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Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Mar. 31, 2020	May 15, 2020
Cover [Abstract]
Entity Registrant Name	CHARLES & COLVARD LTD
Entity Central Index Key	0001015155
Current Fiscal Year End Date	--06-30
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Shell Company	false
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		28,981,910
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2020
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Entity Address, State or Province	NC

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) - USD ($)	Mar. 31, 2020	Jun. 30, 2019
Current assets:
Cash and cash equivalents	$ 11,869,028	$ 12,465,483
Restricted cash	32,287	541,062
Accounts receivable, net	1,646,429	1,962,471
Inventory, net	5,315,227	11,909,792
Prepaid expenses and other assets	1,240,905	989,559
Total current assets	20,103,876	27,868,367
Long-term assets:
Inventory, net	26,354,155	21,823,928
Property and equipment, net	1,057,375	1,026,098
Intangible assets, net	165,946	97,373
Operating lease right-of-use assets	684,039	0
Other assets	52,812	330,615
Total long-term assets	28,314,327	23,278,014
TOTAL ASSETS	48,418,203	51,146,381
Current liabilities:
Accounts payable	4,126,035	3,372,172
Operating lease liabilities	618,299	0
Accrued expenses and other liabilities	1,098,283	1,325,608
Total current liabilities	5,842,617	4,697,780
Long-term liabilities:
Noncurrent operating lease liabilities	349,424	0
Deferred rent	0	236,745
Accrued income taxes	7,454	6,214
Total long-term liabilities	356,878	242,959
Total liabilities	6,199,495	4,940,739
Commitments and contingencies (Note 9)
Shareholders' equity:
Common stock, no par value; 50,000,000 shares authorized; 28,981,910 and 28,027,569 shares issued and outstanding at March 31, 2020 and June 30, 2019, respectively	54,342,864	54,342,864
Additional paid-in capital	25,635,104	24,488,147
Accumulated deficit	(37,759,260)	(32,625,369)
Total shareholders' equity	42,218,708	46,205,642
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 48,418,203	$ 51,146,381

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) (Parenthetical) - $ / shares	Mar. 31, 2020	Jun. 30, 2019
Shareholders' equity
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized (in shares)	50,000,000	50,000,000
Common stock, shares issued (in shares)	28,981,910	28,027,569
Common stock, shares outstanding (in shares)	28,981,910	28,027,569

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) [Abstract]
Net sales	$ 6,491,048	$ 7,902,242	$ 24,758,559	$ 24,636,409
Costs and expenses:
Cost of goods sold	9,171,932	4,150,229	18,579,069	13,110,185
Sales and marketing	2,518,732	1,912,484	7,909,289	5,900,501
General and administrative	994,254	1,042,048	3,547,441	3,517,004
Research and development	0	0	0	1,422
Total costs and expenses	12,684,918	7,104,761	30,035,799	22,529,112
(Loss) Income from operations	(6,193,870)	797,481	(5,277,240)	2,107,297
Other income (expense):
Interest income	39,425	0	146,182	0
Interest expense	(116)	(287)	(535)	(985)
Loss on foreign currency exchange	(206)	(209)	(1,058)	(311)
Other expense	0	0	0	(13)
Total other income (expense)	39,103	(496)	144,589	(1,309)
(Loss) Income before income taxes	(6,154,767)	796,985	(5,132,651)	2,105,988
Income tax (expense) benefit	(493)	17,099	(1,240)	7,565
Net (loss) income	$ (6,155,260)	$ 814,084	$ (5,133,891)	$ 2,113,553
Net (loss) income per common share:
Basic (in dollars per share)	$ (0.21)	$ 0.04	$ (0.18)	$ 0.10
Diluted (in dollars per share)	$ (0.21)	$ 0.04	$ (0.18)	$ 0.10
Weighted average number of shares used in computing net (loss) income per common share:
Basic (in shares)	28,656,910	21,537,636	28,625,723	21,486,692
Diluted (in shares)	28,656,910	21,752,043	28,625,723	21,733,616

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (unaudited) - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Total
Balance at Jun. 30, 2018	$ 54,243,816	$ 14,962,071	$ (34,900,836)	$ 34,305,051
Balance (in shares) at Jun. 30, 2018	21,705,173
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	$ 0	71,176	0	71,176
Retirement of restricted stock	$ 0	0	0	0
Retirement of restricted stock (in shares)	(109,604)
Stock option exercises	$ 3,480	(1,229)	0	2,251
Stock option exercises (in shares)	2,500
Net (loss) income	$ 0	0	109,904	109,904
Balance at Sep. 30, 2018	$ 54,247,296	15,032,018	(34,790,932)	34,488,382
Balance (in shares) at Sep. 30, 2018	21,598,069
Balance at Jun. 30, 2018	$ 54,243,816	14,962,071	(34,900,836)	34,305,051
Balance (in shares) at Jun. 30, 2018	21,705,173
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income				2,113,553
Balance at Mar. 31, 2019	$ 54,247,296	15,330,495	(32,787,283)	36,790,408
Balance (in shares) at Mar. 31, 2019	21,727,569
Balance at Sep. 30, 2018	$ 54,247,296	15,032,018	(34,790,932)	34,488,382
Balance (in shares) at Sep. 30, 2018	21,598,069
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	$ 0	171,906	0	171,906
Net (loss) income	0	0	1,189,565	1,189,565
Balance at Dec. 31, 2018	$ 54,247,296	15,203,924	(33,601,367)	35,849,853
Balance (in shares) at Dec. 31, 2018	21,598,069
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	$ 0	126,571	0	126,571
Issuance of restricted stock	$ 0	0	0	0
Issuance of restricted stock (in shares)	129,500
Net (loss) income	$ 0	0	814,084	814,084
Balance at Mar. 31, 2019	$ 54,247,296	15,330,495	(32,787,283)	36,790,408
Balance (in shares) at Mar. 31, 2019	21,727,569
Balance at Jun. 30, 2019	$ 54,342,864	24,488,147	(32,625,369)	46,205,642
Balance (in shares) at Jun. 30, 2019	28,027,569
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock, net of offering costs	$ 0	932,480	0	932,480
Issuance of common stock, net of offering costs (in shares)	630,500
Stock-based compensation	$ 0	212,380	0	212,380
Issuance of restricted stock	$ 0	0	0	0
Issuance of restricted stock (in shares)	325,000
Retirement of restricted stock	$ 0	0	0	0
Retirement of restricted stock (in shares)	(1,159)
Net (loss) income	$ 0	0	207,319	207,319
Balance at Sep. 30, 2019	$ 54,342,864	25,633,007	(32,418,050)	47,557,821
Balance (in shares) at Sep. 30, 2019	28,981,910
Balance at Jun. 30, 2019	$ 54,342,864	24,488,147	(32,625,369)	46,205,642
Balance (in shares) at Jun. 30, 2019	28,027,569
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (loss) income				(5,133,891)
Balance at Mar. 31, 2020	$ 54,342,864	25,635,104	(37,759,260)	42,218,708
Balance (in shares) at Mar. 31, 2020	28,981,910
Balance at Sep. 30, 2019	$ 54,342,864	25,633,007	(32,418,050)	47,557,821
Balance (in shares) at Sep. 30, 2019	28,981,910
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	$ 0	146,725	0	146,725
Net (loss) income	0	0	814,050	814,050
Balance at Dec. 31, 2019	$ 54,342,864	25,779,732	(31,604,000)	48,518,596
Balance (in shares) at Dec. 31, 2019	28,981,910
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	$ 0	(144,628)	0	(144,628)
Net (loss) income	0	0	(6,155,260)	(6,155,260)
Balance at Mar. 31, 2020	$ 54,342,864	$ 25,635,104	$ (37,759,260)	$ 42,218,708
Balance (in shares) at Mar. 31, 2020	28,981,910

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) - USD ($)	9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$ (5,133,891)	$ 2,113,553
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization	366,322	355,812
Stock-based compensation	214,477	369,653
Provision for (Recovery of) uncollectible accounts	151,000	(944)
Provision for sales returns	108,000	89,000
Inventory write-off	5,620,991	377,000
Provision for accounts receivable discounts	6,416	9,149
Changes in operating assets and liabilities:
Accounts receivable	50,626	241,069
Inventory	(3,556,653)	(2,250,702)
Prepaid expenses and other assets, net	326,146	(1,226)
Accounts payable	753,863	(279,644)
Deferred rent	0	(116,156)
Accrued income taxes	1,240	15,584
Accrued expenses and other liabilities	(480,075)	716,288
Net cash (used in) provided by operating activities	(1,571,538)	1,638,436
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(394,825)	(337,271)
Payments for intangible assets	(71,347)	(56,666)
Net cash used in investing activities	(466,172)	(393,937)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock, net of offering costs	932,480	0
Stock option exercises	0	2,251
Net cash provided by financing activities	932,480	2,251
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(1,105,230)	1,246,750
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD	13,006,545	3,393,186
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD	11,901,315
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	535	985
Cash paid during the period for taxes	$ 2,050	$ 5,065

DESCRIPTION OF BUSINESS

9 Months Ended

Mar. 31, 2020

DESCRIPTION OF BUSINESS [Abstract]

DESCRIPTION OF BUSINESS

1.	DESCRIPTION OF BUSINESS

Charles & Colvard, Ltd. (the “Company”), a North Carolina corporation founded in 1995, manufactures, markets, and distributes Charles & Colvard Created Moissanite^® (hereinafter referred to as moissanite or moissanite jewels) and finished jewelry featuring moissanite for sale in the worldwide jewelry market. Moissanite, also known by its chemical name silicon carbide (“SiC”), is a rare mineral first discovered in a meteorite crater. Because naturally occurring SiC crystals are too small for commercial use, larger crystals must be grown in a laboratory. The Company sells loose moissanite jewels and finished jewelry at wholesale prices to distributors, manufacturers, retailers, and designers, including some of the largest distributors and jewelry manufacturers in the world. The Company’s finished jewelry and loose moissanite jewels that are mounted into fine jewelry by other manufacturers are sold at retail outlets and via the Internet. The Company sells at retail prices to end-consumers through its wholly owned operating subsidiary, charlesandcolvard.com, LLC, third-party online marketplaces, drop-ship retail, and other pure-play, exclusively e-commerce outlets.

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Mar. 31, 2020

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract]

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

2.	BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation – The accompanying unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. However, certain information or footnote disclosures normally included in complete financial statements prepared in accordance with U.S. GAAP have been condensed, or omitted, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of the Company’s management, the unaudited statements in this Quarterly Report on Form 10-Q include all normal and recurring adjustments necessary for the fair statement of the results for the interim periods presented. The results for the three and nine months ended March 31, 2020 are not necessarily indicative of the results to be expected for the fiscal year ending June 30, 2020.

The condensed consolidated financial statements as of and for the three and nine months ended March 31, 2020 and 2019 included in this Quarterly Report on Form 10-Q are unaudited. The balance sheet as of June 30, 2019 is derived from the audited consolidated financial statements as of that date. The accompanying statements should be read in conjunction with the audited financial statements and related notes contained in the Company’s Annual Report on Form 10-K (the “2019 Annual Report”) for the fiscal year ended June 30, 2019 filed with the SEC on September 6, 2019.

The accompanying condensed consolidated financial statements as of and for the three and nine months ended March 31, 2020 and 2019, and as of the fiscal year ended June 30, 2019, include the accounts of the Company and its wholly owned subsidiaries charlesandcolvard.com, LLC; Charles & Colvard Direct, LLC; and Charles & Colvard (HK) Ltd., the Company’s Hong Kong subsidiary, which was re-activated in December 2017. Charles & Colvard Direct, LLC, had no operating activity during the nine-month periods ended December 31, 2020 or 2019. Charles & Colvard (HK) Ltd. previously became dormant in the second quarter of 2009 and has had no operating activity since 2008. All intercompany accounts have been eliminated.

Significant Accounting Policies – In the opinion of the Company’s management, the Company’s significant accounting policies used for the three and nine months ended March 31, 2020, are consistent with those used for the fiscal year ended June 30, 2019. Accordingly, please refer to Note 2 to the Consolidated Financial Statements in the 2019 Annual Report for the Company’s significant accounting policies.

Use of Estimates – The future effects of the COVID-19 pandemic on the Company’s results of operations, cash flows, and financial position are unclear. The preparation of financial statements presented herein are prepared in conformity with 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. The most significant estimates impacting the Company’s condensed consolidated financial statements relate to valuation and classification of inventories, accounts receivable reserves, deferred tax assets, uncertain tax positions, and revenue recognition. Actual results could differ materially from those estimates.

Cash and Cash Equivalents – All highly liquid investments with an original maturity of three months or less from the date of purchase are considered to be cash equivalents.

Restricted Cash – In accordance with cash management process requirements relating to the Company’s asset-based revolving credit facility from White Oak Commercial Finance, LLC (“White Oak”), there are access and usage restrictions on certain cash deposit balances for periods of up to two business days during which time such deposits are held by White Oak for the benefit of the Company. During the period these cash deposits are held by White Oak, such amounts are classified as restricted cash for reporting purposes on the Company’s condensed consolidated balance sheets. In the event that the Company has an outstanding balance on its revolving credit facility from White Oak, restricted cash balances held by White Oak would be applied to reduce such outstanding amounts.

The Company has full access to its cash balances without restriction following the period of time such cash is held by White Oak. For additional information regarding the Company’s asset-based revolving credit facility, see Note 10, “Line of Credit.”

The reconciliation of cash, cash equivalents, and restricted cash, as presented on the Condensed Consolidated Statements of Cash Flows, consists of the following as of the dates presented:

	March 31, 2020		June 30, 2019
Cash and cash equivalents	$	11,869,028	$	12,465,483
Restricted cash		32,287		541,062
Total cash, cash equivalents, and restricted cash	$	11,901,315	$	13,006,545

Recently Adopted/Issued Accounting Pronouncements – Effective July 1, 2019, the Company adopted the new lease accounting standard, which requires virtually all leases to be recorded as right-of-use (“ROU”) assets and lease liabilities on the condensed consolidated balance sheet and provides guidance on the recognition of lease expense and income. The new guidance requires the modified retrospective transition approach when applying the new standard to an entity’s leases existing at the date of initial application. The guidance further states that an entity’s date of initial application may be either the effective date upon which it adopts the new standard or the beginning of the earliest comparative period presented in the financial statements during the period in which it adopts the new guidance. The Company used the date of initial application as the effective date, and as such, financial information and disclosures required under the new accounting standard will not be provided for dates and periods prior to July 1, 2019.

The new standard provides a number of practical expedients for transition and policy elections for ongoing accounting. The Company elected the “package of practical expedients”, which permits the Company to not reassess its prior conclusions about lease identification, lease classification, and initial direct costs. The standard provides policy election options for recognition exemption for short-term leases and separation of lease and non-lease components. The Company elected the “short-term lease recognition” exemption and elected not to separate lease and non-lease components for all underlying asset classes. The Company determines lease and non-lease components based on observable information, including terms provided by the lessor.

The adoption of the new accounting standard resulted in the recognition of ROU assets and lease liabilities of approximately $983,000 and $1.38 million, respectively, for operating leases as of July 1, 2019. Currently, the Company has no other material leases that qualify as finance, variable, or short-term leases. The adoption did not have a material impact on the Company’s condensed consolidated statement of operations or condensed consolidated statement of cash flows.

Subsequent to the date of adoption, the Company determines if a contract is or contains a lease at inception of the agreement. Operating leases are recognized as ROU assets and the related obligations are recognized as current or noncurrent liabilities on the Company’s consolidated balance sheet. Leases with an initial lease term of one year or less are not recorded on the balance sheet.

ROU assets, which represent the Company’s right to use an underlying asset, and lease liabilities, which represent the Company’s obligation to make lease payments arising from the lease, are recognized based on the present value of the future lease payments over the lease term at the commencement date. The ROU asset also includes any lease payments made at or before the commencement date and any initial direct costs incurred and excludes lease incentives. Certain of the Company’s leases contain renewal and/or termination options. The Company recognizes renewal or termination options as part of its ROU assets and lease liabilities when the Company has the unilateral right to renew or terminate and it is reasonably certain these options will be exercised. The Company determines the present value of lease payments based on the implicit rate, which may be explicitly stated in the lease if available or the Company’s estimated collateralized incremental borrowing rate based on the term of the lease. For operating leases, lease expense is recognized on a straight-line basis over the lease term.

Some leases could require the Company to pay non-lease components, which may include taxes, maintenance, insurance and certain other expenses applicable to the leased property, and are primarily considered variable costs. When applicable, such costs are expensed as incurred.

For additional information regarding the Company’s accounting for lease arrangements, see Note 9, “Commitments and Contingencies.”

In August 2018, the Financial Accounting Standards Board (the “FASB”) issued additional guidance in connection with accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. The updated guidance is effective for fiscal years beginning after December 15, 2019. The Company is finalizing its analysis, but currently believes the effect of the adoption of this new pronouncement is not expected to be material to the Company’s financial statements.

In December 2019, the FASB issued guidance on simplifying the accounting for income taxes that is intended to reduce the complexity while maintaining or improving the usefulness of tax disclosure information in financial statements. The new guidance is effective for fiscal years beginning after December 15, 2020. The Company does not expect the impact of the new guidance to have a material impact to the Company’s financial statements.

In March 2020, in response to concerns about structural risks of interbank offered rates (“IBORs”), and, particularly, the risk of cessation of the London Interbank Offered Rate (“LIBOR”), the FASB issued new guidance to ease the burden in accounting for or recognizing the effects of referenced interest rate reform on financial reporting. The new guidance is effective as of March 12, 2020 through December 31, 2022. As described in more detail in Note 10, “Line of Credit”, borrowings under the Company’s line of credit are based on a rate equal to the one-month LIBOR. As of March 31, 2020, the Company had not borrowed against its line of credit, and therefore, is not subject to recognizing or disclosing any effect of referenced rate reform as of March 31, 2020.

SEGMENT INFORMATION AND GEOGRAPHIC DATA

9 Months Ended

Mar. 31, 2020

SEGMENT INFORMATION AND GEOGRAPHIC DATA [Abstract]

SEGMENT INFORMATION AND GEOGRAPHIC DATA

3.	SEGMENT INFORMATION AND GEOGRAPHIC DATA

The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making operating decisions and assessing performance as the source of the Company’s operating and reportable segments.

The Company manages its business through two operating and reportable segments based on its distribution channels to sell its product lines, loose jewels and finished jewelry: its “Online Channels” segment, which consists of e-commerce outlets including charlesandcolvard.com, third-party online marketplaces, drop-ship retail, and other pure-play, exclusively e-commerce outlets; and its “Traditional” segment, which consists of wholesale and retail customers. The accounting policies of the Online Channels segment and Traditional segment are the same as those described in Note 2, “Basis of Presentation and Significant Accounting Policies” of this Quarterly Report on Form 10-Q and in the Notes to the Consolidated Financial Statements in the 2019 Annual Report.

The Company evaluates the financial performance of its segments based on net sales; product line gross profit, or the excess of product line sales over product line cost of goods sold; and operating income. The Company’s product line cost of goods sold is defined as product cost of goods sold, excluding non-capitalized expenses from the Company’s manufacturing and production control departments, comprising personnel costs, depreciation, leases, utilities, and corporate overhead allocations; freight out; inventory write-offs; and other inventory adjustments, comprising costs of quality issues, and damaged goods.

The Company allocates certain general and administrative expenses between its Online Channels segment and its Traditional segment based on net sales and number of employees to arrive at segment operating income. Unallocated expenses remain in its Traditional segment.

Summary financial information by reportable segment is as follows:

	Three Months Ended March 31, 2020
	Online Channels			Traditional			Total
Net sales
Finished jewelry	$	2,922,439		$	557,729		$	3,480,168
Loose jewels		915,818			2,095,062			3,010,880
Total	$	3,838,257		$	2,652,791		$	6,491,048

Product line cost of goods sold
Finished jewelry	$	1,286,865		$	302,636		$	1,589,501
Loose jewels		395,999			1,116,050			1,512,049
Total	$	1,682,864		$	1,418,686		$	3,101,550

Product line gross profit
Finished jewelry	$	1,635,574		$	255,093		$	1,890,667
Loose jewels		519,819			979,012			1,498,831
Total	$	2,155,393		$	1,234,105		$	3,389,498

Operating loss	$	(332,837	)	$	(5,861,033	)	$	(6,193,870	)

Depreciation and amortization	$	49,333		$	82,686		$	132,019

Capital expenditures	$	34,250		$	39,347		$	73,597

	Three Months Ended March 31, 2019
	Online Channels		Traditional		Total
Net sales
Finished jewelry	$	3,189,083	$	768,978	$	3,958,061
Loose jewels		973,799		2,970,382		3,944,181
Total	$	4,162,882	$	3,739,360	$	7,902,242

Product line cost of goods sold
Finished jewelry	$	1,303,914	$	329,465	$	1,633,379
Loose jewels		435,050		1,471,133		1,906,183
Total	$	1,738,964	$	1,800,598	$	3,539,562

Product line gross profit
Finished jewelry	$	1,885,169	$	439,513	$	2,324,682
Loose jewels		538,749		1,499,249		2,037,998
Total	$	2,423,918	$	1,938,762	$	4,362,680

Operating income	$	502,675	$	294,806	$	797,481

Depreciation and amortization	$	52,806	$	72,993	$	125,799

Capital expenditures	$	725	$	51,168	$	51,893

	Nine Months Ended March 31, 2020
	Online Channels		Traditional			Total
Net sales
Finished jewelry	$	11,044,107	$	2,732,403		$	13,776,510
Loose jewels		2,584,534		8,397,515			10,982,049
Total	$	13,628,641	$	11,129,918		$	24,758,559

Product line cost of goods sold
Finished jewelry	$	4,739,488	$	1,517,037		$	6,256,525
Loose jewels		1,067,062		4,326,093			5,393,155
Total	$	5,806,550	$	5,843,130		$	11,649,680

Product line gross profit
Finished jewelry	$	6,304,619	$	1,215,366		$	7,519,985
Loose jewels		1,517,472		4,071,422			5,588,894
Total	$	7,822,091	$	5,286,788		$	13,108,879

Operating income (loss)	$	62,591	$	(5,339,831	)	$	(5,277,240	)

Depreciation and amortization	$	131,356	$	234,966		$	366,322

Capital expenditures	$	245,175	$	149,650		$	394,825

	Nine Months Ended March 31, 2019
	Online Channels		Traditional		Total
Net sales
Finished jewelry	$	9,662,737	$	2,047,218	$	11,709,955
Loose jewels		3,039,410		9,887,044		12,926,454
Total	$	12,702,147	$	11,934,262	$	24,636,409

Product line cost of goods sold
Finished jewelry	$	4,050,505	$	1,110,541	$	5,161,046
Loose jewels		1,357,084		5,068,277		6,425,361
Total	$	5,407,589	$	6,178,818	$	11,586,407

Product line gross profit
Finished jewelry	$	5,612,232	$	936,677	$	6,848,909
Loose jewels		1,682,326		4,818,767		6,501,093
Total	$	7,294,558	$	5,755,444	$	13,050,002

Operating income	$	1,393,013	$	714,284	$	2,107,297

Depreciation and amortization	$	123,945	$	231,867	$	355,812

Capital expenditures	$	63,576	$	273,695	$	337,271

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 condensed consolidated financial statements is as follows:

	Three Months Ended March 31,					Nine Months Ended March 31,
	2020		2019			2020			2019
Product line cost of goods sold	$	3,101,550	$	3,539,562		$	11,649,680		$	11,586,407
Non-capitalized manufacturing and production control expenses		286,722		375,901			1,104,241			1,029,669
Freight out		153,081		126,438			425,433			429,227
Inventory write-off		5,471,992		325,000			5,620,991			377,000
Other inventory adjustments		158,587		(216,672	)		(221,276	)		(312,118	)
Cost of goods sold	$	9,171,932	$	4,150,229		$	18,579,069		$	13,110,185

The Company recognizes sales by geographic area based on the country in which the customer is based. Sales to international end consumers made through the Company’s transactional website, charlesandcolvard.com, are included in international sales for financial reporting purposes. During periods prior to the quarter ended December 31, 2018, sales to international end consumers made through charlesandcolvard.com were included in U.S. sales because during those prior periods products were shipped and invoiced to a U.S.-based intermediary that assumed all international shipping and credit risks. Currently, sales to international end consumers are made directly by the Company’s own transactional website. A portion of the Company’s Traditional segment sales made to international wholesale distributors represents products sold internationally that may be re-imported to U.S. retailers. All intangible assets, as well as property and equipment, as of March 31, 2020 and June 30, 2019, are held and located in the United States.

The following presents net sales by geographic area:

	Three Months Ended March 31,				Nine Months Ended March 31,
	2020		2019		2020		2019
Net sales
United States	$	6,153,787	$	6,991,720	$	22,560,974	$	21,684,906
International		337,261		910,522		2,197,585		2,951,503
Total	$	6,491,048	$	7,902,242	$	24,758,559	$	24,636,409

FAIR VALUE MEASUREMENTS

9 Months Ended

Mar. 31, 2020

FAIR VALUE MEASUREMENTS [Abstract]

FAIR VALUE MEASUREMENTS

4.	FAIR VALUE MEASUREMENTS

Under U.S. GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are obtained from independent sources and can be validated by a third party, whereas unobservable inputs reflect assumptions regarding what a third party would use in pricing an asset or liability. The fair value hierarchy consists of three levels based on the reliability of inputs, as follows:

Level 1 – Quoted prices in active markets for identical assets and liabilities;

Level 2 – Inputs other than Level 1 quoted prices that are directly or indirectly observable; and

Level 3 – Unobservable inputs that are not corroborated by market data.

The Company evaluates assets and liabilities subject to fair value measurements on a recurring and non-recurring basis to determine the appropriate level to classify them for each reporting period. This determination requires significant judgments to be made by management of the Company. All financial instruments are reflected in the condensed consolidated balance sheets at carrying value, which approximates fair value due to the short-term nature of these financial instruments.

Assets that are measured at fair value on a non-recurring basis include property and equipment, leasehold improvements, and intangible assets comprising patents, license rights, and trademarks. These items are recognized at fair value when they are considered to be impaired. For the nine months ended March 31, 2020 and 2019, no impairment was recorded.

INVENTORIES

9 Months Ended

Mar. 31, 2020

INVENTORIES [Abstract]

INVENTORIES

5.	INVENTORIES

The Company’s total inventories, net of reserves, consisted of the following as of the dates presented:

	March 31, 2020		June 30, 2019
Finished jewelry:
Raw materials	$	813,440	$	643,797
Work-in-process		750,142		487,680
Finished goods		6,097,180		6,332,533
Finished goods on consignment		2,400,394		1,867,549
Total finished jewelry	$	10,061,156	$	9,331,559
Loose jewels:
Raw materials	$	3,954,750	$	3,806,681
Work-in-process		10,478,542		10,384,143
Finished goods		6,880,947		9,878,691
Finished goods on consignment		211,987		203,535
Total loose jewels		21,526,226		24,273,050
Total supplies inventory		82,000		129,111
Total inventory	$	31,669,382	$	33,733,720

As of the dates presented, the Company’s total inventories, net of reserves, are classified as follows:

	March 31, 2020		June 30, 2019
Short-term portion	$	5,315,227	$	11,909,792
Long-term portion		26,354,155		21,823,928
Total	$	31,669,382	$	33,733,720

The Company’s work-in-process inventories include raw SiC crystals on which processing costs, such as labor and sawing, have been incurred; and components, such as metal castings and finished good moissanite jewels, that have been issued to jobs in the manufacture of finished jewelry. The Company’s moissanite jewel manufacturing process involves the production of intermediary shapes, called “preforms,” that vary depending upon the expected size and shape of the finished jewel. To maximize manufacturing efficiencies, preforms may be made in advance of current finished inventory needs but remain in work-in-process inventories. As of March 31, 2020 and June 30, 2019, work-in-process inventories issued to active production jobs approximated $1.81 million and $1.23 million, respectively.

The Company’s jewels do not degrade in quality over time and inventory generally consists of the shapes and sizes most commonly used in the jewelry industry. In addition, the majority of jewel inventory is not mounted in finished jewelry settings and is therefore not subject to fashion trends, and product obsolescence is closely monitored and reviewed by management as of and for each financial reporting period.

The Company manufactures finished jewelry featuring moissanite. Relative to loose moissanite jewels, finished jewelry is more fashion-oriented and subject to styling trends that could render certain designs obsolete over time. The majority of the Company’s finished jewelry featuring moissanite is held in inventory for resale and largely consists of such core designs as stud earrings, solitaire and three-stone rings, pendants, and bracelets that tend not to be subject to significant obsolescence risk due to their classic styling. In addition, the Company generally holds smaller quantities of designer-inspired and trend moissanite fashion jewelry that is available for resale through retail companies and through its Online Channels segment. The Company also carries a limited amount of inventory as part of its sample line that is used in the selling process to its customers.

The Company’s continuing operating subsidiaries carry no net inventories, and inventory is transferred without intercompany markup from the parent entity as product line cost of goods sold when sold to the end consumer.

The Company’s inventories are stated at the lower of cost or net realizable value on an average cost basis. Each accounting period the Company evaluates the valuation and classification of inventories including the need for potential adjustments to inventory-related reserves, which also include significant estimates by management. As a result of the deterioration of marketability of the Company’s legacy inventory, management determined that the inventory has lost its revenue-generating ability and the net realizable value of this inventory has fallen below that of its historical carrying cost. The Company has recognized the loss in net realizable value in the current period ended March 31, 2020, for its legacy material inventory, i.e., boules, work-in-process gemstones, finished gemstones, and gemstones set in finished jewelry, the carrying cost of which was approximately $5.26 million.

Included in cost of goods sold during the quarter ended March 31, 2020, is the write-off of approximately $5.26 million representing the carrying value of the Company’s legacy loose jewel inventory and finished jewelry inventory set with these legacy gemstones. The legacy material inventory comprised lower grade raw materials, or boules, work-in-process gemstones, loose finished gemstones and finished jewelry set with these legacy gemstones in precious metals. The legacy inventory raw materials were purchased and finished gemstone products were produced through the period ended August 2015. These gemstone products and finished jewelry items are known and marketed as the Company’s older Forever Classic^TM, Forever Brilliant^®, and lower-grade gemstones.

The need for adjustments to inventory-related reserves and valuation allowances is evaluated on a period-by-period basis. Changes to the Company’s inventory reserves and allowances are accounted for in the current accounting period in which a change in such reserves and allowances is observed and deemed appropriate, including changes in management’s estimates used in the process to determine such reserves and valuation allowances.

RETURNS ASSET AND REFUND LIABILITIES

9 Months Ended

Mar. 31, 2020

RETURNS ASSET AND REFUND LIABILITIES [Abstract]

RETURNS ASSET AND REFUND LIABILITIES

6.	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 March 31, 2020 and June 30, 2019, the Company’s refund liabilities balances were $854,000 and $746,000, respectively, and are included within accounts receivable, net, in the accompanying condensed consolidated balance sheets. As of March 31, 2020 and June 30, 2019, the Company’s returns asset balances were $356,000 and $279,000, respectively, and are included within prepaid expenses and other assets in the accompanying condensed consolidated balance sheets.

ACCRUED EXPENSES AND OTHER LIABILITIES

9 Months Ended

Mar. 31, 2020

ACCRUED EXPENSES AND OTHER LIABILITIES [Abstract]

ACCRUED EXPENSES AND OTHER LIABILITIES

7.	ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses and other liabilities, current, consist of the following as of the dates presented:

	March 31, 2020		June 30, 2019
Accrued compensation and related benefits	$	624,476	$	760,324
Accrued sales tax		268,366		286,864
Deferred rent		-		156,306
Accrued cooperative advertising		82,125		73,033
Other		123,316		49,081
Total accrued expenses and other liabilities	$	1,098,283	$	1,325,608

INCOME TAXES

9 Months Ended

Mar. 31, 2020

INCOME TAXES [Abstract]

INCOME TAXES

8.	INCOME TAXES

The Company recognized a net income tax expense of approximately $500 and a net income tax benefit of approximately $17,000, respectively, related to estimated taxes, penalties, and interest associated with uncertain tax positions for the three months ended March 31, 2020 and 2019, and a net income tax expense of approximately $1,000 and a net income tax benefit of approximately $8,000, respectively, also related to estimated taxes, penalties, and interest associated with uncertain tax positions for the nine months ended March 31, 2020 and 2019.

As of each reporting date, the Company’s management considers new evidence, both positive and negative, that could impact its view with regard to future realization of deferred tax assets. As of March 31, 2020 and June 30, 2019, 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. Therefore, the Company continued to maintain a full valuation allowance against its deferred tax assets as of March 31, 2020 and June 30, 2019.

COMMITMENTS AND CONTINGENCIES

9 Months Ended

Mar. 31, 2020

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

9.	COMMITMENTS AND CONTINGENCIES

Lease Arrangements

On December 9, 2013, the Company entered into a Lease Agreement, as amended on December 23, 2013 and April 15, 2014 (the “Lease Agreement”), for its corporate headquarters, which occupies approximately 36,350 square feet of office, storage and light manufacturing space and is classified as an operating lease for financial reporting purposes. The base term of the Lease Agreement expires on October 31, 2021 and the terms of the Lease Agreement contain no early termination provisions. Provided there is no outstanding uncured event of default under the Lease Agreement, the Company has two options to extend the lease term for a period of five years under each option. The Company’s option to extend the term of the Lease Agreement must be exercised in writing on or before 270 days prior to expiration of the then-current term. If the options are exercised, the monthly minimum rent for each of the extended terms will be adjusted to the then prevailing fair market rate.

The Company took possession of the leased property on May 23, 2014, once certain improvements to the leased space were completed and did not have access to the property before this date. These improvements and other lease related incentives offered by the landlord totaled approximately $623,000, of which approximately $393,000 was unamortized as of July 1, 2019, the effective date upon which the Company adopted the new lease accounting standard as described in more detail in Note 2, “Basis of Presentation and Significant Accounting Policies.”

The Company has no other material operating leases and is not party to leases that would qualify for classification as a finance lease, variable lease, or short-term lease.

As of March 31, 2020, the Company’s balance sheet classifications of its leases are as follows:

Operating Leases:
Noncurrent operating lease ROU assets	$	684,039

Current operating lease liabilities	$	618,299
Noncurrent operating lease liabilities		349,424
Total operating lease liabilities	$	967,723

The Company’s total operating lease cost was approximately $117,000 and $352,000, respectively, for the three- and nine-month periods ended March 31, 2020. The Company’s total rent expense was approximately $133,000 and $390,000, respectively, for the three- and nine-month periods ended March 31, 2019.

As of March 31, 2020, the Company’s estimated incremental borrowing rate used and assumed discount rate with respect to operating leases was 7.14% and the remaining operating lease term was 1.58 years.

As of March 31, 2020, the Company’s remaining future payments under operating leases for each fiscal year ending June 30 are as follows:

2020	$	157,520
2021		642,997
2022		219,723
Total lease payments		1,020,240
Less: imputed interest		(52,517	)
Present value of lease payments		967,723
Less: current lease obligations		618,299
Total long-term lease obligations	$	349,424

The Company makes cash payments for amounts included in the measurement of its lease liabilities. During the three and nine months ended March 31, 2020, cash paid for operating leases was approximately $172,000 and $500,000, respectively, and there were no new ROU assets obtained in exchange for new operating lease liabilities.

Lease Disclosures for the fiscal year ended June 30, 2019, as reported

The Company recognized rent expense on a straight-line basis, having given consideration to the rent holidays and escalations, the lease signing and moving allowance paid to the Company, and the rent abatement.

The Company’s total rent expense for operating leases was approximately $528,000 for the fiscal year ended June 30, 2019. The Company also had future minimum payments as of June 30, 2019 under its operating leases for each fiscal year ending June 30 that were as follows:

2020	$	625,788
2021		642,997
2022		219,723
Total	$	1,488,508

Purchase Commitments

On December 12, 2014, the Company entered into an exclusive supply agreement (the “Supply Agreement”) with Cree, Inc. (“Cree”). Under the Supply Agreement, subject to certain terms and conditions, the Company agreed to exclusively purchase from Cree, and Cree agreed to exclusively supply, 100% of the Company’s required SiC materials in quarterly installments that must equal or exceed a set minimum order quantity. The initial term of the Supply Agreement was scheduled to expire on June 24, 2018, unless extended by the parties.

Effective June 22, 2018, the Supply Agreement was amended to extend the expiration date to June 25, 2023. The Supply Agreement was also amended to (i) provide the Company with one option, subject to certain conditions, to unilaterally extend the term of the Supply Agreement for an additional two-year period following expiration of the initial term; (ii) establish a process by which Cree may begin producing alternate SiC material based on the Company’s specifications that will give the Company the flexibility to use the materials in a broader variety of its products; and (iii) permit the Company to purchase certain amounts of SiC materials from third parties under limited conditions.

The Company’s total purchase commitment under the Supply Agreement until June 2023 is approximately $52.95 million, of which approximately $36.51 million remains to be purchased as of March 31, 2020. Over the life of the Supply Agreement, as amended, the Company’s future minimum annual purchase commitments of SiC crystals range from approximately $10 million to $12 million each year.

During the nine months ended March 31, 2020, the Company purchased approximately $7.47 million of SiC crystals from Cree pursuant to the terms of the Supply Agreement, as amended. During the nine months ended March 31, 2019, the Company purchased approximately $6.67 million of SiC crystals from Cree.

COVID-19

During the third quarter of the Company’s fiscal year ending June 30, 2020, or Fiscal 2020, the global outbreak of the coronavirus disease 2019, known as COVID-19, was declared a pandemic by the World Health Organization, or the WHO, and a national emergency by the U.S. Government, and has negatively affected the U.S. and global economies. In response to this pandemic, federal, state, county and local governments and public health organizations and authorities around the world have implemented a variety of measures intended to control the spread of the virus, including quarantines, “stay-at-home” orders, travel restrictions, school closures, business limitations and closures, social distancing and hygiene requirements. These measures have adversely affected workforces, customers, economies and global supply chains, and resulted in significant travel and transport restrictions – all of which have combined to lead to an economic downturn. It has also disrupted the normal operations of many businesses, including that of the Company’s. In early 2020 in the Asia Pacific region and during the Company’s quarter ended March 31, 2020 globally, the pandemic and related governmental and business responses began to have an adverse effect on the Company’s operations, supply chains, distribution channels, and consumer buying behaviors. Cumulatively, these things also impacted the net realizable value and marketability of the Company’s legacy inventory, which was subsequently written-off. The overall impacts of the COVID-19 pandemic include following:

•

Across the Company’s supply chain, it has experienced instances of suppliers temporarily closing their operations, delaying order fulfillment or limiting their production. Where applicable, the Company utilized alternative supply arrangements with partners whose businesses are not under stay-at-home orders or whose production came back online. However, the Company and its suppliers remain subject to ongoing changes to governmental closure requirements that may have a long-term impact on its supply chain and ability to produce gemstones and finished jewelry for sale.

•

In the Company’s Online Channels segment, its transactional website charlesandcolvard.com remained open under restricted fulfillment capabilities. However, a quickly rising unemployment rate combined with consumer uncertainty and lack of confidence began reducing website traffic and conversions in March 2020. Beginning in March 2020, the Company maintained limited shipping functions with support from third-party production and fulfillment partners. The Company was also able to support only a certain level of active products on marketplaces and drop-ship partner websites such as Macys.com, Helzberg.com, Overstock.com, ShopHQ.com and more. This ongoing e-commerce presence was restricted to available stock and the limited production capacity of functioning suppliers. Until stay-at-home orders are fully lifted and business resumes to pre-pandemic levels across the Company’s entire supply chain, its Online Channels segment will continue to be adversely impacted by the pandemic.

•

In the Company’s Traditional segment, brick and mortar customers began closing their stores to foot traffic in March 2020. The Company also experienced instances of distributors, whose businesses rely on sales into retail organizations, reducing or closing their operations. These adverse effects impacted the Company’s ability to maintain significant levels of sales through its wholesale customers. In addition, trade shows and industry events have been preemptively cancelled for the critical production season leading up to the calendar year-end 2020 holiday season. As a result, the Company’s selling activities have been significantly modified, and its ability to convert those activities into sales have been – and may continue to be – adversely impacted by the pandemic.

•

As global and U.S economic activity slowed in response to the COVID-19 pandemic, the Company experienced and anticipates ongoing constraints on its cash and working capital, including experiencing potential liquidity challenges. The impact of the pandemic has had – and is expected to continue having – an adverse effect on the Company’s operations and financial condition as revenues declined and, despite its cost-saving efforts, many business and operating expenses remained flat or continued to rise. Cash flow scrutiny will be crucial for the Company’s business in the months ahead as it anticipates seeing lower revenues resulting in less cash flow, along with delayed accounts receivable collections, as needs grow to step up payables to important suppliers. The Company expects to become much more nimble in managing its inventory levels given the uncertainty in the supply chain, which may also place further demands on working capital.

The Company believes that its management has taken swift and appropriate action designed to hedge against the overall impact that the pandemic may have on its business, to prepare for a recessionary environment that may follow, and to efficiently manage the business while maintaining adequate liquidity and maximum operating flexibility. The Company remains focused on three critical areas of wellbeing, including safeguarding the health and safety of its employees, streamlining operations while ensuring support of its brand and customers, and maintaining its financial strength and stability Given these uncertainties, these disruptions may have a material adverse impact on the Company’s future results of operations, financial condition, and liquidity.

Since the onset of the pandemic domestically, the Company has implemented the following measures:

•

Deployed a work-from-home option for its employees on March 13, 2020, and effective March 27, 2020, instituted a mandatory work-from-home policy for all, but essential, employees due to mandated stay-at-home orders by the State of North Carolina and local governmental authorities;

•

Suspended all hiring of employees, and furloughed approximately 50% of the Company’s employee workforce, starting April 13, 2020, with furloughed employees retaining their health and welfare benefits at no cost to them;

•

Extended new benefits to assist employees who participate in its 401(k) plan with additional distributions and new borrowing terms;

•

Implemented temporary salary and wage reductions for all employees, including a 25% reduction in salary for the President and Chief Executive Officer and a 15% reduction for each of the Chief Financial Officer and Chief Operating Officer;

•

Instituted a temporary 50% reduction in fees paid to the Company’s Board of Directors; and

•

Reduced non-payroll operating expenses, including decreased digital marketing spend and significantly reduced product development investments and travel expenditures.

Going forward, the Company also plans to take the following actions to further address the impact of the COVID-19 pandemic:

•

Actively renegotiating contracts with vendors and suppliers to amend commitments to size the Company’s supply with current demand and delivery terms with others to reduce the Company’s cost of goods and services;

•

Negotiating extended payment terms with select partners; and

•

Continuing to align variable expenses to match current sales trends.

LINE OF CREDIT

9 Months Ended

Mar. 31, 2020

LINE OF CREDIT [Abstract]

LINE OF CREDIT

10.	LINE OF CREDIT

On July 13, 2018, the Company and its wholly owned subsidiary, charlesandcolvard.com, LLC (collectively, the “Borrowers”), obtained a $5.00 million asset-based revolving credit facility (the “White Oak Credit Facility”) from White Oak. The White Oak Credit Facility may be used for general corporate and working capital purposes, including permitted acquisitions. The White Oak Credit Facility, which matures on July 13, 2021, is guaranteed by Charles & Colvard Direct, LLC, a wholly owned subsidiary of the Company. Under the terms of the White Oak Credit Facility, the Borrowers must maintain at least $500,000 in excess availability at all times. The White Oak Credit Facility contains no other financial covenants.

Advances under the White Oak Credit Facility may be either revolving or non-revolving. During the first year of the term of the White Oak Credit Facility, revolving advances accrued interest at a rate equal to one-month LIBOR (reset monthly, and subject to a 1.25% floor) plus 3.75%, and non-revolving advances accrued interest at such LIBOR rate plus 4.75%. Thereafter, the interest margins will reduce upon the Company’s achievement of a specified fixed charge coverage ratio. However, advances are in all cases subject to a minimum interest rate of 5.50%. Interest is calculated on an actual/360 basis and payable monthly in arrears. Principal outstanding during an event of default accrues interest at a rate 2% in excess of the rate otherwise applicable.

As of March 31, 2020, the Company had not borrowed against the White Oak Credit Facility.

The Company has applied, and been approved, for funds under the Paycheck Protection Program after the period end in the amount of $965,000. The application for these funds requires the Company to, in good faith, certify that the current economic uncertainty made the loan request necessary to support the ongoing operations of the Company. This certification further requires the Company to take into account its current business activity and its ability to access other sources of liquidity sufficient to support ongoing operations in a manner that is not significantly detrimental to the business. The receipt of these funds, and the forgiveness of the loan attendant to these funds, is dependent on the Company having initially qualified for the loan and qualifying for the forgiveness of such loan based on its future adherence to the forgiveness criteria.

A more detailed description of this subsequent event is included in Note 14, “Subsequent Event”.

STOCK-BASED COMPENSATION

9 Months Ended

Mar. 31, 2020

STOCK-BASED COMPENSATION [Abstract]

STOCK-BASED COMPENSATION

11.	STOCK-BASED COMPENSATION

The following table summarizes the components of the Company’s stock-based compensation included in net (loss) income for the periods presented:

	Three Months Ended March 31,					Nine Months Ended March 31,
	2020			2019		2020		2019
Employee stock options	$	43,874		$	57,534	$	155,938	$	172,281
Restricted stock awards		(188,502	)		69,037		58,539		197,372
Totals	$	(144,628	)	$	126,571	$	214,477	$	369,653

No stock-based compensation was capitalized as a cost of inventory during the three and nine months ended March 31, 2020 and 2019.

Stock Options

The following is a summary of the stock option activity for the nine months ended March 31, 2020:

	Shares			Weighted Average Exercise Price
Outstanding, June 30, 2019		2,523,638		$	1.39
Granted		255,387		$	1.39
Forfeited		(50,005	)		1.00
Expired		(189,425	)	$	1.18
Outstanding, March 31, 2020		2,539,595		$	1.40

The total fair value of stock options that vested during the nine months ended March 31, 2020 was approximately $180,000.

The following table summarizes information about stock options outstanding at March 31, 2020:

Options Outstanding						Options Exercisable						Options Vested or Expected to Vest
Balance as of 3/31/2020		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Balance as of 3/31/2020		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Balance as of 3/31/2020		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price
	2,539,595		6.53	$	1.40		2,157,958		6.13	$	1.44		2,483,853		6.49	$	1.41

As of March 31, 2020, the unrecognized stock-based compensation expense related to unvested stock options was approximately $182,000, which is expected to be recognized over a weighted average period of approximately 18 months.

The aggregate intrinsic value of stock options outstanding, exercisable, and vested or expected to vest at March 31, 2020 was $0. If there was an aggregate intrinsic value, this amount would be before applicable income taxes and would represent the closing market price of the Company’s common stock at March 31, 2020 less the grant price, multiplied by the number of stock options that had a grant price that is less than the closing market price. This amount would also represent the amount that would have been received by the optionees had these stock options been exercised on that date. No stock options were exercised during the nine months ended March 31, 2020. During the nine months ended March 31, 2019, the aggregate intrinsic value of stock options exercised was approximately $300.

Restricted Stock

The following is a summary of the restricted stock activity for the nine months ended March 31, 2020:

	Shares			Weighted Average Grant Date Fair Value
Unvested, June 30, 2019		129,500		$	1.07
Granted		325,000		$	1.57
Vested		(128,341	)	$	1.07
Canceled		(1,159	)	$	1.07
Unvested, March 31, 2020		325,000		$	1.57

The unvested restricted shares as of March 31, 2020 are all performance-based restricted shares that are scheduled to vest, subject to achievement of the underlying performance goals, in July 2020. As of March 31, 2020, the estimated unrecognized stock-based compensation expense related to unvested restricted shares subject to achievement of performance goals was approximately $510,000. However, pursuant to the estimated success rates related to the performance-based criteria of the restricted shares, none of the compensation expense related to the unvested shares is expected to be recognized during the year ending June 30, 2020. Accordingly, estimated quantity of awards for which it is probable that performance conditions will be achieved was reevaluated during the current period ended March 31, 2020 to reflect the adjusted estimated compensation expense for the unvested restricted shares subject to achievement of the underlying performance goals. This reevaluation related to the restricted stock awards resulted in a year-to-date reduction of stock compensation expense that was recognized in the current period.

Dividends

The Company has paid no cash dividends during the current fiscal year through March 31, 2020.

NET (LOSS) INCOME PER COMMON SHARE

9 Months Ended

Mar. 31, 2020

NET (LOSS) INCOME PER COMMON SHARE [Abstract]

NET (LOSS) INCOME PER COMMON SHARE

12.	NET (LOSS) INCOME PER COMMON SHARE

Basic net (loss) income per common share is computed by dividing net income by the weighted average number of common shares outstanding during the periods. Diluted net income per common share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the periods. Common equivalent shares consist of stock options and unvested restricted shares that are computed using the treasury stock method. Anti-dilutive stock awards consist of stock options that would have been anti-dilutive in the application of the treasury stock method.

The following table reconciles the differences between the basic and diluted net (loss) income per share presentations:

	Three Months Ended March 31,					Nine Months Ended March 31,
	2020			2019		2020			2019
Numerator:
Net (loss) income	$	(6,155,260	)	$	814,084	$	(5,133,891	)	$	2,113,553

Denominator:
Weighted average common shares outstanding:
Basic		28,656,910			21,537,636		28,625,723			21,486,692
Effect of dilutive securities		-			214,407		-			246,924
Diluted		28,656,910			21,752,043		28,625,723			21,733,616

Net (loss) income per common share:
Basic	$	(0.21	)	$	0.04	$	(0.18	)	$	0.10
Diluted	$	(0.21	)	$	0.04	$	(0.18	)	$	0.10

For the three- and nine-month periods ended March 31, 2020, stock options to purchase approximately 2.54 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 three- and nine-month periods ended March 31, 2019 stock options to purchase approximately 2.49 million shares, and 2.46 million shares, respectively, were excluded from the computation of diluted net income per common share for each respective financial reporting period then ended because the exercise price of the stock options was greater than the average market price of the common shares. Unvested restricted stock is excluded from the computation of diluted net income per common share as the shares are performance-based and the underlying conditions have not been met as of the periods presented.

MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK

9 Months Ended

Mar. 31, 2020

MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK [Abstract]

MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK

13.	MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, and restricted cash and trade accounts receivable. At times, cash balances may exceed the Federal Deposit Insurance Corporation (“FDIC”) insurable limits of $250,000 per depositor at each financial institution. The Company has never experienced any losses related to these balances. Non-interest-bearing amounts on deposit in excess of FDIC insurable limits at March 31, 2020 approximated $2.12 million.

Trade receivables potentially subject the Company to credit risk. Payment terms on trade receivables for the Company’s Traditional segment customers are generally between 30 and 90 days, though it may offer extended terms with specific customers and on significant orders from time to time. The Company extends credit to its customers based upon a number of factors, including an evaluation of the customer’s financial condition and credit history that is verified through trade association reference services, the customer’s payment history with the Company, the customer’s reputation in the trade, and/or an evaluation of the Company’s opportunity to introduce its moissanite jewels or finished jewelry featuring moissanite to new or expanded markets. Collateral is not generally required from customers. The need for an allowance for doubtful accounts is determined based upon factors surrounding the credit risk of specific customers, historical trends, and other information.

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:

	March 31, 2020			June 30, 2019
Customer A		20	%		*	%
Customer B		19	%		13	%
Customer C		16	%		25	%
Customer D		**	%		15	%

* Customer A did not have individual balances that represented 10% or more of total gross accounts receivable as of June 30, 2019.

** Customer D did not have individual balances that represented 10% or more of total gross accounts receivable as of March 31, 2020.

A significant portion of sales is derived from certain customer relationships. The following is a summary of customers that represent greater than or equal to 10% of total net sales for the periods presented:

	Three Months Ended March 31,						Nine Months Ended March 31,
	2020			2019			2020			2019
Customer A		11	%		*	%		*	%		*	%
Customer B		11	%		**	%		13	%		10	%
Customer C		15	%		12	%		14	%		14	%

* Customer A did not have net sales that represented 10% or more of total net sales for the three months ended March 31, 2019 and the nine months ended March 31, 2020 and 2019.

** Customer B did not have net sales that represented 10% or more of total net sales for the three months ended March 31, 2019.

SUBSEQUENT EVENT

9 Months Ended

Mar. 31, 2020

SUBSEQUENT EVENT [Abstract]

SUBSEQUENT EVENT

14.	SUBSEQUENT EVENT

In April 2020, the Company applied for a loan pursuant to the Paycheck Protection Program under the CARES Act, as administered by the U.S. Small Business Administration (the “SBA”). The application was approved on May 3, 2020 for the principal amount of $965,000 (the “PPP Loan”), but the PPP Loan has not yet been disbursed to the Company. There is no guarantee that the Company will receive the principal amount of the PPP Loan.

Under the CARES Act, loan forgiveness is available for the sum of documented payroll costs, covered rent payments, and covered utilities during the measurement period beginning on the date of first disbursement of the PPP Loan. For purposes of the CARES Act, payroll costs exclude compensation of an individual employee in excess of $100,000, prorated annually. Not more than 25% of the forgiven amount can be attributable to non-payroll costs. The receipt of these funds, and the forgiveness of the loan attendant to these funds, is dependent on the Company having initially qualified for the loan and qualifying for the forgiveness of such loan based on its future adherence to the forgiveness criteria.

As permitted by the CARES Act, the Company is also deferring payment of the employer’s share of Social Security tax payable currently to the federal government. The deferred employment tax over the measurement period is payable over the next two years - with half of the required amount to be paid by December 31, 2021 and the other half by December 31, 2022. In addition, the CARES Act provides that existing alternative minimum tax, or AMT, credit carryforwards are now eligible for acceleration and refundable AMT credits are to be completely refunded to companies for taxable years beginning in 2019, or by election, taxable years beginning in 2018. Accordingly, the Company has elected to have the AMT tax completely refunded and has filed a tentative refund claim for the remaining AMT tax credit. Therefore, the remaining balance of the Company’s AMT credit refund in the amount of approximately $270,000 will be completely refundable with the filing of the Company’s Fiscal 2020 federal income tax return. The full amount of the Company’s AMT credit refund has been classified as current as of the quarter ended March 31, 2020. The Company continues to monitor future developments and interpretations of the CARES Act for any material impacts on its future results of operations, financial position, and liquidity.

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Mar. 31, 2020

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Basis of Presentation and Principles of Consolidation

Significant Accounting Policies

Use of Estimates

Cash and Cash Equivalents

Cash and Cash Equivalents – All highly liquid investments with an original maturity of three months or less from the date of purchase are considered to be cash equivalents.

Restricted Cash

The reconciliation of cash, cash equivalents, and restricted cash, as presented on the Condensed Consolidated Statements of Cash Flows, consists of the following as of the dates presented:

	March 31, 2020		June 30, 2019
Cash and cash equivalents	$	11,869,028	$	12,465,483
Restricted cash		32,287		541,062
Total cash, cash equivalents, and restricted cash	$	11,901,315	$	13,006,545

Recently Adopted/Issued Accounting Pronouncements

For additional information regarding the Company’s accounting for lease arrangements, see Note 9, “Commitments and Contingencies.”

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Mar. 31, 2020

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Cash, Cash Equivalents and Restricted Cash

The reconciliation of cash, cash equivalents, and restricted cash, as presented on the Condensed Consolidated Statements of Cash Flows, consists of the following as of the dates presented:

	March 31, 2020		June 30, 2019
Cash and cash equivalents	$	11,869,028	$	12,465,483
Restricted cash		32,287		541,062
Total cash, cash equivalents, and restricted cash	$	11,901,315	$	13,006,545

SEGMENT INFORMATION AND GEOGRAPHIC DATA (Tables)

9 Months Ended

Mar. 31, 2020

SEGMENT INFORMATION AND GEOGRAPHIC DATA [Abstract]

Summary Financial Information by Reportable Segment

Summary financial information by reportable segment is as follows:

	Three Months Ended March 31, 2020
	Online Channels			Traditional			Total
Net sales
Finished jewelry	$	2,922,439		$	557,729		$	3,480,168
Loose jewels		915,818			2,095,062			3,010,880
Total	$	3,838,257		$	2,652,791		$	6,491,048

Product line cost of goods sold
Finished jewelry	$	1,286,865		$	302,636		$	1,589,501
Loose jewels		395,999			1,116,050			1,512,049
Total	$	1,682,864		$	1,418,686		$	3,101,550

Product line gross profit
Finished jewelry	$	1,635,574		$	255,093		$	1,890,667
Loose jewels		519,819			979,012			1,498,831
Total	$	2,155,393		$	1,234,105		$	3,389,498

Operating loss	$	(332,837	)	$	(5,861,033	)	$	(6,193,870	)

Depreciation and amortization	$	49,333		$	82,686		$	132,019

Capital expenditures	$	34,250		$	39,347		$	73,597

	Three Months Ended March 31, 2019
	Online Channels		Traditional		Total
Net sales
Finished jewelry	$	3,189,083	$	768,978	$	3,958,061
Loose jewels		973,799		2,970,382		3,944,181
Total	$	4,162,882	$	3,739,360	$	7,902,242

Product line cost of goods sold
Finished jewelry	$	1,303,914	$	329,465	$	1,633,379
Loose jewels		435,050		1,471,133		1,906,183
Total	$	1,738,964	$	1,800,598	$	3,539,562

Product line gross profit
Finished jewelry	$	1,885,169	$	439,513	$	2,324,682
Loose jewels		538,749		1,499,249		2,037,998
Total	$	2,423,918	$	1,938,762	$	4,362,680

Operating income	$	502,675	$	294,806	$	797,481

Depreciation and amortization	$	52,806	$	72,993	$	125,799

Capital expenditures	$	725	$	51,168	$	51,893

	Nine Months Ended March 31, 2020
	Online Channels		Traditional			Total
Net sales
Finished jewelry	$	11,044,107	$	2,732,403		$	13,776,510
Loose jewels		2,584,534		8,397,515			10,982,049
Total	$	13,628,641	$	11,129,918		$	24,758,559

Product line cost of goods sold
Finished jewelry	$	4,739,488	$	1,517,037		$	6,256,525
Loose jewels		1,067,062		4,326,093			5,393,155
Total	$	5,806,550	$	5,843,130		$	11,649,680

Product line gross profit
Finished jewelry	$	6,304,619	$	1,215,366		$	7,519,985
Loose jewels		1,517,472		4,071,422			5,588,894
Total	$	7,822,091	$	5,286,788		$	13,108,879

Operating income (loss)	$	62,591	$	(5,339,831	)	$	(5,277,240	)

Depreciation and amortization	$	131,356	$	234,966		$	366,322

Capital expenditures	$	245,175	$	149,650		$	394,825

	Nine Months Ended March 31, 2019
	Online Channels		Traditional		Total
Net sales
Finished jewelry	$	9,662,737	$	2,047,218	$	11,709,955
Loose jewels		3,039,410		9,887,044		12,926,454
Total	$	12,702,147	$	11,934,262	$	24,636,409

Product line cost of goods sold
Finished jewelry	$	4,050,505	$	1,110,541	$	5,161,046
Loose jewels		1,357,084		5,068,277		6,425,361
Total	$	5,407,589	$	6,178,818	$	11,586,407

Product line gross profit
Finished jewelry	$	5,612,232	$	936,677	$	6,848,909
Loose jewels		1,682,326		4,818,767		6,501,093
Total	$	7,294,558	$	5,755,444	$	13,050,002

Operating income	$	1,393,013	$	714,284	$	2,107,297

Depreciation and amortization	$	123,945	$	231,867	$	355,812

Capital expenditures	$	63,576	$	273,695	$	337,271

Reconciliation of 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 condensed consolidated financial statements is as follows:

	Three Months Ended March 31,					Nine Months Ended March 31,
	2020		2019			2020			2019
Product line cost of goods sold	$	3,101,550	$	3,539,562		$	11,649,680		$	11,586,407
Non-capitalized manufacturing and production control expenses		286,722		375,901			1,104,241			1,029,669
Freight out		153,081		126,438			425,433			429,227
Inventory write-off		5,471,992		325,000			5,620,991			377,000
Other inventory adjustments		158,587		(216,672	)		(221,276	)		(312,118	)
Cost of goods sold	$	9,171,932	$	4,150,229		$	18,579,069		$	13,110,185

Net Sales by Geographic Area

The following presents net sales by geographic area:

	Three Months Ended March 31,				Nine Months Ended March 31,
	2020		2019		2020		2019
Net sales
United States	$	6,153,787	$	6,991,720	$	22,560,974	$	21,684,906
International		337,261		910,522		2,197,585		2,951,503
Total	$	6,491,048	$	7,902,242	$	24,758,559	$	24,636,409

INVENTORIES (Tables)

9 Months Ended

Mar. 31, 2020

INVENTORIES [Abstract]

Inventories

The Company’s total inventories, net of reserves, consisted of the following as of the dates presented:

	March 31, 2020		June 30, 2019
Finished jewelry:
Raw materials	$	813,440	$	643,797
Work-in-process		750,142		487,680
Finished goods		6,097,180		6,332,533
Finished goods on consignment		2,400,394		1,867,549
Total finished jewelry	$	10,061,156	$	9,331,559
Loose jewels:
Raw materials	$	3,954,750	$	3,806,681
Work-in-process		10,478,542		10,384,143
Finished goods		6,880,947		9,878,691
Finished goods on consignment		211,987		203,535
Total loose jewels		21,526,226		24,273,050
Total supplies inventory		82,000		129,111
Total inventory	$	31,669,382	$	33,733,720

As of the dates presented, the Company’s total inventories, net of reserves, are classified as follows:

	March 31, 2020		June 30, 2019
Short-term portion	$	5,315,227	$	11,909,792
Long-term portion		26,354,155		21,823,928
Total	$	31,669,382	$	33,733,720

ACCRUED EXPENSES AND OTHER LIABILITIES (Tables)

9 Months Ended

Mar. 31, 2020

ACCRUED EXPENSES AND OTHER LIABILITIES [Abstract]

Accrued Expenses and Other Liabilities

Accrued expenses and other liabilities, current, consist of the following as of the dates presented:

	March 31, 2020		June 30, 2019
Accrued compensation and related benefits	$	624,476	$	760,324
Accrued sales tax		268,366		286,864
Deferred rent		-		156,306
Accrued cooperative advertising		82,125		73,033
Other		123,316		49,081
Total accrued expenses and other liabilities	$	1,098,283	$	1,325,608

COMMITMENTS AND CONTINGENCIES (Tables)

9 Months Ended

Mar. 31, 2020

COMMITMENTS AND CONTINGENCIES [Abstract]

Balance Sheet Classifications of Leases

As of March 31, 2020, the Company’s balance sheet classifications of its leases are as follows:

Operating Leases:
Noncurrent operating lease ROU assets	$	684,039

Current operating lease liabilities	$	618,299
Noncurrent operating lease liabilities		349,424
Total operating lease liabilities	$	967,723

Remaining Future Payments Under Operating Leases

As of March 31, 2020, the Company’s remaining future payments under operating leases for each fiscal year ending June 30 are as follows:

2020	$	157,520
2021		642,997
2022		219,723
Total lease payments		1,020,240
Less: imputed interest		(52,517	)
Present value of lease payments		967,723
Less: current lease obligations		618,299
Total long-term lease obligations	$	349,424

Future Minimum Payments Under Operating Leases

The Company also had future minimum payments as of June 30, 2019 under its operating leases for each fiscal year ending June 30 that were as follows:

2020	$	625,788
2021		642,997
2022		219,723
Total	$	1,488,508

STOCK-BASED COMPENSATION (Tables)

9 Months Ended

Mar. 31, 2020

STOCK-BASED COMPENSATION [Abstract]

Stock Based Compensation

The following table summarizes the components of the Company’s stock-based compensation included in net (loss) income for the periods presented:

	Three Months Ended March 31,					Nine Months Ended March 31,
	2020			2019		2020		2019
Employee stock options	$	43,874		$	57,534	$	155,938	$	172,281
Restricted stock awards		(188,502	)		69,037		58,539		197,372
Totals	$	(144,628	)	$	126,571	$	214,477	$	369,653

Stock Option Activity

The following is a summary of the stock option activity for the nine months ended March 31, 2020:

	Shares			Weighted Average Exercise Price
Outstanding, June 30, 2019		2,523,638		$	1.39
Granted		255,387		$	1.39
Forfeited		(50,005	)		1.00
Expired		(189,425	)	$	1.18
Outstanding, March 31, 2020		2,539,595		$	1.40

Stock Options Outstanding

The following table summarizes information about stock options outstanding at March 31, 2020:

Options Outstanding						Options Exercisable						Options Vested or Expected to Vest
Balance as of 3/31/2020		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Balance as of 3/31/2020		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Balance as of 3/31/2020		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price
	2,539,595		6.53	$	1.40		2,157,958		6.13	$	1.44		2,483,853		6.49	$	1.41

Restricted Stock Activity

The following is a summary of the restricted stock activity for the nine months ended March 31, 2020:

	Shares			Weighted Average Grant Date Fair Value
Unvested, June 30, 2019		129,500		$	1.07
Granted		325,000		$	1.57
Vested		(128,341	)	$	1.07
Canceled		(1,159	)	$	1.07
Unvested, March 31, 2020		325,000		$	1.57

NET (LOSS) INCOME PER COMMON SHARE (Tables)

9 Months Ended

Mar. 31, 2020

NET (LOSS) INCOME PER COMMON SHARE [Abstract]

Basic and Diluted Net (Loss) Income Per Share

The following table reconciles the differences between the basic and diluted net (loss) income per share presentations:

	Three Months Ended March 31,					Nine Months Ended March 31,
	2020			2019		2020			2019
Numerator:
Net (loss) income	$	(6,155,260	)	$	814,084	$	(5,133,891	)	$	2,113,553

Denominator:
Weighted average common shares outstanding:
Basic		28,656,910			21,537,636		28,625,723			21,486,692
Effect of dilutive securities		-			214,407		-			246,924
Diluted		28,656,910			21,752,043		28,625,723			21,733,616

Net (loss) income per common share:
Basic	$	(0.21	)	$	0.04	$	(0.18	)	$	0.10
Diluted	$	(0.21	)	$	0.04	$	(0.18	)	$	0.10

MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK (Tables)

9 Months Ended

Mar. 31, 2020

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:

	March 31, 2020			June 30, 2019
Customer A		20	%		*	%
Customer B		19	%		13	%
Customer C		16	%		25	%
Customer D		**	%		15	%

* Customer A did not have individual balances that represented 10% or more of total gross accounts receivable as of June 30, 2019.

** Customer D did not have individual balances that represented 10% or more of total gross accounts receivable as of March 31, 2020.

	Three Months Ended March 31,						Nine Months Ended March 31,
	2020			2019			2020			2019
Customer A		11	%		*	%		*	%		*	%
Customer B		11	%		**	%		13	%		10	%
Customer C		15	%		12	%		14	%		14	%

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	Mar. 31, 2020	Jun. 30, 2019	Dec. 31, 2018	Jun. 30, 2018
Cash, Cash Equivalents and Restricted Cash [Abstract]
Cash and cash equivalents	$ 11,869,028	$ 12,465,483
Restricted cash	32,287	541,062
Total cash, cash equivalents, and restricted cash	11,901,315	13,006,545	$ 4,639,936	$ 3,393,186
Recently Adopted/Issued Accounting Pronouncements [Abstract]
Operating lease ROU assets	684,039	0
Operating lease liabilities	$ 967,723
ASU 2016-02 [Member]
Recently Adopted/Issued Accounting Pronouncements [Abstract]
Operating lease ROU assets		983,000
Operating lease liabilities		$ 1,380,000

SEGMENT INFORMATION AND GEOGRAPHIC DATA, Summary Financial Information by Reportable Segment (Details)	3 Months Ended		9 Months Ended
	Mar. 31, 2020 USD ($)	Mar. 31, 2019 USD ($)	Mar. 31, 2020 USD ($) Segment	Mar. 31, 2019 USD ($)
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	$ 6,491,048	$ 7,902,242	$ 24,758,559	$ 24,636,409
Product line cost of goods sold	9,171,932	4,150,229	18,579,069	13,110,185
Operating income (loss)	(6,193,870)	797,481	(5,277,240)	2,107,297
Depreciation and amortization	132,019	125,799	366,322	355,812
Capital expenditures	73,597	51,893	394,825	337,271
Product Line [Member]
Summary Information by Reportable Segment [Abstract]
Product line cost of goods sold	3,101,550	3,539,562	11,649,680	11,586,407
Product line gross profit	3,389,498	4,362,680	13,108,879	13,050,002
Finished Jewelry [Member]
Summary Information by Reportable Segment [Abstract]
Net sales	3,480,168	3,958,061	13,776,510	11,709,955
Product line cost of goods sold	1,589,501	1,633,379	6,256,525	5,161,046
Product line gross profit	1,890,667	2,324,682	7,519,985	6,848,909
Loose Jewels [Member]
Summary Information by Reportable Segment [Abstract]
Net sales	3,010,880	3,944,181	10,982,049	12,926,454
Product line cost of goods sold	1,512,049	1,906,183	5,393,155	6,425,361
Product line gross profit	1,498,831	2,037,998	5,588,894	6,501,093
Operating and Reportable Segments [Member] \| Online Channels [Member]
Summary Information by Reportable Segment [Abstract]
Net sales	3,838,257	4,162,882	13,628,641	12,702,147
Product line cost of goods sold	1,682,864	1,738,964	5,806,550	5,407,589
Product line gross profit	2,155,393	2,423,918	7,822,091	7,294,558
Operating income (loss)	(332,837)	502,675	62,591	1,393,013
Depreciation and amortization	49,333	52,806	131,356	123,945
Capital expenditures	34,250	725	245,175	63,576
Operating and Reportable Segments [Member] \| Online Channels [Member] \| Finished Jewelry [Member]
Summary Information by Reportable Segment [Abstract]
Net sales	2,922,439	3,189,083	11,044,107	9,662,737
Product line cost of goods sold	1,286,865	1,303,914	4,739,488	4,050,505
Product line gross profit	1,635,574	1,885,169	6,304,619	5,612,232
Operating and Reportable Segments [Member] \| Online Channels [Member] \| Loose Jewels [Member]
Summary Information by Reportable Segment [Abstract]
Net sales	915,818	973,799	2,584,534	3,039,410
Product line cost of goods sold	395,999	435,050	1,067,062	1,357,084
Product line gross profit	519,819	538,749	1,517,472	1,682,326
Operating and Reportable Segments [Member] \| Traditional [Member]
Summary Information by Reportable Segment [Abstract]
Net sales	2,652,791	3,739,360	11,129,918	11,934,262
Product line cost of goods sold	1,418,686	1,800,598	5,843,130	6,178,818
Product line gross profit	1,234,105	1,938,762	5,286,788	5,755,444
Operating income (loss)	(5,861,033)	294,806	(5,339,831)	714,284
Depreciation and amortization	82,686	72,993	234,966	231,867
Capital expenditures	39,347	51,168	149,650	273,695
Operating and Reportable Segments [Member] \| Traditional [Member] \| Finished Jewelry [Member]
Summary Information by Reportable Segment [Abstract]
Net sales	557,729	768,978	2,732,403	2,047,218
Product line cost of goods sold	302,636	329,465	1,517,037	1,110,541
Product line gross profit	255,093	439,513	1,215,366	936,677
Operating and Reportable Segments [Member] \| Traditional [Member] \| Loose Jewels [Member]
Summary Information by Reportable Segment [Abstract]
Net sales	2,095,062	2,970,382	8,397,515	9,887,044
Product line cost of goods sold	1,116,050	1,471,133	4,326,093	5,068,277
Product line gross profit	$ 979,012	$ 1,499,249	$ 4,071,422	$ 4,818,767

SEGMENT INFORMATION AND GEOGRAPHIC DATA, Reconciliation of Cost of Goods Sold (Details) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Reconciliation of Cost of Goods Sold [Abstract]
Cost of goods sold	$ 9,171,932	$ 4,150,229	$ 18,579,069	$ 13,110,185
Inventory write-off	5,260,000		5,620,991	377,000
Product Line [Member]
Reconciliation of Cost of Goods Sold [Abstract]
Cost of goods sold	3,101,550	3,539,562	11,649,680	11,586,407
Segment Reconciling Item [Member]
Reconciliation of Cost of Goods Sold [Abstract]
Non-capitalized manufacturing and production control expenses	286,722	375,901	1,104,241	1,029,669
Freight out	153,081	126,438	425,433	429,227
Inventory write-off	5,471,992	325,000	5,620,991	377,000
Other inventory adjustments	$ 158,587	$ (216,672)	$ (221,276)	$ (312,118)

SEGMENT INFORMATION AND GEOGRAPHIC DATA, Net Sales by Geographic Area (Details) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Net Sales by Geographic Area [Abstract]
Net sales	$ 6,491,048	$ 7,902,242	$ 24,758,559	$ 24,636,409
Reportable Geographical Component [Member] \| United States [Member]
Net Sales by Geographic Area [Abstract]
Net sales	6,153,787	6,991,720	22,560,974	21,684,906
Reportable Geographical Component [Member] \| International [Member]
Net Sales by Geographic Area [Abstract]
Net sales	$ 337,261	$ 910,522	$ 2,197,585	$ 2,951,503

FAIR VALUE MEASUREMENTS (Details) - USD ($)	9 Months Ended
FAIR VALUE MEASUREMENTS (Details) - USD ($)	Mar. 31, 2020	Mar. 31, 2019
FAIR VALUE MEASUREMENTS [Abstract]
Asset impairment	$ 0	$ 0

INVENTORIES (Details) - USD ($)	3 Months Ended	9 Months Ended
INVENTORIES (Details) - USD ($)	Mar. 31, 2020	Mar. 31, 2020	Mar. 31, 2019	Jun. 30, 2019
Inventories [Abstract]
Total supplies inventory	$ 82,000	$ 82,000		$ 129,111
Total inventory	31,669,382	31,669,382		33,733,720
Short-term portion	5,315,227	5,315,227		11,909,792
Long-term portion	26,354,155	26,354,155		21,823,928
Work-in-process inventories issued to active production jobs	1,810,000	1,810,000		1,230,000
Write-off of inventory	5,260,000	5,620,991	$ 377,000
Finished Jewelry [Member]
Inventories [Abstract]
Raw materials	813,440	813,440		643,797
Work-in-process	750,142	750,142		487,680
Finished goods	6,097,180	6,097,180		6,332,533
Finished goods on consignment	2,400,394	2,400,394		1,867,549
Total	10,061,156	10,061,156		9,331,559
Loose Jewels [Member]
Inventories [Abstract]
Raw materials	3,954,750	3,954,750		3,806,681
Work-in-process	10,478,542	10,478,542		10,384,143
Finished goods	6,880,947	6,880,947		9,878,691
Finished goods on consignment	211,987	211,987		203,535
Total	21,526,226	21,526,226		$ 24,273,050
Legacy Material Inventory [Member]
Inventories [Abstract]
Total	$ 5,260,000	$ 5,260,000

RETURNS ASSET AND REFUND LIABILITIES (Details) - USD ($)	Mar. 31, 2020	Jun. 30, 2019
RETURNS ASSET AND REFUND LIABILITIES [Abstract]
Refund liabilities	$ 854,000	$ 746,000
Asset returns	$ 356,000	$ 279,000

ACCRUED EXPENSES AND OTHER LIABILITIES (Details) - USD ($)	Mar. 31, 2020	Jun. 30, 2019
ACCRUED EXPENSES AND OTHER LIABILITIES [Abstract]
Accrued compensation and related benefits	$ 624,476	$ 760,324
Accrued sales tax	268,366	286,864
Deferred rent	0	156,306
Accrued cooperative advertising	82,125	73,033
Other	123,316	49,081
Total accrued expenses and other liabilities	$ 1,098,283	$ 1,325,608

INCOME TAXES (Details) - USD ($)	3 Months Ended		9 Months Ended
INCOME TAXES (Details) - USD ($)	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
INCOME TAXES [Abstract]
Income tax expense (benefit) for estimated tax, penalties, and interest for other uncertain tax positions	$ 500	$ (17,000)	$ 1,000	$ (8,000)

COMMITMENTS AND CONTINGENCIES, Lease Arrangements (Details)	3 Months Ended	9 Months Ended	12 Months Ended
	Mar. 31, 2020 USD ($) ft²	Mar. 31, 2020 USD ($) ft² Option	Jun. 30, 2019 USD ($)	May 23, 2014 USD ($)
COMMITMENTS AND CONTINGENCIES [Abstract]
Area leased under operating lease \| ft²	36,350	36,350
Number of options to extend lease term \| Option		2
Period of extension on each options	5 years	5 years
Minimum notice period for extension of lease term		270 days
Leasehold improvements and other lease related incentives offered by landlord				$ 623,000
Unamortized lease assets			$ 393,000
Balance Sheet Classifications of Leases [Abstract]
Noncurrent operating lease ROU assets	$ 684,039	$ 684,039	0
Current operating lease liabilities	618,299	618,299	0
Noncurrent operating lease liabilities	349,424	349,424	0
Total operating lease liabilities	967,723	967,723
Operating lease cost	$ 117,000	$ 352,000
Assumed discount rate	7.14%	7.14%
Remaining operating lease term	1 year 6 months 29 days	1 year 6 months 29 days
Future Lease Payments Under Operating Leases [Abstract]
2020	$ 157,520	$ 157,520
2021	642,997	642,997
2022	219,723	219,723
Total lease payments	1,020,240	1,020,240
Less: imputed interest	(52,517)	(52,517)
Total operating lease liabilities	967,723	967,723
Less: current lease obligations	618,299	618,299	0
Total long-term lease obligations	349,424	349,424	0
Cash paid for operating leases	172,000	500,000
Rent expense	$ 133,000	$ 390,000	528,000
Future Minimum Payments Under Operating Leases [Abstract]
2020			625,788
2021			642,997
2022			219,723
Total			$ 1,488,508

COMMITMENTS AND CONTINGENCIES, Purchase Commitments (Details) - SiC Materials [Member] - USD ($) $ in Thousands	9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Purchase Commitments [Abstract]
Percentage of materials committed to be purchased	100.00%
Period of exclusive supply agreement	2 years
Total purchase commitment	$ 52,950
Remaining purchase commitment	36,510
Purchases	7,470	$ 6,670
Minimum [Member]
Purchase Commitments [Abstract]
Future minimum annual purchase commitments	10,000
Maximum [Member]
Purchase Commitments [Abstract]
Future minimum annual purchase commitments	$ 12,000

COMMITMENTS AND CONTINGENCIES, COVID-19 (Details) - COVID - 19 [Member] - Subsequent Event [Member]	Apr. 13, 2020
COVID-19 [Abstract]
Percentage of workforce furloughed	50.00%
Percentage reduction in fees paid to Board of Directors	50.00%
President and Chief Executive Officer [Member]
COVID-19 [Abstract]
Percentage reduction in salary	25.00%
Chief Financial Officer [Member]
COVID-19 [Abstract]
Percentage reduction in salary	15.00%
Chief Operating Officer [Member]
COVID-19 [Abstract]
Percentage reduction in salary	15.00%

LINE OF CREDIT (Details) - USD ($)	9 Months Ended
LINE OF CREDIT (Details) - USD ($)	Mar. 31, 2020	May 03, 2020
PPP Loan [Member] \| Subsequent Event [Member]
Line of Credit [Abstract]
Principal amount of loan approved		$ 965,000
White Oak [Member] \| Revolving Credit Facility [Member]
Line of Credit [Abstract]
Borrowing capacity	$ 5,000,000
Maturity date	Jul. 13, 2021
Interest rate floor	1.25%
Interest rate premium in excess of rate otherwise applicable charged during an event of default	2.00%
Credit facility outstanding	$ 0
White Oak [Member] \| Revolving Credit Facility [Member] \| Minimum [Member]
Line of Credit [Abstract]
Excess availability	$ 500,000
Interest rate	5.50%
White Oak [Member] \| Revolving Credit Facility [Member] \| LIBOR [Member]
Line of Credit [Abstract]
Term of variable rate	1 month
White Oak [Member] \| Revolving Credit Facility [Member] \| Revolving Advances [Member] \| LIBOR [Member]
Line of Credit [Abstract]
Basis spread on variable rate	3.75%
White Oak [Member] \| Revolving Credit Facility [Member] \| Non-Revolving Advances [Member] \| LIBOR [Member]
Line of Credit [Abstract]
Basis spread on variable rate	4.75%

STOCK-BASED COMPENSATION, Stock-Based Compensation (Details) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019	Mar. 31, 2020	Mar. 31, 2019
Stock-Based Compensation [Abstract]
Stock-based compensation expense	$ (144,628)	$ 126,571	$ 214,477	$ 369,653
Employee Stock Options [Member]
Stock-Based Compensation [Abstract]
Stock-based compensation expense	43,874	57,534	155,938	172,281
Stock-based compensation capitalized as a cost of inventory	0	0	0	0
Restricted Stock Awards [Member]
Stock-Based Compensation [Abstract]
Stock-based compensation expense	$ (188,502)	$ 69,037	$ 58,539	$ 197,372

STOCK-BASED COMPENSATION, Stock Options (Details) - Stock Options [Member] - USD ($)	9 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Stock Option Activity [Roll Forward]
Outstanding, beginning balance (in shares)	2,523,638
Granted (in shares)	255,387
Forfeited (in shares)	(50,005)
Expired (in shares)	(189,425)
Outstanding, ending balance (in shares)	2,539,595
Weighted Average Exercise Price [Roll Forward]
Outstanding, beginning balance (in dollars per share)	$ 1.39
Granted (in dollars per share)	1.39
Forfeited (in dollars per share)	1.00
Expired (in dollars per share)	1.18
Outstanding, ending balance (in dollars per share)	$ 1.40
Fair value of stock options vested	$ 180,000
Options Outstanding and Exercisable [Abstract]
Outstanding, ending balance (in shares)	2,539,595
Options outstanding, weighted average remaining contractual life	6 years 6 months 11 days
Outstanding, ending balance (in dollars per share)	$ 1.40
Options exercisable, balance as of end of period (in shares)	2,157,958
Options exercisable, weighted average remaining contractual life	6 years 1 month 17 days
Options exercisable, weighted average exercise price (in dollars per share)	$ 1.44
Options Vested or Expected to Vest [Abstract]
Options vested or expected to vest, balance as of end of period (in shares)	2,483,853
Options vested or expected to vest, weighted average remaining contractual life	6 years 5 months 26 days
Options vested or expected to vest, weighted average exercise price (in dollars per share)	$ 1.41
Unrecognized Stock-Based Compensation Expense [Abstract]
Unrecognized stock-based compensation expense	$ 182,000
Unrecognized stock-based compensation expense, period for recognition	18 months
Aggregate Intrinsic Value [Abstract]
Options outstanding, aggregate intrinsic value	$ 0
Options exercisable, aggregate intrinsic value	0
Options vested or expected to vest, aggregate intrinsic value	$ 0
Options exercised (in shares)	0
Options exercised, aggregate intrinsic value		$ 300

STOCK-BASED COMPENSATION, Restricted Stock (Details) - Restricted Stock [Member]	9 Months Ended
	Mar. 31, 2020 USD ($) $ / shares shares
Restricted Stock Activity [Roll Forward]
Unvested, beginning balance (in shares) \| shares	129,500
Granted (in shares) \| shares	325,000
Vested (in shares) \| shares	(128,341)
Canceled (in shares) \| shares	(1,159)
Unvested, ending balance (in shares) \| shares	325,000
Weighted Average Grant Date Fair Value [Roll Forward]
Unvested, beginning balance (in dollars per share) \| $ / shares	$ 1.07
Granted (in dollars per share) \| $ / shares	1.57
Vested (in dollars per share) \| $ / shares	1.07
Canceled (in dollars per share) \| $ / shares	1.07
Unvested, ending balance (in dollars per share) \| $ / shares	$ 1.57
Unrecognized Stock-Based Compensation Expense [Abstract]
Unrecognized stock-based compensation expense \| $	$ 510,000

STOCK-BASED COMPENSATION, Dividends (Details)	9 Months Ended
STOCK-BASED COMPENSATION, Dividends (Details)	Mar. 31, 2020 USD ($)
Dividends [Abstract]
Cash dividends	$ 0

NET (LOSS) INCOME PER COMMON SHARE (Details) - USD ($)	3 Months Ended						9 Months Ended
NET (LOSS) INCOME PER COMMON SHARE (Details) - USD ($)	Mar. 31, 2020	Dec. 31, 2019	Sep. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Mar. 31, 2020	Mar. 31, 2019
Numerator [Abstract]
Net (loss) income	$ (6,155,260)	$ 814,050	$ 207,319	$ 814,084	$ 1,189,565	$ 109,904	$ (5,133,891)	$ 2,113,553
Denominator [Abstract]
Weighted average common shares outstanding, Basic (in shares)	28,656,910			21,537,636			28,625,723	21,486,692
Effect of dilutive securities (in shares)	0			214,407			0	246,924
Weighted average common shares outstanding, Diluted (in shares)	28,656,910			21,752,043			28,625,723	21,733,616
Net (loss) income per common share [Abstract]
Basic (in dollars per share)	$ (0.21)			$ 0.04			$ (0.18)	$ 0.10
Diluted (in dollars per share)	$ (0.21)			$ 0.04			$ (0.18)	$ 0.10
Stock Options [Member]
Antidilutive Securities [Abstract]
Shares excluded from the computation of diluted net income per common share (in shares)	2,540,000			2,490,000			2,540,000	2,460,000

MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK (Details) - USD ($)

3 Months Ended

9 Months Ended

12 Months Ended

Mar. 31, 2020

Mar. 31, 2019

Mar. 31, 2020

Mar. 31, 2019

Jun. 30, 2019

Major Customers and Concentration of Credit Risk [Abstract]

Interest bearing amounts on deposit in excess of FDIC insurable limits

$ 250,000

Non-interest-bearing amounts on deposit in excess of FDIC insurable limits

$ 2,120,000

Minimum [Member]

Major Customers and Concentration of Credit Risk [Abstract]

Payment terms on trade receivables

30 days

Maximum [Member]

Major Customers and Concentration of Credit Risk [Abstract]

Payment terms on trade receivables

90 days

Trade Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer A [Member]

Major Customers and Concentration of Credit Risk [Abstract]

Concentration risk, percentage

20.00%

^[1]

Trade Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer B [Member]

Major Customers and Concentration of Credit Risk [Abstract]

Concentration risk, percentage

19.00%

13.00%

Trade Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer C [Member]

Major Customers and Concentration of Credit Risk [Abstract]

Concentration risk, percentage

16.00%

25.00%

Trade Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer D [Member]

Major Customers and Concentration of Credit Risk [Abstract]

Concentration risk, percentage

^[2]

15.00%

Total Net Sales [Member] | Customer Concentration Risk [Member] | Customer A [Member]

Major Customers and Concentration of Credit Risk [Abstract]

Concentration risk, percentage

11.00%

^[3]

Total Net Sales [Member] | Customer Concentration Risk [Member] | Customer B [Member]

Major Customers and Concentration of Credit Risk [Abstract]

Concentration risk, percentage

11.00%

^[4]

13.00%

10.00%

Total Net Sales [Member] | Customer Concentration Risk [Member] | Customer C [Member]

Major Customers and Concentration of Credit Risk [Abstract]

Concentration risk, percentage

15.00%

12.00%

14.00%

[1]	Customer A did not have individual balances that represented 10% or more of total gross accounts receivable as of June 30, 2019.
[2]	Customer D did not have individual balances that represented 10% or more of total gross accounts receivable as of March 31, 2020.
[3]	Customer A did not have net sales that represented 10% or more of total net sales for the three months ended March 31, 2019 and the nine months ended March 31, 2020 and 2019.
[4]	Customer B did not have net sales that represented 10% or more of total net sales for the three months ended March 31, 2019.

SUBSEQUENT EVENT (Details) - USD ($)	May 03, 2020	Mar. 31, 2020
Subsequent Event [Abstract]
AMT credit refund		$ 270,000
Subsequent Event [Member] \| PPP Loan [Member]
Subsequent Event [Abstract]
Principal amount of loan approved	$ 965,000