CHARLES & COLVARD LTD 8-K

What Happened
Charles & Colvard, Ltd. announced it completed the sale of certain company assets to AJS Creations, Inc. for cash consideration of $2,700,000 following a bankruptcy-court approved auction process. The auction was held June 22, 2026; the Bankruptcy Court approved the AJS transaction on July 1, 2026, and the Company closed the AJS Purchase Agreement thereafter. As a result, the previously negotiated Asset Purchase Agreement with Jewelry Design Partners LLC (JDP) was terminated and the Company paid JDP a $45,000 break-up fee. JDP had been designated the stalking-horse bidder (original JDP consideration was $1,500,000, subject to credit bidding under the DIP Facility).

Key Details

• Sale price to AJS Creations: $2,700,000 (cash).
• Auction date: June 22, 2026; Bankruptcy Court approval of AJS sale: July 1, 2026.
• JDP stalking-horse bid: $1,500,000 (subject to credit bid under Company’s DIP Facility); JDP paid a $45,000 break-up fee after termination.
• Light & Star USA Inc. was designated the back-up bidder at the auction.
• The Company noted it cannot currently prepare pro forma financial information reflecting these transactions.

Why It Matters
The asset sale and court-approved closing move Charles & Colvard’s Chapter 11 restructuring forward by transferring significant business assets to a buyer and resolving competing bids. For shareholders, this is material because proceeds and how assets are distributed in bankruptcy will determine recoveries — the Company explicitly warns that holders of its common stock may suffer significant or complete losses. The filing also highlights that restructuring outcomes remain subject to the bankruptcy process, court rulings, and other risks, and the Company has not provided pro forma financials showing the post-sale financial impact.