SCHEDULE: Activist Investor Duc Pham Seeks Board Seat at Charles & Colvard

Duc Pham, a long-term investor, has increased his voting power to 9.6% in Charles & Colvard LTD and plans to seek a board seat to address company trajectory concerns.

Summary

• Duc Pham, a committed investor for nearly a decade, has increased his beneficial ownership and voting power in Charles & Colvard LTD.
• Through an irrevocable proxy agreement with Don Pham on August 20, 2025, Duc Pham now holds sole voting power over 299,900 shares, representing 9.6% of the company's outstanding common stock.
• The total outstanding shares of Charles & Colvard LTD are 3,118,273 as of April 3, 2025.
• Duc Pham is deeply concerned about the company's current trajectory and intends to seek a seat on the board of directors.
• His objective is to propose a multi-pronged strategy focused on governance reform, financial stabilization, and operational turnaround to restore long-term shareholder value.

Sentiment

Score: 3

Explanation: The sentiment is negative due to a significant shareholder expressing deep concern about the company's trajectory and seeking a board seat to implement reforms, indicating dissatisfaction with current performance and governance.

Positives

• A long-term investor, Duc Pham, is actively engaged and committed to improving the company's performance.
• Duc Pham brings over 20 years of leadership experience as a senior engineer at a major technology company, along with entrepreneurial experience in the jewelry industry, offering a unique blend of skills to the board.
• His deep familiarity with the Issuer's core products (moissanite, lab-grown gemstones) and customer base could provide valuable insights for strategic direction.

Negatives

• A significant shareholder, Duc Pham, is 'deeply concerned about the Company's current trajectory,' indicating potential underlying operational or strategic issues.
• The need for 'governance reform, financial stabilization, and operational turnaround' suggests the company may be facing significant challenges.

Risks

• The company faces potential disruption and uncertainty as an activist investor seeks a board seat and proposes significant strategic changes.
• Failure to implement effective governance reform, financial stabilization, or operational turnaround could further erode shareholder value.
• Potential for conflict between current management/board and the activist investor could distract from core business operations.

Future Outlook

Duc Pham intends to seek a seat on the board of directors to propose a multi-pronged strategy focused on governance reform, financial stabilization, and operational turnaround to restore long-term shareholder value.

Management Comments

• Duc Pham is 'deeply concerned about the Company's current trajectory.'
• Duc Pham will seek a board seat 'in order to propose a multi-pronged strategy focused on these issues of governance reform, financial stabilization, and operational turnaround.'

Industry Context

The jewelry industry, particularly the lab-grown gemstone segment, is dynamic and competitive. An investor with deep familiarity with the Issuer's core products and customer base, as well as experience in creative design and cost-effective material selection, could potentially help Charles & Colvard navigate market trends and competitive pressures, especially given the increasing consumer interest in lab-grown alternatives.

Comparison to Industry Standards

• The filing does not provide specific financial or operational metrics to compare Charles & Colvard's performance against industry benchmarks or competitors like Brilliant Earth, Lightbox (De Beers), or other lab-grown diamond/moissanite retailers.
• The activist investor's concerns about 'governance reform, financial stabilization, and operational turnaround' suggest that Charles & Colvard may be underperforming relative to industry best practices or growth opportunities in the lab-grown jewelry sector.

Management Changes

Corporate Governance

Related Party Transactions

• An irrevocable proxy agreement was signed between Duc Pham and Don Pham, transferring Don Pham's voting power to Duc Pham. While not a financial transaction, it is a significant arrangement between related individuals impacting beneficial ownership.

Stakeholder Impact

• Shareholders: Potential for increased shareholder value if Duc Pham's proposed reforms are successful, but also uncertainty and potential for conflict during the transition.
• Current Management/Board: Faces a challenge from a significant activist shareholder, potentially leading to changes in leadership or strategic direction.
• Employees: Potential for operational changes and restructuring as part of the 'operational turnaround' strategy.

Next Steps

• Duc Pham will seek a seat on the board of directors of Charles & Colvard LTD.
• Duc Pham plans to propose a multi-pronged strategy focusing on governance reform, financial stabilization, and operational turnaround.

Key Dates

Recommendation

The filing indicates significant shareholder dissatisfaction and an intent to pursue governance, financial, and operational reforms. While this signals potential for positive change, the outcome of an activist campaign is uncertain and can involve volatility. A seasoned investor would likely 'hold' to observe the developments, the company's response, and the specifics of the proposed strategy before making a definitive buy or sell decision.

Keywords

Charles & Colvard, CHAS, SEC filing, Schedule 13D, Activist investor, Corporate governance, Shareholder value, Board seat, Moissanite, Lab-grown gemstones, Jewelry industry