SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


                     For the Quarter Ended December 31, 2005


                           Commission File No. 0-16056


                                TRUDY CORPORATION
                                 353 Main Avenue
                                Norwalk, CT 06851


                      Incorporated in the State of DELAWARE

                      Federal Identification No. 06-1007765


                            Telephone: (203) 846-2274


    Trudy Corporation has filed all reports required to be filed by section
     13 or 15 (d) of the Securities Act of 1934 during the preceding twelve
  months and has been subject to such filing requirements for the past 90 days.

    Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]


                              SHARES OUTSTANDING AT
                                February 14, 2006
               Common Stock, $.0001 par value: 458,734,057 shares

<PAGE>

INDEX                                                                PAGE NUMBER
-----                                                                -----------

                          PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

   Consolidated Balance Sheet - December 31, 2005 (unaudited)               3

   Consolidated Statements of Operations (unaudited) for the three
     and nine months ended December 31, 2005 and December 31, 2004
     (unaudited)                                                            4

   Consolidated Statement of Shareholders' Deficit (unaudited) from
     April 1, 2005 through December 31, 2005                                5

   Consolidated Statements of Cash Flows (unaudited) for the nine months
     ended December 31, 2005 and December 31, 2004 (unaudited)              6

   Notes to Financial Statements (unaudited)                                7

Item 2. Management's Discussion and Analysis                               15


                           PART II. OTHER INFORMATION

Item 1. Legal Proceedings                                                  26

Item 2. Changes in Securities                                              26

Item 3. Defaults upon Senior Securities                                    26

Item 4. Submission of Matters to a Vote of Security Holders                26

Item 5. Other Information                                                  26

Item 6. Exhibits and Reports on Form 8-K                                   27

                                       2
<PAGE>

                        Trudy Corporation and Subsidiary
                           Consolidated Balance Sheet
                                December 31, 2005

                                                                    (Unaudited)
                                                                   ------------
Assets

Current assets:
  Cash and cash equivalents                                        $     23,392
  Accounts receivable, net                                            1,027,632
  Inventories                                                         1,768,729
  Prepaid expenses and other current assets                             121,039
                                                                   ------------

    Total current assets                                              2,940,792

  Equipment, net                                                         31,367
  Royalty advances, net                                                 195,307
  Pre-publication costs and other assets, net                           524,488
                                                                   ------------

    Total other assets                                                  751,161
                                                                   ------------

      Total assets                                                 $  3,691,953
                                                                   ============

Liabilities and shareholders' equity

Current liabilities:
  Notes payable - bank                                             $  1,155,485
  Current portion, long term debt                                        28,285
  Accounts payable and accrued expenses                               1,634,475
  Royalties and commissions payable                                     269,544
                                                                   ------------

      Total current liabilities                                       3,087,789

Long-term liabilities:
  Due to The Chart Studio (Pty) Ltd.                                    371,819
  Long term debt, net of current portion                              1,612,903
                                                                   ------------

      Total long-term liabilities                                     1,984,722

                                                                   ------------
      Total liabilities                                               5,072,511

Shareholders' equity:
  Common stock: $.0001 par value                                         48,574
  Additional paid-in capital                                          5,356,454
  Accumulated equity deficit                                         (6,785,586)
                                                                   ------------

      Total shareholders' equity                                     (1,380,558)
                                                                   ------------

      Total liabilities and shareholders' equity                   $  3,691,953
                                                                   ============


The accompanying summary of significant accounting policies and notes to
financial statements are an integral part of the consolidated financial
statements.

                                       3
<PAGE>
<TABLE>

                        Trudy Corporation and Subsidiary
                      Consolidated Statement of Operations


                                                             Three Month Period                  Nine Month Period
                                                             Ended December 31,                  Ended December 31,
                                                      -------------------------------     -------------------------------
                                                           2005              2004              2005              2004
                                                      -------------     -------------     -------------     -------------
<S>                                                       <C>               <C>               <C>               <C>
Net Sales                                                 1,074,595         2,267,965         4,405,633         5,127,589

Cost of Sales                                               646,213         1,135,700         2,482,356         2,598,114
                                                      -------------     -------------     -------------     -------------

Gross profit                                                428,383         1,132,265         1,923,276         2,529,475

Operating expenses
  Selling, general and administrative                       590,940           965,967         1,937,834         2,347,529
                                                      -------------     -------------     -------------     -------------

Income/(loss) from operations                              (162,557)          166,298           (14,558)          181,946

Other income (expense)
  Interest, net                                             (45,838)          (40,260)         (125,982)         (114,245)
  Royalties, net                                              6,535            16,885            23,457            19,569
  Other income/(expense)                                       (999)           53,297             9,547            60,865
                                                      -------------     -------------     -------------     -------------

Other income/(expense):                                     (40,302)           29,922           (92,978)          (33,811)

Income/(loss) before minority interest                     (202,859)          196,220          (107,535)          148,135

  Minority interest income/(expense)                             --           (12,365)               --           (11,813)
                                                      -------------     -------------     -------------     -------------

Net income/(loss)                                     $    (202,859)    $     183,855     $    (107,535)    $     136,322
                                                      =============     =============     =============     =============


Basic and diluted net income/(loss) loss per share    $          --     $          --     $          --     $          --
                                                      =============     =============     =============     =============

Weighted average number of shares outstanding           458,734,057       442,460,249       457,414,057       442,460,249
                                                      =============     =============     =============     =============
</TABLE>

The accompanying summary of significant accounting policies and notes to
financial statements are an integral part of the consolidated financial
statements.

                                       4
<PAGE>
<TABLE>
<CAPTION>

                        Trudy Corporation and Subsidiary
                Consolidated Statements of Shareholders' Deficit
                         Quarter ended December 31, 2005

                                                                                                 Total
                                          Common Stock          Additional                    Shareholders'
                                  ---------------------------     Paid-in      Accumulated     (Deficit)
                                     Shares         Amount        Capital        Deficit        Equity
                                  ------------   ------------   ------------   ------------   ------------
<S>                                <C>           <C>            <C>            <C>            <C>
Balance at March 31, 2005          455,734,057   $     45,574   $  5,267,793   $ (6,678,049)  $ (1,364,682)

Contributed compensation                    --             --         25,120             --         25,120

Net loss (unaudited)                        --             --             --       (211,120)      (211,120)

                                  ------------   ------------   ------------   ------------   ------------
Balance at June 30, 2005           455,734,057         45,574      5,292,913     (6,889,169)    (1,550,682)
                                  ============   ============   ============   ============   ============

Contributed compensation                    --             --         25,253             --         25,253

Board Compensation                   3,000,000          3,000         14,058             --         17,058

Net income (unaudited)                      --             --             --        306,442        306,442

                                  ------------   ------------   ------------   ------------   ------------
Balance at September 30, 2005      458,734,057         48,574      5,332,224     (6,582,727)    (1,201,929)
                                  ============   ============   ============   ============   ============

Contributed compensation                    --             --         24,230             --         24,230

Net loss (unaudited)                        --             --             --       (202,859)      (202,859)

                                  ------------   ------------   ------------   ------------   ------------
Balance at December 31, 2005       458,734,057         48,574      5,356,454     (6,785,586)    (1,380,558)
                                  ============   ============   ============   ============   ============
</TABLE>

The accompanying summary of significant accounting policies and notes to
financial statements are an integral part of the consolidated financial
statements.

                                       5
<PAGE>
<TABLE>
<CAPTION>

                        Trudy Corporation and Subsidiary
                      Consolidated Statements of Cash Flows

                                                                              For the Nine Months
                                                                               Ended December 31,
                                                                          ---------------------------
                                                                              2005           2004
                                                                          ------------   ------------
                                                                           (Unaudited)    (Unaudited)
<S>                                                                           <C>             <C>
Cash Flows From Operating Activities
Net income /(loss)                                                            (107,535)       136,322
Adjustments to reconcile net loss/(income) to net cash provided
by / (used in) operating activities:
  Depreciation                                                                  13,355         27,250
  Amortization of pre-publication costs                                        207,286        149,688
  Provision for losses on accounts receivable                                    3,877         24,834
  Provision for promotional allowance                                                0         92,465
  Provision for slow moving inventory                                                0        115,456
  Provision for sales returns                                                   (9,151)        88,755
  Minority interest                                                                  0         11,814
  Contributed compensation                                                      74,603         79,250
  Board Stock Grants                                                            17,059              0
  Imputed interest on long-term loan                                            20,276         18,815

Changes in operating assets and liabilities:
  Decrease (Increase) in accounts receivable                                   (57,516)    (1,258,142)
  Decrease (Increase) in inventories                                          (605,036)      (163,094)
  (Increase) Decrease in prepaid expenses and other current assets              58,911         18,729
  Increase (Decrease) in accounts payable and accrued expenses                 413,527        559,552
  Increase (Decrease) in royalties and commissions payable                    (121,799)       388,638
                                                                          ------------   ------------
Net cash provided /(used) used by operating activities                         (92,144)       290,332

Investing activities:
  Purchases of property and equipment                                          (13,735)        (7,173)
  Pre-publication and royalty advances                                        (192,337)      (255,623)
                                                                          ------------   ------------
Net cash provided/(used) by investing activities                              (206,072)      (262,796)

Financing activities:
  Proceeds from short-term debt                                                      0         35,977
  Net change in note payable, bank                                             439,001              0
  Repayments to related parties                                               (149,834)      (111,401)
                                                                          ------------   ------------
Net cash provided/(used) by financing activities                               289,167        (75,424)
                                                                          ------------   ------------

Net increase (decrease) in cash and cash equivalents                            (9,050)       (47,889)
Cash and cash equivalents at beginning of period                                32,442         49,253
                                                                          ------------   ------------
Cash and cash equivalents at end of period                                      23,392          1,363
                                                                          ============   ============

Cash paid for interest                                                    $     34,255   $     36,061
Cash paid for income taxes                                                $         --   $         --
</TABLE>

The accompanying summary of significant accounting policies and notes to
financial statements are an integral part of the consolidated financial
statements.

                                       6
<PAGE>

                        TRUDY CORPORATION AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

1. Description of Business and Basis of Presentation

Trudy Corporation (hereinafter referred to as the `Company'), publishes
children's books and audiobooks and designs, manufactures and markets plush
stuffed animals for sale to domestic and international retail and wholesale
customers. The Company's products are sold under the trade names of Soundprints
and Studio Mouse.

The accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
and with the instructions to Form 10-QSB and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by accounting principles generally accepted in the United States of America for
complete financial statements. In the opinion of management, all adjustments
(including normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and nine month
periods ended December 31, 2005 are not necessarily indicative of the results
that may be expected for the year ending March 31, 2006. For further
information, refer to the financial statements and footnotes thereto included in
the Company's annual report on Form 10-KSB/A for the year ended March 31, 2005.

The Company has incurred operating losses in three of the past four years, and
has a deficiency in net assets. However, the Company's revenues increased from
$3,392,808 in 2002 to $4,405,006 in 2003 and declined to $3,804,188 in the year
ended March 31, 2004. Revenues for the year ended March 31, 2005 were
$6,344,875.

2. Summary of Significant Accounting Policies

Principles of Consolidation

Investments in 20% to 50% owned equities are accounted for using the equity
method. Ownership interests in excess of 50% are accounted for in consolidation.

Estimates

The preparation of these financial statements in conformity with accounting
principles generally accepted in the United States of America requires the
Company to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses and related disclosures. On an
ongoing basis, the Company evaluates its estimates and judgments based on

                                       7
<PAGE>

historical experience and various other factors that are believed to be
reasonable under the circumstances. Actual results may differ from these
estimates under different assumptions or conditions.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of
three months or less to be cash equivalents.

Credit Risk

The Company transacts business on a credit basis with its customers. The Company
routinely assesses the financial strength of its customers and, as a
consequence, believes that its trade accounts receivable credit risk exposure is
limited. The Company does not require collateral or other security to support
credit sales, but provides an allowance for bad debts based on historical
experience and specifically identified risks. The Company also obtains credit
insurance on customers when it is deemed warranted.

Inventories

Inventories, which consist principally of finished goods, are stated at the
lower of cost or market. Cost is determined using the first-in, first-out
method. The Company reviews its inventory for obsolescence and provides for
obsolescence when the inventory is deemed to be unsaleable over a reasonable
time.

Equipment

Equipment is stated at cost. Depreciation is computed principally by the
straight-line method over the estimated useful lives of the assets which range
from three to seven years for machinery and equipment, and furniture and
fixtures, and from one to three years for computer software and hardware.

Fair Value of Financial Instruments

The Company has the following financial instruments: cash and cash equivalents,
accounts receivable, inventories, prepaid expenses, accounts payable and accrued
expenses, notes payable and long-term debt. The carrying value of cash and cash
equivalents, accounts receivable, accounts payable and accrued expenses, and
notes payable approximate their fair value based on the liquidity of these
financial instruments or based on their short-term nature. The carrying value of
long-term debt approximates fair market value based on the market interest rates
available to the Company for debt of similar risk and maturities.

                                       8
<PAGE>

Pre-Publication Costs

Pre-publication costs are deferred and amortized on an accelerated method over
their expected revenue generating lives.

Intangible Assets

As a result of the merger of Studio Mouse, LLC into the Company effective March
31, 2005, an intangible asset was recorded as a result of the premium paid due
to the non-exclusive license granted by Disney Licensed Publishing, an imprint
of Disney Children's Book Group, LLC ("Disney"). The intangible asset is being
amortized on a straight line basis over a three year period.

Long-Lived Assets

In accordance with Financial Accounting Standards Board Statement No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets", the Company
reviews its long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Management performs ongoing business reviews and evaluates
impairment indicators based on qualitative and quantitative factors. If it is
determined that the carrying amount of an asset cannot be fully recovered, an
impairment loss is recognized.

Revenue

Revenues are recorded in accordance with SEC Staff Accounting Bulletin No. 101
"Revenue Recognition in Financial Statements."

Revenues from product sales are recognized in the period when persuasive
evidence of an arrangement with the customer exists, the products are shipped
and title has transferred to the customer, all significant obligations have been
delivered, and collection is considered probable. Since many of the product
shipments are accompanied with the right of return, a provision for estimated
returns on these sales is made at the time of sale, in accordance with Statement
of Financial Accounting Standards No. 48, "Revenue Recognition When Right of
Return Exists", based on historical experience. Returned product is resold when
possible. Historically, a portion of returned product is deemed unsaleable and
is destroyed.

Royalties

The Company records royalty revenue as earned and provides for its royalty
expense at the time the royalty income is recorded. Royalty advances are
recorded as earned when such advances represent a nonrefundable guarantee and
there are no obligations to perform services. Advance royalty payments are
recorded as expense when such advance represents a nonrefundable guarantee.

                                       9
<PAGE>

Subsidiary Licensing Rights

Depending upon the terms of its various licensing agreements, the Company can
lease its intellectual property rights to another party. The associated income
is recorded as either advances against royalties or royalties. The associated
expenses due to the authors, illustrators or licensors are a percentage of such
income for use of their text, illustrations, content or imprimaturs.

Income Taxes

Income taxes are accounted for in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes." The
statement employs an asset and liability approach for financial accounting and
reporting of deferred income taxes. Generally, SFAS 109 allows for recognition
of deferred tax assets in the current period for the future benefit of net
operating loss carryforwards and items for which expenses have been recognized
for financial statement purposes but will be deductible for tax purposes in
future periods. A valuation allowance is recognized, if on the weight of the
available evidence, it is more likely than not that some portion or all of the
deferred tax assets will not be realized.

Stock-Based Compensation

The Company has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" (APB 25) and related Interpretations
in accounting for its employee stock options. Under APB 25, to the extent that
the exercise price of the Company's employee stock options equals management's
estimate of the fair value of the underlying stock on the date of grant, no
compensation expense is recognized.

Deferred expense on stock and options issued to officers and directors for
services or other consideration to be received in the future are offset against
equity and are amortized to expense over the period of benefit.

The Company periodically issues shares of its common stock to employees. Shares
issued for services are valued either at the Company's estimate of the fair
value of the common stock at the date of issuance or based on the market price
at the date of issuance.

Income/Loss Per Share Computation

Income/loss per share is computed in accordance with Statement of Financial
Accounting Standards (SFAS) No. 128, "Earnings Per Share," (Statement 128).
Basic earnings per share is computed by dividing net income/loss by the weighted
average number of outstanding common shares. Diluted earnings per share is
computed using the weighted average number of outstanding common shares and

                                       10
<PAGE>

common share equivalents during the period. Dilutive common share equivalents
consist of employee stock options using the treasury method and dilutive
convertible securities, if any, using the if-converted method. The assumed
exercise of stock options would not have an effect on earnings per share in
either fiscal year 2006 or 2005.

Comprehensive Income (Loss)

The Company has adopted SFAS No. 130, "Reporting Comprehensive Income"
(Statement 130). Statement 130 establishes rules for the reporting and display
of comprehensive income and its components. Comprehensive income (loss) for the
Company is the same as net income (loss) for all periods presented.

Segments of an Enterprise and Related Information

The Company has adopted the FASB's SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information" (Statement 131). Statement 131
established standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports. Statement 131 also establishes standards for related
disclosures about products and services, geographic areas, and major customers.
The Company has determined it has no reportable segments under Statement 131.

Advertising

Advertising costs are expensed as incurred, except for catalogs and brochures
which are all amortized over the period benefited not to exceed the publication
date of the new brochure or twelve months, whichever is less. The Company
provides cooperative advertising allowances to certain customers. These
allowances are accounted for in accordance with the requirements of Emerging
Issues Task Force Statement No. 01-9, "Accounting for Consideration Given by a
Vendor to a Customer".

Advertising expense related to catalogs and brochures was $1,618 and $5,166 for
the three month period ended December 31, 2005 and 2004, respectively.
Advertising expense related to catalogs and brochures was $32,881 and $98,066
for the nine month period ended December 31, 2005 and 2004, respectively.

Other advertising expense for the three month period ended December 31, 2004 was
$2,489; there was no expense in the current quarter. Other advertising expense
was $675 and $3,365 for the nine month period ended December 31, 2005 and 2004,
respectively.

                                       11
<PAGE>

Reclassifications

Certain reclassifications pertaining to net sales, selling, general and
administrative expenses and other income/expense were necessary in the prior
fiscal year in order to be consistent with the current fiscal year's
presentation.

3.  Inventories

Inventories consist of the following:

    Raw Materials                                                  $     39,367
    Finished Goods                                                    2,049,362
    Reserve for Obsolescence                                           (320,000)
                                                                   ------------
    Inventory                                                      $  1,768,729
                                                                   ============

4. Notes Payable, Bank

Notes payable, bank includes the following:

     A revolving line of credit totaling $750,000 due on
     demand. Interest is payable monthly equal to the Wall
     Street Journal reported prime rate plus 1.5%. Borrowings
     are subject to a borrowing base equal to 80% of eligible
     accounts receivable. The note is also secured by all of
     the assets of the Company, a mortgage on the Company's
     premises, a personal guarantee of a principal shareholder
     and a limited guarantee of another principal shareholder.     $    352,000

     Note payable, bank, due February 21, 2006. Interest is
     payable at maturity equal to the Wall Street Journal
     reported prime rate plus 1.0% The note is secured by all
     of the assets of the Company, a mortgage on the Company's
     premises, a personal guarantee of a principal shareholder
     and a limited guarantee of another principal shareholder.          160,000

     Note payable, bank, due on demand. Interest is payable
     monthly at LIBOR plus 1%. The note is secured by a
     personal guarantee of a principal shareholder.                     643,485
                                                                   ------------
                                  Total                            $  1,155,485
                                                                   ============

                              12
<PAGE>

5. Long term debt:

     Notes payable to the principal shareholder due in January
     and March 2007. Interest is payable monthly at LIBOR plus
     1%.                                                           $    874,124

     Notes payable, another principal shareholder, payable at
     various dates between January and March 2007. Interest is
     payable at specified maturity dates at 2.5% per annum.             454,000

     Note payable, bank, payable in monthly installments of
     $2,713 including interest at 7%. Balance due in February
     2009. The note is secured by all assets of the Company, a
     mortgage on the Company's premises, a personal guarantee
     of a principal shareholder and a limited guarantee of
     another principal shareholder.                                     277,995

     Note payable, affiliate, payable in monthly installments of
     $1,252.  The note is unsecured.                                     35,069
                      Less current portion                              (28,285)
                                                                   ------------
                      Total                                        $  1,612,903
                                                                   =============

The scheduled principal payments on long term debt follow:

    Year ending December 31, 2006                                  $     28,285
    Year ending December 31, 2007                                     1,357,381
    Year ending December 31, 2008                                        20,229
    Year ending December 31, 2009                                       235,293
                                                                   ------------
                      Total                                        $  1,641,188
                                                                   ============
<TABLE>
<CAPTION>

6.   Income Taxes

The components of income tax (benefit) are as follows:


                                                          December 31, 2005            December 31, 2004
                                                    ---------------------------   ---------------------------
                                                      Current        Deferred       Current        Deferred
                                                    ------------   ------------   ------------   ------------
<S>                                                 <C>            <C>            <C>            <C>
Income tax expense (benefit) before application
of operating loss carryforwards                     $          0   $    (43,000)  $          0   $     54,500

Income tax expense (benefit) of operating
loss carryforwards                                             0              0              0              0

Change in valuation allowance                                  0         43,000              0        (54,500)
                                                    ------------   ------------   ------------   ------------

Income tax expense (benefit)                        $          0   $          0   $          0   $          0
                                                    ============   ============   ============   ============
</TABLE>

                              13
<PAGE>

The deferred tax asset represents expected future tax savings resulting from the
Company's reserves and allowances expensed for financial reporting purposes but
not for tax purposes and net operating loss carryforwards. As of December 31,
2005, the Company has a net operating loss carryforward of approximately $5
million for federal income tax purposes which expire at various dates through
2024. Utilization of these benefits is primarily subject to the extent of future
earnings of the Company, and may be limited by, among other things, shareholder
changes, including the possible issuance by the Company of additional shares in
one or more financing transactions. The Company has established a valuation
allowance for the portion of possible tax savings not likely to be realized by
the end of the carryforward period.

7. Related Party Transactions

The Company is involved in several transactions with existing officers and
shareholders of the Company and entities which are controlled by these
individuals, collectively "related parties". The following is a summary of this
activity:

The Main Avenue property leased by the Company is owned by a Connecticut limited
liability company, Noreast Management LLC, which is owned jointly by William W.
Burnham, the Chairman of the Company, Peter Ogilvie, a former Director and
Officer of the Company, and Fred M. Filoon, a Director of the Company. Rent
expense totaled $13,990 and $15,595 for the three months ended December 31, 2005
and 2004, respectively. For the nine months ended December 31, 2005 and 2004,
rent expense totaled $57,488 and $47,844, respectively.

The Company has borrowings from related parties of $1,363,193. The terms of
these notes can be found in Note 5 to the financial statements. Interest to
related parties totaled $14,136 and $6,161 for the three months ended December
31, 2005 and 2004, respectively. For the nine months ended December 31, 2005 and
2004, interest to related parties totaled $23,562 and $21,384, respectively.
Repayments to related parties totaled $26,095 for the three months ended
December 31, 2005. Subsequent to December 31, 2005 the Company repaid an
additional $11,183 of these borrowings.

Effective August 1, 2005 Mr. Burnham entered into an agreement with the Board of
Directors in which he would receive a salary in order to be eligible for a 401K
matching contribution from the Company. Salary paid to the Chairman for the
quarter was approximately $7,020. For the quarter ended December 31, 2005, the
Company recognized the difference between the fair market value of his services
and the salary of $7,020 for the quarter. This was an expense of $24,230 and was
recorded as a contribution to capital.

8. Subsequent Events

On February 7, 2006 the Company announced that it had executed a binding letter
agreement with Disney for the renewal of its non-exclusive license through
December 31, 2008. Both parties are working towards executing the final
agreement as soon as possible which will supersede this binding letter
agreement. As a condition of extending the license, the Company increased its
letter of credit issued to Disney to $500,000.

                                       14
<PAGE>

On February 10, 2006, the Company announced that it had reached an agreement in
principle with Sesame Workshop, the nonprofit educational organization behind
Sesame Street, for a new publishing license focusing on book and audio CD
formats. The license territory includes distribution into North America. The
agreement includes approximately a 3 year term ending June 30, 2009. The Company
anticipates the first titles will come to market in June, 2006. The licensed
characters include core properties such as the characters from Sesame Street
which include Big Bird, Elmo and the rest of their furry friends. The parties
intend to negotiate in good faith to sign a definitive agreement as quickly as
possible.


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

NET SALES.

Overview

Net Sales for the third quarter of fiscal 2006 decreased 52.6% versus the prior
year. This is primarily due to a reduction in the total number of book titles or
SKUs, in the warehouse club book departments over the Holiday period, a general
weakness in sales across all the Company's product lines, including Disney and
Smithsonian, as well as an increase in the provision for anticipated returns.
One major warehouse club, citing difficulty with the merchandizing of children's
books opted not to purchase any titles from the Company in the fourth calendar
quarter. The Company's profit margin also deteriorated from 49.9% in the prior
year to 39.9% in the current year. The decline in revenue in the third quarter
resulted in a net loss of $202,859 versus income of $183,855 for the prior year.


Three months ended December 31, 2005

Net sales for the three months ended December 31, 2005 were $1,074,595, a
decrease of $1,193,370 or 52.6% versus $2,267,965 in the quarter ended December
31, 2004.

The revenue decline was primarily driven by decreased sales of the Company's
Disney-licensed products sold under the Studio Mouse imprint and its
Smithsonian-licensed content sold under the Soundprints imprint. An increase in
the Company's provision for sales returns also contributed to the sales decline.

In the quarter ended December 31, 2005, Disney-licensed product sales accounted
for 69.0% of the Company's total sales, versus 80.3% of the Company's sales in
the prior year. On a revenue basis, Disney-licensed product sales declined
nearly 69.2%. Sales of product under license with the Smithsonian Institution
and distributed by the Company's Soundprints imprint increased as a percentage
of sales to 17.7% of net sales in the current quarter from 13.1% in the prior
quarter. However, revenue from Smithsonian product sales declined 51.5%.

                                       15
<PAGE>

Sales for the Company's newest publishing initiative, entitled PEEP and the Big
Wide World, licensed to the Company by WGBH Educational Foundation, did not
perform well in the current quarter. PEEP product net revenue was less than 2%
of total sales. Peep and the Big Wide World airs as part of the Ready, Set,
Learn programming block on The Learning Channel and Discovery Kids weekdays in
the United States and on assorted channels worldwide. While sales have not
materialized in line with the Company's expectations, the Company continues to
be encouraged by the success of the series which won its first Emmy Award for
Outstanding Children's Animated Program in May, 2005, chosen from a pool of
program nominees such as Nickelodeon's Dora the Explorer and Disney's Kim
Possible.

For the three months ended December 31, 2005, the following are the key sales
channels that contributed to the overall decrease in Company sales for the
quarter versus the comparable period a year ago. For the first two sales
channels listed, the Company sells products on a returnable basis and as such,
sales shown are net of provision for returns. Sales to direct-to-consumer book
distributors and discount retailers are non-returnable.
<TABLE>
<CAPTION>

                                  Sales declines for the three
                                   months ended December 31,
                                  ---------------------------
Sales channel                         2005           2004         Variance        % change
-------------                     ------------   ------------   ------------   -------------
<S>                               <C>            <C>            <C>                     <C>
Warehouse Club Distributors       $    196,522   $    733,575   $   (537,053)          -73.2%

Mass Market Distributors               190,236        345,053       (154,817)          -44.8

Direct-to-Consumer
Book Distributors                        5,359        158,902       (153,543)          -96.6
</TABLE>

Warehouse club distributor sales were $196,522 for the current quarter versus
$733,535 for the prior year. This is partially attributable to an increase in
the provision for returns based upon management's observation of a trend in
significantly increased returns rates from warehouse clubs in recent quarters in
which returns rates have more than doubled. This trend is a result of several
factors, including market saturation of certain of the Company's warehouse club
products, fewer new formats available, softer sales in the book category in the
warehouse clubs in general and the absence of orders from one major warehouse
club. Management believes that a more diligent review of warehouse club orders
is required to ship product according to Management's sales expectations and not
that of the customers. This would entail a unilateral reduction of the order
quantity. In addition, the Company has expanded the number of new formats which
will come to market in the fiscal year ended March 31, 2007.

                                       16
<PAGE>

Sales to mass market distributors decreased $154,817 from $345,053 in the prior
year's quarter to $190,236 in the current quarter. This decrease was primarily
attributable to no December quarter reorders for holiday items shipped in the
September quarter for one major distributor. The Company increased its provision
for returns for sales made to the mass market distributor division for another
distributor, who elected to return the bulk of their opening order this past
Spring for one title to go into their planned children's book section. This
title did not perform up to expectations.

Direct-to-Consumer book distributor sales decreased $153,543 to $5,359. The
major customer in this channel had placed their annual orders for shipment in
the first two quarters of the fiscal year. As a result nine month sales have
increased versus the prior year.

Other channels of trade experienced decreased sales including school and library
distributors, book retailers, and book distributors.

The below schedule shows those sales divisions which demonstrated improved sales
for the fiscal quarter ending December 31, 2005 versus the comparable period a
year ago.
<TABLE>
<CAPTION>

                              Sales increases, net of provisions
                                  for returns, for the three
                                    months ended December 31,
                                  ---------------------------
Sales channel                         2005           2004         Variance        % change
-------------                     ------------   ------------   ------------   -------------
<S>                               <C>            <C>            <C>                     <C>
Non-returnable Discount
Retailers                         $    336,458   $    254,148   $     82,310            32.4%

Int'l Trade Book Retailers              38,519          1,197         37,322             NMF

Int'l Direct-to-Consumer
Book Distributors                       27,573          2,142         25,431             NMF
</TABLE>

Over the last year management has placed a particular emphasis on developing
sales to the Company's international retailers and distributors, domestic
discount retailers and direct-to-consumer divisions in which sales are firm with
no return privileges. The key channel with the greatest upside volume potential
is for discount department stores. One such chain, after testing several Disney
titles, elected to purchase these titles on a monthly basis. Other divisions
which posted sales increases include specialty retailers and international and
domestic toy and gift distributors, all of which are sold on a firm sale basis.


Nine months ended December 31, 2005

Net sales for the nine months ended December 31, 2005 and December 31, 2004 were
$4,405,633 and $5,127,589, respectively. This represents a decrease of $721,956
or 14.1% over the prior year.

                                       17
<PAGE>

For the nine months ended December 31, 2005, Disney-licensed product sales
accounted for 69.2% of the Company's total sales, versus 72.0% of the Company's
sales in the prior year. Sales of product under license with the Smithsonian
Institution decreased to 15.1% of sales in the current year from 16.7% in the
nine month period ended December 31, 2004.

For the nine months ended December 31, 2005, the decrease in net sales is
attributable to several channels of trade:
<TABLE>
<CAPTION>

                               Sales declines, net of provisions
                                   for returns, for the nine
                                   months ended December 31,
                                  ---------------------------
Sales channel                         2005           2004         Variance        % change
-------------                     ------------   ------------   ------------   ------------
<S>                               <C>            <C>            <C>                     <C>
Warehouse Club
Distributors                      $    517,080   $  1,661,021   $ (1,143,941)         (68.9%)

Canadian Book Distributors             241,172        567,278       (326,106)         (57.5%)

Mass Market Distributors               345,540        547,170       (201,630)         (36.8%)
</TABLE>

Warehouse Club Distributor sales decreased 68.9% or $1,143,941 as a result of
market saturation of certain products and increased reserves for returns. In
addition, one major warehouse club elected not to purchase any of the Company's
titles in the fourth calendar quarter. Management believes that a more diligent
review of warehouse club orders is required to ship product according to
Management's sales expectations and not that of the customers. This would entail
a unilateral reduction of the order quantity. In addition, the Company has
expanded the number of new formats which will come to market in the fiscal year
ended March 31, 2007.

Sales to Canadian book distributors decreased $326,106 as a result of the
significant buy-in of Disney products during the nine months ended December 31,
2004 when the Disney product line was introduced in Canada. Mass market
distributor sales decreased $201,630 due to reduced sales to one of the key
Canadian customer in this channel of trade. Other sales channels experienced
sales declines including school and library distributors and educational and
consumer catalogs.

For the nine months ended December 31, 2005, several channels of trade
experienced increased sales. In each of the following channels, the Company sold
product on a non-returnable, firm sale basis:

                                       18
<PAGE>
<TABLE>
<CAPTION>

                                   Sales gains for the nine
                                   months ended December 31,
                                  ---------------------------
Sales channel                         2005           2004         Variance        % change
-------------                     ------------   ------------   ------------   ------------
<S>                               <C>            <C>            <C>                     <C>
International
Direct-to-Consumer Book
Distributor                       $    557,122   $      7,840   $    549,282            NMF

Direct-to-Consumer Book
Distributor                            802,014        301,036        500,978          166.4%

International Mass Market
Distributors                           473,317        218,536        254,781          116.6%
</TABLE>

The Company continues to make progress in increasing its non-returnable sales,
including sales to international retailers and distributors and
direct-to-consumer distributors both in the domestic and international markets.
Versus the prior nine month period, international direct-to-consumer book
distributor sales increased $549,282 and domestic direct-to-consumer book
distributor sales increased $500,978 for a total combined increase of
$1,050,260. These sales resulted from successful tests of titles in the display
marketing category of direct to consumer sales in the United States and the
United Kingdom.

International mass market distributor sales increased $254,781. This revenue is
the result of strong relationships the Company has forged among Disney licensees
in Latin America and Australia. In these markets the Company has enjoyed repeat
sales of Disney licensed products in Spanish and English respectively. In other
markets, the Company, on a pre-approved basis by Disney, has demonstrated
significantly increased sales such that it now sells to 75 retailers or
distributors in 45 countries. More times than not orders for Disney licensed
products are accompanied by orders for Smithsonian licensed titles. The Company
believes that an ongoing presence at international trade expositions is critical
to solidifying its relationship with existing customers and increasing its
penetration into new international markets. The Company continues to actively
seek and enlist distributors in international markets with potential to absorb
substantial quantities of the Company's products.


COST OF SALES.

Three months ended December 31, 2005

The Company's cost of sales for the quarter ended December 31, 2005 decreased
$489,487 from $1,135,700 in the prior year to $646,213 in the current quarter, a
decrease of 43.1%. However, cost of sales as a percentage of net sales increased
from 50.1% to 60.1% in the current quarter. The decrease reflects a slight
increase in product costs as a percentage of net sales, relative to the prior
year. The decrease also illustrates the semi-fixed nature of the Company's
warehouse operations which did not decline to the same extent as sales.

                                       19
<PAGE>

Nine months ended December 31, 2005

The Company's cost of sales for the nine months ended December 31, 2005
decreased $115,758 from $2,598,114 in the prior year to $2,482,356 in the
current year, a decrease of 4.5%. As a percentage of net sales, direct product
costs (cost of goods excluding overhead and miscellaneous costs) increased from
33.0% to 38.6%. This is partially the result of the higher level of sales to
non-returnable customers which necessitate a lower gross margin. Total warehouse
and miscellaneous costs as a percentage of sales stayed relatively flat.


GROSS PROFIT.

Three months ended December 31, 2005

The resulting gross profit for the quarter ended December 31, 2005 decreased
62.2% to $428,383 versus the prior quarter's gross profit of $1,132,265. Gross
margin decreased from 49.9% in the prior year to 39.9% in the quarter ended
December 31, 2005.

Nine months ended December 31, 2005

Gross profit for the nine months ended December 31, 2005 was $1,923,276 versus
$2,529,475 for the prior year, a decrease of 24.0%. Gross margin declined to
43.7% from 49.3%.


SELLING, GENERAL & ADMINISTRATIVE COSTS.

Three months ended December 31, 2005

Selling, general and administrative costs decreased $375,027 from $965,967 to
$590,940 a decrease of 38.8%. As a percentage of net sales, selling, general and
administrative expenses increased from 42.6% of net sales in the prior year's
comparable quarter to 55.0% of net sales in the current quarter. As a result of
the decreased sales and a change in the sales mix of licensed products for the
quarter, royalty expenses decreased $278,275 from $462,232 to $183,957, or
60.2%. Other sales-related expenses including commissions and travel and
entertainment also declined versus the prior year. Sales salaries declined for
the quarter as a result of a temporary vacancy in sales personnel.

Nine months ended December 31, 2005

The Company's selling, general, and administrative costs decreased $409,695 to
$1,937,834 for the nine months ended December 31, 2005, a decrease of 17.5%. As
a percentage of net sales, selling, general and administrative expenses
decreased to 44.0% of net sales from 45.8% of net sales in the prior year.

The decreased sales and sales mix for the nine months again resulted in
decreased royalty expenses of $261,186 or 31.3% from $833,707 in the prior year
to $572,521 in the current year. Decreased sales-related costs including
commissions, catalog expense, travel and entertainment expenses as well as a
significant decline in legal expenses also contributed to decreased costs for
the current year to date period.

                                       20
<PAGE>

Offsetting these decreases, office and executive salaries increased $58,668 from
$447,407 in the prior year to $506,075 in the current year. This is attributable
to new hires and merit increases for certain employees and management.

INCOME/LOSS FROM OPERATIONS.

Three months ended December 31, 2005

The resulting loss from operations for the quarter ended December 31, 2005 was
$162,557 versus income of $166,298 for the prior year.

Nine months ended December 31, 2005

The loss from operations for the nine months ended December 31, 2005 was $14,558
versus income of $181,946 for the prior year.

INTEREST EXPENSE.

Interest expense (net) for the three and nine month periods ended December 31,
2005 increased as a result of higher interest rates on shareholder and bank
loans.

ROYALTY INCOME.

Three months ended December 31, 2005

Royalty income (net) for the quarter ended December 31, 2005 was $6,535 versus
$16,885 for the prior year. The decrease is a result of reduced subsidiary
rights royalty earnings from international subsidiary rights customers.

Nine months ended December 31, 2005

Royalty income (net) for the nine months ended December 31, 2005 was $23,457
versus the prior period's income of $19,569. The increase is due to subsidiary
rights royalty income streams.

NET INCOME/LOSS.

Three months ended December 31, 2005

As a result of the items discussed above, net loss for the quarter ended
December 31, 2005 was $202,859 compared to net income of $183,855 for the
comparable prior quarter, a decrease of $386,714. Net margin was -18.9% for the
current year versus 8.1% for the prior year.

                                       21
<PAGE>

Nine months ended December 31, 2005

Net loss for the nine months ended December 31, 2005 was $107,535 compared to
net income of $136,322 for the comparable prior quarter, a decrease of $243,857.
Net margin was -2.4% for the current year versus 2.7% for the prior year.


Impact of New Accounting Pronouncements
---------------------------------------

In November 2004, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 151, "Inventory Costs - An
Amendment of Accounting Research Bulletin No. 43, Chapter 4" (SFAS 151). SFAS
151 clarifies that abnormal amounts of idle facility expense, freight, handling
costs and spoilage should be expensed as incurred and not included in overhead.
Further, SFAS 151 requires that allocation of fixed production overhead to
conversion costs be based on normal capacity of the production facilities. The
provisions in SFAS 151 must be applied prospectively to the Company's inventory
costs incurred after January 1, 2006. The adoption of SFAS 151 is not expected
to have a material impact on the Company's consolidated financial statements.

In December 2004, the FASB issued SFAS No. 123R, "Share-Based Payment" (SFAS
123R), replacing SFAS 123 and superseding Accounting Principles Board Opinion
No. 25, "Accounting for Stock Issued to Employees" (APB 25). SFAS 123R requires
public companies to recognize compensation expense for the cost of awards of
equity compensation effective for fiscal years beginning after July 1, 2005.
This compensation cost will be measured as the fair value of the award estimated
using an option-pricing model on the grant date. The Company is currently
evaluating the various transition provisions under SFAS 123R and will adopt SFAS
123R effective for the fiscal year beginning after July 1, 2005, which is
expected to result in increased compensation expense in future periods.

In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets
- an Amendment of APB No. 29" (SFAS 153). The amendments made by SFAS 153 are
based on the principle that exchanges of nonmonetary assets should be measured
based on the fair value of the assets exchanged. Further, the amendments
eliminate the narrow exception for nonmonetary exchanges of similar productive
assets and replace it with a broader exception for exchanges of nonmonetary
assets that do not have "commercial substance." This standard is effective for
nonmonetary asset exchanges occurring after July 1, 2005. The adoption of this
standard is not expected to impact the Company's consolidated financial
statements.

Critical Accounting Estimates
-----------------------------

Management's discussion and analysis of financial condition and results of
operations are based upon the Company's financial statements which have been
prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements requires

                                       22
<PAGE>

the Company to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses and related disclosures. On an
ongoing basis, the Company evaluates its estimates and judgments based on
historical experience and various other factors that are believed to be
reasonable under the circumstances. Actual results may differ from these
estimates under different assumptions or conditions. The Company annually
reviews its financial reporting and disclosure practices and accounting policies
to ensure that its financial reporting and disclosures provide accurate and
transparent information relative to the current economic and business
environment. The Company believes that of its significant accounting policies
(see summary of significant accounting policies more fully described on Note 2
of notes to our financial statements), the following policies involve a higher
degree of judgment and/or complexity:

Pre-Publication Costs

Pre-publication costs are deferred and amortized on an accelerated method over
their expected revenue generating lives.

Prepaid Catalog Costs

Catalogs and brochures are amortized over the period benefited, not to exceed
the publication date of the subsequent brochure or twelve months, whichever is
less.

Inventory

The company reviews its inventory for obsolescence and provides for obsolescence
when the inventory becomes unsaleable over a reasonable time.

Reserve for Returns

The Company maintains allowances for product returns. These allowances are based
on historical experience and known factors regarding specific information from
customers or a product's known sell-through performance in the marketplace. If
product return rates exceeded the established allowances, additional allowances
would be required. The Company attempts to resell all returned product whenever
possible.
<TABLE>
<CAPTION>

Liquidity and Capital Resources

                                            For the quarters
                                            ended December 31,
                                       ---------------------------
                                           2005           2004         Variance      % change
                                       ------------   ------------   ------------   ------------
<S>                                    <C>            <C>            <C>                   <C>
Net assets (deficiency)                $ (1,380,558)  $   (889,669)  $   (490,899)         (55.2)%

Working capital (deficiency)               (146,997)    (1,567,910)     1,420,913            NMF

Accounts receivable                       1,027,632      1,807,563       (779,931)         (43.1)

Accounts payable and  accrued
expenses                                  1,634,475      1,405,493        228,982           16.3

Royalties and commissions payable           269,544        646,911       (377,367)         (58.3)
</TABLE>

                                       23
<PAGE>

Although the Company continues to suffer from a deficiency in net assets, the
Company's financial health has improved versus the past several years. At
December 31, 2005 the Company had a deficiency of net assets of $1,380,558
versus a deficiency at December 31, 2004 of $889,669. Working capital improved
$1,420,913 from a deficiency of $1,567,910 at December 31, 2004 to a deficiency
of $146,997 in the current year. This is principally attributable to the
reclassification of shareholder debt from short term to long term after
renegotiation of terms at March 31, 2005.

Accounts payable and accrued expenses increased $228,982 versus the prior year
from $1,405,493 to $1,634,475 at December 31, 2005. Royalties and commissions
payable decreased 58.3% to $269,544 at December 31, 2005 versus the prior year.

Expected cash flows from operations supplemented by available lending sources
are forecast to be adequate in covering the Company's operations. Although the
Company does not expect to run out of available funds in the coming fiscal year,
it does expect that the need for working capital will eclipse the limits of its
revolving credit facility if revenue growth is to be maintained. Thus the
Company continues to explore outside funding options in the event that cash flow
does not materialize in line with current expectations. Additional working
capital would be required to fund new growth opportunities and publication
initiatives. It is believed a strategic investor would allow the Company to
better position itself for growth by providing working capital for future
publishing initiatives and even a strategic acquisition. In that regard, the
Company continues its engagement with the Delta Capital Group, LLC which
provides assistance in seeking and securing financing while exploring the
Company's strategic options.

On November 23, 2005 the Company received a $160,000 3-month term note from one
of its lending institutions to bridge short-term requirements. The note is
secured by all of the assets of the Company, a mortgage on the Company's
premises, a personal guarantee of a principal shareholder and a limited
guarantee of another principal shareholder. While the note is to be paid back
February 21, 2006, the Company has requested that the note be rolled into the
Company's revolving credit line.

As of December 31, 2005 the balance on the Company's revolving line of credit
was $352,000 out of $750,000 available to the Company. As of February 10, 2006,
the balance was $482,000. The Company has requested an increase in its credit
line, which is currently under review by its primary lending source.

As of February 10, 2006 the Company's backlog was approximately $1,527,000.

                                       24
<PAGE>

On February 7, 2006, the Company announced that it had executed a binding letter
agreement with Disney for the renewal of its non-exclusive book and audio CD
license. The Company and Disney are operating under this interim binding
agreement which will be superceded by the final definitive agreement as soon as
it is executed.

On February 10, 2006, the Company announced that it had reached an agreement in
principle with Sesame Workshop, the nonprofit educational organization behind
Sesame Street, for a new publishing license focusing on book and audio CD
formats.

The Company has recorded $371,819, the net present value of $444,852, which
Chart Studio claims is owed to it by the Company under the terms of the
Memorandum of Understanding ("MOU") (for more information please refer to Item 1
of Part 1, Description of Business, in the Company's Annual Report on Form
10-KSB, as to the reasons the Company is of the view that none of such amount is
owed.) It is Management's opinion that Trudy has no further obligation under the
MOU although Chart Studio does not currently agree with the Company's position
in respect to such alleged indebtedness. It is anticipated that an amicable
solution will be reached as both parties are in discussion.

For the quarter ended December 31, 2005 the principal shareholder/Chairman of
the Board (William W. Burnham, also currently serving as Acting Chief Financial
Officer and Director of Corporate Development) was repaid approximately $26,095
relating to pre-existing loans. Subsequent to December 31, 2005, Mr. Burnham was
repaid approximately $11,183 relating to pre-existing loans.

Effective April 1, 2005, Mr. Burnham entered into an agreement with the Board of
Directors in which he would receive a salary in order to be eligible for a 401K
matching contribution from the Company. Salary paid to the Chairman for the
quarter was approximately $7,020. For the quarter ended December 31, 2005, the
Company recognized the difference between the fair market value of his services
and the salary of $7,020 for the quarter. This was an expense of $24,230 and was
recorded as a contribution to capital.

While the Company has been able to negotiate favorable interest rates on
$1,328,124 in loans from two principal shareholder/officers due on or before
January 1, 2007, there is no guarantee this will continue when these loans are
renegotiated at maturity.

Forward-looking Statements
--------------------------

We have made forward-looking statements in this report that are subject to a
number of risks and uncertainties, including without limitation, those described
in our Annual Report on Form 10-KSB for the year ended March 31, 2005 and other
risks and uncertainties indicated from time to time in our filings with the SEC.
These forward-looking statements are made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements include the information concerning possible or assumed future results
of operations. Also, when we use words such as "believes," "expects,"
"anticipates" or similar expressions, we are making forward-looking statements.

                                       25
<PAGE>

Readers should understand that the following important factors, in addition to
those discussed in the referenced SEC filings, could affect our future financial
results, and could cause actual results to differ materially from those
expressed in our forward-looking statements:

* The implementation of our strategies;

* The availability of additional capital;

* Variations in stock prices and interest rates;

* Fluctuations in quarterly operating results; and

* Other risks and uncertainties described in our filings with the SEC.

We make no commitment to disclose any revisions to forward-looking statements,
or any facts, events or circumstances after the date hereof that may bear upon
forward-looking statements.


                            PART II OTHER INFORMATION

Item 1.  Legal Proceedings

         None.

Item 2.  Changes in Securities

         None.

Item 3.  Defaults upon Senior Securities

         None

Item 4.  Submission of Matters to a Vote of Security Holders

         None

Item 5.  Other Information

         None

                                       26
<PAGE>

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

         (a)      Exhibits

         3a.      Certificate of Incorporation (incorporated by reference to the
                  Company's registration statement on Form S-18 (file number
                  33-14379B)).

         3b.      Certificate of Amendment of Certificate of Incorporation
                  (incorporated by reference to the Company's registration
                  statement on Form S-18 (file number 33-14379B)).

         3c.      By-laws of Company (incorporated by reference to the Company's
                  registration statement on Form S-18 (file number 33-14379B)).

         3d.      Certificate of Incorporation of Norwest Manufacturing Company
                  (incorporated by reference to the Company's registration
                  statement on Form S-18 (file number 33-14379B)).

         3e.      Certificate Amending Certificate of Incorporation of Norwest
                  Manufacturing Company dated December 5, 1979 (incorporated by
                  reference to the Company's registration statement on Form S-18
                  (file number 33-14379B)).

         3f.      Certificate Amending Certificate of Incorporation of Trudy
                  Toys Company, Inc. dated March 27, 1984 (incorporated by
                  reference to the Company's registration statement on Form S-18
                  (file number 33-14379B)).

         31.1     Certification of Chief Executive Officer Pursuant to Section
                  302 of the Sarbanes-Oxley Act of 2002.

         31.2     Certification of Chief Financial Officer Pursuant to Section
                  302 of the Sarbanes-Oxley Act of 2002.

         32.1     Certification of Chief Executive Officer Pursuant to 18 U.S.C.
                  Section 1350, as adopted pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.

         32.2     Certification of Chief Financial Officer Pursuant to 18 U.S.C.
                  Section 1350, as adopted pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.


         (b)      Reports on Form 8-K

         I.       Item 8.01. On November 22, 2005 the registrant announced an
                  agreement in principle with Disney Licensed Publishing, an
                  imprint of Disney Children's Book Group, LLC, New York, for
                  the renewal of its non-exclusive license through December 31,
                  2008.


                                       27
<PAGE>

                                   SIGNATURES

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

                                       TRUDY CORPORATION
                                       (REGISTRANT)

Date: February 14, 2006                By: /s/ ASHLEY C. ANDERSEN
                                           -------------------------------------
                                           Ashley C. Andersen,
                                           President and Chief Executive Officer


                                       28