Problems and Bankruptcy
The company was never profitable. Despite heavily-discounted subscription fees and low margins, customers often found that buying goods online was more expensive and less convenient than traditional wholesale purchasing. The company attracted over 140,000 mostly small and medium-sized vendors by making strategic "preferred" deals. Many of these deals involved PurchasePro giving away stock or its partners providing free services, which generated losses for both sides.PurchasePro's stock value began to fall quickly in April, 2001 after it announced that it would fall short of its revenue predictions. Investors began to question the company's accounting practices and the truthfulness of its prior financial claims. Founder and CEO Charles Johnson was forced to resign by PurchasePro's board of directors in May, 2001. The company filed for bankruptcy in September, 2002, and PurchasePro's assets were sold for $2.5 million in January, 2003.
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