Attached files
| file | filename |
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| 8-K - Scio Diamond Technology Corp | 8k.htm |
Exhibit 99.1
Editors Contact
Cynthia Hoye
Cynthia.Hoye@MarketSmartNow.com
408.239.0717
Scio Diamond Reports Second Quarter FY 2016 Results
Lab-grown diamond producer continues advances in development of colorless and pink diamonds
GREENVILLE, SC, November 13, 2015 – Scio Diamond Technology Corp. (OTCBB: SCIO), a leading lab-grown diamond producer, announced financial results for the fiscal 2016 second quarter ended September 30, 2015.
“We are pleased to report revenue growth, an outcome of the company’s increased production capacity that is allowing us to manufacture our single-crystal Type IIa colorless diamonds in higher volume and quality,” explained Gerald McGuire, president and CEO. “As our business and the market evolve together, we are intensifying efforts to increase our growth velocity.”
“During this quarter, the company made progress with customers, products and manufacturing. We are growing and selling colorless and fancy color pink diamonds, and have attracted new investments to fund manufacturing and operations improvements,” he continued.
Scio Diamond began delivering fancy color pink and colorless gems to the market during the summer. All of the company’s gems are certified by recognized gem grading organizations, including the International Gemological Institute (IGI) and the Gemological Institute of America (GIA).
In September, Scio Diamond closed on $1.565 million in equity financing in a non-brokered, private placement to a group of accredited investors based in Greenville, SC. The investment was to fund continuing product development and working capital.
The lab-grown diamond producer has scheduled the 2015 annual meeting of stockholders for December 2, 2015 at 4 pm EST in Greenville.
Second Quarter Results, 3 Months Ended September 30, 2015
Scio Diamond generated total revenue of $236,292 in Q2 FY 2016, an increase of 127.3%, or $132,316, from $103,976 in total revenue in Q2 FY 2016. The increase related primarily to increases in products sold.
Cost of goods sold for Q2 FY 2016 was $461,279, an increase of 13.2%, or $53,934, from $407,345 for Q2 FY 2015. The increase in cost of goods sold was primarily due to the increases in products sold.
Salaries and benefits expense for Q2 FY 2016 was $255,389, an increase of $91,557, from $163,832 for Q2 FY 2015. The increase was primarily due to the Company recognizing $123,466 in non-cash stock based compensation expense in Q2 FY 2016.
Professional and consulting fees for Q2 FY 2016 were $44,122, an increase of $137,361 from $(93,239) for Q2 FY 2015. Q2 FY 2015 results included the reversal of $312,824 for payments made by our insurance carrier for past professional fees.
Other operating expenses, consisting of rent and facilities, marketing, and general and administrative expenses, were $216,065 for Q2 FY 2016, an increase of $111,886, from $104,169 for the year-ago quarter. The increase in other operating expenses in Q2 FY 2016 was primarily due to executive relocation expenses during the quarter.
Depreciation and amortization expense was $198,477 for Q2 FY 2016, compared to $200,124 for Q2 FY 2015.
The second quarter of FY 2016 included a one-time forgiveness of severance liabilities for of $(137,561) due to a settlement with a former Company executive. There were no one-time items for Q2 FY 2015.
Loss from operations in Q2 FY 2016 was $(801,469), compared to $(678,255) for the year-ago quarter.
Cash and cash equivalents were $942,802 at September 30, 2015 versus $767,214 at March 31, 2015. This increase in cash was due to the Company’s successful completion of a recent equity offering.
About Scio Diamond
Scio Diamond employs a patent-protected chemical vapor deposition process to produce high-quality, single-crystal near colorless and fancy-colored diamonds for the jewelry market in a controlled laboratory setting. Lab-grown diamonds are chemically, physically and optically identical to “earth-mined” diamonds. Scio’s technology offers the flexibility to produce lab-grown diamonds in size, color and quality combinations that are rare in earth-mined diamonds. Scio also delivers diamond materials for advanced industrial, medical and semiconductor applications. www.sciodiamond.com.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements that may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Scio to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “could,” “would,” “forecast,” “potential,” “continue,” “contemplate,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.
The condensed statements of operations, balance sheets and statements of cash flows are unaudited.
SCIO DIAMOND TECHNOLOGY CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
For the Three and Six Months ended September 30, 2015 and 2014
(Unaudited)
| Three Months | Three Months | Six Months | Six Months | |||||||||||||
| Ended | Ended | Ended | Ended | |||||||||||||
| September 30, 2015 | September 30, 2014 | September 30, 2015 | September 30, 2014 | |||||||||||||
| Revenue | ||||||||||||||||
| Product revenue, net | $ | 236,292 | $ | 103,976 | $ | 408,467 | $ | 183,314 | ||||||||
| Licensing revenue | — | — | — | 375,000 | ||||||||||||
| Revenue, net | 236,292 | 103,976 | 408,467 | 558,314 | ||||||||||||
| Cost of goods sold | ||||||||||||||||
| Cost of goods sold | 461,279 | 407,345 | 876,646 | 781,768 | ||||||||||||
| Gross deficit | (224,987 | ) | (303,369 | ) | (468,179 | ) | (223,454 | ) | ||||||||
| General and administrative expenses | ||||||||||||||||
| Salaries and benefits | 255,389 | 163,832 | 457,691 | 560,700 | ||||||||||||
| Professional and consulting fees | 44,122 | (93,239 | ) | 96,065 | 166,996 | |||||||||||
| Rent, equipment lease and facilities expense | 40,961 | 37,884 | 79,974 | 72,031 | ||||||||||||
| Marketing costs | 28,463 | 8,179 | 56,646 | 18,867 | ||||||||||||
| Corporate general and administrative | 146,631 | 58,106 | 232,178 | 182,259 | ||||||||||||
| Depreciation and amortization | 198,477 | 200,124 | 396,882 | 400,248 | ||||||||||||
| Forgiveness of severance liability | (137,561 | ) | — | (137,561 | ) | — | ||||||||||
| Loss from operations | (801,469 | ) | (678,255 | ) | (1,650,054 | ) | (1,624,555 | ) | ||||||||
| Other expense | ||||||||||||||||
| Income from RCDC joint venture | 18,363 | — | 34,702 | — | ||||||||||||
| Interest expense | (26,482 | ) | (70,238 | ) | (71,331 | ) | (132,165 | ) | ||||||||
| Net loss | $ | (809,588 | ) | $ | (748,493 | ) | $ | (1,686,683 | ) | $ | (1,756,720 | ) | ||||
| Loss per share | ||||||||||||||||
| Basic: | ||||||||||||||||
| Weighted average number of shares outstanding | 58,385,140 | 50,706,794 | 57,464,860 | 50,702,418 | ||||||||||||
| Loss per share | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.03 | ) | $ | (0.03 | ) | ||||
| Fully diluted: | ||||||||||||||||
| Weighted average number of shares outstanding | 58,385,140 | 50,706,794 | 57,464,860 | 50,702,418 | ||||||||||||
| Loss per share | $ | (0.01 | ) | $ | (0.01 | ) | $ | (0.03 | ) | $ | (0.03 | ) | ||||
SCIO DIAMOND TECHNOLOGY CORPORATION
CONDENSED BALANCE SHEETS
As of September 30, 2015 and March 31, 2015
| September 30, | March 31, | |||||||
| 2015 | 2015 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 942,802 | $ | 767,214 | ||||
| Accounts receivable | 220,224 | 243,929 | ||||||
| Deferred contract costs | 178,066 | 179,969 | ||||||
| Inventory | 333,464 | 295,760 | ||||||
| Prepaid expenses | 43,830 | 57,012 | ||||||
| Prepaid rent | 23,050 | 23,050 | ||||||
| Total current assets | 1,741,436 | 1,566,934 | ||||||
| Property, plant and equipment | ||||||||
| Facility | 904,813 | 904,813 | ||||||
| Manufacturing equipment | 3,412,777 | 2,927,761 | ||||||
| Other equipment | 74,338 | 71,059 | ||||||
| Construction in progress | — | 207,252 | ||||||
| Total property, plant and equipment | 4,391,928 | 4,110,885 | ||||||
| Less accumulated depreciation | (1,837,681 | ) | (1,543,652 | ) | ||||
| Net property, plant and equipment | 2,554,247 | 2,567,233 | ||||||
| Intangible assets, net | 7,660,528 | 8,047,948 | ||||||
| Prepaid rent, noncurrent | 7,713 | 19,238 | ||||||
| Investment in joint venture – RCDC | 64,743 | 30,041 | ||||||
| TOTAL ASSETS | $ | 12,028,667 | $ | 12,231,394 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 651,872 | $ | 708,760 | ||||
| Customer deposits | 13,911 | 38,603 | ||||||
| Deferred revenue | 215,480 | 215,375 | ||||||
| Accrued expenses | 331,469 | 517,942 | ||||||
| Current portion of notes payable | 64,182 | — | ||||||
| Current portion of capital lease obligations | 167,614 | — | ||||||
| Total current liabilities | 1,444,528 | 1,480,680 | ||||||
| Notes payable | 2,235,818 | 2,500,000 | ||||||
| Capital lease obligation, non-current | 32,386 | — | ||||||
| Other liabilities | 105,791 | 118,092 | ||||||
| TOTAL LIABILITIES | 3,818,523 | 4,098,772 | ||||||
| Common stock $0.001 par value, 75,000,000 shares authorized; 63,844,291 and 56,531,499 shares issued and outstanding at September 30, 2015 and March 31, 2015, respectively | 63,845 | 56,532 | ||||||
| Additional paid-in capital | 28,571,897 | 26,815,005 | ||||||
| Accumulated deficit | (20,425,598 | ) | (18,738,915 | ) | ||||
| Total shareholders’ equity | 8,210,144 | 8,132,622 | ||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 12,028,667 | $ | 12,231,394 | ||||
SCIO DIAMOND TECHNLOGY CORPORATION
CONDENSED STATEMENTS OF CASH FLOW
For the Six Months Ended September 30, 2015 and 2014
(Unaudited)
| Six Months Ended | Six Months Ended | |||||||
| September 30, 2015 | September 30, 2014 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (1,686,683 | ) | $ | (1,756,720 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | 685,349 | 760,829 | ||||||
| Expense for stock and inventory issued in exchange for services | — | 34,200 | ||||||
| Employee stock based compensation | 187,967 | 155,000 | ||||||
| Income from joint venture – RCDC | (34,702 | ) | — | |||||
| Inventory write down | — | 68,722 | ||||||
| Changes in assets and liabilities: | ||||||||
| Decrease in accounts receivable and deferred revenue | 23,810 | 42,085 | ||||||
| Decrease in other receivables | — | 89,192 | ||||||
| Decrease/(increase) in prepaid expenses, rent, and deferred contract costs | 22,710 | (8,642 | ) | |||||
| Increase in inventory and other assets | (37,704 | ) | (112,996 | ) | ||||
| Increase/(decrease) in accounts payable | (148,888 | ) | 102,050 | |||||
| Decrease in customer deposits | (24,692 | ) | (137,884 | ) | ||||
| Increase/(decrease) in accrued expenses | (186,473 | ) | 17,743 | |||||
| Increase/(decrease) in other liabilities | (12,301 | ) | 16,974 | |||||
| Net cash used in operating activities | (1,211,607 | ) | (729,447 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Purchase of property, plant and equipment | (189,043 | ) | (13,152 | ) | ||||
| Net cash used in investing activities | (189,043 | ) | (13,152 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from note payable | — | 129,072 | ||||||
| Proceeds from the exercise of stock options | 11,238 | — | ||||||
| Proceeds from sale of common stock | 1,565,000 | 570,500 | ||||||
| Net cash provided by financing activities | 1,576,238 | 699,572 | ||||||
| Change in cash and cash equivalents | 175,588 | (43,027 | ) | |||||
| Cash and cash equivalents, beginning of period | 767,214 | 47,987 | ||||||
| Cash and cash equivalents, end of period | $ | 942,802 | $ | 4,960 | ||||
| Supplemental cash flow disclosures: | ||||||||
| Cash paid for: | ||||||||
| Interest, includes capitalized interest of $19,031 | $ | 72,097 | $ | — | ||||
| Income taxes | $ | — | $ | — | ||||
| Non-cash investing and financing activities: | ||||||||
| Payment of accrued expenses with stock | $ | — | $ | 12,000 | ||||
| Purchase of property, plant and equipment in accounts payable | $ | 92,000 | $ | — | ||||
| Reclass of debt to capital lease due to completion of sale leaseback transaction | $ | 200,000 | $ | — | ||||