SCHEDULE: Activist Group Targets Charles & Colvard Board

Duc Pham and a newly formed group, holding 11.9% of Charles & Colvard, plan to nominate a director slate for the 2025 annual meeting.

Summary

• Duc Pham, along with Riverstyx Capital Management, LLC, and other individuals, formed a group on September 23, 2025, to engage with Charles & Colvard Ltd.
• The group's primary objective is to nominate and solicit proxies for a director slate at the Issuer's 2025 annual meeting.
• Mr. Pham beneficially owns an aggregate of 532,216 shares, representing approximately 11.9% of the outstanding Common Stock (based on 4,471,453 shares outstanding).
• This ownership includes sole voting power over 299,900 shares and shared dispositive power over 388,216 shares.
• Mr. Pham also holds an irrevocable proxy for 144,000 shares from Don Pham, granting him sole voting power for the 2025 annual meeting, without dispositive or economic interest in those shares.

Sentiment

Score: 7

Explanation: The formation of an activist group with a significant stake and the stated intent to nominate directors suggests a push for value creation, which can be a positive catalyst for shareholders. However, it also introduces uncertainty and the potential for a proxy contest, which can be disruptive in the short term.

Positives

• Increased shareholder activism could lead to improved corporate governance and strategic direction, potentially unlocking shareholder value.
• A significant stake (11.9%) held by an activist group demonstrates conviction in the company's potential and a strong incentive to drive positive change.

Negatives

• The potential for a proxy contest could create near-term uncertainty and divert management resources from core business operations.
• The formation of an activist group suggests dissatisfaction with current management or board performance, indicating underlying issues.

Risks

• A proxy fight could be costly and disruptive to the company's operations and reputation.
• Uncertainty regarding the outcome of the 2025 annual meeting and potential changes to the board composition.
• Disagreements between the activist group and current management could hinder strategic execution and create internal friction.

Future Outlook

The activist group intends to engage with the Issuer and its shareholders regarding the nomination of a director slate for the 2025 annual meeting, indicating a push for future strategic or governance changes within Charles & Colvard Ltd.

Management Comments

• The reporting person, Duc Pham, is identified as a Senior Engineer at Apple Inc. and Founder/Director of Infinitive Love Inc.
• The group's actions, including the intent to nominate directors, imply a belief that changes to the board or management are necessary to unlock shareholder value.

Industry Context

Shareholder activism is a common strategy in various sectors, including jewelry and luxury goods, particularly for companies perceived as undervalued or underperforming. Such activism aims to drive strategic changes, improve operational efficiency, or enhance corporate governance.

Management Changes

Corporate Governance

Stakeholder Impact

• Shareholders: Potential for increased value if activist initiatives are successful; near-term uncertainty due to potential proxy contest.
• Management/Board: Increased scrutiny, potential for leadership changes, and diversion of resources to address activist demands.
• Employees: Potential for strategic shifts that could impact operations and organizational structure.

Next Steps

• Proxy solicitation for the Issuer's 2025 annual meeting.
• Engagement with the Issuer and its shareholders.
• Nomination of a director slate for the 2025 annual meeting.

Key Dates

Recommendation

The filing indicates significant shareholder activism aimed at influencing the company's board and strategy. While this could unlock value, the immediate future involves a potential proxy contest, creating uncertainty. A 'hold' recommendation allows investors to observe the developments and the specific proposals from the activist group before making a more definitive investment decision.

Keywords

Charles & Colvard, Duc Pham, Riverstyx Capital, Shareholder Activism, Proxy Fight, Board Nomination, SEC Filing, 13D, Common Stock, Corporate Governance