A Look at Scio Diamond Technology Corp (OTCBB:SCIO)

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Scio Diamond Technology Corp (OTCBB:SCIO) is making an explosive move up on accelerating volume in recent days on massive insider buying after a long standing lawsuit against SCIO chairman and major shareholder Edward S. Adams was dismissed.

SCIO has a number of other positive catalysts at play here including the credit extension, huge insider buying and the JV with Renaissance as the stock races up the charts on record breaking volume. The move is marked by massive accumulation, excellent support and big buying.

Scio Diamond Technology Corp (OTCBB:SCIO) uses a patent-protected CVD process to produce high-quality, single-crystal lab-grown diamonds in a controlled laboratory setting, The Company produces fancy-colored diamonds as well as develops diamond materials for several industrial applications where hard diamonds are used to cut, polish, mill and grind.

Scio Diamond’s lab-grown diamonds are chemically, physically and optically identical to earth-mined diamonds and offer flexibility in size, color and quality combinations that are very rare in earth-mined diamonds.

The shell was incorporated on September 17, 2009 in the State of Nevada under the name Krossbow Holdings Corporation. Their original business plan was focused on offsetting carbon dioxide emissions through the creation and protection of forest-based carbon “sinks.” The plan failed and the Company changed their name to Scio Diamond Technology.

SCIO hit the bb’s in August 2011 and initially ran from just over $2 to a high of $4.50 a share before a long downward drift that lasted for years and culminated in SCIO hitting an all-time low of $0.15 earlier this year.

In 2011 SCIO began a build-out of its Greenville, South Carolina production facility which was completed in early 2012; soon after the Company became operational with ten diamond growing machines in their Greenville facility.

Through March of 2013, Scio Diamond’s production was focused on industrial cutting tool products supplied to a single customer. In March 2013, this customer notified the Company that due to the global supply chain restructuring of the ultimate end use of our product that they would not be purchasing additional materials. This is reflected in the Company’s most recent filing which reveal a significant drop in revenues over the past year.

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Back in October SCIO made 2 very important announcements including extending their credit facility with Platinum Capital Partners, LP and signing a memo of understanding with Renaissance Diamonds Inc. for a joint venture to develop and deliver high-quality, lab-grown, fancy-colored diamonds to the gem stone and jewelry market.

Jonathan Pfohl, Scio Diamond Chief Financial Officer said at the time “The extension puts Scio Diamond in good standing on all terms and conditions of its credit facility. Platinum has been a strong financing partner for Scio Diamond and the extension shows their confidence in management and the Company’s direction,”

Although SCIO trades on the pinks the Company did file a 10Q on November 14 that reveals a fairly shaky financial situation with limited funds in the treasury and mounting short term debt including $1,541,132 in notes payable, $773,832 in accounts payable and $578,869 in accrued expenses.

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Conclusion: Currently trading at a $47 mm market valuation SCIO has gone from illiquid at $0.30 to one of the top traded stocks on the entire exchange in recent days on no news or known promotion. There is massive accumulation under way that includes large blocks of stock being purchased by the BOD and related shareholders.

It looks as if something big is happening behind the scenes at SCIO which continues to race up the charts on record breaking volume. As I said catalysts include the credit extension, huge insider buying, the lawsuit against Company Chairman Edward S. Adams being dismissed, the JV with Renaissance and a short position that built up over the years that really needs to cover here. SCIO is a stock to watch.

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Disclosure: we hold no position in SCIO either long or short and we have not been compensated for this article.

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