PurchasePro’s Johnson says he resigned to help diffuse lawsuits

Wednesday, May 23, 2001 | 10:33 a.m.

PurchasePro founder Charles Johnson resigned as chairman and chief executive of the Las Vegas-based software company to help it focus on business rather than lawsuits targeting him, Johnson told the Wall Street Journal.

"Since I'm not there, it takes away the focus of litigation and puts the focus back on running the company," Johnson told the Journal in comments published today.

Johnson, who founded the business-to-business e-commerce company in October 1996, quit or was fired following an emergency meeting of the board of directors Sunday night.

The company has had a turbulent last few months, stemming from accounting issues and problems, a months-long search for a chief financial officer, and one lawsuit that alleges Johnson stole a business plan he allegedly used to start PurchasePro.

Johnson and PurchasePro have repeatedly disputed the merits of that lawsuit. The company recently filled the CFO spot with Richard Clemmer, a former CFO of Quantum Corp.

PurchasePro, which employs a staff of 500-plus, develops marketplaces for businesses to buy and sell products online.

The company has failed to file its 10-Q quarterly earnings statement with the Securities and Exchange Commission, which was due last week. PurchasePro spokesman Steve Stern said the company plans to file it "soon," but he declined to give a date.

Stern also declined to say why the company revised its earnings downward Tuesday, noting that that will be explained in the next 8-K document PurchasePro files with the SEC.

PurchasePro has been hit with numerous lawsuits since the company fell far short of earnings estimates in late April, and had to restate the earnings with numbers even more disappointing the day after Johnson resigned.

Many of the lawsuits filed by disgruntled investors allege Johnson and other executives made false and misleading statements about the company's financial condition in order to pump up the PurchasePro stock.

In response to the lawsuits, Johnson told the Journal until "the night of April 24, I thought we had made our numbers. At the time, I reaffirmed guidance, I felt comfortable."

PurchasePro said Tuesday it had a first-quarter loss of $32.4 million, or 47 cents a share, rather than the previously reported loss of $18.1 million, or 26 cents a share. The company's revenue for the quarter ended March 31 was revised downward to $17.1 million from $29.8 million.