Suzanne Miglucci – President and Chief Executive Officer Clint Pete – Chief Financial Officer.

Rodney Baber – Paulsen Investment Company.

Good day and welcome to the Charles & Colvard First Quarter 2018 Earnings Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions.

[Operator Instructions] This earnings call may contain forward-looking statements as defined in Section 27A of the Securities Act of 1933 as amended, including statements regarding, among other things, the Company’s business strategy and growth strategy.

Expressions which identify forward-looking statements speak only as of the date the statement is made. These 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 or underlying the forward-looking statements. In light of these risks and uncertainties, there can be no assurance that the forward-looking information will prove to be accurate.

This earnings call does not constitute an offer to purchase any securities nor a solicitation of a proxy, consent, authorization or agent designation with respect to the meeting of the Company’s shareholders. Please note, this event is being recorded.

I would now like to turn the conference over to Suzanne Miglucci, President and Chief Executive Officer. Please go ahead..

Thank you, Brian. Good afternoon and thank you for joining us as we summarize Charles & Colvard’s first quarter 2018 results. We introduced new format to our earnings call in Q4 with the intention of providing you a more comprehensive visual presentation of our quarterly report.

It’s been there with enthusiasm, so we’ve decided to continue this format going forward. Accompanying today’s call is a supporting PowerPoint slide deck, which we will refer to you during our formal remarks. This presentation file is available in the Investor Relations section of our website at ir.charlesandcolvard.com/events.

Let’s turn to our review I’ll begin on Slide 3. We’ll divide today’s call into three sections. I’ll discuss our execution highlights in Q1 2018. Our CFO, Clint Pete will discuss the numbers. And then I’ll wrap up with an update on our strategic initiatives. Let’s turn to Slide 4.

Our 20% net sales growth in Q1 was driven in large part by the continued growth in our direct to consumer online channels segment. Online channels grew 40% over the year ago quarter bolstered by the continued digital marketing efforts that are expanding our awareness with the consumer.

We’re reaching the consumer through a mix of digital marketing, channel expansion and co-promotional partnership since we believe it’s important that we engage the consumer where they socialize and shop. In Q1, we began a concerted effort to partner with organizations that are already engaged with our target market.

For example, we launched a program for current and former military service men and women providing a special promotions and discount on for everyone moissanite jewelry purchased from Charles & Colvard’s website. This partnership provides us access to over 30 million active and retired military personnel.

We went live on Zulily a membership base daily sales website. We recently hosted a successful inaugural event on their platform promoting our popular stackable rings. Based on the promotions positive traction we’ve been invited to participate in a second event.

We also introduced a curated assortment of jewelry, including rings, necklaces, earrings and bracelets, in support of She Should Run, a non-partisan organization whose mission is to expand the talent pool of women running for office; Similar co-promotional relationships were launched with Flont, a fine jewelry rental service for luxury brand and that it an online creditor.

We also continue to grow our presence on marketplaces. In Q1, we went live on Wish, a marketplace that helps us reach the younger Gen Z audience and creates opportunities to sell our legacy inventory. We’re also fostering deeper relationships with existing marketplace partners that are high performing.

And the first quarter of 2018, we achieved more than 100% net sales growth in marketplaces compared to the year ago quarter. A significant part of this growth came through Amazon which is quickly become our number one marketplace. Q1 2018 was our first full quarter as the Seller Fulfilled Prime vendor on Amazon.

With the Seller Fulfilled Prime badge, we ship directly from our global distribution center enabling us to feature any of our inventory to the Amazon prime audience. Our transactional website charlesandcolvard.com also continues to see steady growth with 53% growth in net sales over the same quarter last year.

These increases in online sales a result of targeted digital marketing efforts that continue to grow our direct relationship with the consumer. Since the Charles & Colvard re-launch in October of 2016, we’ve grown our social media following by 750%, including a 776% increase in views on our YouTube channel.

In Q1, our public relations and digital marketing efforts drove significant traffic to our Valentine’s and St. Patrick’s Day sales and garnered a unique opportunity for exposure on the Megyn Kelly TODAY show where our product was featured and gifted to studio audience members.

The subsequent traffic to our website from these promotions contributed to our Q1 online channel success. This growing awareness for moissanite is creating a halo effect for Charles & Colvard.

On Slide 5, you can see exurbs from online media attention receiving Q1 with articles across Reddit, Huffington Post, Harper’s Bazaar and Pinterest that feature the beauty, value and ethical sourcing of moissanite.

Pinterest recently issued its annual trend report and they noted moissanite as one of the top ten wedding trends for 2018 based on a 294% increase in searches for moissanite engagement rings on their site. All of this buzz in Q1 boosted organic traffic and increased social media traffic to our website.

Our social media presence has increased traffic to our site by 305% in Q1 2018 versus last year. And our sales conversions from that traffic have increased by 46%. We continue to optimize the customer journey to make it easy to shop by charlesandcolvard.com. In Q1 we deployed new technology to automate returns processes.

We also implemented and interactive voice response system or IVR to automate inbound phone inquiries. These efforts to enhance the customer experience when engaging with Charles & Colvard can be directly tied to our growth. Our traditional segment, which had a 7% increase in net sales over Q1 2017.

This growth is not a surprise as most traditional jewelry retailers experienced a slow quarter, sales to domestic distributors were lower than in the year ago quarter. But this was positively offset by our growing relationship with Helzberg Diamonds stores. We’re now in nearly all of their flagship stores.

In summary, we grew net sales by 20% while keeping our expense base and our cash on hand relatively flat to the year ago quarter. With me today is Clint Pete, our Chief Financial Officer. Clint will dig deeper into the financials, then I’ll return to close out our discussions with thoughts on the coming quarters.

Clint?.

Thank you, Suzanne. Good afternoon everyone. And thank you for joining us today. Please turn to Slide 7, as we first review our Q1 results. Net sales for the first quarter of 2018 increased 20% versus the year ago quarter. Here is the breakdown.

In the company’s Online Channels segment which consists of e-commerce outlets including charlesandcolvard.com, marketplaces, drop ship and other pure play exclusively e-commerce customers, net sales for the quarter increased 40% to $3 million or 45% of total net sales for the quarter compared with $2.2 million or 38% of total net sales in the year ago first quarter.

In the company’s Traditional segment which consists of wholesale, retail and television customers, net sales for the quarter increased 7% to $3.8 million or 55% of total net sales compared with $3.5 million or 62% of total net sales in the year ago first quarter.

On a product line basis, finished jewelry net sales increased 83% to $3.3 million for the quarter. This increase continues to result from our direct to consumer expansion. And our strategy to drive finished jewelry sales across multiple geographies and channels including Helzberg retail stores, which had very positive sales trends.

The company’s net sales of loose jewels decreased 10% to $3.5 million in Q1, primarily due to lower demand and or distributor channels. Moving on to Slide 8. While our gross margin has strengthened and stabilized over the past several quarters during 2017. In the first quarter 2018, our gross margin was 39%, compared to 43% in the first quarter 2017.

This decline was mainly due to the intentional impact of higher levels of finished jewelry sales from our legacy inventory gemstones. We made a focused effort to move these older gemstones and jewelry pieces out to promotions and we’re pleased with the positive margins were able to generate even at lower rates and for everyone jewelry sales.

And in upcoming slide, I will address the corresponding reduction in our legacy inventory, which is a positive trend. On Slide 9, at the top of the bar, we show operating expenses as a percentage of net sales, which continues to show improvement from a level of 53% in the year ago quarter to 48% in Q1 2018.

While expenses increase slightly in Q1 versus Q4 2017. The trend line of our expenses as a percentage of net sales continues to reflect the scalability that we have built into our business by controlling costs while growing the top line. The dollar level of operating expenses for each quarter is presented inside the bar.

Operating expenses for the first quarter 2018 were $3.2 million up from the $3 million in the year ago quarter.

Sales and marketing expenses in Q1 were $1.9 million, essentially flat compared with the first quarter of 2017, which included approximate $245,000 and a one time severance expense related to the departure of our former Chief Revenue Officer.

This decrease in severance expense was offset impart by an increase in salaries and related benefits, as well as digital marketing investment aligned with the ongoing strategic expansion of sale to marketing initiatives. G&A expenses in Q1 were $1.4 million an increase of $300,000 compared with a year ago quarter.

This increase was primarily due to higher salaries and related benefits which included certain non-cash items such as restricted stock expense related to the annual equity awards.

On Slide 10, we reported a net loss for the first quarter of approximately $578,000 or $0.03 per share compared with a net loss of $560,000 or $0.03 per share in the year ago quarter.

As we describe Q1 2018 was impacted by a combination of lower gross margin dollars from selling legacy gemstones and jewelry slower sales to the distributor channels and increased G&A expenses. Slide 11 presents the balance sheet snapshot.

We ended the first quarter of 2018 with $4.5 million of cash and cash equivalents compared to $4.6 million at the end of 2017. The company anticipates continuing to invest a portion of this cash in marketing, branding and awareness initiatives during the upcoming quarters.

The company has no long-term debt and has not utilized our $10 million credit facility. Inventory at the end of the first quarter of 2018 was approximately $31 million essentially flat with the inventory at the end of 2017. At the end of Q1 loose jewels inventory increased to $22.9 million from $22.1 million at year end 2017.

Finished jewelry inventory decreased to $8 million compared to $9.8 million at the end of 2017. This trend shows the success in selling finished jewelry with both our current higher margin for Forever One gemstones and our legacy lower margin gemstones. On Slide 12, we provided detail regarding the classification of our new versus legacy materials.

At the end of the first quarter of 2018 68% of our inventory was classified as a new inventory. This leased us 32% of our inventory classified is legacy inventory at the end of the first quarter.

Based on the carrying value of our inventory this change in legacy inventory represents an 11% reduction from the amount of the inventory classified as legacy inventory at year end 2017 and a 30% reduction from the amount of inventory classified as legacy inventory at year end 2016.

Before closing, I’d like to highlight a few financial reporting matters for your information. As of January 1, 2018 we adopted the new ASC 606 revenue recognition accounting standards issued by the Financial Accounting Standards Board.

Based on our analysis we determined that our prior revenue recognition accounting policy was consistent with the requirements of the new guidance. Therefore except for required disclosures that mediums of our financial statements, we’ll see adoption of the new accounting standards did not have a material effect on our financial statements.

I’d also like to remind our shareholders that in January of this year our Board of Directors approved a change in the company’s calendar year end reporting cycle from December 31 to fiscal year ending June 30.

Following the filing this week of our results for the first quarter of fiscal 2018 ended March 31, we plan to file a transition year end report with fiscal results for the six month period ending June 30, 2018. This filing and our related earnings release is expected in early September. Our fiscal 2019 year will begin on January 1, 2018.

In connection with the change of our fiscal year our 2018 annual meeting to shareholders will be held on November 8, 2018. I’d like now to turn the call back over to Suzanne..

Thank you, Clint. On Slide 14, I’ll turn our attention to the quarters ahead. We intend to build on Charles & Colvard position as a leading worldwide moissanite provider, to further establish our presence in emerging markets, and to differentiate our product quality and service offering globally. Here’s what to expect from our key strategies.

Number one, drive organic revenue growth in the U.S. and maintain attractive margins. We’re making significant headway in expanding our reach with the U.S. consumer. And we plan to continue engaging our target customers through creative and progressive marketing campaigns. Number two.

Expand our gemstone and jewelry offerings to serve a broad range of customers. We believe it’s important to offer a selection of jewelry to address of a variety of significant moments. From fine jewelry worthy of commemorating birthdays and anniversaries to fashion jewelry simply because she loves it.

Our Q1 2018 bridal sales on charlesandcolvard.com were 63% of net sales, compared to 37% for both fine and fashion jewelry combined. We expected this surge in bridal sale during the first quarter, given the popularity of engagement around Valentine’s Day. However, we believe there is more opportunity to capture sales in the fashion space.

For example, we recently expanded our jewelry offerings with a selection of personalized options as seen on the Slide. We’d like a deeper relationship with the consumer as she’s coming of age, so that we can develop a lifetime customer.

Offering fashion jewelry at an attractive entry price point is a logical way to gain her attention and have her fall in love with moissanite. This establishes a long-term connection that we believe will guide her to bridal and fine jewelry selections over the lifetime of her relationship with Charles & Colvard.

We’re focusing on our brands of selection and targeting our fashion category for future growth. Number three. Target the global market opportunity through continued brand building, focused channel expansion, and world class customer service. There are many strategies that can be deployed when expanding into new geographies.

Traditional land and expand strategies can be very costly, requiring significant upfront investment and a lot of patience, and it’s often a long time line to return on investment. So we are not going to take that approach.

At Charles & Colvard, our methodology is an agile strategy based on digital marketing and e-commerce investments, underscoring our commitment to using technology and everything we do. Over the past 18 months, we’ve become adept at utilizing marketplaces to serve our customers.

We believe that marketplace is offer a logical channel of entry into new territories. The customer base is already established for Charles & Colvard, it first acquires localizing product listings and then posting them to the marketplace.

Then with the addition of in-country social and digital advertising, we can draw attention to our brand and marketplace presence. The beauty of this strategy is that entirely digital and entirely measurable. Investments can be dialed up or down, depending on the customer’s reaction to the brand.

Should we find it territory is underperforming we can easily shift our marketing investment to other territories where the consumer is embracing our brand. In Q2 and in fiscal year 2019, we’ll be testing a few new territories for their viability. We’re focused on two major areas, Asia Pacific and Europe.

We began with our pilot into China in 2017 and we’ll continue our efforts there. Australia is an attractive target due to customer trends being similar to the U.S. and the use of the English language. We will also look at select markets in Europe.

These aren’t random selections rather they’re guided by cross-border purchasing already taking place on our U.S. charlesandcolvard.com website. We believe that if the consumer is finding their way to us in the U.S. the likelihood of find – us finding meaningful customer base in their territory is promising.

We’ll also continue taking steps to optimize our cross-border sales. If a foreign national comes to our U.S. website to shop, we want to welcome them in a manner and a manner familiar to them.

For that reason, we will be focused on serving selected native languages to international visitors and improving our international customer service capabilities to make cross-border purchasing easier. This cross-border approach gives us both an ongoing revenue stream and it serves to provide market research to inform our next geographical selections.

And finally strategic initiative number four, balanced growth oriented investments to generate sustainable earnings improvement. We plan to maintain financial flexibility and use data driven business decisions to balance investment in future growth with consistent near term financial performance.

We remain very pleased with our performance as we consistently outpace growth rates in traditional retail and e-commerce sales and we’ll continue to invest in these four strategic strategies as we believe their central to helping us propel the business forward. We now like to open a call to take your question.

Brian, would you please call for questions from our listening audience?.

Yes, absolutely. We now begin the question-and-answer session. [Operator Instructions] And our first question comes from Polly Patterson [ph], Private Investor. Please go ahead..

Hi, I think that your momentum is really great and that’s you’re managing this company very well, thank you. I just had one question, what is happening with your supplier contract is coming up in July..

Sure. Thanks for the question, Polly and for being on the line with us. The question that Polly has is related to our supply agreement with Cree. They are the company that supplies us our base moissanite material from which faceted our gemstones. Charles & Colvard has the exclusive in unilateral right to renew that agreement for two years.

So we can simply determine that we want to do exactly the same as we’re doing and go two years ahead or we can certainly negotiate for new terms and we’re actively engaged with our suppliers we’ve got a great relationship with them, we’re actively at the table at all times both doing research together as well as negotiating on the contract that we both believe is beneficial for both companies.

So we feel good about our future with that organization..

Okay, great. Thank you..

Our next question today comes from Jeremy Blum [ph]. Please go ahead..

Yes. In the last call you talked about some new product lines, I just wonder if you could give more color on them, you talked about colored stones, exotic stones, men’s stones.

Can you give us an update on what’s going on with those?.

Sure. So we did launch of men’s line of jewelry it was put out there for the holiday timeframe, we offered a men’s rings and many of them in an alternate metals which is kind of fun, and seems to be fairly popular with the male organizations there.

We also – we put in a single stud earrings which we’re finding is kind of common with both women and men, but we offered a stud for your stud campaign over the holiday period for women to buy their gentlemen earrings.

We do have a colored program that we launched, it was the late Q4 and into Q1 without green gemstone, so I was actually had green gemstone for some time we took them off the market for a bit, brought them that forward.

We very much focus on being a green company and being green in everything that we do from a business standpoint, and so we think that these stones are sort of indicative of what it is, we focus on as a business.

And what’s interesting about that program is that a portion of the proceeds actually go to a conservancy for the nature -- The Nature Conservancy – excuse me, and we give funds back to saving the earth.

And as you may know the moissanite gemstones is not mine from the earth it’s completely lab created, that makes it a sustainable products and that’s what makes it so attractive to some of our millennial consumers and this green program actually brings that forward.

I will say, going forward, as I noted in prepared remarks expanding the selections are very important because we really want to make sure that we’re squarely hitting this millennial audience and that is our target, as well as the Gen Z that’s coming of age now, Gen Z is go up to about age 21, they’re starting to move into their spending years.

So critically important for us that we engage them as they’re thinking about where they want to make their investments. For that reason we believe fashion jewelry is an important thing for us to begin expanding into, and I think we can expect to see some of those opportunities come live with us in the coming quarters..

And I like to just point out at – just want to highlight the 89% growth in our finished jewelry, what’s Suzanne mentioned this indicates that traction that were gaining.

Thank you, Jeremy.

Thank you..

[Operator Instructions] And our next question comes from [indiscernible] of Private Investor. Please go ahead..

Good afternoon. Couple basic questions.

With regard to new competition around the world, years ago we have exclusive position in the marketplace and I know I can ask one question, but is the point at which we will turn the profit for a quarter?.

Sure. Thanks for being on the line with Chuck, we appreciate it. There is moissanite competition coming to market and we went off patent in the U.S. about two years ago, about a year and a half ago in certain Asia-Pacific and European countries, we are seeing some products trickle to market.

And we’re seeing it where we were several years ago, we’re not necessarily seeing competitive color in that clear stone that the quality that we can bring forward in for everyone or certainly not seeing quality of stone when it comes to the fastening of the stone, the polish, if that finishing that we have spent 22 years perfecting at Charles & Colvard.

So we do believe we’re going to see competition coming to market, we’re not seeing a volume and scale Chuck, but we’re seeing it as sort of 1Z, 2Z at this point in time. What we love about the competition, and I did say love. We love that the competition is how creating buzz about moissanite.

And so we have organizations other than just Charles & Colvard now, speaking to the markets and bringing forward an awareness and a buzz around the beauties of the value of this gemstone. So we’re seeing them there in the market. Now, you’ve asked two – a part two question, which is around profitability.

let me remind you that we had a profitable quarter in Q4 and that was the first profitable quarter that we saw since the year 2013. So, the good news is that we understand what profitability looks like, and how to get there.

Clint, anything that you would like to add on the profitability side?.

I think….

It’s fine..

Okay..

All right. Thanks, Chuck. .

Thank you..

[Operator Instructions] Our next question comes from Rodney Baber with Paulsen Investment Company. Please go ahead.

Hi, Suzanne, thanks for the update. I’ve got probably more and more question, but a couple of things we should just give us some color on, the finished jewelry of 89% just obviously a good number, but down 10% on the loose to your sales appears to me that you’re focusing on doing your own stuff as opposed to just sell on the loose stones.

What’s the difference in the margins in those two pieces of business? And also the drop in loose jewel sales, I would wonder why that would happen in light of all the opportunities out there to bring our new people distributing the product, new retailers all those kind of things. So if you could clarify that for me, I’d appreciate it..

Sure, Rodney. and again thanks for being with us today. I think that finished jewelry up 89% is an absolutely great metric that point to Charles & Colvard controlling our own destiny. So this is absolutely an indicator that we are making the immediate sales to the consumers, this is direct to consumer outcomes.

This is indicative of the sales that we have in charlesandcolvard.com. This is also in this bucket, is direct sales that we do through Amazon, eBay and other marketplaces where we’re deployed. We get to still control the brand message and the customer experience that they’re opening that box and they’re having an experience with Charles & Colvard.

So we’re pleased with it, because we do see higher margins in that business Rodney. Our blended margin rate right now is around 39% over the holiday period, it was a bit higher more like 43% or so. These are nice margins for us to have. The more we go direct-to-consumer, the higher margins we see.

We may see and I’m going to swag some general numbers here, because we don’t give specific guidance on that. But we can see – we can see ranges at 60% or more when we’re going directly to consumer on our margins.

As we go down into our distribution channels, of course, we need to leave room for our distribution partners and their customers the independent jeweler and the retailers to also make margin off of that business. So we take the hit on that margin and that’s what brings their numbers down far lower in the low 30% range.

So it’s a blend of the two, we really like controlling our destiny, not that we don’t mind selling through distribution partners. they’re absolutely a critical part of what it is we do. But we can certainly have far more control and far better margin when we sell direct to consumer..

Got it. One other thing the channel you didn’t break the numbers out. you’ve been in that for a while and I think you are cautious about how quickly that comes on, and then you announced that in Asia Pacific and Europe, you’re bringing those own, which implies that you’re happy with what you’re seeing in China.

Can you give us any more color on China, and how that is doing and if you’ve changed your opinion plus or minus on whether or not that’s going to be a significant market force.

and then Asia Pacific thing in Europe, just any more color on that?.

You’ve got it. So as I mentioned in prepared remarks, we believe that marketplaces are a logical way for us to go to market, because it’s a very low overhead, light footprint for us to test to market. So we are using that vehicle in order to bring us into various channels. In China, that vehicle is Tmall.

Tmall is the largest e-commerce channel in all of China. And it’s the challenge and I did put cautionary sort of – a tough cautionary tone out there about it, because we don’t know how long this one will take. We’ve only been two quarters in China now, and the numbers are coming through.

We are seeing sales is very slow and it’s commensurate with the amount of dollars we’re throwing into advertising. The more we throw into advertising and the faster we may grow, but we are up against a number of Western brands that are attempting to get into China.

So we’re taking a cautionary and fairly slow burn there to see what will the consumer enjoy from a jewelry standpoint and how much investment does it take to turn a dollar or yen. When we go into Europe, and we go into certain other Asia Pacific countries. there are marketplaces that are more familiar to Charles & Colvard.

As you may know, we have strong capabilities on both Amazon and eBay. Amazon and eBay are already in many of the new territories that we made test. What that means for us by using technology as we can turn listings that we currently have in the U.S.

and make them live in other countries, a very again, low footprint way to use technology to test to market. So we’re going to put out our feelers in many of these places. the beauty is that the marketplace does the job of bringing all the eyeballs and then Charles & Colvard ultimately is there to then deliver.

Once we get to yes, and we understand that there is a potential consumer in that region, then and only then are we going to spend time building a brand.

building a brand costs money, and we’re not quite ready yet to make a full investment in any one of these territories until the territory validates itself through sales either cross-border trade to us in the U.S. or internationally on marketplaces, where we serve our goods.

So we’ll call it dipping a toe and it’s a cautionary way for us again, to do market research while collecting a bit of a profit and validating a potential market..

Do you have a revenue growth in China; number with Tmall you can share with us over the last few quarters?.

We do not, but what I can share with you Rodney is that we saw a nice uptick in our international, traditional sales, that’s up compared to prior quarters. We’re seeing our distributor partners in that part of the world. Beginning to see an uptick in their business.

If you do go to China and you search for moissanite out there, and there is awareness of it, and the good news is that that is to the benefit of our distributors, they’re seeing an uptick, and of course, we’re seeing the uptick here as well on cross-border trade. We’re seeing some of those Chinese nationals come to the U.S. and transact with up here.

So, indicators are good that there’s a market, we just are not clear entirely on how much effort it’s going to take to build a brand in China. We’re crawling before we’re walking on this one..

Suzanne, and my first question, talking about the margins which you have been 42% for the last three or four quarters, drawdown to 38%, is that product mix or is there anything else involved with that?.

The good news here is that is a drawdown of legacy inventory. So we got a very aggressive in Q1 about bringing down the total amount of inventory that is legacy and what we’ve done here is we did a fairly meaningful selloff of the inventory that is legacy in order to – and what that’s done is it’s brought us from that 42, 43, down to 39.

Clint, why don’t you share with folks on the call that mix and the drawdown percentage drawdown that we did as we went and sold these legacy goods.

Can you address that for the audience?.

Sure. Hey, Rodney, just wanted to point out actual gross margin is actually 39%. So just to make that clarification, but we did see some decrease in our legacy inventory, compared to our year-end 2017. The carrying value of our inventory decreased about 11%..

Right. So we’re pleased with the fact that we are working very hard to bring down that legacy inventory and to be clear we talked about this in our last call. Forever One, it was our breakthrough product that came live in the 2015 into 2016 timeframe. it’s a whole new substrate materials that we have generated with our partner, Cree.

Prior to 2015, we’ve created legacy inventories and we carried that over here on our shelves. Our charter here is to sell through our legacy inventories. It’s the good news as itself.

We can load it up in jewelry and we’ve done a very nice job of bringing that forward in finished jewelry on marketplaces, hence the 89% growth in finished jewelry and hence the 11% decrease in our legacy inventory. these are great numbers folks.

We’re selling it through, we’re making a profit and at the same time, we’re cleaning the decks, so that we can focus on the premium product, which is Forever One.

Brian, do we have anyone else in the queue?.

No. At this time, there are no more questions in the queue..

All right. Well, let me just say once again, we’d like to thank everyone for taking the time to participate in our call today. the Charles & Colvard has started 2018 with top-line growth, continued momentum in online sales and improved inventory position in a positive outlook for the year.

We believe we’re well positioned for growth as we execute on our four strategic initiatives in 2018. We appreciate your time, your interest and your investment in Charles & Colvard. And we look forward to being in touch and updating you on our continued progress. Thank you and good evening..

The conference is now concluded. thank you for attending today’s presentation. you may now disconnect your lines..