- Online Channels Segment Generated Double Digit Net Sales Increase -
- Continued Innovation and Marketing Drives Customer Demand for Forever One Gemstones -
- Conference Call to Be Held Today at 4:30 PM EDT -
RESEARCH TRIANGLE PARK, N.C., Aug. 03, 2017 (GLOBE NEWSWIRE) -- Charles & Colvard, Ltd. (NASDAQ:CTHR), the original
and leading worldwide source of created moissanite, reports financial results for the second quarter ended June 30, 2017.
Continuing operations for the quarter and prior periods do not include the results of Charles & Colvard Direct, LLC (dba Lulu
Avenue®), which are now being reported as a discontinued operation following the sale of certain assets on March 4, 2016
to Yanbal USA, Inc.
Suzanne Miglucci, President and CEO of Charles & Colvard, said, “At the halfway point in 2017, we have made
tremendous progress in executing our strategic plan for the year. We saw positive results in the second quarter of 2017 compared to
the year-ago quarter, based on several key drivers of success. First, we continued to grow our Online Channels segment, generating
a net sales increase in that segment of 10%, driven by website and marketplace sales. Second, we leveraged our omnichannel
strategy, which led to a 21% increase in finished jewelry net sales coming through multiple channels, including our expanded
presence in 100 Helzberg Diamonds stores. Third, customers are embracing our expanded and upgraded gemstone cuts and jewelry
selection, with more than 86% of net sales related to Forever One™, the world’s first colorless moissanite jewel. And fourth, we
continued our strong marketing initiatives, highlighted by Mother’s Day promotions, new television segments with our partner Evine,
and marketing campaigns driving increased social media exposure.”
“Our revenue generation efforts are supported by prudent financial management. We achieved an attractive gross
margin percentage of 43% in the first half of 2017, compared to 27% in the same period of 2016. Total operating expenses were down
6% in the first half of 2017, compared to the year-ago period, even as we continue to invest in sales and marketing. This
performance led to continued improvement in our bottom line, as we neared profitability with a net loss of only $403,000, or $0.02
per share, in the second quarter of 2017,” Ms. Miglucci concluded.
Recent Corporate Highlights
- Appointed Benedetta Casamento, renowned retail, fashion and jewelry expert, to the Company’s Board of Directors, bringing
industry, brand marketing and financial expertise from her roles at The Talbots, Inc., Liz Claiborne Inc. and Saks Fifth
Avenue;
- Strengthened Traditional segment reach by debuting an assortment of moissanite jewelry curated specifically for Evine, a
multiplatform video commerce company that offers consumers an engaging shopping experience via television, online and
mobile;
- Increased the Forever One™ moissanite collection to eleven shapes with the introduction of princess and baguette
gemstones;
- Displayed the unique and creative designs that are possible with moissanite through a significant booth presence at JCK Las
Vegas, North America’s largest annual jewelry trade event, attended by 30,000 of the world’s most influential industry
professionals;
- Received recognition of moissanite as a unique gemstone by American Gem Society (AGS), including moissanite in the gemstone
listing on the AGS website in order to educate consumers in distinguishing moissanite from other clear gemstones such as diamond,
white sapphire and cubic zirconia;
- Promoted two senior executives, Don O'Connell to Chief Operating Officer and SVP, Supply Chain, and Clint J. Pete to Chief
Financial Officer, both of whom have served critical roles in the Company’s transformation over the past year and its operational
and financial progress; and
- Extended the maturity to June 2018 for a currently unused $10.0 million asset-based revolving credit facility with Wells
Fargo Bank.
Financial Summary for the Second Quarter 2017
- Net sales from continuing operations were $6.6 million for the quarter, an increase of 2% compared with $6.5 million in the
year-ago second quarter.
- Loose jewel net sales from continuing operations were $4.7 million for the quarter, a decrease of 4% compared with $5.0
million for the year-ago second quarter.
- Finished jewelry net sales from continuing operations were $1.9 million for the quarter, a 21% increase compared with $1.6
million in the year-ago second quarter.
- In the Company’s Traditional segment, which consists of wholesale, retail and television customers, net sales decreased 2% to
$4.4 million, or 66% of net sales for the quarter, compared with $4.5 million, or 69% of net sales in the year-ago second
quarter.
- In the Company’s Online Channels segment, which consists of e-commerce customers including charlesandcolvard.com,
marketplaces, drop-ship and other pure-play, exclusively e-commerce customers, net sales increased 10% to $2.2 million, or 34% of
net sales for the quarter, compared with $2.0 million, or 31% of net sales in the year-ago second quarter.
- Operating expenses from continuing operations were $3.2 million for the second quarter of 2017, compared with $3.6 million in
the year-ago second quarter.
- Net loss from continuing operations for the second quarter of 2017 was $0.4 million, or $0.02 per share, compared with a net
loss from continuing operations of $1.0 million, or $0.05 per share, in the year-ago second quarter.
- Net loss for the second quarter of 2017 was $0.4 million, or $0.02 per share, compared with a net loss of $1.0 million, or
$0.05 per share, in the year-ago second quarter.
Financial Summary for the First Six Months of 2017:
- Net sales from continuing operations were $12.3 million for the six months ended June 30, 2017, a decrease of 31% compared
with $17.9 million in the year-ago period, which included a sale, in a single transaction, for $6.8 million of legacy loose
gemstone inventory.
- Loose jewel net sales from continuing operations were $8.7 million for the six months ended June 30, 2017, a decrease of 41%
compared with $14.6 million in the year-ago period.
- Finished jewelry net sales from continuing operations were $3.6 million for the six months ended June 30, 2017, a 9% increase
compared with $3.3 million in the year-ago period.
- In the Company’s Traditional segment, which consists of wholesale, retail and television customers, net sales decreased 43%
to $7.9 million, or 64% of net sales for the six months ended June 30, 2017, compared with $13.8 million, or 77% of net sales in
the year-ago period.
- In the Company’s Online Channels segment, which consists of e-commerce customers including charlesandcolvard.com,
marketplaces, drop-ship and other pure-play, exclusively e-commerce customers, net sales increased 8% to $4.4 million, or 36% of
net sales for the six months ended June 30, 2017, compared with $4.1 million, or 23% of net sales in the year-ago period.
- Operating expenses from continuing operations were $6.2 million for the first six months of 2017, compared with $6.6 million
for the year-ago period.
- Net loss from continuing operations for the six months ended June 30, 2017 was $1.0 million, or $0.05 per share, compared
with a net loss from continuing operations of $1.7 million, or $0.08 per share, in the year-ago period.
- Net loss for the six months ended June 30, 2017 was $1.0 million, or $0.05 per share, compared with a net loss of $2.3
million, or $0.11 per share, in the year-ago period.
Financial Position
Cash and cash equivalents totaled $6.3 million at June 30, 2017, a decrease of $1.1 million from $7.4 million at
December 31, 2016. The Company had no debt outstanding as of June 30, 2017. Total inventory was $29.2 million at June 30, 2017
compared with $28.1 million at December 31, 2016.
Reportable Business Segments
As previously disclosed, the Company formerly managed its business through two operating and reportable segments:
wholesale distribution transacted through the parent entity, and the direct-to-consumer distribution channel transacted through the
Company’s wholly owned operating subsidiary, charlesandcolvard.com, LLC. During the three months ended March 31, 2017, the Company
began managing its business through two newly defined operating and reportable segments based on its distribution channels: its
“Traditional” segment, which consists of wholesale, retail and television customers; and its “Online Channels” segment, which
consists of e-commerce customers including charlesandcolvard.com, marketplaces, drop-ship and other pure-play, exclusively
e-commerce customers. To allow investors to view certain historical information based on the new reporting framework, the
supplemental Summary Financial Information by Reportable Segment (Recast) included herein at Appendix B presents, for each segment,
the net sales, product line cost of goods sold, product line gross profit and operating (loss) income, together with a
reconciliation of product line cost of goods sold to cost of goods sold as reported in the Company’s consolidated financial
statements, for each quarter and cumulative six month and nine month periods and the full year of fiscal 2016. With the exception
of information for the first quarter, the Summary Financial Information by Reportable Segment (Recast) for fiscal 2016 has not been
subject to review by the Company’s independent registered public accounting firm.
The attached historical supplemental information includes the recasting of previously issued segment-related
financial information to reflect the new framework. The attached financial information does not represent a restatement of
previously issued financial statements and does not affect the Company’s consolidated financial statements for any of the
previously reported periods. For additional information regarding the change in the Company’s segment reporting framework, please
refer to Footnote 3 of the Company’s condensed consolidated financial statements included in the Company’s Quarterly Report on Form
10-Q for the three months ended March 31, 2017.
Investor Conference Call
Shareholders and other interested parties may participate in the upcoming investor conference call by dialing
844-875-6912 (U.S. toll-free) or 412-317-6708 (international) and asking to be connected to the “Charles & Colvard, Ltd. Conference
Call” a few minutes before 4:30 p.m. EDT on Thursday, August 3, 2017. A replay of this conference call will be available until
August 10, 2017 at 877-344-7529 (U.S. toll-free) or 412-317-0088 (international). The replay conference ID is 10101208. The call
will also be available live and for replay in the Investor Relations section of the Company’s website at http://ir.charlesandcolvard.com/events.
About Charles & Colvard, Ltd.
Charles & Colvard, Ltd., based in the Research Triangle Park area of North Carolina, is the original creator and
leading source of Forever One™, Forever Brilliant® and Forever Classic™ moissanite gemstones for fine jewelry. Moissanite is
unique, available in three color grades (colorless, near-colorless and faint color) and produced from silicon carbide (SiC)
crystals. Charles & Colvard Created Moissanite® is sold with a Limited Lifetime Warranty to wholesale distributors, manufacturers,
retailers, TV shopping networks and designers as loose stones or set in a wide variety of quality metal setting options. Charles &
Colvard, Ltd. also sells direct to consumers through its wholly owned operating subsidiary, charlesandcolvard.com, LLC, and through
third-party marketplaces. Charles & Colvard, Ltd.’s common stock is listed on the NASDAQ Global Select Market under the symbol
“CTHR.” For more information, please visit www.charlesandcolvard.com.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements expressing expectations
regarding our future and projections relating to our products, sales, revenues, and earnings are typical of such statements and are
made under the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to,
statements about our plans, objectives, representations, and contentions and are not historical facts and typically are identified
by use of terms such as “may,” “will,” “should,” “could,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,”
“continue,” and similar words, although some forward-looking statements are expressed differently.
All forward-looking statements are subject to the risks and uncertainties inherent in predicting the future. You
should be aware that although the forward-looking statements included herein represent management’s current judgment and
expectations, our actual results may differ materially from those projected, stated, or implied in these forward-looking statements
as a result of many factors including, but not limited to, our dependence on consumer awareness, acceptance, and growth of sales of
our products resulting from our strategic initiatives; dependence on a limited number of customers; the impact of the execution of
our business plans on our liquidity; our ability to fulfill orders on a timely basis; the financial condition of our major
customers and their willingness and ability to market our products; dependence on our exclusive supply agreement with Cree, Inc.
for the sole supply of the raw material; intense competition in the worldwide jewelry industry; our ability to maintain compliance
with the continued listing requirements of The Nasdaq Stock Market LLC; our current wholesale customers’ potential perception of us
as a competitor in the finished jewelry business; quality control challenges from time to time that can result in lost revenue and
harm to our brands and reputation; general economic and market conditions, including the current economic environment; risks of
conducting business in foreign countries; the impact of natural disasters on our operations; the pricing of precious metals, which
is beyond our control; the potential impact of seasonality on our business; our ability to protect our intellectual property; the
risk of a failure of our information technology infrastructure to protect confidential information and prevent security breaches;
the impact of significant changes in e-commerce opportunities, technology, or models; the failure to evaluate and integrate
strategic opportunities; possible adverse effects of governmental regulation and oversight; and the impact of anti-takeover
provisions included in our charter documents, in addition to the other risks and uncertainties described in our filings with the
Securities and Exchange Commission, or the SEC, including our Annual Report on Form 10-K for the fiscal year ended December 31,
2016 and subsequent reports filed with the SEC. Forward-looking statements speak only as of the date they are made. We undertake no
obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur except as
required by the federal securities laws, and you are urged to review and consider disclosures that we make in the reports that we
file with the SEC that discuss other factors relevant to our business.
-Financial Tables (Appendix A) and Summary Financial Information by Reportable Segment (Recast) (Appendix B)
Follow-
Appendix A |
CHARLES & COLVARD, LTD. |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(unaudited) |
|
|
June 30,
2017 |
|
December 31,
2016 |
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
6,289,111 |
|
$ |
7,427,273 |
Accounts receivable, net |
|
1,992,434 |
|
|
2,794,626 |
Inventory, net |
|
10,102,334 |
|
|
9,770,206 |
Prepaid expenses and other assets |
|
643,811 |
|
|
682,083 |
Total current assets |
|
19,027,690 |
|
|
20,674,188 |
Long-term assets: |
|
|
|
|
|
Inventory, net |
|
19,130,743 |
|
|
18,360,211 |
Property and equipment, net |
|
1,404,442 |
|
|
1,391,116 |
Intangible assets, net |
|
8,944 |
|
|
8,808 |
Other assets |
|
67,681 |
|
|
71,453 |
Total long-term assets |
|
20,611,810 |
|
|
19,831,588 |
TOTAL ASSETS |
$ |
39,639,500 |
|
$ |
40,505,776 |
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable |
$ |
3,864,978 |
|
$ |
3,977,149 |
Accrued cooperative advertising |
|
42,956 |
|
|
50,000 |
Accrued expenses and other liabilities |
|
634,099 |
|
|
581,107 |
Total current liabilities |
|
4,542,033 |
|
|
4,608,256 |
Long-term liabilities: |
|
|
|
|
|
Accrued expenses and other liabilities |
|
532,609 |
|
|
594,916 |
Accrued income taxes |
|
452,578 |
|
|
433,983 |
Total long-term liabilities |
|
985,187 |
|
|
1,028,899 |
Total liabilities |
|
5,527,220 |
|
|
5,637,155 |
Commitments and contingencies |
|
|
|
|
|
Shareholders’ equity: |
|
|
|
|
|
Common stock, no par value; 50,000,000 shares authorized; 21,629,685
and 21,369,885 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively |
|
54,243,816 |
|
|
54,243,816 |
Additional paid-in capital |
|
14,489,042 |
|
|
14,282,956 |
Accumulated deficit |
|
(34,620,578 |
) |
|
(33,658,151 |
Total shareholders’ equity |
|
34,112,280 |
|
|
34,868,621 |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ |
39,639,500 |
|
$ |
40,505,776 |
CHARLES & COLVARD, LTD. |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(unaudited) |
|
|
Three Months Ended
June 30, |
|
Six Months Ended June
30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
Net sales |
$ |
6,641,792
|
|
$ |
6,527,004 |
|
$ |
12,287,174 |
|
$ |
17,920,275 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
3,840,086 |
|
|
3,894,094 |
|
|
7,060,701 |
|
|
13,057,982 |
|
Sales and marketing |
|
1,776,853 |
|
|
1,803,010 |
|
|
3,692,188 |
|
|
3,331,595 |
|
General and administrative |
|
1,420,711 |
|
|
1,693,123 |
|
|
2,474,882 |
|
|
3,135,818 |
|
Research and development |
|
2,324 |
|
|
980 |
|
|
3,143 |
|
|
2,848 |
|
Loss on abandonment of property and equipment |
|
- |
|
|
115,548 |
|
|
- |
|
|
115,548 |
|
Total costs and expenses |
|
7,039,974 |
|
|
7,506,755 |
|
|
13,230,914 |
|
|
19,643,791 |
|
Loss from operations |
|
(398,182 |
) |
|
(979,751 |
) |
|
(943,740 |
) |
|
(1,723,516 |
) |
Other expense: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
(92 |
) |
|
(5 |
) |
|
(92 |
) |
|
(1,512 |
) |
Total other expense |
|
(92 |
) |
|
(5 |
) |
|
(92 |
) |
|
(1,512 |
) |
Loss before income taxes from continuing operations |
|
(398,274 |
) |
|
(979,756 |
) |
|
(943,832 |
) |
|
(1,725,028 |
) |
Income tax net expense from continuing operations |
|
(4,507 |
) |
|
(3,500 |
) |
|
(18,595 |
) |
|
(6,743 |
) |
Net loss from continuing operations |
|
(402,781 |
) |
|
(983,256 |
) |
|
(962,427 |
) |
|
(1,731,771 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Discontinued operations: |
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations |
|
-
|
|
|
(4,708 |
) |
|
- |
|
|
(579,078 |
) |
Gain on sale of assets from discontinued operations |
|
- |
|
|
- |
|
|
- |
|
|
15,463 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss from discontinued operations |
|
- |
|
|
(4,708 |
) |
|
- |
|
|
(563,615 |
) |
Net loss |
$ |
(402,781 |
) |
$ |
(987,964 |
) |
$ |
(962,427 |
) |
$ |
(2,295,386 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic – continuing operations |
$ |
(0.02 |
) |
$ |
(0.05 |
) |
$ |
(0.05 |
) |
$ |
(0.08 |
) |
Basic – discontinued operations |
|
- |
|
|
- |
|
|
- |
|
|
(0.03 |
) |
Basic – total |
$ |
(0.02 |
) |
$ |
(0.05 |
) |
$ |
(0.05 |
) |
$ |
(0.11 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted – continuing operations |
$ |
(0.02 |
) |
$ |
(0.05 |
) |
$ |
(0.05 |
) |
$ |
(0.08 |
) |
Diluted – discontinued operations |
|
- |
|
|
- |
|
|
- |
|
|
(0.03 |
) |
Diluted – total |
$ |
(0.02 |
) |
$ |
(0.05 |
) |
$ |
(0.05 |
) |
$ |
(0.11 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computing net income (loss) per common
share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
21,214,730 |
|
|
20,966,256 |
|
|
21,166,799 |
|
|
20,848,337 |
|
Diluted |
|
21,214,730 |
|
|
20,966,256 |
|
|
21,166,799 |
|
|
20,848,337 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CHARLES & COLVARD, LTD. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(unaudited) |
|
|
Six Months Ended June
30, |
|
|
2017 |
|
2016 |
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
Net loss |
$ |
(962,427 |
) |
$ |
(2,295,386 |
) |
Net loss from discontinued operations |
|
- |
|
|
(563,615 |
) |
Net loss from continuing operations |
|
(962,427 |
) |
|
(1,731,771 |
) |
Adjustments to reconcile net loss from continuing operations to net cash (used in)
provided by operating activities of continuing operations: |
|
|
|
|
|
|
Depreciation and amortization |
|
214,164 |
|
|
330,147 |
|
Stock-based compensation |
|
206,086 |
|
|
594,728 |
|
Provision for uncollectible accounts |
|
29,000 |
|
|
(59,558 |
) |
Provision for sales returns |
|
55,000 |
|
|
(295,000 |
) |
Provision for inventory reserves |
|
47,000 |
|
|
55,000 |
|
Loss on abandonment of property and equipment |
|
- |
|
|
115,548 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts receivable |
|
718,192 |
|
|
1,978,664 |
|
Inventory |
|
(1,149,660 |
) |
|
6,190,637 |
|
Prepaid expenses and other assets, net |
|
42,044 |
|
|
(171,358 |
) |
Accounts payable |
|
(112,171 |
) |
|
(260,448 |
) |
Accrued cooperative advertising |
|
(7,044 |
) |
|
(58,000 |
) |
Accrued income taxes |
|
18,595 |
|
|
6,743 |
|
Accrued expenses and other liabilities |
|
(9,315 |
) |
|
(175,285 |
) |
Net cash (used in) provided by operating activities of continuing
operations |
|
(910,536 |
) |
|
6,520,047 |
|
Net cash used in operating activities of discontinued operations |
|
- |
|
|
(935,326 |
) |
Net cash (used in) provided by operating activities |
|
(910,536 |
) |
|
5,584,721 |
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
Purchases of property and equipment |
|
(226,633 |
) |
|
(118,433 |
) |
Intangible assets |
|
(993 |
) |
|
(255 |
) |
Net cash used in investing activities of continuing
operations |
|
(227,626 |
) |
|
(118,688 |
) |
Net cash provided by investing activities of discontinued
operations |
|
- |
|
|
368,671 |
|
Net cash (used in) provided by investing activities |
|
(227,626 |
) |
|
249,983 |
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
Stock option exercises |
|
- |
|
|
2,300 |
|
Net cash provided by financing activities of continuing
operations |
|
- |
|
|
2,300 |
|
|
|
|
|
|
|
|
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |
|
(1,138,162 |
) |
|
5,837,004 |
|
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
|
7,427,273 |
|
|
5,274,305 |
|
CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ |
6,289,111 |
|
$ |
11,111,309 |
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
Cash paid during the period for interest |
$ |
92 |
|
$ |
1,512 |
|
Appendix B
CHARLES & COLVARD, LTD.
SUMMARY FINANCIAL INFORMATION BY REPORTABLE SEGMENT (RECAST)
(unaudited)
The Company evaluates the financial performance of its segments based on net sales; product line gross profit, or the excess of
product line sales over product line cost of goods sold; and operating income (loss). Product line cost of goods sold is defined as
product cost of goods sold, excluding non-capitalized expenses from the Company’s manufacturing and production control departments,
comprising personnel costs, depreciation, rent, utilities, and corporate overhead allocations; freight out; inventory valuation
allowance adjustments; and other inventory adjustments, comprising costs of quality issues, damaged goods, and inventory
write-offs.
The Company allocates certain general and administrative expenses from its Traditional segment to its Online Channels segment
primarily based on net sales and number of employees to arrive at segment operating loss. Unallocated expenses, which also include
interest and taxes, remain in its Traditional segment.
Summary financial information by reportable segment for each quarter and cumulative six month and nine month periods and the
full year of fiscal 2016 is as follows:
|
|
|
|
Three Months Ended
March 31, 2016 |
|
|
|
|
|
|
|
Online |
|
|
|
|
|
|
|
Traditional |
|
Channels |
|
Total |
|
Net sales |
|
|
|
|
|
|
|
|
|
Loose jewels |
|
|
$ |
9,083,502 |
|
|
$ |
557,096 |
|
$ |
9,640,598 |
|
|
Finished jewelry |
|
|
|
254,630 |
|
|
|
1,498,043 |
|
|
1,752,673 |
|
|
Total |
|
|
$ |
9,338,132 |
|
|
$ |
2,055,139 |
|
$ |
11,393,271 |
|
|
|
|
|
|
|
|
|
|
|
|
Product line cost of goods sold |
|
|
|
|
|
|
|
Loose jewels |
|
|
$ |
7,625,495 |
|
|
$ |
188,565 |
|
$ |
7,814,060 |
|
|
Finished jewelry |
|
|
|
91,912 |
|
|
|
673,195 |
|
|
765,107 |
|
|
Total |
|
|
$ |
7,717,407 |
|
|
$ |
861,760 |
|
$ |
8,579,167 |
|
|
|
|
|
|
|
|
|
|
|
|
Product line gross profit |
|
|
|
|
|
|
|
Loose jewels |
|
|
$ |
1,458,007 |
|
|
$ |
368,531 |
|
$ |
1,826,538 |
|
|
Finished jewelry |
|
|
|
162,718 |
|
|
|
824,848 |
|
|
987,566 |
|
|
Total |
|
|
$ |
1,620,725 |
|
|
$ |
1,193,379 |
|
$ |
2,814,104 |
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income |
|
$ |
(816,997 |
) |
|
$ |
73,232 |
|
$ |
(743,765 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, 2016 |
|
Six Months Ended June
30, 2016 |
|
|
|
|
|
|
|
Online |
|
|
|
|
|
Online |
|
|
|
|
|
|
|
Traditional |
|
Channels |
|
Total |
|
Traditional |
|
Channels |
|
Total |
|
Net sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loose jewels |
|
|
$ |
4,323,417 |
|
|
$ |
633,408 |
|
|
$ |
4,956,825 |
|
|
$ |
13,406,919 |
|
|
$ |
1,190,723 |
|
|
$ |
14,597,642 |
|
|
Finished jewelry |
|
|
|
166,263 |
|
|
|
1,403,916 |
|
|
|
1,570,179 |
|
|
|
420,893 |
|
|
|
2,901,740 |
|
|
|
3,322,633 |
|
|
Total |
|
|
$ |
4,489,680 |
|
|
$ |
2,037,324 |
|
|
$ |
6,527,004 |
|
|
$ |
13,827,812 |
|
|
$ |
4,092,463 |
|
|
$ |
17,920,275 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product line cost of goods sold |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loose jewels |
|
|
$ |
2,164,477 |
|
|
$ |
205,346 |
|
|
$ |
2,369,823 |
|
|
$ |
9,789,972 |
|
|
$ |
393,911 |
|
|
$ |
10,183,883 |
|
|
Finished jewelry |
|
|
|
601,475 |
|
|
|
594,199 |
|
|
|
1,195,674 |
|
|
|
693,387 |
|
|
|
1,267,394 |
|
|
|
1,960,781 |
|
|
Total |
|
|
$ |
2,765,952 |
|
|
$ |
799,545 |
|
|
$ |
3,565,497 |
|
|
$ |
10,483,359 |
|
|
$ |
1,661,305 |
|
|
$ |
12,144,664 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product line gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loose jewels |
|
|
$ |
2,158,940 |
|
|
$ |
428,062 |
|
|
$ |
2,587,002 |
|
|
$ |
3,616,947 |
|
|
$ |
796,812 |
|
|
$ |
4,413,759 |
|
|
Finished jewelry |
|
|
|
(435,212 |
) |
|
|
809,717 |
|
|
|
374,505 |
|
|
|
(272,494 |
) |
|
|
1,634,346 |
|
|
|
1,361,852 |
|
|
Total |
|
|
$ |
1,723,728 |
|
|
$ |
1,237,779 |
|
|
$ |
2,961,507 |
|
|
$ |
3,344,453 |
|
|
$ |
2,431,158 |
|
|
$ |
5,775,611 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income |
|
$ |
(681,580 |
) |
|
$ |
(298,171 |
) |
|
$ |
(979,751 |
) |
|
$ |
(1,498,578 |
) |
|
$ |
(224,938 |
) |
|
$ |
(1,723,516 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CHARLES & COLVARD, LTD. |
SUMMARY FINANCIAL INFORMATION BY REPORTABLE
SEGMENT (RECAST) |
(unaudited) |
|
|
|
|
|
Three Months Ended
September 30, 2016
|
|
Nine Months Ended
September 30, 2016
|
|
|
|
|
|
|
|
|
Online
|
|
|
|
|
|
|
|
|
|
Online
|
|
|
|
|
|
|
|
|
Traditional
|
|
Channels
|
|
Total
|
|
Traditional
|
|
Channels
|
|
Total
|
Net sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loose jewels |
|
$ |
3,165,142 |
|
|
$ |
432,337 |
|
|
$ |
3,597,479 |
|
|
$ |
16,572,061 |
|
|
$ |
1,623,060 |
|
|
$ |
18,195,121 |
|
Finished jewelry |
|
|
302,652 |
|
|
|
1,312,842 |
|
|
|
1,615,494 |
|
|
|
723,545 |
|
|
|
4,214,582 |
|
|
|
4,938,127 |
|
Total |
|
$ |
3,467,794 |
|
|
$ |
1,745,179 |
|
|
$ |
5,212,973 |
|
|
$ |
17,295,606 |
|
|
$ |
5,837,642 |
|
|
$ |
23,133,248 |
|
|
Product line cost of goods sold |
|
Loose jewels |
|
$ |
1,654,137 |
|
|
$ |
154,842 |
|
|
$ |
1,808,979 |
|
|
$ |
11,444,109 |
|
|
$ |
548,753 |
|
|
$ |
11,992,862 |
|
Finished jewelry |
|
|
148,760 |
|
|
|
557,419 |
|
|
|
706,179 |
|
|
|
842,147 |
|
|
|
1,824,813 |
|
|
|
2,666,960 |
|
Total |
|
$ |
1,802,897 |
|
|
$ |
712,261 |
|
|
$ |
2,515,158 |
|
|
$ |
12,286,256 |
|
|
$ |
2,373,566 |
|
|
$ |
14,659,822 |
|
|
Product line gross profit |
|
Loose jewels |
|
$ |
1,511,005 |
|
|
$ |
277,495 |
|
|
$ |
1,788,500 |
|
|
$ |
5,127,952 |
|
|
$ |
1,074,307 |
|
|
$ |
6,202,259 |
|
Finished jewelry |
|
|
153,892 |
|
|
|
755,423 |
|
|
|
909,315 |
|
|
|
(118,602 |
) |
|
|
2,389,769 |
|
|
|
2,271,167 |
|
Total |
|
$ |
1,664,897 |
|
|
$ |
1,032,918 |
|
|
$ |
2,697,815 |
|
|
$ |
5,009,350 |
|
|
$ |
3,464,076 |
|
|
$ |
8,473,426 |
|
|
Operating (loss) income |
|
$ |
(612,526 |
) |
|
$ |
(531,070 |
) |
|
$ |
(1,143,596 |
) |
|
$ |
(2,111,103 |
) |
|
$ |
(756,009 |
) |
|
$ |
(2,867,112 |
) |
|
|
|
|
Three Months Ended
December 31, 2016 |
|
Year Ended December
31, 2016 |
|
|
|
|
|
|
|
Online |
|
|
|
|
|
Online |
|
|
|
|
|
|
|
Traditional |
|
Channels |
|
Total |
|
Traditional |
|
Channels |
|
Total |
|
Net sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loose jewels |
|
|
$ |
2,659,473 |
|
|
$ |
597,134 |
|
|
$ |
3,256,607 |
|
|
$ |
19,231,534 |
|
|
$ |
2,220,194 |
|
|
$ |
21,451,728 |
|
|
Finished jewelry |
|
|
|
351,612 |
|
|
|
2,426,661 |
|
|
|
2,778,273 |
|
|
|
1,075,157 |
|
|
|
6,641,243 |
|
|
|
7,716,400 |
|
|
Total |
|
|
$ |
3,011,085 |
|
|
$ |
3,023,795 |
|
|
$ |
6,034,880 |
|
|
$ |
20,306,691 |
|
|
$ |
8,861,437 |
|
|
$ |
29,168,128 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product line cost of goods sold |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loose jewels |
|
|
$ |
1,663,257 |
|
|
$ |
260,630 |
|
|
$ |
1,923,887 |
|
|
$ |
13,107,366 |
|
|
$ |
809,383 |
|
|
$ |
13,916,749 |
|
|
Finished jewelry |
|
|
|
353,493 |
|
|
|
1,128,335 |
|
|
|
1,481,828 |
|
|
|
1,195,640 |
|
|
|
2,953,148 |
|
|
|
4,148,788 |
|
|
Total |
|
|
$ |
2,016,750 |
|
|
$ |
1,388,965 |
|
|
$ |
3,405,715 |
|
|
$ |
14,303,006 |
|
|
$ |
3,762,531 |
|
|
$ |
18,065,537 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product line gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loose jewels |
|
|
$ |
996,216 |
|
|
$ |
336,504 |
|
|
$ |
1,332,720 |
|
|
$ |
6,124,168 |
|
|
$ |
1,410,811 |
|
|
$ |
7,534,979 |
|
|
Finished jewelry |
|
|
|
(1,881 |
) |
|
|
1,298,326 |
|
|
|
1,296,445 |
|
|
|
(120,483 |
) |
|
|
3,688,095 |
|
|
|
3,567,612 |
|
|
Total |
|
|
$ |
994,335 |
|
|
$ |
1,634,830 |
|
|
$ |
2,629,165 |
|
|
$ |
6,003,685 |
|
|
$ |
5,098,906 |
|
|
$ |
11,102,591 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating (loss) income |
|
$ |
(978,456 |
) |
|
$ |
(91,250 |
) |
|
$ |
(1,069,706 |
) |
|
$ |
(3,089,559 |
) |
|
$ |
(847,259 |
) |
|
$ |
(3,936,818 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
CHARLES & COLVARD, LTD.
SUMMARY FINANCIAL INFORMATION BY REPORTABLE SEGMENT (RECAST)
(unaudited)
A reconciliation of the Company’s product line cost of goods sold to cost of goods sold as reported in the consolidated financial
statements for each applicable period is as follows:
|
|
|
|
|
|
Three Months
Ended March 31,
2016 |
|
Product line cost of goods sold |
|
|
|
$ |
8,579,167 |
|
Non-capitalized manufacturing and production control expenses |
|
|
|
|
|
|
410,750 |
|
Freight out |
|
|
|
|
|
72,058 |
|
Inventory valuation allowances |
|
|
|
55,000 |
|
Other inventory adjustments |
|
|
|
|
46,913 |
|
Cost of goods sold |
|
|
|
$ |
9,163,888 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended June 30,
2016 |
|
Six Months
Ended June 30,
2016 |
|
Product line cost of goods sold |
|
|
|
$ |
3,565,497 |
|
|
$ |
12,144,664 |
|
|
Non-capitalized manufacturing and production control expenses |
|
|
|
|
|
|
331,533 |
|
|
|
742,299 |
|
|
Freight out |
|
|
|
|
|
91,031 |
|
|
|
163,089 |
|
|
Inventory valuation allowances |
|
|
|
- |
|
|
|
55,000 |
|
|
Other inventory adjustments |
|
|
|
|
(93,967 |
) |
|
|
(47,070 |
) |
|
Cost of goods sold |
|
|
|
$ |
3,894,094 |
|
|
$ |
13,057,982 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended September 30,
2016 |
|
Nine Months
Ended September 30,
2016 |
|
Product line cost of goods sold |
|
|
|
$ |
2,515,158 |
|
|
$ |
14,659,822 |
|
Non-capitalized manufacturing and production control expenses |
|
|
|
|
|
|
448,038 |
|
|
|
1,190,321 |
|
Freight out |
|
|
|
|
|
105,616 |
|
|
|
268,705 |
|
Inventory valuation allowances |
|
|
|
(1,000 |
) |
|
|
54,000 |
|
Other inventory adjustments |
|
|
|
|
153,195 |
|
|
|
106,141 |
|
Cost of goods sold |
|
|
|
$ |
3,221,007 |
|
|
$ |
16,278,989 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended December 31,
2016 |
|
Year Ended
December 31,
2016 |
|
Product line cost of goods sold |
|
|
|
$ |
3,405,715 |
|
$ |
18,065,537 |
|
Non-capitalized manufacturing and production control expenses |
|
|
|
|
|
|
237,603 |
|
|
1,427,924 |
|
Freight out |
|
|
|
|
|
108,021 |
|
|
376,726 |
|
Inventory valuation allowances |
|
|
|
146,000 |
|
|
200,000 |
|
Other inventory adjustments |
|
|
|
|
225,111 |
|
|
331,252 |
|
Cost of goods sold |
|
|
|
$ |
4,122,450 |
|
$ |
20,401,439 |
|
|
|
|
|
|
|
|
|
|
|
Contacts: Clint J. Pete Chief Financial Officer 919-468-0399 cpete@charlesandcolvard.com Investor Relations: Taglich Brothers, Inc. Christopher Schreiber 212-661-6886