SCIO DIAMOND TECHNOLOGY CORPORATION Company continues to execute business plan
GREENVILLE, SC, Feb. 13, 2015 /PRNewswire/ - Scio Diamond Technology Corp. (OTCBB: SCIO), a leading lab-grown diamond producer, announced financial results for the fiscal 2015 third quarter ended December 31, 2014.
"This was a very important quarter for Scio Diamond, strategically and operationally," said Gerald McGuire, president and CEO. "This quarter's successful go-to-market activities, $4.5 million in new funding and operational and product quality improvements are positioning the Company for future growth."
"While our product revenue is up slightly quarter-to-quarter, our main focus has been on growing diamonds to deliver to the market," he continued.
In December, Scio Diamond closed $2.5 million in growth funding from Heritage Gemstone Investors (HGI). A portion of the HGI funding was used to significantly reduce its borrowing costs by obtaining a new interest rate of 7.25% to replace the original loan rate of 18%. The rest of the funds from HGI were earmarked to double production capacity.
In December, the Company formally launched a joint venture with Renaissance Diamonds Inc. to develop and deliver high-quality, lab-grown, fancy-colored diamonds to the gem and jewelry market. Scio Diamond produces the diamonds and Renaissance finishes and distributes them to national retailers, wholesalers and more than 500 independent retailers.
Operational advances included an increase in the average size of the Company's rough diamonds by 45% and higher production yield by 7%. The Company also increased factory reliability, as measured by uptime, by more than 8%.
Third Quarter Results
Scio Diamond generated product revenue of $109,358 in Q3 FY 2015, an increase of 16.4%, or $15,443, from $93,915 in product revenue in the year-ago quarter. The increase related primarily to an increase in the price of units sold.
Total revenue was $109,358 in Q3 FY 2015, a decrease of $234,557 from $343,915 of total revenue in the year-ago quarter. The decrease is due to the company recognizing no licensing revenue during Q3 FY 2015, while it recognized $250,000 of licensing revenue during the same quarter the previous year.
Cost of goods sold for Q3 FY 2015 was $495,410, a decrease of 3.5%, or $17,735, from $513,145 for Q3 FY 2014. The decrease in cost of goods sold was primarily due to cost efficiencies from reduced headcount and lower depreciation offset by higher property taxes on manufacturing equipment.
Combined operating expenses, consisting of professional and consulting, salaries and benefits, rent and facilities, marketing, and general and administrative expenses, were $420,671 for Q3 FY 2015, a decrease of 4.4%, or $19,560, from $440,231 for the year-ago quarter. The decrease in combined operating expenses in Q3 FY 2015 was primarily due to reduced executive compensation included in salaries and benefits during the quarter.
Depreciation and amortization expense was $199,931 for Q3 FY 2015, compared to $200,018 for Q3 FY 2014.
The third quarter of FY 2015 included a one-time forgiveness of legal accounts payable of $(165,453) due to a settlement with a former Company vendor, and a non-cash loss on impairment of in-process research and development of $418,065 related to the Company determining that certain projects will no longer be pursued for commercial development. There were no one-time items for Q3 FY 2014.
Loss from operations in Q3 FY 2015 was $(1,259,266), compared to $(809,479) for the year-ago quarter.
Cash and cash equivalents were $1,090,858 at December 31, 2014 versus $47,987 at March 31, 2014. This increase in cash was due to the Company's successful debt refinancing that provided for increased borrowing and lower interest rates and the completion of a recent equity offering.
"This has been a positive transitional quarter. We are continuing to execute our business plan and we are pleased with the recent positive strategic and operational developments," explained McGuire.
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 Nine Months ended December 31, 2014 and 2013
(Unaudited)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
December 31, 2014 December 31, 2013 December 31, 2014 December 31, 2013
Revenue
$
Product revenue, net 109,358 $93,915 $292,672 $589,129
Licensing revenue - 250,000 375,000 250,000
Revenue, net 109,358 343,915 667,672 839,129
Cost of goods sold
Cost of goods sold 495,410 513,145 1,277,178 1,740,932
Gross deficit (386,052) (169,230) (609,506) (901,803)
-------- -------- -------- --------
General and administrative expenses
Professional and
consulting fees 142,699 104,131 309,695 1,097,030
Salaries and
benefits 127,668 186,967 688,368 612,405
Rent, equipment
lease and
facilities expense 36,772 37,101 108,803 112,349
Marketing costs 13,198 15,300 32,065 41,716
Depreciation and
amortization 199,931 200,018 600,179 599,910
Corporate general
and administrative 100,334 96,732 282,593 282,091
Forgiveness of legal
accounts payable (165,453) - (165,453) -
Loss from impairment
of in-process
research and
development 418,065 - 418,065 -
Loss from operations (1,259,266) (809,479) (2,883,821) (3,647,304)
---------- -------- ---------- ----------
Other expense
Interest expense (60,025) (55,756) (192,190) (102,702)
Net loss $(1,319,291) $(865,235) $(3,076,011) $(3,750,006)
=========== ========= =========== ===========
Loss per share
Basic:
Weighted average number of
shares outstanding 53,701,988 50,264,312 51,705,910 49,303,267
========== ========== ========== ==========
Loss per share $(0.02) $(0.02) $(0.06) $(0.08)
====== ====== ====== ======
Fully diluted:
Weighted average number of
shares outstanding 53,701,988 50,264,312 51,705,910 49,303,267
========== ========== ========== ==========
Loss per share $(0.02) $(0.02) $(0.06) $(0.08)
====== ====== ====== ======
SCIO DIAMOND TECHNOLOGY CORPORATION
CONDENSED BALANCE SHEETS
As of December 31, 2014 and March 31, 2014
(Unaudited)
December 31, March 31,
2014 2014
---- ----
ASSETS
Current Assets:
Cash and cash
equivalents $1,090,858 $47,987
Accounts
receivable, net 92,894 42,085
Other receivables - 89,192
Inventory, net 215,202 152,817
Deferred contract
costs 55,739 -
Prepaid expenses 43,569 79,078
Prepaid rent 23,050 23,050
------ ------
Total current
assets 1,521,312 434,209
--------- -------
Property, plant and
equipment
Facility 904,813 899,499
Manufacturing
equipment 3,192,350 3,171,656
Other equipment 71,059 71,059
------ ------
Total property,
plant and
equipment 4,168,222 4,142,214
Less accumulated
depreciation (1,493,818) (1,029,212)
---------- ----------
Net property, plant
and equipment 2,674,404 3,113,002
Intangible assets,
net 8,241,654 9,240,640
Prepaid rent, non-
current 25,000 42,288
Other assets 21,000 20,000
------ ------
TOTAL ASSETS $12,483,370 $12,850,139
=========== ===========
LIABILITIES AND
SHAREHOLDERS'
EQUITY
Current
Liabilities:
Notes payable $ - $1,412,060
Accounts payable 567,341 671,782
Customer deposits 52,151 179,610
Deferred revenue 61,675 -
Accrued expenses 594,335 573,126
------- -------
Total current
liabilities 1,275,502 2,836,578
Notes payable, non-
current 2,000,000 -
Other liabilities 109,605 84,144
------- ------
TOTAL LIABILITIES 3,385,107 2,920,722
--------- ---------
Common stock $0.001
par value,
75,000,000 shares
authorized;
57,198,166 and
50,739,312 shares
issued and
outstanding at
December 31, 2014
and March 31,
2014, respectively 57,199 50,739
Additional paid-in
capital 26,715,337 24,476,940
Accumulated deficit (17,673,273) (14,597,262)
Treasury stock,
1,000,000 shares
at December 31,
2014 and March 31,
2014 (1,000) (1,000)
------ ------
Total shareholders'
equity 9,098,263 9,929,417
TOTAL LIABILITIES
AND SHAREHOLDERS'
EQUITY $12,483,370 $12,850,139
=========== ===========
SCIO DIAMOND TECHNOLOGY CORPORATION
CONDENSED STATEMENTS OF CASH FLOW
For the Nine Months Ended December 31, 2014 and 2013
(Unaudited)
Nine Months Ended Nine Months Ended
December 31, 2014 December 31, 2013
----------------- -----------------
Cash flows from operating activities:
Net loss $(3,076,011) $(3,750,006)
Adjustments to reconcile net loss to
net cash used in operating
activities: -
Depreciation and amortization 1,111,209 1,118,114
Loss on impairment of in-process
research and development 418,065 -
Expense for warrants, stock and
inventory issued in exchange for
services and rent 34,200 389,731
Employee stock based compensation 155,000 193,150
Inventory write down 68,722 -
Changes in assets and liabilities:
Decrease/(increase) in accounts
receivable (50,809) 36,459
Decrease in other receivables 89,192 -
Increase in deferred contract costs (55,739) -
Decrease/(increase) in prepaid
expenses and rent (12,886) 63,211
Decrease/(increase) in inventory and
other assets (131,107) 139,918
Increase/(decrease) in accounts
payable (104,441) 392,817
Increase/(decrease) in customer
deposits (127,459) 127,222
Increase in accrued expenses 76,866 15,034
Increase in deferred revenues 61,675 125,000
Increase in other liabilities 25,461 25,461
------ ------
Net cash used in operating activities (1,518,062) (1,123,889)
Cash flows from investing activities:
Purchase of property, plant and
equipment (26,007) (30,486)
Investment in joint venture (1,000) -
------ ---
Net cash used in investing activities (27,007) (30,486)
Cash flows from financing activities:
Proceeds from note payable 2,153,615 1,304,746
Payments of notes payable (1,565,675) -
Finance charges paid on note payable - (214,746)
Proceeds from sale of common stock -
net of fees 2,000,000 129
--------- ---
Net cash provided by financing
activities 2,587,940 1,090,129
Change in cash and cash equivalents 1,042,871 (64,246)
Cash and cash equivalents, beginning
of period 47,987 223,257
------ -------
Cash and cash equivalents, end of
period $1,090,858 $159,011
========== ========
Supplemental cash flow disclosures:
Cash paid for:
Interest $48,000 $18,874
======= =======
Income taxes $ - $ -
=== === === ===
Non-cash investing and financing
activities:
Payment of accounts payable and
accrued expenses with stock $55,657 $ -
======= === ===
Editors Contact
Cynthia Hoye
Cynthia.Hoye@MarketSmartNow.com
408.239.0717
SOURCE Scio Diamond
