|
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
|
|
|
Large accelerated filer
|
☐ |
Accelerated filer
|
☐ | |
|
☒ |
Smaller reporting company
|
||
Emerging growth company
|
Page
Number
|
||
PART I – FINANCIAL INFORMATION
|
||
Item 1.
|
Financial Statements
|
|
|
1
|
|
|
2
|
|
|
3
|
|
|
4
|
|
|
Notes to Condensed Consolidated Financial Statements (unaudited) |
5
|
Item 2.
|
20
|
|
Item 3.
|
33
|
|
Item 4.
|
33
|
|
PART II – OTHER INFORMATION
|
||
Item 1.
|
34
|
|
Item 1A.
|
34
|
|
Item 2.
|
34
|
|
Item 6.
|
35
|
|
|
Signatures |
36
|
Item 1. |
Financial Statements
|
March 31, 2023
(unaudited)
|
June 30, 2022 | |||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Restricted cash
|
|
|
||||||
Accounts receivable, net
|
|
|
||||||
Inventory, net
|
|
|
||||||
Note receivable
|
|
|
||||||
Prepaid expenses and other assets
|
|
|
||||||
Total current assets
|
|
|
||||||
Long-term assets:
|
||||||||
Inventory, net
|
|
|
||||||
Property and equipment, net
|
|
|
||||||
Intangible assets, net
|
|
|
||||||
Operating lease right-of-use assets
|
|
|
||||||
Deferred income taxes, net
|
||||||||
Note receivable
|
||||||||
Other assets
|
|
|
||||||
Total long-term assets
|
|
|
||||||
TOTAL ASSETS
|
$
|
|
$
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
||||||||
Accounts payable
|
$
|
|
$
|
|
||||
Operating lease liabilities, current portion
|
|
|
||||||
Accrued expenses and other liabilities
|
|
|
||||||
Total current liabilities
|
|
|
||||||
Long-term liabilities:
|
||||||||
Noncurrent operating lease liabilities
|
|
|
||||||
Total long-term liabilities
|
|
|
||||||
Total liabilities
|
|
|
||||||
Commitments and contingencies (Note 9)
|
||||||||
Shareholders’ equity:
|
||||||||
Common stock,
|
|
|
||||||
Additional paid-in capital
|
|
|
||||||
Treasury stock, at cost,
|
( |
) | ( |
) | ||||
Accumulated deficit
|
(
|
)
|
(
|
)
|
||||
Total shareholders’ equity
|
|
|
||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
$
|
|
$
|
|
Three Months Ended March 31,
|
Nine Months Ended March 31,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Net sales
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Costs and expenses:
|
||||||||||||||||
Cost of goods sold
|
|
|
|
|
||||||||||||
Sales and marketing
|
|
|
|
|
||||||||||||
General and administrative
|
|
|
|
|
||||||||||||
Total costs and expenses
|
|
|
|
|
||||||||||||
(Loss) Income from operations
|
(
|
)
|
|
(
|
)
|
|
||||||||||
Other income (expense):
|
||||||||||||||||
Interest income
|
|
|
|
|
||||||||||||
Loss on foreign currency exchange
|
|
|
|
(
|
)
|
|||||||||||
Total other income (expense), net
|
|
|
|
|
||||||||||||
(Loss) Income before income taxes
|
(
|
)
|
|
(
|
)
|
|
||||||||||
Income tax expense
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
||||||||
Net (loss) income
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||
Net (loss) income per common share:
|
||||||||||||||||
Basic
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
|
||||||
Diluted
|
$
|
(
|
)
|
$ |
|
$
|
(
|
)
|
$
|
|
||||||
Weighted average number of shares used in computing net (loss) income per common share:
|
||||||||||||||||
Basic
|
|
|
|
|
||||||||||||
Diluted
|
|
|
|
|
Nine Months Ended March 31, 2023 | ||||||||||||||||||||||||
Common Stock
|
||||||||||||||||||||||||
Number of
Shares
|
Amount
|
Additional
Paid-in
Capital
|
Treasury Stock |
Accumulated
Deficit
|
Total
Shareholders’
Equity
|
|||||||||||||||||||
Balance at June 30, 2022
|
|
$
|
|
$
|
|
$ |
( |
) |
$
|
(
|
)
|
$
|
|
|||||||||||
Stock-based compensation
|
-
|
|
|
|
|
|||||||||||||||||||
Cancellation of restricted stock
|
( |
) | ||||||||||||||||||||||
Repurchases of common stock
|
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Net loss
|
-
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||
Balance at September 30, 2022
|
|
|
|
|
|
( |
) |
|
(
|
)
|
|
|
||||||||||||
Stock-based compensation
|
-
|
|
|
|
|
|||||||||||||||||||
Issuance of restricted stock
|
|
|
|
|
|
|||||||||||||||||||
Net loss
|
-
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||
Balance at December 31, 2022
|
|
|
|
|
|
( |
) |
|
(
|
)
|
|
|
||||||||||||
Stock-based compensation
|
-
|
|
|
|
|
|||||||||||||||||||
Net loss
|
-
|
|
|
(
|
)
|
(
|
)
|
|||||||||||||||||
Balance at March 31, 2023
|
|
$
|
|
$
|
|
$ |
( |
) |
$
|
(
|
)
|
$
|
|
Nine Months Ended March 31, 2022
|
||||||||||||||||||||||||
Common Stock
|
||||||||||||||||||||||||
Number of
Shares
|
Amount
|
Additional
Paid-in
Capital
|
Treasury Stock |
Accumulated
Deficit
|
Total
Shareholders’
Equity
|
|||||||||||||||||||
Balance at June 30, 2021
|
|
$
|
|
$
|
|
$ |
$
|
(
|
)
|
$
|
|
|||||||||||||
Stock-based compensation
|
-
|
|
|
|
|
|||||||||||||||||||
Issuance of restricted stock
|
|
|
|
|
|
|||||||||||||||||||
Stock option exercises
|
|
|
(
|
)
|
|
|
||||||||||||||||||
Net income
|
-
|
|
|
|
|
|||||||||||||||||||
Balance at September 30, 2021
|
|
|
|
|
|
|
(
|
)
|
|
|
||||||||||||||
Stock-based compensation
|
-
|
|
|
|
|
|||||||||||||||||||
Stock option exercises
|
( |
) | ||||||||||||||||||||||
Net income
|
-
|
|
|
|
|
|||||||||||||||||||
Balance at December 31, 2021
|
|
|
|
|
|
|
(
|
)
|
|
|
||||||||||||||
Stock-based compensation
|
-
|
|
|
|
|
|||||||||||||||||||
Stock option exercises
|
( |
) | ||||||||||||||||||||||
Net income
|
-
|
|
|
|
|
|||||||||||||||||||
Balance at March 31, 2022
|
|
$
|
|
$
|
|
$ |
$
|
(
|
)
|
$
|
|
Nine Months Ended March 31,
|
||||||||
2023
|
2022
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net (loss) income
|
$
|
(
|
)
|
$
|
|
|||
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
|
||||||||
Depreciation and amortization
|
|
|
||||||
Stock-based compensation
|
|
|
||||||
(Recovery of) Provision for uncollectible accounts
|
(
|
)
|
|
|||||
Provision for (Recovery of) sales returns
|
|
(
|
)
|
|||||
Inventory write-downs
|
|
|
||||||
Provision for accounts receivable discounts
|
|
|
||||||
Deferred income taxes
|
||||||||
Changes in operating assets and liabilities:
|
||||||||
Accounts receivable
|
|
|
||||||
Inventory
|
|
(
|
)
|
|||||
Prepaid expenses and other assets, net
|
|
|
||||||
Accounts payable
|
(
|
)
|
|
|||||
Accrued income taxes
|
|
|
||||||
Accrued expenses and other liabilities
|
(
|
)
|
(
|
)
|
||||
Net cash (used in) provided by operating activities
|
(
|
)
|
|
|||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchases of property and equipment
|
(
|
)
|
(
|
)
|
||||
Payments for intangible assets
|
(
|
)
|
(
|
)
|
||||
Net cash used in investing activities
|
(
|
)
|
(
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Repurchases of common stock |
( |
) | ||||||
Stock option exercises | ||||||||
Net cash (used in) provided by financing activities
|
(
|
)
|
|
|||||
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
|
(
|
)
|
|
|||||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD
|
|
|
||||||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD
|
$
|
|
$
|
|
||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid during the period for income taxes
|
$
|
|
$
|
|
1. |
DESCRIPTION OF BUSINESS
|
2. |
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
|
March 31,
2023
|
June 30,
2022
|
|||||||
Cash and cash equivalents
|
$
|
|
$
|
|
||||
Restricted cash
|
|
|
||||||
Total cash, cash equivalents, and restricted cash
|
$
|
|
$
|
|
3. |
SEGMENT INFORMATION AND GEOGRAPHIC DATA
|
Three Months Ended March 31, 2023
|
||||||||||||
Online
Channels
|
Traditional
|
Total
|
||||||||||
Net sales
|
||||||||||||
Finished jewelry
|
$
|
|
$
|
|
$
|
|
||||||
Loose jewels
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
||||||
Product line cost of goods sold
|
||||||||||||
Finished jewelry
|
$
|
|
$
|
|
$
|
|
||||||
Loose jewels
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
||||||
Product line gross profit
|
||||||||||||
Finished jewelry
|
$
|
|
$
|
|
$
|
|
||||||
Loose jewels
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
||||||
Operating loss
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||
Depreciation and amortization
|
$
|
|
$
|
|
$
|
|
||||||
Capital expenditures
|
$
|
|
$
|
|
$
|
|
Three Months Ended March 31, 2022
|
||||||||||||
Online
Channels
|
Traditional
|
Total
|
||||||||||
Net sales
|
||||||||||||
Finished jewelry
|
$
|
|
$
|
|
$
|
|
||||||
Loose jewels
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
||||||
Product line cost of goods sold
|
||||||||||||
Finished jewelry
|
$
|
|
$
|
|
$
|
|
||||||
Loose jewels
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
||||||
Product line gross profit
|
||||||||||||
Finished jewelry
|
$
|
|
$
|
|
$
|
|
||||||
Loose jewels
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
||||||
Operating income
|
$
|
|
$
|
|
$
|
|
||||||
Depreciation and amortization
|
$
|
|
$
|
|
$
|
|
||||||
Capital expenditures
|
$
|
|
$
|
|
$
|
|
Nine Months Ended March 31, 2023
|
||||||||||||
Online
Channels
|
Traditional
|
Total
|
||||||||||
Net sales
|
||||||||||||
Finished jewelry
|
$
|
|
$
|
|
$
|
|
||||||
Loose jewels
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
||||||
Product line cost of goods sold
|
||||||||||||
Finished jewelry
|
$
|
|
$
|
|
$
|
|
||||||
Loose jewels
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
||||||
Product line gross profit
|
||||||||||||
Finished jewelry
|
$
|
|
$
|
|
$
|
|
||||||
Loose jewels
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
||||||
Operating income
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
|||
Depreciation and amortization
|
$
|
|
$
|
|
$
|
|
||||||
Capital expenditures
|
$
|
|
$
|
|
$
|
|
Nine Months Ended March 31, 2022
|
||||||||||||
Online
Channels
|
Traditional
|
Total
|
||||||||||
Net sales
|
||||||||||||
Finished jewelry
|
$
|
|
$
|
|
$
|
|
||||||
Loose jewels
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
||||||
Product line cost of goods sold
|
||||||||||||
Finished jewelry
|
$
|
|
$
|
|
$
|
|
||||||
Loose jewels
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
||||||
Product line gross profit
|
||||||||||||
Finished jewelry
|
$
|
|
$
|
|
$
|
|
||||||
Loose jewels
|
|
|
|
|||||||||
Total
|
$
|
|
$
|
|
$
|
|
||||||
Operating income
|
$
|
|
$
|
|
$
|
|
||||||
Depreciation and amortization
|
$
|
|
$
|
|
$
|
|
||||||
Capital expenditures
|
$
|
|
$
|
|
$
|
|
Three Months Ended March 31,
|
Nine Months Ended March 31,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Product line cost of goods sold
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Non-capitalized manufacturing and production control expenses
|
|
|
|
|
||||||||||||
Freight out
|
|
|
|
|
||||||||||||
Inventory write-downs
|
|
|
|
|
||||||||||||
Other inventory adjustments
|
|
(
|
)
|
|
(
|
)
|
||||||||||
Cost of goods sold
|
$
|
|
$
|
|
$
|
|
$
|
|
Three Months Ended March 31,
|
Nine Months Ended March 31,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Net sales
|
||||||||||||||||
United States
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
International
|
|
|
|
|
||||||||||||
Total
|
$
|
|
$
|
|
$
|
|
$
|
|
|
4. |
FAIR VALUE MEASUREMENTS
|
5. |
INVENTORIES
|
March 31,
2023
|
June 30,
2022
|
|||||||
Finished jewelry:
|
||||||||
Raw materials
|
$
|
|
$
|
|
||||
Work-in-process
|
|
|
||||||
Finished goods
|
|
|
||||||
Finished goods on consignment
|
|
|
||||||
Total finished jewelry
|
$
|
|
$
|
|
||||
Loose jewels:
|
||||||||
Raw materials
|
$
|
|
$
|
|
||||
Work-in-process
|
|
|
||||||
Finished goods
|
|
|
||||||
Finished goods on consignment
|
|
|
||||||
Total loose jewels
|
|
|
||||||
Total supplies inventory
|
|
|
||||||
Total inventory
|
$
|
|
$
|
|
March 31,
2023
|
June 30,
2022
|
|||||||
Short-term portion
|
$
|
|
$
|
|
||||
Long-term portion
|
|
|
||||||
Total
|
$
|
|
$
|
|
6. |
NOTE RECEIVABLE
|
7. |
ACCRUED EXPENSES AND OTHER LIABILITIES
|
March 31,
2023
|
June 30,
2022
|
|||||||
Deferred revenue
|
$ |
|
$ |
|
||||
Accrued compensation and related benefits
|
||||||||
Accrued sales taxes and franchise taxes
|
|
|
||||||
Accrued cooperative advertising
|
|
|
||||||
Other accrued expenses
|
|
|
||||||
Total accrued expenses and other liabilities
|
$
|
|
$
|
|
8. |
INCOME TAXES
|
9. |
COMMITMENTS AND CONTINGENCIES
|
Operating Leases:
|
||||
Noncurrent operating lease ROU assets
|
$
|
|
||
|
||||
Current operating lease liabilities
|
$
|
|
||
Noncurrent operating lease liabilities
|
|
|||
Total operating lease liabilities
|
$
|
|
2023
|
$
|
|
||
2024
|
|
|||
2025
|
|
|||
2026
|
|
|||
2027
|
|
|||
Total lease payments
|
|
|||
Less: imputed interest
|
|
|||
Present value of lease payments
|
|
|||
Less: current lease liability
|
|
|||
Total long-term lease liability
|
$
|
|
10. |
DEBT
|
11. |
SHAREHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION
|
Three Months Ended
March 31,
|
Nine Months Ended
March 31,
|
|||||||||||||||
2023
|
2022
|
2023
|
2022
|
|||||||||||||
Employee stock options
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Restricted stock awards
|
(
|
)
|
|
|
|
|||||||||||
Totals
|
$
|
|
$
|
|
$
|
|
$
|
|
Shares
|
Weighted
Average
Exercise Price
|
|||||||
Outstanding, June 30, 2022
|
|
$
|
|
|||||
Granted
|
|
$
|
|
|||||
Forfeited
|
(
|
)
|
$
|
|
||||
Expired
|
(
|
)
|
$
|
|
||||
Outstanding, March 31, 2023
|
|
$
|
|
Options Outstanding
|
Options Exercisable
|
Options Vested or Expected to Vest
|
||||||||||||||||||||||||||||||||
Balance
as of
March 31,
2023
|
Weighted
Average
Remaining
Contractual
Life
(Years)
|
Weighted
Average
Exercise
Price
|
Balance
as of
March 31,
2023
|
Weighted
Average
Remaining
Contractual
Life
(Years)
|
Weighted
Average
Exercise
Price
|
Balance
as of
March 31,
2023
|
Weighted
Average
Remaining
Contractual
Life
(Years)
|
Weighted
Average
Exercise
Price
|
||||||||||||||||||||||||||
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|