Spherix posts $2.9 million loss

CEO's heir apparent resigns

Affeldt had been seen as Levin's successor

March 08, 2003|By Julie Bell | Julie Bell,SUN STAFF

Spherix Inc., best known for its decades-long attempt to develop a low-calorie sugar substitute, reported yesterday that it lost $2.9 million last year and said its president and chief operating officer had resigned.

David Affeldt, who had been with the company since 1998 and president and COO since January 2001, had been expected to take over as chief executive officer upon the resignation of Gilbert Levin, Spherix's 78-year-old founder. Levin said in February 2002 that he was thinking of stepping aside so he could concentrate solely on the company's biotechnology division.

"All I can say is, the CEO like all other officers must be elected by the board," Levin said of why he never stepped down.

Affeldt declined to talk about the reasons for his departure, other than to say "it was just timing."

He said he had accepted another job but was not yet at liberty to disclose where.

Affeldt, whose background was in information systems, also was president and CEO of the company's InfoSpherix Division, which oversees its call centers.

Spherix Chief Financial Officer Richard Levin, the founder's nephew, is to head the division for now. Gilbert Levin said the company is not looking for a new president and COO.

"I think the company has been dominated by Dr. Gilbert Levin all along," making it difficult to assess Affeldt's contributions, said analyst Lincoln A. Werden of H.G. Wellington & Co. in New York.

Gilbert Levin has been trying since the 1960s to bring a low-calorie sweetener to market. Unlike conventional biotechnology companies, Spherix has generated profits by operating call centers that have handled everything from consumer questions about pharmaceuticals to a state child-support hot line. But last year, call center revenue fell as new contracts slowed.

The company also said legal fees associated with its arbitration case against Arla Foods had contributed to losses.

Spherix licensed its tagatose sugar substitute in 1996 to Arla for use in foods, but the Danish dairy giant has yet to begin making it. Spherix wants an arbitrator to award it monetary damages as well as the right to revoke Arla's license on the grounds that the delay invalidates it.

Spherix is attempting to develop the sweetener itself for uses in items other than food, such as toothpaste.

The company said its annual loss amounted to 26 cents per share. That compares with a profit of $567,823, or 5 cents per share, in 2001. Annual revenue was $15.1 million, down from $19.9 million in 2001.

Shares of Spherix rose 55 cents, or more than 9 percent, to $6.64 yesterday.

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