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SEGMENT INFORMATION AND GEOGRAPHIC DATA
 3 Months Ended
Sep. 30, 2024
SEGMENT INFORMATION AND GEOGRAPHIC DATA [Abstract]  
SEGMENT INFORMATION AND GEOGRAPHIC DATA
3.
SEGMENT INFORMATION AND GEOGRAPHIC DATA

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

The Company manages its business through two operating and reportable segments based on its distribution channels to sell its product lines, loose jewels and finished jewelry: its “Online Channels” segment, which consists of e-commerce outlets including charlesandcolvard.com, moissaniteoutlet.com, third-party online marketplaces, drop-ship retail, and other pure-play, exclusively e-commerce outlets; and its “Traditional” segment, which consists of wholesale and retail customers, including its own Charles & Colvard Signature Showroom and charlesandcolvarddirect.com. The 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 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, excluding non-capitalized expenses from the Company’s manufacturing and production control departments, comprising personnel costs, depreciation, leases, utilities, and corporate overhead allocations; freight out; inventory write-downs; and other inventory adjustments, comprising costs of quality issues, and damaged goods.

Summary financial information by reportable segment is as follows:

   
Three Months Ended September 30, 2024
  
   
Online
Channels
    
Traditional
    
Total
  
Net sales
                  
Finished jewelry
  
$
2,048,945
    
$
914,786
    
$
2,963,731
  
Loose jewels
    
113,809
      
155,865
      
269,674
  
Total
  
$
2,162,754
    
$
1,070,651
    
$
3,233,405
  
                         
Product line cost of goods sold
                        
Finished jewelry
  
$
968,761
    
$
856,064
    
$
1,824,825
  
Loose jewels
    
46,848
      
61,026
      
107,874
  
Total
  
$
1,015,609
    
$
917,090
    
$
1,932,699
  
                         
Product line gross profit
                        
Finished jewelry
  
$
1,080,184
    
$
58,722
    
$
1,138,906
  
Loose jewels
    
66,961
      
94,839
      
161,800
  
Total
  
$
1,147,145
    
$
153,561
    
$
1,300,706
  
                         
Depreciation and amortization
  
$
92,009
    
$
123,501
    
$
215,510
  
                         
Capital expenditures
  
$
96,647
    
$
-
    
$
96,647
  

   
Three Months Ended September 30, 2023
  
   
Online
Channels
    
Traditional
    
Total
  
Net sales
                  
Finished jewelry
  
$
3,596,942
    
$
704,317
    
$
4,301,259
  
Loose jewels
    
319,744
      
332,020
      
651,764
  
Total
  
$
3,916,686
    
$
1,036,337
    
$
4,953,023
  
                         
Product line cost of goods sold
                        
Finished jewelry
  
$
1,575,600
    
$
383,567
    
$
1,959,167
  
Loose jewels
    
99,978
      
139,396
      
239,374
  
Total
  
$
1,675,578
    
$
522,963
    
$
2,198,541
  
                         
Product line gross profit
                        
Finished jewelry
  
$
2,021,342
    
$
320,750
    
$
2,342,092
  
Loose jewels
    
219,766
      
192,624
      
412,390
  
Total
  
$
2,241,108
    
$
513,374
    
$
2,754,482
  
                         
Depreciation and amortization
  
$
48,758
    
$
129,533
    
$
178,291
  
                         
Capital expenditures
  
$
120,145
    
$
96,907
    
$
217,052
  

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 September 30,
  
   
2024
    
2023
  
Product line cost of goods sold
  
$
1,932,699
    
$
2,198,541
  
Non-product line cost of goods sold: Manufacturing and production control expenses
    
371,684
      
597,885
  
Freight out
    
82,480
      
204,216
  
Other inventory adjustments
    
(154,460
)
    
7,865
  
Cost of goods sold
  
$
2,232,403
    
$
3,008,507
  


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 September 30,
  
   
2024
    
2023
  
Product line gross profit
  
$
1,300,706
    
$
2,754,482
  
Non-allocated cost of goods sold
    
(299,704
)
    
(809,966
)
Sales and marketing
    
(1,877,330
)
    
(2,721,965
)
General and administrative
    
(1,262,292
)
    
(1,854,268
)
Total other income, net
    
5,100
      
92,260
  
Loss before income taxes
  
$
(2,133,520
)
  
$
(2,539,457
)

The Company recognizes sales by geographic area based on the country in which the customer is based. Sales to international end consumers made through the Company’s transactional websites, charlesandcolvard.com and moissaniteoutlet.com, are included in international sales for financial reporting purposes. A portion of the Company’s Traditional segment sales made to international wholesale distributors represents products sold internationally that may be re-imported to U.S. retailers.

The following presents net sales data by geographic area:


  
Three Months Ended September 30,
  

 
2024
    
2023
  
Net sales:
            
United States
  
$
3,233,405
    
$
4,768,910
  
International
    
-
      
184,113
  
Total
  
$
3,233,405
    
$
4,953,023