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Cryo-Cell's CEO abruptly quits
By KRIS HUNDLEY, Times Staff Writer
CLEARWATER -- The top executive of Cryo-Cell International Inc. resigned suddenly from the troubled stem cell storage company. No reason was given for his departure, and no successor has been named. John V. Hargiss, who had been with Cryo-Cell of Clearwater for just over a year, gave Cryo-Cell's board a letter of intent to resign Tuesday and immediately left the company's headquarters on McMullen-Booth Road. Hargiss was the company's chief executive, president and chief operating officer, as well as a company director. Mercedes Walton, chairwoman of Cryo-Cell's board, said she did not know the reason for Hargiss' departure. "He indicated he would follow up with more information, but I haven't seen that letter yet," she said. "I assume he's going to pursue other business interests." Reached at his home Wednesday evening, Hargiss, 58, said he expected to fax his resignation letter to Cryo-Cell last night. He declined further comment. Before joining Cryo-Cell, Hargiss had been a health care consultant and president of Biodynamics International Inc. Cryo-Cell, which stores newborns' umbilical cord blood for possible future medical use, has been trying to get its business back on track after several missteps. The company lost $5.3-million for the fiscal year ended Nov. 30 compared to a profit of nearly $900,000 the prior year. Revenues were $7.1-million last year compared to $5.6-million in 2001. The company's financial report for the quarter ended Feb. 28 is expected to be filed Monday. Neither Hargiss nor Walton would say whether the departing executive received a severance package. His employment contract provided an annual salary of $200,000 but did not have automatic provisions for such benefits. Walton said the company has not yet named an interim successor or begun a search for a permanent replacement. "At this point there are no definitive plans," she said. "It's a challenging business, and we will take appropriate time to conduct a search." Walton said it was "highly unlikely" that Dan Richard, Cryo-Cell's founder and former chief executive, would return to an executive position on even a temporary basis. Wanda Dearth, who was fired from her position as Cryo-Cell's president and chief operating officer in December 2001, filed two lawsuits against the company. One, a breach of contract complaint, was settled for $79,000. The other, alleging that Dearth had been sexually harassed by Richard, then Cryo-Cell's chief executive, is pending. The company has denied the allegations. Cryo-Cell also has denied assertions by Dearth and other current and former employees that the company's patented freezer repeatedly malfunctioned, jeopardizing the viability of customers' stored samples. The company said it has more than 46,000 clients who pay a processing fee of $315 and annual storage fee of $90. During his 14 months with Cryo-Cell, Hargiss oversaw several management and board changes, including the resignation of Richard, the company's largest shareholder, from both the chief executive job and the board. Richard remains chairman and chief executive of Stem Cell Preservation Technologies Inc., a Cryo-Cell subsidiary. He also receives a $200,000 annual consulting fee from the company for life. Other changes implemented by Hargiss included the addition of a second storage facility, owned by a board member in Arizona. Cryo-Cell also changed auditors in March, bringing on Ernst and Young to replace long-time auditors Weinick Sanders Leventhal & Co., LLP. Hargiss also supervised the successful accreditation of the company by the American Association of Blood Banks, announced the day he resigned. Cryo-Cell's officers did not publicly announce Hargiss' resignation. The company's shares, which were nearly $6 in June, have been headed steadily downhill, hitting a 52-week low of 61 cents on April 1. They closed Wednesday at 90 cents, up 3 cents. -- Kris Hundley can be reached at hundley@sptimes.com
or (727)892-2996.
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From the Times Business report
From the AP
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