The chief executive of Spherix Inc. resigned after the board of the Beltsville company rejected his proposal to scale back its biotechnology division and focus on information services.
The company's executive vice president and chief financial officer, Richard C. Levin, 51, was named acting chief executive and president, according to an announcement yesterday. The departing chief executive and president, Thomas W. Gantt, also resigned from the company's board.
Mandalay Profit Misses Street Target (Reuters, Sep 2, 2004)
Mandalay Resort Group Reports 2Q Profit (Associated Press, Sep 2, 2004)
Mandalay Profit Rise Misses Street Target (Reuters, Sep 2, 2004)
Del Monte Profit Tumbles 41 Percent (Associated Press, Sep 2, 2004)
Del Monte Quarterly Profit Falls (Reuters, Sep 2, 2004)
More Earnings News
Founded in 1967, Spherix has its roots in biotechnology. But its information services offerings have come to dominate the company's revenue stream, especially through its phone and online reservation services for state and national parks.
Gilbert V. Levin, the company's founder and chairman, said Gantt "came to the conclusion that information services should be the major thrust rather than biotech because he looks at typical biotech companies as having large burn and low success rates."
Gantt, 62, could not be reached for comment. Yesterday would have marked his first anniversary on the job.
Spherix's lead biotech product is tagatose, a low-calorie sweetener licensed for manufacturing to a company in Denmark last year. Royalties for the first half of last year were $3,000, according to Securities and Exchange Commission filings.
While Spherix has continuously posted profit from its information services division, which employs 480 people, it has logged consistent quarterly losses in biotech, which employs six. The biotech division lost $239,000 for the quarter ended June 30, according to the filings.
Last month, the company reported an overall second-quarter profit of $192,257, or 2 cents a share, on revenue of $6.8 million.
Despite losses in biotech, Gilbert Levin, who is Richard Levin's uncle, said the company's operating premise remains unchanged: Leverage revenue from information services to fund the biotech operation.
Investors buy into the company for the biotechnology component, not information services, he said.
"They want to see things happen in biotech," he said. "We're trying to make it happen. We can land a multibillion contract on the information side and nothing happens with the stock. But when we do something in biotech, the stock takes off. All of the shareholders, their interest is in biotech."
However, last month, when the company announced it had lost a major bid to a competitor for providing one-stop reservation services to federal parks and recreation areas, the stock plunged 17 percent, or 66 cents.
The company has since protested the Department of Agriculture's decision to award the contract, potentially worth $128 million, to ReserveAmerica, a subsidiary of Ticketmaster based in Ballston Spa, N.Y. Spherix said its bid was $32.6 million lower.
Richard Levin said losing the contract had nothing to do with Gantt's departure.
"That was just part of business," he said. "You win some and you lose some, and we still think we can turn that contract around."
Gantt will assist the company with special projects, be paid his full salary, and retain his right to exercise options on Feb. 28, according to an SEC filing. Gantt's yearly salary was not available yesterday, though he was paid $65,625 for the four months from Sept. 1 to Dec. 31 last year, according to the company.
Yesterday, shares of Spherix fell 33 cents, or 7.8 percent, to close at $3.89.