<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

[X] Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of
1934 for the quarterly period ended September 30, 2003

[ ] Transition Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the transition period from _______________ to _______________.

                          Commission File No. 2-86551C

                       Peoples Educational Holdings, Inc.
                 ----------------------------------------------
                 (Name of small business issuer in its charter)

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

                    299 Market Street, Saddle Brook, NJ   07663
               ---------------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                 (201) 712-0090
                ------------------------------------------------
                (Issuer's telephone number, including area code)


         Indicate by check mark whether the registrant (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the past 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 practical date: 3,809,199 shares of
Common Stock (par value $0.02 per share) outstanding on November 11, 2003.





<PAGE>



ITEM 1. FINANCIAL STATEMENTS

PEOPLES EDUCATIONAL HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                           (Unaudited)
                                                                                       September 30, 2003     December 31, 2002
                                                                                   --------------------------------------------
<S>                                                                                 <C>                      <C>
ASSETS

Current Assets

Cash and Cash Equivalents                                                                 $   1,896,819        $      312,470
Accounts Receivable Net of Allowance for Doubtful Accounts
  of $40,000 in 2003 and $51,000 in 2002 and Allowance for Returns                            4,608,978             1,124,874
Inventory                                                                                     1,246,359               984,669
Deferred Income Taxes                                                                           132,000               132,000
Advance Royalties                                                                               188,346               290,196
Prepaid Catalog Expenses and Other Current Assets                                               282,386               111,534
                                                                                   -------------------------------------------
     Total Current Assets                                                                     8,354,888             2,955,743
                                                                                   -------------------------------------------
Equipment - At Cost, Less Accumulated Depreciation
of $564,000 in 2003 and $469,000 in 2002                                                        654,763               500,698
                                                                                   -------------------------------------------

Other Assets

Deferred Prepublication Costs, Net                                                            6,276,813             4,596,460
Intangible Assets, Net                                                                           33,518                     -
Equipment Deposits and Other                                                                     81,278                44,384
                                                                                   -------------------------------------------
     Total Other Assets                                                                       6,391,609             4,640,844
                                                                                   -------------------------------------------

Total Assets                                                                              $  15,401,260       $     8,097,285
                                                                                   ===========================================
</TABLE>



<PAGE>




PEOPLES EDUCATIONAL HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                          (Unaudited)
                                                                                       September 30, 2003      December 31, 2002
                                                                                   ---------------------------------------------
<S>                                                                                   <C>                     <C>
LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities

Current Maturities of Long Term Debt                                                       $     84,548        $       78,953
Accounts Payable                                                                              7,659,860             1,840,135
Accrued Expenses                                                                              1,000,679               527,297
Income Taxes Payable                                                                            624,556                33,965
                                                                                   -------------------------------------------
     Total Current Liabilities                                                                9,369,643             2,480,350

Long-Term Liabilities

Long Term Debt, less current maturities                                                         143,236               807,544
Convertible Note Payable to Shareholder                                                               -             1,000,000
Accrued Royalty Payable                                                                               -                61,000
Deferred Income Taxes                                                                             5,000                 5,000
                                                                                   -------------------------------------------

Total Liabilities                                                                             9,517,879             4,353,894
                                                                                   -------------------------------------------

Stockholders' Equity

Common Stock, $0.02 par value; authorized 8,500,000 shares; issued and
  outstanding 3,531,421 shares in 2003 and 3,216,933 shares in 2002                              70,628                64,338

Additional Paid In Capital                                                                    3,802,384             2,787,690
Retained Earnings                                                                             2,010,369             1,049,513

Less: Note Receivable from issuance of stock                                                          -              (158,150)
                                                                                   -------------------------------------------

Total Stockholders' Equity                                                                    5,883,381             3,743,391
                                                                                   -------------------------------------------

Total Liabilities and Stockholders' Equity                                                $  15,401,260       $     8,097,285
                                                                                   ===========================================
</TABLE>




<PAGE>




PEOPLES EDUCATIONAL HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

<TABLE>
<CAPTION>
                                                             Three Months Ended                 Nine Months Ended
                                                                September 30                       September 30
                                                            2003            2002              2003            2002
                                                    --------------------------------  ---------------------------------


<S>                                                      <C>            <C>               <C>             <C>
Revenue:
     Product Line                                        $ 10,659,987   $ 7,813,779       $ 19,510,756    $ 13,849,566
     Delivery and Handling                                    850,855       676,301          1,564,780       1,173,197
                                                    --------------------------------  ---------------------------------
   TOTAL REVENUE                                           11,510,842     8,490,080         21,075,536      15,022,763

Cost of Revenue                                             6,886,155     5,408,219         12,091,524       9,187,237
                                                    --------------------------------  ---------------------------------
   GROSS PROFIT                                             4,624,687     3,081,861          8,984,012       5,835,526

Selling, General and Administrative Expenses                2,984,632     1,794,475          7,285,820       4,708,486
                                                   --------------------------------  ---------------------------------
   INCOME FROM OPERATIONS                                   1,640,055     1,287,386          1,698,192       1,127,040

Interest Expense                                               24,984        24,419             96,736          79,438
                                                    --------------------------------  ---------------------------------
   INCOME BEFORE INCOME TAXES                               1,615,071     1,262,967          1,601,456       1,047,602

Federal and State Income Tax Expense                          646,050       505,500            640,600         419,000
                                                    --------------------------------  ---------------------------------
   NET INCOME                                              $  969,021     $ 757,467         $  960,856      $  628,602
                                                    ================================  =================================

Net Income per Common Share
   Basic:                                                  $     0.27     $    0.24         $     0.28      $     0.20
   Diluted:                                                $     0.26     $    0.23         $     0.27      $     0.19
                                                    ================================  =================================

Weighted-average Number of Common
Shares Outstanding
   Basic:                                                   3,531,421     3,216,933          3,467,409       3,216,933
   Diluted:                                                 3,666,068     3,280,879          3,557,219       3,259,564
                                                    ================================  =================================
</TABLE>




<PAGE>




PEOPLES EDUCATIONAL HOLDINGS, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)


<TABLE>
<CAPTION>
                                                          Additional
                                             Common        Paid-In         Accumulated       Notes
                                             Stock         Capital           Earnings      Receivable      Total
                                        ----------------------------------------------------------------------------
<S>                                     <C>            <C>                <C>             <C>           <C>
Balance, December 31, 2002                  $ 64,338     $ 2,787,690        $ 1,049,513   $ (158,150)   $ 3,743,391

Interest on Notes Receivable
   from issuance of Stock                          -           2,821                  -       (2,821)             -

Payment on Notes Receivable                        -               -                  -      160,971        160,971

Exercise of Stock Options                        799          56,516                  -            -         57,315

Repurchase of Common Stock                      (224)        (38,928)                 -            -        (39,152)

Conversion of Notes Payable and Accrued
Interest into Common Stock                     5,715         994,285                  -            -      1,000,000

Net Income                                         -               -            960,856            -        960,856
                                        ----------------------------------------------------------------------------

Balance, September 30, 2003                 $ 70,628     $ 3,802,384        $ 2,010,369   $        -    $ 5,883,381
                                        ============================================================================
</TABLE>




<PAGE>




PEOPLES EDUCATIONAL HOLDINGS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                   Nine Months Ended
                                                                         September 30, 2003     September 30, 2002
                                                                       ---------------------   --------------------
<S>                                                                    <C>                     <C>
Cash Flows From Operating Activities
Net Income                                                                  $       960,856          $     628,602
Adjustments to Reconcile Net Income to Net Cash Provided by
   Operating Activities
    Depreciation                                                                    132,635                112,686
    Amortization of Prepublication Costs                                          1,464,250                857,270
Changes in Assets and Liabilities
    Accounts Receivable                                                          (3,484,104)            (1,568,587)
    Inventory                                                                      (261,690)               284,452
    Prepaid Catalog Expense and Other Current Assets                               (170,852)              (203,861)
    Advance Royalties                                                               101,850                278,745
    Equipment Deposits and Other                                                    (36,894)                40,087
    Accounts Payable and Accrued Expenses                                         6,293,107              3,232,128
    Accrued Royalty Payable                                                         (61,000)                61,000
    Income Taxes Payable                                                            590,591                280,199
                                                                     -----------------------   --------------------
        Net Cash Provided by Operating Activities                                 5,528,749              4,002,721
                                                                     -----------------------   --------------------

Cash Flows From Investing Activities
    Purchases of Equipment                                                         (286,699)              (194,461)
    Expenditures for Prepublication Costs                                        (3,144,603)            (2,507,156)
    Intangible Assets                                                               (33,518)                     -
                                                                     -----------------------   --------------------
        Net Cash Used in Investing Activities                                    (3,464,820)            (2,701,617)
                                                                     -----------------------   --------------------

Cash Flows From Financing Activities
    Net Payments Under Line of Credit                                              (600,000)            (1,400,000)
    Proceeds from Exercise of Stock Options                                          57,315                      -
    Payments Received on Notes Receivable                                           160,971                      -
    Repurchase of Common Stock                                                      (39,152)                     -
    Principal Payments on Long Term Debt                                            (58,714)               (26,069)
                                                                     -----------------------   --------------------
        Net Cash Used in Financing Activities                                      (479,580)            (1,256,696)
                                                                     -----------------------   --------------------

        Net Increase in Cash and Cash Equivalents                                 1,584,349                 44,408

Cash and Cash Equivalents
    Beginning of Period                                                             312,470                784,540
                                                                     -----------------------   --------------------
    End of Period                                                           $     1,896,819          $     828,948
                                                                     =======================   ====================

Supplemental Cash Flow Information
    Cash Payments for:
        Interest                                                            $        96,736          $      79,438
        Income Taxes                                                                 50,009                132,000
                                                                     =======================   ====================

Supplemental Schedule of Noncash Investing and Financing Activities
  Conversion of Note Payable and Accrued Interest to Common Stock           $     1,000,000          $           -
                                                                     =======================   ====================
</TABLE>



<PAGE>



Peoples Educational Holdings, Inc. and Subsidiary
Notes to Consolidated Financial Statements (Unaudited)

NOTE 1 - Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
by the Company without audit and in accordance with the instructions to Form
10-QSB and therefore do not include all information and disclosures necessary
for a fair presentation of financial position, results of operations, and cash
flows in conformity with accounting principles generally accepted in the United
States of America. These unaudited financial statements contain, in the opinion
of management, all adjustments (consisting of normal accruals and other
recurring adjustments) necessary for a fair presentation of the consolidated
financial position, results of operations, and cash flows for the periods
presented. The operating results for the period ended September 30, 2003, are
not necessarily indicative of the operating results to be expected for the full
fiscal year.

NOTE 2 -- Revenue Recognition and Accounts Receivable
The Company recognizes revenue upon shipment and estimates returns if the right
of return exists. The allowances for returns as of September 30, 2003 and
December 31, 2002, were $691,000 and $489,000 respectively. These allowances are
recorded as a reduction of accounts receivable.

NOTE 3 -- Basic And Diluted Per Share Amounts
Basic per share amounts are computed, generally, by dividing net income or loss
by the weighted average number of common shares outstanding. Diluted per share
amounts assume the conversion, exercise or issuance of all potential common
stock instruments, unless their effect is anti-dilutive thereby reducing the
loss or increasing the income per common share.

NOTE 4-- Deferred Prepublication Costs
The activity in deferred prepublication costs and the balances as of September
30, 2003 and 2002, are as follows:

<TABLE>
<CAPTION>
                                                Three Months Ended                Nine Months Ended
                                                   September 30                     September 30
                                              2003            2002               2003           2002
                                        ------------------------------   -------------------------------
<S>                                     <C>             <C>               <C>             <C>
Balances, Beginning                        $5,749,248      $3,452,633        $4,596,460      $2,402,852
  Prepublication Cost Additions             1,096,990         905,568         3,144,603       2,507,156
  Amortization Expense                       (569,425)       (305,463)       (1,464,250)       (857,270)
                                        ------------------------------   -------------------------------
Balances, Ending                           $6,276,813      $4,052,738        $6,276,813      $4,052,738
                                        ==============================   ===============================
</TABLE>

Amortization expense for the year ended December 31, 2002 was approximately
$1,212,000.

The estimated future amortization expense related to deferred prepublication
costs is as follows:

<TABLE>
<S>                                                        <C>
For the remainder of 2003                                     $   603,000
For the year ended December 31, 2004                          $ 2,614,000
For the year ended December 31, 2005                          $ 2,019,000
For the year ended December 31, 2006                          $ 1,041,000
                                                            -------------
                                                              $ 6,277,000
                                                            =============
</TABLE>

NOTE 5 -- Stock-Based Compensation
The Company grants options to its employees under its 1998 Stock Option Plan. As
permitted under accounting principles generally accepted in the United States of
America, these grants are accounted for following APB Opinion No. 25 and related
interpretations. Accordingly, compensation cost is recognized for those grants
whose exercise price is less than the fair market value of the stock on the date
of grant.

<PAGE>



There was no compensation expense recorded for employee grants for the three and
nine-month periods ended September 30, 2003 and 2002.

Had compensation cost for all of the stock-based compensation grants and
warrants issued been determined based on the fair values at the grant date
consistent with the provisions of Statement No. 123, the Company's net income
and net income per basic and diluted common share would have been as indicated
below.

<TABLE>
<CAPTION>
                                                                   Three Months Ended                  Nine Months Ended
                                                                       September 30                       September 30
                                                                   2003           2002               2003           2002
                                                              ------------------------------    ------------------------------
<S>                                                              <C>           <C>                 <C>           <C>
Net Income , as reported                                            $ 969,021     $ 757,467           $ 960,856     $ 628,602
Deduct total stock-based employee compensation
  expense determined under the fair value-based
  method for all rewards                                              (35,747)      (35,307)           (107,241)     (105,922)
                                                              ------------------------------    ------------------------------
Net Income, proforma                                                $ 933,274     $ 722,160           $ 853,615     $ 522,680
                                                              ==============================    ==============================

Basic Net Income per Common Share, as reported                         $ 0.27        $ 0.24              $ 0.28        $ 0.20
Basic Net Income per Common Share, proforma                              0.26          0.22                0.25          0.16
Diluted Net Income per Common Share, as reported                         0.26          0.23                0.27          0.19
Diluted Net Income per Common Share, proforma                            0.25          0.22                0.24          0.16
</TABLE>

The above pro forma effects on net income and net income per basic and diluted
common share are not likely to be representative of the effects on reported Net
Income or Net Income per common share for future years because options vest over
several years and additional awards are generally made each year.



<PAGE>




ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS


FORWARD--LOOKING STATEMENTS

This Form 10-QSB contains forward-looking statements regarding Peoples
Educational Holdings, Inc. (the "Company"), The Peoples Publishing Group, Inc.
("PPG") and their markets as defined in section 21E of the Securities Exchange
Act of 1934. These forward-looking statements involve a number of risks and
uncertainties, including (1) demand from major customers, (2) effects of
competition, (3) changes in product or customer mix or revenues and in the level
of operating expenses, (4) rapidly changing technologies and the Company's
ability to respond thereto, (5) the impact of competitive products and pricing,
(6) local and state levels of educational spending, (7) the Company's and PPG's
ability to retain qualified personnel, (8) PPG's ability to retain its
distribution agreements in the Advanced Placement market, (9) the sufficiency of
PPG's copyright protection, (10) PPG's ability to continue to rely on the
services of Mercedes Distribution Center for its warehousing and distribution
services and (11) the Company's and PPG's ability to retain and increase market
acceptance of its Test Preparation products in existing and new states, and
other factors disclosed below and throughout this report. The actual results
that the Company or PPG achieve may differ materially from any forward-looking
statements due to such risks and uncertainties. The Company undertakes no
obligation to revise any forward-looking statements in order to reflect events
or circumstances that may arise after the date of this report. Readers are urged
to carefully review and consider the various disclosures made by the Company in
this report, including the discussion set forth below and in the Company's other
reports filed with the Securities and Exchange Commission from time to time that
attempt to advise interested parties of the risks and factors that may affect
the Company's business and results of operations.


SEASONALITY

The seasonality of the Advanced Placement product line is significantly
different than that of the Instruction and Test Preparation product lines. For
Advanced Placement, revenue, on a historical basis, by quarter is approximately
as follows: 1st quarter 6%, 2nd quarter 24%, 3rd quarter 61% and 4th quarter 9%.
For Instruction and Test Preparation, revenue by quarter is approximately as
follows: 1st quarter 21%, 2nd quarter 23%, 3rd quarter 35% and 4th quarter 21%.


<PAGE>



Third  Quarter 2003 vs. Third Quarter 2002


Overview

Total revenue increased 35.6% and Product Line revenue increased 36.4% for the
third quarter of 2003 compared to the same period in 2002. This increase was led
by a 142.6% increase in Test Preparation revenue. Net Income for the three
months ended September 30, 2003 was $969,000, as compared to $757,000 for the
three months ended September 30, 2002, representing an increase of 28.0%.

<TABLE>
<CAPTION>
                                                                       Three Months Ended
                                                                          September 30
                                                    2003             2002           Variance        % Variance
                                            -------------------------------------------------------------------
<S>                                            <C>              <C>               <C>                 <C>
Product Line Revenue
Test Preparation                                 $ 4,429,000      $ 1,826,000       $ 2,603,000         142.6%
Advanced Placement                                 5,733,000        5,505,000           228,000           4.1%
Instruction                                          498,000          483,000            15,000           3.1%
                                            -------------------------------------------------------------------
       Total Product Line Revenue                 10,660,000        7,814,000         2,846,000          36.4%
Shipping and Handling Revenue                        851,000          676,000           175,000          25.9%
                                            -------------------------------------------------------------------
             Total Revenue                      $ 11,511,000      $ 8,490,000       $ 3,021,000          35.6%
                                            ===================================================================

Net Income                                         $ 969,000        $ 757,000         $ 212,000          28.0%
</TABLE>

REVENUE

Test Preparation Product Revenue

Test Preparation product line revenue was $4,429,000 for the third quarter in
2003 compared to $1,826,000 in 2002, representing a 142.6% increase. The revenue
growth can be attributed to increased market penetration and the release of new
products into a new state. During the third quarter of 2002 the Company had
state-specific products published for eight states. In 2003, the Company had
state-specific products for nine states. All Test Preparation products are
proprietary, and management believes this niche will continue to be the
Company's fastest growth area in the future. This expansion is not without major
competitors and similar efforts by other publishers will make this arena a hotly
contested environment.

Advanced Placement Product Revenue

Advanced Placement product line revenue for the third quarter in 2003 was
$5,733,000 compared to $5,505,000 during the same period in 2002, representing
an increase of 4.1%. The increase is a result of the Company's expanded sales
and marketing efforts into the growing private and parochial school markets. The
Company continues to be optimistic about the opportunities for growth in the
Advanced Placement market.

Instruction Product Revenue

Instruction products include two sales sources referred to as Student-At-Risk
and Multicultural. Both include a mix of proprietary and nonproprietary titles.
PPG's sales and marketing emphasis is on proprietary products, and PPG uses
nonproprietary products to round out or fill in a full catalog of product
offerings for PPG's customers. Instruction revenue increased 3.1% for the third
quarter of 2003 compared to the same period in 2002. The increase is a result of
revenue timing as the year to date revenue for 2003 is $124,000 below 2002. The
Company has shifted its strategic focus away from this product line to its Test
Preparation product line.



<PAGE>




GROSS PROFIT AND COST OF REVENUE

Gross Profit increased from $3,082,000 in the third quarter of 2002 to
$4,625,000 for the same period in 2003, and increased as a percentage of revenue
from 36.3% in 2002 to 40.2% in 2003. The increase in both dollars and percentage
is a result of increased overall revenue growth combined with the relatively
fixed nature of certain costs and a decrease in costs as a percentage of revenue
due to changes in product mix, discussed below.

Cost of Revenue consists of (1) product cost, which includes paper, printing,
binding, and prepress costs for proprietary products and product purchases for
non-proprietary products, (2) amortization of prepublication costs for
proprietary products, (3) royalty for proprietary products, and (4) warehousing
and shipping costs for proprietary and distributed products.

Product cost decreased from 53.5% of revenue in 2002 to 48.0% in 2003. The
decrease was a result of favorable product mix, as Test Preparation revenues
increased from 21.5% of total revenue for the third quarter of 2002 to 38.5% in
2003. Test Preparation products in general, have lower product costs associated
with them.

Prepublication costs include all the one-time expenses associated with
developing and producing new or revised proprietary products. Prepublication
costs include all editorial expenses, writing, page design and makeup, art
permissions and other permissions, prepress, and any other costs incurred up to
the print/bind stage of the books. These prepublication costs also include
expenses incurred for other forms of product development, such as expert
reviews. Such product development usually involves creating sample lessons for
each content area of a prospective title; PPG then obtains feedback on these
samples, which it applies to the creation of the rest of the book.
Prepublication costs are capitalized and expensed over a three-year period
beginning on the in-stock date of new and revised products. PPG believes its
policy for a three-year amortization schedule is conservative and in line with
industry practice. For the three months ended September 30, 2003, PPG amortized
$569,000 of prepublication costs as compared to $305,000 for the same period in
2002. In book publishing, prepublication cost expenditures serve as an important
financial indicator of new product commitment. For the quarter ended September
30, 2003, PPG's prepublication cost expenditures increased 21.1% to $1,097,000
compared to expenditures of $906,000 for the same period in 2002.


SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

<TABLE>
<CAPTION>
                                                                    Three Months Ended
                                                                       September 30
                                                  2003             2002           Variance      % Variance
                                           ----------------------------------------------------------------
<S>                                          <C>              <C>               <C>            <C>
Selling, General and Adminstrative             $ 2,985,000      $ 1,794,000       $1,191,000     66.4%
</TABLE>


The marketing and selling expenditures portion of the total increased by
$989,000 from the third quarter of 2002 to the third quarter of 2003. The
fluctuation is due to increases in salaries, commissions, and marketing expenses
relating to the Company's increased revenue, market penetration, and brand
recognition.

The general and administrative expenditures portion, increased by $202,000 from
the third quarter of 2002 to the third quarter of 2003. This fluctuation is due
to increases in salaries and related employee expenses to support the Company's
growth.


<PAGE>



Nine Months Ended September 30, 2003 vs. Nine Months Ended September 30, 2002

Overview


Total revenue increased 40.3%, and Product Line revenue increased 40.9%, for the
nine months ended September 30, 2003 compared to the same period in 2002. This
fluctuation was led by a 125.9% increase in Test Preparation revenue. Net Income
for the nine months ended September 30, 2003 was $961,000, as compared to
$629,000 for the same period in 2002, representing a 52.8% increase.

<TABLE>
<CAPTION>
                                                                     Nine Months Ended
                                                                        September 30
                                                  2003             2002          Variance       % Variance
                                            -----------------------------------------------------------------
<S>                                           <C>               <C>           <C>               <C>
Product Line Revenue
Test Preparation                                $ 10,065,000      $ 4,455,000     $ 5,610,000         125.9%
Advanced Placement                                 8,495,000        8,320,000         175,000           2.1%
Instruction                                          951,000        1,075,000        -124,000         -11.5%
                                            -----------------------------------------------------------------
       Total Product Line Revenue                 19,511,000       13,850,000       5,661,000          40.9%
Shipping and Handling Revenue                      1,565,000        1,173,000         392,000          33.4%
                                            -----------------------------------------------------------------
             Total Revenue                      $ 21,076,000      $15,023,000     $ 6,053,000          40.3%
                                            =================================================================

Net Income                                      $    961,000      $   629,000     $   332,000          52.8%
</TABLE>

REVENUE

Test Preparation Product Revenue

Test Preparation product line revenue was $10,065,000 for the nine months ended
September 30, 2003 compared to $4,455,000 in 2002, representing a 125.9%
increase. As of September 30, 2002, the Company had state-specific products
published for eight states. As of September 30, 2003, the Company had
state-specific products for nine states. Revenue growth can be attributed to
increased market penetration due to the introduction of new products within
existing states and the release of products into a new state. All Test
Preparation products are proprietary, and management believes this niche will
continue to be the Company's fastest growth area in the future. This expansion
is not without major competitors and similar efforts by other publishers will
make this arena a hotly contested environment.

Advanced Placement Product Revenue

Advanced Placement product line revenue for the nine months ended September 30,
2003 was $8,495,000 compared to $8,320,000 during the same period in 2002,
representing an increase of 2.1%. The increase is a result of the Company's
expanded sales and marketing efforts into the growing private and parochial
school markets. The Company continues to be optimistic about the opportunities
for growth in the Advanced Placement market.

Instruction Product Revenue

Instruction products include two sales sources referred to as Student-At-Risk
and Multicultural. Both include a mix of proprietary and nonproprietary titles.
PPG's sales and marketing emphasis is on proprietary products, and PPG uses
nonproprietary products to round out or fill in a full catalog of product
offerings for PPG's customers. Instruction revenue decreased 11.5% for the nine
months ended September 30, 2003 compared to the same period in 2002. The Company
has shifted its strategic focus away from this product line to its Test
Preparation product line.



<PAGE>





GROSS PROFIT AND COST OF REVENUE

Gross Profit increased from $5,836,000 for the nine months ended September 30,
2002 to $8,984,000 for the same period in 2003. In addition, Gross Profit as a
percent of revenue increased from 38.8% to 42.6%. The increase in both dollars
and percentage is a result of increased overall revenue growth, combined with
the relatively fixed nature of certain costs, and a decrease in costs as a
percentage of revenue due to changes in product mix, discussed below.

Cost of Revenue consists of (1) product cost, which includes paper, printing,
binding, and prepress costs for proprietary products and product purchases for
non-proprietary products, (2) amortization of prepublication costs for
proprietary products, (3) royalty for proprietary products, and (4) warehousing
and shipping costs for proprietary and distributed products.

Product cost decreased from 48.0% of revenue in 2002 to 41.9% in 2003. The
decrease was a result of favorable product mix, as Test Preparation revenue
increased from 29.7% of total revenue for the nine months ended September 30,
2002 to 47.8% in 2003. Test Preparation products in general have lower product
costs associated with them.

For the nine months ended September 30, 2003, PPG amortized $1,464,000 of
prepublication costs as compared to $857,000 for the same period in 2002. In
book publishing, prepublication cost expenditures serve as an important
financial indicator of new product commitment. For the nine months ended
September 30, 2003, PPG's prepublication cost expenditures increased 25.4% to
$3,145,000, compared to expenditures of $2,507,000 for the same period in 2002.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

<TABLE>
<CAPTION>
                                                                     Nine Months Ended
                                                                        September 30
                                                  2003             2002          Variance      % Variance
                                           ---------------------------------------------------------------
<S>                                         <C>              <C>             <C>             <C>
Selling, General and Adminstrative             $ 7,286,000      $ 4,708,000     $ 2,578,000     54.8%
</TABLE>

The marketing and selling expenditures portion of the total increased by
$2,240,000 for the nine months ended September 30, 2003, as compared to the same
period in 2002. Increases in commission and incentive as a result of increased
revenues accounted for 61.0% of the increase. The balance was due to increases
in salaries, and marketing expenses relating to the Company's increased revenue,
market penetration, and brand recognition.

The general and administrative expenditures portion of the total increased
$338,000 for the nine months ended September 30, 2003 as compared to the same
period in 2002. The fluctuation is primarily due to an increase in salary
expense needed to support the Company's growth.


LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by operating activities for the nine months ended September
30, 2003 was $5,529,000. Cash was primarily provided by the predepreciation and
amortization profitability of the Company, and an increase in accounts payable,
accrued expenses, and income taxes payable, offset primarily by increases in
accounts receivable, inventory and prepaid catalog expenses.

Accounts receivable increased as a result of the significant increase in revenue
during the third quarter of 2003.



<PAGE>




Inventory increased due to increased customer demand for the Company's
publications and an increase in the number of titles published.

Accounts payable and accrued expenses increased due to purchases, prepublication
cost and commissions made in the ordinary business cycle, combined with the
significant increase in revenue.

Net cash used in investing activities was $3,465,000, consisting primarily of
prepublication cost expenditures of $3,145,000, and equipment purchases of
$287,000.

Net cash used in financing activities was $480,000, consisting primarily of net
payments under the Company's line of credit of $600,000, repurchase of common
stock of $39,000 and principal payments under capital leases of $59,000. This
was offset by proceeds from the sale of common stock and proceeds from payments
received on officers note receivable.

The Company has a $6,500,000 financing agreement with a financial institution.
The arrangement includes three separate revolving lines of credit. The main line
of credit provides for advances up to $4,000,000 for a two-year period, subject
to borrowing base restrictions limited to 80 percent of eligible accounts
receivable and 35 percent of inventory. The second line of credit is for
$2,000,000 for a two-year period, and the third is a $500,000 line of credit for
a one-year period. All three lines of credit bear interest at LIBOR plus 2.25
percent. Total borrowings are secured by substantially all assets of the Company
and are subject to certain financial covenants. There was no balance outstanding
under these lines as of September 30, 2003. In addition, the Company sold
277,778 shares of its common stock for $1,000,000 subsequent to September 30,
2003.

The Company believes that its cash, line of credit, and subsequent proceeds from
the sale of common stock, together with cash generated from anticipated revenue
and gross profit, will be sufficient to meet its normal cash needs for the
remainder of 2003. The Company intends to continue investing in prepublication
costs for its proprietary, Test Preparation products, to the extent cash flow
allows. As the Company develops these products for more states, additional
investment in inventory will be required.

For the remainder of fiscal year 2003, the Company has contractual cash
obligations, under operating and capital leases in the amount of $116,000.

CRITICAL ACCOUNTING POLICIES

The Company's significant accounting policies are summarized in the footnotes to
our financial statements as reported at December 31, 2002. Some of the most
critical policies are as follows. As a matter of policy, the Company reviews its
major assets for impairment. The Company's major operating assets are accounts
receivable, inventories, prepublication assets, and property and equipment. The
Company established reserves for doubtful accounts and returns based upon
management's review of accounts and historical analysis. The Company also
establishes reserves for slow moving and obsolete inventory based on sales
history and market conditions. The Company depreciates its property and
equipment and amortizes its prepublication assets over their estimated useful
lives.



<PAGE>



ITEM 3.  CONTROLS AND PROCEDURES.

The Company's management, including the Chief Executive Officer and Chief
Financial Officer, have conducted an evaluation of the effectiveness of the
design and operation of the Company's disclosure controls and procedures
pursuant to Rule 15d-15 under the Securities Exchange Act of 1934 (the "1934
Act") , as of the end of the period covered by this quarterly report. Based on
that evaluation, the Company's Chief Executive Officer and Chief Financial
Officer concluded that the Company's disclosure controls and procedures are
effective in ensuring that information required to be disclosed by the Company
in the reports it files or submits under the 1934 Act is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and
forms.

There have been no changes in internal control over financial reporting that has
materially affected, or are reasonably likely to materially affect, the
registrant's internal control over financial reporting, subsequent to the date
the Chief Executive Officer and Chief Financial Officer completed their
evaluation.

                                     PART II
                                OTHER INFORMATION


ITEM 2.  Changes in Securities and Use of Proceeds

In November 2003, the Company sold 277,778 shares of its Common Stock at $3.60
per share pursuant to exemptions provided under Section 4(2) of the Securities
Act of 1933.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

Exhibit 31.1 CEO Certification pursuant to Rule 15d-14(a).

Exhibit 31.2 CFO Certification pursuant to Rule 15d-14(a).

Exhibit 32.1 CEO Certification Pursuant To 18 U.S.C. Section 1350, As Adopted
Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002.

Exhibit 32.2 CFO Certification Pursuant To 18 U.S.C. Section 1350, As Adopted
Pursuant To Section 906 Of The Sarbanes-Oxley Act Of 2002.





<PAGE>



                                   SIGNATURES

          In accordance with the requirements of the Securities Exchange Act of
1934, the Registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

          Dated:     November 12, 2003        PEOPLES EDUCATIONAL HOLDINGS, INC.


                                              By: /s/ Brian T. Beckwith
                                                  ------------------------------
                                                   Brian T. Beckwith, President
                                                   and Chief Executive Officer