|   | x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
|--------|---|-----------------------------------------------------------------------------------------|

|   |  ̈ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
|--------|--------|------------------------------------------------------------------------------------------|

| Peoples Educational Holdings, Inc.                     |
|--------------------------------------------------------|
| (Exact name of registrant as specified in its charter) |

| Delaware                                                      |   | 41-1368898                           |
|---------------------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction ofincorporation or organization) |   | (I.R.S. Employer Identification No.) |

| 299 Market Street, Saddle Brook, NJ 07663                  |
|------------------------------------------------------------|
| (Address of principal executive offices) (Zip Code)        |
|                                                       |
| (201) 712-0090                                             |
| (Registrant’s telephone number, including area code) |

| Large accelerated filer  ̈                                             | Accelerated filer  ̈    |
|----------------------------------------------------------------------------|-----------------------------|
| Non-accelerated filer  ̈ (Do not check if a smaller reporting company) | Smaller reporting company x |

----

|          |                                                                                                                         |      | Page   |
|---------------|------------------------------------------------------------------------------------------------------------------------------|-----------|--------|
|          |                                                                                                                         |      |   |
| PART I.       | FINANCIAL INFORMATION                                                                                                        |      |   |
|          |                                                                                                                         |      |   |
| Item 1:  | Financial Statements:                                                                                                        |      |   |
|          |                                                                                                                         |      |   |
|          | Condensed Consolidated Balance Sheets as of February 28, 2011 (Unaudited) and May 31, 2010 and February 28, 2010 (Unaudited) |      | 3      |
|          | Condensed Consolidated Statements of Operations for the Three and Nine Months Ended February 28, 2011 and 2010 (Unaudited)   |      | 4      |
|          | Condensed Consolidated Statements of Cash Flows for the Nine Months Ended February 28, 2011 and 2010 (Unaudited)             |      | 5      |
|          | Notes to Condensed Consolidated Financial Statements (Unaudited)                                                             |      | 6      |
|          |                                                                                                                         |      |   |
| Item 2:  | Management’s Discussion and Analysis of Financial Condition and Results of Operations                                  |      | 10     |
|          |                                                                                                                         |      |   |
| Item 4:  | Controls and Procedures                                                                                                      |      | 18     |
|          |                                                                                                                         |      |   |
| PART II.      | OTHER INFORMATION                                                                                                            |      |   |
|          |                                                                                                                         |      |   |
| Item 1:  | Legal Proceedings                                                                                                            |      | 19     |
|          |                                                                                                                         |      |   |
| Item 2:  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                  |      | 19     |
|          |                                                                                                                         |      |   |
| Item 3:  | Defaults Upon Senior Securities                                                                                              |      | 19     |
|          |                                                                                                                         |      |   |
| Item 5:  | Other Information                                                                                                            |      | 19     |
|          |                                                                                                                         |      |   |
| Item 6:  | Exhibits                                                                                                                     |      | 19     |
|          |                                                                                                                         |      |   |
| SIGNATURES    |                                                                                                                         | 20        |
|          |                                                                                                                         |      |   |
| EXHIBITS      |                                                                                                                         |   21 |

----

|                                                                                                                       |   | UNAUDITED         |   |   |         |   |   | UNAUDITED         |   |
|----------------------------------------------------------------------------------------------------------------------------|--------|-------------------|--------|--------|--------------|--------|--------|-------------------|--------|
| (In Thousands-Except Share Data)                                                                                           |   | February 28, 2011 |   |   | May 31, 2010 |   |   | February 28, 2010 |   |
| ASSETS                                                                                                                     |   |              |   |   |         |   |   |              |   |
|                                                                                                                       |   |              |   |   |         |   |   |              |   |
| Current Assets                                                                                                             |   |              |   |   |         |   |   |              |   |
| Cash and Cash Equivalents                                                                                                  |   | $                 | 33     |   |         | $      | 110    |              |   | $ | 95 |   |
| Accounts Receivable, Net of Allowances for Doubtful Accounts and Returns                                                   |   |              | 2,204  |   |         |   | 2,990  |              |   |   | 2,261 |   |
| Inventory, Net                                                                                                             |   |              | 3,554  |   |         |   | 3,591  |              |   |   | 3,980 |   |
| Prepaid Expenses and Other                                                                                                 |   |              | 390    |   |         |   | 264    |              |   |   | 357 |   |
| Prepaid Marketing Expenses                                                                                                 |   |              | 710    |   |         |   | 642    |              |   |   | 443 |   |
| Deferred Income Taxes                                                                                                      |   |              | 900    |   |         |   | 833    |              |   |   | 938 |   |
| Total Current Assets                                                                                                       |   |              | 7,791  |   |         |   | 8,430  |              |   |   | 8,074 |   |
|                                                                                                                       |   |              |   |   |         |   |   |              |   |   |   |   |
| Equipment - At Cost, Less Accumulated Depreciation of $2,551, $2,444 and      $2,405, respectively     |   |              | 308    |   |         |   | 249    |              |   |   | 272 |   |
|                                                                                                                       |   |              |   |   |         |   |   |              |   |   |   |   |
| Other Assets                                                                                                               |   |              |   |   |         |   |   |              |   |   |   |   |
| Deferred Prepublication Costs, Net                                                                                         |   |              | 13,095 |   |         |   | 12,864 |              |   |   | 11,991 |   |
| Deferred Income Taxes                                                                                                      |   |              | 502    |   |         |   | 477    |              |   |   | 212 |   |
| Trademarks, Net                                                                                                            |   |              | 232    |   |         |   | 189    |              |   |   | 189 |   |
| Prepaid Expenses and Other                                                                                                 |   |              | 114    |   |         |   | 167    |              |   |   | 185 |   |
| Total Other Assets                                                                                                         |   |              | 13,943 |   |         |   | 13,697 |              |   |   | 12,577 |   |
| Total Assets                                                                                                               |   | $                 | 22,042 |   |         | $      | 22,376 |              |   | $ | 20,923 |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                       |   |              |   |   |         |   |   |              |   |   |   |   |
|                                                                                                                       |   |              |   |   |         |   |   |              |   |   |   |   |
| Current Liabilities                                                                                                        |   |              |   |   |         |   |   |              |   |   |   |   |
| Current Maturities of Long Term Obligations                                                                                |   | $                 | 2,000  |   |         | $      | 2,000  |              |   | $ | 2,000 |   |
| Accounts Payable                                                                                                           |   |              | 4,004  |   |         |   | 4,904  |              |   |   | 3,322 |   |
| Accrued Compensation                                                                                                       |   |              | 391    |   |         |   | 153    |              |   |   | 241 |   |
| Other Accrued Expenses                                                                                                     |   |              | 506    |   |         |   | 527    |              |   |   | 444 |   |
| Deferred Revenue                                                                                                           |   |              | 508    |   |         |   | 404    |              |   |   | 546 |   |
| Total Current Liabilities                                                                                                  |   |              | 7,409  |   |         |   | 7,988  |              |   |   | 6,553 |   |
| Long Term Obligations, Less Current Maturities                                                                             |   |              | 8,810  |   |         |   | 8,584  |              |   |   | 8,475 |   |
| Total Liabilities                                                                                                          |   |              | 16,219 |   |         |   | 16,572 |              |   |   | 15,028 |   |
|                                                                                                                       |   |              |   |   |         |   |   |              |   |   |   |   |
| Commitments and Contingencies                                                                                              |   |              |   |   |         |   |   |              |   |   |   |   |
| Stockholders' Equity                                                                                                       |   |              |   |   |         |   |   |              |   |   |   |   |
| Preferred Stock, authorized 1,500,000 shares; none issued                                                                  |   |              | -      |   |         |   | -      |              |   |   | - |   |
| Common Stock, $0.02 par value; authorized 8,500,000 shares; issued:                                                        |   |              |   |   |         |   |   |              |   |   |   |   |
| 4,481,434 shares as of February 28, 2011 and 4,478,434 shares, as of May 31, 2010     and February 28, 2010 |   |              | 90     |   |         |   | 90     |              |   |   | 90 |   |
| Additional Paid In Capital                                                                                                 |   |              | 8,294  |   |         |   | 8,120  |              |   |   | 8,105 |   |
| Accumulated Deficit                                                                                                        |   |              | (2,497 | )      |         |   | (2,342 | )                 |   |   | (2,236 | ) |
| Treasury Stock - 16,232 shares, at cost                                                                                    |   |              | (64    | )      |         |   | (64    | )                 |   |   | (64 | ) |
| Total Stockholders' Equity                                                                                                 |   |              | 5,823  |   |         |   | 5,804  |              |   |   | 5,895 |   |
| Total Liabilities and Stockholders' Equity                                                                                 |   | $                 | 22,042 |   |         | $      | 22,376 |              |   | $ | 20,923 |   |

----

|                                                  |   | Three Months Ended |   |   | Nine Months Ended |   |
|-------------------------------------------------------|--------|--------------------|--------|--------|-------------------|--------|
|                                                  |   | February 28,       |   |   | February 28,      |   |
|                                                  |   | 2011               |   |   | 2010              |   |   | 2011 |   |   | 2010 |   |
|                                                  |   |               |   |   |              |   |   |   |   |   |   |   |
| Revenue, Net                                          |   | $                  | 5,126  |   |              | $      | 5,450 |   |   | $ | 24,430 |   |   | $ | 27,504 |   |
|                                                  |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Cost of Revenue                                       |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Direct Costs                                          |   |               | 1,496  |   |              |   | 1,809 |   |   |   | 10,561 |   |   |   | 11,950 |   |
| Prepublication Cost Amortization                      |   |               | 1,385  |   |              |   | 1,364 |   |   |   | 3,918 |   |   |   | 4,092 |   |
| Total                                                 |   |               | 2,881  |   |              |   | 3,173 |   |   |   | 14,479 |   |   |   | 16,042 |   |
|                                                  |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Gross Profit                                          |   |               | 2,245  |   |              |   | 2,277 |   |   |   | 9,951 |   |   |   | 11,462 |   |
|                                                  |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Selling, General and Administrative Expenses          |   |               | 3,162  |   |              |   | 3,398 |   |   |   | 9,945 |   |   |   | 10,548 |   |
|                                                  |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Income (Loss) from Operations                         |   |               | (917   | )      |              |   | (1,121 | ) |   |   | 6 |   |   |   | 914 |   |
|                                                  |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Other Expenses, Net                                   |   |               | 5      |   |              |   | 11 |   |   |   | 22 |   |   |   | 25 |   |
| Interest Expense                                      |   |               | 71     |   |              |   | 46 |   |   |   | 230 |   |   |   | 206 |   |
|                                                  |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Income (Loss) Before Income Taxes                     |   |               | (993   | )      |              |   | (1,178 | ) |   |   | (246 | ) |   |   | 683 |   |
|                                                  |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Income Tax Expense (Benefit)                          |   |               | (368   | )      |              |   | (377 | ) |   |   | (91 | ) |   |   | 326 |   |
|                                                  |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Net Income (Loss)                                     |   | $                  | (625   | )      |              | $      | (801 | ) |   | $ | (155 | ) |   | $ | 357 |   |
|                                                  |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Net Income (Loss) per Common Share:                   |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Basic and Diluted                                     |   | $                  | (0.14  | )      |              | $      | (0.18 | ) |   | $ | (0.03 | ) |   | $ | 0.08 |   |
|                                                  |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Weighted-average Number of Common Shares Outstanding: |   |               |   |   |              |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                 |   |               | 4,465  |   |              |   | 4,462 |   |   |   | 4,465 |   |   |   | 4,462 |   |
| Diluted                                               |   |               | 4,465  |   |              |   | 4,462 |   |   |   | 4,465 |   |   |   | 4,465 |   |

----

| (In Thousands)                                             |   | Nine Months Ended |   |
|------------------------------------------------------------|--------|-------------------|--------|
|                                                       |   | February 28,      |   |
|                                                       |   | 2011              |   |   | 2010 |   |
| Cash Flows From Operating Activities                       |   |              |   |   |   |   |
| Net Income (Loss)                                          |   | $                 | (155   | ) |   | $ | 357 |   |
| Adjustments to Reconcile Net Income (Loss) to Net Cash     |   |              |   |   |   |   |   |   |
| Provided by Operating Activities                           |   |              |   |   |   |   |   |   |
| Depreciation                                               |   |              | 107    |   |   |   | 164 |   |
| Amortization of Prepublication Costs and Intangible Assets |   |              | 3,936  |   |   |   | 4,104 |   |
| Stock-Based Compensation                                   |   |              | 170    |   |   |   | 45 |   |
| Market Value Adjustment of Interest Rate Swap              |   |              | 15     |   |   |   | (117 | ) |
| Deferred Income Tax (Benefit)                              |   |              | (92    | ) |   |   | 948 |   |
| Changes in Assets and Liabilities                          |   |              |   |   |   |   |   |   |
| Accounts Receivable                                        |   |              | 786    |   |   |   | 581 |   |
| Inventory                                                  |   |              | 37     |   |   |   | 239 |   |
| Prepaid Expenses and Other                                 |   |              | (73    | ) |   |   | 54 |   |
| Prepaid Marketing Expenses                                 |   |              | (68    | ) |   |   | 419 |   |
| Accounts Payable and Accrued Expenses                      |   |              | (683   | ) |   |   | (1,016 | ) |
| Deferred Revenue                                           |   |              | 104    |   |   |   | 268 |   |
| Net Cash Provided By Operating Activities                  |   |              | 4,084  |   |   |   | 6,046 |   |
|                                                       |   |              |   |   |   |   |   |   |
| Cash Flows From Investing Activities                       |   |              |   |   |   |   |   |   |
| Purchases of Equipment                                     |   |              | (166   | ) |   |   | (49 | ) |
| Expenditures for Intangibles                               |   |              | (61    | ) |   |   | (31 | ) |
| Expenditures for Prepublication Costs                      |   |              | (4,149 | ) |   |   | (2,617 | ) |
| Net Cash Used In Investing Activities                      |   |              | (4,376 | ) |   |   | (2,697 | ) |
|                                                       |   |              |   |   |   |   |   |   |
| Cash Flows From Financing Activities                       |   |              |   |   |   |   |   |   |
| Net (Payments) Borrowings Under Line of Credit             |   |              | 1,711  |   |   |   | (1,762 | ) |
| Exercise of Stock Options                                  |   |              | 4      |   |   |   | - |   |
| Principal Payments On Long-Term Debt                       |   |              | (1,500 | ) |   |   | (1,534 | ) |
| Net Cash Provided By (Used In) Financing Activities        |   |              | 215    |   |   |   | (3,296 | ) |
|                                                       |   |              |   |   |   |   |   |   |
| Net Increase (Decrease) in Cash and Cash Equivalents       |   |              | (77    | ) |   |   | 53 |   |
|                                                       |   |              |   |   |   |   |   |   |
| Cash and Cash Equivalents                                  |   |              |   |   |   |   |   |   |
| Beginning of Period                                        |   |              | 110    |   |   |   | 42 |   |
| End of Period                                              |   | $                 | 33     |   |   | $ | 95 |   |
|                                                       |   |              |   |   |   |   |   |   |
| Supplemental Cash Flow Information                         |   |              |   |   |   |   |   |   |
| Cash Payments for:                                         |   |              |   |   |   |   |   |   |
| Interest                                                   |   | $                 | 217    |   |   | $ | 382 |   |

----

| February 28, 2011 |   | $ | 1 50,000 |   |
|-------------------|--------|---|----------|--------|
| May 31, 2010      |   | $ | 153,000  |   |
| February 28, 2010 |   | $ | 6 19,000 |   |

----

| (In Thousands)                |   |               |   |
|-------------------------------|--------|--------------------|--------|
|                          |   | Three Months Ended |   |   | Nine Months Ended |   |
|                          |   | February 28,       |   |   | February 28, |   |
|                          |   | 2011               |   |   | 2010 |   |   | 2011 |   |   | 2010 |   |
| Balances, Beginning           |   | $                  | 13,445 |   |   | $ | 12,233 |   |   | $ | 12,864 |   |   | $ | 13,466 |   |
| Prepublication Cost Additions |   |               | 1,035  |   |   |   | 1,122 |   |   |   | 4,149 |   |   |   | 2,617 |   |
| Amortization Expense          |   |               | (1,385 | ) |   |   | (1,364 | ) |   |   | (3,918 | ) |   |   | (4,092 | ) |
| Balances, Ending              |   | $                  | 13,095 |   |   | $ | 11,991 |   |   | $ | 13,095 |   |   | $ | 11,991 |   |

| (In Thousands)                               |   |   |   |
|----------------------------------------------|--------|--------|--------|
|                                         |   |   |   |
| Remainder of fiscal year ending May 31, 2011 |   | $      | 1,400  |   |
| Year ending May 31, 2012                     |   |   | 4,824  |   |
| Year ending May 31, 2013                     |   |   | 3,300  |   |
| Year ending May 31, 2014                     |   |   | 2,039  |   |
| Year ending May 31, 2015 and thereafter      |   |   | 1,532  |   |
|                                         |   | $      | 13,095 |   |

| February 28, 2011 |   | $ | 710,000 |   |
|-------------------|--------|---|---------|--------|
| May 31, 2010      |   | $ | 642,000 |   |
| February 28, 2010 |   | $ | 443,000 |   |

----

|   | · | The revolving line of credit provides for advances up to $10 million and expires in March 2012. The interest rate on the revolving line of credit is in a range from LIBOR plus 2.0% to LIBOR plus 2.25%, or prime to prime plus 0.5%, with the exact interest rate based on the ratio of the Company’s total funded debt to EBITDA. The average interest rates for the reporting periods ended February 28, 2011, May 31, 2010 and February 28, 2010 was 2.5%. At February 28, 2011, $6.8 million was outstanding under this facility, and $3.2 million was available for borrowing. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The term loan is for $10 million and matures in December 2012. The term loan provides for 20 equal quarterly payments of principal and interest which began on March 31, 2008. The term loan bears interest at the same rate as the revolving line of credit for $1.825 million of the $4.0 million outstanding at February 28, 2011. In May 2007, the Company entered into a swap agreement to fix the interest rate on the balance of the term loan for three years at a rate of 5.3% plus an interest spread of 2.00% to 2.25% based upon the Company’s total funded debt to EBITDA ratio. This swap agreement expired on May 31, 2010. On June 3, 2010, the Company entered into a new swap agreement for $3 million, expiring in February 2012, fixing the interest rate at 1.25% plus an interest spread of 2.00% to 2.25% based upon the Company’s total funded debt to EBITDA ratio. The change in the fair value of the interest rate swap is recognized as an adjustment to interest expense during each reporting period. For the nine months ended February 28, 2011, the Company recorded interest expense of $15,000 relating to the swap. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                          |   | Jun - Aug   |   |   | Sep - Nov   |   |   | Dec - Feb   |   |   | Mar - May   |   |
|-----------------------------------------------|--------|-------------|--------|--------|-------------|--------|--------|-------------|--------|--------|-------------|--------|
|                                          |   | 1st Quarter |   |   | 2nd Quarter |   |   | 3rd Quarter |   |   | 4th Quarter |   |
| Test Preparation, Assessment, and Instruction |   |        | 31%    |   |        |   | 24%    |        |   |   | 22%         |   |   |   | 23% |   |
| College Preparation                           |   |        | 63%    |   |        |   | 16%    |        |   |   | 4%          |   |   |   | 17% |   |
| Literacy                                      |   |        | 33%    |   |        |   | 16%    |        |   |   | 23%         |   |   |   | 28% |   |
| Total Revenue                                 |   |        | 42%    |   |        |   | 21%    |        |   |   | 16%         |   |   |   | 21% |   |

----

|   | · | We create and sell print and digital products targeted to grades 1-12 to help students prepare for state proficiency tests. The Measuring Up® Test Preparation and Assessment print products are sold in eleven states. MeasuringUp® is positioned as standards-based, state customized instruction and classroom assessment, designed to be an integral part of a school’s instructional program throughout the school year. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | ePath KnowledgeTM, is a suite of online tools designed to meet unique needs of schools and districts. Our first offering, ePath Assess TM, formerly Measuring Up e-Path® was developed in conjunction with Cisco Learning Systems. ePath AssessTM provides formative assessment and ongoing progress-monitoring that allows educators to make data-driven decisions. ePath DiscoveryTM delivers immediate online standards-based instructional intervention for students. Lastly, Practice PathTM provides an easy-to-use student-based interface for online standards and test-based skill building and practice. The ePath KnowledgeTM suite of tools provides educators with online options to best meet the needs of their students and teachers, while providing state customized content for assessment and instruction. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | We have two product lines within this group: Focused Instruction and remedial and multicultural related materials. Focused Instruction materials provide standards–based, state-specific supplemental instruction in particular subject areas such as reading comprehension, mathematics problem solving, and vocabulary development. Essential to this strategy is the market alignment of the Focused Instruction and Test Preparation and Assessment products so that both product lines are suitable for sale to an identical customer base with an identical sales force. We continue to sell our backlist remedial and multicultural materials, but we are not investing in new development for these products. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (Amounts in Thousands - Except Per Share Data)     |   | Three Months Ended February 28, |   |
|----------------------------------------------------|--------|---------------------------------|--------|
|                                               |   | 2011                            |   |   | 2010 |   |
| Revenue                                            |   |                            |   |   |   |   |   |   |   |   |   |   |
| Test Preparation, Assessment and Instruction       |   | $                               | 4,107  |   |   |   | 80.1 | % |   | $ | 4,350 |   |   |   | 79.8 | % |
| College Preparation                                |   |                            | 713    |   |   |   | 13.9 | % |   |   | 521 |   |   |   | 9.6 | % |
| Literacy                                           |   |                            | 306    |   |   |   | 6.0 | % |   |   | 579 |   |   |   | 10.6 | % |
| Total Revenue                                      |   |                            | 5,126  |   |   |   | 100.0 | % |   |   | 5,450 |   |   |   | 100.0 | % |
|                                               |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of Revenue                                    |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Direct Costs                                       |   |                            | 1,496  |   |   |   | 29.2 | % |   |   | 1,809 |   |   |   | 33.2 | % |
| Prepublication Cost Amortization                   |   |                            | 1,385  |   |   |   | 27.0 | % |   |   | 1,364 |   |   |   | 25.0 | % |
| Total Cost Of Revenue                              |   |                            | 2,881  |   |   |   | 56.2 | % |   |   | 3,173 |   |   |   | 58.2 | % |
|                                               |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross Profit                                       |   |                            | 2,245  |   |   |   | 43.8 | % |   |   | 2,277 |   |   |   | 41.8 | % |
|                                               |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling, General and Administrative Expenses       |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Marketing and Selling                              |   |                            | 1,995  |   |   |   | 38.9 | % |   |   | 2,330 |   |   |   | 42.8 | % |
| General and Administrative                         |   |                            | 1,167  |   |   |   | 22.8 | % |   |   | 1,068 |   |   |   | 19.6 | % |
| Total Selling, General and Administrative Expenses |   |                            | 3,162  |   |   |   | 61.7 | % |   |   | 3,398 |   |   |   | 62.3 | % |
|                                               |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating Loss                                     |   |                            | (917   | ) |   |   | -17.9 | % |   |   | (1,121 | ) |   |   | -20.6 | % |
|                                               |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Expenses, Net                                |   |                            | 5      |   |   |   | 0.1 | % |   |   | 11 |   |   |   | 0.2 | % |
| Interest Expense                                   |   |                            | 71     |   |   |   | 1.4 | % |   |   | 46 |   |   |   | 0.8 | % |
| Loss Before Income Tax Benefit                     |   |                            | (993   | ) |   |   | -19.4 | % |   |   | (1,178 | ) |   |   | -21.6 | % |
|                                               |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income Tax Benefit                                 |   |                            | (368   | ) |   |   | -7.2 | % |   |   | (377 | ) |   |   | -6.9 | % |
|                                               |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Loss                                           |   | $                               | (625   | ) |   |   | -12.2 | % |   | $ | (801 | ) |   |   | -14.7 | % |
|                                               |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Loss per Common Share:                         |   |                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic and Diluted                                  |   | $                               | (0.14  | ) |   |   |   |   |   | $ | (0.18 | ) |   |   |   |   |

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|   | · | Direct costs as a percentage of revenue for the quarter were 29.2%, as compared to 33.2% during the same period in the prior year. The decrease is due to the product revenue mix. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Prepublication costs include one-time expenses associated with developing and producing new or revised proprietary products. It includes all editorial expenses, writing, page design and makeup, art and other permissions, prepress, and any other costs incurred up to the print/bind stage of the books. Prepublication costs are capitalized and expensed on a straight-line basis over a three- or five-year period, based upon the product. We believe our amortization policy is in line with industry practice. For the quarter, we amortized $1.4 million of prepublication costs which was consistent with the prior year. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (Amounts in Thousands - Except Per Share Data)     |   | Nine Months Ended February 28, |   |
|----------------------------------------------------|--------|--------------------------------|--------|
|                                               |   | 2011                           |   |   | 2010 |   |
| Revenue                                            |   |                           |   |   |   |   |   |   |   |   |   |   |
| Test Preparation, Assessment and Instruction       |   | $                              | 13,207 |   |   |   | 54.1 | % |   | $ | 15,523 |   |   |   | 56.4 | % |
| College Preparation                                |   |                           | 9,697  |   |   |   | 39.7 | % |   |   | 10,135 |   |   |   | 36.8 | % |
| Literacy                                           |   |                           | 1,526  |   |   |   | 6.2 | % |   |   | 1,846 |   |   |   | 6.7 | % |
| Total Revenue                                      |   |                           | 24,430 |   |   |   | 100.0 | % |   |   | 27,504 |   |   |   | 100.0 | % |
|                                               |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cost of Revenue                                    |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Direct Costs                                       |   |                           | 10,561 |   |   |   | 43.2 | % |   |   | 11,950 |   |   |   | 43.4 | % |
| Prepublication Cost Amortization                   |   |                           | 3,918  |   |   |   | 16.0 | % |   |   | 4,092 |   |   |   | 14.9 | % |
| Total Cost Of Revenue                              |   |                           | 14,479 |   |   |   | 59.3 | % |   |   | 16,042 |   |   |   | 58.3 | % |
|                                               |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gross Profit                                       |   |                           | 9,951  |   |   |   | 40.7 | % |   |   | 11,462 |   |   |   | 41.7 | % |
|                                               |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling, General and Administrative Expenses       |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Marketing and Selling                              |   |                           | 6,555  |   |   |   | 26.8 | % |   |   | 7,109 |   |   |   | 25.8 | % |
| General and Administrative                         |   |                           | 3,390  |   |   |   | 13.9 | % |   |   | 3,439 |   |   |   | 12.5 | % |
| Total Selling, General and Administrative Expenses |   |                           | 9,945  |   |   |   | 40.7 | % |   |   | 10,548 |   |   |   | 38.4 | % |
|                                               |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Operating Income                                   |   |                           | 6      |   |   |   | 0.0 | % |   |   | 914 |   |   |   | 3.3 | % |
|                                               |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Expenses, Net                                |   |                           | 22     |   |   |   | 0.1 | % |   |   | 25 |   |   |   | 0.1 | % |
| Interest Expense                                   |   |                           | 230    |   |   |   | 0.9 | % |   |   | 206 |   |   |   | 0.7 | % |
| Income (Loss) Before Income Tax Expense (Benefit)  |   |                           | (246   | ) |   |   | -1.0 | % |   |   | 683 |   |   |   | 2.5 | % |
|                                               |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Income Tax Expense (Benefit)                       |   |                           | (91    | ) |   |   | -0.4 | % |   |   | 326 |   |   |   | 1.2 | % |
|                                               |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Income (Loss)                                  |   | $                              | (155   | ) |   |   | -0.6 | % |   | $ | 357 |   |   |   | 1.3 | % |
|                                               |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net Income (Loss) per Common Share:                |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic and Diluted                                  |   | $                              | (0.03  | ) |   |   |   |   |   | $ | 0.08 |   |   |   |   |   |

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|   | · | Direct costs as a percentage of revenue for the current year was 43.2%, which was slightly lower than the prior year percentage of 43.4%. The fluctuation is due to product revenue mix. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Prepublication costs include one-time expenses associated with developing and producing new or revised proprietary products. It includes all editorial expenses, writing, page design and makeup, art and other permissions, prepress, and any other costs incurred up to the print/bind stage of the books. Prepublication costs are capitalized and expensed on a straight-line basis over a three- or five-year period, based upon the product. We believe our amortization policy is in line with industry practice. For the period, we amortized $3.9 million of prepublication costs, a year-over-year decline of $174,000 and 4.2% due to lower spending levels over the past several fiscal years. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | · | The revolving line of credit provides for advances up to $10 million and expires in March 2012. The interest rate on the revolving line of credit is in a range from LIBOR plus 2.0% to LIBOR plus 2.25%, or prime to prime plus 0.5%, with the exact interest rate based on the ratio of our total funded debt to EBITDA. The average interest rates for the reporting periods ending February 28, 2011, May 31, 2010 and February 28, 2010 were 2.5%. At February 28, 2011, $6.8 million was outstanding under this facility, and $3.2 million was available for borrowing. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | The term loan is for $10 million and matures in December 2012. The term loan provides for 20 equal quarterly payments of principal and interest which began on March 31, 2008. The term loan bears interest at the same rate as the revolving line of credit for $1.825 million of the $4.0 million outstanding at February 28, 2011. In May 2007, we entered into a swap agreement to fix the interest rate on the balance of the term loan for three years at a rate of 5.3% plus an interest spread of 2.00% to 2.25% based upon our total funded debt to EBITDA ratio. This swap agreement expired on May 31, 2010. On June 3, 2010, we entered into a new swap agreement for $3 million, expiring in February 2012, fixing the interest rate at 1.25% plus an interest spread of 2.00% to 2.25% based upon our total funded debt to EBITDA ratio. The change in the fair value of the interest rate swap is recognized as an adjustment to interest expense during each reporting period. For the nine months ended February 28, 2011, we recorded interest expense of $15,000 relating to the swap. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|   | In October 2005, our Board of Directors approved a share repurchase program, permitting us to repurchase up to 100,000 shares of our common stock.  We did not repurchase any shares during the three months ended February 28, 2011.  At February 28, 2011, 83,768 shares remained that could be purchased under the plan or programs.  No share repurchase plan or program expired, or was terminated, during the period covered by this report. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Exhibit 31.1 | CEO Certification pursuant to Rule 13a-14(a).                                                                                                  |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------|
|         |                                                                                                                                           |
| Exhibit 31.2 | CFO Certification pursuant to Rule 13a-14(a).                                                                                                  |
|         |                                                                                                                                           |
| Exhibit 32   | Certification of the CEO and the CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |

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| Dated:  April 8, 2011 | PEOPLES EDUCATIONAL HOLDINGS, INC.    |
|---------------------------------|---------------------------------------|
|                            |                                  |
|                            | By:                                   | /s/ Brian T. Beckwith |
|                            | Brian T. Beckwith                     |
|                            | President and Chief Executive Officer |

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