Q1 2024 Charles & Colvard Ltd Earnings Call

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Yeah.

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Good day.

Welcome to the Charles and Cologuard first quarter.

Why 'twenty 'twenty four earnings conference call and webcast.

All participants will be in listen only mode.

Should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

This earnings call may contain forward looking statements as defined in section.

<unk> 27 a.

Of the Securities Act.

1933 as of Monday.

Adding statements regarding among other things the company's business strategy and growth.

The expression, but identify forward looking statements are based largely on our company's expectations and are subject to a number of risks and uncertainties some of which cannot be predicted or quantified and are beyond our control.

Future developments and actual results could differ materially from those set forth in.

Contemplated by or underlying the floor.

<unk> looking statements.

In light of these risks and uncertainties there can be no greater assurance that the forward looking information will prove to be accurate.

Company today's call is a supporting Powerpoint slide deck, which is available on the Investor Relations section of the company's website at.

I R Dot Charles and Cold our dotcom Slashdot.

The company will be hosting a Q&A session at the conclusion of the prepared remarks should you have any questions you'd like to submit please E mail.

C P H R at Lytham partners Dot com.

Please note. This event is being recorded I would now like to turn the conference over to Don O'connell, President and Chief Executive Officer. Please go ahead. Good afternoon, everyone and welcome to our first quarter fiscal 2024 financial results Conference call.

My comments will be briefer than usual as we spoke with investors just one month ago and Youll recognize a lot of the same themes.

During the first quarter, we continued to experience headwinds from a challenging economy that has created weakened consumer spending as well as softening engagement activity.

There is definite outside pressure on the industry as a whole we continue to forge ahead with several new initiatives leading into the important holiday season through Valentine's day.

While we worked through these dynamics, it's important to note that we believe our strategies will soon begin to offset the downward pricing pressure at the company's Charles and Colvard direct initiatives take hold and as consumers continue to seek alternatives to mind diamond such as lab grown diamonds moist Tonight and lab created colored gemstones.

As we've discussed in prior quarters. The consumer is gravitating towards products that are sustainable and ethically sourced. We believe we are well positioned to navigate this meaningful shift in the industry as our lab grown diamond revenue as a percentage of sales quarter over quarter continued to grow.

While early indicators within our industry suggest that consumer spending will likely be down this holiday season compared to recent years.

With our enhanced sales initiatives, Charles and Colvard direct dot com and our direct to consumer digital streaming made shopping experience our product assortment at our inventory levels. We believe that we'll be able to provide an enticing value proposition for those retailers and consumers seeking quality made not mined gemstones and fine jewelry.

Products.

But that being said closing out the quarter with over $12 $7 million in cash and cash equivalents $27 million in inventory and investments made to maintain our retail partners service level commitments for the quarter.

Reaching 94% in stock, we believe this positions us well into the holiday quarter.

As we stated last quarter and as we move into Q2 look to us to continue to stabilize our business, while we make strategic investments and global brand awareness campaigns innovative technology, including key personnel and our product assortment to meet consumer expectations and to stay ahead of the competition.

To deliver additional products and services designed to unlock new revenue streams.

More specifically, we continue to invest in our technology, and our web properties, including Charles and Colvard direct dotcom.

Which we believe enables us to engage thousands of independent jewelers directly capturing an untapped wholesale markets for our multiple grades of loose gemstones.

While we continue to make capital investments to transform Charles and Colvard Doctor them into what we believe will be the best in class web experience.

We continue to expand our product offerings to include more fashion forward styles and larger Acadia lab grown diamond total weights in response to consumer demand.

Additionally, we received positive responses to Arcadia lab grown diamonds, and precious created color Assortments, which can help us to broaden our consumer appeal.

Lastly, we continue to shift our moist night assortments to leverage their value proposition I guess increased pricing pressure from lab grown diamonds.

On the traditional side of our business, we continue to work with our existing brick and mortar partners modifying our forever, one voice night Assortments with fresh new designs and increased carat weights to highlight the value proposition and differentiate against competitive diamond alternatives.

In addition, we have introduced Arcadia lab grown diamonds finished jewelry assortments in key markets through these brick and mortar partners.

We believe that significant growth opportunities remain within this channel in future quarters industrial remain top of mind to the organization.

As I mentioned on our last call, we have been expanding our business directly interface with the consumer while controlling the customer experience to achieve this we have built an environment to meet today's consumers with sharper ball interactive live streaming on connected TV linear broadcasting satellite and social media platforms like.

Facebook Youtube ex formerly Twitter.

And linked it with tic toc to come, allowing our consumers the ability to click and buy anywhere they see us. This initiative not only enables us to reach a broader audience. It also allows us to generate vast amounts of content supporting our social media channels and marketing efforts.

We see potential for future revenue growth as we leverage these platforms to showcase our product and brands in new and exciting ways.

While intended to provide an exceptional user experience.

We are excited about the possibilities that lie ahead and the positive impact of this initiative on our marketing and growth trajectory.

As we look ahead, while we must certainly recognize the impact of the pricing pressures and the macro elements of the economy on our business. We remain focused on cash preservation diligent sourcing and increase brand focused initiatives to help ensure we are all well positioned to capture greater market share.

I will now turn the presentation over to Clint Pete our CFO to provide detailed insight into Q1's financial performance.

Please proceed.

Thanks Dawn today I'll provide a summary of key financials for the first quarter ended September 32023.

Additional details can be found in our earnings press release that we issued this afternoon and our foreign 10-Q, which we expect to file tomorrow.

Please note that all percentage comparisons to the first quarter ended September 32022.

Specified otherwise.

First we will start on slide eight with the comparative analysis of the first quarter of fiscal 2024 compared to the same period one year ago.

In total net sales for Q1 2024 totaled $5 million.

Or so $7 $4 million a decrease of 33%.

Primarily to a changing economic environment and are declining wholesale business.

Net sales for online channels segment, which is primarily direct to consumer and include Charles and Colvard Dot com moist snuff I'll, let dot com.

Charles on Cobra direct dot com.

Places drop ship retail and other pure play outlets totaled $3 $9 million for the quarter.

Or a decrease of 19%, but now representing 79% of total net sales up from 56% one year ago.

Net sales for our traditional segment, which consists of wholesale and brick and mortar customers totaled $1 million for the quarter or a decrease of 59%.

Representing now 21% of total net sales down from 34% ourselves and a year ago quarter.

Finished jewelry net sales decreased 22% for the quarter. It represented 87% of total sales in the quarter.

And 75% ourselves in the first quarter, one year ago, as we further position ourselves and our fine jewelry market.

As we've mentioned on prior calls due in part to our shift towards finished jewelry and direct to consumer strategies loose jewel net sales decreased 64% for the quarter, while continuing to experience weak demand with our domestic and international distributors, but can add sales by geography, nearly all cells in the first quarter withdraw.

In the U S.

International net sales reported in the quarter $180000 moving.

Moving to slide nine to discuss gross margin.

Reported a gross margin of 39% versus 45% gross margin in the year ago quarter.

Or a gross profit of $1 $9 million versus $3 $3 million and gross profit in the year ago quarter.

For Q1, 2024 total operating expenses increased 1% from a year ago quarter.

Sales and marketing expenses decreased 12% to $2 $7 million.

General and administrative expenses were $1 $9 million for the quarter compared to $1 $4 million in the yoga a quarter or a 31% increase.

The increase in G&A for Q1 was due in large part to expenses occurred as a result of the cyber security matter in a late Q4 totaling approximately $300000 in the quarter.

We reported a net loss for Q1 2000 $24 million to $5 million.

Or eight cents loss per diluted share compared with a net loss of $890000 or three cents loss per diluted share in the year ago period.

The main drivers for our increase in net loss were the decline in revenue and <unk> expenses due to the cyber security that our weighted average shares outstanding on a diluted basis used in the calculation of the loss per share for the quarter were approximately 34 million shares for.

For the period ended September 32023.

As in the year ago quarter.

Now, let's move onto a snapshot of our balance sheet.

Our liquidity and capital position remains strong as we ended the quarter with $12 $7 million of total cash compared to $15 $6 million at the end of the fourth quarter ended June 32023.

Working capital remained strong at $15 $1 million in.

In addition, the company remained debt free.

Our cash flow used in operations was $2 $7 million during the quarter.

<unk> to $3 $7 million of cash flow used in operations during the same quarter a year ago.

In terms of other sources of liquidity, we have access to our five man dollars Castro carry credit facility with JP Morgan Chase Bank.

Which was renewed for another year in June 2023.

As of September 30th 2023, we have not accessed funds through our credit facility agreement inventory as of September 32023, and totaled $27 $3 million compared to June 32023, when it totaled $26 $8 million.

Compared to $36 $6 million at September 30 of 2022.

Our year over year decrease nearly $9 $3 million due to the inventory write down in Q4 FY 2023.

Finished jewelry inventory was $8 $6 million as of September 32023, compared to a $9 $1 million as of June 32023, and compared to $16 $6 million as of September 32022.

Our year over year decrease again due to the inventory write down referred to above.

Jewelry inventory was $18 $4 million as of September 32023, compared to $17 $3 million as of June 32023, and compared to $19 $9 million as of September 32022. The increase through June 30 is due to our preparation for the upcoming holiday season, that's it.

We remain focused on prudent inventory management strategies going forward.

Value per share at the end of the first quarter was $1 22 per share sequentially lower to Q4 2023.

In summary, we remain diligent in our cash management and support of our ongoing business.

Technological advances towards growth initiatives further brand awareness.

With that I'll turn it back over to dawn.

Thanks Glenn.

In conclusion, while acknowledging the challenging economic environment and industry pressures, we remain steadfast in our commitment to adapt evolve it to thrive.

We firmly believe that the strategic initiatives pricing strategies and product expansions reflect our proactive response to current market conditions.

We are confident that these measures will help to enhance and elevate our overall position in the marketplace.

As always I would like to express our gratitude for your continued support and look forward to updating you on our future call.

At this time I will turn the call back over to the operator, who will open the lines for any questions.

Thank you we will now begin the question and answer session.

To ask a question you May Press Star then one on your Touchtone phone.

If you're using a speakerphone please pick up your handset before pressing mckean.

To withdraw your question. Please press Star then two.

Please limit yourself to one question and one follow up.

Further questions you may reenter the question queue.

At this time, we will pause momentarily to assemble our basseterre.

Our first question comes from Eric Landry private Investor. Please go ahead.

Hello.

Hey, Eric how are you doing.

Okay.

What is the state of the.

Litigation regarding the supply agreement with Wall Street.

Yes, that's a great question so.

We did publish in the indicated what our what the status was at this particular time right now, but we did set a date for the arbitration date, it's almost a year from now.

So that's pretty much all I can elaborate on that but.

So we believe that.

It's pretty clear the arbitration will come up and we'll continue to process forward.

Okay. So from what I understand you haven't taken delivery of anything for nine months.

And they want 3 million Bucks so to speak to that is that basically what it comes down to.

Yes, I mean basically that is.

That is correct. So we opted that.

We don't.

Wish to pursue more material at this time and we did it over the course of nine months.

And they believe that there's.

Theres $3 million that is material that we should happen.

We you know everything is subject to interpretation so that's great.

We're at right now.

Okay. So thats not on the balance sheet correct Glenn.

That agreement is nowhere on the balance sheet correct.

The agreement as far as the material.

The 18 million Bucks that the case.

Still.

Outstanding on the supply agreement there is no liability on.

On the balance sheet correct.

So again, that's the whole purpose for arbitration right everything is subjective to the agreement.

So there is nothing on the balance sheet in relation to the $18 million outstanding correct.

So Charles we Khobar does not believe that that's a liability.

Whether we believe or don't believe is open for arbitration.

And for the consideration that we're gonna be discussing in the future months to come.

Okay.

Is that I mean is there a scenario where you could pay them a couple of million bucks and be done with it.

Well the scenario would be we need to do what's best for the business right now if what's best for the business to take simply what the business needs and kind of.

Negotiate future state or terms or whatever the both parties agreed to then we're open for discussion but at this point in time, we have.

Inventory to support our business, we believe that we've got what we need for our kind of the short and long term at this point.

If theres other needs or consideration, then well what kind of take that out from them or from others, but at this point in time, we feel that.

You know at the current price and where we're at in the market.

Not within the best interest of our shareholders or the company at this time to seek out and get more goods.

Now whether they have growth available for us or don't have goods available all that subject to interpretation of negotiation.

Obviously, it's obviously not good to take on any more inventory. The question is how much is it going to cost us.

Out of this thing is it going to be the full $80 million is going to be $3 million I think you owe them right now.

I don't know it seems like a pretty difficult situations.

Well.

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We have to understand that we've been in this situation where.

Where we've come to the table and negotiated over the past the supply agreement.

They've been a great partner for almost three decades.

Maybe we have an impasse related to pricing, maybe we haven't been passed to other things, but certainly.

We do have a good relationship back and forth with them. It's just we personally cannot take on goods right now and whether we believe that.

The future of their product is for us or not or it's.

It's at a price that we could afford to take and be competitive in the market is all things that we need to consider for US we believe that we're in.

And our position within the agreement where theres certain provisions within the agreement that we believe that we're in a good place and certainly they have their own position that they decided to do so.

That's where we're at so at this point, we don't have any other obligation to them.

<unk>.

You know.

Other than what's in writing in the interpretation of what the agreement is.

What it is.

How quickly our lab grown diamond prices.

Slowing down right now if any.

You are right now is over the last nine months the movement and the downward pressure has been considerable we are seeing some stabilization now and some stability in the pricing and really it's the the retailers that are actually are holding the levels up and maintaining a pretty respectful and moderate retail, but it did absolutely.

Put pressure on voice and I considerably.

As I've been alluding to in the past quarter and our year end and also now in this quarter. So what we're doing right. Now is we're looking for ways to come to market and be able to create a bigger delta between the two we believe we have a solution for that.

But look to us in the coming quarters to kind of talk us through it speak to it.

But we believe stayed.

Stabilization coming on but price of lab grown its come down unbelievably low.

Right I'm trying to get a sense for is it is it bottoming or is there still more.

Significant declines to go.

Where are you.

Where are you where you go in who you speak to so it's from the growers perspective, it probably is bottoming a little bit.

But you still have distributors that are in the middle of that are you know what we'll call bottom feeders that are going into the market with a lot of cash and they are buying up over.

Oversupplied goods at a unbelievable price and they're willing to take very small margins on so you know for US I mean, those are opportunistic buys for us. So we are acquiring those goods have put us in a better position to make higher margin. So we're also going into the market in the lab grown diamonds space and seek.

Those opportunities ourselves too as well.

Okay.

Alright last question for me.

How.

How far is the board willing to go with this thing where six quarters, we lost money in our decline in revenue lost money for several quarters in a row here.

It just pays the cash is not going to last forever.

At what point does the board and say Hey, we need to do some do we need to think about strategic alternatives.

We need to do something the house is on fire.

Well so.

Okay.

Yes, that's a good question right. So you would understand one would believe that the board and the executive team is looking at all considerations every single day. So it's a question of the environment the economic.

No impact on the business, it's the lab grown diamonds impacted the moist night impact, but our ability to pivot the company and change are effectively changed the company's direction is really where we're going and strategically.

We believe we're going to a really good place and we believe that we've got great initiatives I will tell you that the old co or like the old methodology of the business with leaning on more traditional partners and distributors is no longer a viable solution for the company our director I want to go.

And if you obviously you know Eric you've been with the company a long time, so we know that wholesale warm and that wholesale piece represented a really big piece of the company or the business overall for years and years. So we've had to reinvent ourselves and move forward and you know what.

I get it.

Pretty decent shareholder myself and my Board members. Certainly you know are you don't have significant positions within the company.

But.

We're all weighing every option of the business that we're moving in the direction that we believe that is a really good direction for the company and that's more direct to consumer and if you listened to my remarks, a little bit earlier, when we talked about Charles <unk> Colvard direct I mean for a lot of years in many many years, we relied on strategic partners and distributors.

To reach the independent jewelers for Us now.

Now of course, they've got margin that they need to deal with and of course, they've got costs associated with that and.

Sales teams, but the reality of it is theyre not doing us a service anymore theyre not providing enough sales and revenue for us because of the downward pressure of lab grown or theyre seeking alternatives or whatever that is so that's why quarter over quarter over the last several quarters, we've been talking about repositioning and going direct ourselves.

So we just launched our Charles <unk> Colvard direct portal, so that gives the opportunity to independent jewelers now at a greater margin for us as a company to reach out and let them buy direct from US that's a big step for this company and it's something that we haven't done in decades. So we believe there is growth there and that's a great position for us and we believe.

Thats going to be a viable business moving forward.

But I will tell you that all the talk and consideration and the strength of this company moving forward is it going to be the direct to consumer initiatives.

Also maintaining support for our brick and mortar partners, giving them, what they need giving them what they are asking for it supporting them. We have a very strong brick and mortar partners that are doing a really really nice job we've gotten in la.

Lab grown diamonds into <unk> diamonds, which we're pretty excited about that so there is just a shift going on right now and we're going to have to painfully go through the shift which is what we've been experiencing to get to the other side to some of these initiatives.

And we've talked about made shopping so if you go to made shopping dot com you can see a live stream show now some people say, okay live streaming TV shopping that's all while it still does hundreds and hundreds of millions of dollars in billions of dollars of business. So we're looking to pick up some additional revenue with our streaming capability and kind of build.

<unk> out that base, but it's really not.

Shopping for T V. It's about streaming our digital content throughout everywhere that consumer is a shot.

Shopping so we believe thats going to be like a change in the entire kind of dynamic of the business moving forward, where we can have consumers that are on Facebook Instagram tick tock Twitter wherever they are clicking buy at that moment individual items at that particular second so shopper will commerce is here, it's growing it's big.

It's important and it's irrelevant.

The difference with us and anybody else is we have the entire infrastructure.

<unk> welcome anybody or have an investor summit.

More to.

To come by and see what we built it's pretty pretty impressive and what that's going to enable us to do Eric is that has been able to reach consumers through some editorial pieces educational pieces Sharpeville commerce small little segments.

<unk>.

In all different channels as well as broadcast satellite like we said so it is a traditional shopping as people know it maybe thats the way they are seeing it right now, but the future is not that the future is.

Our ability to create and stream content in a meaningful way that's aligned with.

Kind of the values and kind of what the consumers looking for at that time. So we think we've got a pretty good roadmap to that we're doing some phasing we're doing some testing and were.

We're building out an individual web property to be able to support that business under made shopping so look for that to come out here shortly and Thats everything thats manufactured and developed ethically. So that means made intentional made for special moments made for the Earth made for all of these things and it's not limited to the single vertical or the color of fine jewelry.

We have the opportunity within these vertical streams to be able to sell multiple products should we choose to go in that direction.

So we're pretty excited about it so and I believe the board is excited about it too as well, but to your point, we're always looking at options and considerations and it's a challenge.

And again long winded here, but I know you are a valued shareholder and you've been around a long time.

But I will tell you candidly.

At.

Okay.

Other companies out there that are not public basically to drive their business their spending.

<unk> is a millions of dollars to chase revenue. So we believe that we need to find organic ways.

Set of traditional click and.

Performance marketing tactics and kind of build awareness with that consumer.

More than a screaming way that doesn't cost so much to do every day, we can't outspend certain big leaders in this space right now because they are literally just buying the business we.

We just don't have the capital to do that at this point.

Right, which is why I would hope that the board is considering.

<unk> alternatives last thing I'll say, and then I'll get off.

Glad that you're confident but I haven't seen an insider buying over a year and the stock is now about a quarter to a third of where people are buying.

David talked about that yes, so let's talk about that so we've had a lot of things going on in the last quarters that preclude us from buying just so you know to be very candid with you. We don't have open to buys or we have quiet periods within the quarters or we had.

Cyber security situation or whether we insiders know things that are going on in the business.

Whether the Wolf speed matter there are several things that preclude us from from.

Leaning in I will tell you that we believe that we are an incredible value right now.

That's an understatement for where my personal belief is but I can't speak on behalf of all my other.

<unk>.

The directors and.

The board members, but I can tell you right now that it definitely is a value for us.

I believe that several board members did purchase within a certain period of time, but if there is no purchases, it's just because we.

We were closed out so to speak.

Okay, well whatever that means I'll I'll move on uptick correct. Thanks.

If you'd like to ask a question. Please.

Sure Ben.

At this time.

Our next question comes from Jason Anderson.

Hey.

Associate Holdings. Please go ahead.

Thanks for taking the questions on the cyber security issued the elevated spending is that.

Dan at this point in your mind or is there any likelihood to be ongoing spending.

I guess at elevated levels and related to that.

Yeah, Great question. So we believe we're in a good place with that right now we did as we kind of stated there was a $300000 spend or expense related to that and that was on several things that we.

Kind of felt the impact on we'll have some a few other expenses related to that we believe moving forward.

But we did a really really good job and I'm proud of my team.

For business continuity efforts to be able to do that and.

We didnt pay out any read some and we are business as usual now that's not to say that we werent impacted.

With a lot of folks doing a lot of things in work and a lot of hours to kind of stabilize and keep things moving but we think we have that behind US also one would also consider that there'll be some type of.

Insurance associated with that so we believe that we will be in a good place with that.

Okay, and just specifically in terms of the the made.

Brand I guess that youre, creating in terms of the roadmap.

I don't know if you have said this I didn't hear if you did what are a couple of the next steps and I think maybe to the last callers point.

What point can you tell us some of them are working have you had like how are you defining success for some of the new brand initiatives.

Just because I guess I see that is now being platform gatekeeper for some of the other brands like KBR and forever, one and all of that working so maybe just I guess, how those tied together in your mind are.

Or where they're headed.

Yes, so for right now, let's talk about kind of the value and the benefit of made and what it's doing to the organization. So wouldnt made shopping it.

It basically puts us in a place where we can have a separate destination for the consumers to shop.

That destination can do all things made that's number one number two is the streaming video and broadcast that we're doing is allowing for us to create as I said in my prepared remarks, a lot a lot of content that would be cost prohibitive. If we were just a higher independent or outside people to do video segments here and there.

Occasional segments. So it's enabled us to build hours upon hours of content with that being said, while we're building that content. It is.

Being subsidized by transactional shoppers that are shopping within those streams and onto network. So right now we're at the early innings of that so.

The early innings are very positive I mean, I can just tell you that the items that we're featuring I mean, today's consumer is a little different than prior years consumers, where they're more sophisticated today, they're looking at a QR code in their scanning the code and it goes right to be choppy and then they click and buy and purchase they will see a stream and they'll hit the QR code and Google.

Right to the product page and there'll be able to click and buy so we envision a future where we have multiple properties. Our main property Charles Nicobar Dot com and Charles and Colvard proper is really kind of the fine jewelry aspect of the business, creating incredible products that live in pillar one of made shopping.

So made shopping will feature Charles and Colbert and all of its product brands.

Not to say that in the future made shopping will bring forward other product brands and other collections and other items that we can sell under the made shopping label.

A label all streaming within the same infrastructure all utilizing the same infrastructure within the organization.

So look to us to build that out.

In the coming quarters.

And so for right now, though 100% of what you are selling through made is your own product.

Over the breadth of your different.

Brands I guess, you could say.

Let's talk that through a little bit. So the bottom line is we have multiple product categories. For example, we have more <unk> by Charles <unk> Colvard, we don't sell that on Charles <unk> Colvard Dot com, we sell those goods into our drop ship partners. So that would mean like the Macy's to <unk> the bell hubs.

Hudson Bay, the APHIS military.

Those particular customers take that product and they sell and distribute.

This made shopping now gives us the ability to allow that consumer to transact on made shopping for those particular goods that don't meet the criteria for Charles <unk> Colvard Dot Com classification for quality standard et cetera, So Charles and Colvard only does forever, one which is our critical prime.

<unk> brand of products, and Arcadia lab grown diamonds et cetera, and the higher elevated classes made shopping will enable us to bring forward different grades or classes of products.

That we can actually sell through that channel without.

Kind of diminishing the value of the products into brand of Charles <unk> Colvard.

<unk> does that makes sense and then youre right. We are only focusing on our inventory and our products. So basically right now made shopping exclusively is featuring all Charles <unk> Colvard product brands.

Okay. That's helpful. Brian.

It's another vehicle Jason for us to move more goods, and then look to us to create new product brands.

In the fine jewelry space that makes sense for us.

Shopper, that's looking for more promotional type products or.

Lower cost items that that makes sense.

Okay and in terms of the platform that you've built kind of going to all these other.

<unk> books tick tock Instagram whatever we're in the path are you in terms of how many of those youre hitting now versus where you I guess want wanted to get to.

Yes, so right now the what Youre seeing were already pushing out right now made shopping right. So made shopping dot com, where streaming that to Charles and Colvard Dot com right now so they are landing on Charles and colvard, but effectively in the next week or so you'll be able to go directly streaming to made sure.

<unk>, which would be its own property with the streaming show and cross streaming of being promoted by Charles or coal barred.

And touching their followers to as well.

Right now to answer your question, we are streaming right now Facebook.

Tictoc is to come.

As soon as we get a couple of more follow some requirements on that Linkedin, where streaming Youtube order streaming.

Across the board so.

And linked into as well. So we are streaming right now, but the way we're streaming is where streaming live six hour blocks between four PM Wednesday Thursday Friday.

To 10 P M.

Those same days look to us to kind of learn more and understand what that consumer wants and not just blanket out six hours of shopping like a regular shopping network look to us to start to cut and slice those into sharper both segments.

Fly submit to our segments 15 minute segments and all the way down to three minute segments, just on educational pieces for each individual items that they click an item on our website will be able to have our hoster storytellers.

Translate that item into meaningful.

<unk>.

Content that they can actually understand and relate to and want to click and buy.

So what we're seeing today is just a phase one where we're trying to understand it we're trying to alert. It we're trying to build more video content. We are streaming now to all of these places right now and we're seeing the traffic we're seeing the awareness now again just because.

Were streaming today doesn't mean that consumer doesn't come back to days and watch those segments. So we are seeing residual effects and residual opportunities to capture we target those customers when they come back after their streams.

Look to us to continue to expand to learn and kind of fine tune what that looks like for the future.

Okay, and the moist Tonight outlet.

Brian are you is that part of the made but are you planning to push that through the <unk> platform as well or is that kind of a separate.

Brand platform at this point.

At this point why site outlet runs pretty much.

On its own and we have a normal disposition cadence of inventory and legacy inventory as it pushes down the funnel. It goes into moist tonight outlet, where its at its end of life. So to speak and it's working nicely. It's not breaking any records. It's the business is always up and it's growing.

That's because people are looking for that low cost item, they're looking for the bargain theyre looking for discounts.

Our answer to the competitive Chinese Moyse night.

Not to stay that made shopping can't take the entire.

Disposition goods and have segments and featured segments unmade shopping we just need to know.

Do we reward that persona or those personas shopping on very choppy. So those are some things that were were answering but for right now its independent on its own.

Okay, and just kind of following up on that aspect of persona. So in terms of the brand person on that of Charles <unk> Colvard.

I guess dot com itself Cavia itself forever, one itself have any of those changed over the last year.

Year or so either based on the market.

<unk> consumer weakening or anything like that or based.

Based on obviously feedback trends you've seen that have.

Either not translated into things are.

Yes.

The brand person on this changed at all with Charlton Colbert.

I will tell you that the brand persona Charles <unk> Colvard is actually elevated so it's starting to go up by design upmarket, we're bringing more higher end goods.

The fact that lab grown diamond pricing has come down so much it gives us the ability and my incredible product team and design teams coming forward with beautiful designs. The couture stuff is.

Stop, but the couture designs and product is performing quite well because it's affordable now like people couldn't afford these particular items or $30 $40. So now you can afford a four carrier lab grown diamonds for.

Under 12.

Have you tried to buy forward cared natural mine Diamond. It's 40 50 60000, so it gives us the opportunity to go upmarket and elevate the brand and elevate Charles <unk> Colvard.

Not to say that we're still not targeting the millennials, but certainly the millennials are choosing and they're opting for bigger stones.

Are you going to get the value, but the quality of Charles <unk> Colvard remains intact and we at one point in time thought about doing more promotional cadence of a higher discount and things like that given the market, but we found that it really started to suck out our average order value or <unk>.

In a way that we did not like what was happening so we shifted back to making sure that it remains the Charles <unk> Colvard proper, we're bringing forward the highest quality that also brings price quality and value into consideration.

But made shopping is going to have a kind of a story and its own and it's going to have a persona and its own it's going to look for Likeminded people that are looking for all things made I mean, it's got to it's got a great.

Trajectory as far as where we can go with it we believe.

Okay, Great I appreciate all the commentary in basketball.

I always appreciate your comments, thank you and your questions take care.

Hi, Sara this is Adam Bowen Steiner from Lytham partners I have a few follow up questions.

Hey, John Quinn, given the reach towards lab grown diamonds, where does this leave moyes unite what can be done to elevate moyes unite in comparison.

Yeah, Hey, Adam how are you doing.

Look first of all we're going to continue to grow lab grown diamonds, we're going to continue to start to capitalize on that we had some limitations because we have a lot of inventory. That's invoice night. So we had to focus on the moist and I know is always top of mind that was where we needed to go. So we tried to do our best not to cannibalize certain styles in carat weights within.

Kind of the moist night business, but but now we have to do.

What we need to to kind of reach that consumer and answer what theyre looking for so with that being said several things are happening, we're expanding all of our Assortments and lab grown diamonds were bringing forward larger carat weights, which were reluctant to do in the past then we took.

Pretty much up bottoms up a top down approach to analyzing all of our moist tonight.

<unk> material that we have in the building the voice in a material that we have in jewelry and kind of saying, okay, where do we need to be to position us that creates that value proposition for that consumer and still.

Maintain the.

Incredible.

No.

Kind of value of moist night in the marketplace and the consumers' journey to buy a piece of jewelry. We believe we've got the answer to that and we believe we're going to come forward with that here shortly I am not going to discuss on this call, but we believe we've got something that brings a little bit more value towards tonight than anyone else in the industry. We know we bring the best the best.

Products to market and moist Tonight. We also know that moist nights still represent the bulk of our business because all of our other channels focused on voice and elevate.

Elevate the moist and.

And promote moist tonight so.

We're going to expand lab grown diamonds in those other channels and we have already begun to do so so there's growth there and we're looking forward to that growth we were a little bit reluctant to do that before but we are now moving in that direction, but with the moist and I'd look to us to come forward here shortly with some significant <unk>.

Meaningful things.

That is going to enable us to tell that consumer wide Charles <unk> Colvard is in fact, the best place in the destination for all of their gemstones are responsible gemstones.

And it's really important because we believe that a lot of people are commercializing voice night. When they showed a lot of people are saying that they have.

The best in class or similar to Charles a cohort when in fact, they don't so with our whole video capability everything moving forward, we're going to be able to tell the story in a real time way that's meaningful that's important to that consumer that we can show in.

Basically I don't want to say that you know people are fraudulent or making false claims or anything like that I mean, we are a publicly traded company. If we say, we're bringing D E F color <unk> color.

They're folks are printing, making claims and we know that's not the fact, so we don't mind being on a playing field, where we're all even and we're all saying, what we're saying and it's factual, but it's not fair to somebody making claims that are false claims.

We need to kind of call them out so look to us to do that and to answer that looked to US also to look at the pricing and maybe coming forward with some other categories that we haven't in the past.

Where we weren't forever, one and all things forever, one so look to us to come forward with other meaningful product brands that we believe in the moist snuff category.

We'll kind.

Kind of changing things up for us a little bit.

So I wanted to ask about repeat customers.

Are you seeing there with these types of customers are they coming back and can you add any color there.

Yes so.

It's always really been a very very important topic in all of our state of the Union all of our meetings.

The bridal business I mean, we've talked about at the bridal business has been a little bit soft I mean, we're starting to see some light back coming into the bridal business in the bridal category, but we were impacted by four folks looking for affordable moist tonight, and so forth but.

I just believe that we're in the right place.

Yeah, one more housekeeping on the stock is below I'm, sorry, sorry, I had to take.

Take a drink bear real quick there.

Okay with the stock a little dollar no. Let me just let me just kind of answer the question. So we've been running about 17% to 19% on a repeat customers. We're now at about 23%, which.

We're pretty excited about that we're doing more re targeting campaigns we've initiated some.

Some new partnerships as of late between SMS III targeting.

More aggressive with subscribers. So that we can kind of reach out to those consumers and tell them. All these great things that we've got going and really my production team and product team have really done a really good job of bringing more fashion forward items.

Gifting items and things.

That will continue to do more to get more repeat customers.

Long time value is really important in all of our conversations and kind of building that customer base. So.

That's really critical to kind of the next steps for success for us.

The one more with the stock below one dollar what's your status with NASDAQ can you get us updated on that and if you have any plans to deal with.

Compliance.

Yes. So look our plan is to continue the path forward to continue to build this business bring incredible results. So organically goes up on its own.

We certainly have to.

Do we need to do I believe the date is December 11th for us to be in compliance.

And then after that.

Like we've done in the past.

We would file for an extension, which would get us an additional six months.

So we're doing all the things we need to do necessary to kind of drive value.

And we believe we are undervalued right now we shouldn't be trading at this price but.

Who am I to say that I mean, we will just continue the path forward. We know it's been a difficult time, Adam we know that.

It's not exclusive to us.

But everybody needs to understand.

Kind of what motivates them to buy and invest in a company and we certainly believe we have.

All the ingredients to kind of the future of a successful company and we're going to continue moving forward and we're going to strive to be in compliance hereby December 11th and kind of speak to the investor community and tell them why we're making the right moves and we're pivoting the company and we are changing and we will certainly maintain every effort.

To be in compliance along the way.

This concludes our question and answer session I.

I would like to turn the conference back over to Don O'connell, President and Chief Executive Officer for any closing remarks.

So thank you for your attention and continued belief in our company.

We look forward to sharing our progress and achievements with you in the future I appreciate everyone's time today. Thank you.

<unk> is now concluded. Thank you for attending today's presentation you may now disconnect.