UNITED STATES
                       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 June 30, 2001

                                       OR

[ ]  TRANSITION  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
     EXCHANGE ACT OF 1934

                  For the transition period from______to______

                        Commission File Number 000-27437

                               PLANETRX.COM, INC.
             (Exact name of registrant as specified in its charter)

               Delaware                                      94-3227733
     (State or other jurisdiction                        (I.R.S. Employer
   of incorporation or organization)                    Identification No.)

                             6399 Shelby View Drive
                            Memphis, Tennessee 38134
                    (Address of principal executive offices)

       Registrant's telephone number, including area code: (901) 379-2200
                                                           --------------

Indicate by check mark whether the Registrant (1) has filed all reports required
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 the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.



         Class                              Outstanding at July 31, 2001

         Common Stock, $0.0001 par value           6,119,115





<PAGE>



                               PLANETRX.COM, INC.

                                Table of Contents



PART I.        FINANCIAL INFORMATION

Item 1.        Condensed Financial Statements

               Condensed Balance Sheets at June 30, 2001
               (unaudited) and December 31, 2000

               Condensed  Statements of Operations  for the Three Months and Six
               Months Ended June 30, 2001 and 2000 (unaudited)

               Condensed  Statements of Cash Flows for the Six Months Ended June
               30, 2001 and 2000 (unaudited)

               Notes to Condensed Financial Statements

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

Item 3.        Quantitative and Qualitative Disclosures About Market
               Risk

PART II.       OTHER INFORMATION

Item 1.        Legal Proceedings

Item 2.        Changes in Securities and Use of Proceeds

Item 3.        Defaults Upon Senior Securities

Item 4.        Submission of Matters to a Vote of Security Holders

Item 5.        Other Information

Item 6.        Exhibits, Financial Statement Schedules, and Reports on
               Form 8-K

Signatures



<PAGE>




PART I
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>

                               PLANETRX.COM, INC.
                            Condensed Balance Sheets
              (unaudited, in thousands, except per share amounts)



                                                                         June 30,         December 31,
                                                                            2001                  2000
                                                                     -----------          ------------
<S>                                                                  <C>                   <C>
ASSETS
Current assets:
     Cash and cash equivalents                                       $     1,095           $     8,700
     Accounts receivable, net                                                 27                 1,887
     Inventories                                                              --                 1,557
     Prepaid expenses and other current assets                               454                 1,219
                                                                     -----------           -----------
         Total current assets                                              1,576                13,363
     Property and equipment, held for sale                                   272                 6,633
     Intangible assets, held for sale                                        169                   515
     Other assets                                                             --                   631
                                                                     -----------           -----------
                                                                     $     2,017           $    21,142
                                                                     ===========           ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable                                                $       354           $     1,752
     Accrued expenses                                                          3                   787
     Accrued restructuring charges                                           179                   179
     Borrowings, current                                                     618                 6,496
     Capital lease obligations, current                                       --                 2,072
                                                                     -----------           -----------
         Total liabilities                                                 1,154                11,286

Commitments and contingencies

Stockholders' equity:
     Preferred Stock: issuable in series, $0.0001 par value;
         5,000 shares authorized; none issued and
         outstanding                                                          --                    --
     Common Stock: $0.0001 par value; 200,000 shares
         authorized; 6,119 and 6,157 shares issued and
         outstanding, respectively                                            --                    --
     Additional paid-in capital                                          427,672               430,690
     Deferred stock-based compensation                                    (1,829)               (5,888)
     Accumulated deficit                                                (424,980)             (414,946)
                                                                     -----------            -----------
         Total stockholders' equity                                          863                 9,856
                                                                     -----------            -----------
                                                                     $     2,017           $    21,142
                                                                     ===========            ===========
</TABLE>


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


<PAGE>

<TABLE>
<CAPTION>

                               PLANETRX.COM, INC.
                       Condensed Statements of Operations
               (unaudited, in thousands except per share amounts)



                                                 Three Months Ended                   Six Months Ended
                                                      June 30,                              June 30,
                                              -----------------------------     -----------------------------
                                                 2001               2000               2001          2000
                                              -----------------------------     -----------------------------
Net revenue:
<S>                                         <C>                 <C>                   <C>           <C>
      e-commerce                            $      --           $   8,132             $3,957        $15,945
      Sponsorship                                  40               1,303              1,783          2,263
                                             ---------           ---------          ---------      ---------
                                                   40               9,435              5,740         18,208
                                             ---------           ---------          ---------      ---------
Cost of net revenue:
      e-commerce                                    1               6,980              4,039         13,383
      Sponsorship                                  --                 209                 --            365
                                             ---------           ---------          ---------     ---------
                                                    1               7,189              4,039         13,748
                                             ---------           ---------          ---------     ---------
Gross profit                                       39               2,246              1,701          4,460
                                             ---------           ---------          ---------     ---------
Operating expenses:
      Marketing and sales                          --              14,538                513         38,132
      Shipping, handling and related costs         --               6,945              3,594         12,897
      Product development                          --               5,217              1,335         11,812
      General and administrative                2,625               2,532              4,420          4,859
      Amortization of intangible assets            --              10,215                 --         20,430
      Stock-based compensation                    430               2,861              1,119          7,129
      Contract restructuring and severance
       charge                                      --               4,466                 --          4,466
      Impairment loss                             141                  --              2,332             --
                                             ---------           ---------          ---------     ---------
             Total operating expenses           3,196              46,774             13,313         99,725
                                             ---------           ---------          ---------     ---------
Operating loss                                 (3,157)            (44,528)           (11,612)       (95,265)
Other income                                      137                  --              2,025             --
Interest income                                    --                 865                124          2,181
Interest expense                                 (345)               (250)              (571)          (465)
                                             ---------           ---------          ---------      ---------

Net loss available to common
 stockholders                               $  (3,365)          $ (43,913)         $ (10,034)     $ (93,549)
                                             =========           =========          =========      =========

Basic and diluted net loss per share        $   (0.55)          $   (7.33)        $   (1.64)      $  (15.74)
                                             =========           =========          =========      =========

Weighted average shares used to
 compute basic and diluted net
 loss per share                                 6,121               5,991              6,120          5,944
                                             =========           =========          =========      =========
</TABLE>


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



<PAGE>
<TABLE>
<CAPTION>

                               PLANETRX.COM, INC.
                       Condensed Statements of Cash Flows
                            (unaudited, in thousands)



                                                                        Six Months Ended
                                                                             June 30,
                                                                  ---------           ----------
                                                                      2001                2000
                                                                  ---------           ----------

CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                              <C>                  <C>
     Net loss                                                    $  (10,034)          $  (93,549)
     Adjustments to reconcile net loss to net cash
      used in operating activities:
          Depreciation and amortization                               1,860                2,676
          Stock-based compensation                                    1,119                7,129
          Amortization of intangible assets                              --               20,430
          Impairment loss                                             2,332                   --
          Gain on sale of intangible assets                          (2,025)                  --
          Changes in assets and liabilities:
               Accounts receivable                                    1,860                   --
               Inventories                                            1,557                 (691)
               Prepaid expenses and other current                       765                2,984
                Assets
               Other assets                                             631                  180
               Accounts payable                                      (1,398)                 874
               Accrued expenses and restructuring charges              (784)               2,951
               Deferred revenue                                          --                    8
                                                                  ---------           ----------
                     Net cash used in operating
                      activities                                    (4,117)              (57,008)
                                                                  ---------           ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchases of property and equipment                                --               (11,216)
     Sale of property and equipment                                  2,169                    --
     Sales of short-term investments                                    --                65,119
     Proceeds from sale of intangible assets                         2,371                    --
                                                                 ---------            ----------
                     Net cash provided by investing activities       4,540                53,903
                                                                 ---------            ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Repurchase of unvested Common Stock Options                       (78)                 (336)
     Proceeds from issuance of Common Stock                             --                   468
     Proceeds from notes payable and equipment
      financing                                                         --                 2,000
     Principal payments on capital lease obligations                (2,072)                  (48)
     Principal payments on borrowings                               (5,878)                   --
                                                                  ---------           ----------
                     Net cash (used in) provided by financing
                      activities                                    (8,028)               2,084
                                                                  ---------           ----------

(Decrease) increase in cash and cash equivalents                    (7,605)              (1,021)
Cash and cash equivalents at beginning of period                     8,700               51,629
                                                                  ---------           ----------
Cash and cash equivalents at end of period                       $   1,095           $   50,608
                                                                  =========           ==========
</TABLE>


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





<PAGE>
                               PLANETRX.COM, INC.
                     Notes to Condensed Financial Statements
                                   (unaudited)

Note 1--The Company and Basis of Presentation

The Company

     PlanetRx.com,  Inc.  ("PlanetRx" or the  "Company"),  was  incorporated  in
Delaware on March 31, 1995 and was in the development stage through December 31,
1998.  Until March 12, 2001, when we closed our online store, the Company was an
online healthcare destination for commerce,  content and community. As discussed
in Note 6 to these financial  statements,  on April 5, 2001, the Company's Board
of  Directors  approved  the  preparation  of a formal plan of  liquidation  and
dissolution,  and since that time  management  has been exploring and evaluating
various strategic options for PlanetRx.com.

     The  accompanying  unaudited  condensed  financial  statements  reflect all
adjustments,  which,  in the opinion of  management,  are necessary for the fair
statement of the results of  operations  for the periods  shown.  The results of
operations for such periods are not necessarily  indicative of the results to be
expected  for  the  full  fiscal  year or any  future  period.  These  financial
statements  should be read in  conjunction  with the Company's  annual report on
Form 10-K for its fiscal year ended December 31, 2000.

Recent accounting pronouncements

     In May 2000, the Emerging Issues Task Force released Issue No. 00-14 ("EITF
00-14"),  "Accounting  for  Certain  Sales  Incentives",   which  addressed  the
recognition,   measurement,   and  income  statement  classification  for  sales
incentives offered  voluntarily without charge to customers that can be used in,
or that  are  exercisable  by a  customer  as a result  of,  a  single  exchange
transaction.  The Company adopted the pronouncement in the second quarter ending
June 30, 2001.

Note 2 - Liquidity

     The  Company  has  sustained  losses  since  inception  of $425.0  million.
Additionally,   the  Company  expects  to  continue  to  incur  losses  for  the
foreseeable future.

     The Company ceased retail  operations  effective March 12, 2001. Given that
the Company does not  anticipate  having any future  business  operations,  this
raises  substantial  doubt  about the  Company's  ability to continue as a going
concern.  Consequently,  the  Company  has  proposed  to  liquidate  its assets.
Management's plans in regards to the proposed  liquidation are discussed in Note
6 to these financial statements.

Note 3 - Impairment of Long-Lived Assets

     Based upon the rapid changes in business  conditions,  its expected  future
cash  flows,  and the  proposed  disposal  plan  for  its  assets,  the  Company
determined  an  impairment  of its fixed  assets had  occurred.  Therefore,  the
Company  wrote down fixed  assets of  approximately  $141,000  during the second
quarter of 2001, $2.2 million during the first quarter of 2001, and $8.0 million
during the fourth quarter ending December 31, 2000.  After the impairment  loss,
the Company's net book value of fixed assets  approximated  $272,000 at June 30,
2001. The fixed assets were written down to their estimated net realizable value
and are currently classified as held for sale.

Note 4--Balance Sheet Components (in thousands)
<TABLE>
<CAPTION>

                                                                        June 30,           December 31,
                                                                          2001                  2000
         Property and equipment:                                       ---------           ------------
<S>                                                                       <C>              <C>
         Computer equipment and software                                  $  102           $  6,941
         Warehouse equipment                                                 401              3,472
         Equipment under capital leases                                        -              2,318
         Furniture and fixtures                                               20                539
         Leasehold improvements                                                -                959
                                                                        --------           --------
                                                                             523             14,229
         Less:  Accumulated depreciation and amortization                   (251)            (7,596)
                                                                        --------           --------
                                                                          $  272           $  6,633
                                                                        ========           ========

                                                                        June 30,           December 31,
                                                                          2001                 2000
         Prepaid expenses and other current assets:                    ---------           ------------

         Prepaid business liability insurance                           $    300           $    582
         Short-term deposits                                                 154                 15
         Other                                                                --                622
                                                                        --------           --------
                                                                             454              1,219
                                                                        ========           ========
</TABLE>



Note 5--Net loss per share

     Basic net loss per share is computed by dividing the net loss  available to
common  stockholders  for the period by the weighted average number of shares of
common  stock  outstanding  during  the  period.  Diluted  net loss per share is
computed  using  the  weighted  average  number  of  common  shares  and  common
equivalent  shares  if  dilutive.   Common  equivalent  shares  consist  of  the
incremental common shares subject to issuance upon conversion of the convertible
preferred  stock (using the  if-converted  method) and shares  issuable upon the
exercise of stock options and warrants  (using the treasury stock  method),  and
the common shares outstanding subject to repurchase. The periods presented below
exclude  common  equivalent  shares as the  effect of such  shares on a weighted
average basis is anti-dilutive.

     The  following  table sets forth the  computation  of basic and diluted net
loss per  share  for the  periods  indicated  (in  thousands,  except  per share
amounts):
<TABLE>
<CAPTION>

                                                    Three Months Ended                 Six Months Ended
                                                         June 30,                          June 30,
                                                ------------------------------    ------------------------------
                                                 2001                2000               2001                2000
                                                ---------          ----------      ---------          ----------

Numerator:
<S>                                            <C>                 <C>            <C>                <C>
  Net loss available to common shareholders    $  (3,365)          $  (43,913)    $  (10,034)        $  (93,549)

Denominator:
  Weighted average common shares                   6,122                 6,486         6,135              6,501
  Weighted average unvested common shares
    subject to repurchase                             (1)                (495)           (15)              (557)
                                               ---------           ----------      ---------          ----------
  Denominator for basic and diluted
    calculation                                    6,121                5,991          6,120              5,944
                                               =========           ==========      =========          ==========
Net loss per share:
  Basic and diluted                            $   (0.55)          $    (7.33)    $    (1.64)         $  (15.74)
                                               =========           ==========      =========          ==========
</TABLE>


NOTE 6 - Liquidation Plan

     On April 5, 2001, the Company's Board of Directors approved the preparation
of a formal plan of liquidation and dissolution (the "Plan") for the Company. At
that time,  management  expected  to submit the Plan to the  Company's  Board of
Directors and its  stockholders  for approval in the second  quarter of 2001. In
the interim,  however,  management  has been  exploring and  evaluating  various
strategic options for the Company.  The Company currently is not engaging in any
business activities except for the purpose of preserving the value of its assets
and  prosecuting  or  defending  lawsuits  by or  against  it.  If its  Board of
Directors  ultimately  determines  that the Plan should be  adopted,  and if its
stockholders  approve  the Plan,  the  Company  anticipates  that it will file a
certificate of dissolution with the Secretary of State of Delaware,  wind up its
business  affairs,  sell and liquidate its properties and assets,  including its
intellectual  property and other intangible  assets, and to the extent possible,
pay its creditors and make  distributions to stockholders in accordance with the
Plan. In conjunction with the proposed liquidation,  the Company has taken steps
to sublease and/or negotiate  cancellations of its operating leases.  Due to the
uncertainty of such steps,  the Company is unable to estimate which amounts,  if
any, will be paid under outstanding commitments. There can be no assurances that
the Company will be able to recover the reported value of its assets at June 30,
2001.


Note 7 - Borrowings

     In July 2001, the Company reached a settlement with Comdisco,  Inc.,  which
had notified the Company in March 2001 that events of default had occurred under
the Subordinated  Loan and Security  Agreement dated as of January 15, 1999 (the
"Loan Agreement"), pursuant to which the Company borrowed the original principal
amount of $7,000,000 secured by a lien on all of its personal property,  and the
Master  Lease  Agreement  dated as of January 15, 1999 (the "Lease  Agreement"),
pursuant to which it leases equipment from Comdisco.  The Company  inadvertently
failed to make its monthly  payments of principal  and  interest  under the Loan
Agreement and rent under the Lease Agreement for February 2001, and as a result,
Comdisco declared that an event of default had occurred under the Loan Agreement
and,  by  way of  such  default,  under  the  Lease  Agreement  pursuant  to its
cross-default  provision. The notice from Comdisco also advised that the secured
obligations  under the Loan Agreement and obligation to pay rent under the Lease
Agreement  were  accelerated,  that  Comdisco's  obligation to lease  additional
equipment  to the Company  under the Lease  Agreement  was  cancelled,  that the
Company's  use of  cash  collateral  (as  defined  in the  Loan  Agreement)  was
restricted,  and that its  ability to sell  collateral  (as  defined in the Loan
Agreement)  was  restricted.   Comdisco   demanded   immediate  payment  of  the
obligations due and owing under the Loan and Lease  Agreements and return of the
leased equipment. Comdisco also gave notice of its intent to foreclose under its
security interest.

     The Company made the February  payments  totaling  $102,902.50  on April 3,
2001,  and requested  that  Comdisco  waive the events of default under the Loan
Agreement  and the Lease  Agreement  and  reinstate  both  agreements.  Comdisco
ultimately  agreed  to waive the  events  of  default  if (a) the  Company  paid
Comdisco  $6,100,000 (which it paid on April 9, 2001),  which was applied first,
to pay all outstanding  obligations  under the Lease Agreement,  and then toward
repayment of the Loan  Agreement,  and (b) the Company  agreed to terms amending
the Loan  Agreement,  which  involved,  among other things,  an additional  $1.4
million  principal  payment toward the Loan Agreement (which was made during the
second quarter of 2001) and a discounted payoff amount of $442,000.

Note 8 - Contingencies

     On March 27, 2001, SDR Investors,  LP filed a lawsuit  against the Company,
certain  underwriters  of the Company's  initial public offering in October 1999
(the "IPO"),  and certain former and current directors of the Company.  Named as
additional defendants in the suit, which was filed in the United States District
Court for the Southern District of New York, are The Goldman Sachs Group,  Inc.,
BancBoston  Robertson  Stephens,  Inc., Merrill Lynch,  Pierce,  Fenner & Smith,
Incorporated,  and Salomon Smith Barney,  Inc., each of which was an underwriter
of the IPO; and William J. Razzouk,  Christos M.  Cotsakos,  David M. Beirne and
Michael  Moritz who are former  directors  of the  Company.  The suit  generally
alleges that the defendants  violated federal  securities laws by not disclosing
certain actions allegedly taken by the underwriter defendants in connection with
the IPO. The suit  alleges  specifically  that the  underwriter  defendants,  in
exchange for the allocation to their customers of shares of the Company's common
stock sold in the IPO,  solicited and received from their customers  undisclosed
commissions on transactions in other  securities and required their customers to
purchase  additional  shares of the Company's common stock in the aftermarket at
pre-determined  prices that were above the IPO price. The suit seeks unspecified
monetary  damages and  certification  of a  plaintiff  class  consisting  of all
persons who acquired  shares of the Company's  common stock  between  October 6,
1999,  and March 23, 2001.  The Company is in the process of reviewing  the suit
and intends to respond in a timely manner. As of the date hereof, the Company is
unable to predict the outcome of the suit and its  ultimate  effect,  if any, on
the Company's financial condition.

Note 9 - Intangible Assets

     Based upon the rapid changes in business conditions and its expected future
cash flows,  the Company  determined an impairment of certain of its domain name
assets  had  occurred.  Therefore,  the  Company  wrote down  intangible  assets
associated  with these domain names of $425,000 during the fourth quarter ending
December 31, 2000.

     Additionally,  as  part of  management's  plan to  liquidate  the  company,
PlanetRx.com  began to sell domain name assets during the first quarter of 2001.
Associated with the sale of these assets,  the Company  recorded other income of
approximately $2.0 million for the six months ended June 30, 2001.



ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     THIS  REPORT  CONTAINS  FORWARD-LOOKING  STATEMENTS  WITHIN THE  MEANING OF
SECTION 21E OF THE  SECURITIES  AND  EXCHANGE  ACT OF 1934,  AS  AMENDED.  THESE
INCLUDE,   BUT  ARE  NOT  LIMITED  TO   STATEMENTS   CONCERNING   PLANETRX.COM'S
EXPECTATIONS,  BELIEFS,  INTENTIONS,  PLANS,  GOALS OR STRATEGIES  REGARDING THE
FUTURE. ALL FORWARD-LOOKING  STATEMENTS INCLUDED IN THIS DOCUMENT ARE BASED UPON
INFORMATION  AVAILABLE TO PLANETRX.COM AS OF THE DATE HEREOF,  AND  PLANETRX.COM
ASSUMES  NO   OBLIGATION   TO  UPDATE  ANY  SUCH   FORWARD-LOOKING   STATEMENTS.
FORWARD-LOOKING  STATEMENTS  INVOLVE RISKS AND  UNCERTAINTIES  WHICH COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED. THESE INCLUDE, BUT ARE
NOT LIMITED TO, THE RISKS NORMALLY  ASSOCIATED WITH A MAJOR CHANGE IN FOCUS OF A
BUSINESS,  CHANGES IN ECONOMIC  AND MARKET  CONDITIONS  AFFECTING  PLANETRX.COM,
CHANGES IN AVAILABILITY OF CAPITAL TO  PLANETRX.COM,  THIRD-PARTY  RELATIONSHIPS
AND  APPROVALS,   DECISIONS  OF  COURTS,  REGULATORS  AND  GOVERNMENTAL  BODIES,
COMPETITIVE  CONDITIONS,  AND OTHER FACTORS OR RISKS RELATING TO  PLANETRX.COM'S
BUSINESS AS SET FORTH IN THIS DOCUMENT AND THE  COMPANY'S  ANNUAL REPORT ON FORM
10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000, INCLUDING (WITHOUT LIMITATION)
UNDER THE CAPTIONS "COMPETITION,"  "GOVERNMENT  REGULATIONS," "RISK FACTORS" AND
"ADDITIONAL  FACTORS THAT MAY AFFECT FUTURE  RESULTS".  NOTHING CAN OR SHOULD BE
INFERRED  ABOUT  PLANETRX.COM'S  FUTURE  REVENUES OR FINANCIAL  RESULTS FROM THE
FORWARD-LOOKING STATEMENTS CONTAINED IN THIS DOCUMENT.

Decision to Liquidate

     On April 5, 2001,  our Board of  Directors  approved the  preparation  of a
formal plan of liquidation and dissolution ("the Plan") for the Company. At that
time,  we  expected  to submit  the Plan to our Board and our  stockholders  for
approval in the second  quarter of 2001. In the interim,  however,  we have been
exploring and evaluating various strategic options for PlanetRx.com.  We are not
engaged in any  business  activities  except for the purpose of  preserving  the
value of our assets and prosecuting and defending  lawsuits by or against us. If
our Board of Directors  ultimately  determines  that the Plan should be adopted,
and if our  stockholders  approve the Plan,  we  anticipate  that we will file a
certificate of dissolution with the Secretary of State of Delaware,  wind up our
business  affairs,  sell and liquidate our properties and assets,  including our
intellectual  property and other intangible  assets, and to the extent possible,
pay our creditors and make distributions to stockholders, all in accordance with
the Plan.

Overview

     Until  March  12,  2001,  PlanetRx.com  was  a  leading  online  healthcare
destination  for  commerce,  content  and  community.  Our  e-commerce  website,
www.PlanetRx.com,  which we launched on March 18, 1999,  provided a  convenient,
private  and  informative  shopping  experience  for  health and  personal  care
products.  On February 12, 2001, we stopped accepting new prescriptions,  and on
March 12, 2001, we closed our online store.  For a description  of the nature of
our  business  and  the  general  characteristics  of our  operations,  see  the
"Overview"  section  of  Management's   Discussion  and  Analysis  of  Financial
Condition and Results of Operations  presented in our Annual Report on Form 10-K
for the year ended December 31, 2000, as updated in our Quarterly Report on Form
10-Q for the quarter ended March 31, 2001.

     Based upon the rapid changes in business  conditions,  its expected  future
cash  flows,  and the  proposed  disposal  plan  for  its  assets,  the  Company
determined  an  impairment  of its fixed  assets had  occurred.  Therefore,  the
Company wrote down fixed assets of  approximately  $2.3 million during the first
six months of 2001 and $8.0 million during the fourth  quarter  ending  December
31, 2000.  After the  impairment  loss,  the  Company's  net book value of fixed
assets  approximated  $272,000 at June 30,  2001.  The fixed assets were written
down to their net  realizable  value and are  currently  classified  as held for
sale.

     On March 30, 2001,  Comdisco,  Inc.  notified us that events of default had
occurred under the Subordinated Loan and Security  Agreement dated as of January
15,  2001,  pursuant  to which we  borrowed  the  original  principal  amount of
$7,000,000  secured by a lien on all of our  personal  property,  and the Master
Lease  Agreement  dated  as of  January  15,  1999,  pursuant  to which we lease
equipment  from Comdisco.  In July 2001, we reached a settlement  agreement with
Comdisco  which  cured  these  events of  default.  See  "Liquidity  and Capital
Resources - Events of Default  Under Loan  Agreement  and Lease  Agreement  with
Comdisco" in this Item 2.

     On March 27, 2001, SDR Investors,  LP filed a lawsuit  against the Company,
certain  underwriters  of the Company's  initial public offering in October 1999
(the "IPO"),  and certain former and current directors of the Company.  Named as
additional defendants in the suit, which was filed in the United States District
Court for the Southern District of New York, are The Goldman Sachs Group,  Inc.,
BancBoston  Robertson  Stephens,  Inc., Merrill Lynch,  Pierce,  Fenner & Smith,
Incorporated,  and Salomon Smith Barney,  Inc., each of which was an underwriter
of the IPO; and William J. Razzouk,  Christos M.  Cotsakos,  David M. Beirne and
Michael  Moritz,  who are former  directors of the Company.  The suit  generally
alleges that the defendants  violated federal  securities laws by not disclosing
certain actions allegedly taken by the underwriter defendants in connection with
the IPO. The suit  alleges  specifically  that the  underwriter  defendants,  in
exchange for the allocation to their customers of shares of the Company's common
stock sold in the IPO,  solicited and received from their customers  undisclosed
commissions on transactions in other  securities and required their customers to
purchase  additional  shares of the Company's common stock in the aftermarket at
pre-determined  prices that were above the IPO price. The suit seeks unspecified
monetary  damages and  certification  of a  plaintiff  class  consisting  of all
persons who acquired  shares of the Company's  common stock  between  October 6,
1999,  and March 23, 2001.  The Company is in the process of reviewing  the suit
and intends to respond in a timely manner.  As of the date hereof, we are unable
to predict  the  outcome of the suit and its  ultimate  effect,  if any,  on the
Company's financial condition.

     Based upon the rapid changes in business conditions and its expected future
cash flows,  the Company  determined an impairment of certain of its domain name
assets  had  occurred.  Therefore,  the  Company  wrote down  intangible  assets
associated  with these domain names of $425,000 during the fourth quarter ending
December 31, 2000.  Additionally,  as part of management's plan to liquidate the
company,  PlanetRx.com began to sell domain name assets during the first quarter
of 2001.  Associated with the sale of these assets,  the Company  recorded other
income of approximately $2.1 million for the six months ended June 30, 2001.

Results of Operations

     The following table sets forth unaudited  quarterly statement of operations
data  for the five  quarters  ended  June 30,  2001.  This  unaudited  quarterly
information  has  been  derived  from our  unaudited  financial  statements  and
reflects all adjustments, which, in the opinion of management, are necessary for
the fair  presentation  of the results of operations for the periods shown.  The
results of  operations  for such periods are not  necessarily  indicative of the
results to be expected for the full fiscal year or any future period.
<PAGE>
<TABLE>
<CAPTION>
                               PlanetRx.com, Inc.
                    Condensed Quarterly Results of Operations
                            (unaudited, in thousands)



                                                                                 Quarter Ended
                                                     --------------------------------------------------------------------------
                                                     June 30,        March 31,     December 31,   September 30,     June 30,
                                                        2001            2001           2000          2000            2000
                                                     --------------------------------------------------------------------------
Net revenue:
<S>                                                  <C>          <C>            <C>             <C>           <C>
    e-commerce                                       $    --      $    3,957     $    6,440      $  9,078      $    8,132
    Sponsorship                                            40          1,743          1,575           864           1,303
                                                   ----------     ----------     ----------    ----------      ----------
                                                           40          5,700          8,015         9,942           9,435
Cost of net revenue:
    e-commerce                                              1          4,038          5,937         7,903           6,980
    Sponsorship                                            --             --             --             8             209
                                                   ----------     ----------     ----------    ----------      ----------
                                                            1          4,038          5,937         7,911           7,189
                                                   ----------     ----------     ----------    ----------      ----------
Gross profit                                               39          1,662          2,078         2,031           2,246
Operating expenses:
    Marketing and sales                                    --            513          3,524         7,633          14,538
    Shipping, handling and related costs                   --          3,594          5,058         6,519           6,945
    Product development                                    --          1,335          2,332         4,117           5,217
    General and administrative                          2,625          1,795          2,027         4,513           2,532
    Amortization of intangible assets                      --             --         10,215        10,215          10,215
    Stock-based compensation                              430            689         (1,188)          389           2,861
    Contract termination and
      severance charges                                    --             --             --            --           4,466
    Restructuring charges                                  --             --            762         2,975              --
    Impairment loss                                       141          2,191        163,712            --              --
                                                   ----------     ----------     ----------    ----------      ----------
            Total operating expenses                    3,196         10,117        186,442        36,361          46,774
                                                   ----------     ----------     ----------    ----------      ----------
Operating loss                                         (3,157)        (8,455)      (184,364)      (34,330)        (44,528)
Other income                                              137          1,888             --
Interest income (expense), net                           (345)           142            283           290             615
                                                   ----------     ----------     ----------    ----------      ----------
Net loss                                           $   (3,365)    $   (6,669)    $ (184,081)     $(34,040)     $  (43,913)
                                                   ==========     ==========     ==========    ==========      ==========
</TABLE>

Net Revenue

     Net  revenues  were  approximately  $40,000 and $9.4  million for the three
months  ended and $5.7  million and $18.2  million for the six months ended June
30, 2001 and 2000, respectively. E-commerce revenues were $4.0 million and $15.9
million  for  the six  months  ended  June  30,  2001  and  2000,  respectively.
Sponsorship revenues were $1.8 million and $2.3 million for the six months ended
June 30, 2001 and 2000, respectively.

Cost of Net Revenue

     Cost of revenues were  approximately  $1,000 and $7.2 million for the three
months  ended June 30, 2001 and 2000,  respectively  and $4.0  million and $13.7
million for the six months ended June 30, 2001 and 2000, respectively.

Operating Expenses

     Marketing  and Sales.  For the three months ended June 30, 2001,  marketing
and sales  expense was zero as compared  to $14.5  million for the three  months
ended June 30, 2000. For the six months ended June 30, 2001, marketing and sales
expense was  approximately  $513,000  as  compared to $38.1  million for the six
months ended June 30, 2000.  The decrease is due primarily to costs  relating to
the absence of marketing  and  promotional  campaigns  and  decreased  headcount
associated with the closure of retail operations.

     Shipping,  Handling and Related Costs.  For the three months ended June 30,
2001, shipping, handling and related costs were zero as compared to $6.9 million
for the three  months  ended June 30,  2000.  For the six months  ended June 30,
2001,  shipping,  handling  and related  costs were $3.6  million as compared to
$12.9  million for the six months ended June 30, 2000.  This decrease is due the
closure of retail operations.

     Product  Development.  For the three months  ended June 30,  2001,  product
development  expense was zero as compared to $5.2  million for the three  months
ended June 30, 2000. For the six months ended June 30, 2001, product development
expense was $1.3  million as compared to $11.8  million for the six months ended
June 30, 2000.  This decrease is related to the closure of our retail stores and
the related decline in maintenance of our websites and internal.

     General  and  Administrative.  For the three  months  ended June 30,  2001,
general  and  administrative  expenses  were $2.6  million as  compared  to $2.5
million for three months ended June 30, 2000.  For the six months ended June 30,
2001, general and administrative  expenses were $4.4 million as compared to $4.9
million for three months ended June 30, 2000.

     Stock-Based Compensation. We recorded the recapture of deferred stock-based
compensation of approximately  $940,000 for three months ended June 30, 2001, in
connection  with stock  options  forfeited  during the period.  Our  stock-based
compensation  expense,  net totaled $430,000 for the three months ended June 30,
2001 as compared to $2.8 million for the three  months ended June 30, 2000.  The
remaining deferred stock compensation balance of approximately $1.8 million will
be amortized through 2004.

     Interest  Income and Expense.  Interest  income consists of earnings on our
cash, cash equivalents,  and marketable securities and interest expense consists
of interest  associated  with our notes payable,  borrowings,  and capital lease
obligations.  Interest  income,  net of interest  expense,  for the three months
ended June 30,  2001,  decreased  over the  corresponding  period of 2000 due to
lower interest-bearing asset balances in 2001.

Liquidity and Capital Resources

     PlanetRx.com invests excess cash predominantly in debt instruments that are
highly  liquid,  of  high-quality   investment  grade,  and  predominantly  have
maturities  of less than one year with the  intent  to make such  funds  readily
available for operating  purposes.  Prior to our initial public offering,  which
closed in  October  1999 and  provided  net  proceeds  of  approximately  $101.0
million,  we  financed  our  operations   primarily  through  private  sales  of
convertible  preferred stock and common stock. At June 30, 2001, we had cash and
cash  equivalents and  investments in marketable  debt securities  totaling $1.1
million compared to $8.7 million at December 31, 2000.

     On April 5, 2001,  our Board of  Directors  approved the  preparation  of a
formal plan of liquidation and dissolution (the "Plan") for the Company. At that
time,  we  expected  to submit  the Plan to our Board and our  stockholders  for
approval in the second  quarter of 2001. In the interim,  however,  we have been
exploring and evaluating various strategic options for PlanetRx.com.  We are not
engaged in any  business  activities  except for the purpose of  preserving  the
value of our assets and  prosecuting or defending  lawsuits by or against us. If
our Board of Directors  ultimately  determines  that the Plan should be adopted,
and if our  stockholders  approve the Plan,  we  anticipate  that we will file a
certificate of dissolution with the Secretary of State of Delaware,  wind up our
business  affairs,  sell and liquidate our properties and assets,  including our
intellectual  property and other intangible  assets, and to the extent possible,
pay our creditors and make  distributions to stockholders in accordance with the
Plan. No assurance can be given that available cash and amounts  received on the
sale of assets  will be  adequate  to  provide  for the  Company's  obligations,
liabilities, expenses, and claims.

     Net cash used in  operating  activities  was $4.1  million  during  the six
months ended June 30, 2001,  primarily a result of quarterly  net losses as well
as  decreases  in  accounts  payable and accrued  expenses  partially  offset by
decreases  in accounts  receivables,  inventories,  prepaid  expenses  and other
assets and  non-cash  charges  for  depreciation,  amortization  and  impairment
losses.  Net cash used in operating  activities was approximately  $57.0 million
during the six months ended June 30, 2000,  primarily a result of quarterly  net
losses as well as increases  in  inventories,  partially  offset by decreases in
prepaid  expenses and other  assets,  increases in accounts  payable and accrued
expenses, and non-cash charges for depreciation and amortization.

     Net cash provided by investing  activities was  approximately  $4.5 million
during the six months ended June 30, 2001, primarily consisting of proceeds from
the sale of intangible  assets and property and equipment.  Net cash provided by
investing activities was approximately $53.9 million during the six months ended
June  30,  2000,  primarily  consisting  of the sale of  short-term  investments
partially offset by the acquisition of equipment and systems, including computer
equipment and fixtures and furniture.

     Net cash used in financing activities was approximately $8.0 million during
the six months ended June 30, 2001 and primarily consisted of principal payments
on  borrowings  and capital  lease  obligations  and the  repurchase of unvested
Common  Stock   options.   Net  cash  provided  by  financing   activities   was
approximately $2.1 million during the six months ended June 30, 2000,  primarily
consisted of net proceeds from equipment financing.

     As of June 30, 2000,  our principal  commitments  consisted of  obligations
outstanding under operating leases  aggregating  approximately  $550,000 through
2005.

Events of Default under Loan Agreement and Lease Agreement with Comdisco

     In July 2001,  we  reached a  settlement  with  Comdisco,  Inc.,  which had
notified  us in March  2001  that  events  of  default  had  occurred  under the
Subordinated Loan and Security Agreement dated as of January 15, 2001 (the "Loan
Agreement"),  pursuant to which we borrowed  the  original  principal  amount of
$7,000,000  secured by a lien on all of our  personal  property,  and the Master
Lease Agreement dated as of January 15, 1999 (the "Lease  Agreement"),  pursuant
to which we lease equipment from Comdisco.  We inadvertently  failed to make our
monthly  payments of principal  and interest  under the Loan  Agreement and rent
under the Lease Agreement for February 2001, and as a result,  Comdisco declared
that an event of default had occurred  under the Loan  Agreement  and, by way of
such default, under the Lease Agreement pursuant to its cross-default provision.
The notice from  Comdisco  also advised that the secured  obligations  under the
Loan  Agreement  and  obligation  to pay rent  under  the Lease  Agreement  were
accelerated,  that  Comdisco's  obligation to lease  additional  equipment to us
under the Lease  Agreement was  cancelled,  that our use of cash  collateral (as
defined in the Loan  Agreement)  was  restricted,  and that our  ability to sell
collateral (as defined in the Loan Agreement) was restricted.  Comdisco demanded
immediate  payment  of the  obligations  due and owing  under the Loan and Lease
Agreements and return of the leased equipment.  Comdisco also gave notice of its
intent to foreclose under its security interest.

     We made the February  payments  totaling  $102,902.50 on April 3, 2001, and
requested that Comdisco waive the events of default under the Loan Agreement and
the Lease Agreement and reinstate both agreements. Comdisco ultimately agreed to
waive the events of default if (a) we paid Comdisco $6,100,000 (which we paid on
April 9, 2001),  which was applied  first,  to pay all  outstanding  obligations
under the Lease Agreement,  and then toward repayment of the Loan Agreement, and
(b) we agreed to terms amending the Loan Agreement,  which involved, among other
things,  an  additional  payment of  principal  under the Loan  Agreement in the
approximate amount of $1.4 million,  which was made during the second quarter of
2001, and a discounted payoff amount of $442,000.

ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS

     The  factors  discussed  in  the  "Overview"  and  "Liquidity  and  Capital
Resources"  sections of this "Management's  Discussion and Analysis of Financial
Condition and Results of  Operations"  and in our annual report on Form 10-K for
our fiscal  year ended  December  31,  2000,  as filed with SEC,  may affect our
future results.  Additionally,  for a discussion of potential  risks  associated
with the  dissolution  of the  Company  (if the Plan is adopted by our Board and
approved by our stockholders),  see "Risks Relating to Proposed  Liquidation and
Dissolution"  in the "Risk  Factors"  section  of  Management's  Discussion  and
Analysis of Financial  Condition  and Results of Operations in our Annual Report
on Form 10-K for the year ended  December 31, 2000,  as updated in our Quarterly
Report on Form 10-Q for the quarter ended March 31, 2001.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We have  assessed our  vulnerability  to certain  market  risks,  including
interest rate risk associated with financial  instruments included in cash, cash
equivalents and short-term  investments.  Due to the short-term  nature of these
investments and our investment  policies and our procedures,  we have determined
that the risk  associated  with  interest  rate  fluctuations  related  to these
financial instruments does not pose a material risk to us.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     On March 27, 2001, SDR Investors,  LP filed a lawsuit against PlanetRx.com,
certain  underwriters  of the Company's  initial public offering in October 1999
(the "IPO"),  and certain former and current directors of the Company.  Named as
additional defendants in the suit, which was filed in the United States District
Court for the Southern District of New York, are The Goldman Sachs Group,  Inc.,
BancBoston  Robertson  Stephens,  Inc., Merrill Lynch,  Pierce,  Fenner & Smith,
Incorporated,  and Salomon Smith Barney,  Inc., each of which was an underwriter
of the IPO;  William J.  Razzouk,  Christos M.  Cotsakos,  David M. Beirne,  and
Michael  Moritz who are former  directors  of the  Company.  The suit  generally
alleges that the defendants  violated federal  securities laws by not disclosing
certain actions allegedly taken by the underwriter defendants in connection with
the IPO. The suit  alleges  specifically  that the  underwriter  defendants,  in
exchange for the allocation to their customers of shares of the Company's common
stock sold in the IPO,  solicited and received from their customers  undisclosed
commissions on transactions in other  securities and required their customers to
purchase  additional  shares of the Company's common stock in the aftermarket at
pre-determined  prices that were above the IPO price. The suit seeks unspecified
monetary  damages and  certification  of a  plaintiff  class  consisting  of all
persons who acquired  shares of the Company's  common stock  between  October 6,
1999,  and March 23, 2001.  The Company is in the process of reviewing  the suit
and intends to respond in a timely manner.  As of the date hereof, we are unable
to predict  the  outcome of the suit and its  ultimate  effect,  if any,  on the
Company's financial condition.

     The Company also is party to routine  legal  proceedings  incidental to its
business.  We do not expect the outcome of such routine  pending  litigation  to
have a material adverse effect on the Company's  consolidated financial position
or results of operations.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

     On March 30, 2001,  Comdisco,  Inc.  notified us that events of default had
occurred under the Subordinated Loan and Security  Agreement dated as of January
15,  2001,  pursuant  to which we  borrowed  the  original  principal  amount of
$7,000,000  secured by a lien on all of our  personal  property,  and the Master
Lease  Agreement  dated  as of  January  15,  1999,  pursuant  to which we lease
equipment  from Comdisco.  In July 2001, we reached a settlement  agreement with
Comdisco which cured these events of default.  See "Management's  Discussion and
Analysis of  Financial  Condition  and  Results of  Operations  - Liquidity  and
Capital Resources."

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

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)      Exhibits

         See Exhibit Index.

(b)      Reports on Form 8-K

     A Form 8-K was  filed by the  Company  on June 18,  2001  reporting  recent
changes in the composition of the Board of Directors of PlanetRx.com, Inc.



<PAGE>


                                   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.

                                       PLANETRX.COM, INC.
                                       (Registrant)



                                       By: /s/  Paul E. Risner
                                          -------------------------------------
                                          Paul E. Risner
                                          Vice President,
                                          General Counsel and Secretary

Date: August 15, 2001



                                  EXHIBIT INDEX




Exhibit
Number                Description
-------               -----------

2.1*         Asset Contribution and Reorganization Agreement between
             PlanetRx.com, Inc., PRX Holdings, Inc., PRX Acquisition Corp.,
             YourPharmacy.com, Inc. and Express Scripts, Inc., dated August 31,
             1999.

3.1*         Certificate of Incorporation of the registrant, as amended.

3.2*         Bylaws of the registrant

3.3****      Certificate of Amendment to Restated Certificate of Incorporation
             of the registrant.

4.1          Reference is made to Exhibits 3.1 and 3.2

4.2*         Amended and Restated Investors' Rights Agreement

4.3*         Specimen Common Stock Certificate

4.4**        Registration Rights Agreement between registrant and Alpha Venture
             Capital, Inc. dated July 25, 2000.

10.1*        Form of Indemnification Agreement.

10.2*        1999 Equity Incentive Plan.

10.3*        Employee Stock Purchase Plan.

10.4*        1999 Director Stock Option Plan.

10.5*        Form of Warrant for the purchase of Preferred Stock.

10.6*        Real Property Lease between  registrant  and Belz Devco,  LP, dated
             October 16, 1998.

10.7*        Real Property Sublease between registrant and Radar Companies,
             dated May 5, 1999.

10.8*        Real Property Sublease between registrant and Cellegy
             Pharmaceuticals, Inc., dated November 6, 1998.

10.9*        Asset Acquisition Agreement between registrant and NetHealth.com,
             Inc., dated June 30, 1999.

10.10*       Series C Preferred Stock Purchase  Agreement between registrant and
             the Investors named on Schedule thereto, dated June 3, 1999.

10.11*       Series D Preferred Stock Purchase  Agreement between registrant and
             the Investors named on Schedule thereto, dated September 3, 1999.

10.12+*      Agreement between registrant and Express Scripts, Inc., dated
             August 31, 1999.

10.13+**     Agreement between registrant and Express Scripts, Inc. dated June
             19, 2000.

10.14**      Common Stock Purchase Agreement between registrant and Alpha
             Venture Capital, Inc. dated July 25, 2000.

10.15***     Master Lease Agreement between registrant and Comdisco, Inc. dated
             January 15, 1999, Equipment Schedules VL-1 and VL-2 dated January
             20, 1999, and Addendum dated January 20, 1999.

10.16***     Subordinated  Loan and Security  Agreement  between  registrant and
             Comdisco,  Inc.  dated as of January 15, 2001. The exhibits to this
             document  have been  omitted  from this  filing.  The Company  will
             furnish,  as  supplementary  information,  copies  of  the  omitted
             materials to the Securities and Exchange Commission upon request.

10.17++      Discounted Payoff Agreement, between registrant and Comdisco, Inc.
             dated July 27, 2001.

---------------

*        Incorporated herein by reference to Form S-1 as declared effective on
         October 7, 1999 (File No. 333-82485).

**       Incorporated  herein  by  reference  to report  on Form  10-Q,  for the
         quarterly period ended June 30, 2000 filed on August 14, 2000.

***      Incorporated herein by reference to annual report on Form 10-K, for the
         fiscal year ended December 31, 2000, filed on April 17, 2001.

****     Incorporated  herein by reference  to Form 10-K/A,  for the fiscal year
         ended December 31, 2000, filed on April 30, 2001.

+        Confidential  treatment has been  requested for certain  portions which
         have  been  blacked  out in the  copy of the  exhibit  filed  with  the
         Securities and Exchange  Commission.  The omitted  information has been
         filed separately with the Securities and Exchange  Commission  pursuant
         to the application for confidential treatment.

++       Filed herewith
<PAGE>
Exhibit 10.17

                                 [Comdisco Logo]
                                 Comdisco, Inc.
                              6111 North River Road
                               Rosemont, IL 60018

July 27, 2001

VIA E-FACSIMILE

PlanetRx, Inc.                              PlanetRx, Inc.
Attention:  Todd Steele                     Attention:  Michael Beindorff
6419 Shelby View Drive                      Chairman and CEO
Suite 122                                   903 Clipper Lane
Memphis, TN  38134                          Foster, City, CA  94404

Facsimile:  901.379.2388                    Facsimile:  650.571.6276

Re:  Discounted Payoff Agreement

     Subordinated  Loan and Security  Agreement dated as of January 15, 1999, by
     and between Comdisco, Inc. and PlanetRx, Inc. (the "Loan Agreement")

     Mater Lease Agreement dated January 15, 1999, by and between Comdisco, Inc.
     and PlanetRx, Inc. (the "Lease Agreement")

Dear Mr. Beindorff and Mr. Steele:

     1. This  letter  agreement  sets  forth the terms on which  Comdisco,  Inc.
("Comdisco") is prepared to accept a discounted payoff of all of the obligations
of PlanetRx,  Inc.  ("PlanetRx")  to Comdisco  under the Loan  Agreement and the
Lease Agreement.

     2.  Subject  to and  effective  upon  Comdisco's  receipt  of  each  of the
following on or before close of business, Friday July 27, 2001:

     (a)  an original or facsimile  transmission of this letter agreement,  duly
          countersigned by PlanetRx; and

     (b)  $442,000.00 (the  "Discounted  Payoff Amount") by wire transfer as set
          forth herein,

     (clauses  (a)  and  (b)  are   collectively   referred  to  herein  as  the
     "Conditions"), then, in such event:

          (i) all of the outstanding debts, liabilities and obligations owing by
     PlanetRx to Comdisco under the Loan Agreement, the other Loan Documents (as
     defined in the Loan Agreement),  and the Lease Agreement shall be satisfied
     in full  and  PlanetRx  shall be  released  from  all  liability  therefor;
     provided,  that (A)  PlanetRx  shall  remain  obligated to Comdisco for any
     claim   thereafter   arising  with  respect  to  (I)  any  of  its  ongoing
     indemnification  obligations  under  the Loan  Agreement,  the  other  Loan
     Documents,  and the  Lease  Agreement  and (II) any  other  obligations  or
     liabilities  of PlanetRx that are expressly  provided in the Loan Agreement
     or any other Loan Document or the Lease Agreement to survive payment of the
     Secured  Obligations,  termination  of the Loan  Agreement or of PlanetRx's
     right to  request  Loans (as  defined  in the Loan  Agreement)  thereunder,
     payment of the Lease  Agreement  obligations,  or  termination of the Lease
     Agreement  or of  PlanetRx's  right to request  Comdisco  lease to PlanetRx
     additional  Equipment (as defined in the Lease  Agreement)  thereunder (the
     "Surviving  Obligations"),  and (B) if any payment by or for the account of
     PlanetRx to Comdisco shall be recovered  from, or repaid by,  Comdisco,  in
     whole or in party,  in any  bankruptcy,  insolvency  or similar  proceeding
     instituted by or against PlanetRx,  then the liability of PlanetRx shall be
     automatically reinstated;

          (ii) the financing  arrangements of Comdisco with PlanetRx pursuant to
     the Loan Agreement and the Lease Agreement shall thereupon be terminated;

          (iii)   all   liens,   security   interests,   mortgages,   and  other
     encumbrances, all of any kind, nature, or description, whenever and however
     arising, in favor of Comdisco,  on any of the assets and property,  real or
     personal,   tangible  or  intangible,   of  PlanetRx  shall   thereupon  be
     terminated;

          (iv)  Comdisco  quitclaims  to  PlanetRx  any  and  all of  Comdisco's
     interest in and title to the Equipment,  said interest being transferred on
     an "as is," and "where is" basis without  representations  or warranties of
     any kind, express or implied, including, without limitation, any warranties
     as to the merchantability or fitness of the Equipment for use or sale; and

          (v) Comdisco shall thereupon  execute and deliver to PlanetRx such UCC
     termination  statements,  releases,  reconveyances  and  other  appropriate
     documentation  reasonably requested by PlanetRx to effectuate the agreement
     in  paragraphs  (iii) and (iv) above  with  respect  to  Comdisco's  liens,
     interests,  security  interests,  mortgages and other  encumbrances  on the
     assets and properties described therein.

     2.  The  Discounted  Payoff  Amount  shall  be  made by  wire  transfer  in
immediately available funds to the following account:

                           Bank of America
                           231 S. LaSalle
                           Chicago, IL

                           ABA # 071 000 039
                           Account Name:  Comdisco Inc.
                           Acct # 8188800645

     3. By its execution of this letter agreement,  PlanetRx,  for itself and on
behalf  of  its  successors,  assigns,  and  present  and  future  stockholders,
officers,  directors,  employees, agents and attorneys, hereby remises, releases
and forever discharges Comdisco and its present and former officers,  directors,
stockholders,  employees, agents, attorneys, successors and assigns from any and
all claims, rights,  actions,  causes of action, suits,  liabilities,  defenses,
damages  and costs  that (a) exist or may  exist as of the date  hereof  and (b)
arise  from or are  otherwise  related  to the Loan  Agreement,  the other  Loan
Documents,  the Lease Agreement,  or any transaction  contemplated  thereby, the
administration  of the Loans and the  Lease and other  financial  accommodations
made thereunder,  the collateral security given in connection therewith,  or any
related  discussion  or  negotiations,  in each case  whether  known or unknown,
suspected  or  unsuspected.  PlanetRx  waives  any and all  claims,  rights  and
benefits  it may  have  under  any law of any  jurisdiction  that  would  render
ineffective  a release made by a creditor of claims that the  creditor  does not
know or suspect to exist in its favor at the time of  executing  the release and
that, if known by it, would have  materially  affected its  settlement  with the
applicable  debtor.  PlanetRx  acknowledges  that it is aware  of the  following
provisions of section 1542 of the California Civil Code:

     A general  release does not extend to claims  which the  creditor  does not
     know or suspect to exist in its favor at the time of executing the release,
     which if known by him must have materially affected his settlement with the
     debtor.

PlanetRx  expressly  and  voluntarily  waives  each and all claims,  rights,  or
benefits it has or may have under section 1542 of the California  Civil Code, or
any other similar law of any other jurisdiction,  to the full extent that it may
lawfully waive such claims, rights and benefits in connection with this release.
PlanetRx  acknowledges  that (a) it has been  represented by  independent  legal
counsel of its own choice  throughout all of the  negotiation  that preceded the
execution  of this  letter  agreement  and  that  it has  executed  this  letter
agreement after receiving the advice of such independent legal counsel,  and (b)
it and its respective counsel have had an adequate  opportunity to make whatever
investigation or inquiry they deem necessary or desirable in connection with the
release contained in this paragraph 4.]

By executing this letter  agreement,  PlanetRx hereby indicates its agreement to
all of the  foregoing.  This letter  agreement  may be executed in any number of
counterparts and by different parties hereto in separate  counterparts,  each of
which  when  so  delivered  shall  be  deemed  an  original,  but  all of  which
counterparts  shall constitute but one and the same  instrument.  Delivery of an
executed  counterpart of a signature page to this letter  agreement by facsimile
transmission  shall be effective as delivery of a manually executed  counterpart
thereof.

Sincerely,

COMDISCO, INC.

/s/ Victor Hanna by John Fredericks, Murphy Sheneman Julian & Rogers, Attorney
in Fact
Victor Hanna
Vice President
Comdisco Ventures

ACKNOWLEDGED AND AGREED TO:

PLANETRX, INC.

By:  /s/ Paul E. Risner
     ------------------
Name Paul E. Risner
Title Sr. VP & General Counsel

cc: (via fax):  Fred Holden, Esq. (415) 979-2930