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

Rhea-AI Summary

Charles & Colvard (Nasdaq: CTHR) received a non-compliance notice from Nasdaq on November 21, 2024, for failing to timely file its Q1 FY2025 Form 10-Q and FY2024 Form 10-K. The company has until December 17, 2024, to either regain compliance or submit a compliance plan. If Nasdaq accepts the plan, CTHR may receive up to 180 calendar days (until April 14, 2025) to file the required documents. While the notice doesn't immediately affect CTHR's Nasdaq listing, the company must address these filing delays to maintain its listing status.

Positive

• Company still maintains its Nasdaq listing status temporarily
• Company has opportunity to submit compliance plan and potentially receive extension until April 2025

Negative

• Failed to file Q1 FY2025 Form 10-Q by November 14, 2024 deadline
• Still delinquent in filing FY2024 Form 10-K
• Risk of potential Nasdaq delisting if compliance is not achieved
• Multiple reporting delays indicating possible internal control issues

Insights

Legal & Compliance Expert

This Nasdaq non-compliance notice represents a significant regulatory concern for Charles & Colvard. The company has failed to file both its annual 10-K and quarterly 10-Q reports, which are important financial disclosures required by securities laws. The dual filing delinquency suggests potential internal control issues or financial reporting complexities that warrant investor attention.

While the company has until December 17, 2024 to either comply or submit a remediation plan, the extended non-compliance period could lead to more severe consequences, including potential delisting. The maximum compliance extension to April 14, 2025 provides some breathing room, but the situation requires immediate remediation to maintain market confidence and listing status.

Financial Analyst

The missing financial reports raise serious red flags about Charles & Colvard's operational transparency and financial health. For a micro-cap company with a market cap of just $4 million, maintaining listing compliance is important for market accessibility and investor confidence. The absence of both quarterly and annual reports leaves investors without vital information about the company's performance, cash position and business trajectory. This information vacuum could lead to increased volatility and potential loss of institutional investor interest.

RESEARCH TRIANGLE PARK, N.C., Nov. 27, 2024 /PRNewswire/ -- Charles & Colvard, Ltd. ("Charles & Colvard" or the "Company") (Nasdaq: CTHR) today announced that on November 21, 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 Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2024 (the "Form 10-Q"), and because the Company remains delinquent in filing its 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-Q was due on November 14, 2024.  The Company filed a Notification of Late Filing on Form 12b-25 with the SEC on November 15, 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 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 file its Form 10-K and Form 10-Q and 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 Form 10-Q and plans to file its Form 10-K and Form 10-Q 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 November 21, 2024?

CTHR received the notice for failing to timely file its Q1 FY2025 Form 10-Q and FY2024 Form 10-K with the SEC, violating Nasdaq Listing Rule 5250(c)(1).

What is the deadline for CTHR to regain Nasdaq compliance?

CTHR has until December 17, 2024, to either regain compliance 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 Nasdaq listing or trading status.

How long of an extension could CTHR receive if Nasdaq accepts their compliance plan?

If Nasdaq accepts the compliance plan, CTHR could receive up to 180 calendar days from the Form 10-K due date, or until April 14, 2025, to file the required documents.