<PAGE>
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, 1997
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)
Registrant's Telephone Number: (847) 583-9400
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, as of November 10, 1997 was 16,799,692.
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. Financial Statements.
PEAPOD, INC.
BALANCE SHEETS
(in thousands, except for share data)
(unaudited)
<TABLE>
<CAPTION>
December 31, September 30,
1996 1997
------------ ------------
<S> <C> <C>
Assets
------
Cash and cash equivalents............................................... $ 13,039 $ 56,799
Investments held to maturity............................................ - 6,058
Receivables, net of bad debt allowance of $42 and $315 as of
December 31, 1996 and September 30, 1997, respectively................ 535 2,433
Prepaid expenses........................................................ 449 1,016
Other current assets.................................................... 189 212
----------- -----------
Total current assets.................................................. 14,212 66,518
Property and equipment:
Computer equipment and software....................................... 2,493 4,051
Service equipment and other........................................... 764 1,296
----------- -----------
Property and equipment, at cost......................................... 3,257 5,347
Accumulated depreciation.............................................. (1,247) (2,172)
----------- -----------
Net property and equipment.............................................. 2,010 3,175
Other assets............................................................ 306 840
----------- -----------
Total assets.......................................................... $ 16,528 $ 70,533
=========== ===========
Liabilities and Owners' Equity
------------------------------
Current liabilities:
Accounts payable...................................................... $ 3,370 $ 4,152
Accrued compensation.................................................. 1,079 1,423
Other accrued liabilities............................................. 875 1,835
Current deferred service fees......................................... 1,200 2,565
Current obligations under capital lease............................... 333 575
----------- -----------
Total current liabilities........................................... 6,857 10,550
Deferred service fees................................................... 929 859
Obligations under capital lease, less current obligations............... 340 637
----------- -----------
Total liabilities..................................................... 8,126 12,046
Owners' equity:
Partners' capital (note 2)............................................ 8,402 -
Preferred Stock, $.01 par value, 5,000,000 shares authorized
none issued and outstanding......................................... - -
Common Stock, $.01 par value, 50,000,000 shares authorized
16,677,364 shares issued and outstanding at September 30, 1997...... - 167
Treasury stock, 2,000 shares at September 30, 1997.................... - (19)
Additional paid-in-capital............................................ - 62,647
Accumulated deficit................................................... - (4,308)
----------- -----------
Total owners' equity................................................ 8,402 58,487
----------- -----------
Total liabilities and owners' equity.................................. $ 16,528 $ 70,533
=========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
PEAPOD, INC.
STATEMENTS OF OPERATIONS
(in thousands, except for share and per share data)
(unaudited)
<TABLE>
<CAPTION>
Three months ended September 30, Nine months ended September 30,
-------------------------------- -------------------------------
1996 1997 1996 1997
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Grocery sales, net of returns............... $ 4,818 $ 10,208 $ 14,828 $ 29,602
Interactive marketing services.............. 284 614 686 1,605
Member and retailer services................ 1,803 3,393 4,148 10,364
----------- ----------- ------------ ------------
Total revenues............................ 6,905 14,215 19,662 41,571
Costs and expenses:
Groceries sold, net of returns.............. 4,818 10,208 14,828 29,602
Grocery operations.......................... 2,038 4,105 5,252 12,333
General and administrative.................. 1,071 1,154 2,133 3,644
Marketing and selling....................... 809 1,679 2,343 3,923
System development and maintenance.......... 455 378 1,144 1,057
Depreciation and amortization............... 174 366 442 956
----------- ----------- ------------ ------------
Total costs and expenses.................. 9,365 17,890 26,142 51,515
----------- ----------- ------------ ------------
Operating loss................................ (2,460) (3,675) (6,480) (9,944)
Other income (expense):
Interest expense............................ (19) (13) (54) (58)
Interest income............................. 195 874 362 1,210
----------- ----------- ------------ ------------
Net loss...................................... $ (2,284) $ (2,814) $ (6,172) $ (8,792)
=========== =========== ============ ============
Pro forma net loss per share.................. $ (0.18) $ (0.17) $ (0.48) $ (0.61)
=========== =========== ============ ============
Shares used in computing pro forma net loss
per share................................... 12,806,794 16,583,315 12,806,794 14,411,775
=========== =========== ============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
PEAPOD, INC.
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine months ended September 30,
-------------------------------
1996 1997
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net loss.................................................... $ (6,172) $ (8,792)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization........................... 442 956
Shares issued for services rendered..................... 111 533
Changes in operating assets and liabilities:
(Increase) decrease in receivables .................. (107) (1,898)
(Increase) decrease in prepaid expenses .............. (191) (567)
(Increase) decrease in other current assets........... 82 (23)
Increase (decrease) in accounts payable............... 683 782
Increase (decrease) in accrued compensation........... 719 344
Increase (decrease) in other accrued liabilities...... (167) 959
Increase (decrease) in deferred service fees.......... 1,051 1,295
-------------- ------------
Net cash used in operating activities............... (3,549) (6,411)
Cash flows from investing activities:
Property and equipment purchased............................ (613) (1,183)
Capitalized software development costs...................... - (565)
Short-term investments held to maturity..................... - (6,058)
-------------- ------------
Net cash used in investing activities............... (613) (7,806)
Cash flows from financing activities:
Proceeds from issuance of equity instruments, net of
issuance costs ........................................... 16,409 58,287
Proceeds from issuance of common shares upon exercise of
options and warrants...................................... - 57
Repayment of subordinated debentures........................ (125) -
Payments on capital lease obligations....................... (119) (367)
-------------- ------------
Net cash provided by financing activities........... 16,165 57,977
Net increase in cash ......................................... 12,003 43,760
Cash and cash equivalents at beginning of period.............. 2,466 13,039
-------------- ------------
Cash and cash equivalents at end of period.................... $ 14,469 $ $ 56,799
============== ============
Supplemental disclosure of cash flows information:
Interest paid .............................................. $ 52 $ 61
Options exercised by sale of stock to Company............... - 19
Supplemental disclosure of noncash investing and financing
activity - equipment on capital leases ..................... 367 907
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 consolidated 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, 1997, and the results of its operations and cash flows
for the periods indicated. The results of operations for the three and nine
months ended September 30, 1997 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 and Peapod LP for the
period from December 5, 1996 through December 31, 1996 and the year ended
December 31, 1996, respectively, which are included in the Company's
Registration Statement on Form S-1 (No. 333-24341) filed with the Securities
and Exchange Commission.
2. Conversion. Peapod, Inc. ("Company") is the successor to a business
originally founded in 1989 as a Delaware corporation and operated since 1992
through an Illinois limited partnership ("Peapod LP"). In December 1996, the
Company was incorporated in Delaware. In a conversion (the "Conversion")
that was effected on May 31, 1997 (i) all of the equity interests in Peapod
LP were transferred to the Company in exchange for 12,656,417 shares of
Common Stock, (ii) Peapod LP was dissolved, (iii) all of the assets and
liabilities of Peapod LP were transferred to the Company and (iv)
outstanding options and warrants for equity interests in Peapod LP were
converted into options and warrants for shares of Common Stock. The transfer
of the assets and liabilities of Peapod LP to the Company have been recorded
by the Company at the historical carrying values of Peapod LP. On June 16,
1997 ("Offering Date"), the Company closed an initial public offering of
4,000,000 shares of Common Stock at $16.00 per share generating net proceeds
of $58.1 million.
The balance sheet as of December 31, 1996 presents the financial condition
of Peapod LP.
3. Earnings Per Share. The pro forma net loss per share is computed based on
the weighted average number of shares outstanding during the period,
assuming the conversion occurred at January 1, 1996.
Pursuant to Securities and Exchange Commission Staff Accounting Bulletin No.
83, common stock, stock warrants and stock options issued during the twelve
months immediately preceding the Offering Date (using the treasury stock
method and an initial public offering price per share of $16.00) have been
included in the calculation of Common Stock as if they were outstanding for
the entire period presented. Other common equivalent shares from stock
options and warrants are excluded from the computation because their effect
is antidilutive.
<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 revenue:
<TABLE>
<CAPTION>
Percentage of total revenues
--------------------------------------------------------------------
Three months ended September 30, Nine months ended September 30,
--------------------------------- -------------------------------
1996 1997 1996 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues:
Grocery sales, net of returns........ 69.8 % 71.8 % 75.4 % 71.2 %
Interactive marketing services....... 4.1 4.3 3.5 3.9
Member and retailer services......... 26.1 23.9 21.1 24.9
------------ ------------- ------------ ------------
Total revenues..................... 100.0 100.0 100.0 100.0
Costs and expenses:
Groceries sold, net of returns....... 69.8 71.8 75.4 71.2
Grocery operations................... 29.5 28.9 26.7 29.7
General and administrative........... 15.5 8.1 10.9 8.8
Marketing and selling................ 11.7 11.8 11.9 9.4
System development and maintenance... 6.6 2.7 5.8 2.5
Depreciation and amortization........ 2.5 2.6 2.3 2.3
------------ ------------ ------------ -----------
Total costs and expenses........... 135.6 125.9 133.0 123.9
------------ ------------ ------------ -----------
Operating loss......................... (35.6) (25.9) (33.0) (23.9)
Other income (expense):
Interest expense..................... (0.3) (0.1) (0.3) (0.1)
Interest income...................... 2.8 6.2 1.9 2.9
------------ ------------ ------------ -----------
(33.1) % (19.8) % (31.4) % (21.1) %
Net loss............................... ============ ============ ============ ===========
</TABLE>
Comparison of Three Months Ended September 30, 1997 and September 30, 1996
- --------------------------------------------------------------------------
Grocery sales, net of returns. Grocery sales, net of returns, which are
the actual costs of groceries purchased by members, increased by 112% from
$4,818,000 in the quarter ended September 30, 1996 to $10,208,000 in the quarter
ended September 30, 1997. This increase was principally due to a 114% increase
in the number of orders offset slightly by a decrease in average order size.
Average order size tends to be smaller in newer markets. The total number of
orders increased from 43,700 in the quarter ended September 30, 1996 to 93,700
in the quarter ended September 30, 1997. Total membership at September 30, 1996
and 1997 was 21,200 and 56,300, respectively, an increase of 166%. Increases in
the Company's membership base resulted largely from the introduction of the
Peapod service in 6 new markets since June 30, 1996: Columbus, Boston, Houston,
Atlanta, Dallas and Austin, as well as increased penetration in the Chicago and
San Francisco/San Jose markets.
Interactive marketing services. Revenues from interactive marketing
services include fees from consumer goods companies for interactive advertising,
promotion and research services. Fees from such services increased by 116% from
$284,000 in the quarter ended September 30, 1996 to $614,000 in the quarter
ended September 30, 1997. The increase is primarily due to an increasing number
of interactive marketing services clients during the period.
Member and retailer services. Revenues from member and retailer services
include subscription, service and other fees paid by members and retail partners
related to Peapod's online shopping and delivery operations. Fees from such
services increased 88% from $1,803,000 in the quarter ended September 30, 1996
to $3,393,000 in the quarter ended September 30, 1997. This increase is
primarily attributable to (i) higher grocery volumes and order quantities, (ii)
the increasing size of the Company's membership base, and (iii) fees paid by new
retailers and additional fees paid by existing retailers.
Groceries sold, net of returns. The Company purchases groceries for its
account on behalf of its members. The actual cost of groceries are subsequently
charged to the members. Groceries sold, net of returns increased from
$4,818,000 in the quarter ended September 30, 1996 to $10,208,000 in the quarter
ended September 30, 1997, commensurate with the increase in grocery sales, net
of returns.
<PAGE>
Grocery operations. Grocery operations expenses include (i) the direct
costs relating to the shopping, packing and delivery of member 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. Grocery operations expenses
increased 101% from $2,038,000 in the quarter ended September 30, 1996 to
$4,105,000 in the quarter ended September 30, 1997. The increase is primarily
attributable to (i) salaries and overhead expenses of new fulfillment centers,
(ii) the direct costs of shopping, packing and delivering the increased volume
of member orders, (iii) salaries and overhead expenses for six new markets, (iv)
salaries and overhead expenses for customer support functions to support
increases in the Company's membership base, and (v) new training and recruiting
functions supporting new markets and new fulfillment centers.
At September 30, 1997, Peapod fulfilled member orders from 57 fulfillment
centers across eight metropolitan markets compared to 20 fulfillment centers
across four metropolitan markets at September 30, 1996. Two fulfillment centers
were consolidated into other existing centers in the quarter ended September 30,
1997. Two new metropolitan markets and five fulfillment centers were added in
the quarter ended September 30, 1996.
General and administrative. General and administrative expenses, which
include corporate staff, accounting and human resource functions, increased 8%
from $1,071,000 in the quarter ended September 30, 1996 to $1,154,000 in the
quarter ended September 30, 1997. The increase resulted primarily from an
increase in compensation-related expenses to support the Company's growth and
expenses related to the relocation of the Company's headquarters.
Marketing and selling. Marketing and selling expenses include the cost of
member acquisition and retention marketing, such as radio advertising and direct
mail, as well as certain costs relating to interactive marketing services. The
Company expenses all such costs as incurred. Marketing and selling expenses
increased by 108% from $809,000 in the quarter ended September 30, 1996 to
$1,679,000 in the quarter ended September 30, 1997. The increase is largely the
result of a more aggressive member acquisition program, the benefits of which
should largely be realized in the fourth quarter.
System development and maintenance. System development and maintenance
expenses, which include new product development as well as the maintenance and
enhancement of existing systems, decreased 17% from $455,000 in the quarter
ended September 30, 1996 to $378,000 in the quarter ended September 30, 1997.
In 1996, Peapod began work on version 5.0 of its end-user software. In the
quarter ended September 30, 1997, the Company capitalized $210,000 of these
development costs while no development costs were capitalized in the quarter
ended September 30, 1996.
Depreciation and amortization. Depreciation and amortization increased
110% from $174,000 in the quarter ended September 30, 1996 to $366,000 in the
quarter ended September 30, 1997. This increase is the result of equipment
added to support new members, fulfillment centers and new employees, and changes
in the depreciable lives of certain capital assets already in service.
<PAGE>
Other income (expense). Other income (expense) includes interest paid on
subordinated debentures, notes payable and capital leases and interest earned on
cash balances. Interest expense decreased from $19,000 in the quarter ended
September 30, 1996 to $13,000 in the quarter ended September 30, 1997. Interest
income increased from $195,000 in the quarter ended September 30, 1996 to
$874,000 in the quarter ended September 30, 1997, resulting from the investment
of proceeds from the issuance of equity in both 1996 and 1997.
Comparison of Nine Months Ended September 30, 1997 and September 30, 1996
- -------------------------------------------------------------------------
Grocery sales, net of returns. Grocery sales, net of returns, increased by
100% from $14,828,000 in the first nine months of 1996 to $29,602,000 in the
first nine months of 1997. This increase was principally due to a 101% increase
in the number of orders offset slightly by a decrease in average order size. The
total number of orders increased from 135,500 in the first nine months of 1996
to 271,800 in the first nine months of 1997. Total membership at September 30,
1996 and 1997 was 21,200 and 56,300, respectively, an increase of 166%.
Increases in the Company's membership base resulted largely from the
introduction of the Peapod service in 6 new markets: Columbus, Boston, Houston,
Atlanta, Dallas and Austin, as well as increased penetration in the Chicago and
San Francisco/San Jose markets.
Interactive marketing services. Revenues from interactive marketing
services increased by 134% from $686,000 in the first nine months of 1996 to
$1,605,000 in the first nine months of 1997. The increase is primarily due to an
increasing number of interactive marketing services clients during the period.
Member and retailer services. Member and retailer services fees increased
150% from $4,148,000 in the first nine months of 1996 to $10,364,000 in the
first nine months of 1997. This increase is primarily attributable to (i)
additional fees paid by new and existing retailers, (ii) higher grocery volumes
and order quantities and (iii) the increasing size of the Company's membership
base.
Groceries sold, net of returns. Groceries sold, net of returns increased
from $14,828,000 in the first nine months of 1996 to $29,602,000 in the first
nine months of 1997, commensurate with the increase in grocery sales, net of
returns.
Grocery operations. Grocery operations expenses increased 135% from
$5,252,000 in the first nine months of 1996 to $12,333,000 in the first nine
months of 1997. The increase is primarily attributable to (i) salaries and
overhead expenses of new fulfillment centers, (ii) the direct costs of shopping,
packing and delivering member orders relating to the increased volume of orders,
(iii) salaries and overhead expenses for six new markets, (iv) salaries and
overhead expenses for customer support functions, and (v) new training and
recruiting functions created to assist in the rapid opening and support of new
markets and new fulfillment stores.
At September 30, 1997, Peapod fulfilled member orders from 57 fulfillment
centers across eight metropolitan markets compared to 20 fulfillment centers
across four metropolitan markets at September 30, 1996. Four new metropolitan
markets and 30 fulfillment centers were
<PAGE>
added in the nine months ended September 30, 1997 compared to two new
metropolitan markets and six fulfillment centers added in the first nine months
of 1996.
General and administrative. General and administrative expenses increased
71% from $2,133,000 in the first nine months of 1996 to $3,644,000 in the first
nine months of 1997. The increase resulted primarily from an increase in
compensation-related expenses to support the Company's growth and occupancy
expenses related to the centralization of field support functions and the
relocation of the Company's headquarters.
Marketing and selling. Marketing and selling expenses increased by 67%
from $2,343,000 in the first nine months of 1996 to $3,923,000 in the first nine
months of 1997. The increase is principally due to acquisition marketing in new
and existing markets, and additional marketing staff to support the growth in
interactive marketing services and other marketing initiatives.
System development and maintenance. System development and maintenance
expenses decreased 8% from $1,144,000 in the first nine months of 1996 to
$1,057,000 in the first nine months of 1997. In 1996, Peapod began work on
version 5.0 of its end-user software. In the first nine months of 1997, the
Company capitalized $565,000 of these development costs while no development
costs were capitalized in the first nine months of 1996.
Depreciation and amortization. Depreciation and amortization increased
116% from $442,000 in the first nine months of 1996 to $956,000 in the first
nine months of 1997. This increase is the result of equipment added to support
new members, new fulfillment centers and new employees and changes in the
depreciable lives of certain capital assets already in service.
Other income (expense). Interest expense increased from $54,000 in the
first nine months of 1996 to $58,000 in the first nine months of 1997. Interest
income increased from $362,000 in the first nine months of 1996 to $1,210,000 in
the first nine months of 1997, resulting from the investment of proceeds from
the issuance of equity in both 1996 and 1997.
LIQUIDITY AND CAPITAL RESOURCES
Cash used in operating activities increased from $3,549,000 in the first
nine months of 1996 to $6,411,000 in the first nine months of 1997. The
increase in cash used in operating activities was primarily attributable to
increased net losses from operations and increased receivables balances,
partially offset by increases in deferred service fees, accrued liabilities and
accounts payable. As of September 30, 1997, the Company had $56,799,000 in cash
and cash equivalents, and $6,058,000 in short-term investments held to maturity.
In 1997, the Company sold equity which generated aggregate net proceeds of
$58,344,000, including $58,137,000 net proceeds from the Company's initial
public offering of Common Stock in June 1997 (the "IPO"). The Company intends
to use the net proceeds from the IPO primarily for expansion into new geographic
markets and further penetration in existing markets. The Company uses its
working capital to fund ongoing operations, marketing programs and geographic
expansion and to further develop its products and services.
<PAGE>
The Company anticipates that existing cash and short term investments held
to maturity 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.
<PAGE>
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
expression, 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; (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.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits - The Exhibits filed with this report are listed on the
attached Exhibit Index.
(b) Reports on Form 8-K - The Registrant filed no Current Reports on
Form 8-K during the quarter ended September 30, 1997.
<PAGE>
EXHIBIT INDEX
Exhibit
No. Description
--- -----------
11-- Statements re: computation of per share earnings
27-- Financial Data Schedule
<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 13, 1997 /s/ John C. Walden
------------------------------
John C. Walden
Chief Operating Officer
<PAGE>
Exhibit 11
Peapod, Inc.
Statement Regarding Computation of Net Loss per Share
<TABLE>
<CAPTION>
Three months ended Sept. 30 Nine months ended Sept. 30,
1996 1997 1996 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Loss $(2,284,000) $(2,814,000) $(6,172,000) $(8,792,000)
============ ============ ============ ============
Weighted average
Common Shares
outstanding 9,645,928 16,583,315 9,645,928 14,196,126
Additional Shares
pursuant to SAB 83
computation 3,160,866 - 3,160,866 215,649
------------ ------------ ------------ ------------
Shares used in computing
pro forma net loss
per share 12,806,794 16,583,315 12,806,794 14,411,775
============ ============ ============ ============
Pro forma net loss
per share $ (0.18) $ (0.17) $ (0.48) $ (0.61)
============ ============ ============ ============
</TABLE>
Note: The pro forma net loss per share is computed assuming the Conversion
occurred at January 1, 1996.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
the balance sheet as of September 30, 1997 and the statements of operations for
the three and nine months ended September 30, 1997 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-START> JUL-01-1997 JAN-01-1997
<PERIOD-END> SEP-30-1997 SEP-30-1997
<CASH> 56,799 56,799
<SECURITIES> 6,058 6,058
<RECEIVABLES> 2,748 2,748
<ALLOWANCES> 315 315
<INVENTORY> 0 0
<CURRENT-ASSETS> 66,518 66,518
<PP&E> 5,347 5,347
<DEPRECIATION> 2,172 2,172
<TOTAL-ASSETS> 70,533 70,533
<CURRENT-LIABILITIES> 10,550 10,550
<BONDS> 0 0
0 0
0 0
<COMMON> 167 167
<OTHER-SE> 58,320 58,320
<TOTAL-LIABILITY-AND-EQUITY> 70,533 70,533
<SALES> 10,208 29,602
<TOTAL-REVENUES> 14,215 41,571
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 17,890 51,515
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 13 58
<INCOME-PRETAX> (2,814) (8,792)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (2,814) (8,792)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (2,814) (8,792)
<EPS-PRIMARY> (.17) (.61)
<EPS-DILUTED> (.17) (.61)
<FN>
1. These financial statements should be read in conjunction with the Company's
Form S-1 (No. 333-24341) filed with the SEC.
2. See the Company's Form S-1 (No. 333-24341) for a description of the
Conversion from Peapod LP to the Company effected on May 31, 1997.
3. On June 16, 1997 the Company closed an initial public offering of 4,000,000
shares of Common Stock at $16.00 per share.
4. SEC Staff Accounting Bulletin No. 83 has been applied in calculating EPS.
</FN>
</TABLE>
