Charles & Colvard Reports Second Quarter Sales Increase 69% And Net Profit Increases $652,000 Over Prior-Year Period

Charles & Colvard, Ltd. (NASDAQ Global Select Market: CTHR), the sole manufacturer of created moissanite gemstones, The Most Brilliant Jewel in the World ^® , today announced that net sales for the second quarter ended June 30, 2012 increased 69% while net profit increased $652,000 over the prior-year period.

Financial Highlights:

• Q2 net sales increased 69% to $5.1 million vs. $3.0 million in Q2 2011
• Q2 net income of $549,000 after approximate $802,000 investment in consumer-direct business models, vs. prior-year period net loss of $103,000
• $11.5 million cash and investments and no long-term debt at 6/30/12
• Q2 positive cash flow from operations of $1.0 million, year to date of $1.4 million

Net sales for the three months ended June 30, 2012 increased 69% to approximately $5.1 million, compared with approximately $3.0 million in sales during the corresponding period of the previous year. Loose moissanite gemstone sales increased 65% to approximately $4.1 million, compared with approximately $2.5 million in the corresponding period of the previous year. Finished jewelry sales increased 86% to approximately $968,000, compared with approximately $521,000 in the corresponding period of the previous year.

Net sales for the six months ended June 30, 2012 increased 55% to approximately $9.2 million, compared with approximately $6.0 million in sales during the corresponding period of the previous year. Loose moissanite gemstone sales increased 30% to approximately $6.5 million, compared with approximately $5.0 million in the corresponding period of the previous year. Finished jewelry sales increased 189% to approximately $2.7 million, compared with approximately $932,000 in the corresponding period of the previous year.

The Company recorded net income of $549,000, or $0.03 per diluted share, in the second quarter of 2012, representing an approximate $652,000 improvement relative to a net loss of $103,000, or $0.01 per share, in the second quarter of 2011. For the first half of 2012, the Company recorded net income of $173,000, or $0.01 per diluted share, representing an approximate $512,000 improvement relative to a net loss of $340,000, or $0.02 per share, in the corresponding period of the prior year.

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