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 October 31, 1998

                                       OR

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

For the transition period from             to


                         Commission File Number 0-19536

                              THE RIGHT START, INC.
             (Exact name of registrant as specified by its charter)


      California                                               95-3971414
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organiztion)                               Identification No.)


         5388 Sterling Center Drive, Unit C, Westlake Village, CA 91361
               (Address of principal executive offices) (Zip Code)

                                 (818) 707-7100
              (Registrant's telephone number, including area code)


--------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)

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_______

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date:

Common Stock Outstanding as of October 31, 1998 - 10,103,639 shares



<PAGE>
                              THE RIGHT START, INC.

                               INDEX TO FORM 10-Q
               FOR THE THIRTEEN WEEK AND THIRTY-NINE WEEK PERIODS
                             ENDED OCTOBER 31, 1998




                         PART I - FINANCIAL INFORMATION

Item 1.        Financial Statements (unaudited)

               Balance Sheet                                                 3
               Statement of Operations                                       4
               Statement of Cash Flows                                       5
               Notes to Financial Statements                                 6


Item 2.        Management's Discussion and Analysis of Financial
               Condition and Results of Operations                           9





                           PART II - OTHER INFORMATION

Item 6.        Exhibits and Reports on Form 8-K                             14


SIGNATURES                                                                  15


























                                              2


<PAGE>
<TABLE>
                              THE RIGHT START, INC.
                                  BALANCE SHEET
                                   (unaudited)


                                                  October 31,        January 31,
                                                      1998              1998
                                                ---------------    --------------
<S>                                             <C>                <C>
ASSETS
Current assets:
    Cash                                        $      321,000     $     240,000
    Accounts and other  receivables                    249,000           405,000
    Merchandise inventories                          7,705,000         6,602,000
    Prepaid catalog expenses                           588,000           297,000
    Other current assets                             1,238,000         1,364,000
                                                ---------------    --------------

        Total current assets                        10,101,000         8,908,000


Property, plant and equipment, net                   7,474,000         8,115,000
Other non-current assets                                71,000            39,000
Deferred income tax benefit                          1,400,000         1,400,000
                                                ---------------    --------------

                                                $   19,046,000     $  18,462,000
                                                ===============    ==============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
    Accounts payable and accrued expenses       $    4,468,000     $   2,372,000
    Accrued salaries and bonuses                       348,000           380,000
    Advance payments on orders                          24,000            30,000
    Note payable                                                       2,014,000
                                                ---------------    --------------

        Total current liabilities                    4,840,000         4,796,000


Note payable long term                               3,000,000         3,000,000
Senior subordinated notes due May 6, 2000            1,470,000
Senior subordinated notes due May 6, 2000            2,778,000         2,734,000
Subordinated convertible debentures due
    May 31, 2002                                     3,000,000         3,000,000
Deferred rent                                        1,424,000         1,625,000


Shareholders' equity:
    Common stock (25,000,000 shares authorized
        at no par value; 10,103,639 issued and
        outstanding)                                22,337,000        22,337,000
    Paid in capital                                  3,850,000
    Accumulated deficit                            (23,653,000)      (19,030,000)
                                                ---------------    --------------

                                                $   19,046,000     $  18,462,000
                                                ===============    ==============
</TABLE>

                                       3
<PAGE>
<TABLE>
                                       THE RIGHT START, INC.
                                      STATEMENT OF OPERATIONS
                                            (unaudited)



                                              Thirteen weeks ended           Thirty-nine weeks ended
                                         -------------------------------  ------------------------------
                                           October 31,      November 1,      October 31,     November 1,
                                               1998            1997            1998            1997
                                          --------------  ---------------  --------------  --------------
<S>                                        <C>             <C>              <C>             <C>
  Net sales:
    Retail                                 $   7,176,000   $    7,311,000   $  22,296,000   $  22,896,000
    Catalog                                      897,000        1,910,000       3,573,000       6,214,000
                                          --------------  ---------------  --------------  --------------
                                               8,073,000        9,221,000      25,869,000      29,110,000

  Costs and expenses:
      Cost of goods sold                       4,076,000        4,486,000      13,232,000      14,717,000
      Operating expense                        3,423,000        4,857,000      11,472,000      14,525,000
      General and administrative expense         850,000        1,059,000       2,627,000       2,997,000
      Pre-opening costs                           68,000          142,000         118,000         519,000
      Depreciation and amortization expense      471,000          395,000       1,145,000       1,186,000
      Other (income) expense                                       35,000        (113,000)        328,000
                                           --------------  ---------------  --------------  --------------

                                               8,888,000       10,974,000      28,481,000      34,272,000
                                           --------------  ---------------  --------------  --------------

    Operating loss                              (815,000)      (1,753,000)     (2,612,000)     (5,162,000)
    Interest expense                           1,578,000          316,000       2,016,000         806,000
                                           --------------  ---------------  --------------  --------------

    Loss before income taxes and
       extraordinary item                     (2,393,000)      (2,069,000)     (4,628,000)     (5,968,000)
    Income tax provision                           5,000            7,000          22,000          27,000
                                           --------------  ---------------  --------------  --------------

    Loss before extraordinary item            (2,398,000)      (2,076,000)     (4,650,000)     (5,995,000)
    Extraordinary gain on debt
      restructuring                                                                27,000
                                           --------------  ---------------  --------------  --------------

    Net loss                               $  (2,398,000)  $   (2,076,000)  $  (4,623,000)  $  (5,995,000)
                                           ==============  ===============  ==============  ==============

    Basic and diluted loss per share       $       (0.24)  $        (0.22)  $       (0.46)  $       (0.67)
                                           ==============  ===============  ==============  ==============

    Weighted average number of shares
      outstanding                             10,103,639        9,566,254      10,103,639       8,886,416
                                           ==============  ===============  ==============  ==============
</TABLE>

                                       4
<PAGE>
<TABLE>

                                        THE RIGHT START, INC.
                                       STATEMENT OF CASH FLOWS
                                             (unaudited)

                                                                    Thirty-nine weeks ended
                                                           -------------------------------------------

                                                             October 31, 1998       November 1, 1997
                                                           -------------------    --------------------

<S>                                                        <C>                    <C>
Cash flows from operating activities:
      Net loss                                             $       (4,623,000)    $        (5,995,000)
      Adjustments to reconcile net loss
        to net cash used in operating activities:
         Depreciation and amortization                              1,195,000               1,705,000
         Loss on store closings                                        39,000
         Amortization of discount on subordinated notes             1,514,000                  57,000
         Changes in assets and liabilities affecting operations       813,000              (2,428,000)
         Extraordinary gain on debt restructuring                     (27,000)
                                                           -------------------    --------------------

             Net cash used in operating activities                 (1,089,000)             (6,661,000)
                                                           -------------------    --------------------

Cash flows from investing activities:
      Additions to property, plant and equipment                     (666,000)             (1,614,000)
                                                           -------------------    --------------------

Cash flows from financing activities:
      Net borrowings (payments) under revolving line of credit     (2,014,000)               (239,000)
      Proceeds from note payable, long term                                                   357,000
      Proceeds from issuance of senior subordinated notes           3,850,000
      Proceeds from common stock issued upon
         exercise of stock options                                                          1,320,000
      Proceeds from private placement of common stock                                       3,705,000
      Proceeds from issuance of subordinated notes                                          3,000,000
                                                           -------------------    --------------------

             Net cash provided by  financing activities             1,836,000               8,143,000
                                                           -------------------    --------------------


Net increase in cash                                                   81,000                (132,000)
Cash at beginning of period                                           240,000                 313,000
                                                           -------------------    --------------------

Cash at end of period                                      $          321,000     $           181,000
                                                           ===================    ====================
</TABLE>

                                       5
<PAGE>

                              THE RIGHT START, INC.
                        NOTES TO THE FINANCIAL STATEMENTS


NOTE 1:  Description of Business and Significant Accounting Policies

     The Right Start, Inc. is a specialty merchant offering unique, high-quality
juvenile  products  for infants  and young  children.  The  Company  markets its
products through its retail stores and through The Right Start Catalog.

        There  have been no  changes  in the  Company's  significant  accounting
policies as set forth in the Company's  financial  statements for the year ended
January 31, 1998.  These unaudited  financial  statements as of October 31, 1998
and for the thirteen and thirty-nine  week periods then ended have been prepared
in  accordance  with  generally  accepted  accounting   principles  for  interim
financial information.  Accordingly,  they do not include all of the information
and footnotes required by generally accepted accounting  principles for complete
financial statements. In the opinion of management,  all adjustments (consisting
of normal recurring  adjustments)  considered  necessary for a fair presentation
have been included.  Certain  reclassifications  have been made to conform prior
year amounts to current year presentation.

        Operating  results for the thirteen and  thirty-nine  week periods ended
October  31, 1998 are not  necessarily  indicative  of the  results  that may be
expected for the year ending January 30, 1999.


NOTE 2:  Recapitalization

        In order to enhance  the  Company's  liquidity  and  improve its capital
structure, effective April 13, 1998 the Company completed a private placement of
non-interest  bearing senior subordinated notes in an aggregate principal amount
of  $3,850,000,  together with  detachable  warrants to purchase an aggregate of
3,850,000  shares of  common  stock  exercisable  at $1.00  per  share.  The new
securities  were sold for an aggregate  purchase  price of  $3,850,000  and were
purchased  principally by affiliates of the Company. In connection with the sale
of the new  securities,  the Company  entered into an agreement  with all of the
holders  of  the  Company's   existing   subordinated   debt   securities   (the
"Agreement"), representing an aggregate principal amount of $6,000,000. Pursuant
to the Agreement, each holder (of new and old securities) agreed to exchange all
of its  subordinated  debt  securities  together  with any  warrants  issued  in
connection  therewith,  for newly issued  preferred  stock.  Ten shares of newly
issued  preferred  stock  will be issued  for each  $1,000  principal  amount of
subordinated debt securities exchanged.  The total number of shares to be issued
are  30,000,  30,000  and  38,500  for  Preferred  Stock  Series  A,  B  and  C,
respectively.  Holders of $3,000,000  principal amount of existing  subordinated
debt  securities  elected to receive Series A Preferred Stock which will have no
fixed  dividend  rights,  will not be  convertible  into common  stock,  will be
mandatorily  redeemable by the Company in May 2002 and will not accrue dividends
unless  the  Company is unable to redeem  the  Series A  Preferred  Stock at the
required redemption date, at which point dividends would begin to accumulate and
accrue at a rate of $15 per share per  annum.  Holders of  $3,000,000  principal
amount of existing  subordinated  debt  securities  elected to receive  Series B
convertible preferred stock which will have no fixed dividend rights and will be
convertible  into  common  stock at a price per share of $1.50.  Holders  of the
$3,850,000  principal  amount of new  subordinated  debt  securities  elected to
receive Series C convertible  preferred  stock which will have no fixed dividend
rights and will be convertible  into common stock at a price per share of $1.00.
The Series B Preferred Stock and the Series C Preferred  Stock were  mandatorily
redeemable upon the occurrence of a change of control of the Company, as defined
in the Agreement.  Pursuant to a letter  agreement dated July 7, 1998,  however,
the Company has received  consent from all but one of the parties that will hold
Series B  Preferred  Stock to remove  the  mandatory  redemption  feature of the
Series B Preferred Stock upon a change of control of the Company.  Additionally,
pursuant to such letter agreement,  the Company has received consent from all of
the  parties  that will hold Series C  Preferred  Stock to remove the  mandatory
redemption  feature of the Series C  Preferred  Stock upon the  occurrence  of a
change of control of the Company.  The issuance of the shares of preferred stock
upon exchange of the subordinated  debt securities is subject to the approval of
the Company's shareholders,  which approval the Company expects to obtain at its
annual meeting.



                                       6
<PAGE>
NOTE 2: (Continued)

        As the $3.85 million of new securities were issued in  contemplation  of
the exchange  into  convertible  preferred  stock,  the  accounting  for the new
securities  is  analogous  to  convertible  debt.  The  new  securities  will be
exchanged for Series C preferred stock which is convertible into common stock at
a price per share of $1.00. As of the date of issue of the new  securities,  the
stock was  trading at $2.00 a share.  Since the  conversion  feature  was in the
money at the date of issue of the debt,  the portion of the debt proceeds  equal
to  the  beneficial  conversion  feature  of  $3.85  million  was  allocated  to
additional  paid in capital.  The resulting debt discount of $3,850,000 is being
amortized to interest  expense in the  historical  accounts over the period from
the April issuance date to the date the debt is first convertible.  The date the
debt is first  convertible  is the exchange  date when the debt is exchanged for
convertible  preferred  stock.  Since the exchange  transaction  is subject to a
proxy vote by the  shareholders,  the  expected  date of the  shareholder  vote,
scheduled  to be in  December,  1998,  was used to  determine  the  amortization
period.  No value has been assigned to the warrants  because the  requirement to
exchange the warrants,  together with the debt, for preferred  stock resulted in
an  assessment  that the  warrants  have no  independent  value  apart  from the
exchange transaction.

        The  exchanges of the  subordinated  debt  securities  for the preferred
stock will be recorded at the date of issuance of the preferred  stock. The fair
value of each preferred  stock series will be determined as of the issuance date
of the stock.  The  difference  between the fair value of the Series B preferred
stock series granted and the carrying  amount of the related  subordinated  debt
security's  balance plus accrued interest exchanged will be recognized as a gain
or loss on the  extinguishment  of debt. If the  convertible  Series B preferred
stock conversion feature is "in the money" at the date of issue of the preferred
stock,  a  portion  of the  fair  value  of the  preferred  stock  equal  to the
beneficial  conversion  feature will be allocated to additional paid in capital.
The beneficial  conversion  feature amount  allocated to paid in capital will be
recognized  as a return  to the  preferred  shareholders  immediately  through a
charge to accumulated deficit and a credit to preferred stock.

        The  estimated  gain  or  loss  to be  recorded  on the  total  proposed
recapitalization  is not determinable at this time as the  transactions  will be
measured and recorded at the date of issuance of the preferred stock.

        In connection with the above restructuring,  the holders of $6.0 million
principal amount of subordinated debt permanently waived their rights to receive
interest  payments  and  agreed  to  exchange  such  debt for  preferred  stock,
resulting in the  elimination of  approximately  $.6 million in annual  interest
payments.  In addition,  the proceeds  from the Company's  private  placement of
$3,850,000 were used to pay off the Company's revolving line of credit. Further,
the  Company's  lender  amended the  existing  loan  agreement  to provide  more
favorable terms which are consistent with management's financial and operational
plans.  These plans include the closure of certain  unprofitable mall stores and
opening of other store locations.


NOTE 3:  Extraordinary Gain

        Effective  April 13,  1998,  the holders of the  Company's  $3.0 million
subordinated notes and $3.0 million subordinated  convertible  debentures agreed
to waive their right to receive any and all interest  payments accrued and owing
on or after  February 28, 1998.  This  modification  of terms was  accounted for
prospectively,  from the effective date, under Statement of Financial Accounting
Standards  No. 15  "Accounting  by  Debtors  and  Creditors  for  Troubled  Debt
Restructurings" as follows.

        The carrying amount of the  subordinated  notes as of April 13, 1998 was
not changed as the  carrying  amount of the debt did not exceed the total future
cash payments of $3.0 million  specified by the new terms.  Interest expense was
computed using the interest method to apply a constant  effective  interest rate
to the  payable  balance  between  the  modification  date of April 13, 1998 and
maturity of the payable in May 2000.

        The  total  future  cash  payments  specified  by the new  terms  of the
convertible  debentures of $3.0 million is less than the carrying  amount of the
liability to the debenture holders of $3,027,000, therefore, the carrying amount
was reduced to an amount  equal to the total future cash  payments  specified by
the new terms and the Company  recognized  a gain on  restructuring  of payables
equal to the amount of the reduction as of April 13, 1998.  No interest  expense
shall be recognized on the payable for any period between the modification  date
of April 13, 1998 and maturity of the payable in May 2002.


                                       7
<PAGE>


NOTE 4:  Per Share Data

        Basic per share data is computed by dividing income  available to common
shareholders  by the  weighted  average  number  of common  shares  outstanding.
Diluted  per share data is  computed  by  dividing  income  available  to common
shareholders  plus income  associated  with dilutive  securities by the weighted
average  number of shares  outstanding  plus any  potential  dilution that could
occur if securities or other  contracts to issue common stock were  exercised or
converted into common stock in each year.

        Securities  that could  potentially  dilute basic EPS in the future that
were not included in the  computation of diluted EPS because to do so would have
been  antidilutive  for the periods  presented  include  options  outstanding to
purchase  652,000  and  662,000  shares of common  stock at October 31, 1998 and
November 1, 1997, respectively, debt issued with detachable warrants in May 1997
enabling  the holder to  purchase  475,000  shares of common  stock at $3.00 per
share and debentures  issued in October 1996  convertible into 750,000 shares of
common  stock.  Additionally,  $3,850,000 of  subordinated  debt was issued with
3,850,000  detachable  warrants  in April 1998  enabling  the holder to purchase
3,850,000  shares of common  stock at $1.00 per share.  This  could  potentially
dilute basic EPS in the future.


NOTE 5:  Supplemental Disclosure of Cash Flow Information

        Interest  paid  amounted to $392,000 and  $670,000  for the  thirty-nine
weeks ended October 31, 1998 and November 1, 1997,  respectively.  Cash paid for
income taxes was $4,000 and $5,000 for the  thirty-nine  weeks ended October 31,
1998 and November 1, 1997, respectively.



        Changes in assets and liabilities  which increased  (decreased) cash are
as follows:
<TABLE>


                                                 Thirty-nine weeks ended
                                           -------------------------------------
                                           October 31, 1998     November 1, 1997
<S>                                             <C>                 <C>

Accounts and other receivables                  $   156,000         $   491,000
Merchandise inventories                          (1,103,000)         (1,681,000)
Prepaid catalog expenses                           (291,000)            217,000
Other current assets                                 76,000            (348,000)
Other non-current assets                            (32,000)              2,000
Accounts payable and accrued expenses             2,113,000          (1,339,000)
Accrued salaries and bonuses                        (32,000)           (132,000)
Advance payments on orders                           (6,000)             42,000
Deferred rent                                       (68,000)            320,000
                                                -----------         -----------
                                                $   813,000         $(2,428,000)
                                                ===========         ===========

</TABLE>












                                       8
<PAGE>



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


        Statements  in this  Form  10-Q  that  are  not  purely  historical  are
forward-looking   statements  within  the  meaning  of  the  Private  Securities
Litigation Reform Act of 1995. These forward-looking  statements with respect to
the financial  condition and results of operations of the Company  involve risks
and uncertainties  which are detailed further in the filings of the Company with
the  Securities  and  Exchange  Commission,  including,  but not limited to, the
Company's  Registration  Statement on Form S-3 (File No. 333-08157),  its Annual
Report on Form  10-K/A for the year ended  January  31,  1998 and its  quarterly
report on Form 10-Q/A for the thirteen weeks ended August 1, 1998.


Thirteen weeks ended October 31, 1998 compared with November 1,  1997

        Net sales for the thirteen  weeks ended October 31, 1998 declined 12% to
$8.1 million  from $9.2 million for the same period last year.  For the quarter,
retail net sales  declined 2% to $7.2  million as compared to $7.3  million last
year,  while  catalog net sales  decreased  53% to $.9 million from $1.9 million
last year.  Retail sales  reflect  sales  increases  due to five store  openings
during and since the third  quarter of the prior fiscal year offset by ten store
closings  during the first three  quarters of the current  fiscal year;  the net
impact  of store  openings  and  closures  is an 8%  decline  in  retail  sales.
Offsetting this decline is an increase in same-store  sales of 6%. The reduction
in catalog net sales is due to the Company's  decision to  significantly  reduce
circulation and operate the catalog at a smaller and more profitable level.

        Cost of goods sold  decreased  $.4 million or 9%,  resulting  in a gross
margin of 50% as compared to 51% last year.  The slight  decline in gross margin
reflects  the  net  impact  of  increased  promotional  activity  offset  by the
introduction of higher margin products and product lines including developmental
toys, books, videos and other media.

        Operating  expense  was $3.4  million  in the third  quarter  of 1998 as
compared  to $4.9  million  in the third  quarter  of 1997,  representing  a 30%
decrease. Retail operating expense decreased 14%, primarily due to reductions in
occupancy  costs,  in  merchandise   warehousing   costs  and  in  labor  costs.
Additionally,  catalog  operating  expense  decreased 69% due to the decrease in
catalog sales and decreased catalog production costs.

        General and administrative  expense decreased 20% to $850,000 during the
third  quarter of 1998 from  $1,059,000  during the same period  last year.  The
Company  has  continued  its  trend  of   significantly   reduced   general  and
administrative  expenses. These costs represent the Company's corporate overhead
expenses  which are fixed in nature  and do not vary  directly  with  changes in
sales.

        Depreciation and amortization  expense  increased to $471,000 during the
third  quarter of 1998 from $395,000  during the same period last year.  The 19%
increase is  primarily  due to the  revision of the  estimated  useful lives for
certain  existing  assets,  which  assets will be fully  depreciated  during the
fourth quarter of fiscal 1998.

        Interest  expense of  $1,578,000  includes  $1,466,000  of debt discount
amortization recorded in connection with the accounting for the $3.85 million of
new securities issued in April 1998. As the $3.85 million of new securities were
issued in contemplation  of the exchange into  convertible  preferred stock, the
accounting  for the new  securities is analogous to  convertible  debt.  The new
securities  will be exchanged for Series C Preferred  Stock which is convertible
into common stock at a price per share of $1.00.  As of the date of issue of the
new  securities  the  common  stock  was  trading  a $2.00 a  share.  Since  the
conversion  feature  was in the  money at the date of  issue  of the  debt,  the
portion of the debt proceeds equal to the beneficial conversion feature of $3.85
million was allocated to additional paid in capital. The resulting debt discount
of $3.85  million is being  amortized  to  interest  expense  in the  historical
accounts  over the period from the April  issuance  date to the date the debt is
first  convertible.  The date the debt is first convertible is the date when the
debt  is  exchanged  for  convertible   preferred  stock.   Since  the  exchange
transaction was subject to a proxy vote by the  shareholders,  the expected date
of the  shareholder  vote,  scheduled  to be in  December,  1998,  was  used  to
determine  the  amortization  period.  The vote  approving the  transaction  was
obtained December 15, 1998.



                                       9
<PAGE>

        The remaining  $112,000 of interest expense for the three quarters ended
October 31,  1998  reflects a 65%  decrease as compared to the third  quarter of
1997. The decrease reflects the elimination of interest expense on the Company's
subordinated convertible debentures and the reduction of interest expense on the
Company's $2,778,000 of senior subordinated notes, both due to the restructuring
that took place in conjunction  with the Company's  April 1998  recapitalization
transaction.  Further, the Company had lower outstanding balances on its line of
credit  during the first three  quarters  of 1998 as compared to the  comparable
period of 1997.




Thirty-nine Weeks Ended October 31, 1998 Compared With November 1, 1997

        Net sales for the thirty-nine  weeks ended October 31, 1998 declined 11%
to $25.9  million from $29.1  million for the same period last year.  Retail net
sales declined 3% to $22.3 million as compared to $22.9 million last year, while
catalog net sales  decreased  43% to $3.6  million  from $6.2 million last year.
Retail sales  reflect the sales  declines due to ten store  closings  during the
first three quarters of the current fiscal year,  offset by sales  increases due
to five store  openings  during and since the third  quarter of the prior fiscal
year;  the net impact of store  openings  and closures is a 2% decline in retail
sales.  The  remaining 1% decline  represents  the  Company's  same-store  sales
results.  The reduction in catalog net sales is due to the Company's decision to
significantly  reduce  circulation and operate the catalog at a smaller and more
profitable level.

        Cost of goods sold decreased  $1.5 million or 10%,  resulting in a gross
margin of 49% in the current and prior year.  This reflects the  introduction of
higher margin products and product lines including  developmental  toys,  books,
videos  and  other  media,  offset  by  the  impact  of  certain  marketing  and
promotional programs.

        Operating  expense was $11.5 million in the first three quarters of 1998
as  compared  to $14.5  million in 1997,  representing  a 21%  decrease.  Retail
operating  expense  decreased  10%,  primarily due to reductions in  merchandise
warehousing  costs and reduced  labor  costs.  Additionally,  catalog  operating
expense decreased 51% in line with management's plan to operate a smaller,  more
profitable catalog.

        General and  administrative  expense  decreased 12% to $2,627,000 during
the first three  quarters of 1998 from  $2,997,000  during thae same period last
year. The Company has continued its trend of  significantly  reduced general and
administrative expenses.

        Depreciation and amortization expense decreased to $1,145,000 during the
first three quarters of 1998 from  $1,186,000  during the same period last year.
The 3% decrease is primarily due to the expense reduction  associated with fixed
assets that were written off in  conjunction  with the closure of eight  stores,
the  relocation  of the  Company's  distribution  facility  and the  move of the
Company's  corporate  office.   These  decreases  were  offset  by  the  expense
associated  with the fixed asset  additions  for the new stores opened in fiscal
1997.

        Other (income) expense is comprised of net revenues generated from store
closings in the Fiscal 1998. In the same period of the prior year, other expense
represents  the  write-off of fixed assets  abandoned  in  conjunction  with the
relocation of the Company's distribution facility and severance expense.

        Interest  expense of  $2,016,000  includes  $1,470,000  of debt discount
amortization recorded in connection with the accounting for the $3.85 million of
new securities issued in April 1998. As the $3.85 million of new securities were
issued in contemplation  of the exchange into  convertible  preferred stock, the
accounting  for the new  securities is analogous to  convertible  debt.  The new
securities  will be exchanged for Series C Preferred  Stock which is convertible
into common stock at a price per share of $1.00.  As of the date of issue of the
new  securities  the  common  stock  was  trading  a $2.00 a  share.  Since  the
conversion  feature  was in the  money at the date of  issue  of the  debt,  the
portion of the debt proceeds equal to the beneficial conversion feature of $3.85
million was allocated to additional paid in capital. The resulting debt discount
of $3,850,000 is being amortized to interest expense in the historical  accounts
over the  period  from  the  April  issuance  date to the date the debt is first
convertible.  The date the debt is first  convertible  is the exchange date when
the debt is  exchanged  for  convertible  preferred  stock.  Since the  exchange
transaction was subject to a proxy vote by the shareholders,  the expect date of
the shareholder vote,  scheduled to be in December,  1998, was used to determine
the  amortization  period.  The vote  approving  the  transaction  was  obtained
December 15, 1998.



                                       10
<PAGE>

        The remaining  $546,000 of interest expense for the three quarters ended
October 31,  1998  reflects a 32%  decrease as compared to the third  quarter of
1997. The decrease reflects the elimination of interest expense on the Company's
subordinated convertible debentures and the reduction of interest expense on the
Company's $2,778,000 of senior subordinated notes, both due to the restructuring
that took place in conjunction  with the Company's  April 1998  recapitalization
transaction.  Further, the Company had lower outstanding balances on its line of
credit  during the first three  quarters  of 1998 as compared to the  comparable
period of 1997.

        The Company has a deferred tax asset of $10.3 million, which is reserved
by a valuation allowance of $8.9 million, for a net tax benefit of $1.4 million.
Management expects that the Company will generate at least $4 million of taxable
income  within  the next 15 years to utilize  the net  deferred  tax asset.  The
taxable  income will be generated  through a combination  of improved  operating
results  and tax  planning  strategies.  Rather  than  lose the  benefit  of the
Company's net operating  loss ("NOL")  carryforward  if the Company's  operating
results alone are  insufficient  to realize such tax benefit,  the Company could
implement  certain tax planning  strategies  including the sale of the Company's
catalog  operation.  Alternatively,  the  Company  could  also sell its  catalog
operation's  mailing lists in order to generate  income to enable the Company to
realize its NOL carryforward. Based on the above operating improvements combined
with tax planning strategies in place, management believes that adequate taxable
income  will be  generated  over the next 15 years in which to  utilize  the NOL
carryforward.


Liquidity and Capital Resources

        During the first three  quarters of Fiscal 1998,  the Company's  primary
sources of liquidity  were from  borrowings  under its $13 million senior credit
facility (the "Credit  Facility")  and proceeds  from the sale of  approximately
$3.9 million of non-interest  bearing senior  subordinated  notes with warrants.
The Credit  Facility  consists  of a  $10,000,000  revolving  line of credit for
working  capital (the  "Revolving  Line") and a $3,000,000  capital  expenditure
facility (the "Capex Line"). Availability under the Revolving Line is subject to
a defined borrowing base. As of October 31, 1998,  borrowings of $3,000,000 were
outstanding  under the Capex Line.  There were no borrowings  and  approximately
$3.5 million available under the Revolving Line. The Credit Facility  terminates
on November 19, 1999 and on such date, all borrowings thereunder are immediately
due  and  payable.   Borrowings   under  the  Credit  Facility  are  secured  by
substantially all of the Company's assets.

        The Credit  Facility,  as amended,  requires the Company at all times to
maintain net worth (defined to include equity and subordinated debt) of at least
$8 million.  The Credit  Facility  also  limits the  Company's  earnings  before
interest,  taxes,  depreciation and amortization  (EBITDA) to the following loss
amounts:  $900,000  for the nine  months  ended  October 31, 1998 and the twelve
months ended January 31, 1999 and $500,000 for the twelve months ended April 30,
1999.  Minimum  EBITDA of zero is required for the twelve  months ended July 31,
1999 and $400,000 for the twelve months ended October 31, 1999.  The Company was
not in  compliance  with this  requirement  at October 31, 1998,  which event of
non-compliance the Lender waived. In addition,  capital expenditures are limited
to $1,750,000 in fiscal years 1998 and 1999.

        The  Company's  ability  to fund its  operations,  open new  stores  and
maintain  compliance  with the Credit  Facility is  dependent  on its ability to
generate  sufficient cash flow from  operations.  Historically,  the Company has
incurred  losses  and  expects  to  continue  to incur  losses in the near term.
Depending on the success of its business  strategy,  the Company may continue to
incur losses beyond such period.  Losses could negatively affect working capital
and the extension of credit by the Company's  suppliers and impact the Company's
operations.

        In order to enhance  the  Company's  liquidity  and  improve its capital
structure,  effective April 13, 1998, the Company  completed a private placement
of  non-interest  bearing senior  subordinated  notes in an aggregate  principal
amount of $3,850,000, together with detachable warrants to purchase an aggregate
of 3,850,000  shares of common  stock  exercisable  at $1.00 per share.  The new
securities  were sold for an aggregate  purchase  price of  $3,850,000  and were
purchased  principally by affiliates of the Company. In connection with the sale
of the new  securities,  the Company  entered into an agreement  with all of the
holders of the Company's existing subordinated debt securities,  representing an
aggregate principal amount of $6,000,000. Pursuant to the agreement, each holder
(of old and new  securities)  agreed to exchange  all of its  subordinated  debt
securities together with any warrants issued in connection therewith,  for newly
issued preferred stock. Ten shares of newly
 issued  preferred  stock will be issued  for each  $1,000  principal  amount of
subordinated debt securities exchanged.  The total number of shares to be issued
are 30,000, 30,000 and 38,500 for Preferred Stock Series A, B and C,



                                       11
<PAGE>

respectively.  Holders of $3,000,000 principal amount existing subordinated debt
securities  elected to receive Series A Preferred Stock which will have no fixed
dividend rights,  will not be convertible into common stock, will be mandatorily
redeemable by the Company in May 2002 and will not accrue  dividends  unless the
Company  is  unable to  redeem  the  Series A  Preferred  Stock at the  required
redemption  date, at which point  dividends would begin to accumulate and accrue
at a rate of $15 per share per annum.  Holders of  $3,000,000  principal  amount
existing  subordinated  debt securities  elected to receive Series B convertible
preferred stock which will have no fixed dividend rights and will be convertible
into  common  stock at a price  per share of $1.50.  Holders  of the  $3,850,000
principal amount of new subordinated debt securities elected to receive Series C
convertible preferred stock which will have no fixed dividend rights and will be
convertible  into  common  stock at a price  per share of  $1.00.  The  Series B
Preferred Stock and the Series C Preferred Stock was mandatorily redeemable upon
the  occurrence  of a change  of  control  of the  Company,  as  defined  in the
agreement.  Pursuant to a letter  agreement  dated July 7, 1998, the Company has
received  consent  from  all but one of the  parties  that  will  hold  Series B
Preferred  Stock to remove  the  mandatory  redemption  feature  of the Series B
Preferred Stock upon a change of control of the Company. Additionally,  pursuant
to such  letter  agreement,  the Company has  received  consent  from all of the
parties  that  will  hold  Series C  Preferred  Stock to  remove  the  mandatory
redemption  feature of the Series C  Preferred  Stock upon the  occurrence  of a
change of control of the Company.  The issuance of the shares of preferred stock
upon exchange of the subordinated  debt securities is subject to the approval of
the Company's  shareholders,  which approval the Company  obtained at its annual
meeting on December 15, 1998.

        As the $3.85 million of new securities were issued in  contemplation  of
the  exchange  into  convertible  preferred  stock  the  accounting  for the new
securities  is  analogous  to  convertible  debt.  The  new  securities  will be
exchanged for Series C Preferred Stock which is convertible into common stock at
a price per share of $1.00.  As of the date of issue of the new  securities  the
common stock was trading at $2.00 a share.  Since the conversion  feature was in
the money at the date of issue of the debt,  the  portion  of the debt  proceeds
equal to the  beneficial  conversion  feature of $3.85  million was allocated to
additional  paid in capital.  The  resulting  debt  discount of $3.85 million is
being amortized to interest  expense in the historical  accounts over the period
from the April issuance date to the date the debt is first convertible. The date
the  debt is first  convertible  is the date  when  the  debt is  exchanged  for
convertible  preferred  stock.  Since the exchange  transaction  is subject to a
proxy vote by the  shareholders,  the  expected  date of the  shareholder  vote,
anticipated  to be in December,  1998,  was used to determine  the  amortization
period.  No value has been assigned to the warrants  because the  requirement to
exchange the warrants,  together with the debt, for preferred  stock resulted in
an  assessment  that the  warrants  have no  independent  value  apart  from the
exchange transaction.

        The  exchanges of the  subordinated  debt  securities  for the preferred
stock will be recorded at the date of issuance of the preferred  stock. The fair
value of each preferred  stock series will be determined as of the issuance date
of the stock.  The  difference  between  the fair value of the  preferred  stock
granted and the  carrying  amount of the related  subordinated  debt  security's
balance plus accrued interest  exchanged will be recognized as a gain or loss on
the  extinguishment  of  debt.  If the  convertible  Series  B  Preferred  Stock
conversion  feature  is "in the  money"  at the date of  issue of the  preferred
stock,  a  portion  of the  fair  value  of the  preferred  stock  equal  to the
beneficial  conversion  feature will be allocated to additional paid in capital.
The beneficial  conversion  feature amount  allocated to paid in capital will be
recognized  as a return  to the  preferred  shareholders  immediately  through a
charge to accumulated deficit and a credit to preferred stock.

        The  estimated  gain  or  loss  to be  recorded  on the  total  proposed
recapitalization  is not determinable at this time as the  transactions  will be
measured and recorded at the date of issuance of the preferred  stock,  however,
management does not believe that the  transactions  will have a material adverse
effect on the Company's financial position or results of operations.

        The  discount  inherent  in the  $3,850,000  of new  securities  must be
amortized to interest  expense over the period from the April  issuance  date to
the date the  security  is first  convertible.  This  treatment  is  required by
generally  accepted  accounting  principles.  In accordance  with the agreement,
however, no interest payments will be made.  Further,  for the fiscal year ended
January 30,  1999,  there will be no impact on total  shareholders'  equity as a
result of the interest amortization.

        In connection with the above restructuring,  the holders of $6.0 million
principal amount of subordinated debt permanently waived their rights to receive
interest  payments  and  agreed  to  exchange  such  debt for  preferred  stock,
resulting in the  elimination of  approximately  $.6 million in annual  interest
payments.  In addition,  the proceeds  from the Company's  private  placement of
$3,850,000 were used to pay off the Company's revolving



                                       12
<PAGE>

line of  credit.  Further,  the  Company's  lender  amended  the  existing  loan
agreement to provide more favorable terms which are consistent with management's
financial  and  operational  plans.  These plans  include the closure of certain
unprofitable mall stores and opening of other store locations.


Other Matters

Year 2000

        The year 2000 problem is the result of computer  programs  being written
using two digits  (rather that four) to define the  applicable  year. Any of the
Company's programs that have time-sensitive  software may recognize a date using
"00" as the  year  1900  rather  that  the  year  2000  which  could  result  in
miscalculations or system failures.

        The Company is currently  working to identify and resolve all  potential
issues relating to the year 2000 on the processing of date-sensitive information
by the Company's computerized information system. For purposes of addressing the
issues and planning the appropriate resolutions,  the Company has segregated its
internal systems and individually assessed their state of readiness as follows:
<TABLE>

                                 Phase  of  Planning   ("x"indicates phase is complete)
                            ------------------------------------------------------------------
<S>                          <C>         <C>          <C>          <C>          <C>
SYSTEM                       AWARENESS   ASSESSMENT   RENOVATION   VALIDATION   IMPLEMENTATION
Credit Card Processing          x            x            x            x            x
Inventory Maintenance           x            x            x
Accounting and Reporting        x            x            x
Point of Sale Transactions      x
Non-computerized systems        x            x
(none are material to the
Company's operations)
</TABLE>

        In addition to resolving any year 2000 issues on the Company's  internal
systems, the Company is working with its third party vendors in implementing the
appropriate solutions.  The Company estimates that the maximum,  worst-case cost
of addressing  its year 2000 issues is  approximately  $125,000 for hardware and
software.


New Accounting Pronouncements

        In April 1998, the American  Institute of Certified  Public  Accountants
issued   Statement  of  Position  98-5  "Reporting  on  the  Costs  of  Start-up
Activities"  ("SOP 98-5").  This  statement  requires that the costs of start-up
activities  and  organization  costs be expensed as incurred.  The impact of SOP
98-5 is not  expected  to be  material to the  Company's  financial  position or
results of operations.  Effective  October 1, 1997, the Company began  expensing
all store pre-opening costs as incurred.

Nasdaq Market Listing

        As previously  disclosed,  the Company received notice from the staff of
The Nasdaq Stock Market,  Inc. ("Nasdaq") that it was not in compliance with the
Nasdaq's  new minimum net  tangible  assets  requirement  of $4 million and that
Nasdaq  intended to delist the Company's  common stock.  In accordance  with the
Nasdaq's  procedures,  the Company  filed an appeal with the  Nasdaq's  Listings
Hearing  Department  which would allow the Company to maintain its listed status
pending the outcome of the appeal.

        The Company  received notice from Nasdaq that the Company would continue
its listing on the Nasdaq National Market. Such ruling is subject to the Company
meeting certain  conditions,  the most  significant of which is that it complete
its   recapitalization.   The   Company   obtained   a  vote  in  favor  of  its
recapitalization at its annual shareholders meeting on December 15, 1998.




                                       13
<PAGE>

                                     PART II

Item  6.  Exhibits and Reports on Form 8-K

The Company  filed a Report on Form 8-K on October 14, 1998 which  reported  the
press  release  issued on that  date.  No other  Reports  on Form 8-K were filed
during the third quarter of Fiscal 1998.


The following exhibits of The Right Start, Inc. are included herein.


Exhibit
Number

27      Financial Data Schedule








                                       14
<PAGE>



                                   SIGNATURES

        Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the  undersigned
and thereunto duly authorized.


                              THE RIGHT START, INC.



Date:  December  15, 1998                              /s/JERRY WELCH
                                                       -----------------------
                                                       Jerry Welch
                                                       Chief Executive Officer



Date:  December  15, 1998                              /s/GINA M.SHAUER
                                                       -----------------------
                                                       Gina M. Shauer
                                                       Chief Financial Officer





                                       15