Charles & Colvard Announces the KGK Group as a New Moissanite Jewelry Manufacturer.

-- Company Provides Update on Advertising and Marketing Initiatives --

MORRISVILLE, N.C. -- Charles & Colvard announced today that the KGK Group has become the Company's newest manufacturer of fine moissanite jewelry. This manufacturer has the potential to expand the Company's reach into higher-end department and independent retail stores.

The KGK Group is a global corporation based in India with fully integrated operations in diamonds, colored gemstones & jewelry. KGK is known worldwide for its exemplary quality, international standards, and its impeccable reputation for customer service. Their customers include high-end independent retailers, upscale department stores and designers located around the world.

KGK has developed a new line of moissanite jewelry and has designed an exclusive collection combining moissanite and high quality diamonds in 18k yellow and white gold, platinum and palladium settings. The collection will include various styles of rings, pendants, moissanite jewels by yard, stud earrings, and bracelets that KGK is beginning to market in the U.S. and internationally.

Dennis Reed, President and CMO of Charles & Colvard commented, "While we are in the early stages of our relationship with the KGK Group this relationship can allow us to develop additional channels of revenue, both in the U.S. and internationally, and broaden our penetration in the higher-end luxury market. KGK's exclusive line of moissanite jewelry will debut at the JCK trade show in Las Vegas at the end of May. We believe this relationship can strengthen our brand recognition and generate greater exposure among independent and specialty stores. As we look to increase awareness and grow the moissanite brand, working with manufacturers like the KGK Group to develop distinct, fashionable designs of moissanite jewelry can help broaden our reach among women at the higher end of our target market."

"This is a great relationship for both parties," said Louis Karten, Managing Director of Guild Solutions LLC, the U.S. marketing partner of the KGK Group, China. "Charles & Colvard targets its moissanite to the self-purchasing woman, who is the core customer for our marketing efforts as well. Working with Charles & Colvard was the ideal next step for KGK as a manufacturer because they have uniquely positioned moissanite in the marketplace. We are extremely impressed with the increasing awareness that Charles & Colvard has built for the moissanite category in the women's jewelry industry and we are thrilled to introduce a stylish moissanite jewelry collection to our upscale retail customer base."

In other corporate developments, the Company, along with its Board of Directors and outside marketing consultants, has completed an extensive review of Charles & Colvard's historical and current marketing campaigns and initiatives. As a natural outgrowth of that review, the company is seeking proposals from advertising agencies to sharpen the creative message to consumers, and to develop and execute a new campaign by the fourth quarter of 2007.

In addition to the new campaign, new marketing initiatives designed to increase consumer awareness that are currently being implemented include:

* a moissanite television commercial in conjunction with a regional department store chain;

* internet-based search engine marketing, and

* an outdoor advertising campaign test linked to mall jewelers in three geographic markets within the U.S.

Bob Thomas, CEO and Chairman, commented, "Our marketing research confirms that we are being successful in reaching our target audience, and that they are recognizing the fundamental positioning we have established for Charles & Colvard created Moissanite[TM]. Expanding awareness and consumer demand is a high priority for our organization and we intend to continue to provide an appropriate level of support to the retailers who choose to market fine moissanite jewelry. As we have previously reported, our research shows that from January 2006 to January 2007 the awareness level for our jewel in the U.S. grew from 7.8% to 10.5% overall, and from 8% to over 20% among consumers with household incomes above $75,000. As part of our commitment to our direct customers and the retailers who market fine moissanite jewelry, as of March 1, 2007, we have realigned our sales and marketing staffs and added significant talent to our organization. We believe that these efforts, coupled with a sharper advertising message, can ensure the continued success of the moissanite category of fine jewelry."

Bob Thomas concluded, "I am very pleased to welcome KGK and their partner, Guild Solutions LLC, to our list of direct customers. We believe that their decision to become involved in our category affirms the growing position of moissanite in the jewelry market. We look forward to our association with these fine companies and their customers."

ABOUT CHARLES & COLVARD, LTD.

Charles & Colvard, Ltd. (NASDAQ: CTHR), based in the Research Triangle Park area of North Carolina, is the global sole source of lab-created moissanite, a unique, near-colorless jewel that is distinct from other gemstones and jewels based on its exceptional fire, brilliance, luster, durability and rarity. Currently used in fine jewelry, Charles & Colvard created Moissanite[TM] is primarily marketed to the self-purchasing woman as the perfect reward or indulgence for a woman celebrating her achievements, whether personal or professional, big or small. For more information, please access www.charlesandcolvard.com.

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Statements expressing expectations regarding our future and projections relating to products, sales, revenues and earnings are typical of such statements and are made under the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, statements about our plans, objectives, representations and contentions and are not historical facts and typically are identified by use of terms such as "may," "will," "should," "could," "expect," "plan," "anticipate," "believe," "estimate," "predict," "potential," "continue" and similar words, although some forward-looking statements are expressed differently.

All forward-looking statements are subject to the risks and uncertainties inherent in predicting the future. You should be aware that although the forward-looking statements included herein represent management's current judgment and expectations, our actual results may differ materially from those projected, stated or implied in these forward-looking statements as a result of many factors, including, but not limited to the Company's ability to manage growth effectively, dependence on Cree, Inc. as the current supplier of the substantial majority of the raw material, ability to develop a material second source of supply, dependence on a limited number of jewelry manufacturing customers, dependence on continued growth and consumer acceptance of the Company's products, in addition to the other risks and uncertainties described in more detail in our most recent annual report on Form 10-K filed with the Securities and Exchange Commission. Forward-looking statements speak only as of the date they are made. We undertake no obligation to update or revise such statements to reflect new circumstances or unanticipated events as they occur except as required by the federal securities laws, and you are urged to review and consider disclosures that we make in the reports that we file with the Securities and Exchange Commission that discuss other factors relevant to our business.