CHARLES & COLVARD LTD 8-K/A

What Happened
Charles & Colvard Ltd filed an 8-K on March 12, 2026 reporting that its Board determined a previously announced conversion of debt into equity was invalid. The company had issued a $2.0 million convertible secured note to Ethara Capital LLC dated July 3, 2025 (maturing October 3, 2025). A Note Conversion Agreement dated August 29, 2025 purported to convert $200,000 of principal plus accrued interest into 1,353,180 shares at a conversion price of $0.1478. The Holder sent a notice of default on November 25, 2025 asserting the Company failed to pay amounts due at maturity. After review and discussions, on February 26, 2026 the Board concluded the disclosed conversion was invalid because it was attempted without required shareholder approval, and the correct number of authorized and outstanding shares is 3,118,273.

Key Details

• Note Purchase Agreement with Ethara Capital LLC for an aggregate $2.0 million; Note dated July 3, 2025, maturing October 3, 2025.
• Conversion purported on August 29, 2025: $200,000 principal + accrued interest → 1,353,180 shares at $0.1478 per share.
• Holder delivered a notice of default on November 25, 2025 alleging failure to pay accreted principal and accrued interest.
• Board determined the conversion invalid on February 26, 2026; correct authorized/outstanding shares: 3,118,273.

Why It Matters
This affects the company’s capitalization and potential dilution: the 1,353,180 shares from the disputed conversion are not recognized, so share count remains lower than would be if the conversion stood. For investors, that means current per‑share metrics (earnings per share, ownership percentages, voting power) reflect the corrected, lower share count. The filing also notes a creditor (Ethara) asserted a default, which could lead to further negotiations or enforcement; the company has only reported its determination and that discussions occurred, not the final resolution.