SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

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


                       For the Quarter Ended June 30, 2007


                           Commission File No. 0-16056


                                TRUDY CORPORATION
                                 353 Main Avenue
                                Norwalk, CT 06851


                      Incorporated in the State of DELAWARE


                      Federal Identification No. 06-1007765


                            Telephone: (203) 846-2274


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


                              SHARES OUTSTANDING AT
                                 August 14, 2007
               Common Stock, $.0001 par value: 612,566,330 shares

<PAGE>

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

                  PART I.  FINANCIAL INFORMATION

Item 1. Financial Statements

      Balance Sheet - June 30, 2007 (unaudited)                              3

      Statements of Operations (unaudited) for the three months
                  ended June 30, 2007 and June 30, 2006 (unaudited)          4

      Statements of Cash Flows (unaudited) for the three months
                  ended June 30, 2007 and June 30, 2006 (unaudited)          5

      Statement of Shareholders' Equity (unaudited) from
                  April 1, 2007 through June 30, 2007                        6

      Notes to Financial Statements (unaudited)                              7

Item 2. Management's Discussion and Analysis                                15


                  PART II.  OTHER INFORMATION

Item 1. Legal Proceedings                                                   22

Item 2. Changes in Securities                                               23

Item 3. Defaults upon Senior Securities                                     23

Item 4. Submission of Matters to a Vote of Security Holders                 23

Item 5. Other Information                                                   23

Item 6. Exhibits and Reports on Form 8-K                                    23


                                       2
<PAGE>

                                Trudy Corporation
                                  Balance Sheet
                                  June 30, 2007

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

Current assets
  Cash and cash equivalents                                         $    46,584
  Accounts receivable, net                                            1,091,152
  Inventory, net                                                      1,568,688
  Prepaid expenses and other current assets                              65,732
                                                                    -----------

    Total current assets                                              2,772,156

  Equipment, net                                                         55,925
  Royalty advances, net                                                 215,404
  Prepublication costs and other assets, net                            494,963
                                                                    -----------

    Total other assets                                                  766,292
                                                                    -----------

    Total assets                                                    $ 3,538,448
                                                                    ===========

Liabilities and shareholders' equity

Current liabilities
  Notes payable - Bank & related parties                            $ 1,674,362
  Current portion, long term debt                                        14,689
  Accounts payable and accrued expenses                               1,227,675
  Royalties and commissions payable                                     303,222
                                                                    -----------

    Total current liabilities                                         3,219,948

Long term liabilities
  Long term debt, net of current portion                                243,038
                                                                    -----------

Total long term liabilities                                             243,038
                                                                    -----------

Total liabilities                                                     3,462,986

Commitments

Shareholders' equity
Common stock - par value
$0.0001, authorized 850,000,000                                          61,257
Paid-in capital                                                       6,931,881
Accumulated deficit                                                  (6,917,676)

Total shareholders' equity                                               75,462
                                                                    -----------

Total liabilities and shareholders' equity                          $ 3,538,448
                                                                    ===========

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

                                       3
<PAGE>
                                Trudy Corporation
                             Statement of Operations
              For the Quarters Ended June 30, 2007 & June 30, 2006


                                                     Three Month Period
                                                        Ended June 30,
                                                 ------------------------------
                                                     2007              2006
                                                 -------------    -------------
                                                  (unaudited)      (unaudited)

Net Revenue
  Net product sales                              $     971,082    $     855,337
  Net royalty sales                                      5,817           44,514
                                                 -------------    -------------

Net sales                                              976,899          899,851

Cost of sales                                          651,820          597,727
                                                 -------------    -------------

Gross profit                                           325,079          302,124

Operating expenses
  Selling, general and administrative                  732,732          597,099
                                                 -------------    -------------

Loss from operations                                  (407,653)        (294,975)

Other income/(expense)
  Interest, net                                        (34,914)         (40,889)
  Other income/(expense), net                            1,942          (13,617)
                                                 -------------    -------------

Other expense                                          (32,972)         (54,506)
                                                 -------------    -------------

Net loss                                         $    (440,625)   $    (349,481)
                                                 =============    =============

Basic and diluted net loss per share             $          --    $          --
                                                 =============    =============

Weighted average number of shares outstanding      612,566,330      458,734,057
                                                 =============    =============

    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 June 30, 2007





                                             Common Stock          Additional                      Total
                                       -------------------------    Paid-in      Accumulated    Shareholders'
                                          Shares        Amount      Capital        Deficit        Equity
                                       -----------   -----------   -----------   -----------    -----------
<S>                                    <C>           <C>           <C>           <C>            <C>
Balance at March 31, 2007 (audited)    612,556,330   $    61,257   $ 6,931,881   $(6,477,051)   $   516,087

Net loss (unaudited)                                                                (440,625)   $  (440,625)

                                       -----------   -----------   -----------   -----------    -----------
Balance at June 30, 2007 (unaudited)   612,556,330   $    61,257   $ 6,931,881   $(6,917,676)   $    75,462
                                       ===========   ===========   ===========   ===========    ===========
</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 Three Months Ended
                                                           -----------------------------
                                                              2007              2006
                                                           ------------     ------------
                                                           (unaudited)      (unaudited)
<S>                                                        <C>              <C>
Cash Flows From Operating Activities
Net loss                                                   $   (440,625)    $   (349,481)
Adjustments to reconcile net loss to net cash
used in operating activities:
  Depreciation                                                    3,248            5,026
  Amortization of pre-publication costs                          66,595          (27,989)
  Provision for losses on accounts receivable                        72           (4,943)
  Provision for promotional allowance                           (32,556)           2,810
  Provision for sales returns                                    (9,227)        (123,707)
  Consulting fee                                                 32,813           22,697

Changes in operating assets and liabilities:
  Decrease in accounts receivable                               630,804          800,464
  Increase in inventories                                      (106,876)         (11,897)
  Decrease in prepaid expenses and other current assets          74,344           15,310
  Decrease in accounts payable and accrued expenses            (159,810)        (259,303)
  Decrease in royalties and commissions payable                (170,926)         (72,182)
                                                           ------------     ------------
Net cash used by operating activities                          (112,144)          (3,195)

Investing activities:
  Purchases of property and equipment                            (4,729)         (45,300)
  Pre-publication and royalty advances                          (46,621)          67,985
                                                           ------------     ------------
Net cash (used) / provided by investing activities              (51,350)          22,685

Financing activities:
Net change in note payable, bank                                264,081            9,755
Repayments to related parties                                   (29,757)         (29,851)
                                                           ------------     ------------
Net cash provided/(used) by financing activities                204,567          (20,096)
                                                           ------------     ------------

Net increase / (decrease) in cash and cash equivalents           41,072             (606)
Cash and cash equivalents at beginning of period                  5,753           10,461
                                                           ------------     ------------
Cash and cash equivalents at end of period                 $     46,825     $      9,855
                                                           ============     ============

Cash paid for interest                                     $     35,401     $     25,799
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 and audiobooks and designs, manufactures and markets plush
stuffed animals for sale to domestic and international retail and wholesale
customers. The Company's products are sold under the trade names (i.e. imprints)
of Studio Mouse, Soundprints, Little Soundprints and Fetching Books.

The accompanying unaudited financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of America
and with the instructions to Form 10-QSB and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by accounting principles generally accepted in the United States of America for
complete financial statements. In the opinion of management, all adjustments
(including normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three month period
ended June 30, 2007 are not necessarily indicative of the results that may be
expected for the year ending March 31, 2008. 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, 2007.

2. Reclassifications

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

3. 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.

                                       7
<PAGE>

Cash and Cash Equivalents

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

Credit Risk

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

Inventories

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

Equipment

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

Fair Value of Financial Instruments

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


Pre-Publication Costs

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

                                       8
<PAGE>

Intangible Assets

As a result of the merger of Studio Mouse, LLC into the Company effective March
31, 2005, an intangible asset was recorded as a result of the premium paid due
to the non-exclusive license granted by Disney Licensed Publishing, an imprint
of Disney 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.

Long-Lived Assets

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

Revenue

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

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

Royalties

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


                                       9
<PAGE>

Government Taxes

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

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

                                       10
<PAGE>

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.

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 $5,375 and $7,636 for
the three month periods ended June 30, 2007 and 2006, respectively.

Other advertising expense was $550 for the three month period ended June 30,
2006. There was no advertising expense in the current period.

4.  Accounts Receivable

Advanced Marketing Services, Inc. (AMS), one of the Company's largest customers,
filed for bankruptcy in December 2006. In March 2007, AMS' wholesale
distributing business and related assets were sold to Baker & Taylor, which
formed Baker & Taylor Marketing Services (BTMS) to ship product to the warehouse

                                       11
<PAGE>

clubs. The Company does not anticipate this change will have a long term
negative impact on sales to this customer despite temporary reductions in
business in the short term. In May 2007 the Company signed returns program
agreements with AMS, to return a significant amount of inventory which will
offset the outstanding receivable. The Company had lowered its net outstanding
receivables from AMS to $213,000. Based on the information currently available
the Company believes its reserves are sufficient to cover any reduction in
receivables that may result from any bankruptcy settlement and the pending
returns.

5. Inventories

Inventories consist of the following:

         Raw Materials                                             $     52,666
         Finished Goods                                               1,836,022
         Reserve for Obsolescence                                      (320,000)
                                                                   ------------
         Inventory                                                 $  1,568,688
                                                                   ============

6. Notes Payable, Bank and Related Parties

         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)                           $    734,206

         Note payable, bank, due on demand with a maturity
         of August 31, 2007 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)                                                         100,000

         Notes payable to a principal shareholder (William
         W. Burnham, Chairman of the Board) due August 31,
         2007. Interest is payable monthly at 6.50%                     234,000

         Note payable, bank, due on demand. Interest is
         payable monthly at LIBOR plus 1%. The note is
         secured by a personal guarantee of a principal
         shareholder (William W. Burnham, Chairman of the
         Board)                                                         593,631

         Note payable, affiliate, payable in monthly
         installments of $1,252. The note is unsecured                   12,525

                                                                   ------------
                                  Total                            $  1,674,362
                                                                   ============

                                       12
<PAGE>

7. Long term debt

         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, Chairman of the Board).                   257,727

                      Less current portion                              (14,689)
                                                                   ------------
                      Total                                        $    243,038
                                                                   ============

The scheduled principal payments on long term debt follow:
         Year ending June 30, 2008                                 $     14,689
         Year ending June 30, 2009                                      243,038
                                                                   ------------
               Total                                               $    257,727
                                                                   ============

8.   Income Taxes

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

                                                        June 30, 2007                  June 30, 2006
                                                  ---------------------------    ---------------------------
                                                     Current       Deferred        Current        Deferred
                                                  ------------   ------------    ------------   ------------
<S>                                               <C>            <C>             <C>            <C>
Income tax expense (benefit) before
application of operating loss carryforwards       $          0   $   (176,000)   $          0   $   (140,000)

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

Change in valuation allowance                                0        176,000               0        140,000
                                                  ------------   ------------    ------------   ------------
Income tax expense (benefit)                      $          0   $          0    $          0   $          0
                                                  ============   ============    ============   ============
</TABLE>

                                       13
<PAGE>

The deferred taxes are comprised of the following at June 30, 2007:

         Net operating loss carryforwards                          $  1,411,000
         Reserves and allowances                                        417,000
                                                                   ------------

         Total deferred tax assets                                    1,828,000
         Less valuation allowance                                    (1,828,000)
                                                                   ------------

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

The deferred tax asset represents expected future tax savings resulting from the
Company's reserves and allowances expensed for financial reporting purposes but
not for tax purposes and net operating loss carryforwards. As of June 30, 2007,
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.

9. Related Party Transactions

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

The Main Avenue property leased by the Company is owned by a Connecticut limited
liability company, Noreast Management LLC, which is owned jointly by William W.
Burnham, the Chairman of the Company, Peter Ogilvie, a former Director and
Officer of the Company, and Fred M. Filoon, a Director of the Company. Rent
expense totaled $23,743 for the three month periods ended June 30, 2007 and
2006.

In November, 2006 the Company borrowed $260,000 from William W. Burnham, the
Chairman of the Company and the principal shareholder. The terms of the note can
be found in Note 5 to the financial statements.

Interest to related parties totaled $13,133 and $15,066 for the three months
ended June 30, 2007 and 2006, respectively. Repayments to related parties
totaled $26,000 for the three months ended June 30, 2007.

The Board of Directors authorized at its Board Meeting held June 19, 2006 that
William W. Burnham would be paid a fee, quarterly, for his personal guarantees
of the Company's debt. Guarantor fees paid to Mr. Burnham for the three months
ended June 30, 2007 were $5,097.


                                       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 June Quarter of fiscal 2008 increased 8.6% versus
the comparable quarter of fiscal 2007. This is primarily a result of revenue
increases among domestic direct-to-consumer book distributors and the Company's
international mass market distributors, including customers in Latin America and
Spain. The increases were broad-based across the Company's major product lines,
including Disney-branded products, Sesame Workshop and Peep and the Big Wide
World, the WGBH-Boston early science development television property. The
Company's profit margin remained relatively stable, declining slightly from
33.6% in the prior year to 33.3% in the same quarter for the current year. The
three month period resulted in a net loss of $440,625 versus a loss of $349,481
for the prior year. Despite an increase in revenue and gross profit, the
expanded loss resulted from increases in selling, general and administrative
expenses.

As noted above, net sales for the first quarter of fiscal 2008 increased 8.6%
versus the prior year. Sparking these increases were the Company's introduction
of lower-priced formats under the Disney and Sesame licenses. Sales of
Disney-licensed products as a percentage of total Company sales, increased from
32.2% to 43.3% for the quarter versus the comparable quarter a year ago. Sesame
Workshop-licensed product sales were 9.8% of Company revenue. There were no
Sesame Workshop-licensed sales in the prior year's quarter since this license
was first introduced in November 2006. Smithsonian-licensed product sales
declined from 34.0% of Company sales to 27.0%, although revenue from the product
line remained stable.

                                             Percentage of Sales by license
                                             for the quarters ended June 30
                                            --------------------------------
License                                          2007               2006
----------------------------------------------------------------------------
Disney                                              43.3%               32.2%
Smithsonian                                         27.0                34.0
Proprietary                                         14.6                24.9
Sesame Workshop                                      9.8                 0.0
All other                                            5.3                 8.9
                                            --------------------------------
Total                                              100.0               100.0
                                            ================================

                                       15
<PAGE>
<TABLE>
<CAPTION>

                                         Sales increases, net of
                                     provisions for returns, for the
                                       three months ended June 30,
                                       ----------------------------
Sales channel                              2007             2006         Variance         % change
---------------------------------------------------------------------------------------------------
<S>                                    <C>             <C>             <C>
Domestic
Direct-to-Consumer Book
Distributors                           $    235,836    $     13,334    $    222,502             NMF

International Mass Market
Distributors                                208,814          45,918         162,896           354.8%

Domestic Mass Market
Distributors                                 62,019          16,874          45,145           267.5

Domestic
Direct-to-Consumers
(returnable)                                 42,593               0          42,593             NMF
</TABLE>

Sales increases for the quarter were selective across major sales channels. A
growing channel for the Company are sales to distributors who sell direct to the
consumer by mail order catalog, the internet or door-to-door canvassing without
the benefit of returnability. This channel generated $235,836 in revenue in the
June Quarter versus negligible sales in the comparable quarter a year ago.

Sales to international mass market distributors increased $162,896 from $45,918
in the prior year to $208,814 for the three months ended June 30, 2007. The
increase was a result of ongoing sales and distribution successes of the
Company's two Spanish language distributors in Latin America and Spain, which
are expanding their offerings of the Company's two prime licenses, Disney and
Sesame Workshop, in these territories.

Sales to domestic mass market distributors increased nearly four fold as a
result of expanded distribution of lower priced formats into the mass market
retailers such as Toys R Us and Wal*Mart.

Domestic direct-to-consumer returnable sales were $42,593 for the three months
ended June 30, 2007. There were no sales in this division in the prior year. The
major customer in this division is a home shopping channel who successfully sold
through a Smithsonian multi-title book, CD and plush toy combination within the
allotted air time.

Several other channels of trade experienced increased sales including education
and consumer catalogs, international trade book retailers, specialty retailers
and schools and libraries.

                                       16
<PAGE>
<TABLE>
<CAPTION>

                                          Sales decreases, net of
                                      provisions for returns, for the
                                        three months ended June 30,
                                       ----------------------------
Sales channel                              2007             2006         Variance         % change
---------------------------------------------------------------------------------------------------
<S>                                    <C>             <C>             <C>
Domestic Warehouse Club
Distributors                           $     70,434    $    339,761    $   (269,327)          (79.3)

Domestic Book Retailers                      22,377          57,319         (34,942)          (61.0)
</TABLE>

Domestic warehouse club distributors decreased from $339,761 to $70,434 in the
current quarter, primarily as a result of the temporary slowdown of business of
Baker & Taylor's purchase of AMS as well as the general timing of orders.

Several other channels of trade including international sub rights royalties,
Canadian book distributors, and international trade book distributors also
experienced decreased sales.

COST OF SALES.

The Company's cost of sales for the quarter ended June 30, 2007 increased
$54,093 from $597,727 in the prior year to $651,820 in the current year, an
increase of 9.0%, as a result of the increased sales volume. Cost of sales as a
percentage of net sales increased from 66.4% to 66.7% in the current quarter as
a result of a change in the sales mix. A slight decrease in product development
and warehousing expenses offset the increase.

GROSS PROFIT.

The resulting gross profit for the quarter ended June 30, 2007 increased 7.6% to
$325,079 versus the prior quarter's gross profit of $302,124. Gross margin was
33.3% in the current quarter versus 33.6% in the quarter ended June 30, 2006.

SELLING, GENERAL & ADMINISTRATIVE COSTS.

The Company's selling, general, and administrative costs increased 22.7% or
$135,633 to $732,732 for the three months ended June 30, 2007 versus $597,099
for the three months ended June 30, 2006. As a percentage of net sales, selling,
general and administrative expenses increased from 66.4% of net sales from the
prior quarter to 75.0% of net sales in the current quarter.

In the June Quarter, 2007 the Company attended two international trade shows
which were not held in the comparable quarter of 2006. As a result trade show

                                       17
<PAGE>

expenses increased $66,711. Travel and entertainment expenses related to these
two shows were $13,827.

Administrative expenses also increased as a result of fees paid to strategic
consultants which resulted in an added expense in the current quarter of
$32,813. Additional factors contributing to the increase in selling and
administrative expenses were the increase in commissions and professional fees.

LOSS FROM OPERATIONS.

For the quarter ended June 30, 2007, the loss from operations was $407,653
versus a loss of $294,975 for the prior year's quarter.

OTHER EXPENSE.

The Company's other expense for the quarter ended June 30, 2007 was $32,972
versus a $54,506 for the quarter ended June 30, 2006. Interest expense decreased
for the quarter versus the comparable quarter a year ago as a result of the
conversion of shareholder debt into equity in July, 2006.

NET LOSS.

As a result of the items discussed above, the Company's net loss for the quarter
ended June 30, 2007 was $440,625 compared to a net loss of $349,481 for the
comparable prior quarter.

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 were effective for the Company
on April 1, 2007. The Company's adoption of FIN 48 did not 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

                                       18
<PAGE>

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.

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.

                                       19
<PAGE>
<TABLE>
<CAPTION>

Liquidity and Capital Resources

                                                 For the quarters
                                                   ended June 30,
                                            ----------------------------
                                                2007             2006         Variance        % change
--------------------------------------------------------------------------------------------------------
<S>                                         <C>             <C>             <C>
Net assets (deficiency)                     $     75,462    $ (1,357,806)   $  1,433,268             NMF

Working capital (deficiency)                    (447,792)       (528,815)         81,023            15.3%

Accounts receivable, net                       1,091,152         743,651         347,501            46.7

Accounts payable and accrued
expenses                                       1,227,675       1,573,713        (346,038)          -22.0

Royalties and commissions payable                303,222         207,856          95,366            31.5
</TABLE>

At June 30, 2007 the Company had net assets of $75,462 versus a deficiency at
June 30, 2006 of $1,357,806. Working capital improved by $81,023 from a
deficiency of $528,815 to a deficiency of $447,592 at June 30, 2007. The change
is primarily due to the conversion of debt to equity in July, 2006.

Accounts receivable increased from $743,651 at June 30, 2006 to $1,091,152 at
June 30, 2007, an increase of $347,501. The increase is due to the timing of
payments from customers and the change in the customer mix and the credit terms
occasionally provided to international customers. Accounts payable and accrued
expenses decreased $346,038 versus the prior year from $1,573,713 to $1,227,675
at June 30, 2007. Royalties and commissions payable increased $95,366 versus the
prior year from $207,856 at June 30, 2006 to $303,222 at June 30, 2007 primarily
as a result of the sales mix and the increased level of sales.

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 credit facility, including the amended facility of $850,000, the
additional bank borrowing of $100,000 and the shareholder note of $234,000, if
revenue growth is to be realized. The Company continues to explore alternative
financing options in the event that cash flow does not materialize in line with
current expectations. Additional working capital would be required to fund new
growth opportunities and publication initiatives. It is believed a strategic or
private equity investor would allow the Company to better position itself for
growth by providing working capital for future publishing initiatives and even a
strategic acquisition.

As of August 7, 2007, the balance on the Company's revolving line of credit was
$726,206 out of $850,000 available. As of June 30, 2007 the balance on the
Company's revolving line of credit was $734,206 out of $850,000 available to the
Company.

As of August 13, 2007 the Company's backlog was approximately $1,450,000.

                                       20
<PAGE>

On November 28, 2006 the Company received a $260,000 short-term note from its
principal shareholder (William W. Burnham, Chairman of the Board). The note is
due August 31, 2007. Interest is payable monthly at 6.50%. Mr. Burnham was
repaid approximately $26,000 of this note in the quarter ended June 30, 2007.

The Company is in discussions with both Mr. Burnham and the Bank to extend the
$260,000 note due to Mr. Burnham and the $100,000 note due to the Bank. Both
notes are due at the end of August, 2007 and the Company does not foresee any
problems with these refinancings.



                                       21
<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, 2007 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:

o        The implementation of our strategies;

o        The availability of additional capital;

o        Variations in stock prices and interest rates;

o        Fluctuations in quarterly operating results; and

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

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



PART II  OTHER INFORMATION
------

Item 1.  Legal Proceedings

None.

Item 2.  Changes in Securities

None.

Item 3.  Defaults upon Senior Securities

None

                                       22
<PAGE>

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)      Exhibits
         --------

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

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

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

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

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

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

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

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

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

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


                                       23
<PAGE>

(b)      Reports on Form 8-K

I.       The registrant announced the following in a press release issued July
         27, 2007:

         (a)      Item 5.03 Amendments to Articles of Incorporation or Bylaws.

                  The registrant announced in a press release issued July 27,
                  2007 that pursuant to Article III, Section 1 of the By-Laws of
                  the Corporation, the Board of Directors was being increased
                  from the current number of six (6) Directors to the new number
                  of eight (8) Directors. This change was made effective at its
                  Board Meeting held on June 14, 2007.

         (b)      Item 5.02 Election of Directors.

                  The registrant announced in the same press release, issued
                  July 27, 2007, that pursuant to Article III, Section 2 of the
                  By-Laws of the Corporation, the Board of Directors voted to
                  fill the two vacancies on the Board with elections of Messrs.
                  H. Kim Bangash and William S. Sondheim.

         (c)      Appointment of Principal Officer.

                  Effective August 1, 2007 the Board of Directors will promote
                  Fell C. Herdeg from Vice President Finance to Chief Financial
                  Officer and Vice President. Mr. Herdeg will receive a salary
                  of $120,000, effective upon his promotion. Ms. Andersen, the
                  Company's Chief Executive Officer, President and Publisher,
                  has been the Acting Chief Financial Officer. She ceded the
                  position to Mr. Herdeg on August 1, 2007.


                                       24
<PAGE>

                                   SIGNATURES

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

                                       TRUDY CORPORATION
                                       (REGISTRANT)


Date: August 17, 2007                  By: /s/ Ashley C. Andersen
                                           -------------------------------------
                                           Ashley C. Andersen,
                                           President, Chief Executive Officer




                                       25