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, 2002

                           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 year.


                              SHARES OUTSTANDING AT
                                February 19, 2003
                                -----------------
               Common Stock, $.0001 par value: 442,460,249 shares

<PAGE>


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

                          PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

         Consolidated Balance Sheet - December 31, 2002 (unaudited)         3

         Consolidated Statements of Operations (unaudited) for the nine
         and three months ended December 31, 2002 and December 31, 2001     4

         Consolidated Statements of Cash Flows (unaudited) for the nine
         and three months ended December 31, 2002 and December 31, 2001     5

         Consolidated Statement of Shareholders' Deficit (unaudited)
         from April 1, 2002 through December 31, 2002                       6

         Notes to Financial Statements (unaudited)                          7

Item 2.  Management's Discussion and Analysis                              15

                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings                                                 20

Item 2.  Changes in Securities                                             20

Item 3.  Defaults upon Senior Securities                                   20

Item 4.  Submission of Matters to a Vote of Security Holders               20

Item 5.  Other Information                                                 20

Item 6.  Exhibits and Reports on Form 8-K                                  20

                                       2
<PAGE>

                        Trudy Corporation and Subsidiary
                           Consolidated Balance Sheet
<TABLE>
<CAPTION>

                                                                              December 31,
                                                                                 2002
                                                                              ------------
                                                                               (Unaudited)
<S>                                                                           <C>
Assets
Current assets:
Cash and cash equivalents                                                     $     24,372
Accounts receivable, net of allowance for doubtful accounts of $245,000          1,042,023
Inventories                                                                      1,262,596
Prepaid expenses and other current assets                                          233,352
                                                                              ------------
     Total current assets                                                        2,562,343

Goodwill                                                                           263,897
Equipment, net                                                                     117,019
Royalty advances, net                                                               38,207
Organization costs, net                                                              3,795
Pre-publication costs and other assets, net                                        303,819
                                                                              ------------
     Total assets                                                             $  3,289,080
                                                                              ============

Liabilities and shareholders' equity Current liabilities:
Notes payable - shareholder/officer and related party                         $  1,426,800
Accounts payable and accrued expenses                                              921,949
Royalties and commissions payable                                                  189,112
Due to The Chart Studio (Pty) Ltd.                                                  17,925
                                                                              ------------
     Total current liabilities                                                   2,555,786

Long-term liabilities:
 Notes payable - shareholder/officer and related parties                           980,192
 Loan from The Chart Studio (Pty) Ltd.                                             297,111
 Royalties payable                                                                  30,741
                                                                              ------------
     Total long-term liabilities                                                 1,308,044
                                                                              ------------
     Total liabilities                                                           3,863,829

Minority interest                                                                   10,421

Shareholders' deficit
Common stock: $.0001 par value:
     Authorized shares - 850,000,000
     Issued and outstanding shares - 442,460,249                                    44,246
Additional paid-in capital                                                       4,945,264
Accumulated deficit                                                             (5,574,681)
                                                                              ------------
     Total shareholders' deficit                                                  (585,171)
                                                                              ------------
     Total liabilities and shareholders' deficit                              $  3,289,080
                                                                              ============
</TABLE>

See accompanying summary of accounting policices and notes to financial
statements.

                                       3
<PAGE>

                        Trudy Corporation and Subsidiary
                      Consolidated Statements of Operations
<TABLE>
<CAPTION>

                                                          Three Month Period               Nine Month Period
                                                          Ended December 31,               Ended December 31,
                                                   ------------------------------    ------------------------------
                                                        2002             2001             2002             2001
                                                   -------------    -------------    -------------    -------------
                                                    (Unaudited)      (Unaudited)      (Unaudited)      (Unaudited)
<S>                                                <C>              <C>              <C>              <C>
Net sales                                          $   1,414,574    $     892,506    $   2,973,712    $   2,572,159
      Cost of sales                                      824,529          423,988        1,944,693        1,555,962
                                                   -------------    -------------    -------------    -------------
Gross profit                                             590,045          468,518        1,029,019        1,016,197

Operating expenses:
      Selling, general and administrative                672,857          746,483        1,502,755        1,328,598
      Depreciation and amortization                       16,162            5,821           45,295           17,464
                                                   -------------    -------------    -------------    -------------
Loss from operations                                     (98,974)        (283,786)        (519,031)        (329,865)

Other income (expense):
      Interest, net                                      (36,848)         (16,097)         (79,221)         (27,459)
      Royalties, net                                         306           69,094          (18,769)          77,608
      Other income (expense)                              (7,444)             123           (2,433)           1,325
      Gain/(loss) in equity investment                                                                      (22,288)
      Minority interest                                   (8,001)                          (10,421)
                                                   -------------    -------------    -------------    -------------
Net loss                                           $    (150,961)   $    (230,666)   $    (629,875)   $    (300,679)
                                                   =============    =============    =============    =============

Net loss per share:                                -------------    -------------    -------------    -------------
Basic and diluted                                  $         -      $         -      $         -      $         -
                                                   =============    =============    =============    =============

Weighted average shares used in computation:       -------------    -------------    -------------    -------------
Basic and diluted                                    442,460,249      442,460,249      442,460,249      442,460,249
                                                   =============    =============    =============    =============
</TABLE>

See accompanying summary of accounting policices and notes to financial
statements.

                                       4
<PAGE>

                        Trudy Corporation and Subsidiary
                      Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>

                                                                                  Nine Month Period
                                                                                  Ended December 31,
                                                                          --------------------------------
                                                                               2002               2001
                                                                          -------------      -------------
                                                                           (unaudited)        (unaudited)
<S>                                                                       <C>                <C>
Operating activities
Net loss                                                                  $    (629,875)     $    (300,679)
Adjustments to reconcile net loss to net cash used in operating
activities:
  Depreciation                                                                   45,025             17,464
  Amortization of pre-publication costs                                          28,499             26,500
  Amortization of organization costs                                                395
  Provision for losses on accounts receivable                                   185,000             10,000
  Provision for slow moving inventory                                           100,000            (15,000)
  Loss on equity investment                                                                         22,288
  Minority interest                                                              10,421
  Imputed interest on long-term loan                                              8,214

Changes in operating assets and liabilities:
  Accounts receivable                                                          (106,128)          (282,859)
  Advances to Studio Mouse LLC                                                   31,445            (45,645)
  Due to Chart Studio (Pty) Ltd.                                                (51,326)
  Inventories                                                                  (192,445)           152,352
  Prepaid expenses and other current assets                                     (15,064)          (285,781)
  Accounts payable and accrued expenses                                         208,812            219,877
  Royalties and commissions payable                                            (143,603)           130,274
                                                                          -------------      -------------
Net cash used by operating activities                                          (520,630)          (351,209)

Investing activities:
  Net assets acquired from Studio Mouse, including cash of $79,656               29,231
  Purchases of property and equipment                                           (14,132)           (71,161)
  Pre-publication and royalty advances, net                                    (126,578)           (83,213)
  Investment in joint venture (prior to acquisition)                                               (22,288)
                                                                          -------------      -------------
Net cash used by investing activities                                          (111,479)          (176,662)

Financing activities:
  Proceeds from short-term debt                                                                    151,782
  Repayments of short-term debt                                                (300,000)
  Repayments to related parties                                                 (53,293)
  Proceeds from related parties                                               1,007,000            102,236
                                                                          -------------      -------------
Net cash provided by financing activities                                       653,707            254,018
                                                                          -------------      -------------

Net increase (decrease) in cash and cash equivalents                             21,598           (273,853)
Cash and cash equivalents at beginning of period                                  2,774            394,851
                                                                          -------------      -------------
Cash and cash equivalents at end of period                                $      24,372      $     120,998
                                                                          =============      =============
</TABLE>

See accompanying summary of accounting policices and notes to financial
statements.

                                       5
<PAGE>

                        Trudy Corporation and Subsidiary
            Consolidated Statement of Shareholders' Equity (Deficit)
<TABLE>
<CAPTION>

                                                                         Additional                          Total
                                              Common Stock                 Paid-In       Accumulated     Shareholders'
                                         Shares           Amount           Capital         Deficit      Equity (Deficit)
                                     -------------    -------------    -------------    -------------    -------------
<S>                                    <C>            <C>              <C>              <C>              <C>
Balance at March 31, 2002              442,460,249    $      44,246    $   4,945,264    $  (4,944,806)   $      44,704

Net loss (unaudited)                           -                -                -           (184,480)        (184,480)
                                     -------------    -------------    -------------    -------------    -------------

Balance at June 30, 2002               442,460,249           44,246        4,945,264       (5,129,286)        (139,776)

Net loss (unaudited)                           -                -                -           (294,434)        (294,434)
                                     -------------    -------------    -------------    -------------    -------------

Balance at September 30, 2002          442,460,249           44,246        4,945,264       (5,423,720)        (434,210)

Net loss (unaudited)                           -                -                -           (150,961)        (150,961)
                                     -------------    -------------    -------------    -------------    -------------

Balance at December 31, 2002           442,460,249    $      44,246    $   4,945,264    $  (5,574,681)   $    (585,171)
                                     =============    =============    =============    =============    =============
</TABLE>

See accompanying summary of accounting policices and notes to financial
statements.

                                       6
<PAGE>

                        TRUDY CORPORATION AND SUBSIDIARY
                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.   Description of Business and Basis of Presentation

Trudy Corporation and Subsidiary ("the Company") designs, manufactures and
markets plush stuffed animals and publishes children's books and audiocassettes
for sale to both retail and wholesale customers, both domestically and
internationally. The Company's product is sold under the trade names of both
Soundprints and Studio Mouse, LLC (the subsidiary).

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 nine months ended
December 31, 2002 are not necessarily indicative of the results that may be
expected for the year ending March 31, 2003. 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, 2002.

The consolidated financial statements reflect the results of the Company's
operating division Soundprints and its subsidiary, Studio Mouse, LLC. Trudy
Corporation previously held a 45% ownership interest in Studio Mouse, LLC and
accounted for such ownership using the equity method. However, due to a change
in ownership of Studio Mouse, LLC effective August 20, 2002 (refer to Note 6),
the results of Studio Mouse, LLC are subsequently accounted for in
consolidation. All material intercompany transactions have been eliminated. The
Company's financial statements for the nine months ended December 31, 2001 do
not reflect the balances of Studio Mouse, LLC.

The Company, without Studio Mouse, LLC, (the operating division Soundprints) has
incurred operating losses in the past four years, has a deficiency in working
capital, and has a deficiency in net assets. While the company experienced a
significant decline in revenues from $3,390,884 in 1999 to $2,476,252 in 2000
and $1,447,931 in 2001, 2002 revenues increased to $3,392,808. The Company has
been funded by a principal shareholder - officer and another shareholder and had
been funded in 2000 by Futech Interactive Products, Inc.

The Company's ultimate ability to continue as a going concern is dependent upon
the market acceptance of its products, and upon a continued increase in revenues
coupled with continuing license agreements and positive cash flow. The Company
believes that continued improvement in its sales and its ability to borrow money
from its principal shareholder/officer, will be sufficient to allow the Company
to continue in operation.


                                       7
<PAGE>

2.   Summary of Significant Accounting Policies

Principles of Consolidation

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

Estimates

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.

Cash Equivalents

The Company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.

Accounts Receivable

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.

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.

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

                                       8
<PAGE>

equivalents, accounts receivable, accounts payable and accrued expenses, and
notes payable approximates 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 capitalized and amortized over a three year period
using the sum-of-years digits method.

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. Management believes that no impairment loss has
occurred.

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. As the products are shipped
from the Soundprints division are accompanied with 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," of SFAS 48, based on historical experience.

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.

Subsidiary Licensing Rights

Depending upon the terms of its various licensing agreements, the Company can
lease its intellectual property rights, as either licensee or licensor, from or
to, another party. The associated income and expense are recorded in a similar
manner as royalties.

                                       9
<PAGE>

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
or financial statement purposes but will be deductible 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.

No provision or liability for federal income taxes has been included in the
Company's financial statements in relation to the income of Studio Mouse. As a
limited liability corporation, it is not subject to corporation income taxes.
However, its shareholders are taxed on their proportionate share of Studio
Mouse's taxable income.

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 at the Company's estimate of fair value of the
common stock 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 using the weighted average number of common
shares. Diluted earnings per share is computed using the weighted average number
of 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 using the if-converted method. Any dilution
caused by the assumed exercise of stock options would not have an effect on
earnings per share in either fiscal year 2002 or 2001.

                                       10
<PAGE>

Comprehensive Loss

As of April 1, 1998, the Company adopted SFAS No. 130, "Reporting Comprehensive
Income" (Statement 130). Statement 130 establishes new rules for the reporting
and display of comprehensive income and its components. Comprehensive (loss)
income for the Company is the same as net (loss) income for all periods
presented.

Segments of an Enterprise and Related Information

Effective April 1, 1998, the Company 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.

New Accounting Standards

The Financial Accounting Standards Board (FASB) issued several pronouncements
and interpretations and the Securities and Exchange Commission (SEC) issued
several Staff Accounting Bulletins (SAB). Certain of these pronouncements may
have future applicability. Statement of Financial Accounting Standards (SFAS)
No. 132 "Employers Disclosures about Pensions and Other Post Retirement
Benefits," effective June 15, 2000, and No. 137 "Accounting for Derivative
Instruments and Hedging Activities," effective June 15, 2000 would not have
impacted the financial statements as the Company has not participated in
derivative transactions nor does the Company have a defined benefit plan.

In December 1999, the SEC issued SAB No. 101 "Revenue Recognition in Financial
Statements." SAB 101 summarizes certain areas of the SEC's views in applying
generally accepted accounting principles to revenue recognition in financial
statements. The Company believes that its current revenue recognition policies
comply with SAB 101.

In March 2000, the FASB issued FASB Interpretation No. 44 "Accounting for
Certain Transactions involving Stock Compensation", and interpretations of
Accounting Principles Board No. 25. This interpretation is effective July 1,
2000. The effects of applying this interpretation would be recognized on a
prospective basis from July 1, 2000. The impact of this interpretation is not
expected to be material.

In August 1999, the SEC issued SAB No. 99 "Materiality". SAB 99 provides that
the exclusive reliance on certain quantitative benchmarks to assess materiality
in preparing financial statements is inappropriate; misstatements are not
immaterial simply because they fall beneath a numerical threshold. Management
believes the Company is in compliance with SAB 99.

In June 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations." SFAS 141 applies prospectively to all business
combinations initiated after June 30, 2001 and to all business combinations
accounted for using the purchase method for which the date of acquisition is

                                       11
<PAGE>

July 1, 2001, or later. This statement requires all business combinations to be
accounted for using one method, the purchase method. The adoption of SFAS No.
141 is expected to have a significant impact on the Company's financial
statements.

In June 2001, the Financial Accounting Standards Board issued SFAS No. 142,
"Goodwill & other Intangible Assets." According to this statement, goodwill and
other intangible assets acquired after June 30, 2001 are no longer amortized.
Instead, such assets are tested for impairment. The adoption of SFAS No. 142 may
have a significant impact on the Company's financial statements.

In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations." The standard requires entities to record the fair value of
liability for an asset retirement obligation in the period in which it is
incurred. When the liability is initially recorded, the entity capitalizes a
cost by increasing the carrying amount of the related long-lived asset. Over
time, the liability is accreted to its present value each period, and the
capitalized cost is depreciated over the useful life of the related asset. Upon
settlement of the liability, an entity either settles the obligation for its
recorded amount or incurs a gain or loss upon settlement. The standard is
effective for fiscal years beginning after June 15, 2002. The adoption of SFAS
143 is not expected to have a material impact on the Company's financial
statements.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." SFAS No. 144 replaces SFAS No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of" and the accounting and reporting provisions of Accounting Principles Board
Opinion No. 30, "Reporting the Results of Operations-Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions", for the disposal of a "segment of a
business" (as previously defined in the Opinion). SFAS No. 144 requires that
long-lived assets be measured at the lower of carrying amount or fair value less
cost to sell, whether reported in continuing operations or in discontinued
operations. Therefore, discontinued operations will no longer be measured at net
realizable value or include amounts for operating losses that have not yet
occurred. SFAS No. 144 also broadens the reporting of discontinued operations to
include all components of an entity with operations that can be distinguished
from the rest of the entity and that will be eliminated from the ongoing
operations of the entity in a disposal transaction. The provisions of SFAS No.
144 are effective for financial statements issued for fiscal years beginning
after December 15, 2001. The adoption of SFAS 144 is not expected to have a
material impact on the Company's financial statements.

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.

There was no advertising expense for the quarters ended December 31, 2002 or
December 31, 2001.

                                       12
<PAGE>

Reclassifications

Certain reclassifications were made to the 2002 financial statements to conform
to those used in 2001.


3.   Inventories

Inventories consist of the following:

           Raw Materials                         $   63,834
           Finished Goods                         1,198,762
                                                 ----------
           Inventory Value                       $1,262,596
                                                 ==========

4.   Goodwill

As a result in the change of ownership of Studio Mouse, LLC as of August 20,
2002, goodwill was recognized in the amount of $263,897. In accordance with FAS
No142, Goodwill and Other Intangible Assets," the Company will not amortize
goodwill, but will instead evaluate it for impairment on a periodic basis. As of
December 31, 2002, the Company's management had determined that no such
impairment had occurred.

5.   Income Taxes

The Company has net operating loss carryforwards, on a fiscal year basis,
approximating $4,408,000 which expire as follows:

           2004                                  $  127,000
           2005                                     157,000
           2006                                   1,246,000
           2007                                     324,000
           2008                                     258,000
           Thereafter                             2,296,000
                                                 ----------
                                                 $4,408,000
                                                 ==========

The net operating loss benefits could be reduced if there is a "382 Change of
Ownership".

6.   Restructure of Joint Venture Ownership

On August 23, 2002, the Company issued the following press release.

                                       13
<PAGE>

TRUDY ANNOUNCES RESTRUCTURE OF THE OWNERSHIP OF STUDIO MOUSE, LLC.

Norwalk, Connecticut, August 23, 2002-Trudy Corporation (OTCBB:TRDY) announced
today the restructuring of the ownership of its publishing operation, Studio
Mouse, LLC. Trudy and Chart Studio Publishing (Pty.) LTD, Gauteng, South Africa,
previously announced their plan for ownership of the venture to be structured
45% by Trudy, 45% by Chart Studio and the remaining 10% by employees of Chart
Studio and Trudy. However, the Reserve Bank of South Africa has disapproved
Chart Studio's second application for equity participation in Studio Mouse.
Accordingly, Trudy and Chart Studio have entered into a Memorandum of
Understanding providing for changes in their business relationship as follows:

     o   Studio Mouse has become a subsidiary of Trudy, 95% owned by Trudy and
         5% owned by Ashley C. Andersen, President of Studio Mouse and Publisher
         of Trudy.

     o   Chart Studio's contingent equity will be converted into a long term
         loan from Chart Studio to Studio Mouse in the amount of approximately
         $420,000.

     o   Over the next 24 months, Chart Studio may reapply to the Reserve Bank
         of South Africa for approval of 50% equity ownership in Studio Mouse.
         Upon such approval and satisfaction of certain other conditions, Chart
         Studio may exercise the option to purchase a 50% equity ownership of
         Studio Mouse, in which case the long term loan will be forgiven. Should
         such approval not be forthcoming, or Chart Studio not exercise its
         option, the long term loan, plus any equity appreciation, must be
         repaid over the 36 months following such 24 month period.

     o   In order to preserve its potential opportunity for equity participation
         in Studio Mouse, Chart Studio shall provide editorial and art content,
         graphic design services and worldwide marketing/sales support at cost
         to Studio Mouse.

Studio Mouse, LLC was established to capitalize on Trudy's license with the
Smithsonian Institution, Washington, DC, and its associated wealth of content
jointly owned by the Smithsonian and Trudy's publishing division, Soundprints,
and the library of educational content owned by Chart Studio. Studio Mouse
repurposes appropriate content from these sources and creates new content for
use in new and innovative "edutainment" product formats which are selling into
the retail market through such resellers as Wal-Mart, Costco, Borders, Barnes &
Noble, and Books-a-Million. In the revised ownership structure, Studio Mouse has
been able to preserve its valuable relationship with Chart Studio Publishing
through licensing and service contracting arrangements.

Prior to August 20, 2002, Trudy Corporation's investment in Studio Mouse, LLC
was accounted for by way of the equity method. Accordingly, the carrying value
of the investment had been increased or decreased by the Company's pro rata
share of the net profit, or loss, through August 19, 2002.

Subsequent to August 19, 2002, Studio Mouse is effectively 95% owned by Trudy
Corporation, and, as such, is reported as a consolidated subsidiary.

                                       14
<PAGE>

7.   Subsequent Events

     A.  In January, 2003, the Company borrowed $60,000 from a principal
         shareholder/officer for working capital purposes.

     B.  In January, 2003, the Company borrowed $204,000 from a principal
         shareholder/director for working capital needs.


Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS

Results of Operations
---------------------

NET SALES. The Company's net sales for the quarter ended December 31, 2002 were
$1,414,574, a 58.5% increase over the same quarter in the prior year, or an
increase of $522,068. Of this figure $986,190 in net sales are attributed to the
Company's Soundprints division, the operating division of Trudy Corporation,
compared to Soundprints' net sales of $892,506 for the prior year's quarter
ended December 31, 2001, an increase of $93,684 or 10.5%. For Soundprints, 2002
year-to-date sales decreased $102,376 from $2,572,159 to $2,469,783 from the
first 9 months of Fiscal Year 2001. This represents a decrease of 3.9%. For
Studio Mouse, LLC, the Company's subsidiary, net sales for the quarter ended
December 31, 2002 were $442,918.

For the quarter ended December 31, 2002, the increase in Soundprints' overall
net sales of $93,684 versus the comparable quarter in 2001 was broad based
across most sales divisions especially in book stores and distributors as well
as catalogers. The increase in book store sales, which jumped 57.8%, were mostly
attributable to new book formats. Catalog sales also increased significantly due
to new account distribution. Quarterly sales in the Mass Merchant division
increased by $160,374 or 62.9% for the period ended December 31, 2002 versus the
same period in 2001 due to strong acceptance of Soundprints' products from prior
promotional sales in two accounts. These two accounts realized a combined sales
increase in the December Quarter, 2002 in excess of $150,000.

As noted, Soundprints' sales for the nine months ended December 31, 2002 versus
the comparable nine month period in 2001 decreased $102,376 or 3.9%. In the
August through October 2001 time frame, the Company received and shipped a large
order to one of the largest of the three warehouse clubs. No such order was
received for shipment in the 2002 period. Additionally, sales of Soundprints'
direct mail catalog to consumers, schools and libraries for the 2002 nine month
period declined $175,589 or 34.6% versus the comparable year ago period. In
2002, Soundprints mailed 69.3% fewer catalogs to these divisional customers in a
planned effort to restructure the catalog creatively and mail more strategically
to a refined, more targeted audience. While revenues were lower, the sales per
catalog mailed increased significantly in 2002 to $.76/catalog from $.35/catalog
in 2001.

                                       15
<PAGE>

In the remaining sales divisions, revenue increases were broad-based. Toy and
gift stores, specialty retailers, museums, zoos & aquariums, and library
distributors posted increases in sales from 5% to over 100%. These sales
increases are attributed to several factors: the diversification of the
Company's product range to include lower target-age formats and content; the
approval of 84 Soundprints titles as Accelerated Readers which helped to boost
school and library distributor sales; and the significant expansion of
Soundprints' backlist with the addition of the Studio Mouse imprint, which was
distributed by Soundprints.

COST OF SALES. The Company's cost of sales for the quarter ended December 31,
2002 increased $400,541 from $423,988 in the prior year quarter to $824,529, an
increase of 94.5%. Soundprints' cost of sales for the quarter ended December 31,
2002 increased $211,973 to $635,961 from $423,987 for the comparable prior year
quarter. The increase in cost of sales came largely from $71,222 in additional
write-downs for the quarter for inventory declared obsolete and an 84.4%
increase in mass merchant sales which carries a significantly lower margin than
the company's other sales divisions. As a percent of net sales, Soundprints'
cost of sales for the quarter ended December 31, 2002 was 64.5% as compared to
47.6% for the comparable quarter a year ago. On a variable cost of sales basis
excluding fixed charges such as packaging, product development, shipping
salaries, amortization of design costs, and miscellaneous warehouse overhead
costs, cost of goods sold increased from 30.4% of net sales in the December
Quarter, 2001 to 41.8% for the quarter ended December 31, 2002. The erosion,
again, was the result of sales increases to Mass Merchants, Soundprints' least
profitable division.

For the nine month period ended December 31, 2002 Soundprints' cost of sales
increased $141,730 to $1,697,692 or 68.7% of sales versus 60.5% in the prior
year comparable period. The change in cost of goods over the nine-month period
is a result of an added charge of $115,000 due to the write-down of inventory
and a change in the sales mix due to an increase in sales to the Mass Merchant
division, whose product is purchased in a large part from the Studio Mouse
subsidiary at a lower margin than traditional purchases direct from Asian
printers. In addition, the Company accepted and shipped a large mass merchant
customer an order that generated less than 20% margin.


GROSS PROFIT. For the quarter ended December 31, 2002, the Company's gross
profit increased 25.9% versus the prior year's comparable quarter to $590,045 as
a result of increased revenues. Gross margin for the December 2002 quarter was
41.7% versus 52.5% for the quarter ended December 31, 2001.

For Soundprints, a 10.5% increase in net sales for the quarter ended December
31, 2002 resulted in a gross profit of $350,229, a decrease of $116,377 versus
the prior year's comparable quarter. The gross margin declined from 52.4% for
the prior year quarter, to 35.5% for the quarter ended December 31, 2002. The
quarter's decline was due to sales to the Mass Merchant division of lower margin
product purchased from the Company's subsidiary, Studio Mouse. The decline was
also due in part to a decrease of higher margin direct mail revenue that was a
result of the reduction of the number of catalogs mailed in the December, 2002
quarter versus the prior year's comparable quarter. For the nine months ended
December 31, 2002, Soundprints' gross profit decreased $242,192 versus the nine
month period ended December 31, 2001 to $772,092 or 31.3% of sales.

SELLING, GENERAL, AND ADMINISTRATIVE. The Company's selling, general, and
administrative costs decreased 9.9% from $746,483 from the prior year quarter to
$672,857 for the quarter ended December 31, 2002. On a year-to-date basis, the
Company's selling, general, and administrative costs increased 13.1% to
$1,502,755 from $1,328,598 for the prior year quarter.

                                       16
<PAGE>

While Soundprints has made good progress in managing its selling and
administrative costs, its bad debt expense increased by $152,826 to $153,544 in
the quarter ended December 31, 2002 versus the comparable period a year ago. In
January, 2003 the Company received word of the bankruptcy of its largest
international customer. Soundprints' receivable of $292,500 as well as Studio
Mouse's receivable of $86,068 was thus deemed uncollectible. The Company's
credit insurance in the amount of $200,000 (less deductible and fees) is to be
shared by both Soundprints and Studio Mouse accordingly.

Soundprints' selling, general, and administrative expenses for the quarter ended
December 31, 2002 decreased by $148,905 to $597,577 compared to $746,482 for the
quarter ended December 31, 2001. As a percentage of net sales, SG&A expenses
improved from 83.8% of net sales in the quarter ended June 30, 2001 to 60.6% for
the comparable quarter this year.

Soundprints' decreased selling and administrative expenses for the quarter ended
December 31, 2002 versus December Quarter, 2001 resulted primarily from the
decrease in amortization expenses associated with fewer direct mail catalogs
printed and mailed along with the decrease in administrative costs to process
mail order catalog orders in September 2002. The total mailing for 2002 was
474,000 catalogs versus 1,500,000 catalogs mailed in 2001. Total amortized costs
for the direct mail program for the quarter ended December 31, 2002 was $107,920
versus $375,719 for the quarter ended December 31, 2001. Both the consumer and
library catalog mailings were profitable, largely due to a more focused mailing
to a more strategically-targeted mailing list and the engagement of a direct
mail consultant.

Soundprints' royalty expenses decreased $23,637 to $36,160 from $59,798 for the
quarter ended December 31, 2002 due to lower sales of Smithsonian licensed books
and toys and greater sales of Mother Goose products which bears a 50% lower
royalty than Smithsonian products.

For the nine months ended December 31, 2002, Soundprints' selling, general, and
administrative expenses increased $80,951 to $1,409,549, or 57.1% of sales
versus 51.7% of sales for the comparable period in 2001.

For the nine months ended December 31, 2002, Soundprints' selling expenses
decreased $152,906 to 23.6% of sales or $583,818, versus 28.7% of sales for the
comparable nine-month period in 2001. The decrease was largely due to the more
efficient catalog mailing in September and reduced royalties from a shift in
product sales to lower royalty-bearing product. General and administrative
expenses increased $233,857 to $825,732 in the nine month period ended December
2002 compared to $591,875 in selling expenses in the comparable prior year
period. General & administrative expenses for the nine-month period ended
December 31, 2002 comprised 33.4% of net sales, a 9.5% increase. A significant
percentage of this increase is attributable to the reserve for bad debt as well
as to the increase in legal and accounting services.

INTEREST INCOME/EXPENSE. The Company's interest expense (net) for the quarter
ended December 31, 2002 was $36,848, an increase of $20,751 over the comparable
prior year quarter. The increase in interest expense for the quarter ended
December 31, 2002 was primarily a result of the reduction in interest income
from customer accounts and a result of increased borrowing. For the nine month
period ended December 31, 2002, the Company's interest expense increased $51,762
to $79,221 from $27,459 for the prior year's respective period.

ROYALTY INCOME/EXPENSE. The Company's royalty income (net) for the quarter ended
December 31, 2002 decreased by $68,788 to $306 versus $69,094 for the comparable
period last year. Royalty income (net) for the nine month period ended December
31, 2002 decreased $96,377 to a net expense of $18,769 versus a net income of
$77,608 in the prior year-to-date period. For the current quarter, Soundprints'
royalty income (net) of $34,255 decreased by $34,839 versus the December
Quarter, 2001 royalty income of $69,094. For the nine month period ended
December 31, 2002 royalty income (net) decreased $43,432 from $77,608 to
$34,175.

GAIN/LOSS IN EQUITY INVESTMENT. For the nine month period ended December 31,
2002, Soundprints' operations reflect no gain or loss attributable to its equity
investment versus a loss of $22,288 for the comparable period a year ago.

NET LOSS. As a result of the items discussed above, the Company's net loss for
the quarter ended December 31, 2002 was $150,961 compared to a net loss of
$230,666 for the comparable prior year quarter. For the nine month period ended
December 31, 2002, the Company had a net loss of $629,875 compared to net loss
of $300,679 for the comparable prior year period.

                                       17
<PAGE>

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

The Company believes that any current pronouncements would not have a material
effect on its financial position or results of operations, except for SFAS 141
and SFAS 142, which may impact following quarters.

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 capitalized and amortized over a three-year period
using the sum-of-years digits method.

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 become unsaleable.

Liquidity and Capital Resources
-------------------------------

The Company continues to experience a working capital deficiency and negative
cash flow as it has staffed up to support future sales growth to a level that it
anticipates to achieve profitability. While the Company has made considerable
progress since the 2001 recapitalization, it has been difficult to meet its
financial obligations as they become due, barring the receipt of an asset-based
line of credit from a commercial lending institution. Over the past year, the
Company received two six month term loans of $475,000 and $300,000 from a local
bank, both of which have been paid back as of July 24, 2002.

In July, 2002, the Company borrowed $400,000 from a principal
shareholder/officer. Between October, 2002 and January, 2003, additional loans
were made to the Company from the same principal shareholder/officer totaling
$377,000. In January, 2003, the Company borrowed $204,000 from a principal
shareholder/director in order to pay its vendors, to cover a significant bad
debt, and to finance the Spring 2003 backlog of $873,141.

During the December Quarter, 2002 the principal shareholder/officer was repaid
$15,000 relating to pre-existing loans. As the company continues to source
products with new vendors in order to lower its product costs, it has done so at
unfavorable credit terms in order to secure lower pricing for its books and
plush. These vendors require payment terms.

                                       18
<PAGE>

The Company's ultimate ability to continue as a going concern is dependent upon
the market acceptance of its products, an increase in revenues coupled with
continuing licensing support from its primary licensor, the Smithsonian
Institution, and positive cash flow. The Company believes that continued
improvement in its sales and its ability to borrow money from its principal
shareholder/officer, will be sufficient to allow the Company to continue in
operation

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, 2002 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.

                                       19
<PAGE>

         PART II  OTHER INFORMATION
         -------

Item 1.  Legal Proceedings

         The Company is not a party to any material legal proceedings.

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

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

 (a)     Reports on Form 8-K

i.

The registrant filed a report on Form 8-K, dated April 8, 2002, disclosing that
The Reserve Bank of South Africa disapproved its application to form a joint
venture with Trudy Corporation in the name of Studio Mouse LLC, a Connecticut
Limited Liability company. The application provided for ownership of Studio
Mouse to be held 45% by Chart Studio, 45% by Trudy Corporation and the remaining
10% by employees of Chart Studio and Trudy.

The press release disclosed that Chart Studio intended to resubmit this
application, using counsel for RMB Corvest, the investment banking unit of RMB
Bank, Johannesburg, which is a minority stockholder in Chart Studio.

ii.

The registrant filed a report on Form 8-K, dated May 13, 2002, disclosing that
Ashley C. Andersen had been elected to its Board of Directors. Ms. Andersen is
the Publisher of Trudy Corporation and the President of Studio Mouse LLC, a
joint venture company formed by Trudy Corporation and Chart Studio (Pty) Ltd., a
privately held South African company.

                                       20
<PAGE>

After working in the field for several years as an editor, graphic artist and
art director, Ms. Andersen joined Trudy in March of 2000 as Associate Publisher.
She was subsequently promoted to Publisher.

iii.

The registrant filed a report on Form 8-K, dated August 30, 2002, disclosing the
restructuring of the ownership of Studio Mouse, LLC. A memorandum of
understanding was executed between the Registrant, Studio Mouse, LLC, The Chart
Studio (Pty)Ltd., and Ashley C. Andersen, president of Studio Mouse and a
director of the registrant. Under the terms of the memorandum of understanding,
the registrant increased its ownership of Studio Mouse, LLC to 95% from 45%.

An amendment was subsequently filed to include the financial statements of
Studio Mouse, LLC.

iv.

The registrant filed a report on Form 8-K, dated September 10, 2002, for the
purpose of submitting a written certification by the Chief Executive Officer and
Acting Chief Financial Officer of the Company's Report on Form 10-QSB for the
quarter ended June 30, 2002, pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 (18 U.S.C. Section 1350).

v.

The registrant filed a report on Form 8-K, dated December 23, 2002, for the
purpose of submitting a written certification by the Chief Executive Officer and
Acting Chief Financial Officer of the Company's Report on Form 10-QSB for the
quarter ended September 30, 2002, pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (18 U.S.C. Section 1350).

                                       21
<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 19, 2003                By: /s/ WILLLIAM W. BURNHAM
      -----------------                    -------------------------------------
                                           William W. Burnham,
                                           Chairman and Chief Executive Officer



                                       22
<PAGE>

                                 CERTIFICATIONS


I, WILLIAM W. BURNHAM, certify that:

1.   I have reviewed this quarterly report on Form 10-QSB of TRUDY CORPORATION;

2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report; and

3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report.


Date: February 19, 2003
      -----------------
                                       /s/ WILLIAM W. BURNHAM
                                       -----------------------------------------
                                       William W. Burnham,
                                       Principal Executive Officer


I, WILLIAM W. BURNHAM, certify that:

1.   I have reviewed this quarterly report on Form 10-QSB of TRUDY CORPORATION;

2.   Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report; and

3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report.


Date: February 19, 2003
      -----------------
                                       /s/ WILLIAM W. BURNHAM
                                       -----------------------------------------
                                       William W. Burnham,
                                       Acting Principal Financial Officer


                                       23