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 September 30, 2000

                                       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 November 10, 2000 was 17,969,504.

                                       1
<PAGE>

                                     PART I
                              FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

                                       2
<PAGE>

                                  PEAPOD, INC.

                            CONDENSED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                                         PRO FORMA
                                                                       SEPTEMBER 30,    SEPTEMBER 30,    DECEMBER 31,
                                                                           2000             2000             1999
                                                                       ------------     ------------     ------------
                           ASSETS                                       (UNAUDITED)      (UNAUDITED)
Current assets:
<S>                                                                    <C>              <C>              <C>
    Cash and cash equivalents .....................................    $     33,284     $     33,284     $      3,343
    Marketable securities .........................................              --               --            4,704
    Receivables, net of bad debt allowance of $268 and
      $232 as of September 30, 2000 and December 31, 1999 .........           1,580            1,580            1,478
    Merchandise inventory .........................................           1,349            1,349              458
    Prepaid expenses ..............................................           1,120            1,120              473
    Other current assets ..........................................           3,231            3,231              535
                                                                       ------------     ------------     ------------
        Total current assets ......................................          40,564           40,564           10,991
Property and equipment:
    Computer equipment and software ...............................          15,714           15,714            6,737
    Service equipment and other ...................................           3,778            3,778            2,857
     Leasehold improvements .......................................           5,266            5,266            1,332
                                                                       ------------     ------------     ------------
Property and equipment, at cost ...................................          24,758           24,758           10,926
    Accumulated depreciation ......................................          (6,547)          (6,547)          (4,290)
                                                                       ------------     ------------     ------------
Net property and equipment ........................................          18,211           18,211            6,636
Restricted cash ...................................................           1,240            1,240            1,588
Non-current marketable securities .................................              --               --            1,565
Goodwill and other intangibles ....................................           5,884            5,884               --
Other non-current assets ..........................................           2,595            2,595               --
                                                                       ------------     ------------     ------------
        Total assets ..............................................    $     68,494     $     68,494     $     20,780
                                                                       ============     ============     ============
     LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
    Accounts payable ..............................................    $      4,366     $      4,366     $      6,147
    Accrued compensation ..........................................           1,658            1,658              497
    Other accrued liabilities .....................................           7,388            7,388            1,897
    Current deferred revenue ......................................             258              258              615
    Current obligations under capital lease .......................             617              617              690
                                                                       ------------     ------------     ------------
        Total current liabilities .................................          14,287           14,287            9,846
Deferred revenue ..................................................              --               --               95
Obligations under capital lease, less current portion .............           6,916            6,916            1,129
                                                                       ------------     ------------     ------------
        Total liabilities .........................................          21,203           21,203           11,070
Redeemable preferred stock, $.01 par value; authorized
  10,000,000 shares; 726,371 shares of series B convertible
  redeemable preferred stock issued at September 30, 2000;
  no shares issued on a pro forma basis ...........................          64,684                                --
Stockholders' equity (deficit):
    Preferred stock, $.01 par value; authorized 10,000,000
       shares; 726,371 shares of series C convertible
       preferred stock issued at September 30, 2000 on a
       pro forma basis ............................................                           64,684               --
    Common stock, $.01 par value, 100,000,000 shares
       authorized, 18,411,356 and 18,320,578 shares issued
       at September 30, 2000 and December 31, 1999 ................             184              184              183
    Additional paid-in capital ....................................         134,399          134,399           71,698
    Note receivable from officer ..................................              --               --           (2,369)
    Accumulated other comprehensive income -
        Unrealized holding loss on available-for-sale securities ..              --               --             (118)
    Accumulated deficit ...........................................        (150,103)        (150,103)         (58,513)
    Treasury stock, at cost, 453,640 and 141,749 common
      shares at September 30, 2000 and December 31, 1999 ..........          (1,873)          (1,873)          (1,171)
                                                                       ------------     ------------     ------------
         Total stockholders' equity (deficit) .....................         (17,393)          47,291            9,710
                                                                       ------------     ------------     ------------
         Total liabilities and stockholders' equity (deficit) .....    $     68,494     $     68,494     $     20,780
                                                                       ============     ============     ============
</TABLE>

                 See accompanying notes to financial statements.
     See footnote #10 regarding pro forma September 30, 2000 balance sheet.

                                       3
<PAGE>

                                  PEAPOD, INC.

                       CONDENSED STATEMENTS OF OPERATIONS
               (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED SEPTEMBER 30,
                                                        ---------------------------------
                                                             2000               1999
                                                        --------------     --------------
<S>                                                     <C>                <C>
Net sales ..........................................    $       21,794     $       16,493
Cost of sales ......................................            17,293             12,241
                                                        --------------     --------------
Gross profit .......................................             4,501              4,252

Operating expenses:
    Fulfillment operations .........................             7,919              5,571
    General and administrative .....................             2,768              2,155
    Marketing and selling ..........................             1,429              1,665
    System development and maintenance .............             1,490                916
    Depreciation and amortization ..................               942                525
    Pre-opening costs ..............................                --                188
    Nonrecurring expenses ..........................                --              2,830
                                                        --------------     --------------
        Total operating expenses ...................            14,548             13,850
                                                        --------------     --------------

Operating loss .....................................           (10,047)            (9,598)
Other income (expense):
    Investment income ..............................               776                288
    Interest expense ...............................               (94)               (42)
    Non-cash interest expense ......................              (431)                --
                                                        --------------     --------------
Net loss ...........................................            (9,796)            (9,352)

Preferred stock dividend and accretion .............            (1,710)                --

                                                        --------------     --------------
Net loss available to common stockholders ..........    $      (11,506)    $       (9,352)
                                                        ==============     ==============

Net loss per share available to common stockholders:
    Basic and diluted ..............................    $        (0.64)    $        (0.53)

Shares used to compute net loss per share:
    Basic and diluted ..............................        17,957,148         17,498,863
</TABLE>

                 See accompanying notes to financial statements.

                                       4
<PAGE>

                                  PEAPOD, INC.

                       CONDENSED STATEMENTS OF OPERATIONS
               (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                         NINE MONTHS ENDED SEPTEMBER 30,
                                                        ---------------------------------
                                                             2000               1999
                                                        --------------     --------------
<S>                                                     <C>                <C>
Net sales ..........................................    $       69,440     $       51,574
Cost of sales ......................................            54,082             39,510
                                                        --------------     --------------
Gross profit .......................................            15,358             12,064

Operating expenses:
    Fulfillment operations .........................            23,835             15,460
    General and administrative .....................             7,769              5,407
    Marketing and selling ..........................             3,856              4,093
    System development and maintenance .............             4,148              2,426
    Depreciation and amortization ..................             2,343              1,603
    Pre-opening costs ..............................                --                828
    Nonrecurring expenses ..........................             5,608              2,830
                                                        --------------     --------------
        Total operating expenses ...................            47,559             32,647
                                                        --------------     --------------

Operating loss .....................................           (32,201)           (20,583)
Other income (expense):
    Investment income ..............................               689              1,352
    Interest expense ...............................              (368)              (115)
    Non-cash interest expense ......................            (1,047)                --
                                                        --------------     --------------
Net loss ...........................................           (32,927)           (19,346)

Non-cash deemed dividend on preferred stock ........           (56,953)                --
Preferred stock dividend and accretion .............            (1,710)                --

                                                        --------------     --------------
Net loss available to common stockholders ..........    $      (91,590)    $      (19,346)
                                                        ==============     ==============

Net loss per share available to common stockholders:
    Basic and diluted ..............................    $        (5.07)    $        (1.11)

Shares used to compute net loss per share:
    Basic and diluted ..............................        18,069,200         17,364,721
</TABLE>

                 See accompanying notes to financial statements.

                                       5
<PAGE>

                                  PEAPOD, INC.

                       STATEMENTS OF COMPREHENSIVE INCOME
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                        THREE MONTHS ENDED SEPTEMBER 30,
                                                                       ---------------------------------
                                                                            2000               1999
                                                                       --------------     --------------
<S>                                                                    <C>                <C>
Net loss ..........................................................    $       (9,796)    $       (9,352)

Other comprehensive income:
   Unrealized holding gain (loss) on available-for-sale securities:
      Unrealized holding loss arising during the period ...........                --                 13
                                                                       --------------     --------------

Comprehensive loss ................................................    $       (9,796)    $       (9,339)
                                                                       ==============     ==============
</TABLE>

                 See accompanying notes to financial statements.

                                       6
<PAGE>

                                  PEAPOD, INC.

                       STATEMENTS OF COMPREHENSIVE INCOME
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                        NINE MONTHS ENDED SEPTEMBER 30,
                                                                       ---------------------------------
                                                                            2000               1999
                                                                       --------------     --------------
<S>                                                                    <C>                <C>
Net loss ..........................................................    $      (32,927)    $      (19,346)

Other comprehensive income:
   Unrealized holding gain (loss) on available-for-sale securities:
      Unrealized holding loss arising during the period ...........                (1)              (333)
      Reclassification adjustment for losses realized during the
        period and included in net loss ...........................               119                 --
                                                                       --------------     --------------

Comprehensive loss ................................................    $      (32,809)    $      (19,679)
                                                                       ==============     ==============
</TABLE>

                 See accompanying notes to financial statements.

                                       7
<PAGE>


                                  PEAPOD, INC.

                            STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                             NINE MONTHS ENDED SEPTEMBER 30,
                                                                            ---------------------------------
                                                                                 2000               1999
                                                                            --------------     --------------
Cash flows from operating activities:
<S>                                                                         <C>                <C>
   Net loss ............................................................    $      (32,927)    $      (19,346)
   Adjustments to reconcile net loss to net cash used in
    operating activities:
      Depreciation and amortization ....................................             2,343              1,603
      Non-cash interest expense ........................................             1,047                 --
      Forgiveness of debt of officer, net of treasury stock purchased ..             2,369                 --
      Stock issued for services rendered ...............................                --                146
      Loss on disposition of fixed assets ..............................                 2                 22
      Changes in operating assets and liabilities, net of
       operations acquired:
         (Increase) decrease in receivables, net .......................               (46)               887
         (Increase) decrease in merchandise inventory ..................              (162)              (268)
         (Increase) decrease in prepaid expenses .......................              (474)            (1,049)
         (Increase) decrease in other current assets ...................              (401)               247
         (Increase) decrease in restricted cash ........................               348                 --
         Increase (decrease) in accounts payable .......................            (1,782)               662
         Increase (decrease) in accrued compensation ...................             1,161                187
         Increase (decrease) in other accrued liabilities ..............             2,854               (592)
         Increase (decrease) in deferred revenue .......................              (452)              (488)
                                                                            --------------     --------------
             Net cash used in operating activities .....................           (26,120)           (17,989)

Cash flows from investing activities:
   Property and equipment purchased ....................................            (2,103)            (1,967)
   Purchases of marketable securities ..................................                --             (7,383)
   Payment for acquisition .............................................           (11,612)                --
   Sales of marketable securities ......................................             6,388             25,276
   Proceeds from sale of property and equipment ........................                --                 12
                                                                            --------------     --------------
             Net cash provided by (used in) investing activities .......            (7,327)            15,938
Cash flows from financing activities:
   Net proceeds from issuance of preferred stock and warrants ..........            64,428                 --
   Proceeds from issuance of stock upon exercise of options and
    employee stock purchase plan .......................................               391              2,105
   Stock purchased for treasury ........................................              (702)              (262)
   Payments on capital lease obligations ...............................              (729)              (584)
                                                                            --------------     --------------
             Net cash provided by financing activities .................            63,388              1,259
                                                                            --------------     --------------
Net increase in cash and cash equivalents ..............................            29,941               (792)

Cash and cash equivalents at beginning of period .......................             3,343              4,341
                                                                            --------------     --------------
Cash and cash equivalents at end of period .............................    $       33,284     $        3,549
                                                                            ==============     ==============

Supplemental disclosure of cash flow information:
   Interest paid .......................................................    $          361     $          236

Supplemental disclosures of non-cash investing and financing activity
(also see Note #8):
   Issuance of common stock for note ...................................                --              2,500
   Common stock issued for professional services .......................                --                140
   Options exercised by sale of stock to the Company ...................               702                262
   Equipment on capital leases .........................................               173              1,287
   Non-cash deferred financing costs related to issuance of warrants ...             5,357                 --
   Preferred stock dividend and accretion ..............................             1,710                 --
</TABLE>

                 See accompanying notes to financial statements.

                                       8
<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 September 30, 2000, and the results of its operations 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, 1999,  which are included in the  Company's  Annual  Report on
     Form 10-K, as amended, filed with the Securities and Exchange Commission.

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

3.   TERMINATION OF EMPLOYMENT.  The Company entered into a Separation Agreement
     with William  Malloy dated March 15, 2000.  Effective as of that date,  Mr.
     Malloy resigned from his position as President and Chief Executive  Officer
     and his  employment  agreement  was  terminated.  Under  the  terms  of the
     Separation  Agreement,  the Company paid Mr.  Malloy's salary through April
     30,  2000.  The options to  purchase  1,100,000  and 500,000  shares of the
     Company's  common  stock,  respectively,  which were granted to Mr.  Malloy
     pursuant to his employment agreement, were cancelled,  unexercised, and the
     option  agreements  relating to those option  grants were  terminated.  The
     $2,500,000 loan, which had been extended to Mr. Malloy in September of 1999
     for the purchase of 311,891 shares of Company common stock,  was cancelled,
     and the purchase of common stock was rescinded and  cancelled.  The Company
     recognized  a  nonrecurring  expense  in the first  quarter  of  $1,584,000
     representing the difference between the balance of the Note Receivable From
     Officer  and the fair market  value of the  311,891  shares on the date the
     Separation Agreement was executed.  Mr. Malloy returned those shares to the
     Company and they became  treasury stock on April 24, 2000.  Under the terms
     of  the  Separation   Agreement,   Mr.  Malloy's  Severance  Agreement  was
     terminated, except as to the Company's obligation to maintain directors and
     officers liability insurance for Mr. Malloy for a period of three years. In
     addition,  Mr. Malloy retains certain contractual rights to indemnification
     as a former  officer and director.  The terms of the  Separation  Agreement
     provide that Mr.  Malloy  continues  to be subject to an  agreement  not to
     compete with the Company or to solicit its  customers  and  employees for a
     year  following the  termination  of his employment and not to disclose the
     Company's proprietary  information.  Both the Company and Mr. Malloy signed
     general  releases of any and all existing  claims  related to Mr.  Malloy's
     employment by the Company.

4.   FINANCING  AND CHANGE IN CONTROL.  On June 30,  2000,  the  Company  issued
     preferred  securities and warrants under the terms of a purchase agreement,
     dated April 14, 2000, (the "Purchase  Agreement.")  with Koninklijke  Ahold
     N.V.  ("Ahold").  Pursuant  to the  terms of the  Purchase  Agreement,  the
     Company agreed to sell 726,371 shares of the Company's series B convertible
     redeemable  preferred  stock,  par  value  $.01 per  share  (the  "Series B
     Preferred  Stock"),  for an aggregate  purchase price of  $72,637,024,  and
     warrants (the  "Warrants") to purchase  32,894,270  shares of the Company's
     common stock.  The Series B Preferred Stock is initially  convertible  into
     19,369,873  shares of common stock,  which represents  approximately 51% of
     the Company's  common stock  outstanding  as of June 30, 2000. The Series B
     Preferred  Stock ranks senior to the common stock with respect to dividends
     and liquidation payments,  and has a liquidation  preference of $100.00 per
     share, plus all then accrued and unpaid  dividends.  The Series B Preferred
     Stock accrues cumulative  dividends,  payable quarterly,  at the rate of 8%
     per annum. The Series B Preferred  Stockholder is entitled to vote together
     with the  holders  of the  common  stock as a single  class on all  matters
     submitted  for a vote of holders of common  stock.  The Series B  Preferred
     Stock is redeemable for cash on the earlier of specified  redemption events
     or April 14,  2008,  at a price per share  equal to the  liquidation  value
     ($72,637,024)  plus all  accrued  and  unpaid  dividends.  In the case of a
     redemption  event only, the holder of the preferred stock has the option of
     not having the preferred  stock redeemed in connection with such redemption
     event.  The  difference  between the net issuance  price and the redemption
     value of the redeemable  preferred stock,  assuming redemption on April 14,
     2008, is being  accreted over the eight-year  period to redemption  through
     charges to additional  paid in capital.  The Company may optionally  redeem
     the outstanding  shares of Series B Preferred Stock at any time after April
     14,  2008 at a  redemption  price  per  share  equal  to  103% of the  $100
     liquidation preference for the Series B Preferred Stock, plus the amount of
     any  accrued and unpaid  dividends  as of the date of the  redemption.  The
     Warrants have an exercise price of $3.75,  subject to  adjustment,  and are
     immediately  exercisable.  The imputed value of the warrants was calculated
     to be $56,953,000 using the  Black-Scholes  Model and was recognized in the
     second  quarter  as a deemed  dividend  on the  Series B  Preferred  Stock,
     increasing  the net  loss  available  to  common  stockholders.  All of the
     outstanding  shares of Series B Preferred  Stock were  exchanged on October
     12, 2000 for shares of series C convertible preferred stock, par value $.01
     per share (the "Series C Preferred  Stock").  The Series C Preferred  Stock
     has the same terms as the Series B Preferred  Stock except that, in lieu of
     a provision  for  mandatory  redemption  by the  Registrant of the Series B
     Preferred  Stock,  the Series C Preferred Stock provides for an increase in
     the  dividend  rate in the Series C Preferred  Stock  beginning on June 30,
     2008. See note 10.

                                       9
<PAGE>

     On April 14, 2000, simultaneous with the signing of the Purchase Agreement,
     the Company  entered into a $20 million secured  revolving  credit facility
     with Ahold maturing in April 2003.  Pursuant to security agreements entered
     into in connection  with the credit  facility,  the  Company's  obligations
     under the credit  facility  are  secured by a lien on all of the  Company's
     personal property,  including its intellectual property. In connection with
     the credit and security agreements, the Company issued to Ahold warrants to
     purchase an  aggregate  of  3,666,667  shares of common stock at an initial
     exercise  price  of  $3.00,  subject  to  adjustment  and  are  immediately
     exercisable.  The  imputed  value  of the  warrants  was  calculated  to be
     $5,357,000 using the Black-Scholes Model and will be recognized as non-cash
     interest  expense over the life of the credit  facility (at  September  30,
     2000,  $1,715,000  and  $2,595,000 is recorded as other current  assets and
     other non-current  assets,  respectively,  and $1,047,000 was recognized as
     non-cash  interest  expense in the nine months ended  September  30, 2000).
     There  are no  outstanding  borrowings  under  the  credit  facility  as of
     September 30, 2000.

     If Ahold  exercises  any of its  warrants  prior to April 2003,  the credit
     facility will be reduced dollar-for-dollar for the exercise price received.
     Total warrants issued to Ahold, if exercised, would represent approximately
     24% of the common stock outstanding as of September 30, 2000.

     As of September 30, 2000, no warrants have been exercised by Ahold.

5.   RESTRICTED CASH. The Company's  restricted cash represents  certificates of
     deposit  in  support  of the  Company's  letter  of  credit  and for  other
     purposes.

6.   NONRECURRING  EXPENSES.  Nonrecurring  expenses totaled  $5,608,000 for the
     nine months ended September 30, 2000 and result from severance  expenses of
     $1,850,000,  which was incurred  primarily in connection  with Mr. Malloy's
     termination  of  employment  - see Note 3;  impaired  asset  write-offs  of
     $1,496,000  related  primarily to the  decision to exit or abandon  certain
     markets,  including  lease  terminations  and  facility  design  costs  and
     contract  termination  costs;  expenses  attributable to a failed financing
     transaction  of $1,037,000  consisting  primarily of legal,  accounting and
     valuation  costs;  charges for the  settlement  of claims  related to prior
     licensing  obligations  of $705,000,  consisting  primarily  of  additional
     programming costs; and other nonrecurring  expenses.  Nonrecurring expenses
     totaled  $2,830,000  for the  nine  months  ended  September  30,  1999 and
     resulted primarily in connection with Mr. Malloy's employment in 1999.

7.   LITIGATION.  On  March  16,  2000,  the  Company  issued  a  press  release
     announcing  that its CEO and  President  (Mr.  Malloy) was departing due to
     health  reasons,  and as a result,  a  previously  announced  $120  million
     financing had been terminated.  Subsequently, seven substantially identical
     cases  were  filed in federal  district  court in Chicago on various  dates
     between  March 17,  2000 and May 10,  2000.  In each  case,  Peapod and two
     individual  defendants  (both of whom are officers of Peapod) were sued for
     alleged violations of Section 10(b) of the Securities  Exchange Act of 1934
     and SEC Rule 10b-5. The seven cases were  consolidated on June 1, 2000. The
     consolidated  complaint  alleged  that Peapod  misrepresented  or failed to
     disclose certain facts relating to the Company's liquidity, cash resources,
     and cash  needs.  The  consolidated  complaint  was  brought on behalf of a
     purported  class of purchasers  of Peapod's  common stock during the period
     from  November  8, 1999 to and  including  March 16,  2000,  and  sought to
     recover  damages  in  an  unspecified  amount.  On  August  29,  2000,  the
     plaintiffs voluntarily dismissed their complaint without prejudice.

8.   ACQUISITION  OF STREAMLINE  WAREHOUSES.  On September 7, 2000,  the Company
     acquired  from  Streamline.com,  Inc.  substantially  all of the assets and
     product on hand of two warehouses,  located in Lake Zurich,  Illinois,  and
     Gaithersburg,  Maryland,  for  $11,612,000  in cash and the  assumption  of
     capital  leases  and other  obligations  in the amount of  $6,659,000.  The
     acquisition was accounted for under the purchase method.  Accordingly,  the
     purchase price has been allocated to  identifiable  tangible and intangible
     assets and liabilities  assumed based on their  estimated fair values.  The
     excess of cost over net tangible  assets  acquired has been  allocated on a
     preliminary basis to customer lists and employee  workforce  (approximately
     $2.5  million)  which will be  amortized  over two to three  years,  and to
     goodwill  (approximately  $3.4 million)  which will be amortized  over five
     years.  The  consolidated  statements of operations  reflect the results of
     operations of the warehouses since the effective date of acquisition.

                                       10
<PAGE>

     The following  summary presents  information  concerning the purchase price
     allocation for the warehouse acquisitions.

          Tangible assets                                 $ 12,387,000
          Goodwill and other intangibles                     5,884,000
                                                          ------------
          Purchase price                                    18,271,000
          Less liabilities assumed                          (6,659,000)
                                                          ------------
          Payment for acquisitions                        $ 11,612,000
                                                          ============

     The  following  unaudited pro forma summary  presents  Peapod's  results of
     operations  as if the  acquisition  of the  warehouses  had occurred at the
     beginning of each period. This summary is provided for information purposes
     only. It does not  necessarily  reflect the actual  results that would have
     occurred had the acquisition been made at the beginning of each period,  or
     results that may occur.

<TABLE>
<CAPTION>
                                                               Nine Months Ended
                                                         -----------------------------
                                                         September 30,    September 30,
                                                             2000             1999
                                                         ------------     ------------
<S>                                                      <C>              <C>
     Net sales                                           $ 81,183,000     $ 56,902,000
     Net loss available to common stockholders           (107,464,000)     (25,737,000)
     Net loss per share available to common stockholders        (5.95)           (1.48)
</TABLE>

9.   RELATED PARTY. In certain  markets,  the Company  purchases  groceries from
     100% owned subsidiaries of Ahold. During 1999, all such purchases were made
     under existing arm's-length contracts. Beginning on July 1, 2000, purchases
     of groceries in these markets have  transitioned to new terms negotiated in
     conjunction  with  the  Purchase  Agreement  which  are  believed  to be at
     arm's-length  terms.  Cost of goods  sold  for the  three-  and  nine-month
     periods  ended  September  30, 2000  include  $5,960,000  and  $17,739,000,
     respectively,  of groceries  purchased  from Ahold.  At September 30, 2000,
     $1,545,000 was owed to Ahold and is reflected in Accounts Payable.

10.  SUBSEQUENT  EVENTS - PRO FORMA  BALANCE  SHEET.  On October 12,  2000,  the
     Company entered into an Exchange  Agreement and First Amendment to Purchase
     Agreement  (dated April 14, 2000) (the  "Exchange  Agreement")  with Ahold.
     Under the Exchange  Agreement,  Ahold agreed to exchange the 726,371 shares
     of the  Registrant's  Series B  Preferred  Stock held by Ahold for  726,371
     shares of the Registrant's Series C Preferred Stock. The Series C Preferred
     Stock has the same terms as the Series B Preferred  Stock except  that,  in
     lieu of a provision  for  mandatory  redemption  by the  Registrant  of the
     Series B Preferred  Stock,  the Series C Preferred  Stock  provides  for an
     increase in the dividend rate on the Series C Preferred  Stock beginning on
     June 30, 2008. The pro forma balance sheet reflects the consummation of the
     exchange as if it occurred on September 30, 2000.

                                       11
<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 net sales:

<TABLE>
<CAPTION>
                                               THREE MONTHS ENDED      NINE MONTHS ENDED
                                                  SEPTEMBER 30,           SEPTEMBER 30,
                                               ------------------      ------------------
                                                2000        1999        2000        1999
                                               ------      ------      ------      ------
<S>                                               <C>         <C>         <C>         <C>
     Net sales ............................       100%        100%        100%        100%
     Cost of sales ........................        79          74          78          77
                                               ------      ------      ------      ------
     Gross profit .........................        21          26          22          23

     Operating expenses:
         Fulfillment operations ...........        36          34          34          30
         General and administrative .......        13          13          11          10
         Marketing and selling ............         7          10           6           8
         System development and maintenance         7           6           6           5
         Depreciation and amortization ....         4           3           3           3
         Pre-opening costs ................        --           1          --           2
         Nonrecurring expenses ............        --          17           8           5
                                               ------      ------      ------      ------
             Total costs and expenses .....        67          84          68          63
                                               ------      ------      ------      ------
     Operating loss .......................       (46)        (58)        (46)        (40)

     Other income (expense):
         Investment income ................         4           2           1           3
         Interest expense .................         *           *          (1)          *
         Non-cash interest expense ........        (2)         --          (1)         --
                                               ------      ------      ------      ------
     Net loss .............................       (45)%       (57)%       (47)%       (38)%
                                               ======      ======      ======      ======
</TABLE>

     * - Less than 1%

COMPARISON OF THREE MONTHS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999
--------------------------------------------------------------------------

     Net sales. Net sales, which are the sales of groceries and related products
to customers,  subscription, service and other fees paid by customers and retail
partners,  and fees from consumer goods companies for  interactive  advertising,
promotion  and  research  services,  increased  by 32% from  $16,493,000  in the
quarter ended  September 30, 1999 to $21,794,000 in the quarter ended  September
30, 2000.

     Revenues from the sales of groceries  increased 45% from $14,574,000 in the
quarter ended  September 30, 1999 to $21,080,000 in the quarter ended  September
30, 2000.  Orders  increased 38% from 130,200 in the quarter ended September 30,
1999 to 179,200 in the quarter  ended  September  30, 2000,  while average order
size increased 5% to $118. Fees paid by customers and retail partners  decreased
from  $1,488,000  in the  quarter  ended  September  30, 1999 to $754,000 in the
quarter ended  September 30, 2000.  This decrease is  attributable to lower fees
paid by retail supply  partners and reduced  customer fees,  consistent with our
centralized  fulfillment  strategy.  Fees  from  consumer  goods  companies  for
interactive  advertising,  promotion  and research  were $431,000 in the quarter
ended  September  30,  1999.   Because  of  a  focus  on  completing   financing
transactions   in  2000,  the  Company   temporarily   reduced  its  interactive
advertising,  promotion and research efforts. One contract was renegotiated at a
lower fee, and accordingly a net $40,000 revenue  reversal was recognized in the
quarter ended September 30, 2000.  Customers,  measured as customers transacting
within the last 12 months, and in the most recent period excluding  customers in
markets  in  which  Peapod  ceased  operations,  increased  28% from  92,900  at
September  30, 1999 to 119,300 at  September  30, 2000.  On September  15, 2000,
Peapod ceased  operations in Columbus,  OH and Houston,  Dallas and Austin,  TX,
which represented 27,900 customers as of September 30, 1999.

     Cost of sales.  Cost of sales is the cost of groceries  and other  products
sold to customers.  Cost of sales increased 41% from  $12,241,000 in the quarter
ended September 30, 1999 to $17,293,000 in the quarter ended September 30, 2000.
The increase  results from the 45% increase in grocery sales during the quarter,
and was partially offset by improved product margins in centralized  fulfillment
centers.

     Fulfillment  operations.  Fulfillment  operations  expenses include (i) the
direct costs relating to the picking,  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,
training,  database  merchandising and customer support.  Fulfillment operations
expenses  increased 42% from $5,571,000 for the quarter ended September 30, 1999
to  $7,919,000  for the quarter  ended  September  30,  2000.  This  increase is
attributable  to the  increase  in the  direct  costs of  picking,  packing  and
delivering  as a result of the 38%  increase  in volume of  orders,  the  higher
fulfillment  costs incurred  while the Company  builds scale in its  centralized
fulfillment  centers  and the two  additional  operations  purchased  during the
quarter.

                                       12
<PAGE>

     On September 7, 2000, Peapod acquired Streamline.com,  Inc.'s operations in
Chicago  and  Washington,  D.C.  On  September  15,  2000,  the  Company  ceased
operations in Columbus, OH and Houston,  Dallas and Austin, TX. At September 30,
2000, the Company fulfilled  customer orders from 11 fulfillment  centers across
six metropolitan  markets  covering  6,715,800  households.  This compares to 22
fulfillment  centers  across eight  metropolitan  markets at September  30, 1999
covering 8,023,500 households.

     General and  administrative.  General and  administrative  expenses,  which
include corporate staff, accounting and human resource functions,  and occupancy
expenses,  increased 28% from $2,155,000 in the quarter ended September 30, 1999
to $2,768,000 in the quarter ended September 30, 2000. The increase is primarily
attributable  to an increase in  compensation-related  expenses as the Company's
corporate  structure has expanded  within the areas of executive  management and
operations planning.

     Marketing and selling.  Marketing and selling  expenses include the cost of
customer  acquisition  and retention  marketing,  such as radio  advertising and
direct  mail,  as well  as  certain  costs  relating  to  public  relations  and
interactive marketing services. The Company expenses all such costs as incurred.
Marketing and selling expenses  decreased by 14% from $1,665,000 for the quarter
ended September 30, 1999 to $1,429,000 for the quarter ended September 30, 2000.
This decrease is primarily  attributable to the Company's decision to scale back
marketing  during the summer  transitioning  period while focusing on developing
new branding and marketing  strategies  incorporating the Company's new partner,
Ahold.

     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  63% from $916,000 for the quarter
ended September 30, 1999 to $1,490,000 for the quarter ended September 30, 2000.
The increase is attributable to compensation  expenses and outside  services for
additional  resources to support the Company's new warehouse  management  system
implementation, to develop and support the Company's website technology, and for
additional  resources to support the  Company's  24/7  centralized  distribution
center operations.

     Depreciation and amortization.  Depreciation and amortization increased 79%
from  $525,000  for the quarter  ended  September  30, 1999 to $942,000  for the
quarter ended September 30, 2000. This increase primarily results from equipment
and leasehold  improvements in centralized  distribution centers opened in 1999,
and the recent purchase of Streamline.com,  Inc.  operations in Chicago,  IL and
Washington, D.C.

     Pre-opening costs.  Pre-opening expenses includes costs incurred prior to a
centralized  fulfillment  center  becoming  operational,  and  certain  one-time
expenditures  to support these  initiatives.  These costs  include  building and
equipment   lease   expense,   utilities,   supplies,   permits,   licenses  and
staffing-related  expenses in advance of operational opening. During the quarter
ended September 30, 1999, pre-opening costs of $188,000 were incurred related to
a centralized distribution center opened in 1999. No such costs were incurred in
the quarter ended September 30, 2000.

     Nonrecurring  expenses.  Nonrecurring  expenses totaled  $2,830,000 for the
quarter ended  September 30, 1999 and is  attributable  to the employment of Mr.
Malloy in September 1999. No nonrecurring  expenses were incurred in the quarter
ended September 30, 2000.

     Other income  (expense).  Other income (expense)  includes interest paid on
capital  leases,  interest on borrowings and credit  facilities,  and investment
income and expense.  Investment  income for the quarter ended September 30, 1999
was $288,000  compared to  investment  income of $776,000 for the quarter  ended
September 30, 2000 due principally to increased  invested  principal  during the
period.  Interest expense increased from $42,000 for the quarter ended September
30, 1999 to $94,000 in the quarter ended September 30, 2000 and is attributed to
increased leasing activity during the period.  Non-cash interest expense totaled
$431,000 for the quarter  ended  September  30, 2000 and consists of  additional
interest expense  attributed to warrants issued in connection with the term note
and the credit facility. The warrant expense related to the credit facility will
continue  to be  recognized  over the  three-year  term of the credit  facility.
Future amortization expense is expected to be $431,000 per quarter through April
2003.  No non-cash  interest  expense was  incurred  during the same period last
year.

COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999
-------------------------------------------------------------------------

     Net sales.  Net sales increased by 35% from  $51,574,000 for the nine-month
period ended September 30, 1999 to $69,440,000  for the nine-month  period ended
September 30, 2000.

     Revenues  from the sales of groceries  and related  products  increased 44%
from  $45,103,000  for  the  nine-month  period  ended  September  30,  1999  to
$65,100,000 for the nine-month period ended September 30, 2000. Orders increased
44% from 393,600 for the nine-month  period ended  September 30, 1999 to 568,500
for the  nine-month  period ended  September  30, 2000 while  average order size
remained  unchanged.  Fees paid by customers and retail partners  decreased from
$5,470,000 for the nine-month  period ended September 30, 1999 to $4,125,000 for
the nine-month period ended September 30, 2000. This decrease is attributable to

                                       13
<PAGE>

lower fees paid by retail supply partners and reduced customer fees,  consistent
with our  centralized  fulfillment  center  strategy.  Fees from consumer  goods
companies for  interactive  advertising,  promotion and research  decreased from
$1,001,000  for the nine-month  period ended  September 30, 1999 to $215,000 for
the  nine-month  period  ended  September  30,  2000,  as  the  Company  reduced
interactive  marketing,  promotions  and research  efforts during the first nine
months of the year.

     Cost of  sales.  Cost of  sales  increased  37%  from  $39,510,000  for the
nine-month  period ended  September 30, 1999 to  $54,082,000  for the nine-month
period ended  September 30, 2000. The increase  results from the 44% increase in
grocery  sales during the period and was  partially  offset by improved  product
margins in centralized fulfillment centers.

     Fulfillment operations.  Fulfillment operations expenses increased 54% from
$15,460,000  for the nine-month  period ended  September 30, 1999 to $23,835,000
for  the  nine-month   period  ended   September  30,  2000.  This  increase  is
attributable  to the  increase  in the  direct  costs of  picking,  packing  and
delivering given the 44% increase in volume of orders;  higher fulfillment costs
incurred while the Company builds scale in its centralized  fulfillment centers;
and the recent addition of two centralized fulfillment operations in Chicago, IL
and Washington, D.C.

     General and administrative.  General and administrative  expenses increased
44% from  $5,407,000  for the  nine-month  period  ended  September  30, 1999 to
$7,769,000 for the nine-month  period ended  September 30, 2000. The increase is
primarily  attributable to an increase in  compensation-related  expenses as the
Company's  corporate  structure  has  expanded  within  the  areas of  executive
management.

     Marketing  and selling.  Marketing and selling  expenses  decreased 6% from
$4,093,000 for the nine-month  period ended September 30, 1999 to $3,856,000 for
the  nine-month  period ended  September  30, 2000 due to a focus by  management
during the second and third  quarters of 2000 on  developing  new  branding  and
marketing strategies incorporating the Company's new partner, Ahold. The Company
expenses all such costs as incurred.

     System  development  and  maintenance.  System  development and maintenance
expenses increased 71% from $2,426,000 for the nine-month period ended September
30,1999 to $4,148,000  for the nine-month  period ended  September 30, 2000. The
increase is  attributable  to  compensation  expenses  and outside  services for
additional  resources to support the Company's new warehouse  management  system
implementation, to develop and support the Company's website technology, and for
additional  resources to support the  Company's  24/7  centralized  distribution
center operations.

     Depreciation and amortization.  Depreciation and amortization increased 46%
from $1,603,000 for the nine-month period ended September 30, 1999 to $2,343,000
for the  nine-month  period ended  September 30, 2000.  This increase  primarily
results from equipment and leasehold  improvements  in centralized  distribution
centers opened in 1999, and the recent addition of two  centralized  fulfillment
operations in Chicago, IL and Washington, D.C.

     Pre-opening  Expense.  During the nine months  ended  September  30,  1999,
pre-opening costs of $828,000 were incurred related to centralized  distribution
centers  opened in the first and  second  quarters  of 1999.  No such costs were
incurred in the nine-month period ended September 30, 2000.

     Non-recurring  Expenses.  Nonrecurring  expenses totaled $5,608,000 for the
nine months  ended  September  30, 2000 and result  from  severance  expenses of
$1,850,000,  which  was  incurred  primarily  in  connection  with Mr.  Malloy's
termination of employment - see Note 3; impaired asset  write-offs of $1,496,000
related primarily to the decision to exit or abandon certain markets,  including
lease  terminations  and facility design costs and contract  termination  costs;
expenses attributable to a failed financing transaction of $1,037,000 consisting
primarily of legal,  accounting and valuation costs;  charges for the settlement
of  claims  related  to prior  licensing  obligations  of  $705,000,  consisting
primarily of additional  programming  costs;  and other  nonrecurring  expenses.
Nonrecurring expenses totaled $2,830,000 for the nine months ended September 30,
1999 and resulted primarily in connection with Mr. Malloy's employment in 1999.

     Other income (expense). Investment income decreased from $1,352,000 for the
nine-month period ended September 30, 1999 to $689,000 for the nine-month period
ended September 30, 2000 due to reduced invested  principal during the first six
months of 2000 as the Company  sought  additional  financing.  Interest  expense
increased  from $115,000 for the nine-month  period ended  September 30, 1999 to
$368,000 for the nine-month period ended September 30, 2000 and is attributed to
borrowing under the Company's credit facility and leasing  activity  utilized in
the new centralized distribution  facilities.  Non-cash interest expense totaled
$1,047,000  for the nine-month  period ended  September 30, 2000 and consists of
additional interest expense attributed to warrants issued in connection with the
term note and the credit  facility.  The warrant  expense  related to the credit
facility will continue to be recognized  over the three-year  term of the credit
facility.  No non-cash interest expense was incurred during the same period last
year.

LIQUIDITY AND CAPITAL RESOURCES

     Cash used in operating  activities  increased from $17,989,000 in the first
nine  months of 1999 to  $26,120,000  in the first  nine  months of 2000.  As of
September 30, 2000, the Company had $33,284,000 in cash and cash equivalents and
$1,240,000  in  restricted  cash.  On September 7, 2000,  the Company  purchased
Streamline.com,  Inc.'s  operations  in Chicago,  IL and  Washington,  D.C.  for
$11,612,000 in cash plus  assumption of  obligations of $6,659,000.  The Company
uses  its  working  capital  to fund  ongoing  operations,  marketing  programs,
geographic expansion and to further develop its products and services.

     On June 30, 2000,  the Company  issued  preferred  securities  and warrants
under the terms of a purchase  agreement,  dated April 14, 2000,  (the "Purchase
Agreement.") with Koninklijke Ahold N.V. ("Ahold"). Pursuant to the terms of the

                                       14
<PAGE>

Purchase  Agreement,  the Company agreed to sell 726,371 shares of the Company's
series B convertible  redeemable  preferred stock, par value $.01 per share (the
"Series B Preferred Stock"), for an aggregate purchase price of $72,637,024, and
warrants (the "Warrants") to purchase  32,894,270 shares of the Company's common
stock.  The Series B Preferred  Stock is initially  convertible  into 19,369,873
shares of common  stock,  which  represents  approximately  51% of the Company's
common stock outstanding as of June 30, 2000. The Series B Preferred Stock has a
liquidation  preference  of $100.00 per share,  plus all then accrued and unpaid
dividends.  The Series B Preferred Stock accrues cumulative  dividends,  payable
quarterly,  at the rate of 8% per annum.  The Warrants have an exercise price of
$3.75, subject to adjustment,  and are immediately  exercisable.  On October 12,
2000,  the Company  entered into an Exchange  Agreement  and First  Amendment to
Purchase Agreement (dated April 14, 2000) (the "Exchange Agreement") with Ahold.
Under the Exchange Agreement, Ahold agreed to exchange the 726,371 shares of the
Registrant's  Series B Preferred  Stock  held by Ahold for 726,371 shares of the
Registrant's Series C Preferred Stock. The Series C Preferred Stock has the same
terms as the Series B Preferred  Stock except that,  in lieu of a provision  for
mandatory  redemption  by the  Registrant of the Series B Preferred  Stock,  the
Series C Preferred  Stock  provides for an increase in the dividend  rate on the
Series C Preferred Stock beginning on June 30, 2008. The pro forma balance sheet
reflects the  consummation  of the  exchange as if it occurred on September  30,
2000.

     On October  24,  2000,  Ahold  waived  their  right to  receive  payment on
September  30,  2000 of any  accumulated  and unpaid  dividends  on the Series B
Preferred  Stock that would  otherwise be due and payable on September 30, 2000,
which amount as of that date was $1,453,000,  provided that such dividends shall
accumulate and be compounded in accordance  with the terms of the Certificate of
Designation  and that Ahold will have the right at any time to demand payment of
the unpaid dividend.

     On April 14, 2000, simultaneous with the signing of the Purchase Agreement,
the Company  entered into a $20 million secured  revolving  credit facility with
Ahold  maturing in April 2003,  with  interest from the date of borrowing at the
higher of (i) the rate,  which is 1/2 of 1% in excess of the Federal Funds Rate;
and (ii),  the Prime  Lending  Rate,  plus a 2% base rate  margin.  Pursuant  to
security  agreements  entered into in connection with the credit  facility,  the
Company's  obligations under the credit facility are secured by a lien on all of
the  Company's  personal  property,  including  its  intellectual  property.  In
connection with the credit and security agreements,  the Company issued to Ahold
warrants to purchase an  aggregate  of  3,666,667  shares of common  stock at an
initial  exercise  price of $3.00,  subject to  adjustment, and are  immediately
exercisable. There are no outstanding borrowings under the credit facility as of
September 30, 2000. If Ahold  exercises any of its warrants prior to April 2003,
the credit  facility will be reduced  dollar-for-dollar  for the exercise  price
received.  Total  warrants  issued  to  Ahold,  if  exercised,  would  represent
approximately  24% of the common stock  outstanding as of September 30, 2000. As
of September 30, 2000, no warrants have been exercised by Ahold.

     The Company believes that current cash together with availability under the
credit  facility  with Ahold should  provide the Company with  adequate  capital
resources for the foreseeable future.

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

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     During 1998, the Financial  Accounting  Standards Board issued Statement of
Financial  Accounting  Standards  (SFAS) No.  133,  "Accounting  for  Derivative
Instruments  and Hedging  Activities,"  as amended,  which is effective  for all
fiscal  years  beginning  after  June 15,  2000.  SFAS  No.  133  establishes  a
comprehensive  standard  for  the  recognition  and  measurement  of  derivative
instruments and hedging activities.  The Company does not expect the adoption of
the new standard to have a material effect on its financial position, liquidity,
or results of operations.

     Financial  Accounting  Standards Board  Interpretation No. 44 (FIN No. 44),
"Accounting  for  Certain   Transactions   Involving  Stock   Compensation,"  an
interpretation  of Accounting  Principles Board Opinion No. 25, is effective for
financial  statements  beginning  after  July 1,  2000.  FIN No. 44  establishes
accounting   and  reporting   standards   for   transactions   involving   stock
compensation.  FIN No.  44 has not had a  significant  impact  on the  Company's
financial statements.

     In December  1999,  the  Securities  and Exchange  Commission  issued Staff
Accounting Bulletin No. 101, "Revenue  Recognition in Financial  Statements," as
amended, which is effective no later than the fourth quarter of fiscal 2000. The
Company does not expect the adoption of this accounting  pronouncement to have a
significant impact on its results of operations or financial position.

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The  Company  does not  have any  derivative  financial  instruments  as of
September 30, 2000. The Company has a $20,000,000  credit facility with interest
from the date of borrowing at the higher of (i) the rate,  which is 1/2 of 1% in
excess of the Federal Funds Rate;  and (ii),  the Prime Lending Rate,  plus a 2%
base rate margin. No such borrowings existed at September 30, 2000.

                                       15
<PAGE>

                                     PART II
                                OTHER INFORMATION

ITEM 1.   LITIGATION

     On March 16, 2000, the Company issued a press release  announcing  that its
CEO and President  (Mr.  Malloy) was departing due to health  reasons,  and as a
result,  a previously  announced  $120 million  financing  had been  terminated.
Subsequently, seven substantially identical cases were filed in federal district
court in Chicago on various  dates  between  March 17, 2000 and May 10, 2000. In
each case,  Peapod and two individual  defendants  (both of whom are officers of
Peapod)  were sued for alleged  violations  of Section  10(b) of the  Securities
Exchange Act of 1934 and SEC Rule 10b-5.  The seven cases were  consolidated  on
June 1, 2000. The consolidated  complaint alleged that Peapod  misrepresented or
failed to disclose  certain  facts  relating to the  Company's  liquidity,  cash
resources, and cash needs. The consolidated complaints were brought on behalf of
a purported  class of purchasers of Peapod's common stock during the period from
November 8, 1999 to and including  March 16, 2000, and sought to recover damages
in an  unspecified  amount.  On August  29,  2000,  the  plaintiffs  voluntarily
dismissed their complaint without prejudice.

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.  Factors that would cause actual  results to differ
materially from Peapod's current expectations  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 Ahold
and with the Company's  retail partners and interactive  marketing  services and
research customers;  (3) the Company's ability to execute its growth strategies,
including effectively  implementing both a centralized fulfillment  distribution
model and a fast-pick  center 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.

     The date of the Company's 2001 annual meeting of  stockholders  has changed
by more than 30 days from last  year's  annual  meeting  of  stockholders.  As a
result, in order to be considered for inclusion in the Company's proxy materials
for the 2001 annual meeting of  stockholders,  any stockholder  proposal must be
addressed to Peapod, Inc., 9933 Woods Drive, Skokie,  Illinois 60077, Attention:
Secretary, and must be received by no later than February 2, 2001. The Company's
by-laws  set  forth  additional   requirements  and  procedures   regarding  the
submission by stockholders of matters for  consideration at an annual meeting of
stockholders. A stockholder proposal or nomination intended to be brought before
the 2001  annual  meeting  must be received  by the  Secretary  in writing on or
before March 2, 2001. A  nomination  or proposal  that does not comply with such
requirements and procedures will be disregarded.

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

     On  September  12, 2000 the  Company  filed a Form 8-K  announcing  that on
     September  7, 2000,  the  Company  issued a press  release  announcing  its
     acquisition of Streamline.com, Inc.'s operations in Chicago and Washington,
     D.C. and the Company's intention to exit from the Texas and Ohio markets.

     On October 18, 2000 the Company filed a Form 8-K announcing that on October
     12, 2000, the Company entered into the Exchange Agreement with Ahold. Under
     the  Exchange  Agreement,  Ahold agreed to exchange  726,371  shares of the
     Registrant's  Series B Preferred  Stock held by Ahold for 726,371 shares of
     the Registrant's Series C Preferred Stock. The Series C Preferred Stock has
     the same terms as the Series B Preferred  Stock except  that,  in lieu of a
     provision  for  mandatory  redemption  by the  Registrant  of the  Series B
     Preferred  Stock,  the Series C Preferred Stock provides for an increase in
     the  dividend  rate on the Series C Preferred  Stock  beginning on June 30,
     2008.

                                       16
<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)

November 14, 2000                       /s/ Dan Rabinowitz
                                        ---------------------
                                        Dan Rabinowitz
                                        Chief Financial Officer

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