EXHIBIT 99.1

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

General

Zany Brainy, Inc. ("Zany Brainy") was a leading specialty retailer of high
quality toys, games, books and multimedia products for children that, as of
August 4, 2001, had 187 stores operating in 34 states.

On May 15, 2001, Zany Brainy and five of its subsidiaries (collectively, the
"Debtors") filed voluntary petitions for relief under Chapter 11 of the
Bankruptcy Code in the Bankruptcy Court (the "Filing").

As a result of the Filing, Zany Brainy is now required to file periodically
with the Bankruptcy Court various documents, including certain financial
information on an unconsolidated basis. This information includes statements of
financial affairs, schedules of assets and liabilities, and monthly operating
reports in forms prescribed by federal bankruptcy law.

Zany Brainy cautions that such materials are prepared according to requirements
of federal bankruptcy law. While they accurately provide then-current
information required under federal bankruptcy law, they are nonetheless
unconsolidated, unaudited, and are prepared in a format different from that used
in our consolidated financial statements filed under the securities laws.
Accordingly, Zany Brainy believes that the substance and format do not allow
meaningful comparison with Zany Brainy's regular publicly-disclosed consolidated
financial statements.

The materials filed with the Bankruptcy Court are not prepared for the purpose
of providing a basis for an investment decision relating to Zany Brainy stock,
or for comparison with other financial information filed with the Securities and
Exchange Commission.

Most of the Debtors' filings with the Bankruptcy Court are available to the
public at the office of the Clerk of the Bankruptcy Court. Those filings may
also be obtained through private document retrieval services. Zany Brainy
undertakes no obligation to make any further public announcement with respect to
the documents filed with the Bankruptcy Court or any matters referred to in
them.

Recent Developments

On August 16, 2001, Zany Brainy announced that it had agreed to sell
substantially all of its assets to The Right Start, Inc. (the "Right Start").
The Bankruptcy Court approved the transaction with Right Start and it was
completed in the beginning of September. Under the terms of the transaction,
the Right Start acquired substantially all of the assets of Zany Brainy in
exchange for $11.7 million in cash, approximately $90 million in the
assumption of certain liabilities, including Zany Brainy's DIP Facility, and
the issuance of 1.1 million shares of The Right Start, Inc. common stock.

On January 18, 2002, the Bankruptcy Court approved the Debtors disclosure
statement including its proposed plan of liquidation. The hearing for
confirmation of the plan of liquidation is currently scheduled for March 6,
2002. The proposed plan of liquidation provides that proceeds from the
transaction with Right Start will be used to pay the Debtors' liabilities.
Zany Brainy shareholders will not receive any of the proceeds from the Right
Start transaction.

Results of Operations

The following table sets forth Zany Brainy financial data expressed as a
percentage of net sales, and operating data for the periods indicated.

Thirteen Weeks Ended Twenty-Six Weeks Ended
-------------------------------- --------------------------------
August 4, 2001 July 29, 2000 August 4, 2001 July 29, 2000
-------------- ------------- -------------- -------------

Net sales 100.0% 100.0% 100.0% 100.0%
Cost of goods sold /1/ 98.9 90.9 91.7 85.8
-------------- ------------- -------------- -------------

Gross profit 1.1 9.1 8.3 14.2
Selling, general, and
administrative expenses 41.4 36.5 40.3 37.5
Merger and integration costs 13.7 7.3
-------------- ------------- -------------- -------------
Operating loss (40.3) (41.1) (32.0) (30.6)
Interest expense, net (6.5) (1.2) (4.5) (0.8)
Equity loss in joint venture 0.0 (8.1) 0.0 (4.3)
-------------- ------------- -------------- -------------
Loss before reorganization costs
and income tax benefit (46.8) (50.3) (36.5) (35.7)
Reorganization costs (4.6) 0.0 (3.7) 0.0
-------------- ------------- -------------- -------------
Loss before tax benefit (51.4) (50.3) (40.2) (35.7)
Income tax benefit 0.0 19.4 0.0 13.7
-------------- ------------- -------------- -------------
Net loss (51.4)% (30.9)% (40.2)% (22.0)%
============== ============= ============== =============
Comparable store sales /2/ (14.5)% (8.5)% (11.8)% (14.3)%

Total number of stores open 187 171 187 171
at end of period

Stores opened (closed)
during the period, net /3/ 0 5 (1) 10

- ---------------------------
/1/ Cost of goods sold includes buying, distribution and occupancy costs.
/2/ A store becomes comparable in the 14th full month of store operations.
/3/ One store was closed during the first quarter of 2001.

Thirteen Weeks Ended August 4, 2001 Compared to Thirteen Weeks Ended July 29,
2000

NET SALES. Net sales decreased $5.1 million, or 7%, to $66.6 million for
the thirteen weeks ended August 4, 2001, from $71.7 million for the comparable
2000 period. The decrease was primarily due to a 15% comparable store sales
decrease of $10.1 million, partially offset by sales from 16 new store openings
(net) since the 2nd quarter of 2000. The decrease in comparable store sales for
the period is primarily attributable to reduced merchandise receipts. As a
result of Zany Brainy's financial difficulties, many vendors have reduced
merchandise shipment quantities and payment terms.

GROSS PROFIT. Gross profit includes all buying, distribution and occupancy
costs. Gross profit decreased $5.8 million, or 89.0%, to $0.7 million for the
thirteen weeks ended August 4, 2001, from $6.5 million for the same period last
year. The decrease was primarily attributable to higher cost of goods sold from
increased freight-in costs and higher inventory shrinkage, and the inability to
leverage store occupancy, buying and distribution costs over the decrease in
store sales. Gross profit decreased to 1.1% of net sales for the period, from
9.1% for the comparable 2000 period.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses include all direct store level expenses and all
corporate level costs not directly associated with or allocable to cost of
sales. Selling, general and administrative expenses increased $1.9 million, or
6.6%, to $28.0 million for the thirteen weeks ended August 4, 2001, from $26.2
million for the same period last year. The increase is primarily related to the
additional 16 stores (net) in the second quarter of fiscal year 2001 compared to
the same period last year, partially offset by lower corporate and store
pre-opening expenses.

MERGER AND INTEGRATION COSTS. During the thirteen weeks ended July 29,
2000, Zany Brainy recognized pre-tax merger-related costs totaling $18.5 million
of which $8.7 million was included in costs of goods sold and $9.8 million was
related to professional fees, severance and change in control costs, and other
expenses. These costs were incurred in conjunction with Zany Brainy's
acquisition of Noodle Kidoodle, Inc. in the second quarter of fiscal year 2000.

INTEREST EXPENSE, NET. Net interest expense was approximately $4.3 million
for the period, an increase of $3.5 million from the comparable period in 2000.
This increase was due to an increase in borrowings under Zany Brainy's credit
facility and higher interest rates.

EQUITY LOSS IN JOINT VENTURE. Zany Brainy's e-commerce joint venture was
dissolved at the end of fiscal 2000. As a result, there was no equity loss in
joint venture incurred during the thirteen weeks ended August 4, 2001 versus
$5.8 million incurred during the comparable period of the previous year,

REORGANIZATION COSTS. During the thirteen weeks ended August 4, 2001, Zany
Brainy incurred reorganization costs of $3.1 million related to the Filing
consisting primarily of professional fees.

INCOME TAX BENEFIT. A 100% valuation allowance was established during the
thirteen weeks ended August 4, 2001 for the tax benefit generated in the period
due to Zany Brainy's net loss. This is based on management's assessment that it
is not more likely than not that the net deferred tax asset generated during the
period will be realized. For the comparable thirteen week period in 2000, we
recorded an income tax benefit of $13.9 million.

Twenty-Six Weeks Ended August 4, 2001 Compared to Twenty-Six Weeks Ended July
29, 2000

NET SALES. Net sales decreased $2.4 million, or 2%, to $132.7 million for
the twenty-six weeks ended August 4, 2001, from $135.2 million for the
comparable 2000 period. The decrease was primarily due to a 12% comparable store
sales decrease of $15.6 million, partially offset by sales from 16 new store
openings (net) since the second quarter of 2000. The decrease in comparable
store sales for the period is primarily attributable to reduced merchandise
receipts. As a result of Zany Brainy's financial difficulties, many vendors have
reduced merchandise shipment quantities and payment terms.

GROSS PROFIT. Gross profit includes all buying, distribution and occupancy
costs. Gross profit decreased $8.2 million, or 42.7%, to $11.0 million for the
twenty-six weeks ended August 4, 2001, from $19.2 million for the same period
last year. The decrease was primarily attributable to higher cost of goods sold
from increased freight-in costs and higher inventory shrinkage, and the
inability to leverage store occupancy, buying and distribution costs over the
decrease in comparable store sales. Gross profit decreased to 8.3% of net sales
for the period, from 14.2% in the comparable period in 2000.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses include all direct store level expenses and all
corporate level costs not directly associated with or

allocable to cost of sales. Selling, general and administrative expenses
increased $3.2 million, or 6.0%, to $54.0 million for the twenty-six weeks ended
August 4, 2001, from $50.7 million for the same period in 2000. The increase is
primarily related to the additional 16 stores (net) in the second quarter of
fiscal year 2001 compared to the same period last year, partially offset by
lower corporate and store pre-opening expenses.

INTEREST EXPENSE, NET. Net interest expense was approximately $6.0 million
for the period, an increase of $4.9 million from the comparable period in 2000.
This increase was due to an increase in borrowings under Zany Brainy's credit
facility and higher interest rates.

EQUITY LOSS IN JOINT VENTURE. Zany Brainy's e-commerce joint venture was
dissolved at the end of last year. As a result, there was no equity loss in
joint venture incurred during the twenty-six weeks ended August 4, 2001 versus
$5.8 million incurred during the comparable period of the previous year.

REORGANIZATION COSTS. During the twenty-six weeks ended August 4, 2001,
Zany Brainy incurred reorganization costs of $4.9 million related to the Filing
consisting primarily of professional fees.

INCOME TAX BENEFIT. A 100% valuation allowance was established during the
twenty-six weeks ended August 4, 2001 for the tax benefit generated in the
period due to Zany Brainy's net loss. This is based on management's assessment
that it is not more likely than not that the net deferred tax asset generated
during the period will be realized. For the comparable twenty-six week period in
2000, we recorded an income tax benefit of $18.6 million.

LIQUIDITY AND CAPITAL RESOURCES

Zany Brainy's main sources of liquidity have been cash flows from operations
and borrowing under Zany Brainy's credit facilities.

Net cash provided by operating activities was $2.6 million for the twenty-six
weeks ended August 4, 2001 compared to net cash used in operating activities
of $36.8 million for the same period for the previous year. This change is
primarily due to a decrease in inventories, resulting from many vendors
having reduced merchandise shipment quantities due to Zany Brainy's financial
difficulties, and an increase in accounts payable the resulting from Zany
Brainy's inability to pay pre-prepetition trade vendor amounts.

Net cash used in investing activities was $0.9 million for the twenty-six
week period ending August 4, 2001, a decrease of $15.5 million compared to
the same period for the previous year. This decrease was due primarily to
lower purchases of property, plant and equipment due to no new store
development in the first six months of fiscal year 2001 compared to the
opening of 10 new stores in the first six months of fiscal year 2000.
Additionally, during the twenty-six week period last year, an investment was
made in Zany Brainy's e-commerce joint venture versus none this year. The
Internet joint venture was dissolved and liquidated in December 2000.

Net cash used in financing activities was $0.2 million for the twenty-six
weeks ended August 4, 2001 compared to cash provided by financing activities
of $31.3 million for the same period for the previous year. The change was
primarily a result of decreased borrowings under Zany Brainy's line of credit.

On February 28, 2001, Congress Financial Corporation ("Congress") asserted
that Zany Brainy was in default under the three-year credit facility (the
"Credit Facility") it had entered into in July 2000. As a result of the
defaults asserted by the bank, outstanding borrowings under the Credit
Facility began to accrue interest at a rate equal to 2% above the highest
alternative pre-default rates (the "Default Rate"). Under the Credit

Facility, Zany Brainy's borrowing availability was tied to a seasonal percentage
of eligible inventory. Such formula included a limitation that Zany Brainy could
not borrow any amounts that exceeded the lesser of (a) 65% of the cost of
eligible inventories or (b) 85% of the appraisal value of eligible inventories,
subject to additional reserves imposed by the bank.

In connection with the Filing, Zany Brainy obtained a two-year, $115.0
million debtor-in-possession credit facility from Wells Fargo Retail Finance,
LLC, as Agent for itself and other lenders that may join the credit facility
from time-to-time (the "DIP Facility"). The DIP Facility is secured with
substantially all of Zany Brainy's assets. The DIP Facility includes a credit
line of up to $100.0 million bearing interest at the prime rate plus 1.75%
or, if Zany Brainy elects, at an annual rate of LIBOR plus 3.5%, and an
additional line of credit of $15.0 million bearing interest at 14.5% per
annum. The DIP Facility requires Zany Brainy to comply with various financial
covenants and contains certain restrictions upon the operations of the
business, including restrictions upon the ability to borrow additional money,
pay dividends, divest assets, make additional corporate investments, and
increase compensation paid to directors, officers and senior management
employees. On August 4, 2001, we had an outstanding balance under the DIP
Facility of approximately $54.7 million ($10.0 million bearing interest at
14.5% and approximately $44.7 million bearing at 8.75%). Of this amount,
approximately $45.0 million, including a $1.7 million termination fee, was
used to repay the Credit Facility which was terminated on May 17, 2001.

Seasonality of Business

Seasonal shopping patterns affect Zany Brainy's business. A significant
portion of Zany Brainy's sales occurs in the fourth quarter, coinciding with
the Christmas holiday shopping season. Therefore, results of operations for the
entire year depend heavily on fourth quarter results and the success of the
Christmas selling season.