SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

 (Mark One)

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

                  For the quarterly period ended March 31, 1999

                                       OR

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


                         Commission file number 0-22557


                               PEAPOD, INC.
          (Exact name of Registrant as specified in its charter)

              Delaware                                   36-4118175
  -----------------------------------         ---------------------------------
    (State or other jurisdiction              (IRS Employer Identification No.)
    of Incorporation or Organization)


                    9933 Woods Drive, Skokie, Illinois 60077
               (Address of principal executive offices) (ZIP Code)


                            (847) 583-9400
          (Registrant's telephone number, including area code)



         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 [ ]


         The number of shares  outstanding  of the  registrant's  common  stock,
$0.01 par value ("Common Stock") as of April 22, 1999 was 17,484,112.



<PAGE>
<TABLE>
<CAPTION>
                                    PART I
                              FINANCIAL INFORMATION
ITEM 1.           Financial Statements.

                                  PEAPOD, INC.

                                 BALANCE SHEETS
                        (in thousands, except share data)

                                                                          March 31,        December 31,
                                                                             1999              1998
                                                                        ----------------- ----------------
                                                                          (unaudited) 
                              Assets
<S>                                                                           <C>                <C>
Current assets:
     Cash and cash equivalents..........................................      $ 4,943            $ 4,341 
     Marketable securities..............................................       17,796             15,836 
     Receivables, net of bad debt allowance of $279 and $287 as
       of March 31, 1999 and December 31, 1998..........................        1,814              2,516 
     Prepaid expenses...................................................          142                186 
     Other current assets...............................................          851                974 
                                                                        ----------------- -----------------
          Total current assets..........................................       25,546             23,853 
Property and equipment:
     Computer equipment and software....................................        4,439              4,010 
     Service equipment and other........................................        3,165              2,147 
                                                                        ----------------- ------------------
Property and equipment, at cost.........................................        7,604              6,157 
     Accumulated depreciation...........................................       (2,723)            (2,252)
                                                                        ----------------- ------------------
Net property and equipment..............................................        4,881              3,905 
Non-current marketable securities                                               7,633             15,213 
                                                                        ----------------- ------------------
          Total assets..................................................      $38,060            $42,971 
                                                                        ================= ==================
                  Liabilities and Stockholders' Equity Current liabilities:
     Accounts payable...................................................      $ 3,685            $ 3,442 
     Accrued compensation...............................................          864                802 
     Other accrued liabilities..........................................        1,616              2,688 
     Current deferred revenue...........................................        1,064              1,000 
     Current obligations under capital lease............................          599                590 
                                                                        ----------------- ------------------
          Total current liabilities.....................................        7,828              8,522 
Deferred revenue........................................................          360                448 
Obligations under capital lease, less current portion...................          681                395 
                                                                        ----------------- ------------------
          Total liabilities.............................................        8,869              9,365 
Stockholders' equity:
     Preferred stock, $.01 par value, authorized 5,000,000
        shares, none issued and outstanding.............................          --                 --  
     Common stock, $.01 par value, 50,000,000 shares authorized,
            17,469,363 and 17,245,828 shares issued at  March 31, 1999
            and December 31, 1998.......................................          175                172 
     Additional paid-in capital.........................................       65,332             64,319 
     Accumulated other comprehensive income -
          Unrealized gain (loss) on available-for-sale securities.......          (16)                83 
     Accumulated deficit................................................      (35,129)           (30,060)
     Treasury stock, at cost, 141,749 and 117,476 shares at March 31,
         1999 and December 31, 1998.....................................       (1,171)              (908)
                                                                        ----------------- ------------------
          Total stockholders' equity....................................       29,191             33,606 
                                                                        ================= ==================
          Total liabilities and stockholders' equity....................      $38,060            $42,971 
                                                                        ================= ==================

               See accompanying  notes to financial statements.
</TABLE>
<TABLE>
<CAPTION>
                                  PEAPOD, INC.

                            STATEMENTS OF OPERATIONS
               (in thousands, except for share and per share data)
                                   (unaudited)

                                                                       Three months ended March 31,
                                                                -------------------------------------------
                                                                ------------------       ------------------
                                                                      1999                     1998
                                                                ------------------       ------------------
<S>                                                                   <C>                      <C>
Net sales    ..................................................         $ 18,008                 $ 18,864 
Cost of sales..................................................           14,366                   14,573 
                                                                ------------------       ------------------
Gross profit  .................................................            3,642                    4,291 

Operating expenses:
     Fulfillment operations....................................            5,152                    4,518 
     General and administrative................................            1,554                    1,737 
     Marketing and selling.....................................            1,238                    1,672 
     System development and maintenance........................              723                      610 
     Depreciation and amortization.............................              474                      463 
                                                                ------------------       ------------------
          Total operating expenses.............................            9,141                    9,000 
                                                                ------------------       ------------------

Operating loss.................................................           (5,499)                  (4,709)
Other income (expense):
     Investment income.........................................              478                      783 
     Interest expense..........................................              (48)                     (56)
                                                                ==================       ==================
Net loss.......................................................         $ (5,069)                $ (3,982)
                                                                ==================       ==================

Net loss per share:
     Basic.....................................................         $  (0.29)                $  (0.24)
     Diluted...................................................         $  (0.29)                $  (0.24)

Shares used to compute net loss per share:
     Basic.....................................................       17,188,508               16,859,437 
     Diluted...................................................       17,188,508               16,859,437 

                     See accompanying notes to financial statements.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                                  PEAPOD, INC.

                       STATEMENTS OF COMPREHENSIVE INCOME
                                 (in thousands)
                                   (unaudited)

                                                                         Three Months Ended March 31,
                                                                       -----------------------------------
                                                                           1999                 1998
                                                                       --------------      ---------------
<S>                                                                     <C>                  <C>
Net loss.............................................                   $ (5,069)            $ (3,982)

Other comprehensive income:
      Unrealized loss on available-for-sale securities.........              (99)                 (71)
                                                                       --------------      ---------------

Comprehensive income (loss)....................................         $ (5,168)            $ (4,053)
                                                                       ==============      ===============

             See accompanying  notes to financial statements.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>
                                  PEAPOD, INC.

                            STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)

                                                                       Three Months Ended March 31,
                                                                   ---------------------------------------
                                                                         1999                  1998
                                                                   -----------------      ----------------
<S>                                                                       <C>                   <C>
Cash flows from operating activities:
    Net loss.......................................................       $ (5,069)             $ (3,982)
    Adjustments to reconcile net loss to net cash used in operating activities:
        Depreciation and amortization..............................            474                   463 
        Stock issued for services rendered.........................             --                    45 
        Changes in operating assets and liabilities:
            (Increase) decrease in receivables, net................            702                  (281)
            (Increase) decrease in prepaid expenses................             44                   292 
            (Increase) decrease in other current assets............            123                  (343)
            Increase (decrease) in accounts payable................            243                (3,900)
            Increase (decrease) in accrued compensation............             62                  (356)
            Increase (decrease) in other accrued liabilities.......         (1,072)                 (172)
            Increase (decrease) in deferred revenue................            (24)                 (553)
                                                                   -----------------      ----------------
                Net cash used in operating activities..............         (4,517)               (8,787)

Cash flows from investing activities:
    Property and equipment purchased...............................           (956)                 (462)
    Capitalized software development costs.........................             --                  (308)
    Purchases of marketable securities.............................         (4,976)              (34,291)
    Sales of marketable securities.................................         10,497                    -- 
                                                                   -----------------      ----------------
                Net cash provided by (used in) investing activities          4,565               (35,061)

Cash flows from financing activities:
    Proceeds from issuance of stock upon exercise of warrants......             50                    -- 
    Proceeds from issuance of stock upon exercise of options and
       employee stock purchase plan................................            703                    67 
    Payments on capital lease obligations..........................           (199)                 (237)
                                                                   -----------------      ----------------
                Net cash provided by (used in) financing activities            554                  (170)
                                                                   -----------------      ----------------
Net increase (decrease) in cash and cash equivalents...............            602               (44,018)
Cash and cash equivalents at beginning of period...................          4,341                54,079 
                                                                   =================      ================
Cash and cash equivalents at end of period.........................        $ 4,943              $ 10,061 
                                                                   =================      ================
 
Supplemental disclosure of cash flows information--interest paid...        $    37              $     65

Supplemental disclosures of noncash investing and financing activity: 
          Options exercised by sale of stock to the Company........            263                    -- 
          Equipment on capital leases..............................            494                    40
                                                                   =================      ================
     See accompanying  notes to financial statements.
</TABLE>

<PAGE>


                                  PEAPOD, INC.

                          NOTES TO FINANCIAL STATEMENTS
                                   (unaudited)

1.   Basis of Presentation.  The unaudited interim financial statements included
     herein  have  been  prepared  by the  Company,  pursuant  to the  rules and
     regulations of the Securities  and Exchange  Commission.  Certain notes and
     other  information  normally included in financial  statements  prepared in
     accordance  with  generally  accepted   accounting   principles  have  been
     condensed or omitted  from the interim  financial  statements  presented in
     this  quarterly  report on Form  10-Q in  accordance  with  such  rules and
     regulations.  In the opinion of the Company's management,  the accompanying
     financial  statements  include all  adjustments,  consisting only of normal
     recurring adjustments,  necessary to state fairly the financial position of
     the  Company  as of March 31,  1999,  and the  results  of its  operations,
     comprehensive income and cash flows for the periods indicated.  The results
     of operations for the periods covered are not necessarily indicative of the
     results to be expected for the full year. These financial statements should
     be read in  conjunction  with the audited  financial  statements  and notes
     thereto of the  Company for the year ended  December  31,  1998,  which are
     included  in the  Company's  Annual  Report  on Form  10-K  filed  with the
     Securities and Exchange Commission.

2.   Reclassifications.  Certain prior year balances have been  reclassified  to
     conform with the current year presentation.

<PAGE>



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


RESULTS OF OPERATIONS

         The following table sets forth certain unaudited financial  information
from the Statements of Operations as a percentage of total revenues:

<TABLE>
<CAPTION>

                                                      Three Months Ended
                                                             March 31,
                                                --------------------------------
                                                -------------    ---------------
                                                  1999                1998
                                                -------------    ---------------
<S>                                                    <C>                <C>
Net sales    ................................          100  %             100  %
Cost of sales................................           80                 77 
                                             ----------------    ---------------
Gross profit ................................           20                 23 

Operating expenses:
     Fulfillment operations..................           28                24 
     General and administrative..............            9                 9 
     Marketing and selling...................            7                 9 
     System development and maintenance......            4                 3 
     Depreciation and amortization...........            3                 3 
                                             ----------------    ---------------
          Total operating expenses...........           51                 48 
                                             ----------------    ---------------
Operating loss...............................          (31)               (25)

Other income (expense):
     Interest income.........................            3                  4 
     Interest expense........................            *                  * 
                                             ================    ===============
Net loss.....................................          (28) %             (21) %
                                             ================    ===============

 * - Less than 1%                                               

</TABLE>



Comparison of Three Months Ended March 31, 1999 and March 31, 1998

         Net sales. Net sales include (i) revenue from the sale of groceries and
related  products,  (ii) fees paid by customers and retail partners,  (iii) fees
from  consumer  goods  companies  for  interactive  advertising,  promotion  and
research,  and (iv) revenues  from  maintenance  and licensing  fees relating to
licensing of the Company's software to Coles Myer Ltd. Net sales decreased by 5%
from  $18,864,000  in the quarter  ended March 31,  1998 to  $18,008,000  in the
quarter ended March 31, 1999.

         Revenues from the sale of groceries  increased from  $15,495,000 in the
quarter ended March 31, 1998 to $15,743,000 in the quarter ended March 31, 1999.
Although  orders  decreased  from 136,600 in the quarter ended March 31, 1998 to
135,200 in the quarter ended March 31, 1999, average order size increased by 3%.
Fees paid by customers  and retail  partners  decreased  from  $2,793,000 in the
quarter  ended March 31, 1998 to $2,059,000 in the quarter ended March 31, 1999.
This decrease is  attributable  to (1) reduced  shopping and delivery  fees, (2)
lower  subscription  fees resulting from reduced customer pricing in centralized
markets,  and (3) to reduced  lower  contractual  fees due to less  reliance  on
retailers in centralized markets.  Customers,  measured as customers transacting
within  the last 12 months,  decreased  11% from  103,800  at March 31,  1998 to
92,600 at March 31, 1999.  Reductions  in the  Company's  customer base resulted
largely from a mid-1998  decision to scale back  marketing  programs in order to
focus  resources  on the new  service  model and on  initiatives  to  centralize
fulfillment operations in a number of markets.

         Fees  from  consumer  goods  companies  for  interactive   advertising,
promotion  and research  decreased  from $526,000 in the quarter ended March 31,
1998 to $206,000 in the quarter ended March 31, 1999.  This reduction is largely
the  result of the  Company's  temporarily  cutting  back on  marketing  and new
customer  initiatives  while  transitioning its fulfillment model to centralized
distribution.

         Licensing  revenues  were $50,000 in the quarter  ended March 31, 1998.
The  licensing  division was spun-off as a separate  entity on December 31, 1998
and no such revenues are anticipated in the future.

         Cost of  sales.  Cost of sales  are the  cost of  groceries  and  other
products sold to customers.  Cost of sales decreased 1% from  $14,573,000 in the
quarter ended March 31, 1998 to  $14,366,000 in the quarter ended March 31, 1999
due to increasing profit margins in markets with centralized distribution.

         Fulfillment operations. Fulfillment operations expenses include (i) the
direct costs relating to the shopping,  packing and delivery of customer orders,
(ii) salaries and overhead expenses of each fulfillment  center,  (iii) salaries
and  overhead  expenses  for each  metropolitan  market  and (iv)  salaries  and
overhead  expenses for certain field support  functions  such as recruiting  and
customer support.  Fulfillment operations expenses increased 14% from $4,518,000
for the quarter ended March 31, 1998 to  $5,152,000  for the quarter ended March
31,  1999.  The increase is  primarily  attributable  to increases in the direct
costs of delivering grocery orders resulting from start-up costs in Chicago,
Long Island and San Francisco and to duplicative resources required to
transition  operations into the new centralized distribution facility in
Chicago. These increases were offset, in part, by decreases in customer support
and zone overhead functions.

         At March 31,  1999,  the  Company  fulfilled  customer  orders  from 32
fulfillment  centers  across  eight  metropolitan   markets  covering  7,109,600
households.  This compares to 40 fulfillment  centers across seven  metropolitan
markets at March 31, 1998 covering  6,105,000 households.  While the Company has
incurred  start-up  costs  related to opening the  centralized  facilities,  the
evolution  of its  fulfillment  model  has  resulted  in  economies  of scale as
fulfillment  centers have been  consolidated  into more centralized or dedicated
facilities.

         General and administrative.  General and administrative expenses, which
include  corporate staff,  accounting and human  resources,  occupancy and other
fixed  expenses,  decreased  11% from  $1,737,000 in the quarter ended March 31,
1998 to  $1,554,000  in the  quarter  ended  March 31,  1999.  The  decrease  is
primarily  attributable  to a decrease in compensation  related  expenses as the
Company's corporate structure has not expanded during 1999.

         Marketing and selling.  Marketing and selling expenses include the cost
of customer  marketing,  such as radio  advertising  and direct mail, as well as
certain costs relating to public relations and the sale of interactive marketing
products. The Company expenses all such costs as incurred. Marketing and selling
expenses  decreased by 26% from  $1,672,000 for the quarter ended March 31, 1998
to $1,238,000  for the quarter  ended March 31, 1999.  The decrease is primarily
attributable to the Company's mid-1998 decision to limit marketing  expenditures
in order to focus on modifying  its service model and  centralizing  fulfillment
operations in a number of markets.

         System development and maintenance.  System development and maintenance
expenses,  which include new product  development as well as the maintenance and
enhancement  of existing  systems,  increased  19% from $610,000 for the quarter
ended March 31,  1998 to $723,000  for the  quarter  ended March 31,  1999.  The
increase is primarily  attributable  to  compensation  expenses  for  additional
resources to support the Company's new website technology.  No development costs
were  capitalized  in the first  quarter of 1999 while  $308,000 of  development
costs were capitalized in the first quarter of 1998.

         Depreciation and amortization.  Depreciation and amortization increased
2% from  $463,000  for the quarter  ended  March 31,  1998 to  $474,000  for the
quarter ended March 31, 1999.  This increase is the result of equipment added to
support new centralized  distribution facilities offset by a fourth quarter 1998
reduction in the depreciable lives of various fixed assets.

         Other income (expense).  Other income (expense)  includes interest paid
on capital  leases and  investment  earnings.  Interest  expense  decreased from
$56,000  for the quarter  ended  March 31, 1998 to $48,000 in the quarter  ended
March 31, 1999.  Investment  income decreased from $783,000 in the quarter ended
March 31, 1998 to $478,000 in the quarter  ended March 31, 1999 due primarily to
a reduction in invested principal.


LIQUIDITY AND CAPITAL RESOURCES

         Cash used in operating  activities  decreased  from  $8,787,000  in the
first three months of 1998 to $4,517,000 in the first three months of 1999.  The
decrease in cash used in operating  activities was primarily  attributable  to a
$3,900,000  decrease in  accounts  payable  early in 1998,  an increase in other
receivables relating to the spin-off of Split Pea Software, Inc. at December 31,
1998 and an increase in other  current  assets in the first three months of 1999
offset by an increase in the net loss in the first three  months of 1999.  As of
March 31, 1999,  the Company had  $4,943,000  in cash and cash  equivalents  and
$25,429,000 in marketable  securities.  The Company uses its working  capital to
fund ongoing operations, marketing programs, geographic expansion and to further
develop its products and services.

         The Company  anticipates  that existing cash and marketable  securities
will be sufficient to fund the Company's operations and capital requirements for
the  foreseeable  future.  However,  no  assurance  can be given  that  changing
business  circumstances will not require additional capital for reasons that are
not currently  anticipated or that the necessary  capital will then be available
to the Company on favorable terms, or at all.

         The Company  believes that  inflation has not had a material  effect on
its operations.

YEAR 2000 DISCLOSURE

         The "Year 2000" problem  concerns the inability of information  systems
to properly recognize and process date-sensitive information beyond December 31,
1999.  The  Company  has  evaluated  the  impact of the Year  2000  issue on its
business and does not expect to incur  significant costs associated with its own
Year 2000  compliance  or that  internal  Year 2000  issues will have a material
impact on the Company's business,  results of operations or financial condition.
The  Company's  software  systems  and  applications  are  currently  Year  2000
compliant.  In addition, with respect to the Company's ability to obtain product
information,  to the extent that any of the Company's retail partners'  computer
systems are not Year 2000  compliant,  the Company  will  establish  alternative
procedures for obtaining relevant retailer  information at a minimal cost to the
Company.  The  Company has not  incurred to date,  and does not expect to incur,
material costs with respect to its initiatives mentioned above.

         Nonetheless,  failure  of  certain  third  party  systems  could have a
material adverse impact on the Company.  Because of the range of possible issues
and the large number of variables  involved,  it is  impossible  to quantify the
potential cost of problems should remediation efforts of third parties with whom
the Company does business not be successful.  For example, the Company relies on
its retail  partners  and on other third party  vendors for  inventory  that the
Company  sells.  The Company is  addressing  whether  these third parties in its
supply chain are adequately  addressing their Year 2000 compliance  issues.  The
Company has initiated  communications  with its significant  suppliers and other
vendors to determine  and monitor the Year 2000 issue and to evaluate the impact
on the Company.  Failure by such  parties to timely  address the Year 2000 issue
could impact the  Company's  ability to obtain  inventory,  among other  things,
which could have a material adverse impact on the Company's business,  financial
condition or results of operations.

         Furthermore,  the Company utilizes third party equipment,  software and
content,   including  non-information   technology  systems  (such  as  building
equipment and security systems) that may not be Year 2000 compliant. The Company
is in  the  process  of  assessing  whether  critical  third-party  systems  and
equipment  and critical  non-information  technology  systems and  equipment are
adequately  addressing  the Year 2000  issue.  For  example,  certain  operating
systems of third party vendors on which certain Company software resides are not
yet Year 2000 compliant.  Several of these vendors have indicated to the Company
that Year 2000  compliant  upgrades  are  available  and the Company  intends to
install  these  upgrades  in the  first  half of 1999.  Failure  of  third-party
equipment,  software or content to operate properly with regard to the Year 2000
issue  could  require  the  Company  to incur  unanticipated  expense  to remedy
problems,  which could have a material adverse effect on the Company's business,
results of operation and financial condition.


                                     PART II
                                OTHER INFORMATION



Item 5.           Other Information

                  Safe Harbor Statement under the Private Securities Litigation
                  Reform Act of 1995.

                  Certain  statements in this report relative to markets for the
                  Company's  products and trends in the Company's  operations or
                  financial results, as well as other statements including words
                  such as "anticipate," "believe," "plan," "estimate," "expect,"
                  "intend"   or   other    similar    expressions,    constitute
                  "forward-looking  statements"  under  The  Private  Securities
                  Litigation Reform Act of 1995. Such forward-looking statements
                  are  contained  in  "Management's  Discussion  and Analysis of
                  Financial  Condition and Results of  Operations"  and in other
                  portions of this report. Such  forward-looking  statements are
                  subject to known and unknown  risks,  uncertainties  and other
                  factors  which  may  cause  actual  results  to be  materially
                  different  from  those  contemplated  by  the  forward-looking
                  statements.  Such factors include, among other things: (1) the
                  developing  nature of the markets for the  Company's  services
                  and the rapid technological  change relating thereto;  (2) the
                  Company's  relationship  with  its  retail  partners  and  its
                  interactive marketing services and research customers; (3) the
                  Company's ability to execute its growth strategies,  including
                  effectively    implementing    a    centralized    fulfillment
                  distribution  model;  (4) the  extent to which the  Company is
                  able to attract and retain key personnel; (5) competition; (6)
                  general economic conditions; (7) regulations; and (8) the risk
                  factors  or  uncertainties  listed  from  time  to time in the
                  Company's filings with the Securities and Exchange Commission.


<PAGE>



Item 6.           Exhibits and Reports on Form 8-K.

(a) Exhibits - The  following  exhibits are filed  herewith or are  incorporated
herein:

                    Exhibit
                      No.                   Description
                      27 --                  Financial Data Schedule

(b)      Reports on Form 8-K - The Registrant filed no Current Reports on Form
         8-K during the quarter ended March 31, 1999.


<PAGE>


                                    SIGNATURE


         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.


                                            Peapod, Inc. 
                                            (Registrant)


                                             /s/ Dan Rabinowitz
April 29, 1999                              -----------------------
                                            Dan Rabinowitz
                                            Chief Financial Officer