SOFR Rate [Member] | ||||
Line of Credit [Abstract] | ||||
Basis spread on variable rate | 1.25% | |||
Interest rate adjustment | 0.10% | |||
JPMorgan Chase Credit Facility [Member] | LIBOR [Member] | ||||
Line of Credit [Abstract] | ||||
Basis spread on variable rate | 1.25% |
SHAREHOLDERS' EQUITY AND STOC_3
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Common and Preferred Stock (Details) | 12 Months Ended | |
Jun. 30, 2023 shares $ / shares | Jun. 30, 2022 $ / 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) | 30,523,705 | 30,747,759 |
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, 2023 | Jun. 30, 2022 | 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) | 358,116 | 30,287 | |
Repurchases of common stock | $ 451,815 | $ 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, 2023 | Jun. 30, 2022 | |
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, 2023 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, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Stock Options [Member] | |||
Equity Compensation Plans [Abstract] | |||
Options outstanding (in shares) | 1,817,665 | 1,658,803 | 2,235,286 |
2018 Equity Incentive Plan [Member] | |||
Equity Compensation Plans [Abstract] | |||
Number of shares authorized (in shares) | 3,300,000 | ||
Options outstanding (in shares) | 1,261,331 | 1,101,211 | |
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) | 556,334 | 557,592 | |
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, 2023 | Jun. 30, 2022 | |
Stock-Based Compensation [Abstract] | ||
Employee stock options | $ 225,694 | $ 243,576 |
Restricted stock awards | 23,734 | 530,765 |
Total | 249,428 | 774,341 |
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, 2023 | Jun. 30, 2022 | |
Stock Option Activity [Roll Forward] | ||
Outstanding, beginning balance (in shares) | 1,658,803 | 2,235,286 |
Granted (in shares) | 270,787 | 289,793 |
Exercised (in shares) | 0 | (622,226) |
Forfeited (in shares) | (65,765) | (24,753) |
Expired (in shares) | (46,160) | (219,297) |
Outstanding, ending balance (in shares) | 1,817,665 | 1,658,803 |
Weighted Average Exercise Price [Roll Forward] | ||
Outstanding, beginning balance (in dollars per share) | $ 1.32 | $ 1.24 |
Granted (in dollars per share) | 1.02 | 2.47 |
Exercised (in dollars per share) | 1.15 | |
Forfeited (in dollars per share) | 1.99 | 1.04 |
Expired (in dollars per share) | 1.76 | 2.57 |
Outstanding, ending balance (in dollars per share) | 1.24 | 1.32 |
Fair Value of Stock Options [Abstract] | ||
Fair value of stock options (in dollars per share) | $ 0.59 | $ 1.27 |
Fair value of stock options vested | $ 229 | $ 222 |
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, 2023 | Jun. 30, 2022 | |
Weighted Average Assumptions for Stock Options Granted [Abstract] | ||
Dividend yield | 0% | 0% |
Expected volatility | 61% | 61.60% |
Risk-free interest rate | 3.75% | 1.46% |
Expected lives | 5 years 4 months 24 days | 4 years 6 months |
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, 2023 | Jun. 30, 2022 | Jun. 30, 2021 | |
Stock Options Outstanding and Exercisable [Abstract] | |||
Options outstanding (in shares) | 1,817,665 | 1,658,803 | 2,235,286 |
Options outstanding, weighted average remaining contractual life | 6 years 3 months 7 days | ||
Options outstanding, weighted average exercise price (in dollars per share) | $ 1.24 | $ 1.32 | $ 1.24 |
Options exercisable (in shares) | 1,405,916 | ||
Options exercisable, weighted average remaining contractual life | 5 years 6 months | ||
Options exercisable, weighted average exercise price (in dollars per share) | $ 1.22 | ||
Options Vested or Expected to Vest [Abstract] | |||
Options vested or expected to vest (in shares) | 1,789,617 | ||
Options vested or expected to vest, weighted average remaining contractual life | 6 years 2 months 23 days | ||
Options vested or expected to vest, weighted average exercise price (in dollars per share) | $ 1.23 | ||
Unrecognized Stock-Based Compensation Expense [Abstract] | |||
Unrecognized stock-based compensation expense | $ 171 | ||
Unrecognized stock-based compensation expense, period for recognition | 15 months | ||
Options outstanding, aggregate intrinsic value | $ 127 | $ 410 | |
Options vested or expected to vest, aggregate intrinsic value | $ 127 | 410 | |
Options exercised, aggregate intrinsic value | 886 | ||
Tax benefit associated with stock options exercised | $ 89 | ||
Stock option exercises (in shares) | 0 | 622,226 |
SHAREHOLDERS' EQUITY AND STO_12
SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION, Restricted Stock (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Unrecognized Stock-Based Compensation Expense [Abstract] | ||
Stock-based compensation expense | $ 249,428 | $ 774,341 |
Restricted Stock [Member] | ||
Restricted Stock Activity [Roll Forward] | ||
Unvested, beginning balance (in shares) | 178,750 | 178,750 |
Shares awarded (in shares) | 178,750 | 242,725 |
Vested (in shares) | (134,063) | (242,725) |
Canceled (in shares) | (44,687) | |
Unvested, ending balance (in shares) | 178,750 | 178,750 |
Weighted Average Grant Date Fair Value [Roll Forward] | ||
Unvested, beginning balance (in dollars per share) | $ 2.75 | $ 0.72 |
Granted (in dollars per share) | 0.97 | 2.75 |
Vested (in dollars per share) | 2.75 | 1.25 |
Canceled (in dollars per share) | 2.75 | |
Unvested, ending balance (in dollars per share) | $ 0.97 | $ 2.75 |
Unrecognized Stock-Based Compensation Expense [Abstract] | ||
Shares expected to vest (in shares) | 0 | |
Stock-based compensation expense | $ 0 | |
Unrecognized stock-based compensation expense | $ 173,000 |
INCOME TAXES, Income Tax Net Ex
INCOME TAXES, Income Tax Net Expense (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Current [Abstract] | ||
Federal | $ 0 | $ 0 |
State | (50,132) | (19,606) |
Total current (expense) benefit | (50,132) | (19,606) |
Deferred [Abstract] | ||
Federal | (5,568,311) | (493,910) |
State | (283,593) | (5,016) |
Total deferred (expense) benefit | (5,851,904) | (498,926) |
Income tax net (expense) benefit | $ (5,902,036) | $ (518,532) |
INCOME TAXES, Noncurrent Deferr
INCOME TAXES, Noncurrent Deferred Tax Assets, Net (Details) - USD ($) | Jun. 30, 2023 | Jun. 30, 2022 |
Deferred Tax Assets [Abstract] | ||
Reversals and accruals | $ 183,907 | $ 487,333 |
Federal net operating loss ("NOL") carryforwards | 5,198,460 | 3,471,594 |
State NOL carryforwards | 743,287 | 532,300 |
Hong Kong NOL carryforwards | 995,566 | 995,566 |
Section 263A adjustment | 120,078 | 118,916 |
Stock-based compensation | 107,842 | 155,139 |
Inventory valuation & obsolescence reserve | 3,465,024 | 1,631,339 |
Operating lease liabilities | 703,254 | 850,910 |
Noncurrent deferred tax assets | 11,517,418 | 8,243,097 |
Valuation allowance | (10,562,696) | (1,442,213) |
Noncurrent deferred tax assets, net | 954,722 | 6,800,884 |
Deferred Tax Liabilities [Abstract] | ||
Prepaid expenses | (15,770) | (52,792) |
Depreciation | (414,555) | (255,734) |
Operating lease right-of-use assets | (524,397) | (640,454) |
Noncurrent deferred tax liabilities | (954,722) | (948,980) |
Total noncurrent deferred tax assets, net | $ 0 | $ 5,851,904 |
INCOME TAXES, Effective Income
INCOME TAXES, Effective Income Tax Rate Reconciliation (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Effective Income Tax Rate Reconciliation [Abstract] | ||
Anticipated income tax benefit (expense) at the statutory rate | $ 2,872,539 | $ (607,414) |
State income tax benefit (expense), net of federal tax effect | 430,355 | (36,928) |
Income tax effect of uncertain tax positions | 0 | 7,804 |
Return to provision adjustments | 0 | 405 |
Stock-based compensation | (67,627) | 131,898 |
Other changes in deferred income tax assets, net | (16,820) | (24,380) |
(Increase) Decrease in valuation allowance | (9,120,483) | 10,083 |
Income tax net (expense) benefit | $ (5,902,036) | $ (518,532) |
Combined federal and state statutory tax rate | 22.94% | 22.45% |
Federal income tax rate | 21% | 21% |
Blended state income tax rate | 1.94% | 1.45% |
Effective tax rate | (43.15%) | 17.93% |
INCOME TAXES, Tax Credits and N
INCOME TAXES, Tax Credits and Net Operating Loss Carryforwards (Details) - USD ($) | Jun. 30, 2023 | Jun. 30, 2022 |
Income Taxes [Abstract] | ||
Deferred tax assets | $ 0 | $ 5,851,904 |
Valuation allowance | 10,562,696 | 1,442,213 |
Federal [Member] | ||
Income Taxes [Abstract] | ||
Net operating loss carryforwards | 24,760,000 | 16,530,000 |
North Carolina [Member] | ||
Income Taxes [Abstract] | ||
Net operating loss carryforwards | 20,010,000 | 19,770,000 |
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, 2023 | Jun. 30, 2022 | |||
Accounts Receivable [Member] | Customer A [Member] | ||||
Major Customers and Concentration of Credit Risk [Abstract] | ||||
Concentration risk, percentage | 24% | [1] | ||
Accounts Receivable [Member] | Customer B [Member] | ||||
Major Customers and Concentration of Credit Risk [Abstract] | ||||
Concentration risk, percentage | 14% | [1] | ||
Accounts Receivable [Member] | Customer C [Member] | ||||
Major Customers and Concentration of Credit Risk [Abstract] | ||||
Concentration risk, percentage | 14% | [1] | ||
Accounts Receivable [Member] | Customer D [Member] | ||||
Major Customers and Concentration of Credit Risk [Abstract] | ||||
Concentration risk, percentage | [2] | 29% | ||
Accounts Receivable [Member] | Customer E [Member] | ||||
Major Customers and Concentration of Credit Risk [Abstract] | ||||
Concentration risk, percentage | [2] | 20% | ||
Accounts Receivable [Member] | Customer F [Member] | ||||
Major Customers and Concentration of Credit Risk [Abstract] | ||||
Concentration risk, percentage | [2] | 13% | ||
Net Sales [Member] | Customer E [Member] | ||||
Major Customers and Concentration of Credit Risk [Abstract] | ||||
Concentration risk, percentage | 14% | 14% | ||
[1]Customers A, B, and C did not have individual balances that represented 10% or more of total gross accounts receivable as of June 30, 2022.[2]Customers D, E, and F did not have individual balances that represented 10% or more of total gross accounts receivable as of June 30, 2023. |
EMPLOYEE BENEFIT PLAN (Details)
EMPLOYEE BENEFIT PLAN (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
EMPLOYEE BENEFIT PLAN [Abstract] | ||
Company contributions to 401(k) Plan | $ 171 | $ 76 |