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, 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
                                September 9, 2002
               Common Stock, $.0001 par value: 442,460,249 shares

<PAGE>


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

               PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

        Balance Sheet - June 30, 2002 (unaudited)                            3

        Statements of Operations (unaudited) for the three months ended
          June 30, 2002 and June 30, 2001                                    4

        Statements of Cash Flows (unaudited) for the three months ended
          June 30, 2002 and June 30, 2001                                    5

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

        Notes to Financial Statements (unaudited)                            7

Item 2. Management's Discussion and Analysis                                15


               PART II.  OTHER INFORMATION

Item 1. Legal Proceedings                                                   19

Item 2. Changes in Securities                                               19

Item 3. Defaults upon Senior Securities                                     19

Item 4. Submission of Matters to a Vote of Security Holders                 19

Item 5. Other Information                                                   19

Item 6. Exhibits and Reports on Form 8-K                                    19

                                       2
<PAGE>
<TABLE>
<CAPTION>

                                Trudy Corporation
                                  Balance Sheet

                                                                                June 30,
                                                                                  2002
                                                                              ------------
                                                                              (Unaudited)
<S>                                                                           <C>
Assets
Current assets:
Cash and cash equivalents                                                     $      1,801
Accounts receivable, net of allowance for doubtful accounts of $60,000             451,489
Advances to Studio Mouse LLC                                                        35,678
Inventories                                                                      1,191,716
Prepaid expenses and other current assets                                          136,344
                                                                              ------------
   Total current assets                                                          1,817,028

Equipment, net                                                                     130,513
Royalty advances, net                                                               43,775
Investment in joint venture                                                         68,836
Pre-publication costs and other assets, net                                        182,006
                                                                              ------------
   Total assets                                                               $  2,242,158
                                                                              ============
Liabilities and shareholders' equity
Current liabilities:
Note payable - bank                                                           $    200,000
Notes payable - shareholder/officer and related party                              372,135
Accounts payable and accrued expenses                                              448,114
Royalties and commissions payable                                                  226,891
                                                                              ------------
   Total current liabilities                                                     1,247,140

Long-term liabilities:
Notes payable - shareholder/officer and related parties                          1,088,682
Royalties payable                                                                   46,112
                                                                              ------------
   Total long-term liabilities                                                   1,134,794
                                                                              ------------
   Total liabilities                                                             2,381,934

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                                                             (5,129,286)
                                                                              ------------
   Total shareholders' deficit                                                    (139,776)
                                                                              ------------
   Total liabilities and shareholders' deficit                                $  2,242,158
                                                                              ============
</TABLE>

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

                                        3
<PAGE>

                                Trudy Corporation
                            Statements of Operations

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

Net sales                                        $     595,204    $     324,930
      Cost of sales                                    347,280          258,754
                                                 -------------    -------------
Gross profit                                           247,924           66,176

Operating expenses:
      Selling, general and administrative              401,449          230,844
      Depreciation and amortization                     14,167            5,821
                                                 -------------    -------------
Loss from operations                                  (167,692)        (170,489)

Other income (expense):
      Interest, net                                    (11,659)          (3,285)
      Royalties, net                                    (7,921)          23,165
      Other income (expense)                               271            1,259
      Gain/(loss) in equity investment                   2,521          (22,288)
                                                 -------------    -------------
Net loss                                         $    (184,480)   $    (171,638)
                                                 =============    =============

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

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

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

                                       4
<PAGE>
<TABLE>
<CAPTION>

                                Trudy Corporation
                            Statements of Cash Flows

                                                                            Three Month Period
                                                                              Ended June 30,
                                                                       ----------------------------
                                                                           2002            2001
                                                                       ------------    ------------
<S>                                                                    <C>             <C>
Operating activities
Net loss                                                               $   (184,480)   $   (171,638)
Adjustments to reconcile net loss to net cash used in operating
activities:
  Depreciation                                                               14,167           5,821
  Amortization of pre-publication costs                                       7,225           7,500
  Provision for losses on accounts receivable                                   -             3,799
  Writedown of slow moving inventory                                         15,000         (15,000)
  (Gain)/loss on equity investment                                           (2,521)         22,288

Changes in operating assets and liabilities:
  Accounts receivable                                                       423,577         (58,227)
  Advances to Studio Mouse LLC                                               (4,233)        (25,000)
  Inventories                                                               (37,063)        (47,573)
  Prepaid expenses and other current assets                                  65,526         (80,912)
  Accounts payable and accrued expenses                                    (149,353)         86,207
  Royalties and commissions payable                                         ( 4,428)          2,394
                                                                       ------------    ------------
Net cash provided/(used) by operating activities                            143,417        (270,341)

Investing activities:
  Purchases of property and equipment                                       (10,070)        (23,178)
  Investment in joint venture                                                   -           (22,288)
  Pre-publication and royalty advances, net                                 (41,852)        (53,399)
                                                                       ------------    ------------
Net cash used by investing activities                                       (51,922)        (98,865)

Financing activities:
  Net borrowings (payments)                                                 (92,468)            -
                                                                       ------------    ------------
Net cash used by financing activities                                       (92,468)            -
                                                                       ------------    ------------

Net decrease in cash and cash equivalents                                      (973)       (369,206)
Cash and cash equivalents at beginning of period                              2,774         394,851
                                                                       ------------    ------------
Cash and cash equivalents at end of period                             $      1,801    $     25,645
                                                                       ============    ============

</TABLE>

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

                                       5
<PAGE>
<TABLE>
<CAPTION>

                                                 Trudy Corporation
                                     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)
                                  =============    =============    =============    =============    ==============
</TABLE>

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

                                       6
<PAGE>

                                TRUDY CORPORATION
                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.   Description of Business and Basis of Presentation

Trudy Corporation (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. All
Company product is sold under the trade name of Soundprints.

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 generally accepted accounting principles 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 months ended June 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 Company 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.


2.   Summary of Significant Accounting Policies

Principles of Consolidation

Investments in 20% to 50% owned equities are accounted for by the equity method.

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

                                       7
<PAGE>

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, investment in joint venture, 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
investment in joint venture and long-term debt approximates fair market value
based on the market interest rates available to the Company for debt of similar
risk and maturities.

Pre-Publication Costs

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

                                       8
<PAGE>

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 are shipped
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," or 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.

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 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.

                                       9
<PAGE>

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 is offset against
equity and is 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 had 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.

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.

                                       10
<PAGE>

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 future financial
statements. See Note 6.

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.

                                       11
<PAGE>

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 June 30, 2002 or June
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:

           Raw Materials               $      74,396
           Finished Goods                  1,117,320
                                       -------------
           Inventory Value             $   1,191,716
                                       =============


                                       12
<PAGE>

4.   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".

5.   Joint Venture

During the third quarter of fiscal year 2002, Trudy Corporation signed an
agreement with The Chart Studio (Pty.) Ltd., a privately held South African
company to form a joint venture. The new company, Studio Mouse, LLC, was set up
to maximize the combined intellectual assets of each company by creating new
product formats utilizing a fresh approach to creating multimedia "books plus"
products.

Under the terms of the agreement between Trudy Corporation and The Chart Studio
(Pty.) Ltd., and subject to the satisfaction of certain conditions set forth
therein, Trudy and Chart Studio, each was to hold 45% of the total issued shares
in Studio Mouse, LLC, with the remaining 10% of the shares held by
employees/related parties of Trudy and Chart Studio. Both Trudy Corporation and
The Chart Studio (Pty.) Ltd. continue to operate individually, developing their
own respective publishing programs. In addition, the agreement stipulates that
Trudy Corporation and The Chart Studio (Pty.) Ltd. will share all costs and
profits of Studio Mouse in accordance with their respective percentage interest.

The Company's investment in Studio Mouse, LLC is accounted for by way of the
equity method. The carrying value of the investment has been increased by the
Company's pro rata share of the net profit earned during the quarter ended June
30, 2002.

Subsequent to June 30, 2002, however, Trudy Corporation and The Chart Studio
(Pty.) Ltd. entered into a Memorandum of Understanding providing for changes in
their business relationship (refer to Note 6).

6.   Subsequent Events

A.   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

                                       13
<PAGE>

45% by Trudy, 45% by Chart Studio and the remaining 10% by employees of Chart
Studio and Trudy. However, the Reserve Bank of South Africa has disapproved
Chart Studio's second application for equity participation in Studio Mouse.
Accordingly, Trudy and Chart Studio have entered into a Memorandum of
Understanding providing for changes in their business relationship as follows:

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

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

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

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

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

B.   Notes Payable

In July, 2002 the Company borrowed $400,000 from a principal shareholder/officer
in order to pay its vendors and to finance the purchase of inventory to meet its
sales order backlog of $712,684 as of 8/28/02.

On July 24, 2002 the Company paid the full balance due on an outstanding bank
note. The balance paid was $200,000.

                                       14
<PAGE>

Item 2.               MANAGEMENT'S DISCUSSION AND ANALYSIS

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

NET SALES. Net sales for the quarter ended June 30, 2002 were $595,204 compared
to net sales of $324,930 for the prior year quarter ended June 30, 2001, an
increase of $270,274 or 83.1%. Gross revenues for the quarter were $672,491, or
a 107.0% increase versus June Quarter, 2001. Gross sales for the June 2002
quarter were reduced by returns from warehouse clubs of $77,287. The Company has
purchase orders pending to reship these returns this coming December to the same
customer. The increase in sales was broad based across the Company's many
channels of trade. Book stores, book distributors, specialty retailers,
cataloguers, schools and libraries posted triple digit sales increase versus the
June Quarter, 2001, attributable to the rebuilding efforts in personnel, sales
and product development of the past year and spurred on by the $1MM
recapitalization of the company in March, 2001. The only significant division
which was off from a year ago was the international sector, whose revenue is
less than 5% of the company's annual gross sales.

COST OF SALES. Cost of sales for the quarter ended June 30, 2002 was $347,280
compared to $258,754 for the comparable prior year quarter, an increase of
$88,526. The increase in cost of sales came largely from the revenue growth this
Quarter. As a percent of net sales, cost of sales for the quarter ended June 30,
2002 was 58.3% as compared to 79.6% for the comparable quarter a year ago. On a
variable cost of sales basis excluding fixed charges such as packaging, product
development, shipping salaries, amortization of design costs, and miscellaneous
warehouse overhead costs, cost of goods sold improved from 56.9% of net sales in
the June Quarter, 2001 to 33.7% for this Quarter. This improvement was the
result of sales increases among divisions where margins are higher and expanded
sourcing among the Company's overseas book printers and toy manufacturers, which
led to improved costs.

GROSS PROFIT. As a result of the changes in net sales and cost of sales, gross
profit for the quarter ended June 30, 2002 increased to $247,924 from $66,176
versus the prior year's comparable Quarter. This represented 41.7% of sales for
the quarter ended June 30, 2002 versus 20.4% for the prior year respective
period.

SELLING, GENERAL, AND ADMINISTRATIVE. Selling, general, and administrative
expenses for the quarter ended June 30, 2002 increased by $170,605 to $401,449
compared to $230,844 for the quarter ended June 30, 2001. As a percentage of net
sales, SG &A expenses improved from 71.0% of net sales in the quarter ended
June 30, 2001 to 67.4% for the comparable quarter this year.

The higher level of expenses primarily reflects the continued amortization of
costs associated with printing, mailing and tele-marketing of the mail order
catalog in September of 2001, which numbered 1.5 million catalogs. Total costs
for the direct mail program during the quarter were $85,264, an increase of

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<PAGE>

$84,659 over the quarter ended June 30, 2001, when there was no mail order
catalog expense to amortize. The fixed nature of the 2001 and 2002 mail order
catalog expenses necessitated the achievement of a certain sales level in order
for the program to be profitable. The library segment of the catalog mailing was
profitable, while the consumer segment failed to pay back its share of printing
and mailing expenses. The direct mail program for fiscal year 2003 has been
restructured in order to lower the risk of the consumer mail order catalog
quantity to rely more on the synergy of a mailed catalog as an advertising
medium to draw purchases to the company's e-commerce website.

The increase in expenses was also attributable to increased royalty expenses due
to increased sales. However, as a percentage of gross sales, the royalty expense
decreased to 5.3% versus the comparable year ago period, when the royalty
expense was 6.7% of gross sales. The decrease came as a result of the greater
sales of non-licensed books and toys. Another increase in SG & A expenses was an
increase of $21,062 in Exhibit & Shows expenditures versus the prior year
respective period, due to the need to prospect and generate more sales leads.

INTEREST EXPENSE. Interest expense (net) for the quarter ended June 30, 2002
increased by $8,374 to $11,659 compared to interest expense of $3,285 for the
quarter ended June 30, 2001. The increase in interest expense for the quarter
ended June 30, 2002 was primarily a result of the reduction in interest income
from customer accounts and a result of increased borrowing.

ROYALTY INCOME/EXPENSE. Royalty income for the quarter ended June 30, 2002
increased by $6,702 to $31,948 versus $25,246 for the comparable period last
year. Royalty expenses of $39,869 for the current quarter were up $37,788 versus
the June Quarter, 2001. 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 quarter ended June 30, 2002, the
Company's operations reflect income of $2,521 associated with its equity
investment in Studio Mouse, LLC. During the quarter ended June 30, 2001, the
Company absorbed a loss of $22,288. It was during the June 2001 quarter in which
Studio Mouse began operations and turned profitable in the quarter ended March
31, 2002. In the current fiscal year, Studio Mouse continues to generate
profits, which the Company shared, through June 30, 2002, in accordance with its
past joint venture agreement (See Note 6A).

NET LOSS. As a result of the items discussed above, net loss for the quarter
ended June 30, 2002 was $184,480 compared to net loss of $171,638 for the
comparable prior year quarter.

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,
which will impact following quarters.

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<PAGE>

Critical Accounting Estimates
-----------------------------

Management's discussion and analysis of financial condition and results of
operations are based upon the Company's financial statements which have been
prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements requires
the Company to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses and related disclosures. On an
ongoing basis, the Company evaluates its estimates and judgments based on
historical experience and various other factors that are believed to be
reasonable under the circumstances. Actual results may differ from these
estimates under different assumptions or conditions. The Company annually
reviews its financial reporting and disclosure practices and accounting policies
to ensure that its financial reporting and disclosures provide accurate and
transparent information relative to the current economic and business
environment. The Company believes that of its significant accounting policies
(see summary of significant accounting policies more fully described on Note 2
of notes to our financial statements), the following policies involve a higher
degree of judgment and/or complexity:

Pre-Publication Costs

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

Prepaid Catalog Costs

Catalogs and brochures are amortized over the period benefited, not to exceed
the publication date of the subsequent brochure or twelve months, whichever is
less.

Inventory

The Company reviews its inventory for obsolescence and provides for obsolescence
when the inventory 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 had increased
receipts from the sale of its product due to the significant double- digit sales
increase, 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, 2002 the
Company borrowed $400,000 from a principal shareholder/officer in order to pay
its vendors and to finance the purchase of inventory to meet its sales order
backlog of $712,684 as of 8/28/02. During the quarter the principal

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<PAGE>

shareholder/officer was repaid $30,000 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

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:

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.

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<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.

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

(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

                                       19
<PAGE>

joint venture company formed by Trudy Corporation and Chart Studio (Pty) Ltd., a
privately held South African company.

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.

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<PAGE>


         SIGNATURES

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

                                       TRUDY CORPORATION
                                       (REGISTRANT)

Date: September 9, 2002                By: /s/ WILLIAM W. BURNHAM
      -----------------                    -------------------------------------
                                           William W. Burnham,
                                           Chairman and Chief Executive Officer

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