On Tuesday, Adamas One, the lab-grown diamond manufacturer that acquired the remnants of former Scio Diamond Corp., filed a registration statement to go public.
Renaissance Capital reported that the IPO hopes to raise up to $30 million. Adamas plans to be listed on NASDAQ under the stock ticker “JEWL.”
In late 2018, Adamas One purchased all of the assets of Scio, which was formerly known as Apollo Diamond. Apollo’s origins date back to 1990, and it is considered one of the first companies in the lab-grown gem diamond space. Scio went public since 2011 in a reverse IPO, but ran out of cash to continue to fund its operations.
Adamas’ chairman, president, and CEO is John “Jay” Grdina, whose eclectic résumé includes heading NoHo, which sells a hangover cure; serving as chief marketing officer for Ammo Inc., a publicly traded munitions company; and years as an adult film actor and director. Grdina spoke to JCK in 2018.
Gerald McGuire, Scio’s final president and CEO, will serve as Adamas’ chief operating officer, the filing said. Steven R. Staehr will take on the role of chief financial officer; he formerly served as CFO for Mix 1 Life, a nutritional supplement company, and NoHo.
Thierry J. Chaunu, the former president and CEO of Leviev Diamonds, and the North American president for Chopard, will serve on its board of directors. Dr. Robert Linares, Apollo’s founder, will act as scientific director. Stephen Adams, the former lab manager of Suncrest for US Synthetic, has been named head of diamond growth.
Adamas said it’s leased a facility where it anticipates building as many as 300 diamond growers. It currently has 12.
The preliminary prospectus was replete with warnings that Adamas was still a new, unproven company.
“There is substantial doubt about our ability to continue as a going concern,” it said, adding it “may incur substantial losses for the foreseeable future.”
As of March 31, 2022, it had accumulated a deficit of $35.5 million. For the six months ended March 31, it reported net sales of $484,519, all of which went to one unnamed customer.
One aspect of the filing seemed unusual. Its section on compliance with Federal Trade Commission (FTC) dictates echoes a 2018 Forbes article by Pam Danziger, without any seeming attribution.
For instance, on page 61, the filing read, “The parallels between cultured pearls and cultured diamonds are precise. A lab-grown diamond requires a crystalize diamond seed to grow, just like a seed is manually placed in an oyster to grow a cultured pearl.”
Danziger’s article said the same.
The filing also said that “the FTC based its amendment in favor of scientific facts, rather than the mined-diamond industry lobby, giving consumers real information on which to make informed diamond purchasing decisions.”
Danziger wrote in Forbes: “The FTC based its decision in favor of scientific facts, not the mined-diamond industry lobby, giving consumers real information on which to make informed diamond purchasing decisions.”
Danziger tells JCK: “Nobody asked permission to take my words, which they indeed are.”
Grdina and two company contacts did not return requests for comment by publication time.
The prospectus also repeatedly uses the term environmentally friendly, and its website uses the term eco-friendly. FTC has warned lab-grown diamond companies against using what it calls “general environmental benefit claims,” specifically singling out the term eco-friendly.
In February, Theo Strous, a former Scio board member, sued four other former Scio board members and executives, including McGuire, in Nevada federal court, alleging “breach[es] of fiduciary duty,” some of which related to the Adamas transaction. The complaint can be seen here.
At press time, none of the defendants had filed a response to the complaint. Strous, the former managing director of the Antwerp Diamond Bank, did not respond to a request for comment.
(Photo courtesy of the U.S. Government Accountability Office)Follow JCK on Instagram: @jckmagazine
Follow JCK on Twitter: @jckmagazine
Follow JCK on Facebook: @jckmagazine