Within weeks of fellow e-death row inmates






having been saved from the gallows,



today slipped into the noose.

drkoop.com postponed release of its first-quarter earnings, warned they would be ugly, said it had cash to stay alive through the summer, and retained

Bear Stearns

to explore strategic alternatives.

A victim of its own bad marketing deals and the recent market downturn, drkoop.com painted a grim picture after the market closed today.

In its annual report, released March 30, the company admitted it had received a "going concern" warning from its independent auditors. In other words, the company didn't have enough cash to cover its obligations and continue operating for the next 12 months.

The company said it would seek financing, possibly through a secondary offering. With its stock price below its IPO level and the entire stock market struggling, prospects for a secondary offering have been slim. drkoop.com went public June 8, 1999, and shares first fell below their IPO price of $9 on Feb 28. Shares of the company rose 1/16, or almost 3%, to 2 11/32 before trading was halted in midafternoon, pending what was supposed to be the company's earnings release.

To try to solve its crisis, the company may seek a sale, though it would not comment on that possibility. There are several factors, beyond its bleeding bank account, that make the company an unattractive purchase. A clause in the company's agreement with former Surgeon General Dr.

C. Everett Koop

allows him to terminate his agreement upon a change in control of the company.

If that happened, the new owners might have to change both the name of the company and the Web address. All money spent on brand recognition might go out the window. That's not the only cause for concern, according to

Pacific Growth Equities

analyst Mark Mulcahy. The company has restrictive agreements with




Walt Disney-Go.com

(GO) - Get Report

that call for drkoop to make huge payments to them in return for being the exclusive health content provider to the two companies' Web properties.

These expensive deals are part of the reason drkoop is where it is now. Last July, the company agreed to pay AOL $89 million over four years. As of Dec. 31, $65 million of that was still outstanding. Today, the company said it had renegotiated with AOL, converting all future cash commitments, estimated at $64 million, and warrants into a 10% equity stake.

The exclusive content agreement also was shortened by 26 months. "AOL taking equity, I'm sure some people will seize on that as a positive. To me, that's the equivalent of, 'You can't pay your bills.' Somebody hands it over to a debt collector who says, 'We'll give you 30 cents on the dollar,' " Mulcahy said.

Pacific Growth hasn't done any underwriting for drkoop, which also said it restructured its year-old agreement with Go.com, which had called for the company to pay Go $57.9 million over three years.

Go.com will receive an undisclosed cash payment and warrants to buy additional drkoop shares at an undisclosed strike price. The company tried to boost analysts' spirits by saying that the restructured deal represents a cash savings of $38 million.

"There's a big lesson to be learned

from drkoop in the sales and marketing side," said

Wit Capital

analyst Richard Lee -- namely, that companies should avoid getting locked into expensive, long-term placement agreements. He said it may be difficult for anyone to step in to bail out drkoop because few would be prepared to assume the types of losses drkoop is suffering.

A buyer would need to do a wholesale restructuring of the company. Wit Capital was co-underwriter of drkoop's IPO and has a neutral rating on the stock. The Austin, Texas-based health care portal reported preliminary first-quarter revenue of roughly $4.6 million, a dismal number that misses even the company's own expectations.

Net loss is expected to be between 80 and 82 cents per share, the company said. Analysts polled by

First Call/Thomson

had anticipated a loss of 52 cents a share. The company attributed the wider loss to disappointing direct-to-consumer advertising revenue.

As of March 31, the company had $24 million in cash, enough to survive through August, according to the company's press release. drkoop said it would release final first-quarter results the second week in May.

drkoop's news comes after CDNow stepped back from the brink of death in March when a proposed merger with

Columbia House

failed, and

Time Warner





jumped in with $51 million to save CDNow. Two weeks ago, Peapod Inc. was rescued by Dutch food company

Royal Ahold


, which invested $73 million in convertible preferred stock of the troubled online grocer.