Material Agreement (Form 8-K)

Item 1.01 Entry into a Material Definitive Agreement.

As previously disclosed, on March 2, 2026, Charles & Colvard, Ltd., a North Carolina corporation (the "Company"), filed a voluntary petition for relief (the "Chapter 11 Case") under Chapter 11 of Title 11 of the United States Code ("Chapter 11") in the United States Bankruptcy Court for the Eastern District of North Carolina (the "Bankruptcy Court"). The case is styled as In re Charles & Colvard, Ltd.

Also as previously disclosed, on April 15, 2026, the Company finalized negotiations of an Asset Purchase Agreement (the "JDP Purchase Agreement") with Van Lang Jewelry LLC or its affiliate Jewelry Design Partners LLC ("JDP"), pursuant to which, subject to the terms and conditions set forth therein, including approval of the Bankruptcy Court, JDP agreed to acquire the assets of the Company (except for the Excluded Assets, as listed on Schedule 1 thereto) and assume certain liabilities (the "JDP Transaction"), for consideration of $1,500,000 (subject to a credit bid and offset against all of the indebtedness owed to JDP under the Section 364 Financing Loan Agreement dated March 24, 2026, by and between the Company and JDP (the "DIP Facility")). A former member of the Company's Board of Directors (the "Board"), Duc Pham, who resigned from the Board on March 25, 2026, is a Manager of JDP.

Also as previously disclosed, on April 29, 2026, the Bankruptcy Court entered an Order (i) approving JDP as the "stalking horse" bidder with respect to the assets to be acquired under the JDP Purchase Agreement on the terms set forth in the Order, (ii) approving the "stalking horse" bidder to credit bid all or any portion of the outstanding DIP Obligations (as defined in the JDP Purchase Agreement) under the DIP Facility, as a part of the purchase price under the JDP Purchase Agreement, (iii) approving the credit bid provisions contemplated by the JDP Purchase Agreement, (iv) approving the stalking horse break-up fee and expense reimbursement as set forth in the JDP Purchase Agreement, and (v) approving the proposed bidding procedures. The Bankruptcy Court scheduled the final sale hearing for June 22, 2026, at 11:00 a.m. ET. The JDP Transaction was to be conducted pursuant to Bankruptcy Court-approved bidding procedures and was subject to (a) the receipt of a bid that meets the specifications set forth in the JDP Purchase Agreement and that constitutes, in the Company's reasonable judgment, a higher or otherwise better offer from competing bidders, (b) approval of the sale by the Bankruptcy Court, and (c) the satisfaction of certain conditions to closing. On April 30, 2026, after approval of the Bankruptcy Court, the Company countersigned the JDP Purchase Agreement.

On June 22, 2026, the Company held an auction pursuant to the bidding procedures approved by the Bankruptcy Court (the "Auction"). At the conclusion of the Auction, the Company determined the bid submitted by AJS Creations, Inc. ("AJS") was the highest or otherwise best bid and designated AJS as the successful bidder for the Company's assets (except for the Excluded Assets, as listed on Schedule 1 to the AJS Purchase Agreement (as defined below)). The Company also determined that the bid submitted by Light & Star USA Inc. ("Light & Star") was the second highest or otherwise second-best bid and designated Light & Star as the back-up bidder for the Company's assets (except for the Excluded Assets, as listed on Schedule 1 to the AJS Purchase Agreement).

On June 22, 2026, the Company and AJS entered into an Overbid Purchase Agreement (the "AJS Purchase Agreement"), pursuant to which, subject to the terms and conditions set forth therein, AJS agreed to acquire specified assets related to the Company's business and assume certain liabilities (the "AJS Transaction"), subject to the Bankruptcy Court's approval, for cash consideration of $2,700,000.

The AJS Purchase Agreement contains customary representations and warranties of the parties and is subject to a number of closing conditions, including, among others, (i) the accuracy of representations and warranties of the parties; (ii) the entry of an order approving the AJS Purchase Agreement and the transactions contemplated therein by the Bankruptcy Court; and (iii) compliance in all material respects with the obligations of the parties set forth in the AJS Purchase Agreement.

Upon the consummation of the AJS Transaction, the JDP Purchase Agreement will terminate, and the Company will use a portion of the purchase price received from AJS to pay Van Lang Jewelry LLC a break-up fee of $45,000.

On June 25, 2026, the Bankruptcy Court approved the AJS Purchase Agreement and the transactions contemplated therein.