Charles & Colvard Ltd SEC Filings

Charles & Colvard, Ltd. reports a dispute over a $2.0 million convertible secured note and recent board and governance developments. The company received a notice from Ethara Capital LLC claiming an event of default after the company did not pay the accreted principal and accrued interest at the note’s October 3, 2025 maturity. The holder asserts that, following this event, the note’s interest rate rose from 5% to 9% annually and that it may accelerate all obligations and pursue remedies against collateral.

The company is contesting the validity of the alleged default, which is part of ongoing litigation in the North Carolina Business Court, and is in discussions with the holder. Separately, director Neal Goldman resigned from the board, with the company stating his resignation was not due to disagreements on operations or financial matters. A court-ordered certification of the October 13, 2025 annual meeting results, excluding certain converted shares, led to the election of four directors and a tie between two candidates, leaving one board seat vacant to be filled later.

Charles & Colvard, Ltd. filed a Form 12b-25 to announce it will not file its Quarterly Report on Form 10-Q for the quarter ended September 30, 2025 on time. The company cites the need for more time to complete procedures related to delinquent annual financial statements, with ongoing litigation and shareholder activism diverting management attention and resources, and it does not expect to meet the five-day grace period. Based on prior disclosures, the upcoming report is expected to state that material weaknesses in internal control over financial reporting remain and that certain factors raise substantial doubt about the company’s ability to continue as a going concern. The company is executing cost reductions, including headcount and executive salary cuts, supplier reevaluation, and inventory repurposing, and expects net sales to decline and a net loss for the quarter versus the same period in 2024.

Charles & Colvard (CTHR) reported a delay in reporting shareholder vote results. The company held its 2025 Annual Meeting on October 13, 2025, where shareholders considered one proposal to elect five nominees to the Board of Directors. Due to pending legal challenges related to the meeting, results cannot be presented at this time. The company plans to file an amended report once the outcome is known and votes can be tabulated.

Ethara Capital LLC filed an Initial Statement of Beneficial Ownership (Form 3) reporting direct ownership of 1,353,180 shares of Charles & Colvard Ltd (CTHR). The form lists the reporting person's address in New York, NY and indicates a relationship to the issuer as a Director. The event date triggering the filing is 08/29/2025 and the form was signed by Donald R. Reynolds by power of attorney on 10/09/2025.

Duc Pham reports an 11.9% stake in Charles & Colvard, Ltd. The filing shows Mr. Pham beneficially owns 532,216 shares of common stock based on 4,471,453 shares outstanding. He acquired shares with personal funds and on August 20, 2025 received an irrevocable, meeting-limited voting proxy over 144,000 shares from Don Pham for the Issuer's 2025 annual meeting; that proxy grants voting power only and conveys no dispositive or economic interest. On September 23, 2025 Mr. Pham formed a group with Riverstyx Capital Management, Riverstyx Fund entities and three individuals to nominate and solicit proxies for a director slate at the 2025 annual meeting and executed a Joint Filing Agreement. The filing discloses no transactions in the last 60 days and includes the joint filing and proxy exhibits.

Riverstyx group reports beneficial ownership of 532,216 shares (approximately 11.9%) of Charles & Colvard Ltd. The filing shows Riverstyx Fund, LP directly holds 232,106 shares and Duc Pham directly holds 299,900 shares; Duc Pham also holds limited voting power for 144,000 shares via an irrevocable proxy applicable to the 2025 Annual Meeting. The Reporting Persons state they formed a group to nominate a slate for the 2025 Annual Meeting and intend to seek board representation to pursue governance reform, financial stabilization, and an operational turnaround. The group is litigating in North Carolina Business Court to compel the Company to hold the Annual Meeting and to challenge the issuance of approximately 1,353,180 shares under an Ethara convertible note, which they describe as highly dilutive.

Charles & Colvard Ltd filed a Form D reporting a Regulation D, Rule 506(b) exempt equity offering. The company set a total offering amount of $200,000, and reports $200,000 sold with $0 remaining. The first sale date is listed as 2025-08-29 and the notice was signed by the Chief Financial Officer on 2025-09-12. The filing indicates the offering is not intended to last more than one year, the minimum investment accepted is $0, no sales commissions or finders' fees were paid, and $0 of proceeds are designated for executive officers, directors, or promoters. The issuer identified one current investor and selected Rule 506(b) as the claimed exemption.

Riverstyx Capital Management and affiliated parties report a 7.4% stake in Charles & Colvard Ltd. On August 22, 2025 the Reporting Persons delivered a nomination notice to the issuer nominating Ben Franklin, Michael R. Levin, and Lloyd M. Sems for election to the company’s board at the 2025 Annual Meeting. The filing states the Reporting Persons intend to solicit proxies and may file additional solicitation materials and engage with management, the board, other shareholders, and interested parties about the issuer’s business, governance, strategy, and structure. The filing lists shared voting and dispositive power over 232,106 shares and aggregate beneficial ownership of 232,106 (Ben Franklin holds 232,206 reported aggregated for certain rows).