SEGMENT INFORMATION AND GEOGRAPHIC DATA |
3. |
SEGMENT INFORMATION AND GEOGRAPHIC DATA
|
The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making operating decisions
and assessing performance as the source of the Company’s operating and reportable segments.
The Company manages its business through two operating and reportable
segments based on its distribution channels to sell its product lines, loose jewels and finished jewelry: its “Online Channels” segment, which consists of e-commerce outlets including charlesandcolvard.com, moissaniteoutlet.com,
charlesandcolvarddirect.com, madenetwork.com, third-party online marketplaces, drop-ship retail, and other pure-play, exclusively e-commerce outlets; and its “Traditional” segment, which consists of wholesale and retail customers, including its
own Charles & Colvard Signature Showroom. 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” and in the Notes to the Consolidated Financial Statements in the 2024 Annual Report.
The Company evaluates the financial performance of its segments based on net sales and product line gross profit, or the excess of product line sales over product line cost of goods
sold. The Company’s product line cost of goods sold is defined as product cost of goods sold and excludes certain indirect supporting expenses from the Company’s manufacturing and production control departments, comprising personnel costs, and
allocations for depreciation, leases, utilities, and corporate overhead; freight; inventory write-downs; and other inventory adjustments, comprising costs of quality issues, and damaged goods.
Summary financial information by reportable segment is as follows:
|
|
Three Months Ended March 31, 2025
|
|
|
|
Online
Channels
|
|
|
Traditional
|
|
|
Total
|
|
Net sales
|
|
|
|
|
|
|
|
|
|
Finished jewelry
|
|
$
|
2,376,826
|
|
|
$
|
1,552,102
|
|
|
$
|
3,928,928
|
|
Loose jewels
|
|
|
114,084
|
|
|
|
6,343
|
|
|
|
120,427
|
|
Total
|
|
$
|
2,490,910
|
|
|
$
|
1,558,445
|
|
|
$
|
4,049,355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product line cost of goods sold
|
|
|
|
|
|
|
|
|
|
|
|
|
Finished jewelry
|
|
$
|
986,979
|
|
|
$
|
1,195,555
|
|
|
$
|
2,182,534
|
|
Loose jewels
|
|
|
44,858
|
|
|
|
4,211
|
|
|
|
49,069
|
|
Total
|
|
$
|
1,031,837
|
|
|
$
|
1,199,766
|
|
|
$
|
2,231,603
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product line gross profit
|
|
|
|
|
|
|
|
|
|
|
|
|
Finished jewelry
|
|
$
|
1,389,847
|
|
|
$
|
356,547
|
|
|
$
|
1,746,394
|
|
Loose jewels
|
|
|
69,226
|
|
|
|
2,132
|
|
|
|
71,358
|
|
Total
|
|
$
|
1,459,073
|
|
|
$
|
358,679
|
|
|
$
|
1,817,752
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
$
|
94,189
|
|
|
$
|
122,464
|
|
|
$
|
216,653
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
$
|
41,359
|
|
|
$
|
2,475
|
|
|
$
|
43,834
|
|
|
|
Three Months Ended March 31, 2024
|
|
|
|
Online
Channels
|
|
|
Traditional
|
|
|
Total
|
|
Net sales
|
|
|
|
|
|
|
|
|
|
Finished jewelry
|
|
$
|
3,840,382
|
|
|
$
|
1,044,116
|
|
|
$
|
4,884,498
|
|
Loose jewels
|
|
|
219,828
|
|
|
|
157,640
|
|
|
|
377,468
|
|
Total
|
|
$
|
4,060,210
|
|
|
$
|
1,201,756
|
|
|
$
|
5,261,966
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product line cost of goods sold
|
|
|
|
|
|
|
|
|
|
|
|
|
Finished jewelry
|
|
$
|
1,980,096
|
|
|
$
|
737,957
|
|
|
$
|
2,718,053
|
|
Loose jewels
|
|
|
75,243
|
|
|
|
76,627
|
|
|
|
151,870
|
|
Total
|
|
$
|
2,055,339
|
|
|
$
|
814,584
|
|
|
$
|
2,869,923
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product line gross profit
|
|
|
|
|
|
|
|
|
|
|
|
|
Finished jewelry
|
|
$
|
1,860,286
|
|
|
$
|
306,159
|
|
|
$
|
2,166,445
|
|
Loose jewels
|
|
|
144,585
|
|
|
|
81,013
|
|
|
|
225,598
|
|
Total
|
|
$
|
2,004,871
|
|
|
$
|
387,172
|
|
|
$
|
2,392,043
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
$
|
41,260
|
|
|
$
|
131,882
|
|
|
$
|
173,142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
$
|
142,756
|
|
|
$
|
85,198
|
|
|
$
|
227,954
|
|
|
|
Nine months Ended March 31, 2025
|
|
|
|
Online
Channels
|
|
|
Traditional
|
|
|
Total
|
|
Net sales
|
|
|
|
|
|
|
|
|
|
Finished jewelry
|
|
$
|
8,228,051
|
|
|
$
|
2,934,998
|
|
|
$
|
11,163,049
|
|
Loose jewels
|
|
|
554,702
|
|
|
|
194,256
|
|
|
|
748,958
|
|
Total
|
|
$
|
8,782,753
|
|
|
$
|
3,129,254
|
|
|
$
|
11,912,007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product line cost of goods sold
|
|
|
|
|
|
|
|
|
|
|
|
|
Finished jewelry
|
|
$
|
4,187,357
|
|
|
$
|
2,406,033
|
|
|
$
|
6,593,390
|
|
Loose jewels
|
|
|
248,853
|
|
|
|
85,352
|
|
|
|
334,205
|
|
Total
|
|
$
|
4,436,210
|
|
|
$
|
2,491,385
|
|
|
$
|
6,927,595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product line gross profit
|
|
|
|
|
|
|
|
|
|
|
|
|
Finished jewelry
|
|
$
|
4,040,694
|
|
|
$
|
528,965
|
|
|
$
|
4,569,659
|
|
Loose jewels
|
|
|
305,849
|
|
|
|
108,904
|
|
|
|
414,753
|
|
Total
|
|
$
|
4,346,543
|
|
|
$
|
637,869
|
|
|
$
|
4,984,412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
$
|
281,199
|
|
|
$
|
370,010
|
|
|
$
|
651,209
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
$
|
204,454
|
|
|
$
|
3,300
|
|
|
$
|
207,754
|
|
|
|
Nine months Ended March 31, 2024
|
|
|
|
Online
Channels
|
|
|
Traditional
|
|
|
Total
|
|
Net sales
|
|
|
|
|
|
|
|
|
|
Finished jewelry
|
|
$
|
13,780,906
|
|
|
$
|
2,796,204
|
|
|
$
|
16,577,110
|
|
Loose jewels
|
|
|
850,208
|
|
|
|
693,311
|
|
|
|
1,543,519
|
|
Total
|
|
$
|
14,631,114
|
|
|
$
|
3,489,515
|
|
|
$
|
18,120,629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product line cost of goods sold
|
|
|
|
|
|
|
|
|
|
|
|
|
Finished jewelry
|
|
$
|
6,948,411
|
|
|
$
|
1,647,325
|
|
|
$
|
8,595,736
|
|
Loose jewels
|
|
|
271,669
|
|
|
|
320,569
|
|
|
|
592,238
|
|
Total
|
|
$
|
7,220,080
|
|
|
$
|
1,967,894
|
|
|
$
|
9,187,974
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product line gross profit
|
|
|
|
|
|
|
|
|
|
|
|
|
Finished jewelry
|
|
$
|
6,832,495
|
|
|
$
|
1,148,879
|
|
|
$
|
7,981,374
|
|
Loose jewels
|
|
|
578,539
|
|
|
|
372,742
|
|
|
|
951,281
|
|
Total
|
|
$
|
7,411,034
|
|
|
$
|
1,521,621
|
|
|
$
|
8,932,655
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
$
|
135,411
|
|
|
$
|
394,750
|
|
|
$
|
530,161
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
$
|
442,460
|
|
|
$
|
280,796
|
|
|
$
|
723,256
|
|
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, |
|
|
|
2025
|
|
|
2024
|
|
|
2025 |
|
|
2024 |
|
Product line cost of goods sold
|
|
$
|
2,231,603
|
|
|
$
|
2,869,923
|
|
|
$ |
6,927,595 |
|
|
$ |
9,187,974 |
|
Non-product line cost of goods sold: Manufacturing and production control expenses
|
|
|
401,395
|
|
|
|
672,373
|
|
|
|
1,118,772 |
|
|
|
1,934,837 |
|
Freight out
|
|
|
108,782
|
|
|
|
286,526
|
|
|
|
392,750 |
|
|
|
828,990 |
|
Other inventory adjustments
|
|
|
376,724
|
|
|
|
247,259
|
|
|
|
36,058 |
|
|
|
182,734 |
|
Cost of goods sold
|
|
$
|
3,118,504
|
|
|
$
|
4,076,081
|
|
|
$ |
8,475,175 |
|
|
$ |
12,134,535 |
|
A reconciliation of the Company’s consolidated product line gross profit to the Company’s consolidated net loss before income taxes is as follows:
|
|
Three Months Ended March 31,
|
|
|
Nine months Ended March 31,
|
|
|
|
2025
|
|
|
2024
|
|
|
2025
|
|
|
2024 |
|
Product line gross profit
|
|
$
|
1,817,752
|
|
|
$
|
2,392,043
|
|
|
$ |
4,984,412 |
|
|
$ |
8,932,655 |
|
Non-allocated cost of goods sold
|
|
|
(886,901
|
)
|
|
|
(1,206,158
|
)
|
|
|
(1,547,580 |
) |
|
|
(2,946,561 |
) |
Sales and marketing
|
|
|
(1,524,954
|
)
|
|
|
(3,684,506
|
)
|
|
|
(6,174,739 |
) |
|
|
(10,702,796 |
) |
General and administrative
|
|
|
(1,374,082
|
)
|
|
|
(1,199,511
|
)
|
|
|
(3,907,913 |
) |
|
|
(4,550,841 |
) |
Other income (expense) net
|
|
|
(4,962
|
)
|
|
|
65,425
|
|
|
|
2,630 |
|
|
|
229,474 |
|
Loss before income taxes
|
|
$
|
(1,973,147
|
)
|
|
$
|
(3,632,707
|
)
|
|
$ |
(6,643,190 |
) |
|
$ |
(9,038,069 |
) |
The Company recognizes sales by geographic area based on the country in which the customer is based. Sales to international end consumers made through the Company’s
transactional websites, including charlesandcolvard.com, moissaniteoutlet.com, charlesandcolvarddirect.com and madeshopping.com, are included in international sales for financial reporting purposes. A portion of the Company’s Traditional segment
sales made to international wholesale distributors represents products sold internationally that may be re-imported to U.S. retailers.
The following presents net sales data by geographic area:
|
|
Three Months Ended March 31,
|
|
|
Nine months Ended March 31, |
|
|
|
2025
|
|
|
2024
|
|
|
2025 |
|
|
2024 |
|
Net sales
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
4,049,355
|
|
|
$
|
5,188,939
|
|
|
$ |
11,912,007 |
|
|
$ |
17,700,626 |
|
International
|
|
|
-
|
|
|
|
73,027
|
|
|
|
- |
|
|
|
420,003 |
|
Total
|
|
$
|
4,049,355
|
|
|
$
|
5,261,966
|
|
|
$ |
11,912,007 |
|
|
$ |
18,120,629 |
|
|