Item 5.06 Change in Shell Company Status.

On August 18, 2011, the Company filed a Form 8-K which stated that, as a result of the Scio Asset Purchase Agreement pursuant to which the Company purchased the name "Scio Diamond Technology Corporation" and acquired other rights from Private Scio on August 5, 2011, the Company concluded that it was no longer a shell corporation as that term is defined in Rule 405 of the Securities Act of 1933 and Rule 12b-2 of the Securities Exchange Act of 1934. The Company filed a Form 8-K/A on August 19, 2011 to update information provided in on our Form 8-K dated August 18, 2011, adding the footnote to the pro-forma. However, the Company has since determined that the August 5, 2011 transaction did not result in the Company ceasing to be a shell corporation as such term is defined under the applicable statutes and rules.

On August 31, 2011, the Company completed the ADI Asset Purchase, pursuant to which it acquired diamond growing machines and intellectual property related thereto from ADI, in exchange for an aggregate of $2,000,000 in a combination of cash and a promissory note to ADI with a September 1, 2012 maturity date, plus the ADI Shareholder Purchase Rights. Management has determined that, as a result of the ADI Asset Purchase, the Company was no longer a shell corporation as that term is defined under the applicable statutes and rules as of August 31, 2011. Disclosures required by Item 5.06 of Form 8-K as a result of the Company's August 31, 211 change in shell company status were previously reported in the 8-K filings on August 18 and 19, 2011, referenced above, which disclosures have been supplemented and superseded by disclosures contained in subsequent SEC filings by the Company, most recently and comprehensively by the Annual Report on Form 10-K filed by the Company for the Company's fiscal year ended March 31, 2011.

Page - 3

---