Charles & Colvard reports weaker sales of gems

Charles & Colvard reported another weak quarter, as sales of its lab-made moissanite gems continue to suffer during the economic downturn.

The Morrisville company's sales for the three months ended Sept. 30 were $2.1 million, down 48 percent.

The third-quarter net loss was $501,458, an improvement from the loss of $3.1 million a year earlier. Charles & Colvard has been cutting costs and jobs in the past year to offset slower sales of its gems used in fine jewelry.

The company now employs 25 people. That includes its new CEO, Randy McCullough, 56, who took the top spot this week.

"In my 36 years in the jewelry industry, I can't remember being more excited about the potential for a product," he told investors on a conference call. "We believe our jewel has great potential as we reposition its future."

Company executives said they're focused on promoting moissanite gems to women as an affordable luxury compared with diamonds.

Charles & Colvard's stock rose 1 cent today to close at 70 cents. The company has until Dec. 2 to get its stock above $1 or it faces being delisted from the Nasdaq.

"We're pursuing every opportunity to try to prevent this from happening, but there's no guarantee we'll be able to accomplish that," chief financial officer Tim Krist told investors.

The stock traded as high as $25 in late 2005.

In a filing with the Securities and Exchange Commission, Charles & Colvard also disclosed it will pay McCullough a base salary of $325,000 plus options to buy 189,252 shares at 58 cents each.

He also stands to earn a bonus of up to 75 percent of his salary. The company also will provide up to $20,000 for moving expenses if he relocates by May, plus lodging and travel expenses for the next six months.