SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

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

                For the quarterly period ended December 31, 2008

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15 ( d ) OF THE EXCHANGE ACT

           For the transition period from ____________ to____________


                           Commission File No. 0-16056


                                TRUDY CORPORATION
             (Exact name of Registrant as specified in its charter)


            Delaware                                          06-1007765
  -------------------------------                        -------------------
  (State or Other Jurisdiction of                        (I.R.S. Employer
   incorporation or organization)                        Identification No.)


                                 353 Main Avenue
                                Norwalk, CT 06851
                    ----------------------------------------
                    (Address of Principal Executive Offices)


                                 (203) 846-2274
              ----------------------------------------------------
              (Registrant's telephone number, including area code)


                                       N/A
              ----------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)

Indicate by check mark whether the Registrant has (1) filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the
"Exchange Act") during the preceding 12 months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definition of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [ ]                        Accelerated filer         [ ]
Non-accelerated filer   [ ]                        Smaller reporting company [X]

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


                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                   PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities and
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.

                                 Not applicable.

                      APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date:

                                February 19, 2009
               Common Stock, $.0001 par value: 645,007,356 shares

<PAGE>

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

                          PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

      Consolidated Balance Sheet - December 31, 2008 (unaudited)            3

      Consolidated Statements of Operations (unaudited) for the
      three and nine months ended December 31, 2008 and
      December 31, 2007 (unaudited)                                         4

      Consolidated Statements of Cash Flows (unaudited) for the
      nine months ended December 31, 2008 and December 31, 2007
      (unaudited)                                                           5

      Consolidated Statement of Shareholders' Deficit (unaudited)
      from April 1, 2008 through December 31, 2007                          6

      Notes to Financial Statements (unaudited)                             7

Item 2. Management's Discussion and Analysis                               15

                           PART II. OTHER INFORMATION

Item 1. Legal Proceedings                                                  26

Item 2. Changes in Securities                                              26

Item 3. Defaults upon Senior Securities                                    26

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

Item 5. Other Information                                                  27

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


                                       2
<PAGE>

                                     PART I
                                     ------

Item 1.  Financial Statements

         The Financial Statements of the Registrant required to be filed with
this 10-Q Quarterly Report were prepared by management and commence below,
together with related notes. In the opinion of management, the Financial
Statements fairly present the financial condition of the Registrant.

<TABLE>
<CAPTION>

                                Trudy Corporation
                                  Balance Sheet
                                December 31, 2008

                                                        Period Ended December 31,
                                                      ----------------------------
                                                          2008            2007
                                                      ------------    ------------
                                                      (Unaudited)     (Unaudited)
<S>                                                   <C>             <C>
Assets

Current assets
  Cash and cash equivalents                           $     48,239    $      1,087
  Accounts receivable, net                               1,534,000       1,903,304
  Inventory, net                                         1,664,590       1,518,706
  Prepaid expenses and other current assets                151,850          98,390
                                                      ------------    ------------

    Total current assets                                 3,398,679       3,521,488

  Equipment, net                                            72,514          70,387
  Royalty advances, net                                    257,686         223,544
  Prepublication costs and other assets, net               449,793         526,549
  Intangible Assets, net                                   408,348              --
                                                      ------------    ------------

  Total Other assets                                     1,188,341         820,480
                                                      ------------    ------------

    Total assets                                      $  4,587,020    $  4,341,968
                                                      ============    ============

Current liabilities
  Notes payable - Bank & related parties              $  2,714,449    $  1,504,180
  Current portion, long term debt                               --          15,520
  Accounts payable and accrued expenses                  1,765,002       1,496,968
  Deferred Revenue                                         172,242         238,063
  Royalties and commissions payable                        436,658         471,368
                                                      ------------    ------------

Total Current liabilities                                5,088,351       3,726,100

Long term liabilities
  Long term debt, net of current portion                        --         468,902
                                                      ------------    ------------

Total long term liabilities                                     --         468,902
                                                      ------------    ------------

Total liabilities                                        5,088,351       4,195,002

Commitments

Shareholders' deficit
  Common stock - par value                                  64,501          61,257
  Paid-in capital                                        7,046,236       6,931,881
  Accumulated deficit                                   (7,612,068)     (6,846,172)
                                                      ------------    ------------

Total shareholders' deficit                               (501,331)        146,966
                                                      ------------    ------------

Total liabilities and shareholders' deficit              4,587,020    $  4,341,968
                                                      ============    ============
</TABLE>

    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
                             Statement of Operations
          For the Quarters Ended December 31, 2008 & December 31, 2007


                                                           Three Month Period                Nine Month Period
                                                           Ended December 31,                Ended December 31,
                                                     ------------------------------    ------------------------------
                                                         2008             2007             2008             2007
                                                     -------------    -------------    -------------    -------------
                                                      (unaudited)      (unaudited)      (unaudited)      (unaudited)
<S>                                                      <C>              <C>              <C>              <C>
Net product sales                                        1,784,142        1,628,573        4,883,419        4,454,942
Royalty sales                                                   --           39,847           17,242           67,964
                                                     -------------    -------------    -------------    -------------

Net Sales                                                1,784,142        1,668,420        4,900,661        4,522,906

Cost of sales                                            1,002,447        1,015,268        2,867,161        2,631,294
                                                     -------------    -------------    -------------    -------------

Gross profit                                               781,695          653,152        2,033,500        1,891,612

Operating expenses:
  Selling, general and administrative                      810,559          708,638        2,364,118        2,198,419
                                                     -------------    -------------    -------------    -------------

Income/(loss) from operations                              (28,864)         (55,486)        (330,618)        (306,807)

Other income/(expense)
Interest, net                                              (28,430)         (34,401)        (102,128)        (103,033)
Other income, net                                           (1,861)          24,511           18,415           40,721
Gain on debt extinguishment                                 55,000               --           55,000               --
                                                     -------------    -------------    -------------    -------------

Other expense                                               24,709           (9,890)         (28,713)         (62,312)
                                                     -------------    -------------    -------------    -------------

Net income/(loss)                                    $      (4,155)   $     (65,376)   $    (359,331)   $    (369,119)
                                                     =============    =============    =============    =============

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

Weighted average number of shares outstanding          643,760,617      612,566,330      637,300,231      612,566,330
                                                     =============    =============    =============    =============
</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
                       Statements of Shareholders' Equity
                         Quarter ended December 31, 2008

                                               Common Stock              Additional                       Total
                                       ----------------------------       Paid-in     Accumulated     Shareholders'
                                          Shares          Amount          Capital       Deficit          Equity
                                       ------------    ------------    ------------   ------------    ------------
<S>                                     <C>            <C>             <C>            <C>             <C>
Balance at March 31, 2008 (audited)     641,307,356    $     64,131    $  7,035,506   $ (7,252,737)   $   (153,100)

Net loss (unaudited)                             --              --              --       (218,556)       (218,556)

                                       ------------    ------------    ------------   ------------    ------------
Balance at June 30, 2008 (unaudited)    641,307,356    $     64,131    $  7,035,506   $ (7,471,293)   $   (371,656)
                                       ============    ============    ============   ============    ============

Net loss (unaudited)                                                                      (136,620)       (136,620)

                                       ------------    ------------    ------------   ------------    ------------
Balance at September 30, 2008           641,307,356    $     64,131    $  7,035,506   $ (7,607,913)   $   (508,276)
                                       ============    ============    ============   ============    ============

Stock-based Compensation                  3,700,000    $        370    $     10,730                         11,100

Net loss (unaudited)                                                                        (4,155)         (4,155)

                                       ------------    ------------    ------------   ------------    ------------
Balance at December 31, 2008            645,007,356    $     64,501    $  7,046,236   $ (7,612,068)   $   (501,331)
                                       ============    ============    ============   ============    ============

</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
                            Statements of Cash Flows

                                                                            For the Nine Months Ended
                                                                                  December 31,
                                                                          ----------------------------
                                                                              2009            2008
                                                                          ------------    ------------
                                                                           (unaudited)     (unaudited)
<S>                                                                       <C>             <C>
Cash Flows From Operating Activities
Net loss                                                                  $   (359,331)   $   (369,119)
Adjustments to reconcile net loss to net cash provided by /
(used in) operating activities:
  Depreciation                                                                  13,566          11,646
  Amortization of pre-publication costs                                        184,888         206,231
  Amortization of intangibles                                                   41,652               0
  Provision for losses on accounts receivable                                       27             800
  Provision for promotional allowance                                          (27,000)        (30,500)
  Provision for slow moving inventory                                         (108,000)        (45,000)
  Provision for sales returns                                                 (571,114)       (177,759)
  Board Compensation                                                            11,100               0
  Gain on debt extinguishment                                                  (55,000)              0
  Consulting fee                                                                     0          54,688

Changes in operating assets and liabilities:
  Decrease / (increase) in accounts receivable                                 606,362         (45,600)
  Increase in inventories                                                      (32,623)        (11,894)
  Decrease in prepaid expenses and other current assets                         10,071          19,811
  Increase in accounts payable and accrued expenses                            339,623         109,480
  Increase in deferred revenue                                                 138,241         238,063
  Increase / (decrease) in royalties and commissions payable                    84,260          (2,779)
                                                                          ------------    ------------
Net cash used by operating activities                                          276,722         (41,932)

Investing activities:
  Purchases of property and equipment                                          (21,170)        (27,590)
  Pre-publication and royalty advances                                        (231,446)       (225,982)
                                                                          ------------    ------------
Net cash provided by investing activities                                     (252,616)       (253,572)

Financing activities:
  Net change in note payable, bank                                            (162,992)        178,201
  Repayments to related parties                                                (44,760)        (37,363)
  Proceeds from related parties                                                210,629         150,000
                                                                          ------------    ------------
Net cash provided/(used) by financing activities                                 2,877         290,838
                                                                          ------------    ------------

Net increase / (decrease) in cash and cash equivalents                          26,983          (4,666)
Cash and cash equivalents at beginning of period                                21,256           5,753
                                                                          ------------    ------------
Cash and cash equivalents at end of period                                $     48,239    $      1,087
                                                                          ============    ============

Cash paid for interest                                                    $     54,859    $    103,917
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
                          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, eBooks and audiobooks and designs, manufactures and markets
plush stuffed toys, children's instruments and musical electronics for sale
directly to consumers in the United States and to domestic and international
retail and wholesale customers. The Company's products are sold under the trade
names (i.e. imprints) of Studio Mouse, Soundprints, Little Soundprints, Fetching
Books, Music for Little People and BeBop.

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-Q 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 December 31, 2008 are not necessarily indicative of the results that may
be expected for the year ending March 31, 2009. For further information, refer
to the financial statements and footnotes thereto included in the Company's
annual report on Form 10-K for the year ended March 31, 2008.

2. Summary of Significant Accounting Policies

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.

Cash and Cash Equivalents

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

                                       7
<PAGE>

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.

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 Book Group, LLC, (formerly Disney Children's Book Group, LLC)
("Disney"). The intangible asset is being amortized on a straight line basis
over a three year period.

                                       8
<PAGE>

Intangible Assets related to Music for Little People are amortized on a straight
line basis over their estimated useful lives.

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.

Government Taxes

Product sales are presented net of sales tax collected and remitted to
governmental authorities.

                                       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.

Due to changes in the Company's business, effective December 31, 2006, royalty
revenue is presented as a component of net sales. All periods presented conform
with this presentation.

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

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 provisions of SFAS No. 123R
were effective for Trudy on April 1, 2006. The adoption of SFAS No. 123R did not
have a material impact on the financial statements since the Company has no
outstanding stock options.

The Company periodically issues shares of its common stock to employees as
grants. 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.

                                       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 $82,697 and $10,861
for the three month periods ended December 31, 2008 and 2007, respectively.
Advertising expense related to catalogs and brochures was $101,278 and $21,372
for the nine month periods ended December 31, 2008 and 2007, respectively.

Other advertising expense was $11,997 for the three month period ended December
31, 2008, there was no expense in the prior quarter. Other advertising expense
was $38,599 for the nine month periods ended December 31, 2008 , again there was
no expense for the nine months ended December 31, 2007.

3. Acquisition: Music for Little People

On March 7, 2008 the Company purchased certain assets from the children's audio
publisher and distributor, Musical Kidz LLC, pertaining to its mail-order and
ecommerce divisions. Musical Kidz is the publisher of children's music
distributed on the record label, Music for Little People (MFLP). The Company did
not purchase any assets related to Musical Kidz, LLC's record label. The total
purchase price of the selected assets was $550,000. The Company received
$100,000 in inventory and $450,000 in intangible assets such as direct mail
catalog files; images; graphics and text used in direct mail catalogs, flyers,
mailing websites; mailing lists; e-mail lists; all MFLP websites; and licensing
agreements for MFLP and Bebop, Musical Kidz, LLC's branded line of musical
instruments.

                                       11
<PAGE>

4.  Inventories

Inventories consist of the following:
<TABLE>
<CAPTION>


                                                                                    December 31,      March 31,
                                                                                        2008            2008
                                                                                    ------------    ------------
<S>                                                                                 <C>             <C>
    Raw Materials                                                                   $     33,860    $     35,726
    Finished Goods                                                                     1,797,730       1,763,241
    Reserve for Obsolescence                                                            (167,000)       (275,000)
                                                                                    ------------    ------------
    Inventory                                                                       $  1,664,590    $  1,523,967
                                                                                    ============    ============
</TABLE>

5. Notes Payable, Bank and Related Parties
<TABLE>
<CAPTION>

                                                                                    December 31,      March 31,
                                                                                        2008            2008
                                                                                    ------------    ------------
<S>                                                                                 <C>             <C>
    A revolving line of credit totaling $850,000 due on demand.
    Interest is payable monthly equal to the Wall Street Journal
    reported prime rate plus 1.0%. 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).              $    563,706    $    715,206

    Note payable, bank, due on demand. Interest is payable monthly equal to
    the Wall Street Journal reported prime rate plus 1.0%. 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). (Mr. Burnham
    paid off this note and replaced it with a note with interest payable
    monthly at Libor plus 1.25%).                                                              0         100,000

    Various notes payable, to principal shareholder (William W.
    Burnham, Chairman of the Board) due on demand. Interest is
    payable monthly at LIBOR + 1.25%.
                                                                                       1,915,450       1,648,329

    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, William W. Burnham.                   235,293         246,785

    Note payable, affiliate, payable in monthly installments of
    $1,252. The note is unsecured.                                                             0           1,252
                                                                                    ----------------------------

                                        Total                                       $  2,714,449    $  2,711,572
                                                                                    ============================
</TABLE>

                                       12
<PAGE>

6.   Income Taxes
<TABLE>
<CAPTION>

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

                                                          December 31, 2008              December 31, 2007
                                                    ----------------------------    ----------------------------
                                                       Current         Deferred       Current         Deferred
                                                    ----------------------------    ----------------------------
<S>                                                 <C>             <C>             <C>             <C>
Income tax expense (benefit) before application
of operating loss carryforwards                     $          0    $   (143,700)   $          0    $   (142,100)

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

Change in valuation allowance                                  0         143,700               0         142,100
                                                    ----------------------------    ----------------------------
Income tax expense (benefit)                        $          0    $          0    $          0    $          0
                                                    ============================    ============================
</TABLE>

The deferred taxes are comprised of the following at December 31, 2008:

    Net operating loss carryforwards                  $  1,408,000
    Reserves and allowances                                571,000

    Total deferred tax assets                            1,979,000
    Less valuation allowance                            (1,979,000)
                                                      ------------
     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 December 31,
2008, the Company has a net operating loss carryforward of approximately $4.0
million for federal income tax purposes which expire at various dates through
2027. Utilization of these benefits is primarily subject to the extent of future
earnings of the Company, and may be limited by, among other things, shareholder
changes, including the possible issuance by the Company of additional shares in
one or more financing transactions. The Company has established a valuation
allowance for the portion of possible tax savings not likely to be realized by
the end of the carryforward period.

7. Related Party Transactions

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

The Main Avenue property leased by the Company is owned by a Connecticut limited
liability company, Noreast Management LLC, which is owned jointly by William W.
Burnham, the Chairman of the Company and a principal shareholder, Peter Ogilvie,
a former Director and Officer of the Company, and Fred M. Filoon, a Director of
the Company. The Company has executed a lease that expires April 30, 2011. Rent
expense totaled $31,350 and $23,743 for the three months ended December 31, 2008
and 2007, respectively. Rent expense totaled $87,848 and $71,228 for the nine
months ended December 31, 2008 and 2007, respectively.

As of December 31, 2008, the Company has borrowings from related parties of
$1,915,450. Interest to related parties totaled $14,127 and $12,354 for the
three months ended December 31, 2008 and 2007, respectively. Interest to related
parties totaled $54,859 and $35,709 for the nine months ended December 31, 2008
and 2007, respectively. Repayments to related parties totaled $20,720 for the
three months ended December 31, 2008 and $43,508 for the nine months ended
December 31, 2008. There were no loan repayments to related parties for the
three or nine months periods ended December 31, 2007.

                                       13
<PAGE>

Guarantor fees for Mr. Burnham for the three months ended December 31, 2008 were
$3,627. Guarantor fees for Mr. Burnham for the three months ended December 31,
2007 were $4,968. Guarantor fees for Mr. Burnham for the nine months ended
December 31, 2008 were $8,842 versus $14,830 for the prior nine months.

8. Non-cash Investing and Financing Activities

For the quarter ended December 31, 2008 the Company recorded $11,100 in fees
paid to Board Members and certain employees. The Company paid in newly issued
shares of Common Stock out of the 850,000,000 shares authorized.

9. Debt Extinguishment

On June 13, 2006 the Company executed a Mutual General Release (the "Mutual
Release") with Chart Studio Publishing (PTY) Ltd, Johannesburg, South Africa for
the alleged $444,852 indebtedness that was due to Chart Studio on August 20,
2007. As of March 31, 2006 the Company had accrued $371,819 of the total amount
due August 20, 2007. Under the terms of the Mutual Release, Trudy was required
to pay to Chart Studio $80,000 in aggregate. 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 the date of the Mutual
Release.

In November, 2006, Chart Studio filed for liquidation in South Africa. On
December 19, 2006, the Company announced that it had been advised that the
assets in liquidation had been sold at auction by a Court-appointed Liquidator
to a successful bidder from Capetown, South Africa. The Company had maintained a
balance due of $55,000 to Chart Studio and at December 31, 2008 the Company
recognized a $55,000 gain on debt extinguishment. The Company has been
indemnified against any claims from a principal shareholder/officer.

10. Subsequent Events

On February 4, 2009 the Company announced that it had entered into a Letter of
Intent providing for PCS Edventures!.com, Inc. ("PCS"), an Idaho corporation, to
acquire substantially all of the assets and assume certain liabilities of Trudy.
An 8K with a copy of the Letter of Intent was filed with the SEC on February 9,
2009.

Consideration for the asset purchase transaction will be up to $2 million in PCS
Common Stock, with the Common Stock being valued at the average per share price
over the 10 business day period immediately prior to the Closing, with a minimum
valuation of $0.90 per share. The PCS Common Stock will be registered with the
Securities and Exchange Commission (the "SEC") and distributed to Trudy
shareholders, pro rata, subject to a holdback of certain shares by PCS to
guarantee representations and warranties of Trudy, after the Closing.
Liabilities of Trudy to be assumed by PCS include accounts payable, licensing
obligations and certain shareholder loans of approximately $1,900,000 at
Closing. In addition, at Closing, PCS will secure new financing to pay off
Trudy's current bank credit line of up to $850,000. The assumed shareholder
loans are to be paid off in full over two years. Ashley Andersen Zantop, CEO and
President of Trudy, and all other key Trudy employees will be retained as
employees by PCS, while William W. Burnham, Chairman of Trudy, will join the
Board of Directors of PCS. The Closing is subject to various conditions outlined
in the Letter of Intent, including PCS's completion of a satisfactory "due
diligence" examination of Trudy, at which time a definitive agreement will be
executed.

                                       14
<PAGE>

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

NET SALES.

Overview

Net Sales for the Company's December quarter of fiscal 2009 increased 6.9%
versus the comparable quarter of fiscal 2008. This is primarily a result of
revenue from Domestic Mass Market Distributors and the Company's Music For
Little People direct-to-consumer business, purchased in March of 2008. The
Company's profit margin increased from 39.1% in the prior year to 43.8% in the
current year, primarily as a result of decreased product costs. The three month
period resulted in a net loss of $4,155 versus a net loss of 65,376 for the
prior year.

Three months ended December 31, 2008

As noted above, net sales for the third quarter of fiscal 2009 increased 6.9%
versus the prior year. Sales from the Company's Music For Little People product
line were 31.9% of sales for the current quarter. The Company acquired certain
assets, which included Music For Little People (MFLP) direct-to-consumer
business related assets from Musical Kidz, LLC in March, 2008. As a result there
were no sales in these sales channels in the prior year.

Sales of Disney-licensed products as a percentage of total Company sales
decreased from 52.2% to 27.7% for the quarter versus the comparable quarter a
year ago as a result of a decline in international mass market sales and a
decline in domestic discount retailer. Smithsonian-licensed product sales
decreased from 29.3% of Company sales to 22.3%.

                                 Percentage of Sales by license and/or
                                  product line for the quarters ended
                                               December 31,
                                 --------------------------------------
License                                   2008               2007
-----------------------------------------------------------------------
Disney                                         27.7%               52.2%
Music For Little People
(MFLP)                                         31.9                 0.0
Proprietary                                    16.1                 9.0
Smithsonian                                    22.3                29.3
Sesame Workshop                                 1.5                 5.9
All other                                       0.5                 3.6
                                 --------------------------------------
Total                                         100.0               100.0
                                 ======================================

                                       15
<PAGE>
<TABLE>
<CAPTION>

                                          Sales increases, net of
                                          provisions for returns,
                                           for the three months
                                            ended December 31,
                                       ----------------------------
Sales channel                              2008            2007           Variance       % change
---------------------------------------------------------------------------------------------------
<S>                                    <C>             <C>             <C>                    <C>
Direct Response (MFLP)                 $    403,466    $          0    $    403,466             NMF

Internet Accounts (MFLP)                    269,161               0         269,161             NMF

Direct- to- Consumer (returnable)           191,687          70,475         121,212           172.0%
</TABLE>

Direct response Music For Little People sales were $403,466 in the current
quarter, sales that were generated through the Company's website and stimulated
by a 400,000-copy catalog mailing and advertising through Google Ad Words. There
were no sales in the prior year as the Company purchased the assets of Music For
Little People in March, 2008. Music For Little People also generated revenue
through Amazon.com, the internet distributor as an Amazon.com third-party
vendor. Sales generated in this manner were $269,161 for the current quarter.

Direct-to-consumer (returnable distributor) sales increased $121,212 from
$70,475 in the prior quarter to $191,687 in the current quarter as the Company
continued to enjoy favorable response from consumers in it first major home
shopping network initiative as a result of positive testing of Smithsonian book
and plush sets in 2007, and the addition of two new sets, created in conjunction
with the African Wildlife Foundation and the American Veterinary Medical
Association.

Several other channels of trade experienced increased sales including domestic
mass market distributors, military bases, and international direct-to-consumer
distributors. As the North American economy contracted worldwide, consumers
turned to low-priced retailers to purchase their seasonal products.

                                       16
<PAGE>
<TABLE>
<CAPTION>

                                         Sales decreases, net of
                                          provisions for returns,
                                           for the three months
                                            ended December 31,
                                       ----------------------------
Sales channel                              2008            2007           Variance       % change
---------------------------------------------------------------------------------------------------
<S>                                    <C>             <C>             <C>                  <C>
Book Clubs                             $          0         124,603    $   (124,603)            NMF

International Mass Market
Distributors                                223,373         343,126        (119,753)          -34.9%

Non-returnable Discount Retailers            39,010         136,001         (96,991)          -71.3

Domestic Warehouse Club
Distributors (returnable
& non-returnable)                             4,020          95,167         (91,147)          -95.8

Domestic Book Retailers                      12,436          74,472         (62,036)          -83.3
</TABLE>

In the December 2007 quarter there was a one-time sale of $124,603 to a school
book club that was not repeated in the current fiscal year quarter.

In the December 2007 there was also a one-time sale of $101,808 to a warehouse
club distributor that was not repeated in the current fiscal year quarter. The
warehouse club distributor, Advanced Marketing Services, filed for bankruptcy on
December 29, 2006, and was later purchased by the book distributor Baker &
Taylor.

Sales to non-returnable discount retailers declined $96,991 as a result of a
non-repeating order from the prior year that was not received in the current
quarter.

For International Mass Market Distributors, sales decreased $119,753 to $223,373
as the Company's Latin American distributor put orders on hold with the Company
as a result of the slumping Mexican economy.

For domestic book retailers, the Company's credit insurance program for the
second largest book chain was cancelled and the Company had to cease shipping
orders on open account to this chain.

Several other traditional channels of trade for books experienced decreased
sales including non-returnable discount retailers, domestic book distributors,
international trade book retailers and school & library distributors.

Nine months ended December 31, 2008

Net sales for the first nine months of fiscal 2009 increased 8.4% versus the
prior year. Sales of Disney-licensed products as a percentage of total Company
sales, decreased from 51.9% to 44.9% for the nine month period versus the
comparable period a year ago. Sesame Workshop-licensed product sales were 2.2%

                                       17
<PAGE>

of Company revenue versus 9.3% in the prior nine month period.
Smithsonian-licensed product sales as a share of total revenue were virtually
unchanged. Sales from the Company's Music For Little People product line were
19.1% of sales for the nine months. The Company acquired certain assets of Music
For Little People in March, 2008. As a result there were no sales in the prior
year.

                                 Percentage of Sales by license and/or
                                 product line for the nine months ended
                                               December 31,
                                 --------------------------------------
License                                   2008               2007
-----------------------------------------------------------------------

Disney                                         44.9%               51.9%
Smithsonian                                    22.0                22.1
Music For Little People                        19.1                 0.0
Proprietary                                    11.1                14.1
Sesame Workshop                                 2.2                 9.3
All other                                       0.7                 2.6
                                 --------------------------------------
Total                                         100.0               100.0
                                 ======================================

<TABLE>
<CAPTION>

                                          Sales increases, net of
                                          provisions for returns,
                                           for the nine months
                                            ended December 31,
                                       ----------------------------
Sales channel                              2008            2007           Variance       % change
---------------------------------------------------------------------------------------------------
<S>                                    <C>             <C>             <C>               <C>
Direct Response (MFLP)                 $    561,473    $          0    $    561,773             NMF

Internet Accounts (MFLP)                    459,640               0         459,640             NMF

Direct- to- Consumer (returnable)           514,574         116,413         398,161             NMF
</TABLE>

Music For Little People sales generated by the Company's website were $561,473
in the current year. There were no sales to this division in the prior year
since the Company purchased Music for Little People in March, 2008. Music For
Little People internet account sales were $459,640 in the current quarter,
largely generated by its internet distributor, Amazon.com. There were no sales
in the prior year as the Company purchased the Music for Little People
direct-to-consumer assets in March, 2008. Overall, for the first nine months
Music for Little People generated revenue of $1,021,113 in sales direct to the
consumer largely moving the Company towards one of its stated goal of decreasing
returnable sales as a percentage of total sales.

Direct-to-consumer returnable sales increased by $398,162 to $514,574 for the
nine months ending December 31, 2008 versus the comparable period a year ago as
a result of roll-out orders from a major television home shopping channel that
emanated from successful product testing a year ago.

                                       18
<PAGE>

Domestic mass market distributor sales were almost double the prior year's nine
month period. It appears that consumers are moving away from traditional
retailers and towards the big box retailers who are advertising best prices in
this tough economy. Consequently the Company has more Plan-o-gram items in with
the Big Box stores than in the past.

Other channels of trade experienced increased sales including domestic warehouse
club distributors, military bases, close out accounts, international mass market
retailers, international subsidiary rights sales and international
direct-to-consumer book distributor sales.

<TABLE>
<CAPTION>
                                           Sales decreases, net of
                                           provisions for returns,
                                             for the nine months
                                             ended December 31,
                                       ----------------------------
Sales channel                              2008            2007           Variance       % change
---------------------------------------------------------------------------------------------------
<S>                                    <C>             <C>             <C>               <C>
Domestic Supermarkets &
Drugstores
                                       $          0    $    426,429    $   (426,429)            NMF

International  Mass  Market
Distributors                                844,371       1,036,664        (192,293)          -18.6%

Direct-to-Consumer Book
Distributors                                412,090         548,943        (136,853)          -24.9

Book Clubs                                        0         124,603        (124,603)            NMF
</TABLE>

Domestic supermarkets and drugstore sales were $426,429 in the prior nine month
period; there were no sales in the current year due to a non-repeating order
from a major drug chain in August 2007.

Sales to international mass market distributors decreased $192,293 versus the
prior year primarily as a result of the global economic contraction, and
specifically the contracting retail market in Mexico. Direct-to-consumer book
distributor sales declined for the nine month period as well as a result of the
cessation of operations of the major display marketer and softening retail
sales. In the December 2007 quarter there was a $124,603 sale to a major book
club that was not repeated in the current year.

Other channels of trade experienced sales decreases including international
trade book distributors, domestic toy and gift retailers, domestic toy and gift
distributors, and domestic book retailers, non-returnable discount retailers,
Canadian book distributors and domestic book distributors.

                                       19
<PAGE>

COST OF SALES.

Three months ended December 31, 2008

The Company's cost of sales for the quarter ended December 31, 2008 decreased
$12,821 from $1,015,268 in the prior year to $1,002,447 in the current year, a
decrease of 1.3%, as a result of the decreased direct product costs which more
than offset increased warehousing and fulfillment expenses related to Music for
Little People. After the purchase of the direct-to-consumer assets of Music for
Little People, the Company decided to maintain the existing outsourced
fulfillment center in Missouri to avoid disruption of continuity of sales,
fulfillment and customer service as it integrated the business into the Company.
The Company believes that there are substantial cost savings to be gained once
its one year distribution agreement expires in March 2009. Cost of sales as a
percentage of net sales decreased from 60.9% to 56.2% in the current quarter as
a result of a change in the sales mix, decreased direct product costs from its
Asian-sourced books and expansive margins from selling Music for Little People
proprietary audio and Be Bop products directly to the consumer.

Nine months ended December 31, 2008

The Company's cost of sales for the nine months ended December 31, 2008
increased $235,867 from $2,631,294 in the prior year to $2,867,161 in the
current year, an increase of 9.0%, primarily as a result of a 9.2% increase in
sales and increased warehousing and fulfillment costs to service distribution of
Music for Little People direct-to-consumer products. Cost of sales as a
percentage of net sales increased from 58.2% to 58.5% in the current quarter as
a result.

GROSS PROFIT.

Three months ended December 31, 2008

The resulting gross profit for the quarter ended December 31, 2008 increased
19.7% to $781,695 versus the prior quarter's gross profit of $653,152. Gross
margin was 43.8% in the current quarter versus 39.1% in the quarter ended
December 31, 2007.

Nine months ended December 31, 2008

Gross profit for the nine months ended December 31, 2008 increased 7.5% to
$2,033,500 versus the prior year's gross profit of $1,891,612. Gross margin was
41.5% in the current year versus 41.8% for the nine months ended December 31,
2007.

                                       20
<PAGE>

SELLING, GENERAL & ADMINISTRATIVE COSTS.

Three months ended December 31, 2008

The Company's selling, general, and administrative costs increased 14.4% or
$101,921 to $810,559 for the three months ended December 31, 2008 versus
$708,638 for the three months ended December 31, 2007. As a percentage of net
sales, selling, general and administrative expenses increased from 42.5% of net
sales from the prior year to 45.4% of net sales in the current fiscal year. The
increase in selling, general and administrative expenses as a percentage of net
sales was largely due to the mail order printing and associated postage expense
attributed to the Music For Little People direct-to-consumer catalog as well as
the credit card processing fees charged to process consumer orders. In addition,
the Company outsourced customer service to its Missouri fulfillment center to
manage inbound consumer internet and mail orders. The catalog and customer
service expense was $101,016, essentially the majority of the increase in the
Company's total selling, general and administrative costs for the December
Quarter 2008.

Royalty expenses declined $40,767 to $183,232 for the current December Quarter
versus the comparable quarter a year ago or -18.2%. The decline was due to lower
licensed product sales to distributors and retailers.

Nine months ended December 31, 2008

The Company's selling, general, and administrative costs increased 7.5% or
$165,699 to $2,364,118 for the nine months ended December 31, 2008 versus
$2,198,419 for the nine months ended December 31, 2007. As a percentage of net
sales, selling, general and administrative expenses decreased from 48.6% of net
sales from the prior year to 48.2% of net sales in the current year. Again the
increase was due to the associated selling and administrative expenses with the
acquisition of the Music for Little People direct to consumer assets including
catalog expense, credit card processing fees and direct-to-consumer customer
service expense.

INCOME / LOSS FROM OPERATIONS.

Three months ended December 31, 2008

For the quarter ended December 31, 2008, the loss from operations was $28,864
versus a loss of $55,486 for the prior year's quarter.

Nine months ended December 31, 2008

For the nine months ended December 31, 2008, the loss from operations was
$330,618 versus a loss of $306,807 for the prior year.

OTHER INCOME / (EXPENSE).

Three months ended December 31, 2008

The Company's other expense for the quarter ended December 31, 2008 was $24,709
versus $9,890 for the quarter ended December 31, 2007.

                                       21
<PAGE>

Nine months ended December 31, 2008

The Company's other expense for the nine months ended December 31, 2008 was
$28,713 versus $62,312 for the six months ended December 31, 2007.

NET LOSS.

Three months ended December 31, 2008

As a result of the items discussed above, the Company's net loss for the quarter
ended December 31, 2008 was $4,155 compared to net loss of $65,376 for the
comparable prior quarter.

Nine months ended December 31, 2008

As a result of the items discussed above, the Company's net loss for the nine
months ended December 31, 2008 was $359,331 compared to a net loss of $369,119
for the comparable prior nine months.

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

In June 2006, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 48, "Accounting for Uncertainty in Income Taxes, an
Interpretation of FASB Statement No. 109" (FIN 48), which clarifies the
accounting for uncertainty in tax positions. FIN 48 requires the recognition of
a tax position when it is more likely than not that the tax position will be
sustained upon examination by taxing authorities, based upon the technical
merits of the position. The provisions of FIN 48 are effective for the Company
on April 1, 2007. The Company does not expect the adoption of FIN 48 to have a
material impact on the financial statements.

In September 2006, the FASB issued Statement of Financial Accounting Standards
(SFAS) No. 157, "Fair Value Measurements" (SFAS 157), which provides guidance
for using fair value to measure assets and liabilities. SFAS 157 defines fair
value and establishes a framework for measuring fair value; however, SFAS 157
does not expand the use of fair value in any new circumstances. The provisions
of SFAS 157 are effective for the Company on April 1, 2008. The Company does not
expect the adoption of SFAS 157 to have a material impact on the financial
statements.

In February 2007, FASB issued SFAS No. 159, "The Fair Value Option for Financial
Assets and Financial Liabilities" (SFAS 159), which permits entities to choose
to measure many financial assets and liabilities at fair value. The fair value
option may be applied, subject to certain exceptions, on an instrument by
instrument basis; is irrevocable; and is applied only to entire instruments and
not to portions of instruments. The provisions of SFAS 159 are effective for us
as of April 1, 2008. This does not have a material impact on our financial
statements.

                                       22
<PAGE>

In December 2007, the FASB issued SFAS No. 141(R), "Business Combinations" (SFAS
141(R)), which establishes principles and requirements for how the acquirer of a
business recognizes and measures in its financial statements the identifiable
assets acquired, the liabilities assumed, and any non-controlling interest in
the acquiree. The Statement also provides guidance for recognizing and measuring
the goodwill acquired in the business combination and determines what
information to disclose to enable users of the financial statements to evaluate
the nature and financial effects of the business combination. SFAS 141(R) is
effective for us as of April 1, 2009. The provisions of SFAS 141(R) will impact
us only if we are party to a business combination after SFAS 141(R) has been
adopted.

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.

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.

                                       23
<PAGE>

Liquidity and Capital Resources
<TABLE>
<CAPTION>

                                              For the quarters
                                             ended December 31,
                                       ----------------------------
                                           2008            2007           Variance       % change
---------------------------------------------------------------------------------------------------
<S>                                    <C>             <C>             <C>               <C>

Net assets (deficiency)                $   (501,331)   $    146,966    $   (648,297)            NMF

Working capital (deficiency)             (1,689,672)       (204,612)     (1,485,060)            NMF

Accounts receivable, net                  1,534,000       1,903,304        (369,304)          -19.4%

Accounts payable and  accrued
expenses                                  1,765,002       1,496,968         268,034            17.9%

Royalties and commissions payable           436,658         471,368         (34,710)           -7.4%
</TABLE>

At December 31, 2008 the Company had a deficiency of net assets of $501,331
versus net assets of $146,966 at December 31, 2007. Working capital deteriorated
by $1,485,060 from a deficiency of $204,612 to a deficiency of $1,689,672 at
December 31, 2008.

Accounts receivable decreased from $1,903,304 at December 31, 2007 to $1,534,000
at December 31, 2008, a decrease of $369,304. Accounts payable and accrued
expenses increased $268,034 versus the prior year from $1,496,968 to $1,765,002
at December 31, 2008. Royalties and commissions payable decreased $34,710 versus
the prior year from $471,368 at December 31, 2007 to $436,658 at December 31,
2008 primarily as a result of the sales mix and the decreased level of sales.

On March 7, 2008 the Company purchased certain direct-to-consumer and school and
library assets from the children's audio publisher, Musical Kidz LLC doing
business as Music for Little People. The acquired assets included trademark
rights, its mail order catalog, house mailing list, email addresses, and the
URLs for Music for Little People (http://www.musicforlittlepeople.com). Musical
Kidz is the publisher of children's music distributed on the record label, Music
for Little People (MFLP). The Company also purchased $100,000 of inventory (see
the Company's Annual Report on Form 10-KSB for the year ended March 31, 2008 for
more information).

In December, 2008 the Company recorded a $55,000 gain on debt extinguishment.
This debt related to a former joint venture partner that filed for bankruptcy in
the republic of South Africa. A principal shareholder has indemnified the
Company against any future claims from this gain on extinguishment.

                                       24
<PAGE>

Expected cash flows from operations supplemented by anticipated 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 bank credit facility of $850,000, if sales are to be maintained.
In addition, the Company can not expect future loans from the Company's
principal shareholder. The Company continues to explore alternative financing
options in the event that cash flow does not materialize in line with current
expectations.

On February 4, 2009 the Company announced that it had entered into a Letter of
Intent providing for PCS Edventures!.com, Inc. ("PCS"), an Idaho corporation, to
acquire substantially all of the assets and assume certain liabilities of Trudy.
An 8K with a copy of the Letter of Intent was filed with the SEC on February 9,
2009.

As of February 14, 2009, the balance on the Company's revolving line of credit
was $789,706 out of $850,000 available. As of December 31, 2008 the balance on
the Company's revolving line of credit was $563,706 out of $850,000 available to
the Company. This note is due at the end of February, 2009 and the Company is
currently in discussions with it Bank.

As of February 18, 2009 the Company's backlog was approximately $2,186,500

In the most recent quarter the Company received an additional $103,829 in
short-term notes from its principal shareholder (William W. Burnham, Chairman of
the Board). These notes are demand notes.


                                       25
<PAGE>

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, 2008 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.


                            PART II OTHER INFORMATION

Item 1. Legal Proceedings

On January 6, 2009 the Company was sued in the Superior Court of California for
breach of contract. The Company and legal counsel are of the opinion that the
complaint is without merit and the final resolution of the litigation will not
have a material adverse impact on the Company.

Item 2. Changes in Securities

None.

Item 3. Defaults upon Senior Securities

None

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<PAGE>

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

None

Item 5. Other Information

None

Item 6. Exhibits

Exhibit No.

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

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

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

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

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

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

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

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

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

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

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<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, 2009                By: /s/ Ashley C. Andersen Zantop
                                          -------------------------------------
                                          Ashley C. Andersen Zantop,
                                          President, Chief Executive Officer


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