Asset Transaction, Termination of Material Agreement (Form 8-K)

The information set forth under Item 2.01 of this Current Report on Form 8-K regarding the JDP Purchase Agreement (as defined below) is incorporated herein by reference.

As previously disclosed, on April 15, 2026, Charles & Colvard, Ltd., a North Carolina corporation (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 United States Bankruptcy Court for the Eastern District of North Carolina (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.

Also as previously disclosed, 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. Also, 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 Company received Bankruptcy Court approval of the AJS Transaction and the AJS Purchase Agreement, in accordance with section 363 of chapter 11 of title 11 of the United States Code (the "Bankruptcy Code"), on July 1, 2026. Following the receipt of such approval, (i) the Company completed the AJS Transaction, (ii) the JDP Purchase Agreement was terminated pursuant to the terms thereof, and (iii) the Company paid JDP a break-up fee of $45,000 in connection with the termination of the JDP Purchase Agreement.

The foregoing description of each of the JDP Purchase Agreement and the AJS Purchase Agreement is included to provide you with information regarding its terms. It does not purport to be a complete description and is qualified in its entirety by reference to the full text of each of the JDP Purchase Agreement and the AJS Purchase Agreement, copies of which are attached to this Current Report on Form 8-K as Exhibit 10.1 and Exhibit 10.2, respectively, and are hereby incorporated herein by reference.