By Michelle Graff
New York--A recent filing with the Securities and Exchange Commission reveals that a number of shareholders of Greenville, S.C.-based Scio want to replace the board because the lab-grown diamond company isn’t making any money.

According to an SEC filing by nine shareholders who hold a total of 14 percent Scio’s stock, the board is comprised of three individuals: Chairman Edward Adams, Theodore Strous and Robert Linares, Adams’ father-in-law and the founder of Scio predecessor Apollo Diamond.

Despite the fact that Adams and Linares have been involved in the synthetics business for decades, Scio has “continuously failed to meet the financial projections and metrics provided to shareholders,” the filing states.

Since Aug. 5, 2011, when Adams became board chair, Scio has reported net losses of more than $13 million. Yet the directors have awarded themselves compensation, consulting payments and bonuses of more than $400,000, and paid entities affiliated with the directors more than $350,000, according to the filing.

The shareholders also allege that the board has failed to call a shareholder meeting since August 2011 and has ignored the multiple requests for a meeting.

For all of these reasons, the nine shareholders, “have organized for the purpose of electing a new and independent slate of directors to lead (Scio) and increase the value for all shareholders,” the filing states. Among those who signed the filing was Bernard McPheely, a former Scio Diamond Technology Corp. board member who resigned in May 2013.

Reached Thursday at the company’s headquarters in Greenville, Scio Chief Financial Officer Jonathan Pfohl said they have no comment on the filing at this time.

Scio purchased Boston-based Apollo Diamonds in September 2011. The company grows diamonds using the chemical vapor deposition, or CVD, process.

In June 2012, Scio reportedly began making pink and white gem-quality diamonds, though in an October 2012 interview with National Jeweler then-President and CEO Joe Lancia said that only 15 percent of the company’s production was gem quality. The bulk of what the company grew were industrial diamonds, he said.

Lancia left the company the following month.

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According to a release published on Scio’s website this past September, however, the company is now in a “product-specific” joint venture to produce Type IIa, single crystal CVD diamonds for a “specific gemstone market.”

Scio is acting as the technology and delivery provider in the agreement and is teaming with two partners that have more than 75 years of collective experience in the gemstone industry, the release states. The partners are providing the funding and associated technologies while Scio is licensing its CVD diamond technology.

The joint venture’s diamond-growing facility will be located in China, where Scio President and CEO Mike McMahon was traveling for business Thursday, and outfitted with 100 Scio-designed reactors. The new entity is set to being producing diamonds in the summer, the release states.  

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