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 September 30, 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
                                December 23, 2002
               Common Stock, $.0001 par value: 442,460,249 shares
<PAGE>

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

                          PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

     Consolidated Balance Sheet - September 30, 2002 (unaudited) ......   3

     Consolidated Statements of Operations (unaudited) for the six
         and three months ended September 30, 2002 and
         September 30, 2001 ...........................................   4
     Consolidated Statements of Cash Flows (unaudited) for the six
         and three months ended September 30, 2002 and
         September 30, 2001 ...........................................   5

     Consolidated Statement of Shareholders' Deficit (unaudited)
         from April 1, 2002 through September 30, 2002 ................   6

     Notes to Financial Statements (unaudited) ........................   7

Item 2.  Management's Discussion and Analysis .........................  10


                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings ............................................  12

Item 2.  Changes in Securities ........................................  12

Item 3.  Defaults upon Senior Securities ..............................  12

Item 4.  Submission of Matters to a Vote of Security Holders ..........  12

Item 5.  Other Information ............................................  12

Item 6.  Exhibits and Reports on Form 8-K .............................  12

                                        2
<PAGE>
<TABLE>
<CAPTION>
                        Trudy Corporation and Subsidiary
                           Consolidated Balance Sheet

                                                                        September 30,
                                                                             2002
                                                                         -----------
                                                                         (Unaudited)
<S>                                                                      <C>
Assets
Current assets:
Cash and cash equivalents                                                $   107,610
Accounts receivable, net of allowance for doubtful accounts of $60,000       772,080
Inventories                                                                1,375,946
Prepaid expenses and other current assets                                    286,068
                                                                         -----------
Total current assets                                                       2,541,704

Goodwill                                                                     257,931
Equipment, net                                                               130,848
Royalty advances, net                                                         42,807
Organization costs, net                                                        4,066
Pre-publication costs and other assets, net                                  266,728
                                                                         -----------
Total assets                                                             $ 3,244,084
                                                                         ===========

Liabilities and shareholders' equity
Current liabilities:
Notes payable - shareholder/officer and related party                    $   374,800
Accounts payable and accrued expenses                                        997,440
Royalties and commissions payable                                            213,796
Due to The Chart Studio (Pty) Ltd.                                            43,062
                                                                         -----------
Total current liabilities                                                  1,629,098

Long-term liabilities:
Notes payable - shareholder/officer and related parties                    1,733,104
Loan from The Chart Studio (Pty) Ltd.                                        282,931
Royalties payable                                                             30,741
                                                                         -----------
Total long-term liabilities                                                2,046,776
                                                                         -----------
Total liabilities                                                          3,675,874

Minority interest                                                              2,420

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                                                       (5,423,720)
                                                                         -----------
Total shareholders' deficit                                                 (434,210)
                                                                         -----------
Total liabilities and shareholders' deficit                              $ 3,244,084
                                                                         ===========
</TABLE>


          See accompanying summary of accounting policies and notes to
                              financial statements

                                       3
<PAGE>
<TABLE>
<CAPTION>
                                       Trudy Corporation and Subsidiary
                                     Consolidated Statements of Operations



                                                     Three Month Period                 Six Month Period
                                                     Ended September 30,               Ended September 30,
                                               ------------------------------    ------------------------------
                                                   2002             2001             2002             2001
                                               -------------    -------------    -------------    -------------
                                                (Unaudited)      (Unaudited)      (Unaudited)       (Unaudited)

<S>                                            <C>              <C>              <C>              <C>
Net sales                                      $     963,934    $   1,354,722    $   1,559,138    $   1,679,652
        Cost of sales                                772,884          873,220        1,120,164        1,131,974
                                               -------------    -------------    -------------    -------------
Gross profit                                         191,050          481,502          438,974          547,678

Operating expenses:
        Selling, general and administrative          428,449          351,272          829,898          582,116
        Depreciation and amortization                 14,966            5,822           29,133           11,643
                                               -------------    -------------    -------------    -------------
Loss from operations                                (252,365)         124,408         (420,057)         (46,081)

Other income (expense):
        Interest, net                                (30,714)          (8,075)         (42,373)         (11,360)
        Royalties, net                               (11,154)         (14,707)         (19,075)           9,717
        Other income (expense)                         4,740                             5,011
        Gain/(loss) in equity investment              (2,521)                                           (22,288)
        Minority interest income                      (2,420)                           (2,420)
                                               -------------    -------------    -------------    -------------
Net loss                                       $    (294,434)   $     101,626    $    (478,914)   $     (70,012)
                                               =============    =============    =============    =============

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 policies and notes to
                              financial statements

                                       4
<PAGE>
<TABLE>
<CAPTION>
                        Trudy Corporation and Subsidiary
                      Consolidated Statements of Cash Flows

                                                                Six Month Period Ended September 30,
                                                                       2002             2001
                                                                  --------------    --------------
                                                                    (unaudited)       (unaudited)
<S>                                                               <C>               <C>
Operating activities
Net loss                                                          $     (478,914)   $      (70,012)
Adjustments to reconcile net loss to net cash used in
operating activities:
 Depreciation                                                             29,133            11,643
 Amortization of pre-publication costs                                    16,246            17,000
 Amortization of organization costs                                          124
 Provision for losses on accounts receivable                                                 10,000
 Provision for slow moving inventory                                      70,662           (15,000)

Changes in operating assets and liabilities:
 Accounts receivable                                                     348,815          (670,476)
 Advances to Studio Mouse LLC                                             (6,081)          (28,059)
 Due to Chart Studio (Pty) Ltd.                                           (1,050)
 Inventories                                                            (276,457)          (50,178)
 Prepaid expenses and other current assets                               (67,780)         (436,990)
 Accounts payable and accrued expenses                                   284,302           429,469
 Royalties and commissions payable                                       (85,923)          102,137
                                                                  --------------    --------------
Net cash used by operating activities                                   (166,923)         (700,466)

Investing activities:
 Net assets acquired from Studio Mouse                                    11,042
 Purchases of property and equipment                                     (12,069)          (26,058)
 Pre-publication and royalty advances, net                               (81,833)          (88,256)
                                                                  --------------    --------------
Net cash used by investing activities                                    (82,860)         (114,314)

Financing activities:
 Proceeds from short-term debt                                                              467,842
 Repayments of short-term debt                                          (300,000)
 Repayments to related parties                                           (35,381)
 Proceeds from related parties                                           690,000           102,236
                                                                  --------------    --------------
Net cash provided by financing activities                                354,619           570,078
                                                                  --------------    --------------

Net increase (decrease) in cash and cash equivalents                     104,836          (244,702)
Cash and cash equivalents at beginning of period                           2,774           394,851
                                                                  --------------    --------------
Cash and cash equivalents at end of period                        $      107,610    $      150,149
                                                                  ==============    ==============
</TABLE>

          See accompanying summary of accounting policies and notes to
                              financial statements

                                       5
<PAGE>
<TABLE>
<CAPTION>
                        Trudy Corporation and Subsidiary
            Consolidated Statement of Shareholders' Equity (Deficit)


                                                             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)
                                ===========   ===========   ===========   ===========    ===========
</TABLE>


          See accompanying summary of accounting policies 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' product is sold under the trade names of both
Soundprints and Studio Mouse (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 six months ended
September 30, 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 six months ended September 30, 2001 do
not reflect the balances of Studio Mouse, LLC.

The Company, without Studio Mouse, LLC, 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.

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 becomes 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
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.

                                        8
<PAGE>

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. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of," 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 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, 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.

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.

                                       10
<PAGE>

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
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 and 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 at a level of
reporting referred to as a reporting unit. The adoption of SFAS No. 142 is
expected to have a significant impact on the Company's financial statements.

                                       11
<PAGE>

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 September 30, 2002 or
September 30, 2001.

Reclassifications

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

3.   Inventories

Inventories consist of the following:

                                       12
<PAGE>

         Raw Materials              $    81,790
         Finished Goods               1,294,156
                                    -----------
         Inventory Value            $ 1,375,946
                                    ===========


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 $282,931. In accordance with FAS
No. 142, "Goodwill and Other Intangible Assets," the Company will not amortize
goodwill, but will instead evaluate it for impairment on a periodic basis. As of
September 30, 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.

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:

                                       13
<PAGE>

     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.

7.   Subsequent Events

     A.   Subsequent to September 30, 2002, the Company borrowed approximately
          $315,000 from a principal shareholder/officer in order to pay its
          vendors and to finance the purchase of inventory. The same principal
          shareholder/officer was also repaid $10,000 toward another
          pre-existing loan.

     B.   On December 4, 2002, William W. Burnham, President and CEO, gifted
          Ashley C. Andersen, Executive Vice President and Publisher, 2,000,000
          shares of registered common stock. This was part of Ms. Andersen's
          bonus compensation and merit increase due to her promotion to
          Executive Vice President. Such gift was made via a transfer,
          representing neither an increase in the authorized nor and increase in
          the outstanding shares of the Company's stock.

                                       14
<PAGE>

Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS

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

NET SALES. The Company's net sales for the quarter ended September 30, 2002 were
$963,934. Of this figure $888,389 in net sales are attributed to Trudy, d/b/a
Soundprints, compared to Trudy's net sales of $1,354,722 for the prior year's
quarter ended September 30, 2001, a decrease of $466,333 or 34.4%. For Trudy,
2002 year-to-date sales decreased $196,059 from $1,679, 652 to $1,483,593 from
the first 6 months of 2001. This represents a decrease of 11.7%. Trudy's gross
revenues for the quarter were $1,125,963, or a 26.5% decrease versus September
Quarter, 2001. This represents a 1.0% increase in sales of $19,849 for the
year-to-year comparison. For the quarter ended September 30, 2002, the decrease
in overall net sales was due for the most part to a reduction in net sales from
the Mass Merchant division. In September Quarter, 2001, the company received and
shipped a large order to Costco Wholesale, the largest of the three warehouse
clubs. No such order was received for the comparable 2002 Quarter. Of the
$466,333 decline in Trudy's overall net sales in the current quarter versus the
comparable period a year ago, $442,666 can be traced to the Mass Merchant
division primarily due to the lack of a re-order from Costco and the $66,784 to
the time-deffered and reduced quantity mailing of Trudy's consumer and library
direct response catalog in the Direct Response division. In 2001, the direct
mail catalog fared poorly in sales due to the catalog's receipt in home during
the 9/11 terrorist attacks. Consequently, the catalog quantity for 2002 was
reduced 70% and deffered to the last week of September to avoid the 9/11
anniversary week.

In other sales divisions increases in sales were broad-based across the
Company's many channels of trade. Book distributors, toy and gift stores,
museums, dealer catalogs, and library distributors posted increases in sales
from 16% to well over 100%, stimulated by the rebuilding efforts in the areas of
personnel, trade shows and product development of the past year and spurred on
by the $1MM recapitalization of the company in March, 2001.

After elimination of inter-company sales transactions net sales for Studio
Mouse, LLC for the quarter ending Septmeber 30, 2002 were $75,545 or 7.8% of the
Company's total net sales.

COST OF SALES. The Company's cost of sales for the quarter ended September 30,
2002 was $772,884. Of this figure, Trudy accounted for a total cost of sales for
the quarter of $714,451 compared to $873,220 for the comparable prior year
quarter, a decrease of $158,769. For the year-to-date, total cost of sales
decreased from $1,131,974 in 2001 to $1,061,731 in 2002, a reduction of 6.2%, or
$70,244. For the quarter ended September 30, 2002, the decrease in cost of sales
was largely a result of the decreased revenue this Quarter and reallocation of
the salary of the Company's Publisher from Product Development to SG & A. As a
percent of Trudy's net sales, cost of sales for the quarter ended September 30,
2002 was 80.4% as compared to 64.5% for the comparable quarter a year ago. For

                                       15
<PAGE>
the year-to-date period, cost of sales as a percentage of net sales increased
from 67.4% in 2001 to 71.6% in 2002. 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 for the quarter increased from 42.6% of net sales in the September
Quarter, 2001 to 49.0% for this Quarter. For the year to date, direct product
costs decreased $111,197, or 13.3%, from $836,943 in 2001 to $725,746 in 2002.
The increase for the quarter was the result of a change in the sales mix among
divisions resulting from the reduction in catalog quantities and a delay in the
mailing to late September of company's mail order catalog which traditionally
generates revenue with an average cost of sales of 20% or less. In addition the
company accepted and shipped a large international order amounting to $290M for
which the company acted as the production and billing agent for merchandise
proprietary to the customer. This order resulted in a cost of goods of 19.6%.

After elimination of inter-company sales transactions cost of sales for Studio
Mouse for the quarter ended September 30, 2002 were $58,434 or 7.8% of the
Company's total cost of sales.

GROSS PROFIT. As a result of the changes in net sales and cost of sales, Trudy's
gross profit for the quarter ended September 30, 2002 decreased $307,563 to
$173,939 from $481,502 in the prior year's comparable Quarter. This represented
19.6% of sales for the quarter ended September 30, 2002 versus 35.5% for the
prior year's respective period. As explained in COST OF SALES, the decrease in
Gross Profit versus the year ago was a result of lower sales and lower margin
sales. In addition, the reserve for inventory obsolescence increased by $55,662.
Gross profit for the year ended September 30, 2002 decreased $125,815 to
$421,862 from $547,678, a decrease of 23.0%. This represented 28.4% of sales for
the six month period ended September 30, 2002, versus 32.6% for the prior year's
respective period.

The Company's consolidated gross profit for the quarter ended September 30,
2002 was $191,050. After elimination of inter-company sales transactions, Studio
Mouse's gross profit was $17,111 or 8.9% of the total gross profit.

SELLING, GENERAL, AND ADMINISTRATIVE. The Company's selling, general and
administrative costs for the quarter ended September 30, 2002 was $428,449. Of
this figure, Trudy's selling, general, and administrative expenses for the
quarter increased by $59,252 to $410,524 compared to $351,272 for the quarter
ended September 30, 2001. As a percentage of net sales, Trudy's SG&A expenses
increased from 25.9% of net sales in the quarter ending September 30, 2001 to
46.2% for the comparable quarter this year. The increase in SG & A was due in
part to increased salary expenses of $31,050. This increase arises from a
reclassification of salary of the Company's Publisher from Product Development
to executive salaries owing to a promotion and standard miscellaneous merit
increases for all related staff. The total increase in SG & A is also
attributable to increases in the costs of accounting services, taxes and
insurance ($45,702). There were no taxes paid in the quarter ended September 30,
2001, the last year of a Connecticut real estate tax abatement program. For the
6 month period ended September 30, 2002, selling, general and administrative
costs increased $229,856 to $811,972 from $582,116, a 39.5% increase.

The higher level of expenses also reflects the final amortization of costs
associated with printing, mailing and sales administration of the direct mail
order catalog in September of 2001, which numbered 1.5 million catalogs. This
program failed to generate its projected revenue due to the catalog's receipt in
homes during the 9/11 terrorist attacks on New York City and Washington, D.C..
Total cost for the direct mail catagory for the September Quarter 2002 was
$61,995 of which $55,749 was attributable to the 2001 mailing. The direct mail
program for 2002 was restructured to allow for a reduced mailing, better graphic
design and a later mailing in September with the objective to return the catalog
to profitability and to provide marketing support and ease of customer use to
the company's e-commerce website.

Trudy's royalty expenses declined due to lower sales and increased sales of
non-royalty bearing book and toy products. As a percentage of gross sales, the
royalty expense decreased to 2.7% versus 6.3% in the comparable year ago period.

                                       16
<PAGE>

Exhibit & Shows expenditures increased $29,071 versus the prior year respective
period. These expenses were the result of the Company's strategy to prospect and
generate more sales in the Toy, Gift, Book and Library markets, where the
company has demonstrated broad based sales increases and a result of expenses
not realized in the previous quarter ending June 30, 2002.

After elimination of inter-company transactions, Studio Mouse accounted for
$17,925 or 4.1% of the Company's total selling, general and administrative
expenses.

INTEREST INCOME/EXPENSE. The Company's interest expense (net) for the quarter
ended September 30, 2002 was $30,714. Of this total expense, Trudy's interest
expense (net) for the quarter increased $21,648 from an expense of $8,136 for
the same quarter in 2001 to 29,783. The increase in interest expense for the
quarter ended September 30, 2002 was primarily a result of the reduction in
interest income from customer accounts and a result of increased borrowings. For
the quarter ended September 30, 2002, Studio Mouse had an interest expense of
$931. For the six month period ended September 30, 2002, interest expense
increased $33,212 to $44,574 from $11,362 for the prior year's respective
period.

ROYALTY INCOME/EXPENSE. Royalty income for the quarter ended September 30, 2002
increased by $11,995 to $18,995 versus $7,000 for the comparable period last
year. Royalty income for the six month period ended September 30, 2002 increased
$18,697 to $50,943 from $32,246. Royalty expenses of $11,154 for the current
quarter decreased by $10,497 versus the September Quarter, 2001. For the six
month period ended September 30, 2002 royalty expense increased $27,290 from
$23,732 to $51,022. The increase in royalty expenses this year is primarily
attributable to the timing in which these expenses occurred. Most were realized
during the quarter ended March 31 2002 and were associated with Studio Mouse LLC
and other subsidiary licensing agreements, which have increased substantially in
number from the prior year's quarter.

GAIN/LOSS IN EQUITY INVESTMENT. For the six month period ended September 30,
2002, Trudy's 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 September 30, 2002 was $294,434 compared to net income of
$101,623 for the comparable prior year quarter. Of the total net loss for this
quarter, Trudy accounted for a loss of $277,050. For the six month period ended
September 30, 2002, the Company's net income decreased from $70,012 to $478,914
versus the prior year's respective period, a decrease, a decrease of $408,902.

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 142, which will 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

                                       17
<PAGE>

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 becomes 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, both of
which have been paid back as of July 24, 2002. These loans were collateralized
and secured by the principal-shareholder-officer's personal assets. However, the
interest rates were over 8%. Future funding for the company for the foreseeable
future will be by a principal shareholder/officer at more favorable rates. In
July through December, the Company borrowed $961,000 from a principal
shareholder/officer in order to pay its vendors and to finance the purchase of
inventory to meet its sales order backlog. The Company's sales order backlog as
of December 20, 2002 was approximately $831,000. Subsequent to September 30,
2002, the principal shareholder/officer was repaid $10,000 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.

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

                                       18
<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, 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).

                                       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: December 23, 2002                By: /s/ WILLIAM 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: December 23, 2002


                                       /s/ WILLIAM W. BURNHAM
                                       -----------------------------------------
                                       William W. Burnham,
                                       Principal Executive Officer




I,  Ashley C. Andersen, 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: December 23, 2002


                                       /s/ ASHLEY C. ANDERSEN
                                       -----------------------------------------
                                       Ashley C. Andersen
                                       Acting Principal Financial Officer

                                       23