Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2016	Mar. 03, 2017	Jun. 30, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	CHARLES & COLVARD LTD
Entity Central Index Key	0001015155
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Public Float			$ 19,558,694
Entity Common Stock, Shares Outstanding		21,386,136
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	FY
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2016

CONSOLIDATED BALANCE SHEETS - USD ($)	Dec. 31, 2016	Dec. 31, 2015
Current assets:
Cash and cash equivalents	$ 7,427,273	$ 5,274,305
Accounts receivable, net	2,794,626	3,852,651
Inventory, net	9,770,206	10,739,798
Prepaid expenses and other assets	682,083	701,105
Assets related to discontinued operations	0	83,000
Total current assets	20,674,188	20,650,859
Long-term assets:
Inventory, net	18,360,211	21,588,622
Property and equipment, net	1,391,116	1,615,683
Intangible assets, net	8,808	71,086
Other assets	71,453	214,588
Total long-term assets	19,831,588	23,489,979
TOTAL ASSETS	40,505,776	44,140,838
Current liabilities:
Accounts payable	3,977,149	3,323,148
Accrued cooperative advertising	50,000	58,000
Accrued expenses and other liabilities	581,107	891,187
Liabilities related to discontinued operations	0	349,000
Total current liabilities	4,608,256	4,621,335
Long-term liabilities:
Accrued expenses and other liabilities	594,916	710,223
Accrued income taxes	433,983	420,503
Total long-term liabilities	1,028,899	1,130,726
Total liabilities	5,637,155	5,752,061
Commitments and contingencies (Note 8)
Shareholders' equity:
Common stock, no par value; 50,000,000 shares authorized; 21,369,885 and 21,111,585 shares issued and outstanding at December 31, 2016 and 2015, respectively	54,243,816	54,240,247
Additional paid-in capital	14,282,956	13,280,920
Accumulated deficit	(33,658,151)	(29,132,390)
Total shareholders' equity	34,868,621	38,388,777
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 40,505,776	$ 44,140,838

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 31, 2016	Dec. 31, 2015
Shareholders' equity
Common stock, par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized (in shares)	50,000,000	50,000,000
Common stock, shares issued (in shares)	21,369,885	21,111,585
Common stock, shares outstanding (in shares)	21,369,885	21,111,585

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	12 Months Ended
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	Dec. 31, 2016	Dec. 31, 2015
CONSOLIDATED STATEMENTS OF OPERATIONS [Abstract]
Net sales	$ 29,168,128	$ 25,693,292
Costs and expenses:
Cost of goods sold	20,401,439	18,943,507
Sales and marketing	7,038,277	5,764,389
General and administrative	5,544,452	6,031,829
Research and development	2,848	17,795
Loss on abandonment of property and equipment	117,930	0
Total costs and expenses	33,104,946	30,757,520
Loss from operations	(3,936,818)	(5,064,228)
Other income (expense):
Interest income	0	11
Interest expense	(1,737)	(10,359)
Gain on sale of long-term assets	0	125
Total other expense, net	(1,737)	(10,223)
Loss before income taxes from continuing operations	(3,938,555)	(5,074,451)
Income tax net expense from continuing operations	(13,480)	(12,821)
Net loss from continuing operations	(3,952,035)	(5,087,272)
Discontinued Operations:
Loss from discontinued operations	(586,124)	(4,485,787)
Gain on sale of assets from discontinued operations	12,398	0
Net loss from discontinued operations	(573,726)	(4,485,787)
Net loss	$ (4,525,761)	$ (9,573,059)
Net loss per common share:
Basic - continuing operations (in dollars per share)	$ (0.19)	$ (0.25)
Basic - discontinued operations (in dollars per share)	(0.03)	(0.22)
Basic - total (in dollars per share)	(0.22)	(0.47)
Diluted - continuing operations (in dollars per share)	(0.19)	(0.25)
Diluted - discontinued operations (in dollars per share)	(0.03)	(0.22)
Diluted - total (in dollars per share)	$ (0.22)	$ (0.47)
Weighted average number of shares used in computing net loss per common share:
Basic (in shares)	20,926,120	20,407,764
Diluted (in shares)	20,926,120	20,407,764

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($)	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Deficit [Member]	Total
Balance at Dec. 31, 2014	$ 53,949,001	$ 11,628,503	$ (19,559,331)	$ 46,018,173
Balance (in shares) at Dec. 31, 2014	20,382,333
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	$ 0	1,770,897	0	1,770,897
Issuance of restricted stock	$ 0	0	0	0
Issuance of restricted stock (in shares)	487,500
Stock option exercises	$ 291,246	(118,480)	0	172,766
Stock option exercises (in shares)	241,752
Net loss	$ 0	0	(9,573,059)	(9,573,059)
Balance at Dec. 31, 2015	$ 54,240,247	13,280,920	(29,132,390)	38,388,777
Balance (in shares) at Dec. 31, 2015	21,111,585
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation	$ 0	1,003,305	0	1,003,305
Issuance of restricted stock	$ 0	0	0	0
Issuance of restricted stock (in shares)	255,800
Stock option exercises	$ 3,569	(1,269)	0	2,300
Stock option exercises (in shares)	2,500
Net loss	$ 0	0	(4,525,761)	(4,525,761)
Balance at Dec. 31, 2016	$ 54,243,816	$ 14,282,956	$ (33,658,151)	$ 34,868,621
Balance (in shares) at Dec. 31, 2016	21,369,885

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	12 Months Ended
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	Dec. 31, 2016	Dec. 31, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (4,525,761)	$ (9,573,059)
Net loss from discontinued operations	(573,726)	(4,485,787)
Net loss from continuing operations	(3,952,035)	(5,087,272)
Adjustments to reconcile net loss to net cash provided by operating activities of continuing operations:
Depreciation and amortization	557,393	758,787
Stock-based compensation	959,134	1,545,144
Provision for uncollectible accounts	(73,300)	89,462
Provision for sales returns	(316,000)	(179,000)
Provision for inventory reserves	200,000	436,000
Loss on abandonment of property and equipment	117,930	0
Gain on sale of long-term assets	0	(125)
Changes in operating assets and liabilities:
Accounts receivable	1,447,325	1,747,140
Inventory	3,998,003	6,174,209
Prepaid expenses and other assets, net	162,157	(103,012)
Accounts payable	654,001	251,517
Accrued cooperative advertising	(8,000)	(162,000)
Accrued income taxes	13,480	12,821
Accrued expenses and other liabilities	(425,387)	338,702
Net cash provided by operating activities of continuing operations	3,334,701	5,822,373
Net cash used in operating activities of discontinued operations	(1,125,578)	(4,254,480)
Net cash provided by operating activities	2,209,123	1,567,893
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(421,761)	(407,452)
Patent, license rights, and trademark costs	(5,615)	(45,742)
Proceeds from sale of long-term assets	250	175
Net cash used in investing activities of continuing operations	(427,126)	(453,019)
Net cash provided by (used in) investing activities of discontinued operations	368,671	(20,676)
Net cash used in investing activities	(58,455)	(473,695)
CASH FLOWS FROM FINANCING ACTIVITIES:
Stock option exercises	2,300	172,766
Net cash provided by financing activities of continuing operations	2,300	172,766
NET INCREASE IN CASH AND CASH EQUIVALENTS	2,152,968	1,266,964
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	5,274,305	4,007,341
CASH AND CASH EQUIVALENTS, END OF PERIOD	7,427,273	5,274,305
Supplemental disclosure of cash flow information:
Cash paid during the year for interest	$ 1,737	$ 10,359

DESCRIPTION OF BUSINESS

12 Months Ended

Dec. 31, 2016

DESCRIPTION OF BUSINESS [Abstract]

DESCRIPTION OF BUSINESS

1.	DESCRIPTION OF BUSINESS

Charles & Colvard, Ltd. (the “Company”), a North Carolina corporation founded in 1995, manufactures, markets, and distributes Charles & Colvard Created Moissanite^® (hereinafter referred to as moissanite or moissanite jewels) and finished jewelry featuring moissanite for sale in the worldwide jewelry market. Moissanite, also known by its chemical name silicon carbide (SiC), is a rare mineral first discovered in a meteorite crater. Because naturally occurring SiC crystals are too small for commercial use, larger crystals must be grown in a laboratory. Leveraging its advantage of being the original and leading worldwide source of created moissanite, the Company’s strategy is to establish itself with reputable, high-quality, and sophisticated brands and to position moissanite as an ethically-sourced, affordable, and luxurious alternative to other gemstones such as diamond. The Company believes this is possible due to moissanite’s exceptional brilliance, fire, durability, and rarity like no other jewel available on the market. The Company sells loose moissanite jewels and finished jewelry at wholesale to distributors, manufacturers, retailers, TV shopping networks, and designers and at retail to end consumers through its wholly owned operating subsidiaries, charlesandcolvard.com, LLC (formerly Moissanite.com, LLC) and Charles & Colvard Direct, LLC (until March 2016), and through third-party marketplaces. As of September 30, 2016, the Company changed the name of its wholly owned subsidiary Moissanite.com, LLC to charlesandcolvard.com, LLC.

In February 2016, the Company made the strategic decision to explore a potential divestiture of its direct-to-consumer home party business previously operated through its Charles & Colvard Direct, LLC (dba Lulu Avenue^®) subsidiary. After careful analysis of the Company’s core competencies, go-to-market strategies, and intent to advance toward profitability, the management team and Board of Directors determined a divestiture of this distribution channel to be in the best interest of the Company and its shareholders. On March 4, 2016, the Company and Charles & Colvard Direct, LLC entered into an asset purchase agreement with Yanbal USA, Inc. (“Yanbal”), under which Yanbal purchased certain assets related to the Company’s direct-to-consumer home party business for $500,000 and assumed certain liabilities related to such assets. A more detailed description of this transaction is included in Note 12, “Discontinued Operations”.

As a result of the divestiture of the Company’s direct-to-consumer home party business operated through its Charles & Colvard Direct, LLC (dba Lulu Avenue®) subsidiary, during the three months ended March 31, 2016, the Company began managing its business primarily through its two continuing distribution channels. Accordingly, for the years ended December 31, 2016 and 2015, the Company’s reportable segments are its wholesale distribution channel transacted through the parent entity, and the Company’s direct-to-consumer distribution channel transacted through the wholly owned operating subsidiary, charlesandcolvard.com, LLC. The Company is now presenting the operating results of Charles and Colvard Direct, LLC as a discontinued operation.

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2016

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract]

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

2.	BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation - The accompanying consolidated financial statements as of and for the years ended December 31, 2016 and 2015 include the accounts of the Company and its wholly owned subsidiaries charlesandcolvard.com, LLC (formerly Moissanite.com, LLC), formed in 2011; Charles & Colvard Direct, LLC, formed in 2011; and Charles & Colvard (HK) Ltd., the Company’s Hong Kong subsidiary that became a dormant entity in the second quarter of 2009 and the operations of which ceased in 2008. All intercompany accounts have been eliminated.

Discontinued Operations - The results of operations for businesses that have been disposed of or classified as held-for-sale are segregated from the results of the Company’s continuing operations and classified as discontinued operations for each period presented in the Company’s consolidated income statement. Similarly, the assets and liabilities of such businesses are reclassified from continuing operations and presented as discontinued operations for each period presented on the Company’s consolidated balance sheet.

Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The most significant estimates impacting the Company’s consolidated financial statements relate to valuation and classification of inventories, accounts receivable reserves, deferred tax assets, uncertain tax positions, cooperative advertising, and revenue recognition. Actual results could differ materially from those estimates.

Reclassifications - Certain amounts in the prior year’s consolidated financial statements have been reclassified to conform to the current year presentation, primarily amounts described in Note 3, “Segment Information and Geographic Data” and Note 12, “Discontinued Operations” related to changes in the Company’s reportable segments.

Cash and Cash Equivalents - All highly liquid investments with an original maturity of three months or less from the date of purchase are considered to be cash equivalents.

Concentration of Credit Risk - Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and trade accounts receivable. At times, cash balances may exceed the Federal Deposit Insurance Corporation (“FDIC”) insurable limits. The Company has never experienced any losses related to these balances. Non-interest-bearing amounts on deposit in excess of FDIC insurable limits at December 31, 2016 approximated $7.04 million.

Trade receivables potentially subject the Company to credit risk. The Company’s standard wholesale customer payment terms on trade receivables are generally between 30 and 90 days, though it may offer extended terms with specific customers and on significant orders from time to time. The Company believes its competitors and other vendors in the wholesale jewelry industry have also expanded their use of extended payment terms and, in aggregate, the Company believes that through its use of extended payment terms, it has provided a competitive response in its market and that its net sales have been favorably impacted. The Company is unable to estimate the impact of this program on its net sales, but if it ceased providing extended payment terms in select instances, the Company believes it would not be competitive for some wholesale customers in the marketplace and that its net sales and profits would likely decrease. The Company extends credit to its customers based upon a number of factors, including an evaluation of the customer’s financial condition and credit history that is verified through trade association reference services, the customer’s payment history with the Company, the customer’s reputation in the trade, and/or an evaluation of the Company’s opportunity to introduce its moissanite jewels or finished jewelry featuring moissanite to new or expanded markets. Collateral is not generally required from customers. The need for an allowance for doubtful accounts is determined based upon factors surrounding the credit risk of specific customers, historical trends, and other information. During the year ended December 31, 2016, the Company wrote off $815,000 in accounts receivable related to one international customer that was past due on its payment arrangement as it determined that the benefits of continued collections efforts did not outweigh the cost of legal proceedings. The Company does not believe its commercial terms were a factor with this customer’s non-payment. The Company’s allowance for doubtful accounts previously included an allowance for this accounts receivable, and therefore, this write-off did not have an impact on net loss for the year ended December 31, 2016. The Company has not experienced any other significant accounts receivable write-offs related to revenue arrangements with extended payment terms.

See Note 13, “Major Customers and Concentration of Credit Risk”, for further discussion of credit risk within trade accounts receivable.

Accounts Receivable Reserves - Estimates are used to determine the amount of two reserves against trade accounts receivable. The first reserve is an allowance for sales returns. At the time revenue is recognized, the Company estimates future returns using a historical return rate that is reviewed quarterly with consideration of any contractual return privileges granted to customers, and it reduces sales and trade accounts receivable by this estimated amount. The allowance for sales returns was $415,000 and $731,000 at December 31, 2016 and 2015, respectively.

The following is a reconciliation of the allowance for sales returns:

	Year Ended December 31,
	2016			2015
Balance, beginning of period	$	731,000		$	910,000
Additions charged to operations		3,574,297			3,651,741
Sales returns		(3,890,297	)		(3,830,741	)
Balance, end of period	$	415,000		$	731,000

The second reserve is an allowance for doubtful accounts for estimated losses resulting from the failure of the Company’s customers to make required payments. This allowance reduces trade accounts receivable to an amount expected to be collected. Based on historical percentages of uncollectible accounts by aging category, changes in payment history, and facts and circumstances regarding specific accounts that become known to management when evaluating the adequacy of the allowance for doubtful accounts, the Company determines a percentage based on the age of the receivable that it deems uncollectible. The allowance is then calculated by applying the appropriate percentage to each of the Company’s accounts receivable aging categories, with consideration given to individual customer account activity subsequent to the current period, including cash receipts, in determining the appropriate allowance for doubtful accounts in the current period. Any increases or decreases to this allowance are charged or credited, respectively, as a bad debt expense to general and administrative expenses. The Company generally uses an internal collection effort, which may include its sales personnel as it deems appropriate. After all internal collection efforts have been exhausted, the Company generally writes off the account receivable.

Any accounts with significant balances are reviewed separately to determine an appropriate allowance based on the facts and circumstances of the specific account. During the quarter ended September 30, 2016, the Company wrote off $815,000 in accounts receivable related to one international customer that was past due on its payment arrangement, as the Company determined that the benefits of continued collections efforts did not outweigh the costs of legal proceedings. The Company’s allowance for doubtful accounts previously included an allowance for this accounts receivable, and therefore, this write-off did not have an impact on net loss for the year ended December 31, 2016. During its review for 2016, the Company determined no additional reserves were necessary for specific accounts. Based on these criteria, management determined that allowances for doubtful accounts receivable of $226,000 and $1.14 million at December 31, 2016 and 2015, respectively, were required.

The following is a reconciliation of the allowance for doubtful accounts:

	Year Ended December 31,
	2016			2015
Balance, beginning of period	$	1,137,000		$	1,074,000
(Reductions) additions charged to operations		(73,300	)		89,462
Write-offs, net of recoveries		(837,700	)		(26,462	)
Balance, end of period	$	226,000		$	1,137,000

Although the Company believes that its reserves are adequate, if the financial condition of its customers deteriorates, resulting in an impairment of their ability to make payments, or if it underestimates the allowances required, additional allowances may be necessary, which would result in increased expense in the period in which such determination is made.

Inventories - Inventories are stated at the lower of cost or market on an average cost basis. Inventory costs include direct material and labor, inbound freight, purchasing and receiving costs, inspection costs, and warehousing costs. Any inventory on hand at the measurement date in excess of the Company’s current requirements based on historical and anticipated levels of sales is classified as long-term on the Company’s consolidated balance sheets. The Company’s classification of its inventory as either short or long-term inventory requires it to estimate the portion of on-hand inventory that can be realized over the next 12 months and does not include precious metal, labor, and other inventory purchases expected to be both purchased and realized in cost of sales over the next 12 months.

Property and Equipment - Property and equipment are stated at cost and are depreciated over their estimated useful lives using the straight-line method as follows:

Machinery and equipment	5 to 12 years
Computer hardware	3 to 5 years
Computer software	3 years
Furniture and fixtures	5 to 10 years
Leasehold improvements	Shorter of the estimated useful life or the lease term

Intangible Assets - The Company capitalizes costs associated with obtaining or defending patents issued or pending for inventions and license rights related to the manufacture of moissanite jewels. Such costs are amortized over the life of the patent, generally 17 years. The Company also capitalizes licenses it obtains for the use of certain advertising images and external costs incurred for trademarks. Such costs are amortized over the period of the license or estimated useful life of the trademark, respectively.

Impairment of Long-Lived Assets - The Company evaluates the recoverability of its long-lived assets by reviewing them for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured by comparing the carrying amount of the asset to future net undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment is measured as the amount by which the carrying amount exceeds the fair value and is recognized as an operating expense in the period in which the determination is made. Assets to be disposed are reported at the lower of the carrying amount or fair value less costs to sell. As of December 31, 2016, the Company did not identify any indicators of long-lived asset impairment.

In addition to the recoverability assessment, the Company routinely reviews the remaining estimated useful lives of its long-lived assets. Any reduction in the useful-life assumption will result in increased depreciation and amortization expense in the period when such determination is made, as well as in subsequent periods.

Revenue Recognition - Revenue is recognized when title transfers at the time of shipment from the Company’s facility or a third-party fulfillment company’s facility, excluding consignment shipments as discussed below; evidence of an arrangement exists; pricing is fixed or determinable; and collectability is reasonably assured. At the time revenue is recognized, an allowance for estimated returns is established. Any change in the allowance for returns is charged against net sales. For the Company’s wholesale customers, the return policy allows for the return of jewels and finished jewelry for credit generally within 30 days of shipment and must be returned for a valid reason, such as quality problems or an error in shipment. For the Company’s direct-to-consumer sales channels, customers can return their purchases for any reason in accordance with the Company’s warranty policy as noted on the charlesandcolvard.com website. The Company has established an allowance for returns based on the Company’s historical return rate, which takes into account any contractual return privileges granted to the Company’s customers. Periodically, the Company ships loose jewel and finished jewelry goods to wholesale customers on consignment terms. Under these consignment terms, the customer assumes the risk of loss and has an absolute right of return for a specified period. In these instances, the Company only recognizes revenue when the contractual right of return is exhausted. Periodically, the Company ships finished goods inventory to wholesale customers on consignment terms. Under these terms, the customer assumes the risk of loss and has an absolute right of return for a specified period that typically ranges from six months to one year. The Company’s wholesale customers are generally required to make payments on consignment shipments within 60 days upon the customer informing the Company that it will keep the inventory. Accordingly, the Company does not recognize revenue on these consignment transactions until the earlier of (1) the customer informing the Company that it will keep the inventory, (2) the expiration of the right of return period, or (3) the customer informing the Company that the inventory has been sold.

Cost of Goods Sold - Cost of goods sold is primarily composed of inventory sold during the period; inventory written off during the period due to ongoing quality reviews or through customer returns; salaries and payroll-related expenses for personnel involved in preparing and shipping product to customers; an allocation of shared expenses such as rent, utilities, communication expenses, and depreciation related to preparing and shipping product to customers; and outbound freight charges.

Advertising Costs - Advertising production costs are expensed as incurred. Media placement costs are expensed the first time the advertising appears.

The Company also offers a cooperative advertising program to certain of its wholesale customers that reimburses, via a credit towards future purchases, a portion of their marketing costs based on the customers’ net purchases from the Company and is subject to the customer providing documentation of all advertising performed that includes the Company’s products. For the years ended December 31, 2016 and 2015, these approximate amounts were an expense of $126,000 for 2016 and a credit of ($4,000) for 2015, and are included as a component of sales and marketing expenses. The credit for the year ended December 31, 2015 is a result of the decision of the Company’s domestic distributors to not utilize the advertising credits the Company had accrued during 2014 within the allowable period that were reversed during the three months ended March 31, 2015.

Advertising expenses, inclusive of the cooperative advertising program, for the years ended December 31, 2016 and 2015 were approximately $2.59 million and $1.76 million, respectively. Included in total advertising expense are approximately $56,000 and $187,000 for the years ended December 31, 2016 and 2015, respectively, related to discontinued operations.

Sales and Marketing - Sales and marketing costs are expensed as incurred. These costs include all expenses of promoting and selling the Company’s products and include such items as the salaries, payroll-related expenses, and travel of sales and marketing personnel; advertising; trade shows; market research; sales commissions; and an allocation of overhead expenses attributable to these activities. Except for an allocation to general and administrative expenses, these costs also include the operating expenses of the Company’s two wholly owned operating subsidiaries charlesandcolvard.com, LLC and, up to the time of divestiture on March 4, 2016, Charles & Colvard Direct, LLC. See Note 12, “Discontinued Operations”.

General and Administrative - General and administrative costs are expensed as incurred. These costs include the salaries and payroll-related expenses of executive, finance, information technology, and administrative personnel; legal, investor relations, and professional fees; general office and administrative expenses; Board of Directors fees; rent; bad debts; and insurance.

Research and Development - Research and development costs are expensed as incurred. These costs primarily comprise salary allocations and consultant fees associated with the study of product enhancement and manufacturing process efficiencies.

Stock-Based Compensation - The Company recognizes compensation expense for stock-based awards based on estimated fair values on the date of grant. The Company uses the Black-Scholes-Merton option pricing model to determine the fair value of stock options. The fair value of other stock-based compensation awards is determined by the market price of the Company’s common stock on the date of grant. The expense associated with stock-based compensation is recognized on a straight-line basis over the requisite service period of each award.

Fair value of stock options using the Black-Scholes-Merton option pricing model is estimated on the date of grant utilizing certain assumptions for dividend yield, expected volatility, risk-free interest rate, and expected lives of the awards, as follows:

Dividend yield - Although the Company issued dividends in prior years, a dividend yield of zero is used due to the uncertainty of future dividend payments.

Expected volatility - Volatility is a measure of the amount by which a financial variable such as share price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. The Company estimates expected volatility giving primary consideration to the historical volatility of its common stock.

Risk-free interest rate - The risk-free interest rate is based on the published yield available on U.S. Treasury issues with an equivalent term remaining equal to the expected life of the stock option.

Expected lives - The expected lives of the stock options issued in 2016 and 2015 represent the estimated period of time until exercise or forfeiture and are based on the simplified method of using the mid-point between the vesting term and the original contractual term.

The assumptions used in calculating the fair value of share-based payment awards represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and the Company uses different assumptions, the Company’s stock-based compensation expense could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rates of stock-based awards and only recognize expense for those shares expected to vest. In estimating the Company’s forfeiture rates, the Company analyzed its historical forfeiture rates, the remaining lives of unvested stock-based awards, and the amount of vested awards as a percentage of total awards outstanding. If the Company’s actual forfeiture rates are materially different from its estimates, or if the Company re-evaluates the forfeiture rates in the future, the stock-based compensation expense could be significantly different from what the Company has recorded in the current period.

Income Taxes - Deferred income taxes are recognized for the income tax consequences of “temporary” differences by applying enacted statutory income tax rates applicable to future years to differences between the financial statement carrying amounts and the income tax bases of existing assets and liabilities. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount that is more likely than not to be realized.

Net Loss per Common Share - Basic net loss from continuing and discontinued operations per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the periods. Diluted net loss from continuing and discontinued operations per common share is computed using the weighted average number of common and dilutive common equivalent shares outstanding during the periods. Common equivalent shares consist of stock options that are computed using the treasury stock method.

The following table reconciles the differences between the basic and diluted net loss per share presentations:

	Year Ended December 31,
	2016			2015
Numerator:
Net loss from continuing operations	$	(3,952,035	)	$	(5,087,272	)
Net loss from discontinued operations		(573,726	)		(4,485,787	)
Net loss	$	(4,525,761	)	$	(9,573,059	)

Denominator:
Weighted average common shares outstanding:
Basic		20,926,120			20,407,764
Stock options		-			-
Diluted		20,926,120			20,407,764

Net loss per common share:
Basic-continuing operations	$	(0.19	)	$	(0.25	)
Basic-discontinued operations		(0.03	)		(0.22	)
Basic-total	$	(0.22	)	$	(0.47	)

Diluted-continuing operations	$	(0.19	)	$	(0.25	)
Diluted-discontinued operations		(0.03	)		(0.22	)
Diluted-total	$	(0.22	)	$	(0.47	)

For the years ended December 31, 2016 and 2015, stock options to purchase approximately 2.13 million and 2.44 million shares, respectively, were excluded from the computation of diluted net loss per common share because the exercise price of the stock options was greater than the average market price of the common shares or the effect of inclusion of such amounts would be anti-dilutive to net loss per common share. For the years ended December 31, 2016 and 2015, 359,000 and 425,000, respectively, of restricted shares that have been issued but not yet vested have been excluded from the computation of diluted net loss per common share.

Recently Adopted/Issued Accounting Pronouncements - In May 2014, the Financial Accounting Standards Board (the “FASB”) issued a new accounting standard that supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of the new standard is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. The new standard defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. The standard is effective for annual periods beginning after December 15, 2017, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting the standard recognized at the date of adoption (which includes additional footnote disclosures). The Company has begun reviewing its significant contracts and continues to assess the impact of adoption of this accounting standard.

In August 2014, the FASB issued new accounting guidance intended to define management’s responsibility to evaluate whether there is substantial doubt about an organization’s ability to continue as a going concern and to provide related footnote disclosures. Under U.S. GAAP, financial statements are prepared under the presumption that the reporting organization will continue to operate as a going concern, except in limited circumstances. The going concern basis of accounting is critical to financial reporting because it establishes the fundamental basis for measuring and classifying assets and liabilities. Prior to this accounting guidance, U.S. GAAP lacked guidance about management’s responsibility to evaluate whether there is substantial doubt about the organization’s ability to continue as a going concern or to provide related footnote disclosures. This new accounting guidance provides guidance to an organization’s management, with principles and definitions that are intended to reduce diversity in the timing and content of disclosures that are commonly provided by organizations today in the financial statement footnotes. This new accounting guidance is effective for annual periods ending after December 15, 2016, and interim periods within annual periods beginning after December 15, 2016. Early application is permitted for annual or interim reporting periods for which the financial statements have not previously been issued. The Company adopted this accounting guidance in 2016, noting no material impact on its consolidated financial statements.

In July 2015, the FASB issued new accounting guidance that will require an entity to measure inventory valued under the average cost method from the lower of cost or market to the lower of cost or net realizable value, with net realizable value defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. No other changes were made to the current guidance on inventory measurement. This guidance is effective on a prospective basis for public entities for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. Early application is permitted as of the beginning of an interim or annual reporting period. On January 1, 2017, the Company began applying the inventory measurement provisions of the new ASU and such provisions are not expected to have a material impact on the Company’s consolidated financial statements.

In February 2016, the FASB issued new guidance that establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either financing or operating, with classification affecting the pattern of expense recognition in the income statement. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. The Company currently expects that upon adoption of this new standard, ROU assets and liabilities will be recognized in the balance sheet in amounts that will be material.

In March 2016, the FASB issued updated guidance that changes how companies account for certain aspects of share-based payment awards to employees, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as the classification of related matters in the statement of cash flows. The update is effective for the Company in the first quarter of 2017. The Company does not expect the adoption of this accounting standard to have a material impact on the Company’s financial statements.

SEGMENT INFORMATION AND GEOGRAPHIC DATA

12 Months Ended

Dec. 31, 2016

SEGMENT INFORMATION AND GEOGRAPHIC DATA [Abstract]

SEGMENT INFORMATION AND GEOGRAPHIC DATA

3.	SEGMENT INFORMATION AND GEOGRAPHIC DATA

The Company reports segment information based on the “management” approach. The management approach designates the internal reporting used by management for making operating decisions and assessing performance as the source of the Company’s operating and reportable segments.

As of September 30, 2016, the Company changed the name of its wholly owned subsidiary Moissanite.com, LLC to charlesandcolvard.com, LLC.

In 2015, the Company managed its business primarily through the three distribution channels that it used to sell its product lines, loose jewels and finished jewelry, which included Charles and Colvard Direct, LLC. Accordingly, the Company determined its three operating and reportable segments to be wholesale distribution transacted through the parent entity, and the two direct-to-consumer distribution channels transacted through the Company’s wholly owned operating subsidiaries, charlesandcolvard.com, LLC and Charles & Colvard Direct, LLC. On March 4, 2016, the Company divested its direct-to-consumer home party business previously operated through its Charles & Colvard Direct, LLC (dba Lulu Avenue^®) subsidiary. As a result, during the three months ended March 31, 2016, the Company began managing its business primarily through its two continuing distribution channels. Accordingly, the Company is presenting segment results for the two continuing operating and reportable segments within this footnote and the segment results for Charles & Colvard Direct, LLC within Note 12, “Discontinued Operations”. The accounting policies of these segments are the same as those described in Note 2, “Basis of Presentation and Significant Accounting Policies”.

The Company evaluates the financial performance of its segments based on net sales; product line gross profit, or the excess of product line sales over product line cost of goods sold; and operating income (loss). Product line cost of goods sold is defined as product cost of goods sold in each of the Company’s wholesale distribution and direct-to-consumer distribution operating segment excluding non-capitalized expenses from the Company’s manufacturing and production control departments, comprising personnel costs, depreciation, rent, utilities, and corporate overhead allocations; freight out; inventory valuation allowance adjustments; and other inventory adjustments, comprising costs of quality issues, damaged goods, and inventory write-offs.

The Company allocates certain general and administrative expenses from its parent entity to its direct-to-consumer distribution segment primarily based on net sales and number of employees to arrive at segment operating loss. Unallocated expenses, which also include interest and taxes, remain in the parent entity’s wholesale distribution segment.

Summary financial information by reportable segment is as follows:

	Year Ended December 31, 2016
	Wholesale			charlesandcolvard .com			Total
Net sales
Loose jewels	$	20,929,322		$	522,406		$	21,451,728
Finished jewelry		3,601,768			4,114,632			7,716,400
Total	$	24,531,090		$	4,637,038		$	29,168,128

Product line cost of goods sold
Loose jewels	$	13,851,463		$	65,286		$	13,916,749
Finished jewelry		2,497,788			1,651,000			4,148,788
Total	$	16,349,251		$	1,716,286		$	18,065,537

Product line gross profit
Loose jewels	$	7,077,859		$	457,120		$	7,534,979
Finished jewelry		1,103,980			2,463,632			3,567,612
Total	$	8,181,839		$	2,920,752		$	11,102,591

Operating loss	$	(1,603,947	)	$	(2,332,871	)	$	(3,936,818	)

Depreciation and amortization	$	479,517		$	77,876		$	557,393

Total assets	$	40,167,149		$	338,627		$	40,505,776

Capital expenditures	$	158,702		$	263,059		$	421,761

	Year Ended December 31, 2015
	Wholesale			charlesandcolvard .com			Total
Net sales
Loose jewels	$	14,581,554		$	531,695		$	15,113,249
Finished jewelry		5,683,478			4,896,565			10,580,043
Total	$	20,265,032		$	5,428,260		$	25,693,292

Product line cost of goods sold
Loose jewels	$	9,375,195		$	83,964		$	9,459,159
Finished jewelry		3,867,080			2,429,684			6,296,764
Total	$	13,242,275		$	2,513,648		$	15,755,923

Product line gross profit
Loose jewels	$	5,206,359		$	447,731		$	5,654,090
Finished jewelry		1,816,398			2,466,881			4,283,279
Total	$	7,022,757		$	2,914,612		$	9,937,369

Operating loss	$	(3,736,111	)	$	(1,328,117	)	$	(5,064,228	)

Depreciation and amortization	$	652,326		$	106,461		$	758,787

Total assets	$	43,882,939		$	174,899		$	44,057,838

Capital expenditures	$	291,372		$	116,080		$	407,452

A reconciliation of the Company’s product line cost of goods sold to cost of goods sold as reported in the consolidated financial statements is as follows:

	Year Ended December 31,
	2016		2015
Product line cost of goods sold	$	18,065,537	$	15,755,923
Non-capitalized manufacturing and production control expenses		1,427,924		1,388,268
Freight out		376,726		600,751
Inventory valuation allowances		200,000		436,000
Other inventory adjustments		331,252		762,565
Cost of goods sold	$	20,401,439	$	18,943,507

The Company’s net inventories by product line maintained in the parent entity’s wholesale distribution segment are as follows:

	December 31,
	2016		2015
Loose jewels
Raw materials	$	2,586,045	$	6,741,712
Work-in-process		10,589,424		5,516,799
Finished goods		9,455,393		15,877,436
Finished goods on consignment		5,473		55,388
Total	$	22,636,335	$	28,191,335

Finished jewelry
Raw materials	$	520,572	$	190,427
Work-in-process		458,702		514,946
Finished goods		4,081,275		3,193,569
Finished goods on consignment		416,305		200,613
Total	$	5,476,854	$	4,099,555

Supplies inventories of approximately $17,000 and $38,000 at December 31, 2016 and 2015, respectively, included in finished goods inventories in the consolidated financial statements are omitted from inventories by product line because they are used in both product lines and are not maintained separately. The Company’s continuing operating subsidiary carries no net inventories, and inventory is transferred without intercompany markup from the parent entity’s wholesale distribution segment as product line cost of goods sold when sold to the end consumer.

The Company recognizes sales by geographic area based on the country in which the customer is based. A portion of the Company’s international wholesale distribution segment sales represents products sold internationally that may be re-imported to U.S. retailers. Sales to international end consumers made by the Company’s direct-to-consumer distribution segment, charlesandcolvard.com LLC, are included in U.S. sales because products are shipped and invoiced to a U.S.-based intermediary party that assumes all international shipping and credit risks. The following presents certain data by geographic area:

	Year Ended December 31,
	2016		2015
Net sales
United States	$	26,164,660	$	22,224,076
International		3,003,468		3,469,216
Total	$	29,168,128	$	25,693,292

	December 31,
	2016		2015
Property and equipment, net
United States	$	1,391,116	$	1,615,683
International		-		-
Total	$	1,391,116	$	1,615,683

	December 31,
	2016		2015
Intangible assets, net
United States	$	8,808	$	15,362
International		-		55,724
Total	$	8,808	$	71,086

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 34
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8981-108599

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9038-108599

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 33
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8971-108599

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 12
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8595-108599

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8380-108599

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8933-108599

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 26
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8844-108599

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 35
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8984-108599

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 40
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9031-108599

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 42
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e9054-108599

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8538-108599

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 29
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8864-108599

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8924-108599

Reference 14: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-URI http://asc.fasb.org/extlink&oid=68060357&loc=d3e8906-108599

+ Details

FAIR VALUE MEASUREMENTS

12 Months Ended

Dec. 31, 2016

FAIR VALUE MEASUREMENTS [Abstract]

FAIR VALUE MEASUREMENTS

4.	FAIR VALUE MEASUREMENTS

Under U.S. GAAP, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. U.S. GAAP also establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are obtained from independent sources and can be validated by a third party, whereas unobservable inputs reflect assumptions regarding what a third party would use in pricing an asset or liability. The fair value hierarchy consists of three levels based on the reliability of inputs, as follows:

Level 1 - quoted prices in active markets for identical assets and liabilities

Level 2 - inputs other than Level 1 quoted prices that are directly or indirectly observable

Level 3 - unobservable inputs that are not corroborated by market data

The Company evaluates assets and liabilities subject to fair value measurements on a recurring and non-recurring basis to determine the appropriate level to classify them for each reporting period. This determination requires significant judgments to be made by management of the Company. The financial instruments identified as subject to fair value measurements on a recurring basis are cash and cash equivalents, trade accounts receivable, and trade accounts payable. All financial instruments are reflected in the consolidated balance sheets at carrying value, which approximates fair value due to the short-term nature of these financial instruments.

Assets that are measured at fair value on a non-recurring basis include property and equipment, leasehold improvements, and intangible assets, comprising patents, license rights, and trademarks. These items are recognized at fair value when they are considered to be impaired. As of December 31, 2016, no assets were identified for impairment. Level 3 inputs are primarily based on the estimated future cash flows of the asset determined by market inquiries to establish fair market value of used machinery or future revenue expected to be generated with the assistance of patents and trademarks.

INVENTORIES

12 Months Ended

Dec. 31, 2016

INVENTORIES [Abstract]

INVENTORIES

5.	INVENTORIES

The Company’s total inventories, net of reserves, consisted of the following as of December 31, 2016 and 2015:

	December 31,
	2016			2015
Raw materials	$	3,106,617		$	6,932,139
Work-in-process		11,048,126			6,031,745
Finished goods		15,074,896			20,441,535
Finished goods on consignment		467,778			293,001
Less inventory reserves		(1,567,000	)		(1,370,000	)
Total	$	28,130,417		$	32,328,420

Short-term portion	$	9,770,206		$	10,739,798
Long-term portion		18,360,211			21,588,622
Total	$	28,130,417		$	32,328,420

Inventories are stated at the lower of cost or market on an average cost basis. Inventory costs include direct material and labor, inbound freight, purchasing and receiving costs, inspection costs, and warehousing costs. Any inventory on hand at the measurement date in excess of the Company’s current requirements based on historical and anticipated levels of sales is classified as long-term on the Company’s consolidated balance sheets. The Company’s classification of its inventory as either short- or long-term inventory requires it to estimate the portion of on-hand inventory that can be realized over the next 12 months and does not include precious metal, labor, and other inventory purchases expected to be both purchased and realized in cost of goods sold over the next 12 months.

The Company’s work-in-process inventories include raw SiC crystals on which processing costs, such as labor and sawing, have been incurred and components, such as metal castings and finished good moissanite jewels, that have been issued to jobs in the manufacture of finished jewelry. The Company’s moissanite jewel manufacturing process involves the production of intermediary shapes, called “preforms,” that vary depending upon the size and shape of the finished jewel. To maximize manufacturing efficiencies, preforms may be made in advance of current finished inventory needs but remain in work-in-process inventories. As of December 31, 2016 and December 31, 2015, work-in-process inventories issued to active production jobs approximated $7.18 million and $3.02 million, respectively.

The Company’s jewels do not degrade in quality over time and inventory generally consists of the shapes and sizes most commonly used in the jewelry industry. In addition, the majority of jewel inventory is not mounted in finished jewelry settings and is therefore not subject to fashion trends nor is obsolescence a significant factor. Presently, the Company has very small market penetration in the worldwide jewelry market, and the Company had the exclusive right in the U.S. through August 2015 and had the exclusive right in many other countries into the third quarter of 2016 to produce and sell created SiC for use in jewelry applications. During the years ended December 31, 2016 and 2015, management identified an opportunity to sell approximately $6.77 million and $2.28 million, respectively, of legacy loose jewel inventory of less desirable quality. As a result of these sales and feedback from customers on the value of some of these goods, the Company determined a lower of cost or market reserve of $517,000 and $352,000 as of December 31, 2016 and December 31, 2015, respectively, was required on some of the remaining inventory of these lower quality goods.

The Company manufactures finished jewelry featuring moissanite. Relative to loose moissanite jewels, finished jewelry is more fashion oriented and subject to styling trends that could render certain designs obsolete. The majority of the Company’s finished jewelry featuring moissanite is held in inventory for resale and consists of such basic designs as stud earrings, solitaire and three-stone rings, pendants, and bracelets that tend not to be subject to significant obsolescence risk due to their classic styling. In addition, the Company manufactures small individual quantities of designer-inspired moissanite fashion jewelry as part of its sample line that are used in the selling process to its wholesale customers.

Prior to March 2016, the Company purchased fashion finished jewelry comprising base metals and non-precious gemstones for sale through Lulu Avenue^®, the Company’s former direct-to-consumer home party division of the Company’s wholly owned operating subsidiary, Charles & Colvard Direct, LLC. This finished jewelry was fashion oriented and subject to styling trends that could change with each catalog season, of which there are generally two each year. Typically, in the jewelry industry, slow-moving or discontinued lines are sold as closeouts or liquidated in alternative sales channels. Management reviews the finished jewelry inventory on an ongoing basis for any lower of cost or market and obsolescence issues. Management identified certain fashion finished jewelry inventory that could not be sold due to damage or branding issues and established an obsolescence reserve of $169,000 as of December 31, 2016 and $164,000 as of December 31, 2015, for the carrying costs in excess of any estimated scrap values. As of December 31, 2016 and December 31, 2015, management identified certain finished jewelry featuring moissanite that was obsolete due to damage and other factors that indicate the finished jewelry is unsaleable, and established an obsolescence reserve of $258,000 and $225,000, respectively, for the carrying costs in excess of any estimated scrap values.

Periodically, the Company ships finished goods inventory to wholesale customers on consignment terms. Under these terms, the customer assumes the risk of loss and has an absolute right of return for a specified period. Finished goods on consignment at December 31, 2016 and December 31, 2015 are net of shrinkage reserves of $46,000 and $36,000, respectively, to allow for certain loose jewels and finished jewelry on consignment with wholesale customers that may not be returned or may be returned in a condition that does not meet the Company’s current grading or quality standards.

Total net loose jewel inventories at December 31, 2016 and December 31, 2015, including inventory on consignment net of reserves, were $22.64 million and $28.19 million, respectively. The loose jewel inventories at December 31, 2016 and December 31, 2015 include shrinkage reserves of $67,000 and $50,000, respectively, which includes $7,000 and $10,000 of shrinkage reserves on inventory on consignment at December 31, 2016 and December 31, 2015, respectively. Loose jewel inventories at December 31, 2016 and December 31, 2015 also include recut reserves of $425,000 and $449,000, respectively.

Total net jewelry inventories at December 31, 2016 and December 31, 2015, including inventory on consignment net of reserves, finished jewelry featuring moissanite manufactured by the Company, and fashion finished jewelry purchased and owned by the Company which was made for sale through Lulu Avenue^®, were $5.48 million and $4.10 million, respectively. The finished jewelry inventories at December 31, 2016 and December 31, 2015 also include shrinkage reserves of $102,000 and $95,000, respectively, including shrinkage reserves of $39,000 and $27,000 on inventory on consignment, respectively; and a repairs reserve of $29,000 and $31,000, respectively.

The need for adjustments to inventory reserves is evaluated on a period-by-period basis.

PROPERTY AND EQUIPMENT

12 Months Ended

Dec. 31, 2016

PROPERTY AND EQUIPMENT [Abstract]

PROPERTY AND EQUIPMENT

6.	PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

	December 31,
	2016			2015
Computer software	$	1,192,922		$	1,771,102
Machinery and equipment		956,050			922,532
Computer hardware		874,347			855,348
Leasehold improvements		1,083,634			1,030,423
Furniture and fixtures		309,046			302,064
Total		4,415,999			4,881,469
Less accumulated depreciation		(3,024,883	)		(3,265,786	)
Property and equipment, net	$	1,391,116		$	1,615,683

Depreciation expense for the years ended December 31, 2016 and 2015 was approximately $528,000 and $672,000, respectively.

Included in total depreciation expense are approximately $26,000 and $98,000 for the years ended December 31, 2016 and 2015, respectively, related to discontinued operations.

INTANGIBLE ASSETS

12 Months Ended

Dec. 31, 2016

INTANGIBLE ASSETS [Abstract]

INTANGIBLE ASSETS

7.	INTANGIBLE ASSETS

Intangible assets consist of the following:

	December 31,						Weighted Average Amortization
	December 31,						Period
	2016			2015			(in Years)
Patents	$	958,604		$	958,604			0.4
Trademarks		55,824			50,208			1.8
License rights		6,718			6,718			0.0
Total		1,021,146			1,015,530
Less accumulated amortization		(1,012,338	)		(944,444	)
Intangible assets, net	$	8,808		$	71,086

Amortization expense for the years ended December 31, 2016 and 2015 was approximately $68,000 and $192,000, respectively. Amortization expense on existing intangible assets is estimated to be $8,000 for 2017, and $1,000 for 2018.

Included in total amortization expense are approximately $13,000 and $6,700 for the years ended December 31, 2016 and 2015, respectively, related to discontinued operations.

COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2016

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

8.	COMMITMENTS AND CONTINGENCIES

Lease Commitments

On December 9, 2013, the Company entered into a Lease Agreement, as amended on December 23, 2013 and April 15, 2014 (the “Lease Agreement”), for a new corporate headquarters, which occupies approximately 36,350 square feet of office, storage, and light manufacturing space. The Company took possession of the leased property on May 23, 2014 once certain improvements to the leased space were completed, and did not have access to the property before this date. These improvements and other lease signing and moving incentives offered by the landlord totaled approximately $550,000 and $73,000, respectively, which will be amortized over the life of the lease until October 31, 2021. Included in the Lease Agreement is a seven-month rent abatement period effective June 2014 through December 2014.

The Company recognizes rent expense on a straight-line basis, giving consideration to the rent holidays and escalations, the lease signing and moving allowance to be paid to the Company, and the rent abatement.

As of December 31, 2016, the Company’s future minimum payments under the operating leases were as follows:


2017	$	584,789
2018		600,871
2019		617,395
2020		634,373
2021		541,957
Total	$	2,979,385

Rent expense for the years ended December 31, 2016 and 2015 was approximately $539,000 and $504,000, respectively.

Included in total rent expense are approximately $40,000 and $66,000 for the years ended December 31, 2016 and 2015, respectively, related to discontinued operations.

Purchase Commitments

On December 12, 2014, the Company entered into a new exclusive supply agreement (the “Supply Agreement”) with Cree, Inc. (“Cree”), which superseded and replaced the exclusive supply agreement that was set to expire in 2015. Under the Supply Agreement, subject to certain terms and conditions, the Company agreed to exclusively purchase from Cree, and Cree agreed to exclusively supply, 100% of the Company’s required SiC materials in quarterly installments that must equal or exceed a set minimum order quantity. The initial term of the Supply Agreement will expire on June 24, 2018, unless extended by the parties. The Company also has one option to unilaterally extend the term of the agreement for an additional two-year period, subject to certain conditions. The Company’s total purchase commitment under the Supply Agreement until June 2018 is dependent upon the size of the SiC material and ranges between approximately $29.60 million and approximately $31.50 million. As of December 31, 2016, the Company’s remaining purchase commitment through June 2018 under the Supply Agreement ranges from approximately $14.54 million to approximately $16.44 million.

During the year ended December 31, 2016 and 2015, the Company purchased approximately $8.20 million and $6.86 million, respectively, of SiC crystals from Cree.

LINE OF CREDIT

12 Months Ended

Dec. 31, 2016

LINE OF CREDIT [Abstract]

LINE OF CREDIT

9.	LINE OF CREDIT

On June 25, 2014, the Company and its wholly owned subsidiaries, Charles & Colvard Direct, LLC, and Moissanite.com, LLC (now charlesandcolvard.com, LLC) (collectively, the “Borrowers”), obtained a $10,000,000 asset-backed revolving credit facility (the “Credit Facility”) from Wells Fargo Bank, National Association (“Wells Fargo”). The Credit Facility will be used for general corporate and working capital purposes, including transaction fees and expenses incurred in connection therewith and the issuance of letters of credit up to a $1,000,000 sublimit. The Credit Facility will mature on June 25, 2017.

The Credit Facility includes a $5,000,000 sublimit for advances that are supported by a 90% guaranty provided by the U.S. Export-Import Bank. Advances under the Credit Facility are limited to a borrowing base, which is computed by applying specified advance rates to the value of the Borrowers’ eligible accounts and inventory, less reserves. Advances against inventory are further subject to an initial $3,000,000 maximum. The Borrowers must maintain a minimum of $1,000,000 in excess availability at all times. There are no other financial covenants.

Each advance accrues interest at a rate equal to Wells Fargo’s 3-month LIBOR rate plus 2.50%, calculated on an actual/360 basis and payable monthly in arrears. Principal outstanding during an event of default accrues interest at a rate of 3% in excess of the above rate. Any advance may be prepaid in whole or in part at any time. In addition, the maximum line amount may be reduced by the Company in whole or part at any time, subject to a fee equal to 2% of any reduction in the first year after closing, 1% of any reduction in the second year after closing, and 0% thereafter. There are no mandatory prepayments or line reductions.

The Credit Facility is secured by a lien on substantially all assets of the Borrowers, each of which is jointly and severally liable for all obligations thereunder. Wells Fargo’s security interest in certain SiC materials is subordinate to Cree’s security interest in such materials pursuant to the Supply Agreement and an Intercreditor Agreement with Wells Fargo.

The Credit Facility is evidenced by a credit and security agreement, dated as of June 25, 2014, as amended (the “Credit Agreement”), and customary ancillary documents. The Credit Agreement contains customary covenants, representations and cash dominion provisions, including a financial reporting covenant and limitations on dividends, distributions, debt, contingent obligations, liens, loans, investments, mergers, acquisitions, divestitures, subsidiaries, affiliate transactions, and changes in control.

Events of default under the Credit Facility include, without limitation, (1) any impairment of the Export-Import Bank guaranty, unless the guaranteed advances are repaid within two business days, (2) an event of default under any other indebtedness of the Borrowers in excess of $200,000, and (3) a material adverse change in the ability of the Borrowers to perform their obligations under the Credit Agreement or in the Borrowers’ assets, liabilities, businesses or prospects, or other circumstances that Wells Fargo believes may impair the prospect of repayment. If an event of default occurs, Wells Fargo is entitled to take enforcement action, including acceleration of amounts due under the Credit Agreement and foreclosure upon collateral.

The Credit Agreement contains other customary terms, including indemnity, expense reimbursement, yield protection, and confidentiality provisions. Wells Fargo is permitted to assign the Credit Facility.

As of December 31, 2016, the Company had not borrowed against the Credit Facility.

SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2016

SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION [Abstract]

SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION

10.	SHAREHOLDERS’ EQUITY AND STOCK-BASED COMPENSATION

Common Stock

The Company is authorized to issue 50,000,000 shares of common stock, no par value. As of December 31, 2016 and 2015, it had 21,369,885 and 21,111,585 shares of common stock outstanding, respectively. Holders of common stock are entitled to one vote for each share held.

Preferred Stock

The Board of Directors is authorized, without further shareholder approval, to issue up to 10,000,000 shares of preferred stock, no par value. The preferred stock may be issued from time to time in one or more series. No shares of preferred stock had been issued as of December 31, 2016.

Equity Compensation Plans

1997 Omnibus Stock Plan

In 1997, the Company adopted the 1997 Omnibus Stock Plan of Charles & Colvard, Ltd. (the “1997 Omnibus Plan”). The 1997 Omnibus Plan authorized the Company to grant stock options, stock appreciation rights, and restricted stock awards (collectively, “awards”) to selected employees, independent contractors, and directors of the Company and related corporations in order to promote a closer identification of their interests with those of the Company and its shareholders. All stock options granted under the 1997 Omnibus Plan have an exercise price equal to the market price of the Company’s common stock on the date the stock option was granted. Stock options granted to employees under the 1997 Omnibus Plan generally vest over three years and have terms of up to 10 years, with the exception of stock options granted in 2005 under the Executive Compensation Plan (which is governed by and subject to the 1997 Omnibus Plan) that vested immediately and stock options granted in 2006 under the Executive Compensation Plan that vested at the end of three years. Stock options granted to the Board of Directors under the 1997 Omnibus Plan generally vested over one year and have terms of up to 10 years. The terms of stock options granted to independent contractors varied depending on the specific grant, but the terms are no longer than 10 years. Restricted stock awards granted to members of the Board of Directors vested at the end of one year. The 1997 Omnibus Plan expired (with respect to future grants) on September 30, 2007. As of December 31, 2016 and 2015, there were 0 and 540 stock options outstanding under the 1997 Omnibus Plan, respectively.

2008 Stock Incentive Plan

In May 2008, the shareholders of the Company approved the adoption of the Charles & Colvard, Ltd. 2008 Stock Incentive Plan, as amended on March 31, 2015 and approved by the shareholders of the Company on May 20, 2015 and further amended on March 15, 2016 and approved by the shareholders of the Company on May 18, 2016 (the “2008 Plan”), which replaced the 1997 Omnibus Plan. The 2008 Plan authorizes the Company to grant stock options, stock appreciation rights, restricted stock, and other equity awards to selected employees, directors, and independent contractors. The aggregate number of shares of the Company’s common stock that may be issued pursuant to awards granted under the 2008 Plan shall not exceed the sum of 6,000,000 plus any shares of common stock subject to an award granted under the 1997 Omnibus Plan or any other stock incentive plan maintained by the Company prior to the 2008 Plan (each, a “Prior Plan”) that is forfeited, cancelled, terminated, expires, or lapses for any reason without the issuance of shares pursuant to the award, or shares subject to an award granted under a Prior Plan which shares are forfeited to, or repurchased or reacquired by, the Company. Stock options granted to employees under the 2008 Plan generally vest over four years and have terms of up to 10 years. The vesting schedules and terms of stock options granted to independent contractors vary depending on the specific grant, but the terms are no longer than 10 years. Restricted stock awards granted to members of the Board of Directors vest at the end of one year on the date of the Annual Meeting of Shareholders. The vesting schedules of restricted stock awards granted to employees or independent contractors vary depending on the specific grant but are generally four years or less. Only stock options and restricted stock have been granted under the 2008 Plan. As of December 31, 2016 and 2015, there were 2,134,898 and 2,441,077 stock options outstanding under the 2008 Plan, respectively.

Stock-Based Compensation

The following table summarizes the components of the Company’s stock-based compensation included in net loss:

	Year Ended December 31,
	2016		2015
Employee stock options	$	383,778	$	697,269
Consultant stock options		170,622		257,342
Restricted stock awards		448,906		816,286
Total	$	1,003,306	$	1,770,897

Due to the Company’s valuation allowance against deferred tax assets as discussed further in Note 11, “Income Taxes”, the income tax benefits for 2016 and 2015 were fully reserved.

No stock-based compensation was capitalized as a cost of inventory during the years ended December 31, 2016 and 2015.

Included in total stock-based compensation are approximately $44,000 and $226,000 for the years ended December 31, 2016 and 2015, respectively, related to discontinued operations.

Stock Options

The following is a summary of the stock option activity for the years ended December 31, 2016 and 2015:

	Shares			Weighted Average Exercise Price
Outstanding, December 31, 2014		1,665,571		$	2.93
Granted		1,413,765		$	1.28
Exercised		(241,752	)	$	0.71
Forfeited		(129,434	)	$	3.08
Expired		(267,073	)	$	3.17
Outstanding, December 31, 2015		2,441,077		$	2.11
Granted		591,005		$	1.14
Exercised		(2,500	)	$	0.92
Forfeited		(449,122	)	$	1.43
Expired		(445,562	)	$	2.09
Outstanding, December 31, 2016		2,134,898		$	1.99

The weighted average grant date fair value of stock options granted during the years ended December 31, 2016 and 2015 was $0.63 and $0.72, respectively. The total fair value of stock options that vested during the years ended December 31, 2016 and 2015 was approximately $780,000 and $862,000, respectively. The fair value of each stock option is estimated on the date of grant using the Black-Scholes-Merton option pricing model with the following weighted average assumptions for stock options granted during the years ended December 31, 2016 and 2015:

	Year Ended December 31,
	2016			2015
Dividend yield		0.0	%		0.0	%
Expected volatility		62.2	%		63.8	%
Risk-free interest rate		1.42	%		1.64	%
Expected lives (years)		5.6			5.7

The following table summarizes information about stock options outstanding at December 31, 2016:

Options Outstanding						Options Exercisable						Options Vested or Expected to Vest
Balance as of 12/31/2016		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Balance as of 12/31/2016		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Balance as of 12/31/2016		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price
	2,134,898		6.71	$	1.99		1,477,644		5.65	$	2.30		2,041,970		6.60	$	2.02

As of December 31, 2016, the unrecognized stock-based compensation expense related to unvested stock options was approximately $323,000, which is expected to be recognized over a weighted average period of approximately 20 months.

The aggregate intrinsic value of stock options outstanding, exercisable, and vested or expected to vest at December 31, 2016 was approximately $18,000. This amount is before applicable income taxes and represents the closing market price of the Company’s common stock at December 31, 2016 less the grant price, multiplied by the number of stock options that had a grant price that is less than the closing market price. This amount represents the amount that would have been received by the optionees had these stock options been exercised on that date. During the years ended December 31, 2016 and 2015, the aggregate intrinsic value of stock options exercised was approximately $0 and $167,000, respectively.

Restricted Stock

The following is a summary of the restricted stock activity for the years ended December 31, 2016 and 2015:

	Shares			Weighted Average Grant Date Fair Value
Unvested, December 31, 2014		287,006		$	3.29
Granted		487,500		$	1.38
Vested		(349,506	)	$	2.36
Canceled		-		$	-
Unvested, December 31, 2015		425,000		$	1.87
Granted		509,250		$	0.93
Vested		(321,400	)	$	2.00
Canceled		(253,450	)	$	1.18
Unvested, December 31, 2016		359,400		$	0.91

The unvested restricted shares as of December 31, 2016 are all performance-based restricted shares that will vest, subject to achievement of performance goals, on March 4, 2017. As of December 31, 2016, the estimated unrecognized stock-based compensation expense related to these unvested restricted shares subject to the achievement of performance goals was approximately $78,000, all of which is expected to be recognized over a weighted average period of approximately two months.

Dividends

The Company has not paid any cash dividends during the years ended December 31, 2016 and 2015.

INCOME TAXES

12 Months Ended

Dec. 31, 2016

INCOME TAXES [Abstract]

INCOME TAXES

11.	INCOME TAXES

The Company accounts for income taxes under the liability method. Under the liability method, deferred income taxes are recognized for the income tax consequences of “temporary differences” by applying enacted statutory income tax rates applicable to future years to differences between the financial statement carrying amounts and the income tax bases of existing assets and liabilities.

Income tax net expense comprises the following:

	Year Ended December 31,
	2016			2015
Current:
Federal	$	-		$	-
State		(13,480	)		(12,821	)
Total		(13,480	)		(12,821	)

Deferred:
Federal		-			-
State		-			-
Total		-			-
Income tax net expense	$	(13,480	)	$	(12,821	)

Significant components of the Company’s deferred income tax assets are as follows:

	December 31,
	2016			2015

Reserves and accruals	$	1,053,863		$	1,578,374
Prepaid expenses		(43,774	)		(50,966	)
Federal NOL carryforwards		8,530,493			6,762,537
State NOL carryforwards		615,919			583,651
Hong Kong NOL carryforwards		995,566			995,566
Federal benefit on state taxes under uncertain tax positions		136,969			132,385
Stock-based compensation		342.294			481,917
Research tax credit		434,637			434,637
Alternative minimum tax credit		348,264			348,264
Contributions carryforward		35,100			33,582
Depreciation		(286,608	)		(312,023	)
Accrued rent		216,432			254,404
Loss on impairment of long-lived assets		53,042			52,226
Valuation allowance		(12,432.197	)		(11,294,554	)
Total		-			-
Total deferred income tax assets, net	$	-		$	-

A reconciliation between expected income taxes, computed at the statutory federal income tax rate of 34% applied to pretax accounting loss, and the income tax net expense included in the consolidated statements of operations for the years ended December 31, 2016 and 2015 is as follows:

	Year Ended December 31,
	2016			2015
Anticipated income tax benefit at statutory rate	$	1,534,176		$	3,315,420
State income tax benefit, net of federal tax effect		(9,350	)		35,814
Capital loss carryforward expiration		-			(9,227	)
Income tax effect of uncertain tax positions		(8,896	)		(8,461	)
Return to provision adjustments		(23,070	)		(82,341	)
Stock-based compensation		(110,066	)		(215,030	)
Other changes in deferred income tax assets, net		(13,118	)		(22,414	)
Increase in valuation allowance		(1,383,156	)		(3,026,582	)
Income tax net expense	$	(13,480	)	$	(12,821	)

As of each reporting date, management considers new evidence, both positive and negative, that could impact its view with regard to future realization of deferred tax assets. As of December 31, 2016 and December 31, 2015, the Company’s management determined that sufficient negative evidence continued to exist to conclude it was uncertain that the Company would have sufficient future taxable income to utilize its deferred tax assets, and therefore, the Company maintained a valuation allowance against its deferred tax assets.

As of December 31, 2016, the Company had approximately $882,000 of remaining federal income tax credits, $533,000 of which expire between 2018 and 2021 and the balance without an expiration, which can be carried forward to offset future income taxes. As of December 31, 2016, the Company had federal tax net operating loss carryforwards under U.S. GAAP of approximately $25.13 million, expiring between 2020 and 2036, which can be used to offset against future federal taxable income; North Carolina tax net operating loss carryforwards across all of the entities of approximately $20.25 million expiring between 2023 and 2031; and various other state tax net operating loss carryforwards expiring between 2021 and 2036, which can be used to offset against future state taxable income.

As of December 31, 2016, there was approximately $6.03 million in net operating loss carryforwards in Hong Kong. In accordance with the Hong Kong tax code, these amounts can be carried forward indefinitely to offset future taxable income in Hong Kong. The Company’s deferred tax assets in Hong Kong were fully reserved with a valuation allowance of $996,000 as of December 31, 2016 and 2015 and had been fully reserved in all prior periods due to the uncertainty of future taxable income in this jurisdiction to utilize the deferred tax assets.

Uncertain Tax Positions

The gross liability for income taxes associated with uncertain tax positions at December 31, 2016 was approximately $532,000. This amount is shown net of approximately $98,000 recorded as a direct reduction to the associated deferred tax asset. The gross liability, if recognized, would favorably affect the Company’s effective tax rate.

The Company’s policy for recording interest and penalties associated with tax audits is to record such items as a component of the provision for income taxes. For each of the years ended December 31, 2016 and 2015, the Company accrued approximately $13,000 of interest and penalties associated with uncertain tax positions. Including the interest and penalties recorded for uncertain tax positions, there is a total of approximately $165,000 of interest and penalties included in the accrued income tax liability for uncertain tax positions at each of December 31, 2016 and 2015. To the extent interest and penalties are not ultimately incurred with respect to uncertain tax positions, amounts accrued will be reduced and reflected as a reduction of the overall income tax provision.

In all of the significant federal and state jurisdictions where it is required to file income tax returns, the Company has analyzed filing positions for all tax years in which the statute of limitations is open. The only periods subject to examination by the major tax jurisdictions where the Company does business are the 2013 through 2015 tax years. The Company does not believe that the outcome of any examination will have a material impact on its consolidated financial statements and does not expect settlement on any uncertain tax positions within the next 12 months.

The following summarizes the activity related to the Company’s gross liability for uncertain tax positions from January 1, 2015 through December 31, 2016:

Balance as of January 1, 2015	$	506,463
Increases related to prior year tax positions		12,821
Balance as of December 31, 2015		519,284
Increases related to prior year tax positions		13,480
Balance as of December 31, 2016	$	532,764

DISCONTINUED OPERATIONS

12 Months Ended

Dec. 31, 2016

DISCONTINUED OPERATIONS [Abstract]

DISCONTINUED OPERATIONS

12.	DISCONTINUED OPERATIONS

On March 4, 2016, the Company and Charles & Colvard Direct, LLC (“Direct”) a wholly owned subsidiary of the Company, entered into an asset purchase agreement (the “Purchase Agreement”) with Yanbal, pursuant to which Yanbal agreed to purchase certain assets of Direct (the “Transferred Assets”). The transactions contemplated by the Purchase Agreement also closed on March 4, 2016 (the “Closing Date”). The Company determined that the sale of these assets represented a strategic shift that will have a major effect on the Company’s operations and financial results. The Company made the decision to divest of these assets after careful analysis of the Company’s core competencies, go-to-market strategies, and intent to advance toward profitability.

Pursuant to the terms of the Purchase Agreement, the Transferred Assets included, among other things, (i) an inventory credit to be used towards $250,000 in existing non-moissanite and moissanite inventory as of the Closing Date, consisting of Direct’s current jewelry offered under the “Lulu Avenue” trademarks, (ii) all existing marketing collateral such as packaging and catalogs for Direct’s current jewelry offered under the “Lulu Avenue” trademarks as of the Closing Date, (iii) certain assigned contracts, (iv) style advisor and customer lists, and (v) all intellectual property rights owned by the Company and Direct and used solely in connection with the operation of Direct’s direct-to-consumer home party business for the sale of fashion jewelry and related products and services in the United States, excluding the “Lulu Avenue” and “Love Knot” trademarks and other “Lulu Avenue” specific intellectual property such as the domain name www.luluavenue.com and all content located on such website (the “Lulu Intellectual Property”). The inventory credit and an exclusive, nontransferable license to use the Lulu Intellectual Property that was also granted to Yanbal on the Closing Date expired on July 31, 2016. After the Closing Date, the Company and Direct may not engage in the direct-to-consumer home party business and may not solicit style advisors or customers of the direct-to-consumer home party business. The Company had also agreed to provide to Yanbal certain transition services, which services ended August 31, 2016.

The purchase price for the Transferred Assets was $500,000 with selling expenses of approximately $131,000, resulting in a net purchase price of approximately $369,000. The Company recorded a liability associated with $35,000 of expense related to certain style advisor incentives and reduced prepaid expenses by $60,000 related to contracts acquired by Yanbal.

The following table presents the major classes of line items constituting assets and liabilities related to discontinued operations:

	December 31, 2016		December 31, 2015
Prepaid expenses and other assets	$	-	$	83,000
Total assets	$	-	$	83,000
Accounts payable	$	-	$	140,000
Accrued expenses and other liabilities		-		209,000
Total liabilities	$	-	$	349,000

The following table presents the major classes of line items constituting pretax loss from discontinued operations:

	Year Ended December 31,
	2016			2015
Net sales	$	804,585		$	5,073,825
Costs and expenses:
Cost of goods sold		276,100			1,609,200
Sales and marketing		940,685			6,598,122
General and administrative		173,913			1,352,290
Interest expense		11			-
Total costs and expenses		1,390,709			9,559,612
Loss from discontinued operations		(586,124	)		(4,485,787	)
Other income:
Gain on sale of long-term assets		12,398			-
Total other income, net		12,398			-
Pretax loss from discontinued operations	$	(573,726	)	$	(4,485,787	)

- Definition

The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 45
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=65878427&loc=SL51721533-107759

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 4B
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721665-107760

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 5C
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721675-107760

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 360
-SubTopic 10
-Section 50
-Paragraph 3A
-URI http://asc.fasb.org/extlink&oid=64862545&loc=SL51724579-110230

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 4A
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721663-107760

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 360
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=64862545&loc=d3e2941-110230

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=64827811&loc=d3e1361-107760

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 5B
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721673-107760

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 3A
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721659-107760

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 5A
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721671-107760

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 5D
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721677-107760

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=64827811&loc=d3e1474-107760

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721683-107760

+ Details

MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK

12 Months Ended

Dec. 31, 2016

MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK [Abstract]

MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK

13.	MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK

At times, a portion of the Company’s accounts receivable will be due from customers that have individual balances of 10% or more of the Company’s total net accounts receivable. The following is a summary of customers that represent 10% or more of total net accounts receivable as of December 31, 2016 and 2015:

	December 31, 2016			December 31, 2015
Customer A		13	%		**	%
Customer B		*	%		17	%
Customer C		*	%		14	%
Customer D		*	%		11	%
Customer E		*	%		10	%

* Customers B, C, D, and E did not have individual balances that represented 10% or more of total net accounts receivable as of December 31, 2016.

** Customer A did not have an individual balance that represented 10% or more of the total net accounts receivable as of December 31, 2015.

A significant portion of sales is derived from certain customer relationships. The following is a summary of customers that represent greater than or equal to 10% of total gross sales for the years ended December 31, 2016 and 2015:

	Year Ended December 31,
	2016			2015
Customer D		23	%		25	%
Customer F		17	%		11	%

The Company records its sales return allowance at the corporate level based on several factors including historical sales return activity and specific allowances for known customer returns.

EMPLOYEE BENEFIT PLAN

12 Months Ended

Dec. 31, 2016

EMPLOYEE BENEFIT PLAN [Abstract]

EMPLOYEE BENEFIT PLAN

14.	EMPLOYEE BENEFIT PLAN

All full-time employees who meet certain age and length of service requirements are eligible to participate in the Company’s 401(k) Plan. The plan provides for matching contributions by the Company in such amounts as the Board of Directors may annually determine, as well as a 401(k) option under which eligible participants may defer a portion of their salaries. The Company contributed a total of $102,000 and $120,000 to the plan during the years ended December 31, 2016 and 2015, respectively.

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2016

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Basis of Presentation and Principles of Consolidation

Discontinued Operations

Use of Estimates

Reclassifications

Cash and Cash Equivalents

Cash and Cash Equivalents - All highly liquid investments with an original maturity of three months or less from the date of purchase are considered to be cash equivalents.

Concentration of Credit Risk

See Note 13, “Major Customers and Concentration of Credit Risk”, for further discussion of credit risk within trade accounts receivable.

Accounts Receivable Reserves

The following is a reconciliation of the allowance for sales returns:

	Year Ended December 31,
	2016			2015
Balance, beginning of period	$	731,000		$	910,000
Additions charged to operations		3,574,297			3,651,741
Sales returns		(3,890,297	)		(3,830,741	)
Balance, end of period	$	415,000		$	731,000

The following is a reconciliation of the allowance for doubtful accounts:

	Year Ended December 31,
	2016			2015
Balance, beginning of period	$	1,137,000		$	1,074,000
(Reductions) additions charged to operations		(73,300	)		89,462
Write-offs, net of recoveries		(837,700	)		(26,462	)
Balance, end of period	$	226,000		$	1,137,000

Inventories

Property and Equipment

Property and Equipment - Property and equipment are stated at cost and are depreciated over their estimated useful lives using the straight-line method as follows:

Machinery and equipment	5 to 12 years
Computer hardware	3 to 5 years
Computer software	3 years
Furniture and fixtures	5 to 10 years
Leasehold improvements	Shorter of the estimated useful life or the lease term

Intangible Assets

Impairment of Long-Lived Assets

Revenue Recognition

Cost of Goods Sold

Advertising Costs

Advertising Costs - Advertising production costs are expensed as incurred. Media placement costs are expensed the first time the advertising appears.

Sales and Marketing

General and Administrative

Research and Development

Stock-Based Compensation

Dividend yield - Although the Company issued dividends in prior years, a dividend yield of zero is used due to the uncertainty of future dividend payments.

Income Taxes

Net Loss per Common Share

The following table reconciles the differences between the basic and diluted net loss per share presentations:

	Year Ended December 31,
	2016			2015
Numerator:
Net loss from continuing operations	$	(3,952,035	)	$	(5,087,272	)
Net loss from discontinued operations		(573,726	)		(4,485,787	)
Net loss	$	(4,525,761	)	$	(9,573,059	)

Denominator:
Weighted average common shares outstanding:
Basic		20,926,120			20,407,764
Stock options		-			-
Diluted		20,926,120			20,407,764

Net loss per common share:
Basic-continuing operations	$	(0.19	)	$	(0.25	)
Basic-discontinued operations		(0.03	)		(0.22	)
Basic-total	$	(0.22	)	$	(0.47	)

Diluted-continuing operations	$	(0.19	)	$	(0.25	)
Diluted-discontinued operations		(0.03	)		(0.22	)
Diluted-total	$	(0.22	)	$	(0.47	)

Recently Adopted/Issued Accounting Pronouncements

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2016

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Reconciliation of allowance for sales returns

The following is a reconciliation of the allowance for sales returns:

	Year Ended December 31,
	2016			2015
Balance, beginning of period	$	731,000		$	910,000
Additions charged to operations		3,574,297			3,651,741
Sales returns		(3,890,297	)		(3,830,741	)
Balance, end of period	$	415,000		$	731,000

Reconciliation of allowance for doubtful accounts

The following is a reconciliation of the allowance for doubtful accounts:

	Year Ended December 31,
	2016			2015
Balance, beginning of period	$	1,137,000		$	1,074,000
(Reductions) additions charged to operations		(73,300	)		89,462
Write-offs, net of recoveries		(837,700	)		(26,462	)
Balance, end of period	$	226,000		$	1,137,000

Schedule of estimated useful life of property, plant and equipment

Property and equipment are stated at cost and are depreciated over their estimated useful lives using the straight-line method as follows:

Machinery and equipment	5 to 12 years
Computer hardware	3 to 5 years
Computer software	3 years
Furniture and fixtures	5 to 10 years
Leasehold improvements	Shorter of the estimated useful life or the lease term

Reconciliation of basic and diluted net loss per share

The following table reconciles the differences between the basic and diluted net loss per share presentations:

	Year Ended December 31,
	2016			2015
Numerator:
Net loss from continuing operations	$	(3,952,035	)	$	(5,087,272	)
Net loss from discontinued operations		(573,726	)		(4,485,787	)
Net loss	$	(4,525,761	)	$	(9,573,059	)

Denominator:
Weighted average common shares outstanding:
Basic		20,926,120			20,407,764
Stock options		-			-
Diluted		20,926,120			20,407,764

Net loss per common share:
Basic-continuing operations	$	(0.19	)	$	(0.25	)
Basic-discontinued operations		(0.03	)		(0.22	)
Basic-total	$	(0.22	)	$	(0.47	)

Diluted-continuing operations	$	(0.19	)	$	(0.25	)
Diluted-discontinued operations		(0.03	)		(0.22	)
Diluted-total	$	(0.22	)	$	(0.47	)

SEGMENT INFORMATION AND GEOGRAPHIC DATA (Tables)

12 Months Ended

Dec. 31, 2016

SEGMENT INFORMATION AND GEOGRAPHIC DATA [Abstract]

Summary information by segment

Summary financial information by reportable segment is as follows:

	Year Ended December 31, 2016
	Wholesale			charlesandcolvard .com			Total
Net sales
Loose jewels	$	20,929,322		$	522,406		$	21,451,728
Finished jewelry		3,601,768			4,114,632			7,716,400
Total	$	24,531,090		$	4,637,038		$	29,168,128

Product line cost of goods sold
Loose jewels	$	13,851,463		$	65,286		$	13,916,749
Finished jewelry		2,497,788			1,651,000			4,148,788
Total	$	16,349,251		$	1,716,286		$	18,065,537

Product line gross profit
Loose jewels	$	7,077,859		$	457,120		$	7,534,979
Finished jewelry		1,103,980			2,463,632			3,567,612
Total	$	8,181,839		$	2,920,752		$	11,102,591

Operating loss	$	(1,603,947	)	$	(2,332,871	)	$	(3,936,818	)

Depreciation and amortization	$	479,517		$	77,876		$	557,393

Total assets	$	40,167,149		$	338,627		$	40,505,776

Capital expenditures	$	158,702		$	263,059		$	421,761

	Year Ended December 31, 2015
	Wholesale			charlesandcolvard .com			Total
Net sales
Loose jewels	$	14,581,554		$	531,695		$	15,113,249
Finished jewelry		5,683,478			4,896,565			10,580,043
Total	$	20,265,032		$	5,428,260		$	25,693,292

Product line cost of goods sold
Loose jewels	$	9,375,195		$	83,964		$	9,459,159
Finished jewelry		3,867,080			2,429,684			6,296,764
Total	$	13,242,275		$	2,513,648		$	15,755,923

Product line gross profit
Loose jewels	$	5,206,359		$	447,731		$	5,654,090
Finished jewelry		1,816,398			2,466,881			4,283,279
Total	$	7,022,757		$	2,914,612		$	9,937,369

Operating loss	$	(3,736,111	)	$	(1,328,117	)	$	(5,064,228	)

Depreciation and amortization	$	652,326		$	106,461		$	758,787

Total assets	$	43,882,939		$	174,899		$	44,057,838

Capital expenditures	$	291,372		$	116,080		$	407,452

Schedule of reconciliation of product line cost of goods sold to cost of goods sold as reported in consolidated financial statements

A reconciliation of the Company’s product line cost of goods sold to cost of goods sold as reported in the consolidated financial statements is as follows:

	Year Ended December 31,
	2016		2015
Product line cost of goods sold	$	18,065,537	$	15,755,923
Non-capitalized manufacturing and production control expenses		1,427,924		1,388,268
Freight out		376,726		600,751
Inventory valuation allowances		200,000		436,000
Other inventory adjustments		331,252		762,565
Cost of goods sold	$	20,401,439	$	18,943,507

Schedule of inventories by product line maintained in its wholesale distribution segment

The Company’s net inventories by product line maintained in the parent entity’s wholesale distribution segment are as follows:

	December 31,
	2016		2015
Loose jewels
Raw materials	$	2,586,045	$	6,741,712
Work-in-process		10,589,424		5,516,799
Finished goods		9,455,393		15,877,436
Finished goods on consignment		5,473		55,388
Total	$	22,636,335	$	28,191,335

Finished jewelry
Raw materials	$	520,572	$	190,427
Work-in-process		458,702		514,946
Finished goods		4,081,275		3,193,569
Finished goods on consignment		416,305		200,613
Total	$	5,476,854	$	4,099,555

Data by geographic area

The following presents certain data by geographic area:

	Year Ended December 31,
	2016		2015
Net sales
United States	$	26,164,660	$	22,224,076
International		3,003,468		3,469,216
Total	$	29,168,128	$	25,693,292

	December 31,
	2016		2015
Property and equipment, net
United States	$	1,391,116	$	1,615,683
International		-		-
Total	$	1,391,116	$	1,615,683

	December 31,
	2016		2015
Intangible assets, net
United States	$	8,808	$	15,362
International		-		55,724
Total	$	8,808	$	71,086

PROPERTY AND EQUIPMENT (Tables)

12 Months Ended

Dec. 31, 2016

PROPERTY AND EQUIPMENT [Abstract]

Property and equipment

Property and equipment consists of the following:

	December 31,
	2016			2015
Computer software	$	1,192,922		$	1,771,102
Machinery and equipment		956,050			922,532
Computer hardware		874,347			855,348
Leasehold improvements		1,083,634			1,030,423
Furniture and fixtures		309,046			302,064
Total		4,415,999			4,881,469
Less accumulated depreciation		(3,024,883	)		(3,265,786	)
Property and equipment, net	$	1,391,116		$	1,615,683

SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION (Tables)

12 Months Ended

Dec. 31, 2016

SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION [Abstract]

Schedule for components of stock based compensation

The following table summarizes the components of the Company’s stock-based compensation included in net loss:

	Year Ended December 31,
	2016		2015
Employee stock options	$	383,778	$	697,269
Consultant stock options		170,622		257,342
Restricted stock awards		448,906		816,286
Total	$	1,003,306	$	1,770,897

Summary of the stock option activity

The following is a summary of the stock option activity for the years ended December 31, 2016 and 2015:

	Shares			Weighted Average Exercise Price
Outstanding, December 31, 2014		1,665,571		$	2.93
Granted		1,413,765		$	1.28
Exercised		(241,752	)	$	0.71
Forfeited		(129,434	)	$	3.08
Expired		(267,073	)	$	3.17
Outstanding, December 31, 2015		2,441,077		$	2.11
Granted		591,005		$	1.14
Exercised		(2,500	)	$	0.92
Forfeited		(449,122	)	$	1.43
Expired		(445,562	)	$	2.09
Outstanding, December 31, 2016		2,134,898		$	1.99

Weighted average assumptions for stock options granted

The fair value of each stock option is estimated on the date of grant using the Black-Scholes-Merton option pricing model with the following weighted average assumptions for stock options granted during the years ended December 31, 2016 and 2015:

	Year Ended December 31,
	2016			2015
Dividend yield		0.0	%		0.0	%
Expected volatility		62.2	%		63.8	%
Risk-free interest rate		1.42	%		1.64	%
Expected lives (years)		5.6			5.7

Information about stock options outstanding

The following table summarizes information about stock options outstanding at December 31, 2016:

Options Outstanding						Options Exercisable						Options Vested or Expected to Vest
Balance as of 12/31/2016		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Balance as of 12/31/2016		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Balance as of 12/31/2016		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price
	2,134,898		6.71	$	1.99		1,477,644		5.65	$	2.30		2,041,970		6.60	$	2.02

Restricted stock activity

The following is a summary of the restricted stock activity for the years ended December 31, 2016 and 2015:

	Shares			Weighted Average Grant Date Fair Value
Unvested, December 31, 2014		287,006		$	3.29
Granted		487,500		$	1.38
Vested		(349,506	)	$	2.36
Canceled		-		$	-
Unvested, December 31, 2015		425,000		$	1.87
Granted		509,250		$	0.93
Vested		(321,400	)	$	2.00
Canceled		(253,450	)	$	1.18
Unvested, December 31, 2016		359,400		$	0.91

INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2016

INCOME TAXES [Abstract]

Income tax net (expense) benefit

Income tax net expense comprises the following:

	Year Ended December 31,
	2016			2015
Current:
Federal	$	-		$	-
State		(13,480	)		(12,821	)
Total		(13,480	)		(12,821	)

Deferred:
Federal		-			-
State		-			-
Total		-			-
Income tax net expense	$	(13,480	)	$	(12,821	)

Significant components of deferred income tax assets

Significant components of the Company’s deferred income tax assets are as follows:

	December 31,
	2016			2015

Reserves and accruals	$	1,053,863		$	1,578,374
Prepaid expenses		(43,774	)		(50,966	)
Federal NOL carryforwards		8,530,493			6,762,537
State NOL carryforwards		615,919			583,651
Hong Kong NOL carryforwards		995,566			995,566
Federal benefit on state taxes under uncertain tax positions		136,969			132,385
Stock-based compensation		342.294			481,917
Research tax credit		434,637			434,637
Alternative minimum tax credit		348,264			348,264
Contributions carryforward		35,100			33,582
Depreciation		(286,608	)		(312,023	)
Accrued rent		216,432			254,404
Loss on impairment of long-lived assets		53,042			52,226
Valuation allowance		(12,432.197	)		(11,294,554	)
Total		-			-
Total deferred income tax assets, net	$	-		$	-

Schedule of effective income tax rate reconciliation

	Year Ended December 31,
	2016			2015
Anticipated income tax benefit at statutory rate	$	1,534,176		$	3,315,420
State income tax benefit, net of federal tax effect		(9,350	)		35,814
Capital loss carryforward expiration		-			(9,227	)
Income tax effect of uncertain tax positions		(8,896	)		(8,461	)
Return to provision adjustments		(23,070	)		(82,341	)
Stock-based compensation		(110,066	)		(215,030	)
Other changes in deferred income tax assets, net		(13,118	)		(22,414	)
Increase in valuation allowance		(1,383,156	)		(3,026,582	)
Income tax net expense	$	(13,480	)	$	(12,821	)

Summary of gross liability for uncertain tax positions

The following summarizes the activity related to the Company’s gross liability for uncertain tax positions from January 1, 2015 through December 31, 2016:

Balance as of January 1, 2015	$	506,463
Increases related to prior year tax positions		12,821
Balance as of December 31, 2015		519,284
Increases related to prior year tax positions		13,480
Balance as of December 31, 2016	$	532,764

DISCONTINUED OPERATIONS (Tables)

12 Months Ended

Dec. 31, 2016

DISCONTINUED OPERATIONS [Abstract]

Summary of discontinued operations

The following table presents the major classes of line items constituting assets and liabilities related to discontinued operations:

	December 31, 2016		December 31, 2015
Prepaid expenses and other assets	$	-	$	83,000
Total assets	$	-	$	83,000
Accounts payable	$	-	$	140,000
Accrued expenses and other liabilities		-		209,000
Total liabilities	$	-	$	349,000

The following table presents the major classes of line items constituting pretax loss from discontinued operations:

	Year Ended December 31,
	2016			2015
Net sales	$	804,585		$	5,073,825
Costs and expenses:
Cost of goods sold		276,100			1,609,200
Sales and marketing		940,685			6,598,122
General and administrative		173,913			1,352,290
Interest expense		11			-
Total costs and expenses		1,390,709			9,559,612
Loss from discontinued operations		(586,124	)		(4,485,787	)
Other income:
Gain on sale of long-term assets		12,398			-
Total other income, net		12,398			-
Pretax loss from discontinued operations	$	(573,726	)	$	(4,485,787	)

- Definition

Tabular disclosure of information related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 45
-Paragraph 11
-URI http://asc.fasb.org/extlink&oid=65878427&loc=SL51721533-107759

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 4B
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721665-107760

Reference 3: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=64827811&loc=d3e1474-107760

Reference 4: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=64827811&loc=d3e1361-107760

Reference 5: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 7
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721683-107760

Reference 6: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 360
-SubTopic 10
-Section 50
-Paragraph 3A
-URI http://asc.fasb.org/extlink&oid=64862545&loc=SL51724579-110230

Reference 7: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 5C
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721675-107760

Reference 8: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 4A
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721663-107760

Reference 9: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 360
-SubTopic 10
-Section 50
-Paragraph 3
-URI http://asc.fasb.org/extlink&oid=64862545&loc=d3e2941-110230

Reference 10: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 5B
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721673-107760

Reference 11: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 3A
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721659-107760

Reference 12: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 5A
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721671-107760

Reference 13: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 205
-SubTopic 20
-Section 50
-Paragraph 5D
-URI http://asc.fasb.org/extlink&oid=64827811&loc=SL51721677-107760

+ Details

MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK (Tables)

12 Months Ended

Dec. 31, 2016

MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK [Abstract]

Summary of customers that represent greater than or equal to 10% of total gross sales and receivables

The following is a summary of customers that represent 10% or more of total net accounts receivable as of December 31, 2016 and 2015:

	December 31, 2016			December 31, 2015
Customer A		13	%		**	%
Customer B		*	%		17	%
Customer C		*	%		14	%
Customer D		*	%		11	%
Customer E		*	%		10	%

* Customers B, C, D, and E did not have individual balances that represented 10% or more of total net accounts receivable as of December 31, 2016.

** Customer A did not have an individual balance that represented 10% or more of the total net accounts receivable as of December 31, 2015.

The following is a summary of customers that represent greater than or equal to 10% of total gross sales for the years ended December 31, 2016 and 2015:

	Year Ended December 31,
	2016			2015
Customer D		23	%		25	%
Customer F		17	%		11	%

DESCRIPTION OF BUSINESS (Details)	Mar. 04, 2016 USD ($)
Yanbal USA Inc. [Member]
Business Acquisition [Line Items]
Purchase price for transferred assets	$ 500,000

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details)	3 Months Ended	12 Months Ended
	Sep. 30, 2016 USD ($)	Dec. 31, 2016 USD ($) Subsidiary $ / shares shares	Dec. 31, 2015 USD ($) $ / shares shares
Concentration of Credit Risk [Abstract]
Non-interest bearing amounts on deposit in excess of FDIC insurable limits		$ 7,040,000
Customer payment term for trade receivables, minimum		30 days
Customer payment term for trade receivables, maximum		90 days
Finite-Lived Intangible Assets [Line Items]
Amortized life of patent		17 years
Advertising Costs [Abstract]
Other sales and marketing expenses		$ 126,000	$ (4,000)
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Advertising expense		$ 2,590,000	1,760,000
Number of wholly owned operating subsidiaries \| Subsidiary		2
Stock-Based Compensation [Abstract]
Dividend yield		0.00%
Numerator [Abstract]
Net loss from continuing operations		$ (3,952,035)	(5,087,272)
Net loss from discontinued operations		(573,726)	(4,485,787)
Net loss		$ (4,525,761)	$ (9,573,059)
Weighted average common shares outstanding [Abstract]
Basic (in shares) \| shares		20,926,120	20,407,764
Stock options (in shares) \| shares		0	0
Diluted (in shares) \| shares		20,926,120	20,407,764
Net loss per common share [Abstract]
Basic - continuing operations (in dollars per share) \| $ / shares		$ (0.19)	$ (0.25)
Basic - discontinued operations (in dollars per share) \| $ / shares		(0.03)	(0.22)
Basic - total (in dollars per share) \| $ / shares		(0.22)	(0.47)
Diluted - continuing operations (in dollars per share) \| $ / shares		(0.19)	(0.25)
Diluted - discontinued operations (in dollars per share) \| $ / shares		(0.03)	(0.22)
Diluted - total (in dollars per share) \| $ / shares		$ (0.22)	$ (0.47)
Computer Software [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives		3 years
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Description of useful life, property, plant and equipment		Shorter of the estimated useful life or the lease term
Trade Accounts Receivable [Member] \| Customer Concentration Risk [Member]
Movement in Valuation Allowances and Reserves [Roll Forward]
Write-offs, net of recoveries	$ (815,000)	$ (815,000)
Allowance for Sales Returns [Member]
Movement in Valuation Allowances and Reserves [Roll Forward]
Balance, beginning of period		731,000	$ 910,000
Additions charged to operations		3,574,297	3,651,741
Sales returns		(3,890,297)	(3,830,741)
Balance, end of period		415,000	731,000
Allowance for Doubtful Accounts [Member]
Movement in Valuation Allowances and Reserves [Roll Forward]
Balance, beginning of period		1,137,000	1,074,000
(Reductions) charged to operations		(73,300)
Additions charged to operations			89,462
Write-offs, net of recoveries		(837,700)	(26,462)
Balance, end of period		$ 226,000	1,137,000
Minimum [Member]
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]
Absolute right of return for shipments to wholesale customers on consignment terms		6 months
Minimum [Member] \| Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives		5 years
Minimum [Member] \| Computer Hardware [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives		3 years
Minimum [Member] \| Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives		5 years
Maximum [Member]
Revenue Recognition, Multiple-deliverable Arrangements [Line Items]
Period for return of jewels and finished jewelry for credit		30 days
Absolute right of return for shipments to wholesale customers on consignment terms		1 year
Customer payment period on consignment shipment		60 days
Maximum [Member] \| Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives		12 years
Maximum [Member] \| Computer Hardware [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives		5 years
Maximum [Member] \| Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property and equipment, estimated useful lives		10 years
Discontinued Operations [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Advertising expense		$ 56,000	$ 187,000
Patents [Member]
Finite-Lived Intangible Assets [Line Items]
Amortized life of patent		4 months 24 days
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded from the computation of diluted net loss per common share (in shares) \| shares		2,130,000	2,440,000
Restricted Shares [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Shares excluded from the computation of diluted net loss per common share (in shares) \| shares		359,000	425,000

SEGMENT INFORMATION AND GEOGRAPHIC DATA (Details)	12 Months Ended
SEGMENT INFORMATION AND GEOGRAPHIC DATA (Details)	Dec. 31, 2016 USD ($) Segment	Dec. 31, 2015 USD ($) Segment
SEGMENT INFORMATION AND GEOGRAPHIC DATA [Abstract]
Number of operating segments \| Segment	2	3
Number of reportable segments \| Segment	2	3
Summary information by segment [Abstract]
Net sales	$ 29,168,128	$ 25,693,292
Product line cost of goods sold	20,401,439	18,943,507
Operating loss	(3,936,818)	(5,064,228)
Depreciation and amortization	557,393	758,787
Total assets	40,505,776	44,140,838
Capital expenditures	421,761	407,452
Inventories, net [Abstract]
Raw materials	3,106,617	6,932,139
Work-in-process	11,048,126	6,031,745
Supplies inventories	17,000	38,000
Continuing Operations [Member]
Summary information by segment [Abstract]
Net sales	29,168,128	25,693,292
Product line gross profit	11,102,591	9,937,369
Operating loss	(3,936,818)	(5,064,228)
Depreciation and amortization	557,393	758,787
Total assets	40,505,776	44,057,838
Capital expenditures	421,761	407,452
Continuing Operations [Member] \| Product Line Cost of Goods Sold [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	18,065,537	15,755,923
Loose Jewels [Member] \| Continuing Operations [Member]
Summary information by segment [Abstract]
Net sales	21,451,728	15,113,249
Product line gross profit	7,534,979	5,654,090
Inventories, net [Abstract]
Raw materials	2,586,045	6,741,712
Work-in-process	10,589,424	5,516,799
Finished goods	9,455,393	15,877,436
Finished goods on consignment	5,473	55,388
Total	22,636,335	28,191,335
Loose Jewels [Member] \| Continuing Operations [Member] \| Product Line Cost of Goods Sold [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	13,916,749	9,459,159
Finished Jewelry [Member] \| Continuing Operations [Member]
Summary information by segment [Abstract]
Net sales	7,716,400	10,580,043
Product line gross profit	3,567,612	4,283,279
Inventories, net [Abstract]
Raw materials	520,572	190,427
Work-in-process	458,702	514,946
Finished goods	4,081,275	3,193,569
Finished goods on consignment	416,305	200,613
Total	5,476,854	4,099,555
Finished Jewelry [Member] \| Continuing Operations [Member] \| Product Line Cost of Goods Sold [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	4,148,788	6,296,764
Operating and Reporting Segments [Member] \| Wholesale [Member] \| Continuing Operations [Member]
Summary information by segment [Abstract]
Net sales	24,531,090	20,265,032
Product line gross profit	8,181,839	7,022,757
Operating loss	(1,603,947)	(3,736,111)
Depreciation and amortization	479,517	652,326
Total assets	40,167,149	43,882,939
Capital expenditures	158,702	291,372
Operating and Reporting Segments [Member] \| Wholesale [Member] \| Continuing Operations [Member] \| Product Line Cost of Goods Sold [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	16,349,251	13,242,275
Operating and Reporting Segments [Member] \| Wholesale [Member] \| Loose Jewels [Member] \| Continuing Operations [Member]
Summary information by segment [Abstract]
Net sales	20,929,322	14,581,554
Product line gross profit	7,077,859	5,206,359
Operating and Reporting Segments [Member] \| Wholesale [Member] \| Loose Jewels [Member] \| Continuing Operations [Member] \| Product Line Cost of Goods Sold [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	13,851,463	9,375,195
Operating and Reporting Segments [Member] \| Wholesale [Member] \| Finished Jewelry [Member] \| Continuing Operations [Member]
Summary information by segment [Abstract]
Net sales	3,601,768	5,683,478
Product line gross profit	1,103,980	1,816,398
Operating and Reporting Segments [Member] \| Wholesale [Member] \| Finished Jewelry [Member] \| Continuing Operations [Member] \| Product Line Cost of Goods Sold [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	2,497,788	3,867,080
Operating and Reporting Segments [Member] \| Charlesandcolvard.com [Member] \| Continuing Operations [Member]
Summary information by segment [Abstract]
Net sales	4,637,038	5,428,260
Product line gross profit	2,920,752	2,914,612
Operating loss	(2,332,871)	(1,328,117)
Depreciation and amortization	77,876	106,461
Total assets	338,627	174,899
Capital expenditures	263,059	116,080
Operating and Reporting Segments [Member] \| Charlesandcolvard.com [Member] \| Continuing Operations [Member] \| Product Line Cost of Goods Sold [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	1,716,286	2,513,648
Operating and Reporting Segments [Member] \| Charlesandcolvard.com [Member] \| Loose Jewels [Member] \| Continuing Operations [Member]
Summary information by segment [Abstract]
Net sales	522,406	531,695
Product line gross profit	457,120	447,731
Operating and Reporting Segments [Member] \| Charlesandcolvard.com [Member] \| Loose Jewels [Member] \| Continuing Operations [Member] \| Product Line Cost of Goods Sold [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	65,286	83,964
Operating and Reporting Segments [Member] \| Charlesandcolvard.com [Member] \| Finished Jewelry [Member] \| Continuing Operations [Member]
Summary information by segment [Abstract]
Net sales	4,114,632	4,896,565
Product line gross profit	2,463,632	2,466,881
Operating and Reporting Segments [Member] \| Charlesandcolvard.com [Member] \| Finished Jewelry [Member] \| Continuing Operations [Member] \| Product Line Cost of Goods Sold [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	1,651,000	2,429,684
Segment Reconciling Items [Member] \| Continuing Operations [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	20,401,439	18,943,507
Segment Reconciling Items [Member] \| Continuing Operations [Member] \| Product Line Cost of Goods Sold [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	18,065,537	15,755,923
Segment Reconciling Items [Member] \| Continuing Operations [Member] \| Non-Capitalized Manufacturing and Production Control Expenses [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	1,427,924	1,388,268
Segment Reconciling Items [Member] \| Continuing Operations [Member] \| Freight Out [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	376,726	600,751
Segment Reconciling Items [Member] \| Continuing Operations [Member] \| Inventory Valuation allowances [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	200,000	436,000
Segment Reconciling Items [Member] \| Continuing Operations [Member] \| Other Inventory Adjustments [Member]
Summary information by segment [Abstract]
Product line cost of goods sold	$ 331,252	$ 762,565

SEGMENT INFORMATION AND GEOGRAPHIC DATA, Data by Geographic Area (Details) - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Net sales [Abstract]
Net sales	$ 29,168,128	$ 25,693,292
Continuing Operations [Member]
Net sales [Abstract]
Net sales	29,168,128	25,693,292
Continuing Operations [Member] \| Reportable Geographical Components [Member]
Net sales [Abstract]
Net sales	29,168,128	25,693,292
Continuing Operations [Member] \| Reportable Geographical Components [Member] \| Property and Equipment, Net [Member]
Assets by geographical area [Abstract]
Total	1,391,116	1,615,683
Continuing Operations [Member] \| Reportable Geographical Components [Member] \| Intangible Assets, Net [Member]
Assets by geographical area [Abstract]
Total	8,808	71,086
Continuing Operations [Member] \| Reportable Geographical Components [Member] \| United States [Member]
Net sales [Abstract]
Net sales	26,164,660	22,224,076
Continuing Operations [Member] \| Reportable Geographical Components [Member] \| United States [Member] \| Property and Equipment, Net [Member]
Assets by geographical area [Abstract]
Total	1,391,116	1,615,683
Continuing Operations [Member] \| Reportable Geographical Components [Member] \| United States [Member] \| Intangible Assets, Net [Member]
Assets by geographical area [Abstract]
Total	8,808	15,362
Continuing Operations [Member] \| Reportable Geographical Components [Member] \| International [Member]
Net sales [Abstract]
Net sales	3,003,468	3,469,216
Continuing Operations [Member] \| Reportable Geographical Components [Member] \| International [Member] \| Property and Equipment, Net [Member]
Assets by geographical area [Abstract]
Total	0	0
Continuing Operations [Member] \| Reportable Geographical Components [Member] \| International [Member] \| Intangible Assets, Net [Member]
Assets by geographical area [Abstract]
Total	$ 0	$ 55,724

INVENTORIES (Details) - USD ($)	Dec. 31, 2016	Dec. 31, 2015
Total inventories, net of reserves [Abstract]
Raw materials	$ 3,106,617	$ 6,932,139
Work-in-process	11,048,126	6,031,745
Finished goods	15,074,896	20,441,535
Finished goods on consignment	467,778	293,001
Less inventory reserves	(1,567,000)	(1,370,000)
Total	28,130,417	32,328,420
Short-term portion	9,770,206	10,739,798
Long-term portion	18,360,211	21,588,622
Inventories issued to active production	7,180,000	3,020,000
Sale of slow moving loose jewel inventory of less desirable quality	6,770,000	2,280,000
Lower of cost or market value	517,000	352,000
Obsolescence reserve for certain fashion finished jewelry inventory	169,000	164,000
Carrying value of inventory reserve for obsolescence of moissanite	258,000	225,000
Shrinkage reserve for finished goods on consignment	46,000	36,000
Inventory of net loose jewels	22,640,000	28,190,000
Inventory reserve for shrinkage of loose jewels	67,000	50,000
Inventory reserve for shrinkage of loose jewels on consignment	7,000	10,000
Inventory reserve for recuts	425,000	449,000
Inventory of net jewelry	5,480,000	4,100,000
Inventory reserve for shrinkage of finished jewelry	102,000	95,000
Inventory reserve for shrinkage of finished jewelry on consignment	39,000	27,000
Inventory reserve for shrinkage of finished jewelry on repairs	$ 29,000	$ 31,000

PROPERTY AND EQUIPMENT (Details) - USD ($)	12 Months Ended
PROPERTY AND EQUIPMENT (Details) - USD ($)	Dec. 31, 2016	Dec. 31, 2015
Property, Plant and Equipment [Line Items]
Total	$ 4,415,999	$ 4,881,469
Less accumulated depreciation	(3,024,883)	(3,265,786)
Property and equipment, net	1,391,116	1,615,683
Depreciation expense	528,000	672,000
Discontinued Operations [Member]
Property, Plant and Equipment [Line Items]
Depreciation expense	26,000	98,000
Computer Software [Member]
Property, Plant and Equipment [Line Items]
Total	1,192,922	1,771,102
Machinery and Equipment [Member]
Property, Plant and Equipment [Line Items]
Total	956,050	922,532
Computer Hardware [Member]
Property, Plant and Equipment [Line Items]
Total	874,347	855,348
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Total	1,083,634	1,030,423
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Total	$ 309,046	$ 302,064

INTANGIBLE ASSETS (Details) - USD ($)	12 Months Ended
INTANGIBLE ASSETS (Details) - USD ($)	Dec. 31, 2016	Dec. 31, 2015
Intangible assets [Abstract]
Total	$ 1,021,146	$ 1,015,530
Less accumulated amortization	(1,012,338)	(944,444)
Intangible assets, net	$ 8,808	71,086
Weighted average amortization period	17 years
Amortization expense	$ 68,000	192,000
Estimated amortization expenses [Abstract]
2017	8,000
2018	1,000
Discontinued Operations [Member]
Intangible assets [Abstract]
Amortization expense	13,000	6,700
Patents [Member]
Intangible assets [Abstract]
Total	$ 958,604	958,604
Weighted average amortization period	4 months 24 days
Trademarks [Member]
Intangible assets [Abstract]
Total	$ 55,824	50,208
Weighted average amortization period	1 year 9 months 18 days
License Rights [Member]
Intangible assets [Abstract]
Total	$ 6,718	$ 6,718
Weighted average amortization period	0 years

COMMITMENTS AND CONTINGENCIES (Details)	12 Months Ended
COMMITMENTS AND CONTINGENCIES (Details)	Dec. 31, 2016 USD ($) ft² Option	Dec. 31, 2015 USD ($)	May 23, 2014 USD ($)
Lease Commitments [Abstract]
Land subject to leases \| ft²	36,350
Leasehold improvements offered by landlord			$ 550,000
Lease signing and moving incentives offered by landlord			$ 73,000
Period for which rent is abated	7 months
Future minimum payments under operating lease [Abstract]
2017	$ 584,789
2018	600,871
2019	617,395
2020	634,373
2021	541,957
Total	2,979,385
Other Commitments [Line Items]
Rent expense	$ 539,000	$ 504,000
Purchase Commitments [Line Items]
Percentage committed to be purchased	100.00%
Period of exclusive supply agreement	2 years
Number of option to unilaterally extend the term \| Option	1
Actual purchases under purchase amendment	$ 8,200,000	6,860,000
Minimum [Member]
Purchase Commitments [Line Items]
Purchase commitment in initial new order	29,600,000
Remaining purchase commitment	14,540,000
Maximum [Member]
Purchase Commitments [Line Items]
Purchase commitment in initial new order	31,500,000
Remaining purchase commitment	16,440,000
Discontinued Operations [Member]
Other Commitments [Line Items]
Rent expense	$ 40,000	$ 66,000

LINE OF CREDIT (Details) - Wells Fargo [Member] - Line of Credit [Member]	12 Months Ended
	Dec. 31, 2016 USD ($)
Line of Credit Facility [Line Items]
Revolving line of credit	$ 10,000,000
Line of credit facility, sublimit for letter of credit	$ 1,000,000
Line of credit maturity date	Jun. 25, 2017
Line of credit facility, sublimit for advances	$ 5,000,000
Percentage of advances, guaranteed by bank	90.00%
Interest rate in event of default in excess of standard rate	3.00%
Prepaid advance fee for reduction in first year after closing	2.00%
Prepaid advance fee for reduction in second year after closing	1.00%
Prepaid advance fee for reduction, thereafter	0.00%
Number of business day within which guaranteed advances to be repaid	2 days
Advances against line of credit	$ 0
Minimum [Member]
Line of Credit Facility [Line Items]
Excess availability of inventory at all times required for advances	1,000,000
Maximum [Member]
Line of Credit Facility [Line Items]
Advances against inventory	3,000,000
Indebtedness to be maintained in the event of default to avoid triggering of default terms	$ 200,000
LIBOR [Member]
Line of Credit Facility [Line Items]
Line of credit, description of variable rate basis	Wells Fargo’s 3-month LIBOR rate
Debt instrument, term of variable rate	3 months
Line of credit, spread on variable rate	2.50%

SHAREHOLDERS' EQUITY AND STOCK-BASED COMPENSATION (Details) - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2016	Dec. 31, 2015
Common Stock [Abstract]
Common stock, shares authorized (in shares)			50,000,000	50,000,000
Common stock, par value (in dollars per share)			$ 0	$ 0
Common stock, shares outstanding (in shares)			21,369,885	21,111,585
Common stock voting rights	common stock are entitled to one vote for each share held
Preferred Stock [Abstract]
Preferred stock, shares authorized (in shares)			10,000,000
Preferred stock, par value (in dollars per share)			$ 0
Preferred stock, shares issued (in shares)			0
Components of the Company's stock based compensation included in net income [Abstract]
Total	$ 1,003,306	$ 1,770,897
Weighted average assumptions for stock options [Abstract]
Dividend yield	0.00%
1997 Omnibus Stock Plan [Member]
Equity Compensation Plans [Abstract]
Vesting period	3 years
Balance as of end of period (in shares)	0	540	0	540
Stock Option Activity [Roll Forward]
Outstanding, beginning balance (in shares)	540
Outstanding, ending balance (in shares)	0	540
Options Outstanding [Abstract]
Balance as of end of period (in shares)	0	540	0	540
1997 Omnibus Stock Plan [Member] \| Maximum [Member]
Equity Compensation Plans [Abstract]
Share based payment award expiration term	10 years
1997 Omnibus Stock Plan [Member] \| Board of Directors [Member]
Equity Compensation Plans [Abstract]
Vesting period	1 year
1997 Omnibus Stock Plan [Member] \| Independent Contractors [Member] \| Maximum [Member]
Equity Compensation Plans [Abstract]
Share based payment award expiration term	10 years
2008 Stock Incentive Plan [Member]
Equity Compensation Plans [Abstract]
Share-based payment award, number of shares authorized (in shares)			6,000,000
Vesting period	4 years
Balance as of end of period (in shares)	2,441,077	2,441,077	2,134,898	2,441,077
Stock Option Activity [Roll Forward]
Outstanding, beginning balance (in shares)	2,441,077
Outstanding, ending balance (in shares)	2,134,898	2,441,077
Options Outstanding [Abstract]
Balance as of end of period (in shares)	2,441,077	2,441,077	2,134,898	2,441,077
2008 Stock Incentive Plan [Member] \| Maximum [Member]
Equity Compensation Plans [Abstract]
Share based payment award expiration term	10 years
2008 Stock Incentive Plan [Member] \| Board of Directors [Member]
Equity Compensation Plans [Abstract]
Vesting period	1 year
2008 Stock Incentive Plan [Member] \| Independent Contractors [Member] \| Maximum [Member]
Equity Compensation Plans [Abstract]
Share based payment award expiration term	10 years
Executive Compensation Plan [Member]
Equity Compensation Plans [Abstract]
Vesting period	3 years
Employee Stock Options [Member]
Equity Compensation Plans [Abstract]
Balance as of end of period (in shares)	2,441,077	1,665,571	2,134,898	2,441,077
Components of the Company's stock based compensation included in net income [Abstract]
Allocated share-based compensation expense	$ 383,778	$ 697,269
Stock-based compensation capitalized as a cost of inventory	$ 0	$ 0
Stock Option Activity [Roll Forward]
Outstanding, beginning balance (in shares)	2,441,077	1,665,571
Granted (in shares)	591,005	1,413,765
Exercised (in shares)	(2,500)	(241,752)
Forfeited (in shares)	(449,122)	(129,434)
Expired (in shares)	(445,562)	(267,073)
Outstanding, ending balance (in shares)	2,134,898	2,441,077
Weighted Average Exercise Price [Roll Forward]
Outstanding, beginning balance (in dollars per share)	$ 2.11	$ 2.93
Granted (in dollars per share)	1.14	1.28
Exercised (in dollars per share)	0.92	0.71
Forfeited (in dollars per share)	1.43	3.08
Expired (in dollars per share)	2.09	3.17
Outstanding, ending balance (in dollars per share)	1.99	2.11
Fair value of stock options (in dollars per share)	$ 0.63	$ 0.72
Fair value of stock options vested	$ 780,000	$ 862,000
Weighted average assumptions for stock options [Abstract]
Dividend yield	0.00%	0.00%
Expected volatility	62.20%	63.80%
Risk-free interest rate	1.42%	1.64%
Expected lives	5 years 7 months 6 days	5 years 8 months 12 days
Options Outstanding [Abstract]
Balance as of end of period (in shares)	2,441,077	1,665,571	2,134,898	2,441,077
Weighted average remaining contractual life	6 years 8 months 16 days
Weighted average exercise price (in dollars per share)	$ 1.99	$ 2.93	$ 1.99	$ 2.11
Options Exercisable [Abstract]
Balance as of end of period (in shares)			1,477,644
Weighted average remaining contractual life	5 years 7 months 24 days
Weighted average exercise price (in dollars per share)			$ 2.30
Options Vested or Expected to Vest [Abstract]
Balance as of end of period (in shares)			2,041,970
Weighted average remaining contractual life	6 years 7 months 6 days
Weighted average exercise price (in dollars per share)			$ 2.02
Additional Disclosures [Abstract]
Unrecognized stock-based compensation expense related to unvested awards			$ 323,000
Total compensation cost not yet recognized, period for recognition	20 months
Aggregate intrinsic value of stock options outstanding			18,000
Aggregate intrinsic value of stock options exercisable			18,000
Aggregate intrinsic value of stock options vested and expected to vest			18,000
Aggregate intrinsic value of stock options exercised	$ 0	$ 167,000
Employee Stock Options [Member] \| Discontinued Operations [Member]
Components of the Company's stock based compensation included in net income [Abstract]
Allocated share-based compensation expense	44,000	226,000
Consultant Stock Options [Member]
Components of the Company's stock based compensation included in net income [Abstract]
Allocated share-based compensation expense	170,622	257,342
Restricted Stock [Member]
Components of the Company's stock based compensation included in net income [Abstract]
Allocated share-based compensation expense	$ 448,906	$ 816,286
Additional Disclosures [Abstract]
Unrecognized stock-based compensation expense related to unvested awards			$ 78,000
Total compensation cost not yet recognized, period for recognition	2 months
Restricted Stock Activity [Roll Forward]
Unvested, beginning balance (in shares)	425,000	287,006
Granted (in shares)	509,250	487,500
Vested (in shares)	(321,400)	(349,506)
Canceled (in shares)	(253,450)	0
Unvested, ending balance (in shares)	359,400	425,000
Weighted Average Grant Date Fair Value [Roll Forward]
Unvested, beginning balance (in dollars per share)	$ 1.87	$ 3.29
Granted (in dollars per share)	0.93	1.38
Vested (in dollars per share)	2.00	2.36
Canceled (in dollars per share)	1.18	0
Unvested, ending balance (in dollars per share)	$ 0.91	$ 1.87
Restricted Stock [Member] \| Maximum [Member]
Equity Compensation Plans [Abstract]
Vesting period	4 years

INCOME TAXES (Details) - USD ($)	12 Months Ended
INCOME TAXES (Details) - USD ($)	Dec. 31, 2016	Dec. 31, 2015
Current [Abstract]
Federal	$ 0	$ 0
State	(13,480)	(12,821)
Total	(13,480)	(12,821)
Deferred [Abstract]
Federal	0	0
State	0	0
Total	0	0
Income tax net expense	(13,480)	(12,821)
Deferred income tax assets [Abstract]
Reserves and accruals	1,053,863	1,578,374
Prepaid expenses	(43,774)	(50,966)
Federal NOL carryforwards	8,530,493	6,762,537
State NOL carryforwards	615,919	583,651
Hong Kong NOL carryforwards	995,566	995,566
Federal benefit on state taxes under uncertain tax positions	136,969	132,385
Stock-based compensation	342,294	481,917
Research tax credit	434,637	434,637
Alternative minimum tax credit	348,264	348,264
Contributions carryforward	35,100	33,582
Depreciation	(286,608)	(312,023)
Accrued rent	216,432	254,404
Loss on impairment of long-lived assets	53,042	52,226
Valuation allowance	(12,432,197)	(11,294,554)
Total	0	0
Total deferred income tax assets, net	$ 0	0
Federal statutory income tax rate	34.00%
Effective income tax rate reconciliation [Abstract]
Anticipated income tax benefit at statutory rate	$ 1,534,176	3,315,420
State income tax benefit, net of federal tax effect	(9,350)	35,814
Capital loss carryforward expiration	0	(9,227)
Income tax effect of uncertain tax positions	(8,896)	(8,461)
Return to provision adjustments	(23,070)	(82,341)
Stock-based compensation	(110,066)	(215,030)
Other changes in deferred income tax assets, net	(13,118)	(22,414)
Increase in valuation allowance	(1,383,156)	(3,026,582)
Income tax net expense	(13,480)	(12,821)
Tax Credit Carryforward [Line Items]
Federal income tax credits	882,000
Remaining balance of federal income tax expire between 2018 and 2021	533,000
Unrecognized Tax Benefits, Income Tax Penalties and Interest Expense [Abstract]
Gross liability for income taxes that will impact the company's effective tax rate	532,000
Direct reduction to associated deferred tax asset	98,000
Interest and penalties associated with uncertain tax positions	13,000	13,000
Interest and penalties included in the accrued income tax liability for uncertain tax positions	165,000	165,000
Activities related to gross liability for uncertain tax positions [Roll Forward]
Beginning balance	519,284	506,463
Increases related to prior year tax positions	13,480	12,821
Ending balance	$ 532,764	519,284
Earliest Tax Year [Member]
Tax Credit Carryforward [Line Items]
Federal income tax credit expiration date	Dec. 31, 2018
Latest Tax Year [Member]
Tax Credit Carryforward [Line Items]
Federal income tax credit expiration date	Dec. 31, 2021
Federal [Member]
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	$ 25,130,000
Federal [Member] \| Minimum [Member]
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, expiration dates	Dec. 31, 2020
Federal [Member] \| Maximum [Member]
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, expiration dates	Dec. 31, 2036
North Carolina [Member]
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	$ 20,250,000
North Carolina [Member] \| Minimum [Member]
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, expiration dates	Dec. 31, 2023
North Carolina [Member] \| Maximum [Member]
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, expiration dates	Dec. 31, 2031
Other State [Member] \| Minimum [Member]
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, expiration dates	Dec. 31, 2021
Other State [Member] \| Maximum [Member]
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards, expiration dates	Dec. 31, 2036
Hong Kong Tax Code [Member]
Operating Loss Carryforwards [Line Items]
Operating loss carryforwards	$ 6,030,000
Valuation allowance	$ (996,000)	$ (996,000)

DISCONTINUED OPERATIONS (Details) - USD ($)		12 Months Ended
DISCONTINUED OPERATIONS (Details) - USD ($)	Mar. 04, 2016	Dec. 31, 2016	Dec. 31, 2015
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Inventory credit		$ 169,000	$ 164,000
Assets Related to Discontinued Operations [Abstract]
Total assets		0	83,000
Total liabilities		0	349,000
Other income [Abstract]
Gain on sale of long-term assets		12,398	0
Pretax loss from discontinued operations		(586,124)	(4,485,787)
Yanbal USA Inc. [Member]
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Inventory credit	$ 250,000
Discontinued operations, purchase price for transferred assets, gross	500,000
Discontinued operations, purchase agreement selling expenses	131,000
Discontinued operations, purchase price for transferred assets, net	369,000
Discontinued operations, expense related to certain style advisor incentives	35,000
Discontinued operations, reduction in prepaid expenses	$ 60,000
Assets Related to Discontinued Operations [Abstract]
Prepaid expenses and other assets		0	83,000
Total assets		0	83,000
Accounts payable		0	140,000
Accrued expenses and other liabilities		0	209,000
Total liabilities		0	349,000
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract]
Net sales		804,585	5,073,825
Costs and expenses [Abstract]
Cost of goods sold		276,100	1,609,200
Sales and marketing		940,685	6,598,122
General and administrative		173,913	1,352,290
Interest expense		11	0
Total costs and expenses		1,390,709	9,559,612
Loss from discontinued operations		(586,124)	(4,485,787)
Other income [Abstract]
Gain on sale of long-term assets		12,398	0
Total other income, net		12,398	0
Pretax loss from discontinued operations		$ (573,726)	$ (4,485,787)

MAJOR CUSTOMERS AND CONCENTRATION OF CREDIT RISK (Details) - Customer Concentration Risk [Member]

12 Months Ended

Dec. 31, 2016

Dec. 31, 2015

Trade Accounts Receivable [Member] | Customer A [Member]

Concentration Risk [Line Items]

Concentration risk, percentage

13.00%

^[1]

Trade Accounts Receivable [Member] | Customer B [Member]

Concentration Risk [Line Items]

Concentration risk, percentage

^[2]

17.00%

Trade Accounts Receivable [Member] | Customer C [Member]

Concentration Risk [Line Items]

Concentration risk, percentage

^[2]

14.00%

Trade Accounts Receivable [Member] | Customer D [Member]

Concentration Risk [Line Items]

Concentration risk, percentage

^[2]

11.00%

Trade Accounts Receivable [Member] | Customer E [Member]

Concentration Risk [Line Items]

Concentration risk, percentage

^[2]

10.00%

Total Gross Sales [Member] | Customer D [Member]

Concentration Risk [Line Items]

Concentration risk, percentage

23.00%

25.00%

Total Gross Sales [Member] | Customer F [Member]

Concentration Risk [Line Items]

Concentration risk, percentage

17.00%

11.00%

[1]	Customer A did not have an individual balance that represented 10% or more of the total net accounts receivable as of December 31, 2015.
[2]	Customers B, C, D, and E did not have individual balances that represented 10% or more of total net accounts receivable as of December 31, 2016.

EMPLOYEE BENEFIT PLAN (Details) - USD ($)	12 Months Ended
EMPLOYEE BENEFIT PLAN (Details) - USD ($)	Dec. 31, 2016	Dec. 31, 2015
EMPLOYEE BENEFIT PLAN [Abstract]
Company contribution, cost recognized	$ 102,000	$ 120,000