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RAPAPORT... Lazare Kaplan International anticipates that revenue will drop nearly 61 percent year on year to $11.4 million for the second quarter that ended on November 30. The company informed the Securities & Exchange Commission that its financial report would be late, citing its inability to resolve material uncertainties pertaining to the recovery of certain assets and the potential obligations under lines of credit. Sales were expected to total $10.1 million during the quarter, down from $13.5 million one year earlier, as sales from commercial (non-branded) and branded polished diamond decreased. Lazare Kaplan collected $1.3 million in other revenue. The diamond firm contended that "uncertain economic conditions" prevail across certain sectors of the diamond and jewelry industry. Rough diamond prices have generally been rising ahead of polished diamond prices, placing significant pressure on diamond manufacturers. In addition, the continued existence of Lazare Kaplan's litigation with Antwerp Diamond Bank N.V. and KBC Bank N.V. and the aforementioned inability to resolve material uncertainties has adversely impacted the company's ability to transact business. Lazare Kaplan reiterated its intention to file official quarterly and annual financial reports dating back to May 31, 2009. Lazare Kaplan denies that any amount is currently due or owed to Antwerp Diamond Bank under a $45 million facility and further denies that any action under that agreement be brought by the bank in the courts of Belgium. In the U.S. court system, Lazare Kaplan is seeking, among other things, in excess of $500 million in damages that could be trebled under the Racketeer Influenced and Corrupt Organizations Act (RICO) and state law against the banks. The company alleges that the banks engaged in money laundering and other illegal activity that includes the theft of over $135 million from the sales of diamonds belonging to Lazare Kaplan and its affiliates.
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