Z Trim founder resigns, stock slides
Shares for Mundelein-based Z Trim Holdings Inc. Tuesday tumbled about 13 percent after founder and Chief Executive Gregory J. Halpern left with a severance package.
Halpern, also the company's major shareholder, handed in a short resignation letter Monday. Yet he received three-months salary and six months of paid health insurance as severance. He also will be paid for unused vacation time.
The board forfeited Halpern's stock options, according to a filing with the U.S. Securities and Exchange Commission.
"It was agreed to mutually by both sides," said Z Trim counsel Brian Chaiken. "He's still the major shareholder. He decided to resign. I couldn't tell you what was going through his head at the time on why he decided to leave."
Z Trim, which changed its name from Circle Group Holdings last year, was founded in 1994. The holding company includes Fiber-Gel Technologies, which makes fat-substitute food ingredients and other products.
The company reported a net loss for the second quarter ending June 30 of $2.5 million, or 3 cents per share, compared to a net loss of $2.2 million, or 4 cents per share, for the same period last year.
Halpern was paid $142,537 and held about 16.7 million shares, according to the company proxy. He is being replaced by company President Steve Cohen.
"We're looking to take this company in a different direction," Cohen said in an interview. "We're going to bring in industry experts and interview them to help move this company in the right direction."
The company's board of directors also voted to postpone the annual meeting of shareholders that had been scheduled for today to provide time to prepare updated proxy information. The shareholder meeting likely will be held in six to eight weeks, Cohen said.
In addition, Z Trim shares closed at 68 cents, down 10 cents, the lowest in about two years.
Also, compounding the company's woes was a letter on Aug. 17 from the American Stock Exchange, which alleged non-compliance.
Chaiken said Z Trim received a notice of "deficiencies" from the American Stock Exchange and intends to respond Thursday.
"The chances of the stock being de-listed is remote and we'll do everything in our power to keep that from happening," Chaiken said.