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Lab Diamond Grower Scio Widens its Losses

Aug 17, 2016 9:31 AM   By Rapaport News
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RAPAPORT... Scio Diamond Technology moved further into the red in the first fiscal quarter as management admitted its future remains in doubt.

The company’s loss widened 44 percent to $1.3 million even as revenue advanced 7.5 percent to $185,061 in the three months that ended June 30. The effects of a water leak at its factory in December, as well as other risks associated with being a new business, “raise substantial doubt about the company’s ability to continue as a going concern,” the lab-grown diamond producer said in its quarterly report.

A production shutdown caused by the leak negatively affected fourth-quarter sales last year. The incident could still impact the business even though it has returned to full production and received a $350,000 insurance payout to cover damages, the company said.

The rise in revenue was due to higher prices as it shifted focus to white diamonds, the company explained. The carat weight of the company’s diamonds continues to increase and its color and clarity capabilities continue to improve, Gerald McGuire, Scio’s chief executive officer (pictured), noted.

“Our customer base is growing, and we are beginning to see the resulting improvements in our financials,” he said.

However, low revenue to date means operations are subject to risk, the company cautioned. The comments come after director James Korn quit, while publicly criticizing management for alleged “horrific operational performance” and misleading investors. Scio’s board set up a special investigation committee of two independent directors which concluded the claims were “baseless and unsupported.”
Tags: Gerald McGuire, James Korn, lab-grown diamonds, Rapaport News, scio, scio diamond, scio diamond technology, Synthetic diamonds, Synthetics
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