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 June 30, 2006


                           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.


                              SHARES OUTSTANDING AT
                                 August 17, 2006
                Common Stock, $.0001 par value: 599,966,330shares

<PAGE>

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

                          PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

    Consolidated Balance Sheet - June 30, 2006 (unaudited)                  3

    Consolidated Statements of Operations (unaudited) for the three
                months ended June 30, 2006 and June 30, 2005 (unaudited)    4

    Consolidated Statements of Cash Flows (unaudited) for the three
                months ended June 30, 2006 and June 30, 2005 (unaudited)    5

    Consolidated Statement of Shareholders' Deficit (unaudited) from
                April 1, 2006 through June 30, 2006                         6

    Notes to Financial Statements (unaudited)                               7

Item 2. Management's Discussion and Analysis                               17


                  PART II.  OTHER INFORMATION

Item 1. Legal Proceedings                                                  26

Item 2. Changes in Securities                                              26

Item 3. Defaults upon Senior Securities                                    27

Item 4. Submission of Matters to a Vote of Security Holders                27

Item 5. Other Information                                                  27

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

                                       2
<PAGE>

                                Trudy Corporation
                           Consolidated Balance Sheet
                                  June 30, 2006

Assets                                                             (Unaudited)

Current assets
  Cash and cash equivalents                                       $      9,855
  Accounts receivable, net                                             743,651
  Inventory, net                                                     1,679,194
  Prepaid expenses and other current assets                             77,300
                                                                  ------------

    Total current assets                                             2,510,000

  Equipment, net                                                        62,210
  Royalty advances, net                                                194,307
  Prepublication costs and other assets, net                           489,407
                                                                  ------------

    Total other assets                                                 745,924
                                                                  ------------

    Total assets                                                  $  3,255,924
                                                                  ============
Liabilities and shareholders' deficit

Current liabilities
  Notes payable - Bank                                            $  1,198,485
  Current portion, long term debt                                       58,761
  Accounts payable and accrued expenses                              1,573,713
  Royalties and commissions payable                                    207,856
                                                                  ------------

    Total current liabilities                                        3,038,815

Long term liabilities
  Long term debt, net of current portion                             1,574,915
                                                                  ------------

Total long term liabilities                                          1,574,915
                                                                  ------------

Total liabilities                                                    4,613,730

Commitments

Shareholders' deficit
Common stock - par value
$0.0001, authorized 850,000,000                                         45,874
Paid-in capital                                                      5,406,081
Accumulated deficit                                                 (6,809,761)

Total shareholders' deficit                                         (1,357,806)
                                                                  ------------

Total liabilities and shareholders' deficit                       $  3,255,924
                                                                  ============

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

                                       3
<PAGE>
<TABLE>
<CAPTION>

                                Trudy Corporation
                      Consolidated Statement of Operations
              For the Quarters Ended June 30, 2006 & June 30, 2005

                                                      June 30, 2006    June 30, 2005
                                                      -------------    -------------
                                                       (unaudited)      (unaudited)
<S>                                                   <C>              <C>
Net Sales                                             $     855,337    $   1,018,441

Cost of sales                                               589,227          700,904
                                                      -------------    -------------

Gross profit                                                266,110          317,537

Operating expenses:
  Selling, general and administrative                       597,099          499,700
                                                      -------------    -------------

Loss from operations                                       (330,989)        (182,163)

Other income/(expense)
  Interest, net                                             (40,889)         (37,652)
  Royalties, net                                             36,014            5,371
  Other income, net                                         (13,617)           3,324
                                                      -------------    -------------

Other income/(expense)                                      (18,492)         (28,957)
                                                      -------------    -------------

Net loss                                              $    (349,481)   $    (211,120)
                                                      =============    =============

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

Weighted average number of shares outstanding           458,734,057      455,734,057
                                                      =============    =============
</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
                Consolidated Statements of Shareholders' Deficit
                           Quarter ended June 30, 2006

                                                 Common Stock              Additional                          Total
                                        -----------------------------       Paid-in        Accumulated      Shareholders'
                                           Shares           Amount          Capital          Deficit          Deficit
                                       -------------    -------------    -------------    -------------    -------------
<S>                                      <C>            <C>              <C>              <C>              <C>
Balance at March 31, 2006 (audited)      458,734,057    $      45,874    $   5,383,384    $  (6,460,280)   $  (1,031,022)

Contributed compensation                          --               --           22,697               --           22,697

Net loss (unaudited)                              --               --               --         (349,481)        (349,481)

                                       -------------    -------------    -------------    -------------    -------------
Balance at June 30, 2006 (unaudited)     458,734,057    $      45,874    $   5,406,081    $  (6,809,761)   $  (1,357,806)
                                       =============    =============    =============    =============    =============
</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
                      Consolidated Statements of Cash Flows




                                                                       For the Three Months Ended
                                                                                June 30,
                                                                     ------------------------------
                                                                          2006             2005
                                                                     -------------    -------------
                                                                      (unaudited)      (unaudited)
<S>                                                                  <C>              <C>
Cash Flows From Operating Activities
Net income                                                           $    (349,481)   $    (211,120)
Adjustments to reconcile net income to net cash provided
by / (used in) operating activities:
  Depreciation                                                               5,026            4,523
  Amortization of pre-publication costs                                    (27,989)          73,569
  Provision for losses on accounts receivable                               (4,943)         (41,005)
  Provision for promotional allowance                                        2,810                0
  Provision for sales returns                                             (123,707)         179,868
  Contributed compensation                                                  22,697           25,120
  Imputed interest on long-term loan                                             0            6,633

Changes in operating assets and liabilities:
  Decrease (Increase) in accounts receivable                               800,464          (58,974)
  Decrease (Increase) in inventories                                       (11,897)        (156,995)
  (Increase) Decrease in prepaid expenses and other current assets          15,310           95,195
  Increase (Decrease) in accounts payable and accrued expenses            (259,303)          96,295
  Increase (Decrease) in royalties and commissions payable                 (72,182)         189,147
                                                                     -------------    -------------
Net cash provided /(used) used by operating activities                      (3,195)         202,256

Investing activities:
  Purchases of property and equipment                                      (45,300)         (10,105)
  Pre-publication and royalty advances                                      67,985          (44,365)
                                                                     -------------    -------------
Net cash used by investing activities                                       22,685          (54,470)

Financing activities:
  Net change in note payable, bank                                           9,755          261,000
  Repayments to related parties                                            (29,851)         (43,323)
                                                                     -------------    -------------
Net cash provided/(used) by financing activities                           (20,096)         217,677
                                                                     -------------    -------------

Net increase (decrease) in cash and cash equivalents                          (606)         (12,831)
Cash and cash equivalents at beginning of period                            10,461           32,442
                                                                     -------------    -------------
Cash and cash equivalents at end of period                           $       9,855    $      19,611
                                                                     =============    =============

Cash paid for interest                                               $      25,799    $      26,101
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 month period
ended June 30, 2006 are not necessarily indicative of the results that may be
expected for the year ending March 31, 2007. For further information, refer to
the financial statements and footnotes thereto included in the Company's annual
report on Form 10-KSB for the year ended March 31, 2006.


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
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.


                                       7
<PAGE>

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.


Pre-Publication Costs

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

                                       8
<PAGE>

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 applies SFAS No. 123, "Accounting for Stock-Based Compensation" and
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
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.

                                       10
<PAGE>

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 $7,636 and $21,897 for
the three month period ended June 30, 2006 and 2005, respectively.

Other advertising expense was $550 for both of the three month periods ended
June 30, 2006 and 2005.


3.       Inventories

Inventories consist of the following:


         Raw Materials                                             $     38,231
         Finished Goods                                               1,960,963
         Reserve for Obsolescence                                      (320,000)
                                                                   ------------
         Inventory                                                 $  1,679,194
                                                                   ============

                                       11
<PAGE>

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 and a personal guarantee of a
    principal shareholder (William W. Burnham, Chairman of
    the Board). On June 27, 2006 the Company reached an
    agreement in principle with its Bank to increase the
    credit line to $850,000. See below, "Note payable,
    Bank," as to rolling into credit line of $100,000 of
    principal under "Note payable."                               $    395,000

    Note payable, Bank. 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 and a
    personal guarantee of a principal shareholder (William
    W. Burnham, Chairman of the Board) and a limited
    guarantee of another principal shareholder. On June 27,
    2006, the Company made arrangements with its bank to
    combine $100,000 of this note into the Company's credit
    line. The Company is planning to pay off the remaining
    $60,000 due on the note                                       $    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                                        $  1,198,485
                                                                  ============

5.       Long term debt

    Notes payable to a principal shareholder (William W
    Burnham, Chairman of the Board) due May 2007. Interest
    is payable monthly at LIBOR plus 1%. On June 19, 2006
    the Board of Directors approved the conversion of this
    note into shares of the Company's authorized but
    unissued Common Stock. The conversion was executed on
    July 7, 2006                                                  $    825,664

                             12
<PAGE>

    Notes payable, shareholder, due May 2007. Interest is
    payable at specified maturity dates at 2.5% per annum
    On June 19, 2006 the Board of Directors approved the
    conversion of this note into shares of the Company's
    authorized but unissued Common Stock. The conversion
    was executed on July 7, 2006                                       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 and a
    personal guarantee of a principal shareholder                      271,458

    Note payable, Chart Studio, see (a) below                           55,000

    Note payable, affiliate, payable in monthly
    installments of $2,241. The note is unsecured                       27,554

                     Less current portion                              (58,761)
                                                                  ------------
                     Total                                        $  1,574,915
                                                                  ============


The scheduled principal payments on long term debt follow:

    Year ending June 30, 2007                                     $     58,761
    Year ending June 30, 2008                                        1,331,878
    Year ending June 30, 2009                                          243,037
                                                                  ------------
                     Total                                        $  1,633,676
                                                                  ============


(a) Note payable, Chart Studio

On June 13, 2006 the Company executed a Mutual General Release (the "Mutual
Release") with Chart Studio for settlement of the $444,852 indebtedness that was
going to be due to Chart Studio on August 20, 2007. As of March 31, 2006 the
accrued debt due to Chart Studio was $371,819. Under the terms of the Mutual
Release, the Company extinguished $291,819 of the debt due to Chart Studio and
is required to pay to Chart Studio $80,000 in four installments:

         o        $25,000 paid in June, 2006;

         o        $15,000 payable on or before December 31, 2006;

         o        $15,000 payable on or before March 31, 2007; and

         o        $25,000 payable on or before August 20, 2007;

                                       13
<PAGE>

As a result of the Mutual Release, the Company and Chart Studio agreed to
extinguish any and all debts or obligations between them which existed on or
before June 1, 2006.


6.       Income Taxes

The components of income tax (benefit) are as follows:
<TABLE>
<CAPTION>

                                                             June 30, 2006                 June 30, 2005
                                                      ---------------------------   ---------------------------
                                                         Current       Deferred       Current        Deferred
                                                      ---------------------------   ---------------------------
<S>                                                   <C>            <C>            <C>            <C>
Income tax expense (benefit) before application
Of operating loss carryforwards                       $          0   $   (140,000)  $          0   $    (84,000)

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

Change in valuation allowance                                    0        140,000              0         84,000
                                                      ---------------------------   ---------------------------

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

The deferred taxes are comprised of the following at June 30, 2006:


    Net operating loss carryforwards                  $  1,478,000
    Reserves and allowances                                444,000
                                                      ------------

    Total deferred tax assets                            1,922,000
    Less valuation allowance                            (1,922,000)
                                                      ------------

     Net deferred tax assets                          $          0
                                                      ============

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 June 30, 2006,
the Company has a net operating loss carryforward of approximately $3.9 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.

                                       14
<PAGE>

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 $23,743 and $21,851 for the three months ended June 30, 2006 and
2005, respectively.

The Company has borrowings from related parties of $1,362,218. The terms of
these notes, including the conversion of such debt into equity of the Company,
effective July 7, 2006, can be found in Note 5 to the financial statements.
Interest to related parties totaled $15,066 and $14,479 for the three months
ended June 30, 2006 and 2005, respectively. Repayments to related parties
totaled $51,094 for the three months ended June 30, 2006. There were no loan
repayments subsequent to June 30, 2006.

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
three months ended June 30, 2006 was approximately $7,020. For the quarter ended
June 30, 2006, the Company recognized the difference between the fair market
value of his services and his salary. This was an expense of $22,697 and was
recorded as a contribution to capital.

On June 19, 2006 Mr. Bradford Mead was elected to the Board of Directors. Mr.
Mead is the President of Delta Capital Group, Inc, the Company's investment
advisor. Delta Capital Group received fees in the amount of $6,000 and $12,000
from the Company in the quarters ended June 30, 2006 and 2005, respectively.


8.       Subsequent Events

(a)      Conversion of Debt into Share of Common Stock

At the Company's June 19, 2006 Board Meeting, the Board of Directors authorized
and approved a proposed conversion by Mr. William W. Burnham and Mrs. Alice B.
Burnham of their loans to the Company, plus accrued interest, into shares of
Common Stock of the Company. The Board provided the Burnhams with a deadline of
July 15, 2006 by which to elect such conversion and the Burnhams elected to make
such conversion on July 7, 2006.

The Independent Committee of the Board of Directors was charged with formulating
an opinion as to the price at which the Burnhams should be allowed to convert
their loans and accrued interest to equity. In reaching its conclusion the
Committee relied upon the following sources of information:

                                       15
<PAGE>

         a.       The Company's past financials, its current financial position,
                  and an understanding of the Company's prospects for the coming
                  fiscal year 2007;
         b.       Valuation information made generally available by the media
                  and a number of business brokerage sources in the publishing
                  industry;
         c.       Judgment based on many years' experience in the publishing
                  industry;
         d.       A review of the average price of Trudy common stock over the
                  past 30, 60 and 90 days.

Based upon a combination of the above items and reasonable judgment, the
Independent Committee proposed that the Burnham loans and accrued interest be
converted to Trudy Common Stock at a price of $0.01 per share.

The below table summarizes the loans and accrued interest that were converted on
July 7, 2006:
<TABLE>
<CAPTION>

                                                                                 Accrued
Individual                     Position                            Debt          Interest        Total
---------------------------------------------------------------------------------------------------------
<S>                <C>                                         <C>            <C>            <C>
Mr. William        Chairman of the Board, Director of
Burnham            Corporate Development, principal
                   shareholder                                 $    825,664   $     22,321   $    847,985

Mrs. Alice         Director, principal shareholder
Burnham                                                             454,000        102,338        556,338
                                                               ------------------------------------------
                               Total:
                                                               $  1,279,664   $    124,659   $  1,404,323
                                                               ==========================================
</TABLE>

(d)      Engagement of Stanton Walker

On July 25, 2006 the Company retained the services of Stanton Walker & Company.
Stanton Walker will provide the Company with corporate development and merger
and acquisition consulting services for the period of one year. The fee for the
firm's services is the issuance of 12,500,000 unrestricted shares of Trudy
common stock.

(b)      Stock grants

On August 1, 2006 the Company granted an aggregate of 800,000 shares to four
Directors for their respective services rendered to the Company. The shares were
valued at $0.007/share, the closing price of the Company's Common Stock as
reported by the OTC Bulletin Board on August 1, 2006. The Company also
authorized a further 1,100,000 shares to be awarded to employees for services
rendered. The shares will be priced once they have been issued to the employees.

                                       16
<PAGE>

(c)      Resignation of Officer

On August 4, 2006, John Sullivan, the Company's Vice President Sales and an
Officer of the Company, tendered his resignation to become an independent sales
representative for the Company. Mr. William Hermes, the Company's existing mass
market sales representative will succeed Mr. Sullivan in his role as Vice
President Sales.


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

NET SALES.

Overview

Net Sales for the first quarter of fiscal 2007 decreased 16.0% versus the prior
year. This is primarily due to broad based sales declines across the majority of
the Company's non-returnable sales divisions. The Company's profit margin
however remained fairly consistent, moving from 31.2% in the prior year to 31.1%
in the current year. The decline in revenue in the first quarter resulted in a
net loss of $349,481 versus a loss of $211,120 for the prior year.

Due to increased title and book format development and marketing efforts,
Smithsonian licensed products' share of total Company sales increased by 31.3%
from 25.9% to 34.0%. Disney-licensed product sales increased 11.8%. The
Company's proprietary products, largely its Mother Goose series, decreased over
11%.

                         Sales by license for the quarters ended June 30,
                      ------------------------------------------------------
License                               2006                        2005
----------------------------------------------------------------------------
Smithsonian                                34.0%                        25.9%
Disney                                      32.2                         28.8
Proprietary                                 23.2                         34.8
AVMA                                         3.5                          2.6
WGBH                                         2.9                          1.5
Mother Goose                                 0.5                          4.4
All other                                    3.7                          2.0


For the three months ended June 30, 2006, the decrease in net sales is
attributable largely to one display marketing customer in the Direct-to-Consumer
Distributor Division who only orders on an opportunistic basis determined from
favorable mini-market tests. There were no sales to this customer for the
quarter ended June 30, 2006, versus sales of $349,839 in the same quarter in the
prior year. This customer has plans to purchase products from the Company later
in the year, but it is anticipated that overall sales to this customer for the
full year ending March 31, 2007 will be lower than comparable sales in the
previous year.

                                       17
<PAGE>

<TABLE>
<CAPTION>
                         Sales decreases, net of credits and provisions for
                             returns, for the quarters ended June 30,
                              ---------------------------------------
    Sales channel                2006                         2005           Variance      % change
----------------------------------------------------------------------------------------------------
<S>                           <C>                          <C>              <C>                <C>
Direct-to-Consumer
Book Distributors             $   13,334                   $  382,484       $ (369,150)        (96.5)%

International
Direct-to-Consumer
Book Distirbutors                      0                       82,508          (82,508)          NMF

International Trade
Book Retailers                    28,653                       50,580          (21,927)        (43.4)
</TABLE>


There were no sales to international Direct-to-Consumer Book Distributors in the
current quarter versus sales of $82,508 in the prior year's comparable quarter.
In the prior year, the Company was granted a limited opportunity by Disney to
sell to customers in this division in the United Kingdom. This limited approval
has since expired and the Company is working to reinstate a comparable approval
later in the Company's fiscal year.

Sales to international trade book retailers decreased $21,927 to $28,653 from
$50,580 in the prior year due primarily to decreases in sales for the quarter to
two international customers in India and Romania, respectively. Both customers
indicate to the Company they plan to place re-orders later in the fiscal year.

While most divisions experienced decreased sales, sales to warehouse clubs
increased by $356,635 in the current year. This was due mainly to the timing of
warehouse club order shipments, which can vary in number from one quarter to
another.

COST OF SALES.

The Company's cost of sales for the quarter ended June 30, 2006 decreased
$111,677 from $700,904 in the prior year to $589,227 in the current year, a
decrease of 15.9%. Cost of sales as a percentage of net sales increased from
68.8% to 68.9% in the current quarter.


GROSS PROFIT.

The resulting gross profit for the quarter ended June 30, 2006 decreased 15.9%
to $266,110 versus the prior quarter's gross profit of $317,537. Gross margin
was 31.1% in the current quarter versus 31.2% in the quarter ended June 30,
2005.

                                       18
<PAGE>

SELLING, GENERAL & ADMINISTRATIVE COSTS.

The Company's selling, general, and administrative costs increased $97,399 to
$597,099 for the three months ended June 30, 2006 versus $499,700 for the three
months ended June 30, 2005. As a percentage of net sales, selling, general and
administrative expenses increased from 49.1% of net sales from the prior quarter
to 69.8% of net sales in the current quarter.

Selling expenses increased principally due to royalties which increased $80,986
from $69,483 to $144,034, a 107.3% increase for the current quarter versus the
comparable June quarter 2005. The increase is primarily the result of a change
in the sales mix for the current quarter versus the prior year, largely
attributable to the increase in sales to the warehouse clubs versus the same
quarter in the prior year.

Offsetting this increase, provision from bad debts decreased $40,041 versus the
prior year.


LOSS FROM OPERATIONS.

For the quarter ended June 30, 2006, the loss from operations was $330,989
versus a loss of $182,163 for the prior year's quarter. This is an increased
loss of $148,826.


OTHER EXPENSE.

The Company's other expense for the quarter ended June 30, 2006 was $18,492
versus $28,957 for the quarter ended June 30, 2005. Increased royalty income in
the current quarter more than offset the increased interest expense on
borrowings from the Company's bank and shareholders.


NET LOSS.

As a result of the items discussed above, the Company's net loss for the quarter
ended June 30, 2006 was $349,481 compared to a net loss of $211,120 for the
comparable prior quarter.


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

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.

                                       19
<PAGE>

In May 2005, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 154, "Accounting Changes and Error
Corrections" (SFAS 154), which supersedes Accounting Principles Bulletin (APB)
Opinion No. 20, "Accounting Changes" and SFAS No. 3, "Reporting Accounting
Changes in Interim Financial Statements". SFAS 154 changes the requirements for
and reporting of changes in accounting principle. The statement requires the
retroactive application to prior periods' financial statements of changes in
accounting principles, unless it is impracticable to determine either the period
specific effects of the cumulative effect of the change. SFAS 154 does not
change the guidance for reporting the correction of an error in previously
issued financial statements or the change in an accounting estimate. SFAS 154 is
effective for accounting changes and corrections of errors made in fiscal years
beginning after December 15, 2005. The adoption of SFAS 154 is not expected to
have a material impact on our 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
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.

                                       20
<PAGE>

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.


Liquidity and Capital Resources

<TABLE>
<CAPTION>
                                   For the quarters ended June 30,
                                   -------------------------------
                                        2006            2005          Variance        % change
------------------------------------------------------------------------------------------------
<S>                                 <C>             <C>             <C>                    <C>
Net assets (deficiency)             ($ 1,357,806)   ($ 1,550,682)   $    192,876           (12.4)%

Working capital (deficiency)            (528,815)       (228,646)       (300,169)          131.3

Accounts receivable                      743,651         884,953        (141,292)          (21.3)

Accounts payable and
accrued expenses                       1,573,713       1,317,243         256,470            21.5

Royalties and commissions
payable                                  207,856         202,196          (5,660)           (2.8)
</TABLE>


At June 30, 2006 the Company had a deficiency of net assets of $1,357,806 versus
a deficiency at June 30, 2005 of $1,550,682. Working capital deteriorated by
$300,169 from a deficiency of $228,646 at June 30, 2005 to $528,815 at June 30,
2006. As noted below, the Company is implementing the following plans to address
the situation.

Accounts receivable decreased from $884,953 at June 30, 2005 to $743,651 at June
30, 2006, a decrease of $141,292. The decreases in accounts receivable is
attributable to a general decrease in net sales for the quarter and an increase
in the Company's reserve for returns. Accounts payable and accrued expenses
increased $256,470 versus the prior year from $1,317,243 to $1,573,713 at June
30, 2006. Accounts payable increased as a result of higher sales in the three
months ending March 31, 2006 versus the prior year. The Company is generally
accorded 90 to 120 day payment terms with its print vendors. Royalties and
commissions payable decreased $5,660 versus the prior year from $202,196 at June
30, 2005 to $207,856 at June 30, 2006 primarily as a result of the sales mix.

On June 27, 2006 the Company reached an agreement in principle with its Bank to
extend and increase the Company's credit line. Significant terms are as follows:

                                       21
<PAGE>

     1.   The current credit line will increase from $750,000 to $850,000;
     2.   For the $160,000 term note the Company made arrangements with its bank
          to fold $100,000 of this note into the Company's expanded credit line.
          At the time of the closing, the remaining $60,000 due on the note will
          be repaid.
     3.   Interest is payable monthly equal to the Wall Street Journal reported
          prime rate plus 1.0%, a decrease of 50 basis points from the current
          terms;
     4.   The term of the credit line is 2 years from closing;
     5.   Borrowings are subject to a borrowing base equal to 80% of eligible
          accounts receivable;
     6.   The note is also secured by all of the assets of the Company, a
          mortgage on the Company's premises and a personal guarantee of a
          principal shareholder (William W. Burnham, Chairman of the Board).

As of June 30, 2006 the balance on the Company's revolving line of credit was
$395,000. The maximum amount of funds currently available to the Company is
$750,000.

As of August 16, 2006 the Company's backlog was approximately $1,727,000.

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 capital will continue to eclipse the limits of
its revolving credit facility, including the amended facility of $850,000, if
revenue growth is to be maintained. 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 or
private equity investor would allow the Company to better position itself for
growth by providing working capital for future publishing initiatives and even a
strategic acquisition. 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. In July, 2006 the Company also
retained Stanton Walker which will provide corporate development and accretive
acquisition advisory services, among other offerings.

On June 13, 2006 the Company executed a Mutual General Release with Chart Studio
for settlement of the $444,852 indebtedness that was going to be due to Chart
Studio on August 20, 2007. As of March 31, 2006 the accrued debt due to Chart
Studio was $371,819. Under the terms of the Mutual Release, the Company
extinguished $291,819 of the debt due to Chart Studio and is required to pay to
Chart Studio $80,000 in four installments. As of June 30, 2006 the remaining
debt due to Chart Studio was $55,000.

As part of the Mutual Release, the Company and Chart Studio agreed to extinguish
any and all debts or obligations between them which existed on or before June 1,
2006. The Company recognized the $291,819 debt extinguishment at March 31, 2006.

On June 19, 2006 the Board of Directors authorized and approved a proposed
conversion by Mr. William W. Burnham and Mrs. Alice B. Burnham of their loans to
the Company, plus accrued interest, into shares of Common Stock of the Company.
The Board provided the Burnhams with a deadline of July 15, 2006 by which to
elect such conversion. On July 7, 2006 the Burnhams elected to make this
conversion.

                                       22
<PAGE>

The Independent Committee of the Board of Directors was charged with formulating
an opinion as to the price at which the Burnhams should be allowed to convert
their loans and accrued interest to equity. In reaching its conclusion the
Committee relied upon the following sources of information:

     a.   The Company's past financials, its current financial position, and an
          understanding of the Company's prospects for the coming fiscal year
          2007;
     b.   Valuation information made generally available by the media and a
          number of business brokerage sources in the publishing industry;
     c.   Judgment based on many years of experience in the publishing industry;
     d.   A review of the average price of Trudy common stock over the past 30,
          60 and 90 days.

Based upon a combination of the above items and reasonable judgment, the
Independent Committee proposed that the Burnham loans and accrued interest be
converted to Trudy Common Stock at a price of $0.01 per share, and the Board of
Directors of Trudy unanimously approved such conversion price, Mr. and Mrs.
Burnham having recused themselves from voting.

The below table summarizes the loans and accrued interest that was converted on
July 7, 2006 based on principal and accrued interest balances as of July 7,
2006.

<TABLE>
<CAPTION>
                                                                                  Accrued
     Individual                      Position                       Debt          Interest          Total
  -----------------------------------------------------------------------------------------------------------
<S>                    <C>                                     <C>              <C>              <C>
  Mr. William          Chairman of the Board, Director of
  Burnham              Corporate Development, principal
                       shareholder                             $    825,664     $     22,321     $    847,985

  Mrs. Alice
  Burnham              Director, principal shareholder              454,000          102,338          556,338
                                                               ------------     ------------     ------------

                                Total:                         $  1,279,664     $    124,659     $  1,404,323
                                                               ============     ============     ============
</TABLE>

The conversion of debt and accrued interest at $0.01 on July 7, 2006 created
140,432,273 newly issued shares of common stock out of the 850,000,000 shares
authorized. These shares, when added to the 458,734,057 fully diluted current
shares previously outstanding and including the 800,000 shares issued to certain
Directors on August 1, 2006, will yield a new total shares issued and
outstanding of 599,966,330. After the conversion, the Burnham family will own
approximately 52.6% of the common shares issued and outstanding.

If the debt and accrued interest due to the Burnhams had been converted prior to
June 30, 2006 the balance sheet presentation would have been as follows:

                                       23
<PAGE>
                            Pro Forma Balance Sheet


Assets                                                              (Unaudited)

Current assets
Cash and cash equivalents                                          $      9,855
Accounts receivable, net                                                743,651
Inventory, net                                                        1,679,194
Prepaid expenses and other current assets                                77,300
                                                                   ------------

Total current assets                                                  2,510,000

Equipment, net                                                           62,210
Royalty advances, net                                                   194,307
Prepublication costs and other assets, net                              489,407
                                                                   ------------

Total other assets                                                      745,924
                                                                   ------------

Total assets                                                       $  3,255,924
                                                                   ============



Liabilities and shareholders' deficit

Current liabilities
Notes payable - Bank                                               $  1,198,485
Current portion, long term debt                                          58,761
Accounts payable and accrued expenses                                 1,449,055
Royalties and commissions payable                                       207,856
                                                                   ------------

Total current liabilities                                             2,914,157

Long term liabilities
Long term debt, net of current portion                                  295,251
                                                                   ------------

Total long term liabilities                                             295,251
                                                                   ------------

Total liabilities                                                     3,209,408

Commitments

Shareholders' equity
Common stock - par value
$0.0001, authorized 850,000,000                                          59,917
Paid-in capital                                                       6,796,360
Accumulated deficit                                                  (6,809,762)

Total shareholders' equity                                               46,516
                                                                   ------------

Total liabilities and shareholders' equity                         $  3,255,924
                                                                   ============

                                       24
<PAGE>

On August 1, 2006 the Company granted an aggregate of 800,000 shares to four
Directors for their respective services rendered to the Company. The shares were
valued at $0.007/share, the closing price of the Company's Common Stock as
reported by the OTC Bulletin Board on August 1, 2006. The Company also
authorized a further 1,100,000 shares to be awarded to employees for services
rendered. The shares will be priced once they have been issued to the employees.

For the quarter ended June 30, 2006 the principal shareholder / chief executive
officer was repaid $26,094 relating to pre-existing loans. Subsequent to June
30, 2006, this individual received no further loan repayments.

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
three months ended June 30, 2006 was approximately $7,020. For the quarter ended
June 30, 2006, the Company recognized the difference between the fair market
value of his services and his salary. This was an expense of $22,697 and was
recorded as a contribution to capital.


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, 2006 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.
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.

                                       25
<PAGE>

         PART II        OTHER INFORMATION
         -------


Item 1.           Legal Proceedings

None.

Item 2.           Changes in Securities

Subsequent to June 30, 2006, the Company authorized the issuance of Common Stock
effective July 7, 2006 and August 1, 2006:

(a)      Conversion of Debt

On June 19, 2006 the Board of Directors authorized and approved a proposed
conversion by Mr. William W. Burnham and Mrs. Alice B. Burnham of their loans to
the Company, plus accrued interest, into shares of Common Stock of the Company.
The Board provided the Burnhams with a deadline of July 15, 2006 by which to
elect such conversion. On July 7, 2006 the Burnhams elected to make this
conversion.

The below table summarizes the loans and accrued interest that was converted on
July 7, 2006 based on principal and accrued interest balances as of July 7,
2006.

<TABLE>
<CAPTION>
                                                                                  Accrued
     Individual                      Position                       Debt          Interest          Total
  -----------------------------------------------------------------------------------------------------------
<S>                    <C>                                     <C>              <C>              <C>
  Mr. William          Chairman of the Board, Director of
  Burnham              Corporate Development, principal
                       shareholder                             $    825,664     $     22,321     $    847,985

  Mrs. Alice
  Burnham              Director, principal shareholder              454,000          102,338          556,338
                                                               ------------     ------------     ------------

                                Total:                         $  1,279,664     $    124,659     $  1,404,323
                                                               ============     ============     ============
</TABLE>

The conversion of debt and accrued interest at $0.01 on July 7, 2006 created
140,432,273 newly issued shares of common stock out of the 850,000,000 shares
authorized.


(b)      Issuance of Shares to Employees and Directors

On August 1, 2006 the Company granted an aggregate of 800,000 shares to four
Directors for their respective services rendered to the Company. The shares were
valued at $0.007/share, the closing price of the Company's Common Stock as

                                       26
<PAGE>

reported by the OTC Bulletin Board on August 1, 2006. The Company also
authorized a further 1,100,000 shares to be awarded to employees for services
rendered. The shares will be priced once they have been issued to the employees.


Item 3.           Defaults upon Senior Securities

None

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

None

Item 5.           Other Information

Effective June 19, 2006 Ms. Ashley C. Andersen was appointed to the position of
Acting Chief Financial Officer. Mr. William W. Burnham had previously occupied
this position.

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.

                                       27
<PAGE>

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 3.02 Unregistered Sales of Equity Securities.

    The registrant announced in a press release issued July 7, 2006 that the
    Board of Directors authorized and approved the proposed conversion by Mr.
    William W. Burnham and Mrs. Alice B. Burnham of their loans to the Company,
    plus accrued interest (an aggregate of approximately $1,404,300), into
    approximately 140 million shares of Common Stock of the Company at a
    conversion rate of $0.01/per share. The conversion price was recommended by
    the Independent Committee of the Board of Directors of the Company and was
    unanimously approved by the Board of Directors, Mr. and Mrs. Burnham having
    recused themselves from voting.

    The issuance by the Company of the aforementioned shares was exempt from
    registration under the Securities Act of 1933, as amended (the "Act"),
    pursuant to the provisions of Section 4(2) of the Act. The transaction did
    not involve any public offering. The shares were issued solely to two
    principal shareholders of Trudy, one of whom is Chairman and a Director and
    the other of whom serves as a Director, as the result of negotiations for
    the conversion and cancellation of principal and accrued interest of
    substantial shareholder loans. No securities were offered or issued to any
    other person.

    The conversion was effective July 7, 2006.

                                       28
<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: August 17, 2006                     By: /s/ ASHLEY C. ANDERSEN
                                              ----------------------------------
                                              Ashley C. Andersen,
                                              President, Chief Executive Officer
                                              Acting Chief Financial Officer

                                       29