Scio Diamond Technology 8-K Scio Diamond Reports First Quarter FY 2017 Results

Exhibit 99.1

Contact:	info@sciodiamond.com	FOR IMMEDIATE RELEASE
	(864) 751-4880

Scio Diamond Reports First Quarter FY 2017 Results

Lab-grown diamond producer shows 7.5% revenue growth

GREENVILLE, SC, August 15, 2016 –Scio Diamond Technology Corp. (OTCPINK: SCIO), a leading lab-grown diamond producer, announced financial results for its fiscal 2017 first quarter ended June 30, 2016.

“We are pleased to report quarterly revenue growth as a result of the Company’s increased production capacity and renewed focus on growing near-colorless, white diamond gemstones,” said Gerald McGuire, Scio Diamond CEO.

After the Company returned to full production in April, following the previously reported December 2015 shutdown, it has experienced strong monthly revenue growth. This growth continued into July and Scio anticipates this trend will continue as production yields improve and overall diamond industry demand increases through the end of the calendar year.

Added McGuire, “Over the past two months, we’ve made significant progress. The carat weight of our diamonds continues to increase, our color and clarity capabilities continue to improve, our customer base is growing, and we are beginning to see the resulting improvements in our financials. While short-term cash requirements continue to challenge our efforts, we are optimistic about the market potential for our lab-grown diamonds, and are encouraged by the increasing demand we are seeing from our customers.”

First Quarter Results, 3 Months Ended June 30, 2016

Scio Diamond generated total revenue of $185,061 in Q1 FY 2017, an increase of 7.5%, or $12,886, from $172,175 in total revenue in Q1 FY 2016. The increase related primarily to increases in price of the products sold as the Company shifted its sales focus to white diamond gemstone material.

Cost of goods sold for Q1 FY 2017 was $547,149, an increase of 31.7%, or $131,782, from $415,367 for Q1 FY 2016. The increase in cost of goods sold was primarily due to increased manufacturing costs as the Company’s product focus shifted to white diamond gemstone material.

Salaries and benefits expense for Q1 FY 2017 was $312,589, an increase of $110,287, from $202,302 for Q1 FY 2016. The increase was primarily due to the Company recognizing $168,543 in non-cash stock based compensation expense in Q1 FY 2017 compared to $64,501 in the year-ago quarter.

Professional and consulting fees for Q1 FY 2017 were $141,088, an increase of $89,145 from $51,943 for Q1 FY 2016.  Q1 FY 2016 results were lower than usual due to $102,311 in payments by our insurance carrier and other reversals of past professional fees. Adjusting for these reductions, professional fees would have been $154,254 for Q1 FY 2016 compared to $141,088 for Q1 FY 2017.

Other operating expenses, consisting of rent and facilities, marketing, and general and administrative expenses, were $120,450 for Q1 FY 2017, a decrease of $32,293, from $152,743 for the year-ago quarter. The decrease in other operating expenses in Q1 FY 2017 was primarily due to reduced marketing, and general and administrative expenses during the quarter.

Depreciation and amortization expense was $245,460 for Q1 FY 2017, compared to $198,405 for Q1 FY 2016.

Loss from operations in Q1 FY 2017 was $(1,181,675), compared to $(848,585) for the year-ago quarter.

Cash and cash equivalents were $67,898 at June 30, 2016 versus $192,880 at March 31, 2016. This decrease in cash was due to the cash used in operations offset by proceeds from the sale of common stock.

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 deliversdiamond materials foradvanced 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 Months Ended June 30, 2016 and 2015

(Unaudited)

	Three Months Ended			Three Months Ended
	June 30, 2016			June 30, 2015
Revenue
Revenue, net	$	185,061		$	172,175
Cost of goods sold
Cost of goods sold		547,149			415,367
Gross margin (deficit)		(362,088	)		(243,192	)
General and administrative expenses
Salaries and benefits		312,589			202,302
Professional fees		141,088			51,943
Rent and facilities expense		41,784			39,013
Marketing costs		3,071			28,183
Corporate general and administrative		75,595			85,547
Depreciation and amortization		245,460			198,405
Total general and administrative expenses		819,587			605,393
Loss from operations		(1,181,675	)		(848,585	)
Other expense
Income (loss) from joint venture – RCDC		(20,369	)		16,339
Interest expense		(62,116	)		(44,849	)
Net loss	$	(1,264,160	)	$	(877,095	)
Loss per share
Basic:
Weighted average number of shares outstanding		62,446,500			56,534,466
Loss per share	$	(0.02	)	$	(0.02	)
Fully diluted:
Weighted average number of shares outstanding		62,446,500			56,534,466
Loss per share	$	(0.02	)	$	(0.02	)

SCIO DIAMOND TECHNOLOGY CORPORATION

CONDENSED BALANCE SHEETS

As of June 30, 2016 and March 31, 2016

	June 30,			March 31,
	2016			2016
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	67,898		$	192,880
Accounts receivable		178,651			175,448
Deferred contract costs		142,471			142,471
Inventory, net		160,171			189,527
Prepaid expenses		34,893			52,150
Prepaid rent		13,475			19,238
Total current assets		597,559			771,714
Property, plant and equipment
Facility		886,630			886,630
Manufacturing equipment		3,308,299			3,294,425
Other equipment		73,543			73,543
Construction in progress		11,107			24,981
Total property, plant and equipment		4,279,579			4,279,579
Less accumulated depreciation		(2,243,603	)		(2,085,508	)
Net property, plant and equipment		2,035,976			2,194,071
Intangible assets, net		6,984,074			7,225,446
Investment in joint venture – RCDC		27,902			48,271
TOTAL ASSETS	$	9,645,511		$	10,239,502
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	577,633		$	438,466
Customer deposits		4,784			46,096
Deferred revenue		174,280			174,280
Accrued expenses		529,916			353,921
Current portion of notes payable		98,999			98,999
Current portion of capital lease obligation		122,495			122,495
Total current liabilities		1,508,107			1,234,257
Notes payable, non-current		2,201,001			2,201,001
Capital lease obligation, non-current		71,994			71,994
Other liabilities		88,569			88,569
TOTAL LIABILITIES		3,869,671			3,595,821
Common stock $0.001 par value, 75,000,000 shares authorized; 65,098,291 and 63,919,291 shares issued and outstanding at June 30, 2016 and March 31, 2016, respectively		65,098			63,919
Additional paid-in capital		29,337,200			28,942,060
Accumulated deficit		(23,626,458	)		(22,362,298	)
Total shareholders’ equity		5,775,840			6,643,681
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	9,645,511		$	10,239,502

SCIO DIAMOND TECHNOLOGY CORPORATION
CONDENSED STATEMENTS OF CASH FLOW
For the Three Months Ended June 30, 2016 and 2015

(Unaudited)

	Three Months Ended			Three Months Ended
	June 30, 2016			June 30, 2015
Cash flows from operating activities:
Net loss	$	(1,264,160	)	$	(877,095	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		401,417			339,072
Employee stock based compensation		168,543			64,501
Loss/(income) from joint venture – RCDC		20,369			(16,339	)
Changes in assets and liabilities:
Decrease/(increase) in accounts receivable and deferred revenue		(3,203	)		28,421
Decrease in prepaid expenses and rent		21,070			8,501
Decrease/(increase) in inventory and deferred contract costs		29,356			(20,263	)
Increase in accounts payable		139,167			44,447
Decrease in customer deposits		(41,312	)		(2,796	)
Increase/(decrease) in accrued expenses		175,995			(137,314	)
Decrease in other liabilities		—			(7,381	)
Net cash used in operating activities		(352,758	)		(576,246	)
Cash flows from investing activities:
Purchase of property, plant and equipment		—			(19,916	)
Net cash used in investing activities		—			(19,916	)
Cash flows from financing activities:
Proceeds from sale of common stock, net of fees		227,776			—
Proceeds from exercise of stock options		—			5,738
Net cash provided by financing activities		227,776			5,738
Change in cash and cash equivalents		(124,982	)		(590,424	)
Cash and cash equivalents, beginning of period		192,880			767,214
Cash and cash equivalents, end of period	$	67,898		$	176,790
Supplemental cash flow disclosures:
Cash paid for:
Interest	$	—		$	23,764
Income taxes	$	—		$	—
Non-cash investing and financing activities:
Purchase of property, plant and equipment in accounts payable	$	—		$	(146,816	)
Purchase of property, plant and equipment in accrued expenses	$	—		$	(92,000	)