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Charles & Colvard (CTHR) flags going concern risks with late 10-Q

Filing Impact
(High)
Filing Sentiment
(Negative)
Form Type
NT 10-Q

Rhea-AI Filing Summary

Charles & Colvard, Ltd. filed a late-filing notice for its Form 10-Q for the quarter ended December 31, 2025, stating it cannot meet the deadline, even with the five-day grace period, because it needs more time to complete delinquent annual and quarterly financial statements.

The company cites recent management and board changes, ongoing litigation, and resource constraints as contributing factors, and plans to file after completing its June 30, 2025 Form 10-K and September 30, 2025 Form 10-Q. It expects the delayed 10-Q to report material weaknesses in internal control over financial reporting and factors that raise substantial doubt about its ability to continue as a going concern.

Consistent with prior periods, the company anticipates lower net sales for the December 31, 2025 quarter versus the prior-year quarter and expects to report a net loss, with preliminary, unaudited estimates subject to change. Management has been implementing cost reductions, including headcount cuts, executive salary reductions, supplier reevaluation, and inventory repurposing.

Positive

  • None.

Negative

  • Repeated filing delays and missed reports: The company is late on the December 31, 2025 Form 10-Q and confirms that the June 30, 2025 Form 10-K and September 30, 2025 Form 10-Q also remain unfiled, indicating ongoing reporting challenges.
  • Going concern and control weaknesses: Management expects the delayed Form 10-Q to disclose material weaknesses in internal controls over financial reporting and factors that raise substantial doubt about the company’s ability to continue as a going concern.
  • Deteriorating operating performance: The company anticipates net sales for the quarter ended December 31, 2025 will decrease versus the same quarter in 2024 and expects to report a net loss for the period, continuing recent trends.

Insights

Multiple late filings, going concern doubts, and control weaknesses signal elevated risk.

Charles & Colvard is delaying its Form 10-Q for the quarter ended December 31, 2025 and does not expect to file within the five-day grace period. The delay ties to unfinished delinquent annual and quarterly statements, alongside management and board changes, ongoing litigation, and resource constraints.

The company expects to disclose material weaknesses in internal controls over financial reporting and factors that raise substantial doubt about its ability to continue as a going concern. It also anticipates lower net sales versus the prior-year quarter and a net loss, in line with recent periods.

Management describes broad cost-cutting measures, including headcount reductions, executive pay cuts, supplier reevaluation, and inventory repurposing through at least the December 31, 2025 quarter. Actual impact will become clearer once the overdue Form 10-K for the year ended June 30, 2025 and subsequent Forms 10-Q are filed.

 

 

    SEC FILE NUMBER
  UNITED STATES 000-23329
  SECURITIES AND EXCHANGE COMMISSION CUSIP
  Washington, D.C. 20549     159765205

 

FORM 12b-25

 

NOTIFICATION OF LATE FILING

 

(Check one):  

¨    Form 10-K ¨  Form 20-F ¨  Form 11-K x Form 10-Q ¨ Form 10-D ¨  Form N-CEN

¨    Form N-CSR

     
      For Period Ended: December 31, 2025  
      ¨   Transition Report on Form 10-K
      ¨   Transition Report on Form 20-F
      ¨   Transition Report on Form 11-K
      ¨   Transition Report on Form 10-Q
     
      For the Transition Period Ended: _____________
 
Nothing in this form shall be construed to imply that the Commission has verified any information contained herein.

 

If the notification relates to a portion of the filing checked above, identify the Item(s) to which the notification relates:

 

PART I — REGISTRANT INFORMATION

 

Charles & Colvard, Ltd.
Full Name of Registrant
 
N/A
Former Name if Applicable
 
170 Southport Drive
Address of Principal Executive Office (Street and Number)
 
Morrisville, NC 27560
City, State and Zip Code

 

 

 

 

 

PART II — RULES 12b-25(b) AND (c)

 

If the subject report could not be filed without unreasonable effort or expense and the registrant seeks relief pursuant to Rule 12b-25(b), the following should be completed. (Check box if appropriate)

 

¨  (a) The reasons described in reasonable detail in Part III of this form could not be eliminated without unreasonable effort or expense;
   (b) The subject annual report, semi-annual report, transition report on Form 10-K, Form 20-F, Form 11-K, Form N-CEN, or Form N-CSR, or portion thereof, will be filed on or before the fifteenth calendar day following the prescribed due date; or the subject quarterly report of transition report on Form 10-Q or subject distribution report on Form 10-D, or portion thereof, will be filed on or before the fifth calendar day following the prescribed date; and
   (c) The accountant’s statement or other exhibit required by Rule 12b-25(c) has been attached if applicable.

 

PART III — NARRATIVE

 

State below in reasonable detail the reasons why Forms 10-K, 20-F, 11-K, 10-Q, 10-D, N-CEN, N-CSR, or the transition report or portion thereof, could not be filed within the prescribed time period.

 

Charles & Colvard, Ltd. (the “Company”) is filing this Notification of Late Filing on Form 12b-25 with respect to its Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2025 (the “Q2 FY2026 Form 10-Q”). The Company was unable to file its Q2 FY2026 Form 10-Q within the prescribed time period without unreasonable effort or expense because it requires additional time to complete procedures and compile information relating to its delinquent annual and quarterly financial statements. The Company’s recent management and board changes, along with ongoing litigation and resource constraints, all of which have been previously reported, contributed to the delay.

 

The Company is diligently working on completing procedures and compiling the information required to be included in its quarterly and annual reports. While the Company intends to file the Q2 FY2026 Form 10-Q as soon as practicable, the Company does not anticipate being able to file its Q2 FY2026 Form 10-Q within the five-day grace period provided by Rule 12b-25 under the Securities Exchange Act of 1934, as amended, without unreasonable effort or expense. The Company intends to file the Q2 FY2026 Form 10-Q as soon as practicable, following the filing of the Annual Report on Form 10-K for the fiscal year ended June 30, 2025, and its Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2025.

 

Based on the currently available information, and consistent with the Company’s disclosure in its Annual Report on Form 10-K for the fiscal year ended June 30, 2024, its Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2024, its Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2024, and its Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2025, the Company expects to disclose in its Q2 FY2026 Form 10-Q, that (1) certain material weaknesses exist in internal controls over financial reporting, and (2) certain factors raise substantial doubt about the Company’s ability to continue as a going concern. In response to this and the continued challenging economic environment, the Company continues to reduce spend across the board in order to stabilize and right-size its business as noted below in Part IV. The Company has implemented a cost reduction strategy that includes a decrease in headcount and related payroll, executive salary reductions, reevaluation of its supplier base, and inventory repurposing – all through the fiscal year ended June 30, 2025, and continuing in the quarters ended September 30, 2025 and December 31, 2025.

 

 

 

 

PART IV — OTHER INFORMATION

 

(1) Name and telephone number of person to contact in regard to this notification

 

  Clint J. Pete   (919)   468-0399
  (Name)   (Area Code)   (Telephone Number)

 

(2) Have all other periodic reports required under Section 13 or 15(d) of the Securities Exchange Act of 1934 or Section 30 of the Investment Company Act of 1940 during the preceding 12 months or for such shorter period that the registrant was required to file such report(s) been filed? If answer is no, identify report(s).
   
 

Yes ¨ No x

 

Form 10-K for the fiscal year ended June 30, 2025 and Form 10-Q for the fiscal quarter ended September 30, 2025.

   
(3) Is it anticipated that any significant change in results of operations from the corresponding period for the last fiscal year will be reflected by the earnings statements to be included in the subject report or portion thereof?
   
  Yes x No ¨
   
 

If so, attach an explanation of the anticipated change, both narratively and quantitatively, and, if appropriate, state the reasons why a reasonable estimate of the results cannot be made.

 

Consistent with the Company’s results for the first, second and third quarters of the fiscal year ended June 30, 2025, and the anticipated results for the fiscal year ended June 30, 2025 and the quarter ended September 30, 2025 (collectively, the “Reporting Periods”), the Company expects net sales for the quarter ended December 31, 2025 to decrease compared to net sales for the quarter ended December 31, 2024.

 

Further, consistent with the Company’s results for the Reporting Periods, the Company expects to report a net loss for the quarter ended December 31, 2025. A reasonable net loss estimate for the quarter ended December 31, 2025 cannot be made at this time until the completion of the quarter-end financial statement review process for the quarter ended December 31, 2025.

 

The foregoing estimates are preliminary and unaudited. While the Company does not expect any significant changes to the aforementioned estimates, such estimates remain subject to change pending the completion of the financial statement review.

 

Forward-Looking Statements

 

This filing contains a number of 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. Words such as “anticipate,” “plan,” “expect,” “will,” “working,” and variations of such words and similar future or conditional expressions are intended to identify forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding our beliefs and expectations relating to the filing of the Form 10-K for the year ended June 30, 2025, the Form 10-Q filing for the quarter ended September 30, 2025 and the Q2 FY2026 Form 10-Q, and the estimated reporting of financial results for such periods. These forward-looking statements are not guarantees of future results and are subject to a number of risks and uncertainties, many of which are difficult to predict and beyond our control. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors detailed in the Company’s filings with the Securities and Exchange Commission. The Company disclaims and does not undertake any obligation to update or revise any forward-looking statement in this report, except as required by applicable law or regulation.

 

 

 

 

 

Charles & Colvard, Ltd.

(Name of Registrant as Specified in Charter)

 

has caused this notification to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: February 17, 2026 By: /s/ Clint J. Pete
  Name: Clint J. Pete
  Title: Chief Financial Officer

 

 

FAQ

Why did Charles & Colvard (CTHR) file an NT 10-Q for December 31, 2025?

Charles & Colvard filed an NT 10-Q because it could not complete its Form 10-Q for the quarter ended December 31, 2025 on time. It needs additional time to finish delinquent annual and quarterly financial statements amid management changes, ongoing litigation, and resource constraints.

Will Charles & Colvard (CTHR) file the delayed Q2 FY2026 10-Q within the five-day grace period?

No, the company does not expect to file the December 31, 2025 Form 10-Q within the five-day grace period. It plans to submit this report after filing its overdue Form 10-K for June 30, 2025 and Form 10-Q for September 30, 2025.

Does Charles & Colvard (CTHR) face going concern risks in this NT 10-Q filing?

Yes. The company expects the delayed Form 10-Q to state that certain factors raise substantial doubt about its ability to continue as a going concern, consistent with prior filings. This reflects ongoing financial pressure and operational challenges disclosed across recent reporting periods.

What operating results does Charles & Colvard (CTHR) expect for the quarter ended December 31, 2025?

For the December 31, 2025 quarter, Charles & Colvard expects lower net sales compared to the same quarter in 2024 and anticipates a net loss. These preliminary, unaudited estimates may change after the quarter-end financial statement review is completed.

What cost reduction measures is Charles & Colvard (CTHR) implementing?

The company has launched a cost reduction strategy to stabilize and right-size its business. Actions include headcount reductions and related payroll cuts, executive salary reductions, reevaluating its supplier base, and repurposing inventory through the year ended June 30, 2025 and subsequent quarters.

Which other Charles & Colvard (CTHR) reports remain outstanding?

Charles & Colvard confirms it has not yet filed its Form 10-K for the fiscal year ended June 30, 2025 and Form 10-Q for the quarter ended September 30, 2025. The company plans to file these before submitting the December 31, 2025 Form 10-Q.
Charles & Colvard Ltd

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Luxury Goods
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