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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13G
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
Charles & Colvard, Ltd.
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
22942P109
(CUSIP Number)
(12/31/01)
Check the appropriate box to designate the rule pursuant to which this Schedule
is filed:
[X] Rule 13d-1(b)
[X] Rule 13d-1(c)
[ ] Rule 13d-1(d)
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
SEC 1745 (3-00) Page 1 of 8 pages
13G
CUSIP No. 22942P109 Page 2 of 8 Pages
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
Chester L.F. and Jacqueline M. Paulson, as joint tenants
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)
(b) |X|
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3 SEC USE ONLY
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4 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
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5 SOLE VOTING POWER
214,600
NUMBER OF ---------------------------------------------------------
SHARES 6 SHARED VOTING POWER
BENEFICIALLY OWNED BY
EACH REPORTING PERSON 2,095,992
WITH ---------------------------------------------------------
7 SOLE DISPOSITIVE POWER
214,600
---------------------------------------------------------
8 SHARED DISPOSITIVE POWER
2,095,992
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9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,310,592
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10 CHECK IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES*
[ ]
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11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9)
17.3%
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12 TYPE OF REPORTING PERSON*
IN
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SEC 1745 (3-00) Page 2 of 8 pages
13G
CUSIP No. 457-961-100 Page 3 of 8 Pages
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1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (ENTITIES ONLY)
Paulson Capital Corporation
IRS No. 93-0589534
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a)
(b) |X|
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3 SEC USE ONLY
--------------------------------------------------------------------------------
4 CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
--------------------------------------------------------------------------------
5 SOLE VOTING POWER
2,095,992
NUMBER OF ---------------------------------------------------------
SHARES 6 SHARED VOTING POWER
BENEFICIALLY OWNED BY
EACH REPORTING PERSON
WITH ---------------------------------------------------------
7 SOLE DISPOSITIVE POWER
2,095,992
---------------------------------------------------------
8 SHARED DISPOSITIVE POWER
--------------------------------------------------------------------------------
9 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,095,992
--------------------------------------------------------------------------------
10 CHECK IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES*
[ ]
--------------------------------------------------------------------------------
11 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9)
15.7%
--------------------------------------------------------------------------------
12 TYPE OF REPORTING PERSON*
CO
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SEC 1745 (3-00) Page 3 of 8 pages
Item 1. Issuer
(a) The name of the Issuer is Charles & Colvard, Ltd.
(b) The Issuer's executive offices are located at 3800 Gateway
Boulevard, Suite 310, Morrisville, North Carolina 27560.
Item 2. Reporting Person and Security
(a) This statement is being filed jointly by each of the following
persons pursuant to Rule 13d- 1(k) promulgated by the Securities and Exchange
Commission under Section 13 of the Securities Exchange Act of 1934, as amended:
(i) Chester L.F. and Jacqueline M. Paulson, as joint tenants and each
individually (together, the "Paulsons"); and (ii) Paulson Capital Corporation,
an Oregon corporation ("PCC"), which directly wholly owns Paulson Investment
Company, Inc., an Oregon corporation ("PIC"). The Paulsons and PCC are
collectively referred to as the "Reporting Persons."
Information with respect to the Reporting Persons is given solely by such
Reporting Person, and no Reporting Person assumes responsibility for the
accuracy or completeness of the information by another Reporting Person, except
as otherwise provided in Rule 13d-1(k). By their signature on this statement,
each of the Reporting Persons agrees that this statement is filed on behalf of
such Reporting Person.
(b) The Paulsons' principal business address is 811 S.W. Naito Parkway,
Suite 200, Portland, OR 97204. Each of PCC's and PIC's principal business
address is 811 S.W. Naito Parkway, Suite 200, Portland, OR 97204.
(c) The Paulsons are citizens of the United States of America, and PCC
and PIC are organized under the laws of the United States of America.
(d) This Statement relates to shares of Common Stock of Charles &
Colvard, Ltd.
(e) The CUSIP number assigned to the Common Stock of the Issuer is
22942P109.
Item 3. Filings Pursuant to Rule 13d-1(b) or 13d-2(b) or (c), check whether the
person filing is a:
(a) /X/ Broker or dealer registered under Section 15 of the Exchange Act
(PIC is a registered broker/dealer);
(b) / / Bank as defined in section 3(a)(6) of the Exchange Act;
(c) / / Insurance company as defined in section 3(a)(19) of the Exchange
Act;
(d) / / Investment company registered under section 8 of the Investment
Company Act of 1940;
(e) / / An investment adviser in accordance with Rule
13d-1(b)(1)(ii)(E);
(f) / / An employee benefit plan or endowment fund in accordance with
Rule 13d-1(b)(1)(ii)(F);
(g) / / A parent holding company or control person, in accordance with
Rule 13d-1(b)(ii)(G);
(h) / / A savings association, as defined in Section 3(b) of the Federal
Deposit Insurance Act;
SEC 1745 (3-00) Page 4 of 8 pages
(i) / / A church plan that is excluded from the definition of an
investment company under section 3(c)(14) of the Investment Company
Act of 1940;
(j) / / Group, in accordance with Rule 13d-1(b)(1)(ii)(J).
If this statement is filed pursuant to Rule 13d-1(c), check this box /X/
Item 4. Ownership
(a) Under the rules and regulations of the Securities and Exchange
Commission (the "SEC"), the Paulsons may be deemed to be the beneficial owners
of a total of 2,310,592 shares of Issuer Common Stock. The Paulsons may be
deemed to control Paulson Capital Corp. ("PCC"), which wholly owns Paulson
Investment Company, Inc. ("PIC").
Mr. Paulson directly owns 214,600 shares of Issuer Common Stock and the
Paulsons may be deemed to indirectly own 2,095,992 shares of Issuer Common
Stock. Pursuant to SEC Rule 13d-4, the Paulsons expressly disclaim beneficial
ownership of the 2,095,992 shares of Issuer Common Stock of which PIC is the
record owner.
The 214,600 shares of Issuer Common Stock directly owned by Mr. Paulson
are comprised of: (i) 184,400 shares of Issuer Common Stock; (ii) a warrant to
purchase 25,200 shares of Issuer Common Stock; and (iii) options to purchase
5,000 shares of Issuer Common Stock that vest within 60 days of December 31,
2001.
The 2,095,992 shares of Issuer Common Stock which the Paulsons may be
deemed to indirectly beneficially own, and of which PIC is record owner, are
comprised of: (i) 1,881,400 shares of Issuer Common Stock; and (ii) a warrant to
purchase 214,592 shares of Issuer Common Stock.
(b) The Paulsons' actual and deemed beneficial ownership of Issuer
Common Stock represented approximately 17.3% of the 13,371,714 issued and
outstanding shares of Issuer Common Stock as of November 9, 2001, as reported in
the Issuer's Form 10-QSB filed with the SEC on November 9, 2001. PCC's indirect
beneficial ownership of Issuer Common Stock represented approximately 15.7% of
the 13,371,714 issued and outstanding shares of Issuer Common Stock as of
November 9, 2001, as reported in the Issuer's Form 10-QSB filed with the SEC on
November 9, 2001.
(c) (i) Of the total amount of shares that are either beneficially
owned or that may be deemed to be beneficially owned by the Paulsons, the
Paulsons have sole power to vote or direct the vote of 214,600 shares. Of the
total amount of shares indirectly beneficially owned by PCC, PCC has sole power
to vote or direct the vote of 2,095,992
(ii) Of the total amount of shares that are either beneficially
owned or that may be deemed to be beneficially owned by the Paulsons, the
Paulsons have shared power to vote or direct the vote of 2,095,992 shares.
(iii) Of the total amount of shares that are either beneficially
owned or that may be deemed to be beneficially owned by the Paulsons, the
Paulsons have sole power to dispose or direct the disposition of 214,600 shares.
Of the total amount of shares indirectly beneficially owned by PCC, PCC has sole
power to dispose or direct the disposition of 2,095,992 shares.
SEC 1745 (3-00) Page 5 of 8 pages
(iv) Of the total amount of shares that are either beneficially
owned or that may be deemed to be beneficially owned by the Paulsons, the
Paulsons have shared power to dispose or direct the disposition of 2,095,992
shares.
Item 5. Ownership of Five Percent or Less of a Class
Not applicable.
Item 6. Ownership of More than Five Percent on Behalf of Another Person
Not applicable.
Item 7. Identification and Classification of the Subsidiary Which Acquired the
Security Being Reported on by the Parent Holding Company
See Item 4(a).
Item 8. Identification and Classification of Members of the Group
Not applicable.
Item 9. Notice of Dissolution of Group
Not applicable.
Item 10. Certification
By signing below I certify that, to the best of my knowledge and
belief, the securities referred to above were not acquired and are not held for
the purposes of or with the effect of changing or influencing the control of the
Issuer of the securities and were not acquired and are not held in connection
with or as a participant in any transaction having that purpose or effect.
SEC 1745 (3-00) Page 6 of 8 pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
February 21, 2002
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Date
/s/CHESTER L.F. PAULSON
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Chester L.F. Paulson
February 21, 2002
----------------------------------------
Date
/s/JACQUELINE M. PAULSON
----------------------------------------
Jacqueline M. Paulson
February 21, 2002
----------------------------------------
Date
PAULSON CAPITAL CORP.
/s/CHESTER L.F. PAULSON
----------------------------------------
Chester L.F. Paulson, Chairman
SEC 1745 (3-00) Page 7 of 8 pages
Exhibit 1
SCHEDULE 13G JOINT FILING AGREEMENT
The undersigned and each other person executing this joint filing
agreement (this "Agreement") agree as follows:
(i) The undersigned and each other person executing this Agreement are
individually eligible to use the Schedule 13G in accordance with the Securities
Exchange Act of 1934 and the regulations promulgated thereunder is attached and
such schedule is filed on behalf of the undersigned and each other person
executing this Agreement; and
(ii) The undersigned and each other person executing this Agreement are
responsible for the timely filing of such Schedule 13G and any amendments
thereto, and for the completeness and accuracy of the information concerning
such person contained herein; provided, however, that none of the undersigned or
any other person executing this Agreement is responsible for the completeness or
accuracy of the information statement concerning any other persons making the
filing, unless such person knows or has reason to believe that such information
is inaccurate.
This Agreement may be executed, in any number of counterparts, each of
which shall be deemed to be an original, but all of which, taken together, shall
constitute one and the same instrument.
DATED: February 21, 2002 PAULSON CAPITAL CORPORATION
/s/CHESTER L.F. PAULSON
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By: Chester L.F. Paulson
Its: Chairman of the Board
PAULSON INVESTMENT COMPANY, INC.
/s/CHESTER L.F. PAULSON
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By: Chester L.F. Paulson
Its: Chairman of the Board
/s/CHESTER L.F. PAULSON
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Chester L.F. Paulson, an individual
/s/JACQUELINE M. PAULSON
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Jacqueline M. Paulson, an individual