Charles & Colvard, Ltd. Receives Non-Compliance Letter from Nasdaq

Rhea-AI Summary

Charles & Colvard (Nasdaq: CTHR) has received a non-compliance notice from Nasdaq on October 18, 2024, for failing to timely file its Annual Report (Form 10-K) for the fiscal year ended June 30, 2024. The filing was due September 30, 2024. The company has until December 17, 2024 to either regain compliance or submit a compliance plan. If Nasdaq accepts the plan, CTHR may receive an extension until April 14, 2025. The notice does not immediately affect CTHR's Nasdaq listing. The company states it is working to complete and file the Form 10-K promptly.

Positive

• No immediate effect on Nasdaq listing status
• Company has 60 days to file or submit compliance plan
• Potential extension available until April 14, 2025 if plan accepted

Negative

• Failed to file Form 10-K by required deadline
• Received Nasdaq non-compliance notice
• Risk of potential delisting if compliance not achieved

Insights

Legal Expert

The Nasdaq non-compliance notice for Charles & Colvard represents a significant regulatory concern. Missing the Form 10-K filing deadline often signals potential internal control issues or financial reporting complexities. The company has until December 17, 2024 to either file the overdue report or submit a compliance plan. While there's a grace period and multiple appeal options, prolonged non-compliance could lead to delisting, severely impacting shareholder value and market access. For a micro-cap company with a market cap of just $3.8M, maintaining Nasdaq listing is important for investor confidence and trading liquidity. The delayed filing raises red flags about potential underlying issues that warrant careful scrutiny from stakeholders.

Financial Analyst

This delayed 10-K filing is particularly concerning given Charles & Colvard's micro-cap status. The lack of timely financial disclosure creates significant uncertainty around the company's current financial position and operational performance. For a company in the luxury goods sector, transparency is paramount. The delay could indicate various issues, from accounting complexities to potential financial distress. Investors should note that companies failing to meet filing deadlines often experience increased volatility and reduced institutional interest. The risk of eventual delisting, while not immediate, could trigger forced selling by institutional investors with mandate restrictions regarding non-compliant securities.

RESEARCH TRIANGLE PARK, N.C., Oct. 24, 2024 /PRNewswire/ -- Charles & Colvard, Ltd. ("Charles & Colvard" or the "Company") (Nasdaq: CTHR) today announced that on October 18, 2024, it received a letter from the Listing Qualifications Department of the Nasdaq Stock Market LLC ("Nasdaq") notifying the Company that it was not in compliance with Nasdaq Listing Rule 5250(c)(1), which requires the timely filing of all required periodic reports (the "Listing Rule"), as a result of not having timely filed its Annual Report on Form 10-K for the fiscal year ended June 30, 2024 (the "Form 10-K"), with the Securities and Exchange Commission (the "SEC"). The Form 10-K was due on September 30, 2024. The Company filed a Notification of Late Filing on Form 12b-25 with the SEC on October 1, 2024.

The Notice has no immediate effect on the listing or trading of the Company's common stock on Nasdaq. Under Nasdaq rules, the Company has 60 calendar days, or until December 17, 2024, to regain compliance with the Listing Rule or to submit to Nasdaq a plan to regain compliance with the Listing Rule (the "Plan"). If Nasdaq accepts the Company's Plan, then Nasdaq may grant the Company up to 180 calendar days from the Form 10-K filing due date, or until April 14, 2025 to regain compliance. If Nasdaq does not accept the Company's Plan, then the Company will have the opportunity to appeal that decision to a Nasdaq Hearings Panel.

The Company is working diligently to complete its Form 10-K and plans to file its Form 10-K as promptly as practicable to regain compliance with the Listing Rule.

About Charles & Colvard, Ltd.

Charles & Colvard, Ltd. (Nasdaq: CTHR) believes that fine jewelry should be as ethical as it is exquisite. Charles & Colvard is the original creator of lab grown moissanite (a rare gemstone formed from silicon carbide). The Company brings revolutionary gems and fine jewelry to market by using exclusively Made, not Mined™ above ground gemstones and a dedication to 100% recycled precious metals. The Company's Forever One™ moissanite and Caydia^® lab grown diamond brands provide exceptional quality, incredible value and a conscious approach to bridal, high fashion, and everyday jewelry. Charles & Colvard was founded in 1995 and is based in North Carolina's Research Triangle Park region. For more information, please visit https://www.charlesandcolvard.com/.

Forward-Looking Statements

This press release contains a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Words such as "plan," "expect," "will," "working," and variations of such words and similar future or conditional expressions are intended to identify forward-looking statements. These forward-looking statements include, but are not limited to, the expected filing of its Form 10-K and ability to regain compliance under the Nasdaq listing rule. These forward-looking statements are not guarantees of future results and are subject to a number of risks and uncertainties, many of which are difficult to predict and beyond our control. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in the Company's filings with the Securities and Exchange Commission, including the risks and uncertainties described in more detail in our filings with the SEC, including our Annual Report on Form 10-K for the fiscal year ended June 30, 2023 and subsequent reports filed with the SEC. For example, there can be no assurance that the Company will regain compliance with the Listing Rule during any compliance period or in the future, or otherwise meet Nasdaq compliance standards. Forward-looking statements speak only as of the date they are made. The Company disclaims and does not undertake any obligation to update or revise any forward-looking statement in this press release, except as required by applicable law or regulation and you are urged to review and consider disclosures that we make in the reports that we file with the SEC that discuss other factors relevant to our business.

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SOURCE Charles & Colvard, Ltd.

FAQ

Why did Charles & Colvard (CTHR) receive a Nasdaq non-compliance notice on October 18, 2024?

CTHR received the notice for failing to timely file its Annual Report (Form 10-K) for the fiscal year ended June 30, 2024, which was due on September 30, 2024.

What is the deadline for CTHR to regain Nasdaq compliance?

CTHR has until December 17, 2024, to either file the Form 10-K or submit a compliance plan to Nasdaq.

Will CTHR be immediately delisted from Nasdaq due to the non-compliance notice?

No, the notice has no immediate effect on CTHR's listing or trading status on Nasdaq.

What happens if Nasdaq accepts CTHR's compliance plan?

If Nasdaq accepts the plan, CTHR may receive an extension until April 14, 2025, to regain compliance.