Nasdaq: CTHR 1 CHARLES & COLVARD Q2 Fiscal 2021 Earnings Conference Call Presentation Forward Looking Statements This presentation contains 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. Statements expressing expectations regarding our future and projections relating to our products, sales, revenues, and earnings are typical of such statements and are made under the Private Securities ...

Financial Data and Key Metrics Changes - The company reported record-breaking results for Q2 2021, achieving $12.1 million in revenue, a 14% increase year-over-year, and a net income of $2.5 million, representing a 200% increase in earnings per diluted share to $0.09 [4][5][10] - For the six months ended December 31, 2020, net income increased by 232% and earnings per diluted share rose by 300% compared to the same period last year [5] - Total cash increased to $16.9 million, a 26% rise from the previous year [5][11] Business Line Data and Key Metrics Changes - Online Channels segment net sales reached $7.6 million, a 25% increase, accounting for 62% of total net sales [6][7] - The company's transactional website, charlesandcolvard.com, saw a 16% increase in net sales, while the Traditional segment remained flat at $4.6 million, representing 38% of total sales [8] - Finished jewelry net sales increased by 28%, driven by strong demand, while loose jewel net sales decreased by 8% due to lower international demand [9][10] Market Data and Key Metrics Changes - International net sales decreased by 25% due to limited orders from Asian distributors and lower cross-border trade sales [9] - The company maintained a strong gross margin of 49%, up from 48% in the previous year [10] Company Strategy and Development Direction - The company is focused on becoming more data-driven, enhancing operational efficiencies, and improving customer experience, which contributed to the positive financial results [14] - The launch of the Caydia lab-grown diamond brand is aimed at capturing a broader customer base and educating consumers about lab-grown options, which is expected to elevate awareness and sales of the Forever One moissanite brand [20][22] - The company plans to continue expanding its product distribution and engaging customers through innovative digital marketing strategies [22] Management's Comments on Operating Environment and Future Outlook - Management noted that the pandemic has impacted international sales but expressed optimism about the growth in online sales and traditional retail channels [36] - The company is committed to maintaining a balance between top-line growth and profitability while exploring opportunities for further brand awareness and market share expansion [42][44] Other Important Information - The company has not yet filed for forgiveness of its PPP loan but expects to do so by April 1, 2021 [55] - Inventory levels were strategically managed, with a total of $28.7 million, reflecting a 6% decrease from the previous year [12][15] Q&A Session Summary Question: Performance of Caydia since launch - Management indicated that Caydia has been additive to the business and has helped raise awareness for the Forever One moissanite brand, although specific metrics were not disclosed [24] Question: Plans for Caydia distribution - Management is open to exploring distribution through traditional channels but currently keeps Caydia proprietary to its website to better understand consumer preferences [28] Question: Performance marketing return on ad spend - The company has shifted its marketing strategy to focus on conversion-based campaigns, resulting in improved efficiency and customer acquisition costs [31] Question: Impact of COVID-19 on growth - Management noted that while online sales have benefited from increased home shopping, traditional retail remained stable, and international sales faced challenges [36] Question: Feedback on PPP loan - The company has not filed for forgiveness yet and plans to do so in the upcoming quarter [55] Question: Growth comparison between lab-grown diamonds and moissanite - Management reported steady growth in both categories but did not disclose specific figures [57]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock, no par value per share CTHR The Nasdaq Stock Market LLC FORM 10-Q (Mark One) ☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended December 31, 2020 OR ☐ Transition report pursuant to Section 13 of 15(d) of the Securities Exchange Act of 1934 For the transition period from _____ ...

1 Conference Call Presentation Nasdaq: CTHR Q1 Fiscal 2021 Earnings Forward Looking Statements This presentation contains 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. Statements expressing expectations regarding our future and projections relating to our products, sales, revenues, and earnings are typical of such statements and are made under the Private Securities Litigation Reform ...

Financial Performance - Net sales for the three months ended September 30, 2020, were $7,926,293, an increase from $7,608,421 in the same period of 2019, representing a growth of approximately 4.2%[133] - Cost of goods sold increased to $4,196,055 from $3,876,624, reflecting a rise of about 8.2% year-over-year[133] - Total costs and expenses decreased to $7,052,023 from $7,455,716, a reduction of approximately 5.4%[133] - Income from operations significantly improved to $874,270 compared to $152,705 in the prior year, marking an increase of approximately 473%[133] - Net income for the quarter was $874,266, up from $207,319 in the same quarter of 2019, indicating a growth of approximately 321%[133] Sales and Revenue Breakdown - Consolidated net sales for the three months ended September 30, 2020, were $7.93 million, an increase of approximately $318,000, or 4%, compared to $7.61 million for the same period in 2019[135] - Sales of finished jewelry increased to $4.34 million, representing 55% of total consolidated net sales, a 12% increase from $3.86 million in the prior year[136] - Sales of loose jewels decreased to $3.59 million, accounting for 45% of total consolidated net sales, a decline of approximately $159,000, or 4%[137] - U.S. net sales increased to $7.50 million, or 11%, for the three months ended September 30, 2020, compared to $6.76 million in the same quarter of 2019[138] - International net sales accounted for approximately 5% of total consolidated net sales, decreasing to $427,000, or 49%, compared to $845,000 in the prior year[141] Cost Management - Sales and marketing expenses decreased to $1.65 million, a reduction of approximately $582,000, or 26%, compared to $2.23 million in the prior year[148] - General and administrative expenses were $1.21 million, a decrease of approximately $141,000, or 10%, compared to $1.35 million for the same period in 2019[152] - The company has implemented cost-saving initiatives that have helped offset the impacts of the pandemic on financial results[125] Strategic Initiatives - The company plans to expand its brand globally and increase business size through disciplined top-line growth, particularly focusing on lab-created gemstones[128] - The introduction of the Caydia™ lab-grown diamond product line in September 2020 is expected to appeal to emerging generations and enhance brand recognition[128] - The strategic focus for Fiscal 2021 includes elevating the Charles & Colvard brand to be synonymous with quality, value, and price[128] Operational Challenges - The ongoing COVID-19 pandemic continues to present challenges, impacting operational performance and financial results, with uncertainty regarding future developments[125] - The company plans to maintain reduced advertising and digital marketing expenditures for the foreseeable future due to the impact of the COVID-19 pandemic[171] Cash Flow and Working Capital - As of September 30, 2020, the company had cash, cash equivalents, and restricted cash totaling $13.86 million, a decrease from $14.62 million as of June 30, 2020[174] - Working capital increased by approximately $3.2 million to $20.63 million as of September 30, 2020, compared to $17.42 million at June 30, 2020[176] - During the three months ended September 30, 2020, approximately $642,000 of cash was used by operations, primarily due to a decrease in accounts payable of $1.17 million and an increase in accounts receivable of $1.08 million[177] Inventory and Production - As of September 30, 2020, the company had approximately $20.75 million of inventories classified as long-term assets[180] - The company manufactured approximately $2.21 million in finished jewelry and $1.68 million in loose jewels during the three months ended September 30, 2020[179] Debt and Financing - The company received a Paycheck Protection Program Loan in the principal amount of $965,000 on June 18, 2020, with a fixed interest rate of 1% per annum[164] - The White Oak Credit Facility, established on July 13, 2018, provides $5.00 million for general corporate and working capital purposes, maturing on July 13, 2021[185] - As of September 30, 2020, the company had not borrowed against the White Oak Credit Facility due to a diminished borrowing base tied to accounts receivable[187] - The company believes that existing cash, access to working capital resources, and federal relief programs will be sufficient to meet working capital and capital expenditure needs over the next twelve months[188] - Future capital requirements will depend on factors such as the impact of COVID-19 on sales growth and the timing of raw materials and labor purchases for production[189] - The company may seek additional equity or debt financing for investments in or acquisitions of complementary businesses[189]

Financial Data and Key Metrics Changes - For Q4 2020, net sales totaled $4.4 million, a decrease of 42% compared to the previous year, primarily due to COVID-19 disruptions [19] - Gross margin for Q4 2020 was 41%, down from 44% in the same quarter last year [22] - The company reported a net loss of approximately $1 million or negative $0.04 per diluted share, compared to net income of approximately $160,000 or $0.01 per diluted share in the prior year [25] - Total operating expenses decreased by 11% in Q4 2020 [23] Business Line Data and Key Metrics Changes - In the online channel segment, net sales were $3 million, a decrease of 18%, representing 68% of total net sales [19] - The traditional segment, which includes wholesale and retail customers, saw net sales of $1.4 million, a decrease of 64%, representing 32% of total net sales [20] - Finished jewelry net sales decreased by 20% for the quarter, while loose jewel net sales decreased by 63% [20] Market Data and Key Metrics Changes - International sales decreased by 86%, with a 48% decrease in cross-border sales on the transactional website due to global closures [21] - The online channel segment's net sales for the fiscal year 2020 increased by 2% to $16.6 million, representing 57% of total net sales, up from 51% in fiscal 2019 [26] Company Strategy and Development Direction - The company aims to expand its digital presence and increase customer engagement through virtual consultations and social media strategies [34][35] - Plans include developing new direct-to-consumer websites and focusing on innovative product brands to diversify offerings [36] - The company intends to engage in strategic partnerships and acquisitions to create sustainable long-term value for shareholders [37] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of COVID-19 on revenue performance but noted a positive shift in e-commerce demand in June [10] - The company is confident in its financial strength and ability to navigate the current environment for growth and profitability [31] - Management emphasized the importance of maintaining a strong cash position while exploring strategic opportunities [53] Other Important Information - The company ended the quarter with $14.6 million in cash, up from $11.9 million in March 2020 [12] - A $965,000 PPP loan was secured to help absorb the impact of COVID-19 on cash position related to salaries and expenses [13] Q&A Session Summary Question: Trends in Average Order Values (AOBs) - AOBs are holding strong, hovering between $1,000 to $1,200, primarily driven by product mix [39] Question: Customer Acquisition Costs (CACs) - Average ad spend per customer decreased to approximately $135 due to a shift in advertising strategy [40][41] Question: G&A Expenses Projections - G&A expenses for Q4 were approximately $730,000, with expectations to model between $700,000 to $900,000 moving forward [45] Question: Trends in July and August - Management could not provide specific data for July and August but noted positive trends in e-commerce [48] Question: Cash Utilization Plans - The company is pleased with its cash position and will consider strategic opportunities for deployment while stabilizing the business [53] Question: Sales in Asia - International sales have suffered due to global shutdowns, but there are signs of recovery in e-commerce [62] Question: Celebrity Endorsements - The company is considering celebrity endorsements as part of its marketing strategy moving forward [65]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended June 30, 2020 OR ☐ Transition report pursuant to Section 13 of 15(d) of the Securities Exchange Act of 1934 For the transition period from_________ to__________ Commission File Number: 000-23329 Charles & Colvard, Ltd. (Exact name of registrant as specified in its charter) North Carolina 56-1928817 (State ...

Nasdaq: CTHR Nasdaq: CTHR 1 CHARLES & COLVARD® Q4 & Full Year Fiscal 2020 Earnings Conference Call Presentation Forward Looking Statements This presentation contains 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. Statements expressing expectations regarding our future and projections relating to our products, sales, revenues, and earnings are typical of such statements and are made un ...

Financial Performance - Q3 FY2020 - Net sales decreased by 18% to $65 million compared to $79 million in the same quarter last year[7] - Online channels segment net sales decreased by 12% to $40 million[7] - Traditional segment net sales decreased by 24% to $30 million[7] - Net loss was $62 million, or $021 per diluted share, compared to net income of $08 million, or $004 per diluted share, in the prior year quarter[10] - Gross margin was -41%, impacted by a $53 million write-off of legacy material inventory[13, 14] Balance Sheet - Total cash decreased to $119 million as of March 31, 2020, compared to $130 million as of June 30, 2019[17] - Inventory decreased to $317 million as of March 31, 2020, compared to $337 million as of June 30, 2019[17] - Shareholders' equity decreased to $422 million as of March 31, 2020, compared to $462 million as of June 30, 2019[17] COVID-19 Response - The company furloughed approximately 50% of employees, primarily in operations and manufacturing[3] - Temporary salary reductions were implemented for all employees, including 25% for the CEO and 15% for the CFO & COO[3]

Financial Data and Key Metrics Changes - In Q3 2020, net sales decreased 18% to $6.5 million compared to the year-ago quarter [19] - The company reported a net loss of approximately $6.2 million or negative $0.21 per diluted share, compared to net income of approximately $814,000 or $0.04 per diluted share in the year-ago quarter [25] - Gross margin for Q3 2020 was a negative 41% compared to 47% in the year-ago quarter, primarily due to a $5.3 million inventory write-off [27] Business Line Data and Key Metrics Changes - Online channel net sales decreased 8% to $3.8 million, representing 59% of total net sales, while the traditional segment saw a 29% decrease to $2.7 million, representing 41% of total net sales [20][22] - Finished jewelry net sales decreased 12%, and loose jewel net sales decreased 24% for the quarter [23] - International sales decreased 63% versus the year-ago quarter, reflecting significantly lower orders from agents and distributors [24] Market Data and Key Metrics Changes - The COVID-19 pandemic adversely affected the overall economy and consumer buying behaviors, particularly impacting supply chains and sales channels [13] - The Asia-Pacific region experienced early impacts from the pandemic, affecting international distributor sales [15] - Domestic brick-and-mortar retailers began closing stores in March, leading to reduced operations for many distributors [15] Company Strategy and Development Direction - The company aims to maintain operational and financial stability while focusing on long-term growth strategies [35] - Key attributes include a strong e-commerce presence, an agile supply chain, and a focus on direct-to-consumer sales [36][41] - The company plans to leverage its digital marketing capabilities and adapt to changing consumer behaviors post-COVID-19 [44] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism about early signs of improvement in online sales and traffic patterns [54] - The recovery of retail sales is expected to lag behind essential purchases, with a focus on rebuilding consumer confidence [56] - The company is prepared for a phased approach to ramping up operations and managing cash burn [48] Other Important Information - The company has applied for an SBA loan under the Payroll Protection Program to support salaries and other expenses [30] - Inventory as of March 31, 2020, totaled $31.7 million, down from $35.8 million at the end of the previous quarter [32] - The company is actively renegotiating contracts with vendors to align supply with current demand [33] Q&A Session Summary Question: What were your sales trends during the quarter leading up to COVID? - The company experienced strong sales leading up to Valentine's Day but saw a significant decline in traffic and sales starting in mid-March due to the pandemic [52][53] Question: Can you clarify the improvement in the online channel? - Online traffic improved compared to the initial downturn in March, but it remains below last year's performance [60] Question: What percentage of your retail customers are currently open? - Retail partners are opening on a phased basis, with varying degrees of operations depending on local regulations [69] Question: Can you provide an update on purchasing minimums with suppliers? - The company is working with suppliers to adjust commitments based on current demand and is focused on flexibility [75] Question: What opportunities exist in the current environment? - The management team is exploring potential acquisitions and strategic moves to augment the business during this challenging time [82]