1015155--3/10/2006--CHARLES_&_COLVARD

related topics

{product, market, service}

{product, liability, claim}

{product, candidate, development}

{loss, insurance, financial}

{interest, director, officer}

{property, intellectual, protect}

{provision, law, control}

{acquisition, growth, future}

{customer, product, revenue}

{operation, natural, condition}

{regulation, change, law}

Our business operations could be adversely affected if we do not manage our growth effectively. Our future financial performance depends upon continued growth and consumer acceptance of our products. We are substantially dependent on the sale of our jewels in North America through K G Creations (a jewelry manufacturer and distributor), Reeves Park (a jewelry manufacturer) and Stuller Settings, Inc. (a jewelry distributor and manufacturer) as well as a limited number of other distributors and jewelry manufacturers. A prolonged economic downturn and the uncertainties caused by war or terrorism could adversely affect our operations. We are subject to certain risks due to our international distribution channels and vendors. We currently depend upon Cree for the supply of a substantial majority of our SiC crystals. We rely upon our ability to protect our intellectual property. Our success depends upon our ability to identify, reach agreements with and work successfully with third parties. Governmental regulation and oversight might adversely impact our operations. Our reputation amongst jewelers and consumers could be damaged if low-quality gemstones or synthetics are marketed as moissanite. Some anti-takeover provisions of our charter documents, agreements and plans may delay or prevent a takeover of our Company.

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1015155--3/10/2006--CHARLES_&_COLVARD_LTD