SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549


                                    FORM 10-Q


   X     Quarterly  report  pursuant  to  Section 13 or 15(d) of the  Securities
-------- Exchange Act of 1934

         For the  quarterly period  ended  December  30,  2000  Commission  File
         Number 0-27050
                -------

         Transition  report  pursuant  to Section 13 or 15(d) of the  Securities
-------- Exchange Act of 1934

         For the transition period from________ to ________


                                 PHAR-MOR, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

         PENNSYLVANIA                                          25-1466309
------------------------------------------------           ---------------------
         (State or other jurisdiction of                   (I.R.S. Employer
         incorporation or organization)                    Identification No.)


         20 Federal Plaza West, Youngstown, Ohio            44501-0400
------------------------------------------------           ---------------------
         (Address of principal executive offices)          (Zip code)


Registrant's telephone number, including area code:        (330) 746-6641
                                                           --------------

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

                                            YES      X        No
                                                   -----           -----

         Indicate by check mark whether the  registrant  has filed all documents
and reports  required to be filed by Sections 12, 13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.

                                            YES      X        No
                                                   -----           -----

On January 30, 2000,  there were 12,240,865  shares of the  registrant's  common
stock  outstanding  before  deducting  1,408,436  shares,  which  represent  the
Company's  25.2% equity interest in common stock of the Company owned by Avatex,
Inc.



<PAGE>2


                          PHAR-MOR, INC. AND SUBSIDIARIES

                                    FORM 10-Q

                      FOR THE QUARTER ENDED DECEMBER 30, 2000


                                    I N D E X


                                                                           Page

Part I:  Financial Information

         Item 1.  Financial Statements

              Condensed Consolidated Balance Sheets as of December 30,
              2000 and July 1, 2000                                            3

              Condensed Consolidated Statements of Operations for the
              Thirteen Weeks Ended December 30, 2000 and January 1, 2000       4

              Condensed Consolidated Statements of Operations for the
              Twenty-six Weeks Ended December 30, 2000 and January 1, 2000     5

              Condensed Consolidated Statements of Cash Flows for the
              Twenty-six Weeks Ended December 30, 2000 and January 1, 2000     6

              Notes to Condensed Consolidated Financial Statements             7

         Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                                   8

Part II: Other Information

         Item 1.  Legal Proceedings                                           12
         Item 2.  Changes in Securities                                       12
         Item 3.  Defaults Upon Senior Securities                             12
         Item 4.  Submission of Matters to a Vote of Security Holders         12
         Item 5.  Other Information                                           12
         Item 6.  Exhibits and Reports on Form 8-K                            12
         Signatures                                                           13
         Exhibit Index                                                        14


<PAGE>3


                              PHAR-MOR, INC. AND SUBSIDIARIES
                           CONDENSED CONSOLIDATED BALANCE SHEETS
                                        (In thousands)
<TABLE>
<CAPTION>

ASSETS                                                    (Unaudited)
                                                          December 30,    July 1,
                                                              2000         2000
                                                           ---------    ---------
<S>                                                        <C>          <C>
Current assets:
  Cash and cash equivalents                                $  17,221    $  16,752
  Marketable securities                                          157        3,019
  Accounts receivable - net                                   31,418       25,017
  Merchandise inventories                                    208,927      207,228
  Prepaid expenses and other current assets                    6,127        6,538
                                                             -------      -------
          Total current assets                               263,850      258,554

Property and equipment - net                                  85,193       91,801
Goodwill                                                      15,487       15,809
Deferred tax asset                                             9,126        9,126
Investments                                                    8,066       13,682
Investment in Avatex                                           3,511        3,691
Other assets                                                   5,642        5,241
                                                             -------      -------

          Total assets                                     $ 390,875    $ 397,904
                                                           =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                         $ 103,517    $  97,461
  Accrued expenses and other current liabilities              38,403       40,621
  Current portion of long-term debt and capital
    lease obligations                                          6,406        6,499
                                                             -------      -------
          Total current liabilities                          148,326      144,581

Long-term debt and capital lease obligations                 158,690      167,856
Long-term self insurance reserves                              7,224        7,335
Deferred rent and unfavorable lease liability - net            9,935       10,639
                                                             -------      -------
          Total liabilities                                  324,175      330,411
                                                             -------      -------

Commitments and contingencies                                   --           --
Minority interests                                               535          535
                                                             -------      -------

Stockholders' equity:
  Preferred stock                                               --           --
  Common stock                                                   122          122
  Additional paid-in capital                                  90,326       90,007
  Stock options outstanding                                    1,881        2,200
  Retained deficit                                           (19,672)     (19,012)
                                                             -------      -------
                                                              72,657       73,317
  Less: equity, through investment in Avatex, in cost of
     common stock of the Company held by Avatex, Inc.         (6,492)      (6,359)
                                                             -------      -------
        Total stockholders' equity                            66,165       66,958
                                                             -------      -------

        Total liabilities and stockholders' equity         $ 390,875    $ 397,904
                                                           =========    =========
</TABLE>

The  accompanying  notes are an integral  part of these  condensed  consolidated
financial statements.


<PAGE>4


                         PHAR-MOR, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (Dollars in thousands, except per share amounts)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                    Thirteen         Thirteen
                                                                  Weeks Ended      Weeks Ended
                                                              December 30, 2000  January 1, 2000
                                                              -----------------  ---------------

<S>                                                              <C>             <C>
Sales                                                            $    342,326    $    350,411

Less:
  Cost of goods sold, including occupancy and
      distribution costs                                              283,053         280,350
  Selling, general and administrative expenses                         53,560          53,993
  Depreciation and amortization                                         4,924           6,092
                                                                      -------         -------
Income from  operations  before interest  expense,  investment
 loss,  equity in (loss) income of affiliates, income taxes
 and extraordinary item                                                   789           9,976

Interest expense                                                       (5,382)         (4,873)
Investment loss                                                        (3,359)             (4)
                                                                      -------         -------
(Loss) income before equity in (loss) income of affiliates
  income taxes and extraordinary item                                  (7,952)          5,099

Equity in (loss) income of affiliates                                  (1,303)          5,294
                                                                      -------         -------
(Loss) income before income taxes and extraordinary item               (9,255)         10,393

Income tax provision                                                     --             2,481
                                                                      -------         -------
(Loss) income before extraordinary item                                (9,255)          7,912

Extraordinary item - net of tax of $0 and $137, respectively           17,097             206
                                                                      -------         -------

Net income                                                       $      7,842    $      8,118
                                                                 ============    ============


Income (loss) per basic and diluted common share:
  Income (loss) before extraordinary gain                        $       (.84)   $        .69
  Extraordinary gain                                             $       1.56             .02
                                                                      -------         -------
  Net income                                                     $        .72    $        .71
                                                                 ============    ============

Weighted average number of basic and diluted common shares
   outstanding                                                     10,932,841      11,383,411

</TABLE>

The  accompanying  notes are an integral  part of these  condensed  consolidated
financial statements.


<PAGE>5



                        PHAR-MOR, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (Dollars in thousands, except per share amounts)
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                               Twenty-six            Twenty-six
                                                              Weeks Ended           Weeks Ended
                                                           December 30, 2000      January 1, 2000
                                                           -----------------      ---------------

<S>                                                            <C>             <C>
Sales                                                          $    650,513    $    668,246

Less:
  Cost of goods sold, including occupancy and
      distribution costs                                            538,331         537,133
  Selling, general and administrative expenses                      103,982         107,448
  Depreciation and amortization                                      10,298          13,267
                                                                    -------         -------
(Loss) income from operations before interest  expense,
  investment loss, equity in (loss) income of affiliates,
  income taxes and extraordinary item                                (2,098)         10,398

Interest expense                                                    (10,404)         (9,418)
Investment loss                                                      (3,862)           (662)
                                                                    -------         -------
(Loss) income before equity in (loss) income of affiliates
  income taxes and extraordinary item                               (16,364)            318

Equity in (loss) income of affiliates                                (1,393)          5,884
                                                                    -------         -------
(Loss) income before income taxes and extraordinary item            (17,757)          6,202

Income tax provision                                                   --             2,481
                                                                    -------         -------
(Loss) income before extraordinary item                             (17,757)          3,721

Extraordinary item - net of tax of $0 and $137, respectively         17,097             206
                                                                    -------         -------

Net (loss) income                                              $       (660)   $      3,927
                                                               ============    ============

Income (loss) per basic and diluted common share:
  Income (loss) before extraordinary gain                      $      (1.62)   $        .32
  Extraordinary gain                                                   1.56             .02
                                                                    -------         -------
  Net (loss) income                                            $       (.06)   $        .34
                                                               ============    ============

Weighted average number of basic and diluted common shares
   outstanding                                                   10,976,356      11,449,798

</TABLE>

The  accompanying  notes are an integral  part of these  condensed  consolidated
financial statements.


<PAGE>6



                            PHAR-MOR, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                           Twenty-six        Twenty-six
                                                          Weeks Ended        Weeks Ended
                                                       December 30, 2000   January 1, 2000
                                                       -----------------   ---------------
<S>                                                           <C>              <C>
OPERATING ACTIVITIES
  Net (loss) income                                           $   (660)        $  3,927
  Adjustments to reconcile net (loss) income to net
    Cash used for operating activities:
    Items not requiring the outlay of cash:
      Depreciation                                               8,832            9,257
      Amortization of video rental tapes                           864            3,306
      Stock option expense                                        --                 95
      Amortization of deferred financing costs and goodwill      1,087              838
      Deferred income taxes                                       --              2,618
      Deferred rent and unfavorable lease liability               (704)            (254)
      Equity in loss (income) of affiliates                      2,393           (5,883)
      Gain on extinguishment of debt                           (17,097)            (343)
    Changes in assets and liabilities:
      Accounts receivable                                       (6,401)          (2,624)
      Marketable securities                                      2,862            3,254
      Merchandise inventories                                   (1,932)          (3,828)
      Prepaid expenses                                             411            2,005
      Other assets                                              (1,166)             (10)
      Accounts payable                                           5,092          (20,151)
      Accrued expenses and other current liabilities            (2,329)           6,615
                                                                ------            -----
  Net cash used for operating activities                        (8,748)          (1,178)
                                                                ------           ------

INVESTING ACTIVITIES
  Proceeds from the sale of equity securities                    3,500             --
  Additions to rental videotapes                                  (631)            (805)
  Additions to property and equipment                           (2,248)         (10,161)
  Proceeds on sale of property and equipment                        23               33
  Investment in Avatex                                            --             (5,724)
  Investment in equity securities                                 (229)          (4,600)
                                                                ------           ------
  Net cash provided by (used for) investing activities             415          (21,257)
                                                                ------           ------

FINANCING ACTIVITIES
  Borrowings under revolving credit facility                    28,446           31,032
  Retirement of senior notes                                   (17,556)            --
  Bank overdrafts                                                  964           (4,337)
  Principal payments on long-term debt                            (990)          (3,672)
  Principal payments on capital lease obligations               (2,062)          (3,659)
                                                                ------           ------
  Net cash provided by financing activities                      8,802           19,364
                                                                ------           ------

  Increase (decrease) in cash and cash equivalents                 469           (3,071)
  Cash and cash equivalents, beginning of period                16,752           17,346
                                                                ------           ------
  Cash and cash equivalents, end of period                    $ 17,221         $ 14,275
                                                              ========         ========
</TABLE>

The  accompanying  notes are an integral  part of these  condensed  consolidated
financial statements.


<PAGE>7


PHAR-MOR, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except per share amounts)
--------------------------------------------------------------------------------
1.       BASIS OF PRESENTATION
         The accompanying  unaudited  interim condensed  consolidated  financial
         statements  have been prepared in accordance  with  generally  accepted
         accounting  principles for interim financial  information.  They do not
         include  all  information  and  footnotes  which  would be  required by
         generally  accepted   accounting   principles  for  complete  financial
         statements.  In the  opinion  of  management  of  Phar-Mor,  Inc.  (the
         "Company") and its  subsidiaries,  these interim  financial  statements
         contain all adjustments considered necessary for a fair presentation of
         financial  position,  results  of  operations  and cash  flows  for the
         periods  presented.  Reference  should be made to the Company's  Annual
         Report  on Form  10-K  for the  fiscal  year  ended  July 1,  2000  for
         additional disclosures, including a summary of the Company's accounting
         policies,  which  have  not  changed  except  for  the  new  accounting
         pronouncement  discussed in Note 2. Operating  results for the thirteen
         and  twenty-six  weeks  ended  December  30,  2000 are not  necessarily
         indicative of the results that may be expected for the fifty-two  weeks
         ending June 30, 2001.

2.       NEW ACCOUNTING PRONOUNCEMENTS
         In June 1998, the Financial  Accounting Standards Board ("FASB") issued
         Statement  of  Financial   Accounting   Standards   ("SFAS")  No.  133,
         "Accounting for Derivative  Instruments and Hedging  Activities," which
         establishes   accounting   and  reporting   standards  for   derivative
         instruments  and for hedging  activities.  It  requires  that an entity
         recognize  all  derivatives  as  either  assets or  liabilities  in the
         statement of financial  position and measure those  instruments at fair
         value,  with the potential effect on operations  dependent upon certain
         conditions  being met.  SFAS No. 133 (as  amended by SFAS Nos.  137 and
         138) is effective  for all fiscal  quarters of fiscal  years  beginning
         after June 15, 2000.  The Company  adopted SFAS 133  effective  July 2,
         2000,  and the adoption of this  standard did not have an impact on its
         consolidated financial position, results of operations or cash flows.

3.       LITIGATION
         The Company and its  subsidiaries  are  involved in legal  proceedings,
         claims and litigation  arising in the ordinary  course of business.  In
         the  opinion  of   management,   the  outcome  of  such  current  legal
         proceedings,  claims and litigation  will not have a material impact of
         the Company's consolidated financial position, results of operations or
         cash flows.


4.       EXTRAORDINARY ITEM
         The Company recorded an extraordinary gain on the early  extinguishment
         of debt of $17,097 in the thirteen  weeks ended  December 30, 2000 from
         the repurchase of $34,653 in senior notes.



<PAGE>8


PHAR-MOR, INC. AND SUBSIDIARIES
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

RESULTS OF OPERATIONS (all dollar amounts in thousands)

Thirteen Weeks Ended December 30, 2000 versus
    Thirteen Weeks Ended January 1, 2000

Sales for the second quarter of fiscal year 2001 ("Fiscal 2001")  decreased 2.3%
compared to the first  quarter of fiscal year 2000 ("Fiscal  2000").  Comparable
store sales  decreased 2.2% from $347,267 for Fiscal 2000 to $339,665 for Fiscal
2001.  Comparable  store pharmacy sales  increased 4.8% while  comparable  store
front-end sales decreased 5.0%.  Higher energy prices,  a declining stock market
and bad weather  throughout much of the quarter  combined to reduce sales in the
current  quarter while last year benefited from a strong stock market,  an early
flu season, Y2K related sales and mild weather.

Cost of sales as a  percentage  of sales was 82.7% in Fiscal  2001  compared  to
80.0% in Fiscal 2000,  an increase of 2.7% of sales.  The increase was primarily
due to  increased  promotional  pricing,  a change in the  sales mix  reflecting
reductions  in higher  margin  front end sales  and  increases  in lower  margin
pharmacy sales, the inclusion of vendor  allowances for the  remerchandising  of
the Pharmhouse  stores in Fiscal 2000 and a reduction in video rental tape sales
and  gross  margin  due to  the  elimination  of  underperforming  video  rental
departments.

Selling, general and administrative expenses as a percentage of sales were 15.6%
in Fiscal 2001  compared to 15.4% in Fiscal  2000,  an increase of .2% of sales.
This increase was primarily due to a provision for employee termination costs of
$1,140 recorded in Fiscal 2001 for a reduction in certain corporate personnel.

Depreciation  and  amortization  expense was $4,924 in Fiscal  2001  compared to
$6,092 in Fiscal 2000, a decrease of $1,168. The decrease was primarily due to a
$720  decrease in video tape  amortization  due to the closure of the  Company's
poorer performing video rental departments combined with lower video rental tape
purchases in continuing video rental departments.

Interest  expense  was $5,382 in Fiscal 2001  compared  to  interest  expense of
$4,873 in Fiscal 2000, a $509 increase. The increase in interest expense was due
to the write-off of $354 in deferred  financing fees  associated  with the prior
credit facility with  BankAmerica and increased  borrowings  under the revolving
credit facility partially offset by lower interest expense due to the repurchase
of senior notes.

Investment  loss  increased  from $4 in Fiscal 2000 to $3,359 in Fiscal 2001, an
increase of $3,355.  Fiscal 2001 includes a reduction in the market value of the
Company's  investment  in  HealthCentral.com  of $2,359 and the write-off of the
Company's remaining investment in More.com of $1,000.

Equity in (loss)  income of  affiliates  declined from a $5,294 income in Fiscal
2000 to a $1,303 loss in Fiscal 2001,  primarily due to lower income realized by
an investment partnership for which the Company has an investment.

The Company recorded an extraordinary  gain on the early  extinguishment of debt
of $17,097 in Fiscal 2001 from the  repurchase  of $34,653 of its 11.72%  senior
notes.

Twenty-six Weeks Ended December 30, 2000 versus
    Twenty-six Weeks Ended January 1, 2000

Sales for the  twenty-six  weeks ended December 30, 2000 decreased 2.7% compared
to the twenty-six weeks ended January 1, 2000.  Comparable store sales decreased
2.5% from $662,209 for the twenty-six  weeks ended December 30, 2000 to $645,531
for the twenty-six weeks ended January 1, 2000.  Comparable store pharmacy sales

<PAGE>9

increased 5.2% while  comparable  store front-end  sales decreased 5.7%.  Higher
energy prices, a declining stock market and bad weather combined to reduce sales
in the current year while last year  benefited  from a strong stock  market,  an
early flu season, Y2K related sales and mild weather.

Cost of sales as a percentage of sales was 82.8% for the twenty-six  weeks ended
December 30, 2000  compared to 80.4% for the  twenty-six  weeks ended January 1,
2000, an increase of 2.4% of sales.  The increase was primarily due to increased
promotional  pricing, a change in the sales mix reflecting  reductions in higher
margin  front  end sales and  increases  in lower  margin  pharmacy  sales,  the
inclusion of vendor allowances for the  remerchandising of the Pharmhouse stores
in the  twenty-six  weeks ended  January 1, 2000 and a reduction in video rental
tape sales and gross  margin due to the  elimination  of  underperforming  video
rental departments.

Selling, general and administrative expenses as a percentage of sales were 16.0%
for the  twenty-six  weeks ended  December  30,  2000  compared to 16.1% for the
twenty-six  weeks  ended  January 1,  2000,  a  decrease  of .1% of sales.  This
decrease was primarily due to lower corporate  incentive  compensation  accruals
partially  offset  by a  provision  for  employee  termination  costs of  $1,140
recorded  in the  twenty-six  weeks  ended  January 1, 2000 for a  reduction  in
certain corporate personnel.

Depreciation and amortization expense was $10,298 for the twenty-six weeks ended
December 30, 2000 compared to $13,267 for the twenty-six  weeks ended January 1,
2000, a decrease of $2,969.  The decrease was primarily due to a $2,442 decrease
in video tape amortization due to the closure of the Company's poorer performing
video rental  departments  combined  with lower video  rental tape  purchases in
continuing video rental departments.

Interest  expense was $10,404 for the  twenty-six  weeks ended December 30, 2000
compared to interest expense of $9,418 for the twenty-six weeks ended January 1,
2000, a $986 increase. The increase in interest expense was due to the write-off
of $354 in deferred  financing fees  associated  with the prior credit  facility
with  BankAmerica and increased  borrowings  under the revolving credit facility
partially  offset by lower  interest  expense  due to the  repurchase  of senior
notes.

Equity in (loss)  income of  affiliates  declined  from a $5,884  income for the
twenty-six weeks ended January 1, 2000 to a $1,393 loss for the twenty-six weeks
ended December 30, 2000, primarily due to lower income realized by an investment
partnership for which the Company has an investment.

The Company recorded an extraordinary  gain on the early  extinguishment of debt
of $17,097 in the  twenty-six  weeks ended December 30, 2000 from the repurchase
of $34,653 in senior notes.

FINANCIAL CONDITION AND LIQUIDITY (all dollar amounts in thousands)

The Company's  cash position as of December 30, 2000 was $17,221.  The Company's
cash  position may fluctuate as a result of seasonal  merchandise  purchases and
timing of payments.

The Company entered into an Amended and Restated  Revolving Credit Facility (the
"Amended  Facility")  effective  September  10, 1998 with  BankAmerica  Business
Credit,  as agent,  and other financial  institutions  that establishes a credit
facility in the maximum amount of $100,000.

Borrowings  under the Amended  Facility were used for working  capital needs and
general  corporate  purposes.  Up to $50,000 of the Amended Facility at any time
may have been used for standby and  documentary  letters of credit.  The Amended
Facility  included  restrictions  on,  among  other  things,   additional  debt,
investments,  dividends and other  distributions,  mergers and  acquisitions and
contained no financial covenants.

Credit availability under the Amended Facility at any time was the lesser of the
aggregate  availability  (as defined in the Amended  Facility) or $100,000.  The
Amended Facility  established a first priority lien and security interest in the



<PAGE>10

current  assets of the Company,  including,  among other items,  cash,  accounts
receivable and inventory.

Advances  made under the  Amended  Facility  bore  interest  at the  BankAmerica
reference rate plus 1/2% or LIBOR plus 2.00% from January 1 to June 30 each year
and the BankAmerica  reference rate plus 3/4% or LIBOR plus 2.25% from July 1 to
December 31 each year. Under the terms of the Amended Facility,  the Company was
required  to pay a  commitment  fee of between  0.25% and 0.35% per annum on the
unused portion of the facility, letter of credit fees and certain other fees.

The Amended Facility was terminated on November 16, 2000.

The Company entered into a Loan and Security  Agreement (the "Credit  Facility")
effective  November 16, 2000 with Fleet Retail Finance Inc., as agent, and other
financial  institutions that establishes a credit facility in the maximum amount
of $150,000.

Borrowings  under the Credit  Facility may be used for working capital needs and
general corporate purposes. Up to $20,000 of the Credit Facility at any time may
be used for  standby  and  documentary  letters of credit.  The Credit  Facility
includes  restrictions  on, among other things,  additional  debt,  investments,
dividends  and other  distributions,  mergers and  acquisitions  and contains no
financial covenants as long as unused credit availability is a least $20,000.

Credit  availability  under the Credit Facility at any time is the lesser of the
aggregate  availability  (as defined in the Credit  Facility) or  $150,000.  The
Credit Facility  establishes a first priority lien and security  interest in the
all of the assets of the Company excluding real property and equipment.

Advances made under the Credit Facility bear interest at the Fleet National Bank
prime rate or LIBOR plus 2.00% to LIBOR  plus  2.50%  depending  on the  average
unused  credit  availability  in the preceding  quarter.  Under the terms of the
Credit  Facility,  the Company is required to pay a commitment  fee of 0.25% per
annum on the unused  portion of the facility,  letter of credit fees and certain
other fees.

Unused  availability under the Credit Facility,  after subtracting  amounts used
for outstanding letters of credit, was $58,571 at December 30, 2000.

The Credit Facility expires on November 30, 2003.


Twenty-six weeks ended December 30, 2000

During the twenty-six weeks ended December 30, 2000, the Company's cash position
increased by $469. Net cash used for operating  activities was $8,748. The major
uses of cash from operating  activities  were net loss of $660 less the non-cash
gain on extinguishment of debt of $17,097, an increase in inventories of $1,932,
an increase in accounts  receivable of $6,401 and a decrease in accrued expenses
and other  current  liabilities  of $2,329.  These were  partially  offset by an
increase in accounts payable of $5,092 and depreciation expense of $8,832.

Capital  expenditures of $2,248,  additions to video rental tapes of $631 and an
investment in equity securities of $229 were offset by proceeds from the sale of
equity securities of $3,500.

Net cash  provided by financing  activities  of $8,802  consisted of  borrowings
under the revolving  credit facility and increases in bank overdrafts  partially
offset by payments  made to retire  senior  notes,  principal  payments on lease
obligations and principal payments on long-term debt.

The  Company  is  exposed to certain  market  risks from  transactions  that are
entered into during the normal course of business. The Company's policies do not
permit active trading of, or speculation in, derivative  financial  instruments.
The Company's  primary  market risk exposure  relates to interest rate risk. The

<PAGE>11

Company manages its interest rate risk in order to balance its exposure  between
fixed and variable rates while attempting to minimize its interest costs.

Trends,  Demands,  Commitments,  Events or  Uncertainties (all dollar amounts in
thousands)

In June  1998,  the  FASB  issued  SFAS  No.  133,  "Accounting  for  Derivative
Instruments and Hedging Activities," which establishes  accounting and reporting
standards for derivative  instruments  and for hedging  activities.  It requires
that an entity  recognize all derivatives as either assets or liabilities in the
statement of financial  position and measure  those  instruments  at fair value,
with the potential effect on operations  dependent upon certain conditions being
met.  SFAS No. 133 (as amended by SFAS Nos.  137 and 138) is  effective  for all
fiscal  quarters of fiscal  years  beginning  after June 15,  2000.  The Company
adopted SFAS 133 effective  July 2, 2000,  and the adoption of this standard did
not have an impact on its consolidated financial position, results of operations
or cash flows.


<PAGE>12


PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

                  None.

ITEM 2.  CHANGES IN SECURITIES

                  None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

                  None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                  The  Company's  Annual  Meeting  of  Shareholders  was held on
                  December 7, 2000. The Company received proxies from holders of
                  11,273,333  shares  of  the  Company's  common  stock,   which
                  constituted  more than a  majority  of all  shares  issued and
                  outstanding  (12,240,865  shares) at the close of  business on
                  September 29, 2000. The holders of at least 10,099,243  shares
                  of common  stock voted for the election of Abbey J. Butler and
                  Melvyn  J.  Estrin as  directors  of the  Corporation  to hold
                  office for three years until the 2003 Annual Meeting and until
                  their successors are duly elected and qualified or until their
                  resignation or removal.

                  The second proposal was for an amendment to the Phar-Mor, Inc.
                  1995 Stock  Incentive  Plan to  increase  the number of shares
                  available under the plan from 3.85 million to 5.0 million. The
                  proposal  passed  as  follows:   5,674,065  shares  in  favor;
                  1,501,975 shares against; and 660,992 shares abstaining.

                  The  third  proposal  was for the  appointment  of the firm of
                  Deloitte  &  Touche  LLP  to  be  the  Company's   independent
                  accountants  for the fiscal  year ending  June 30,  2001.  The
                  proposal passed as follows: 11,172,792 shares in favor; 66,196
                  shares against; and 34,345 shares abstaining.

ITEM 5.  OTHER INFORMATION

                  None.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits

                  See Exhibit Index on page 14.

         (b)      Reports on Form 8-K

                  The  following  reports  on  Form  8-K  were  filed  with  the
                  Securities  and Exchange  Commission  during the quarter ended
                  December 30, 2000

          Date of Report       Date of Filing       Description
          November 16, 2000    November 20, 2000    Entered into a $150 million
                                                    senior secured revolving
                                                    credit agreement with
                                                    Fleet Retail Finance, Inc.

<PAGE>13

                                   SIGNATURES



Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.




                                           PHAR-MOR, INC.


Date:  February 9, 2001                by:   /s/ Martin S. Seekely
                                          ------------------------
                                                 Martin S. Seekely
                                                 Vice President and Chief
                                                   Financial Officer



Date:  February 9, 2001                by:   /s/ John R. Ficarro
                                          ----------------------
                                                 John R. Ficarro
                                                 Senior Vice President and Chief
                                                   Administrative Officer


<PAGE>14


                                 PHAR-MOR, INC.

                                INDEX TO EXHIBITS


Exhibit No.

*3.1              Amended and Restated Articles of Incorporation

**3.2             Amended and Restated By-laws

*4.1              Indenture dated  September 11, 1995 between Phar-Mor, Inc. and
                  IBJ Schroder Bank & Trust Company

*4.2              Warrant  Agreement  dated September 11, 1995 between Phar-Mor,
                  Inc. and Society National Bank

10.1              Loan and Security Agreement, dated as of November 16, 2000, by
                  and among the financial institutions listed on  the  signature
                  pages  therein,  Fleet  Retail  Finance,  Inc.,  as agent, and
                  Phar-Mor,  Inc.,  Phar-Mor,  Inc., LLC,  Phar-Mor of Delaware,
                  Inc., Phar-Mor of  Florida,  Inc.,  Phar-Mor  of  Ohio,  Inc.,
                  Phar-Mor of Virginia,  Inc.,  Phar-Mor  of Wisconsin, Inc. and
                  Pharmhouse Corp.

--------------------------------------------------------------------------------
*        Previously filed in connection with the filing of Phar-Mor's  Form  10,
         on October 23, 1995

**       Previously filed in connection with the filing of Phar-Mor's  quarterly
         report on Form 10-Q, on May 1, 1998