Lab-grown diamond co. under SEC scrutiny
August 21, 2014
Greenville, S.C.--Recent SEC filings by diamond grower Scio show that the company is in default on a loan and may come under investigation by the Securities and Exchange Commission.
In in a 10-Q filed with the SEC on Wednesday, Scio Diamond Technology Corp. stated it borrowed $1 million from Platinum Capital Partners LP during the quarter ended June 30, 2013, which it used to fund its ongoing operations. Scio borrowed more money from Platinum, nearly $300,000, that October.
Including all accrued fees, Scio now owes Platinum $1.5 million. The company went into default status on the loans when they matured on June 20. Platinum has the right to take possession of Scio’s fixed assets and intellectual property but hasn’t done so to date, the filing states.
Scio said it “continues to pursue additional financing alternatives.”
In addition, Scio revealed in its 10-K that on May 16, it received a subpoena from the SEC ordering it to turn over documents and related information about “various corporate transactions between the company and its predecessors,” the filing states. Scio said it is fully cooperating with this inquiry.
While problems abound for the Greenville-based diamond grower, the 10-Q filing shows that revenue increased from $258,980 in the three-month period ended June 30, 2013 to $454,338 in the same period this year. Losses shrank, from $1.5 million to $946,300.
For the just-past fiscal year, which ended March 31, revenue also was up, from $881,748 to $1.4 million. Net losses were down from $7.3 million to $4.8 million.
Scio is on its fourth CEO in three years, Gerald (Jerry) McGuire, and has a new board of directors, created after disgruntled shareholders ousted the former board members.
During a conference call held in July, McGuire said he believes the company can break even within six to nine months.