{"url_path":"/sec/cik-0001015155/8-k/2026-06-26/item-1-01","section_key":"item-1-01","section_title":"Item 1.01 Entry into a Material Definitive","topic":"sec","document":{"doc_type":"8-K","doc_date":"2026-06-26","source_url":"https://www.sec.gov/Archives/edgar/data/1015155/0001104659-26-078310-index.html","accession_number":"0001104659-26-078310","cik":"0001015155","ticker":null,"issuer_name":"CHARLES & COLVARD LTD","edgar_url":"https://www.sec.gov/Archives/edgar/data/1015155/0001104659-26-078310-index.html","primary_entity_key":"0001015155","primary_entity_name":"CHARLES & COLVARD LTD"},"word_count":1348,"has_tables":true,"body_markdown":"**Item 1.01 Entry into a Material Definitive\nAgreement.**\n\n \n\nAs previously disclosed, on\nMarch 2, 2026, Charles & Colvard, Ltd., a North Carolina corporation (the “Company”), filed a voluntary petition for relief\n(the “Chapter 11 Case”) under Chapter 11 of Title 11 of the United States Code (“Chapter 11”) in the United States\nBankruptcy Court for the Eastern District of North Carolina (the “Bankruptcy Court”). The case is styled as *In re Charles\n& Colvard, Ltd.*\n\n**\n\nAlso as previously disclosed, on\nApril 15, 2026, the Company finalized negotiations of an Asset Purchase Agreement (the “JDP Purchase Agreement”) with\nVan Lang Jewelry LLC or its affiliate Jewelry Design Partners\nLLC (“JDP”), pursuant to which, subject\nto the terms and conditions set forth therein, including approval of the Bankruptcy Court, JDP agreed to acquire the assets of the Company\n(except for the Excluded Assets, as listed on Schedule 1 thereto) and assume certain liabilities (the “JDP Transaction”),\nfor consideration of $1,500,000 (subject to a credit bid and offset against all of the indebtedness owed to JDP under the Section 364\nFinancing Loan Agreement dated March 24, 2026, by and between the Company and JDP (the “DIP Facility”)). A former member of\nthe Company’s Board of Directors (the “Board”), Duc Pham, who resigned from the Board on March 25, 2026, is a Manager\nof JDP.\n\n \n\nAlso as previously disclosed, on\nApril 29, 2026, the Bankruptcy Court entered an Order (i) approving JDP as the “stalking horse” bidder with respect to the\nassets to be acquired under the JDP Purchase Agreement on the terms set forth in the Order, (ii) approving the “stalking horse”\nbidder to credit bid all or any portion of the outstanding DIP Obligations (as defined in the JDP Purchase Agreement) under the DIP Facility,\nas a part of the purchase price under the JDP Purchase Agreement, (iii) approving the credit bid provisions contemplated by the JDP Purchase\nAgreement, (iv) approving the stalking horse break-up fee and expense reimbursement as set forth in the JDP Purchase Agreement, and (v)\napproving the proposed bidding procedures. The Bankruptcy Court scheduled the final sale hearing for June 22, 2026, at 11:00 a.m. ET.\nThe JDP Transaction was to be conducted pursuant to Bankruptcy Court-approved bidding procedures and was subject to (a) the receipt of\na bid that meets the specifications set forth in the JDP Purchase Agreement and that constitutes, in the Company’s reasonable judgment,\na higher or otherwise better offer from competing bidders, (b) approval of the sale by the Bankruptcy Court, and (c) the satisfaction\nof certain conditions to closing. On April 30, 2026, after approval of the Bankruptcy Court, the Company countersigned the JDP Purchase\nAgreement.\n\n \n\nOn June 22, 2026, the Company held an auction\npursuant to the bidding procedures approved by the Bankruptcy Court (the “Auction”). At the conclusion of the Auction, the\nCompany determined the bid submitted by AJS Creations, Inc. (“AJS”) was the highest or otherwise best bid and designated AJS\nas the successful bidder for the Company’s assets (except\nfor the Excluded Assets, as listed on Schedule 1 to the AJS Purchase Agreement (as defined below)).\nThe Company also determined that the bid submitted by Light & Star USA Inc. (“Light & Star”) was the second highest\nor otherwise second-best bid and designated Light & Star as the back-up bidder for the Company’s assets (except\nfor the Excluded Assets, as listed on Schedule 1 to the AJS Purchase Agreement).****\n\n \n\nOn June 22, 2026, the Company and AJS entered\ninto an Overbid Purchase Agreement (the “AJS Purchase Agreement”), pursuant to which, subject to the terms and conditions\nset forth therein, AJS agreed to acquire specified assets related to the Company’s business and assume certain liabilities (the\n“AJS Transaction”), subject to the Bankruptcy Court’s approval, for cash consideration of $2,700,000.\n\n \n\nThe AJS Purchase Agreement contains customary\nrepresentations and warranties of the parties and is subject to a number of closing conditions, including, among others, (i) the accuracy\nof representations and warranties of the parties; (ii) the entry of an order approving the AJS Purchase Agreement and the transactions\ncontemplated therein by the Bankruptcy Court; and (iii) compliance in all material respects with the obligations of the parties set\nforth in the AJS Purchase Agreement.\n\n \n\nUpon the consummation of the AJS Transaction,\nthe JDP Purchase Agreement will terminate, and the Company will use a portion of the purchase price received from AJS to pay Van Lang\nJewelry LLC a break-up fee of $45,000.\n\n \n\nOn June 25, 2026, the Bankruptcy Court approved\nthe AJS Purchase Agreement and the transactions contemplated therein.\n\n \n\n \n\n \n\n \n\nThe AJS Purchase Agreement may be terminated by\nAJS or the Company under certain circumstances, including, among others, if the AJS Transaction is not consummated by July 7, 2026 (subject\nto specified extensions), or upon the occurrence of certain Bankruptcy Court actions. \n\n \n\nThe foregoing description of the AJS Purchase\nAgreement is not complete and is qualified in its entirety by reference to the AJS Purchase Agreement, a copy of which is attached to\nthis Current Report on Form 8-K as Exhibit 10.1 and is hereby incorporated herein by reference.\n\n \n\n**Cautionary Note Regarding the Chapter 11\nCase**\n\n* *\n\nThe Company cautions that trading in the Company’s\ncommon stock during the pendency of the Chapter 11 Case is highly speculative and poses substantial risks. Trading prices for the Company’s\ncommon stock may bear little or no relationship to the actual recovery, if any, by the holders of the Company’s common stock in\nthe Chapter 11 Case. The Company expects that holders of the Company’s common stock may experience a significant or complete loss\non their investment, depending on the outcome of the Chapter 11 Case. Accordingly, the Company urges extreme caution with respect\nto existing and future investments in its common stock.\n\n* *\n\n**Cautionary Statements Regarding Forward-Looking\nStatements**\n\n* *\n\nThis Current Report on Form 8-K contains forward-looking\nstatements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act\nof 1934, as amended. These forward-looking statements typically can be identified by use of terms such as “may,” “will,”\n“should,” “could,” “expect,” “intend,” “plan,” “anticipate,” “believe,”\n“estimate,” “predict,” “continue,” and similar words, although some forward-looking statements are\nexpressed differently. All forward-looking statements are subject to the risks and uncertainties inherent in predicting the future. You\nshould be aware that although the forward-looking statements included herein represent management’s current judgment and expectations,\nthe Company’s actual results may differ materially from those projected, stated, or implied in these forward-looking statements\nas a result of many factors including, but not limited to, risks attendant to the bankruptcy process, including the Company’s ability\nto obtain court approval from the Bankruptcy Court with respect to motions or other requests made to the Bankruptcy Court throughout the\ncourse of Chapter 11; the effects of Chapter 11, including increased legal and other professional costs necessary to execute the Company’s\nrestructuring process, on the Company’s liquidity (including the availability of operating capital during the pendency of Chapter\n11); the effects of Chapter 11 on the interests of various constituents and financial stakeholders; the length of time that the Company\nwill operate under Chapter 11 protection and the continued availability of operating capital during the pendency of Chapter 11; objections\nto the Company’s restructuring process or other pleadings filed that could protract Chapter 11; risks associated with the Company’s\nproposed restructuring plan; risks associated with third-party motions in Chapter 11; Bankruptcy Court rulings in the Chapter 11 process\nand the outcome of Chapter 11 in general; employee attrition and the Company’s ability to retain senior management and other key\npersonnel due to the distractions and uncertainties; in addition to the other risks and uncertainties described in more detail in the\nCompany’s filings with the U.S. Securities and Exchange Commission. Furthermore, such forward-looking statements speak only as of\nthe date of this Current Report on Form 8-K. Except as required by applicable law, the Company does not intend to update any of the\nforward-looking statements to conform these statements to actual results, later events or circumstances or to reflect the occurrence of\nunanticipated events."}