Charles & Colvard, Ltd. (CTHR): Business Model Canvas [Dec-2025 Updated]

You're looking to understand the real mechanics behind Charles & Colvard, Ltd. (CTHR)'s strategic pivot, and honestly, it's more than just a name change; they are actively shifting from being the moissanite pioneer to a full-spectrum lab-grown jewelry player. As a former head analyst, I see a company doubling down on high-margin direct-to-Consumer (DTC) sales, which hit a whopping 79% of total net sales in Q1 FY2025, while simultaneously integrating new supply chains for lab-grown diamonds like Caydia®. To see how this transformation-from key partnerships with Ethara Capital to managing that substantial $16.9 million finished jewelry inventory-is structured across all nine building blocks, you need to look at the full Business Model Canvas below.

Charles & Colvard, Ltd. (CTHR) - Canvas Business Model: Key Partnerships

You're looking at the core relationships Charles & Colvard, Ltd. relies on to fuel its lab-grown diamond and moissanite business, especially as the company navigates its post-Nasdaq listing environment. These alliances are critical for both sourcing materials and reaching consumers in late 2025.

Here's a quick look at the major players and the financial context surrounding these deals:

The strategic supply chain partnership with Ethara Capital, announced on October 9, 2025, is a big one for expanding Charles & Colvard, Ltd.'s lab-grown diamond (LGD) offerings, particularly the Caydia® brand. This relationship is underpinned by Ethara Group's operational scale; their affiliates pioneer Chemical Vapor Deposition LGD manufacturing and currently own and operate over 3,000 diamond-growing machines. This brings Charles & Colvard, Ltd. an expanded, vertically integrated, and global supply chain of CVD lab-grown diamonds. To secure this, Charles & Colvard, Ltd. entered into a Convertible Secured Note Purchase Agreement with Ethara Capital LLC in June 2025 for gross proceeds of $2,000,000, with tranches closing in July 2025, and in September 2025, Ethara converted the first 10% of that Note to common equity. That note accrues 5% annual interest, payable in cash or PIK (Payment-In-Kind). Honestly, getting that kind of direct supply backing is a major de-risking move for their core product line.

Also critical for market reach is the social commerce partnership Charles & Colvard, Ltd. struck with VideoShops, announced on November 17, 2025. This move is designed to bring their lab-grown jewelry to a performance-based sales force. VideoShops is a network built to change commerce flow through social channels, giving Charles & Colvard, Ltd. access to over 50,000+ influential sellers who can share products across social feeds and group chats. This arrangement allows everyday customers and creators to earn commission income by launching their own VideoShops storefronts, effectively activating a scalable, risk-free sales channel driven by peer-to-peer recommendations.

You must also factor in the resolution of the long-standing dispute with Wolfspeed, Inc. Charles & Colvard, Ltd. concluded a settlement on February 10, 2025, terminating the exclusive supply agreement that had been in place since December 12, 2014. The total settlement required Charles & Colvard, Ltd. to pay Wolfspeed approximately $4.77 million. This amount covered purchased and consigned inventory, interest, and Wolfspeed's attorney fees related to the arbitration. The payment schedule was set through December 31, 2025, with an initial payment of $500,000, followed by $1.83 million by February 28, 2025, and the final $2.44 million by December 31, 2025. Closing that chapter frees up capital allocation, though it was a significant cash outlay.

On the financing side, you should note the historical context. Charles & Colvard, Ltd. previously had a cash collateralized line of credit facility with JPMorgan Chase for $5.00 million, which was extended but ultimately matured on July 31, 2023. That facility is no longer a current operational factor. The immediate liquidity support in 2025 comes from the aforementioned Ethara Capital convertible note. If onboarding takes 14+ days, churn risk rises, but the $2.0 million from Ethara in mid-2025 was structured with tranches of $500,000 and $1,500,000 closing on July 8 and July 23, 2025, respectively, providing necessary working capital.

Finance: draft 13-week cash view by Friday.

Charles & Colvard, Ltd. (CTHR) - Canvas Business Model: Key Activities

You're looking at the core actions Charles & Colvard, Ltd. is taking right now, especially after the significant operational shift in 2025. The focus is clearly on digital presence, cost control, and managing the fallout from regulatory compliance issues. Here's the quick math on what they're actively doing to keep the lights on and move product.

E-commerce operations and management of charlesandcolvard.com and B2B portal.

Charles & Colvard, Ltd. manages its sales through two primary segments, with the Online Channels segment being critical. This segment encompasses several digital properties used for direct-to-consumer and direct-to-wholesaler sales. The company launched charlesandcolvarddirect.com in May 2023 as a wholesale outlet for loose Forever BrightTM and Forever OneTM moissanite gemstones. As of late 2025, a major activity is expanding this digital reach through new partnerships.

• The Online Channels segment includes charlesandcolvard.com, moissaniteoutlet.com, charlesandcolvarddirect.com, and madenetwork.com.
• In November 2025, Charles & Colvard, Ltd. partnered with VideoShops, a social commerce network boasting over 50,000 sellers.
• This partnership aims to distribute the product catalog across customer-run storefronts, activating a performance-based sales force.

Marketing and brand development for Forever One™ and Caydia® lab-grown gems.

Brand activity centers on promoting the ethical sourcing and quality of its core products, Forever One™ moissanite and Caydia® lab-grown diamonds. The brand message emphasizes Made, not MinedTM fine jewelry. The shift to over-the-counter trading following the Nasdaq delisting means marketing efforts must now resonate strongly with direct consumers and the new social commerce partners.

Fine jewelry design, manufacturing, and inventory management.

The company's manufacturing activity is intrinsically linked to managing its supply chain and inventory levels amid global uncertainty. A key operational activity in the preceding year involved resolving a major supply agreement issue, which impacts future material sourcing. The company is committed to continuously improving operations to be as environmentally friendly as possible, including energy-efficient manufacturing processes.

The resolution of a significant legal matter directly affected material supply chain strategy.

Implementing cost reduction strategies, including headcount and salary cuts.

Cost management is a top-tier activity, especially as the company navigates a market with inflationary pressures and seeks financial stability. These measures were initiated in Fiscal 2024 and continued into late 2025 to mitigate economic headwinds. The goal is stabilizing operations through disciplined spending.

• Strategic measures implemented in Fiscal 2024 included a reduction in headcount.
• Review and renegotiation of vendor contracts was a key focus area.
• The company is continuing headcount and salary reductions into late 2025 to stabilize operations.
• Consolidation of the supply chain and shifting to a more cost-effective freight partner were also executed.

Regaining compliance with periodic SEC filings after delisting from Nasdaq in April 2025.

A major ongoing activity is managing the consequences of the Nasdaq delisting and striving to fulfill ongoing SEC reporting obligations. The suspension of trading occurred at the opening of business on April 25, 2025, after the company failed to file Forms 10-Q for the quarters ended September 30 and December 31, 2024. The stock is now expected to quote on the OTC Experts Market. The company is still working to file delinquent reports as of November 2025.

The compliance status as of late 2025 shows continued challenges in filing timely reports.

Furthermore, the company is managing significant financing and governance activities that impact its ability to focus on reporting. As of November 25, 2025, Charles & Colvard, Ltd. received a notice of default on a $2.0 million convertible secured note, with the holder claiming the interest rate stepped up from 5% to 9% annually.

Charles & Colvard, Ltd. (CTHR) - Canvas Business Model: Key Resources

You're looking at the core assets Charles & Colvard, Ltd. (CTHR) relies on to operate in the fine jewelry space. These aren't just things they own; they are the unique advantages that underpin their entire operation.

The most fundamental resource is their intellectual property. Charles & Colvard, Ltd. is the original creator of lab-grown moissanite, a gemstone made from silicon carbide. This foundational knowledge is key to their positioning as the sole worldwide source of scientifically-made moissanite jewels. They market this heritage with the tagline Made, not Mined™.

This IP is commercialized through established, recognized brands. You see two main ones driving consumer and trade engagement:

• Forever One™ moissanite.
• Caydia® lab-grown diamonds.

These brands are central to their strategy of appealing to consumers making conscious buying decisions.

Inventory levels represent a significant, though sometimes volatile, asset. As you requested, the stated value for finished jewelry inventory was $16.9 million as of March 31, 2024. To give you a more current snapshot of their asset base, here are some other relevant figures from recent filings and reports:

The company's distribution and sales channels are critical digital assets. They utilize a Direct-to-Consumer (DTC) e-commerce platform, charlesandcolvard.com, for end consumers. Furthermore, they established the B2B wholesale portal, charlesandcolvarddirect.com, to allow independent jewelers to purchase loose gems directly, shifting away from the traditional distributor model.

Access to capital markets is a necessary, but currently strained, resource. Charles & Colvard, Ltd. has faced significant compliance issues, receiving notices from Nasdaq regarding late filings for its Form 10-K for the fiscal year ended June 30, 2024, and subsequent quarterly reports. This filing delinquency has impacted their listing status; for instance, one report suggests a delisting from Nasdaq occurred around April 2025, with trading moving to OTC: CTHR. To bolster liquidity, the company secured a $2.0 million convertible secured note from Ethara Capital LLC in June 2025. However, this access is complicated by a subsequent notice of default received in November 2025 after failing to meet the October 3, 2025, maturity date on that note, which increased the interest rate to 9% annually. This situation definitely limits their traditional, easy access to fresh capital right now.

Finance: draft 13-week cash view by Friday.

Charles & Colvard, Ltd. (CTHR) - Canvas Business Model: Value Propositions

You're looking at the core reasons customers choose Charles & Colvard, Ltd. (CTHR) over competitors. It's about what they deliver that matters most to the buyer.

Ethical and conscious jewelry using Made, not Mined™ gems and 100% recycled precious metals.

• Proudly grown in the USA.
• Commitment to responsible sourcing and using recycled metals.
• Global inventor and exclusive patent holder of moissanite.

Superior brilliance and fire, with moissanite being the world's most brilliant gem.

The optical performance is a key differentiator based on physics. Forever One™ Moissanite gemstones are described as magnificently colorless, equivalent to D-F color diamonds.

Exceptional value and affordability compared to natural mined diamonds.

The financial gap between moissanite and mined diamonds is a major driver for today's shoppers. For instance, equivalent moissanite engagement rings rarely exceed $1,000 retail pricing, while premium 1-carat diamonds typically cost between $6,000 and $12,000. As of 2025, lab-grown diamonds are generally 80-85% more affordable than natural counterparts.

Premium quality and durability, with moissanite second only to diamond on the Mohs scale.

The material science supports daily wearability. Here's a quick look at the comparative hardness:

Lifetime warranty on Forever One™ moissanite.

Charles & Colvard, Ltd. (CTHR) backs its core product with a strong guarantee, providing peace of mind. The terms specify coverage for the gem itself, but not for all types of damage or loss.

• Forever One™ gem(s) 4mm or larger receive a Limited Lifetime Warranty.
• Jewelry pieces receive a 12-month limited warranty.
• Warranty covers optical properties (brilliance and fire) and physical integrity (chipping, breaking, scratching, abrasions).
• Remedy is repair or replacement with item(s) of equal or greater quality at Charles & Colvard's option.

To give you context on the business scale supporting these value propositions, Charles & Colvard, Ltd. reported net sales of $21,956,472 for the fiscal year ended June 30, 2024. The Online Channels segment, which drives much of the direct-to-consumer value proposition, accounted for 79% of total net sales in Q1 FY2024.

Finance: draft 13-week cash view by Friday.

Charles & Colvard, Ltd. (CTHR) - Canvas Business Model: Customer Relationships

You're looking at how Charles & Colvard, Ltd. connects with the people buying their Made, Not Mined™ gems, and it's clear they are pushing hard on digital self-service. The relationship strategy is pivoting, moving away from layers of distributors toward direct engagement, both with consumers and wholesale partners.

Automated and personalized DTC engagement via e-commerce platforms

The direct-to-consumer (DTC) side, which Charles & Colvard, Ltd. calls the Online Channel Segment, is now the main revenue driver, even as overall sales faced headwinds. For the fiscal year ended June 30, 2024, net sales for this segment were reported at $3.9 million for Q1 FY2024, representing 79% of the total net sales for that period. This is a significant increase in reliance from Q1 FY2023, when the online share was 66%. To be fair, the overall net sales for the full fiscal year 2024 were $21,956,472, showing the pressure the entire business faced. The trend in e-commerce for 2025 suggests that hyper-personalization, using AI algorithms to tailor experiences, can boost revenue by 10% to 30%. Also, social commerce is a huge lever, with projections showing over $100 billion in revenue from social media purchases in 2025, a 22% jump from 2024. Charles & Colvard, Ltd. is actively working to refresh its consumer website to align with these digital expectations.

Self-service wholesale purchasing through the charlesandcolvarddirect.com B2B portal

Charles & Colvard, Ltd. made a major strategic shift by launching the charlesandcolvarddirect.com portal in May 2023. This is designed to cut out distributors and let independent jewelers buy loose gems directly. This change is happening while the traditional wholesale channel struggles; Loose Jewel Net Sales saw a substantial 64% YoY decline in Q3 FY2024, partly due to this strategic move away from the old model. The goal is to offer moissanite, including the premium Forever One™ and the newer Forever Bright™ brands, directly to these retailers. This move aims to give them better pricing, as the company seeks to sell at the cost previously reserved for distributors.

Here's a quick look at the channel shift:

Financial flexibility offered via third-party financing options like Affirm and Afterpay

Offering Buy Now, Pay Later (BNPL) options like Affirm and Afterpay is a standard way to reduce friction at checkout, especially for higher-ticket jewelry items. While Charles & Colvard, Ltd. has not publicly stated its specific adoption rates for these services, the market context is massive. The U.S. BNPL market is projected to hit $122.26 billion in 2025. For merchants, offering BNPL can increase average order values by 20-40%. To give you a sense of the scale of the partners, Affirm processes about $28 billion annually through 22 million users, and Afterpay handles $27.3 billion for 24 million users. If you're thinking about conversion, these options are key for the modern e-commerce shopper.

Customer service support via phone and email for order status and sizing

For interactions that require a human touch, Charles & Colvard, Ltd. maintains traditional support channels. You can reach out via phone or email for specific needs related to your purchase. This support is critical for handling order status inquiries, which is a baseline expectation, and for sizing assistance, which is vital for jewelry sales. The company's commitment to customer satisfaction is part of its core values, which translates into offering various support options to address concerns.

• Support covers order status checks.
• Support handles sizing questions.
• Support is available via phone and email.

Finance: draft 13-week cash view by Friday.

Charles & Colvard, Ltd. (CTHR) - Canvas Business Model: Channels

You're mapping out where Charles & Colvard, Ltd. actually connects with its buyers right now. The focus has clearly shifted, moving away from the old ways toward digital dominance, but the traditional side still matters, even if it's shrinking.

The primary engine for Charles & Colvard, Ltd. is its direct-to-consumer (DTC) e-commerce presence at charlesandcolvard.com. This platform is where the company pushes its finished jewelry, which accounted for 93% of total sales in the second quarter of fiscal year 2024. For that quarter, the entire Online Channels segment, which includes this DTC site, pulled in $6.7 million, making up 84% of the company's total net sales. Honestly, the growth on the DTC side is key; for instance, lab-grown diamond sales specifically on charlesandcolvard.com saw a 15% year-over-year increase in that same quarter.

The B2B Wholesale Portal, charlesandcolvarddirect.com, is a dedicated digital channel designed to serve retailers and jewelers directly. This portal is part of that larger Online Channels segment, which is the main revenue driver. The company launched this portal in May 2023 to expand its wholesale customer base for loose Forever BrightTM and Forever OneTM moissanite gemstones.

A major development for late 2025 is the move into Social Commerce Networks. Charles & Colvard, Ltd. announced a strategic partnership with VideoShops in November 2025. This channel brings their Made, not MinedTM fine jewelry to VideoShops' platform, which features over 50,000 sellers. This lets customers and creators earn commission by sharing products, effectively activating a performance-based sales force.

Traditional Wholesale remains a channel, though it's clearly being recalibrated. This segment covers domestic and international distributors and brick-and-mortar retailers. In the second quarter of fiscal year 2024, this Traditional segment contributed only $1.3 million in net sales, which was just 16% of the total net sales for the period. That's a significant drop from representing 24% of sales in the prior year's second quarter.

The digital ecosystem supporting these channels is quite broad. You should know the specific digital properties that feed into the 84% Online Channels segment:

• charlesandcolvard.com
• moissaniteoutlet.com
• charlesandcolvarddirect.com
• madenetwork.com
• Third-party online marketplaces
• Drop-ship customers

Here's a quick look at the segment split using the most recent concrete financial data from Q2 FY2024, which shows the channel prioritization:

To be fair, the International sales component within these segments is relatively small; for one recent quarter, international net sales were reported at $180,000. Finance: draft the Q3 FY2025 channel revenue projection by next Tuesday.

Charles & Colvard, Ltd. (CTHR) - Canvas Business Model: Customer Segments

You're looking at the core buyers for Charles & Colvard, Ltd. (CTHR) as they navigate a challenging market environment. The focus has clearly shifted digitally, but the wholesale pipeline remains a distinct customer group.

Value-conscious consumers seeking affordable, high-quality bridal and fine jewelry.

This group is drawn to the value proposition of lab-created stones versus mined diamonds. Management has actively worked to capture this price-sensitive buyer, evidenced by the rebranding of its moissanite offering to "Everbright" specifically to target these value-oriented consumers at lower price points. This segment is heavily served through the company's direct digital properties.

Ethically-minded consumers prioritizing lab-grown and recycled materials.

Charles & Colvard, Ltd. positions itself as a conscientious choice in fine jewelry, appealing to customers who value environmental and social responsibility. This segment is interested in the company's core offering, the proprietary moissanite, and the premium Caydia lab-grown diamond brand. The acceptance of lab-created gemstones is a key driver for this customer base.

The sales breakdown between the primary channels gives you a clear picture of where these consumers are reached. Note that for Q1 FY2025, management expected net sales to decline year-over-year, and the company furnished an NT 10-Q instead of the full report.

Domestic and international independent jewelers and approved retailers.

These buyers fall squarely into the Traditional operating segment. They purchase loose moissanite gems and finished jewelry at wholesale prices. This channel has seen significant contraction; for instance, Traditional Segment sales plunged by 59% year-over-year in Q1 FY2024. The company sells loose gems to international wholesale distributors in regions including the U.K., Australia, India, and South Africa.

High-fashion and everyday jewelry buyers, beyond just the bridal market.

This group is primarily captured by the Online Channels segment, which represented 79% of net sales in Q1 FY2025. Finished jewelry is the dominant product type, accounting for 93% of total sales in Q3 FY2024. The company markets fashion and bridal jewelry under its main brands. The growth in the Caydia lab-grown diamond line, which saw revenues increase by 16% in Q3 FY2024, suggests this segment is also driving demand for higher-end lab-grown diamond pieces.

• The overall jewelry segment of the accessories market is forecast to reach $446 billion U.S. dollars in revenue by 2029.
• The company has over 3.1 million shares of common stock outstanding as of March 25, 2025.
• The Online Channels segment includes digital properties like charlesandcolvard.com and moissaniteoutlet.com.
• The company has a strategic focus on expanding its lab-grown diamond offerings to both consumers and wholesale markets as of October 2025.

Charles & Colvard, Ltd. (CTHR) - Canvas Business Model: Cost Structure

You're looking at the core expenses that drive Charles & Colvard, Ltd.'s operations, which is key to understanding their path to profitability. The cost structure is heavily weighted toward the direct cost of the product and getting it in front of the customer, but significant non-operating costs, like legal battles, have recently skewed the picture.

The single largest recurring cost is the Cost of Goods Sold (COGS). For the fiscal year ended June 30, 2024, this figure stood at $16,764,099. This number reflects the direct costs associated with creating their Forever One™ moissanite and Caydia® lab grown diamonds, including raw materials and manufacturing labor.

Next up, you have the push to sell those goods. Sales and Marketing expenses for FY2024 were reported at $12,546,547. This represents a substantial outlay aimed at driving traffic to their online channels, which, as of Q1 FY2025 context, account for about 79% of total net sales.

The overhead required to run the business, General and Administrative (G&A) expenses, came in at $5,777,216 for FY2024. Honestly, this line item has been under pressure. Management noted that this figure was inflated by significant legal fees related to compliance and, critically, the arbitration case with Wolfspeed. For instance, an interim award in December 2024 limited the damages sought by Wolfspeed to approximately $3.3 million plus interest and certain fees, a reduction from an initial claim of over $28 million, though a final award was still pending.

You also have to factor in the costs tied up in the balance sheet. Charles & Colvard, Ltd. has had to manage substantial inventory levels. If we look at the inventory balance as a reference point, say the requested $16.9 million figure, the associated inventory holding costs-storage, insurance, and obsolescence risk-become a real, though often unstated, drag on cash flow. This is especially true when product mix shifts or market prices fluctuate, as seen with the inventory write-down noted in Q4 FY2023.

The structure of these major costs for the fiscal year ended June 30, 2024, looks like this:

Beyond the standard operating costs, the legal exposure has been a major variable cost driver. Here are the key elements impacting the G&A and overall cost base:

• Legal and professional fees tied to the Wolfspeed arbitration.
• Costs associated with maintaining Nasdaq listing compliance.
• Potential final settlement payment related to the arbitration.
• Costs for inventory repurposing and supplier contract renegotiations.

To give you a clearer picture of the operating expense volatility, consider the G&A breakdown from earlier periods, which helps contextualize the current pressure:

• G&A for the six months ended December 31, 2023, saw decreases in compensation costs offset by insurance expense increases.
• The company implemented headcount reductions and supply chain consolidation as strategic cost actions as of the June-September 2024 period.

Finance: draft 13-week cash view incorporating the impact of the $4.77 million Wolfspeed settlement by Friday.

Charles & Colvard, Ltd. (CTHR) - Canvas Business Model: Revenue Streams

You're looking at the hard numbers that drive Charles & Colvard, Ltd. revenue, which is key for understanding their current financial structure. Here's the quick math on where the money comes from, based on the latest reported figures and strategic emphases.

Total Net Sales for the fiscal year ended June 30, 2024, were $21,956,472.

The revenue mix shows a clear, ongoing pivot toward direct customer engagement channels.

Key revenue stream percentages, based on recent quarterly reports, illustrate this channel shift:

• Online Channels (DTC) sales represented 79% of total net sales in Q1 FY2025, showing continued prioritization of e-commerce.
• The Traditional Segment (Wholesale/B&M) sales accounted for 21% of total net sales in Q1 FY2025, reflecting a strategic reduction in this channel's reliance.

Product-wise, the focus is heavily on finished goods over loose components, though both branded product lines are crucial revenue drivers.

Charles & Colvard, Ltd. generates revenue across its core product brands, which are sold through these various channels:

• Sales derived from loose moissanite gemstones under the Forever One™ brand.
• Sales generated from lab-grown diamonds and finished jewelry featuring them under the Caydia® brand.
• Revenue from finished jewelry, which accounted for 93% of total sales in Q3 FY2024.

For context on the product mix in Q3 FY2024, the breakdown was:

• Finished jewelry net sales: $4.9 million.
• Loose jewel net sales: $400,000.