SCHEDULE: Activist Investor Duc Pham Nominates Self to Charles & Colvard Board

Activist investor Duc Pham has nominated himself for election to the board of directors of Charles & Colvard Ltd. and intends to solicit proxies for the 2025 annual meeting.

Summary

• Duc Pham, an individual investor, has filed an Amendment No. 1 to his Schedule 13D filing regarding Charles & Colvard, Ltd.
• Pham beneficially owns 299,900 shares of Common Stock, representing 9.6% of the class.
• On August 25, 2025, Pham delivered an advance notice nomination to elect himself to the Issuer's board of directors at the 2025 annual meeting.
• The 2025 annual meeting is scheduled for October 13, 2025.
• Pham intends to solicit proxies from shareholders representing at least 67% of the voting power and will furnish a universal proxy card.
• He may communicate with shareholders regarding board composition, governance, strategy, and performance.
• Pham entered into an irrevocable proxy voting agreement with Don Pham on August 20, 2025, granting him voting power over an additional 144,000 shares solely for the 2025 annual meeting, for which he paid $10,000.
• Pham has no dispositive or economic rights over these 144,000 shares, which remain beneficially owned by Don Pham.
• Pham's principal occupation is Senior Engineer at Apple Inc.

Sentiment

Score: 6

Explanation: The filing indicates an activist investor is seeking board representation, which can be a catalyst for change and potentially value creation. However, it also signals potential conflict and uncertainty for the company's current management and board. The investor's background and commitment (paying for proxy) suggest a serious intent.

Positives

• An activist investor is seeking to improve corporate governance and strategic direction, potentially unlocking shareholder value.
• The investor has secured additional voting power through a proxy agreement, demonstrating commitment and a strategic approach to board representation.
• The investor's background as a Senior Engineer at Apple Inc. suggests a strong analytical and technical skillset, which could be beneficial to the board.

Negatives

• A proxy contest could lead to increased costs for the company and potential disruption to management focus.
• The nomination indicates dissatisfaction with current board composition, governance, strategy, or performance, which could signal underlying issues within the company.

Risks

• Potential for a costly and distracting proxy fight if the company resists the nomination.
• Uncertainty regarding the outcome of the board election and the potential impact on the company's strategic direction.
• The activist's proposed changes might not align with the interests of all shareholders or could lead to unforeseen operational challenges.

Future Outlook

Duc Pham intends to solicit proxies from shareholders representing at least 67% of the voting power entitled to vote in the election of directors and to furnish a universal proxy card. He may file preliminary or definitive proxy statements and additional soliciting materials and communicate with shareholders and other market participants regarding the issuer, board composition, governance, strategy, and performance. He reserves the right to evaluate additional plans or proposals.

Industry Context

Shareholder activism, particularly through board nominations and proxy contests, is a recurring theme in the public markets, often driven by investors seeking to influence corporate strategy, improve governance, or unlock perceived undervalued assets. This action by Duc Pham aligns with a broader trend of individual and institutional investors taking more proactive roles in corporate oversight.

Management Changes

Corporate Governance

Related Party Transactions

• Duc Pham paid $10,000 to Don Pham for an irrevocable proxy voting agreement, granting voting power over 144,000 shares for the 2025 annual meeting.

Stakeholder Impact

• Shareholders: Potential for increased shareholder value if the activist's proposals lead to improved performance or governance. Risk of dilution of existing board influence.
• Management/Board: Increased scrutiny and potential for a contested election, requiring significant time and resources to address.
• Employees: Potential for strategic shifts or operational changes depending on the outcome of the board election.

Next Steps

• Duc Pham will solicit proxies from shareholders for the 2025 annual meeting.
• Duc Pham will furnish a universal proxy card.
• Duc Pham may file preliminary or definitive proxy statements and additional soliciting materials.
• Duc Pham may communicate with shareholders and other market participants regarding the issuer, board composition, governance, strategy, and performance.
• The 2025 annual meeting is scheduled for October 13, 2025, where the election of directors will take place.

Key Dates

Recommendation

The filing indicates an activist investor is seeking board representation, which often signals dissatisfaction with current management or strategy. While this could be a catalyst for positive change and value creation, the outcome of a proxy contest is uncertain and can introduce volatility. Investors should hold to observe the developments of the proxy solicitation and the 2025 annual meeting before making further investment decisions.

Keywords

Charles & Colvard Ltd, Schedule 13D, Activist investor, Board nomination, Proxy contest, Corporate governance, Shareholder activism, Common Stock, Proxy voting agreement, Board of Directors