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We are working to mitigate additional margin creep and stabilize product margins by reviewing our vendor agreements and relationships and negotiating when possible to reduce cost of goods sold, evaluating our overall product assortment and mindfully managing our overall advertising and marketing spend. While the current environment, we're encouraged by the opportunities that conscious consumerism and ethical manufacturing awareness create for Charles & Colvard and our forward momentum on our strategic initiatives. Forever One, the company's Cornerstone and Pinnacle lab-grown voice and a gemstone product brand saw revenues increased 5% compared to Q3 FY 2023 while KDL lab-grown diamond sales and Charles & Colvard were up 16% compared to the year ago quarter.

We believe, we're well positioned to capitalize on increased consumer awareness of lab-grown gems, particularly moissanite and lab-grown diamonds, as more brands and retailers continue to embrace the lab-grown movement. Prada joined LVMH brands Fred and TAG Heuer, as one of the first high jewelry houses to adopt lab-grown gems launching a collection featuring lab-grown diamonds and recycled gold last year. We feel that the wider acceptance of lab-grown diamonds and recycled metals further validates that Charles & Colvard made not mind story. Additionally we've re-branded moissanite by Charles & Colvard to our newest gem brand for Everbright to further distinguish our premium moissanite gemstones in the market. For Everbright moissanite will replace moissanite by Charles & Colvard's listings on our drop-ship and marketplace partner sites, including macys.com, belk.com, Kohls.com, fredmeyerjewelers.com, shopmyexchange.com, the Army & Air Force Exchange Services online store and others.

The new gemstone brand will also be available for purchase by approved independent jewelers and retailers on charlesandcolvarddirect.com. A downstream solution for value-oriented consumers seeking quality synonymous with Charles & Colvard Moissanite at lower price points to broaden our overall reach. Inventory decreased 24% for the quarter as the company continued to refine its jewelry offerings in response to consumer preferences. On charlesandcolvard.com, the company expanded engagement in fashion and jewelry categories in both Forever One moissanite and Caydia lab-grown diamond product brands during the quarter. To better penetrate the low-cost consumer market and capture additional market share, the company updated its moissaniteoutlet.com website with improved item filters for a better user experience, a fresh look and feel, refreshed assortment and increased frequency of its marketing campaigns and e-mails.

The company continued to make significant investments in its people resources, its next-generation web platform and its marketing and advertising assets and capabilities with what we deem to be essential for a lifestyle brand to better align with consumers in a crowded and competitive environment, keeping us top of mind with more concentrated social media campaigns, refreshed evergreen assets across paid media platforms and new brand ambassadorships such as the recently announced strategic partnership with American Actress, Skyler Samuels, Erin Lim of Host of E! The Rundown, Don Caydia lab grown diamonds on the red carpet for the People's Choice Awards in February. And the company's successful Valentine's Day sales comprised 52% of charlesandcolvard.com revenue for the quarter.

We strategically incorporated more user-generated content this quarter as we have seen positive results from the company's paid search and paid social campaigns by implementing these new assets. In Q3, the company launched an ethical consumerism campaign across its digital marketing efforts, focusing on Charles & Colvard's MADE online story. We believe our increased digital marketing efforts and e-commerce presence enable us to reach a broader audience and drive more customers online. The more places consumers can reach Charles & Colvard, the stronger the company's brand equity can become, showcasing our quality, craftsmanship and innovation, thereby seeking to capture a greater market share. Bottom line, we believe that our marketing efforts are gaining traction.

We continue to beta test our MADE shopping broadcast and streaming initiatives, the leading valuable insights into a new customer base while recognizing a lift in top of funnel brand awareness. We have recently begun to scale back spending while effectively fine-tuning the programming to appeal to optimal markets for our products. We look forward to updating you with further MADE shopping plans in more detail on future calls, as we believe this network will enable us to cross more verticals beyond the jewelry and gemstone industry. As we look to hedge against the pricing pressures that continue to impact the jewelry and gemstone industry, as well as our traditional segment, we believe that the new launch of our charlesandcolvarddirect.com wholesale portal enables the company to be more competitive while incentivizing independent jewels of retailers to buy direct in support of this initiative.

We launched the trade campaign announcing Charles & Colvard direct website with biweekly newsletter ads on jck.com, a leading industry website publication. We partnered with JCK to send a dedicated e-mail to more than 30,000 independent jewelers and retailers announcing Charles & Colvard Direct. We revamped the charlesandcolvarddirect.com website with updated marketing assets and simple-to-use account registration, and most recently, we issued a press release announcing the strategic shift with our traditional segment. I firmly believe while we face challenges within our industry, we are confident that our team's agility in the face of adversity will guide us towards success and growth. I will now turn the presentation over to Clint Pete, our CFO, to provide detailed insight into our financial performance during Q3.

Clint, please proceed.

Clint Pete: Thanks, Don. Today, I'll provide a summary of key financials for the third quarter ended March 31, 2024. Additional details can be found in our earnings press release that we issued this afternoon and on Form 10-Q, which we expect to file early next week. Please note that all percentage comparisons are to the third quarter ended March 31st, 2023 unless specified otherwise. First, we'll start on Slide 8 with a comparative analysis of the third quarter of fiscal 2024 compared to same period one year ago. In total, net sales for Q3 2024 totaled $5.3 million versus $6.6 million, a decrease of 21% due primarily to the continued weak consumer confidence, continued pricing pressures on the lab grown diamond market, and the expected decline in the company's wholesale revenue as we continue to build a more robust direct-to-consumer business.

And as our independent dealer and retailer initiative of charlesandcolvarddirect.com continues to mature. Net sales for our online channels segment which is primarily direct to consumer and includes charlesandcolvard.com, merchandiseoutlet.com, charlesandcolvarddirect.com, madeshopping.com, Marketplaces, Drop Ship Retail, and other pure-play outlets totaled $4.1 million for the quarter now representing 77% of total net sales, up 7% from a year ago. Net sales for our traditional segment, which consists of wholesale and brick-and-mortar customers, totaled $1.2 million for the quarter, representing now 22% of total net sales compared to 30% of sales in the year ago quarter. Finished jewelry net sales represent 93% of total sales in the quarter up from 80% of sales in the third quarter one year ago.

As previously mentioned due to the company's strategic shift in its traditional segment strategies, finished net sales decreased 71% for the quarter. Domestic sales of charlesandcolvard.com represented 98% of all sales in the third quarter with international sales totaling 2%. Moving to Slide 9 to discuss gross margin. We reported a gross margin at 23% versus 32% gross margin in the year-ago quarter or a gross profit of $1.2 million versus $2.1 million in gross profit in the year-ago quarter due in large part to rising commodity prices, the company's sale cadence, and a disposition strategy to liquidate some obsolescence inventory. For Q3 2024, operating expenses increased 13% from the year-ago quarter. Sales and marketing expenses increased 13% to $3.7 million.

This increase reflects our continuing investments in people resources, top of funnel and influencer marketing, campaigns and brand awareness initiatives that we believe allow us to elevate our brands position. General and administrative expenses were $1.2 million for the quarter compared to $1.1 million in the year-ago quarter, a 14% increase. The increase in G&A for Q3 2024 was due in large part to increased legal fees compared to the prior year quarter. We reported a net loss for Q3 2024 of $3.6 million or $0.12 loss per diluted share compared with a net loss of $8.4 million or $0.28 loss per diluted share in the year-ago period. The main driver for our decreased net loss was $6.3 million tax expense in the year-ago quarter, driven by the establishment of a deferred tax asset valuation allowance on our debt deferred tax assets.

Our weighted average shares outstanding on a diluted basis used in the calculation of loss per share for the quarter were approximately 30.3 million shares for the period ended March 31st, 2024, same as in the year ago period. Now, let's move on to a snapshot of our balance sheet. Our liquidity and capital position remained strong as we ended the quarter with $9.2 million of total cash compared to $11.1 million at the end of Q2. Working capital remained strong at $12.7 million. As of March 31st, 2024, the company had $500,000 in short-term outstanding debt. Our cash flow used in operations was $2.1 million during the quarter compared to $800,000 of cash flow used in operations in the same quarter a year ago. In terms of other liquidity, we have access to our $5 million cash secured credit facility with JPMorgan Chase Bank.

As of March 31st, 2024, the company had $500,000 outstanding on the credit facility. Inventory as of March 31st, 2024 totaled $25.3 million compared to June 30, 2023, when it totaled $26.8 million compared to $33.3 million at March 31st, 2023, a year-over-year decrease of $8 million due to the inventory write-down in Q4 FY 2023. Boost jewels inventory was $8.2 million as of March 31st, 2024, compared to $9.1 million as of June 30, 2023, and compared to $15.6 million as of March 31st, 2023. The year-over-year decrease, again, due to the inventory write-down referred to above. Finished jewelry inventory was $16.9 million, as of March 31st, 2024, compared to $17.3 million as of June 30, 2023, and compared to $17.4 million as of March 31st, 2023.The company remains focused on prudent inventory management strategies in support of our in-stock requirements with select drop-ship marketplace partners.

Book value per share at the end of the third quarter was $1.01 per share, trading well below market. In summary, we remain confident in our continued efforts to increase shareholder value and brand equity. With that, I'll turn it back over to Don.

Don O'Connell: Thank you, Clint. As we approach our fiscal year-end, our focus remains steadfast on launching key initiatives while diligently working to navigate the challenge of reducing expenses while driving revenue. By leveraging our resources more efficiently and better maximizing our efforts, we are committed to achieving sustainable growth and delivering value to our stakeholders. With a collective dedication to innovation and operational excellence, we believe we are poised to capitalize on the opportunities we've created and to overcome challenges as we chart a successful path forward. Thank you for your unwavering support as we continue this journey together. With that, I'll turn the call back over to the operator, who will open the lines for any questions.

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