RESEARCH TRIANGLE PARK, N.C. - Charles & Colvard, Ltd. (NASDAQ:CTHR), a company known for its lab-grown gemstones and fine jewelry, announced today that it has deemed the director nominations by Riverstyx Capital Management, LLC's principal, Ben Franklin, as invalid. The nominations were intended for the upcoming Annual Meeting of the company's shareholders.
On August 27, Charles & Colvard received a notice from Franklin indicating his intention to nominate three candidates to the company's Board of Directors. However, the notice reportedly failed to meet the requirements set out in the company's 2011 Amended and Restated Bylaws. The company highlighted that the notice lacked essential information such as candidate biographies, work histories, ownership stakes, and their consent to serve as directors.
After a thorough review and consultation with advisors, the Board concluded that the notice is invalid due to these deficiencies. Charles & Colvard has informed Franklin that it will not recognize his nominations and any votes cast for his candidates will be disregarded.
The Board has expressed its willingness to engage with Franklin directly to discuss his views on the company's business and strategy. The company will make a recommendation to its shareholders regarding the director elections in due course and has advised shareholders that no action is required at this time.
Charles & Colvard was founded in 1995 and is headquartered in North Carolina. The company is known for its ethical approach to jewelry, promoting lab-grown moissanite and diamonds, and utilizing recycled precious metals.
The information in this article is based on a press release statement.
In other recent news, Charles & Colvard Ltd. reported a significant annual sales drop of 25% for the fiscal year ended June 30, 2024, with its net sales falling to $22.5 million from $29.9 million in the previous year. The company also anticipates a substantial net loss for the year, a divergence from the previous year's $19.6 million net loss. These figures are preliminary and unaudited, subject to adjustments upon the completion of the audit.
In response to market pressures, the company's top executives and directors agreed to substantial pay cuts, including a 10% reduction in base salaries for President and CEO, Don O'Connell, and CFO, Clint J. Pete. The Board of Directors also approved a 100% reduction in their fees.
Recently, Charles & Colvard Ltd. also reported a 21% decrease in its third-quarter revenue with net sales amounting to $5.3 million. However, the company's net loss improved to $3.6 million from the previous year's $8.4 million loss.
The company announced a reverse stock split of its common stock at a one-for-ten ratio, reducing the number of outstanding shares from approximately 30.3 million to about 3 million. Lastly, Charles & Colvard has regained compliance with Nasdaq's minimum bid price requirement for continued listing and launched a new gem brand, For Everbright, as part of its strategic initiatives.
InvestingPro Insights
As Charles & Colvard navigates this challenge with director nominations, it's crucial to consider the company's financial position and market performance. According to InvestingPro data, Charles & Colvard's market capitalization stands at a modest $5.07 million, reflecting its current struggles in the jewelry market.
InvestingPro Tips reveal that the company holds more cash than debt on its balance sheet, which could provide some financial flexibility during this period of corporate governance uncertainty. However, the company is also quickly burning through cash, which may be a concern for potential investors and could impact future strategic decisions.
The company's stock price has taken a significant hit, with a one-year price total return of -69.66% as of the most recent data. This decline aligns with another InvestingPro Tip indicating that the stock price has performed poorly over the last decade, suggesting long-term challenges for the company.
Despite these headwinds, analysts anticipate sales growth in the current year, which could provide a glimmer of hope for the company's future performance. Additionally, Charles & Colvard is trading at a low Price / Book multiple of 0.16, potentially indicating that the stock might be undervalued relative to its assets.
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for Charles & Colvard, providing a deeper understanding of the company's financial health and market position during this critical period.
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