U.S. SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549
                                FORM 10-QSB

(Mark One)

[X]  Quarterly report pursuant to Section 13 or 15(d) of the
     Securities Exchange Act of 1934

     For the quarterly period ended April 30, 1997

[ ]  Transition report pursuant to Section 13 or 15(d) of the Exchange
     Act

     For the transition period from                 to
                                    --------------     ---------------
 

Commission file number     0-20303
                     ------------------------------------------------------

                    TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
---------------------------------------------------------------------------
      (Exact name of small business issuer as specified in its charter)

              Delaware                                 13-2846796
-----------------------------------              ---------------------
  (State or other jurisdiction of                   (I.R.S. Employer
   incorporation or organization)                  Identification No.)

               P.O. Box 382, Fields Lane, Brewster, New York  10509
---------------------------------------------------------------------------
                     (Address of principal executive offices)

                                (914) 277-8100
---------------------------------------------------------------------------
                          (Issuer's telephone number)


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

  Check whether the issuer: (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12
months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes____X____ No___________

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

  Check whether the registrant filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange Act
after the distribution of securities under a plan confirmed by court.

Yes_________ No___________              

                     APPLICABLE ONLY TO CORPORATE ISSUERS

   State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:  As of
May 20, 1997: 8,139,322 shares of Common Stock, par value $.0001 per
share.

   Transitional Small Business Disclosure Format (check one):

Yes_________ No_____X____

<PAGE>

                                PART I

                         FINANCIAL INFORMATION



ITEM 1. FINANCIAL STATEMENTS.

        The consolidated financial statements for the Company's
fiscal quarter ended April 30, 1997 are attached to this Report,
commencing at page F-1.


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

        Until January 1997, the Company's revenues were derived
solely from the sale of its Degrees of Reading Power Tests and Degrees
of Word Meaning Tests, the sales of ancillary materials, and test
scoring and reporting services.  Tests are sold pursuant to specific
contracts with state and local governments and through catalog sales. 
With the acquisition of Beck Evaluation & Testing Associates, Inc.
("BETA") as of January 2, 1997, revenues are now also derived from the
provision of consulting services to schools and publishers.  BETA is a
wholly-owned subsidiary of the Company. 

RESULTS OF OPERATIONS

        REVENUES.  For the three-month period ended April 30, 1997,
the Company's total net revenues increased 28.5% versus the comparable
1996 period ($654,656 in 1997 versus $509,470 in 1996).  Of this
$145,186 increase in revenues, $99,453 is attributable to revenue
generated by BETA and $45,733 is attributable to the Company's core
products.

        For the six-month period ended April 30, 1997, the Company's
total net revenues increased 23.9% versus the comparable 1996 period
($1,592,167 in 1997 versus $1,285,086 in 1996).  Of this $307,081
increase in revenues, $147,890 is attributable to revenues generated
by BETA and $159,191 is attributable to the Company's core products.

        For the three-month period ended April 30, 1997, contract
income increased 21.8% versus the comparable 1996 period ($73,106 in
1997 versus $60,000 in 1996).  For the six-month period ended April
30, 1997, contract income increased 2.2% versus the comparable 1996
period ($539,154 in 1997 versus $527,480 in 1996). Contract income now
represents 33.9% of six-month revenues versus 41.1% in the comparable
1996 period.  With the acquisition of BETA and the increase in catalog
sales for the Company's core products, the Company has become less
dependent upon any one major source for its income.  

        For the three-month period ended April 30, 1997, catalog
sales for shelf tests and associated products increased 7.3% versus
the comparable 1996 period ($482,097 in 1997 versus $449,470 in 1996). 
For the six-month period ended April 30, 1997, catalog sales increased
19.5% versus the comparable 1996 period ($905,123 in 1997 versus
$757,606 in 1996).  Catalog sales now represent 56.9% of six-month
revenues versus 59.0% in the comparable 1996 period.  Management
believes that this significant increase in catalog sales is
attributable to the continued emphasis by the Company on the marketing
and sales effort in this area and the new software products that the
Company introduced into the market during the second half of the
Company's 1996 fiscal year.

        For the three-month period ended April 30, 1997, consulting
revenues of $99,453 were attributable to BETA, which represented 15.2%
of second quarter revenues.  For the six-month period ended April 30,
1997, consulting revenues were $147,890 or 9.3% of total revenues. 
There were no comparable revenues in the comparable 1996 periods.  

        COSTS AND EXPENSES.  For the three-month period ended April
30, 1997, cost of goods sold increased 89.4% versus the comparable
1996 period ($304,124 in 1997 versus $160,615 in 1996).  For the
six-month period ended April 30, 1997, cost of goods sold increased 55.0%
versus the comparable 1996 period ($564,236 in 1997 versus $363,961 in
1996).  Cost of goods sold as a percentage of sales for the three-
month period ended April 30, 1997 increased 15.0% versus the
comparable 1996 period (46.5% in 1997 versus 31.5% in 1996).  This
increase is due to an overall change in product mix between catalog
sales, contract income and consulting income and the costs associated
with marketing each of these product types. 

        For the three-month period ended April 30, 1997, selling
expenses increased 24.1% versus the comparable 1996 period ($205,747
in 1997 versus $165,792 in 1996).  For the six-month period ended
April 30, 1997, selling expenses increased 29.8% versus the
comparable 1996 period ($414,979 in 1997 versus $319,820 in 1996). 
This increase is primarily attributable to the Company's addition of
three educational consultants in the second half of the Company's 1996
fiscal year.  

        For the three-month period ended April 30, 1997, general and
administrative expenses increased 22.9% versus the comparable 1996
period ($276,896 in 1997 versus $225,254 in 1996).  For the six-month
period ended April 30, 1997, general and administrative expenses
increased by 31.7% versus the comparable 1996 period ($531,748 in 1997
versus $403,724 in 1996).  This increase in spending is primarily
attributable to professional fees associated with the review of
potential acquisition candidates and fees associated with deferred
offering expenses in the comparable 1996 period. 

        In fiscal year 1996, the Company had product development
costs relating to a consumer product which was in development.  In
late 1996, the product achieved feasibility.  Therefore, in accordance
with generally accepted accounting principles, the Company is now
capitalizing the costs associated with the product prior to its
introduction into the marketplace.  Accordingly, there is no
comparable 1997 expenditure.  

        For the three-month period ended April 30, 1997, interest
expense increased 41.9% versus the comparable 1996 period ($18,812 in
1997 versus $13,260 in 1996).  For the six-month period ended April
30, 1997, interest expense increased by 16.1% ($36,059 in 1997 versus
$31,060 in 1996).  This increase is attributable to the Company's
financing of the BETA acquisition.  For the three-month period ended
April 30, 1997, investment income decreased 25.0% versus the comparable
1996 period ($34,580 in 1997 versus $46,104 in 1996).  For the six-month
period ended April 30, 1997, investment income decreased 8.9%
($74,635 in 1997 versus $81,900 in 1996).  This decline is due to the
maturity of certain investment and the reinvestment of those funds in
lower yield instruments.  For the three- and six-month periods ended
April 30, 1997, the Company experienced a loss on the sale of assets
of $3,383 and $15,083, respectively.  There were no comparable
expenses in the comparable 1996 period.

        NET INCOME AND EARNINGS PER SHARE.  For the three-month
period ended April 30, 1997, net after-tax loss was ($60,265) versus
($6,438) in the comparable 1996 period.  For the six-month period
ended April 30, 1997, earnings were 43.1% lower than in the comparable
1996 period ($91,177 in 1997 versus $160,111 in 1996).  This decrease
is primarily attributable to increased selling and general and
administrative expenses.

        For the three-month period ended April 30, 1997, earnings
per share were ($0.01) versus $0.00 in 1996.  For the six-month period
ended April 30, 1997, earnings per share were $.01 in 1997 versus $.02
in 1996.

LIQUIDITY AND CAPITAL RESOURCES

        Working capital, which consists principally of cash, cash
equivalents, marketable securities and accounts receivable, was
$3,832,762 on April 30, 1997 versus $4,116,202 on October 31, 1996. 
The decrease in working capital is primarily attributable to the
payment of the purchase price of BETA.

        For the six-month period ended April 30, 1997, net cash
flows from operating activities were $388,984 (versus $422,095 in the
comparable 1996 period).  Additionally, for the six-month period ended
April 30, 1997, the Company invested $238,261 to increase the size of
its Test Passage Bank (versus $166,168 in the comparable 1996 period),
$52,191 in property, plant and equipment (versus $28,835 in the
comparable 1996 period), $106,837 readying its new DRP->BookLink
software and BookMatch products for market (versus $56,023 in the
comparable 1996 period), $29,900 to purchase the MACULAITIS TEST
SERIES (versus no comparable expenditures in the comparable 1996
period) and $143,975 to purchase BETA (versus no comparable
expenditures in the comparable 1996 period). 

        For the six-month period ended April 30, 1997, the Company
had a net cash outflow from financing activities of ($65,026) versus a
net cash inflow from financing activities of $412,485 in the
comparable 1996 period.  The change was primarily due to the
acquisitions of BETA and the MACULAITIS TEST SERIES. 

        In November 1996, the Company refinanced its second mortgage
for the addition to its facility which was completed in 1991.  Both
the first and second mortgages are due in 2001.  The Company has
certain debt obligations in connection with the acquisition of BETA
which management believes can be financed from the cash flow from
operations.  The Company has no other material commitments for capital
or other capital expenditures and is not party to any arrangement that
would adversely impact the Company's liquidity.

        On March 27, 1997, the Company entered into a letter of
intent to purchase the assets of Programs for Education, Inc. for an
aggregate purchase price of $3,200,000.  The purchase price is to be
paid $2,200,000 at the closing and $1,000,000 over five years, payable
quarterly, with interest accruing at 9.0% per annum.  The Company will
finance the acquisition out of available cash and short-term
borrowings, and is in the process of negotiating long-term financing. 
The Company consummated the acquisition on May 30, 1997.


CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

        Statements made in this Quarterly Report on Form 10-QSB,
including, without limitation, descriptions of the Company's targets
or goals and management's views concerning the Company's pending and
proposed projects, prospects and future financial performance
contained in this discussion and analysis and elsewhere, constitute
forward-looking statements made pursuant to the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995 and involve
known and unknown risks and uncertainties which may cause the
Company's actual results in future periods to differ materially from
forecasts.  These risks include, among others: risks and uncertainties
relating to government regulation in the educational testing area;
increased competition; the ability of the Company to accommodate
changes in policy and technology; as well as risks generally
associated with educational testing.  Many of such factors are beyond
the Company's ability to control or predict.  Readers are cautioned
not to put undue reliance on forward-looking statements.  The Company
disclaims any intent or obligation to update publicly these forward-looking
statements, whether as a result of new information, future
events or otherwise. 

<PAGE>
                                PART II

                           OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS

        None.


ITEM 2. CHANGES IN SECURITIES

        (a)  On March 28, 1997, at the Company's Annual Meeting of
Stockholders, the stockholders approved the adoption of various
amendments to the Company's By-Laws.  The text of the Amendments and a
discussion of the effects thereof are set forth in the Company's Proxy
Statement, dated March 3, 1997.  The Amended and Restated By-Laws have
been filed as Exhibit 4.3 to the Company's Registration Statement on
Form S-3, File No. 333-27659.

        (b)  None.

        (c)  As of February 24, 1997, the Company entered into a
consulting agreement with Meyers Pollock Robbins, Inc. ("MPR")
pursuant to which MPR agreed to perform services to the Company for a
term of two years in exchange for 100,000 shares of the Company's
Common Stock, par value $0.0001 per share (the "Common Stock") and
warrants to purchase up to 250,000 shares of Common Stock at a
purchase price equal to the fair market value of the Common Stock on
February 24, 1997, or $0.489, which warrants will remain exercisable
for a period of five years.  

        As of March 6, 1997, the Company entered into a consulting
agreement with Jericho State Capital Corp. of Florida ("JSCCF")
pursuant to which JSCCF agreed to render assistance and advice to the
Company on matters relating to the growth and financing goals of the
Company for a term of one year (subject to automatic renewals for
additional one-year terms) in exchange for warrants to purchase up to
250,000 shares of Common Stock at a purchase price equal to the fair
market value of the Common Stock on March 6, 1997, or $0.50, which
warrants will remain exercisable for a period of five years.  

        The Company relied on the exemption from registration
provided by Section 4(2) of the Securities Act of 1933, as amended, in
effecting these transactions, as the Company believes each of MPR and
JSSCF to be sophisticated investors and there was no general
solicitation or advertising.  

        The Company is in the process of registering these shares of
Common Stock on the Company's Registration Statement on Form S-3 (File
No. 333-27659).  


ITEM 3. DEFAULTS UPON SENIOR SECURITIES

        None.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS

        The Company held its annual meeting of stockholders on March
28, 1997.  At the meeting, the stockholders:

  (i)  elected Michael D. Beck as a director of the Company by a
       vote of 12,093,690 votes in favor of his election, with
       34,000 votes against and no abstentions and broker non-votes, to
       serve until the next annual meeting of stockholders;

  (ii) elected Steven R. Berger as a director of the Company by a
       vote of 12,056,190 votes in favor of his election, with
       71,500 votes against and no abstentions and broker non-votes, to
       serve until the next annual meeting of stockholders;

 (iii) elected Stephen H. Ivens as a director of the Company
       was approved by a vote of 12,056,190 votes in favor of
       his election, with 71,500 votes against and no
       abstentions and broker non-votes, to serve until the
       next annual meeting of stockholders;

  (iv) elected Michael Milone as a director of the Company by a
       vote of 12,093,690 votes in favor of his election, with
       34,000 votes against and no abstentions and broker non-votes, to
       serve until the next annual meeting of stockholders;

   (v) elected Andrew L. Simon as a director of the Company by a
       vote of 12,093,690 votes in favor of his election, with
       34,000 votes against and no abstentions and broker non-votes, to
       serve until the next annual meeting of stockholders;
 
  (vi) elected Linda G. Straley as a director of the Company by a
       vote of 12,093,690 votes in favor of her election, with
       34,000 votes against and no abstentions and broker non-votes,
       each to serve until the next annual meeting of stockholders;

 (vii) approved the adoption of the Amendment of Provisions of
       the By-Laws relating to Stockholder Meetings by a vote
       of 11,766,983 votes in favor of the proposal, with
       204,527 votes against, 22,600 votes abstaining and
       133,580 broker non-votes; 

(viii) approved the adoption of the Amendment of Provisions of
       the By-Laws relating to the Board of Directors by a
       vote of 7,577,552 votes in favor of the proposal, with
       67,419 votes against, 23,600 votes abstaining and
       4,459,119 broker non-votes; 

  (ix) approved the adoption of the Amendment of Provisions of the
       By-Laws relating to Officers and Other Corporate Matters by
       a vote of 7,324,372 votes in favor of the proposal, with
       80,899 votes against, 183,200 votes abstaining and 4,539,219
       broker non-votes; 

   (x) approved the adoption of the Amendment of Provisions of the
       By-Laws relating to Indemnification of Officers and
       Directors of the Company by a vote of 11,559,111 votes in
       favor of the proposal, with 243,249 votes against, 191,750
       votes abstaining and 133,580 broker non-votes; 

  (xi) approved the adoption of the Amendment of Provisions of the
       By-Laws relating to the Further Amendment of the By-Laws by
       a vote of 7,124,564 votes in favor of the proposal, with
       292,627 votes against, 68,880 votes abstaining and 4,641,619
       broker non-votes; 

 (xii) ratified the appointment of Lazar, Levine & Company LLP
       as the independent auditors of the Company by a vote of
       12,076,640 votes in favor of the proposal, with 20,150
       votes against, 30,900 votes abstaining and no broker
       non-votes.  


ITEM 5. OTHER INFORMATION

        As of March 10, 1997, the Company adopted a Consultants
Stock Incentive Plan (the "Plan"), pursuant to which the Company may
grant stock options to purchase up to an aggregate of 200,000 shares
of Common Stock to consultants or advisors of the Company who are
designated as eligible to receive awards under the Plan.

        As of March 11, 1997, the Company entered into a consulting
agreement with Michael Milone ("Milone") pursuant to which Milone
agreed to perform consulting services to the Company until October 31,
1997 (subject to automatic renewal for successive one-year terms), in
exchange for options to purchase up to 30,000 shares of Common Stock
at an exercise price equal to the fair market value of the Common
Stock on March 11, 1997, which options shall remain exercisable for a
period of ten years.  

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        (a)  Exhibits

                Exhibit 10.1 -- Agreement, dated as of February 24,
                                1997, between the Company and
                                Meyers Pollock Robbins, Inc.


                Exhibit 10.2 -- Agreement, dated as of March 6,
                                1997, between Jericho State Capital
                                Corp. of Florida and the Company 


                Exhibit 10.3 -- Consultants Stock Incentive Plan


                Exhibit 10.4 -- Consulting Agreement, dated as of
                                March 11, 1997, between Michael Milone
                                and the Company


                Exhibit 11   -- Computation of Earnings per Common Share


                Exhibit 27   -- Financial Data Schedule


        (b)  Reports on Form 8-K

             Current Report on Form 8-K, filed April 15, 1997
             (reporting the entrance by the Company into a letter of
             intent to purchase all of the assets of Programs for
             Education, Inc.).

<PAGE>



                       TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.

                INDEX TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                     FOR THE FISCAL QUARTER ENDED APRIL 30, 1997



   Consolidated Balance Sheets                                      F-1

   Consolidated Statements of Income                                F-3

   Consolidated Statements of Cash Flows                            F-4

   Notes to Consolidated Financial Statements                       F-6

<PAGE>          F - 1
<TABLE>
<CAPTION>

                    TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
                                   AND SUBSIDIARY
                                                                      Page 1 of 2
                           CONSOLIDATED BALANCE SHEETS
                                                         April 30,               October 31,
                                                          1 9 9 7                  1 9 9 6
                                                          -------                  -------
<S>                                                  <C>                      <C>
        ASSETS
        ------

Current assets:
  Cash and temporary investments                        $1,454,896               $1,049,819
  Marketable securities                                  1,454,325                2,076,158
  Accounts receivable                                      351,066                  567,374
  Inventories                                              216,255                  242,081
  Loan receivable                                          400,000                  400,000
  Prepaid expenses and other current assets                259,363                  123,106
                                                         ---------                ---------
		
Total current assets                                     4,135,905                4,458,538
		
Property, plant and equipment - net of
  accumulated depreciation of  $961,248 and
  $909,607, respectively                                 1,762,698                1,795,195
		
Other assets:
  Test passage bank, net of accumulated
  amortization of $1,041,144 and $907,053,
  respectively                                           2,667,456                2,563,286
Software development costs, net of
  accumulated amortization of $17,972
  and $5,427, respectively                                 231,220                  136,928
Goodwill, net of accumulated amortization
  of $20,780                                               353,287                     --
Other assets                                                50,856                   21,595
                                                        ----------               ----------              

     Total assets                                       $9,201,422               $8,975,542
                                                        ==========               ==========

<FN>
See notes to consolidated financial statements.
</FN>
                              F - 1
</TABLE
<PAGE>          F - 2

</TABLE>
<TABLE>
<CAPTION>
                    TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
                                   AND SUBSIDIARY
                                                                      Page 2 of 2
                           CONSOLIDATED BALANCE SHEETS

                                                         April 30,               October 31,
                                                          1 9 9 7                  1 9 9 6
                                                          -------                  -------
<S>                                                  <C>                      <C>
    LIABILITIES AND STOCKHOLDERS' EQUITY
    ------------------------------------

Current liabilities:
  Current portion of long-term debt                    $   158,623                $    95,500
  Accounts payable and accrued expenses                    144,520                    246,270
  Corporation taxes payable                                     --                        566
                                                        ----------                 ----------
		
     Total current liabilities                             303,143                    342,336
	
Long-term debt:
  Long-term debt less current portion                      755,675                    728,250
  Deferred income taxes                                    473,842                    521,221
                                                        ----------                 ----------
	
     Total liabilities                                   1,532,660                  1,591,807
                                                        ----------                 ----------
	
Stockholders' equity:
  Preferred stock, $.0001 par value, 5,000,000
    authorized, 1,500 issued and outstanding                    --                         --
  Common stock, $.0001 par value, 20,000,000
    authorized, 8,139,322 and 7,789,322 shares issued and 
    outstanding                                                814                        779
  Additional paid-in capital                             4,251,299                  4,077,935
  Stock subscription receivable                            (14,350)                   (14,350)
  Unrealized holding gain (loss)                               377                    (20,073)
  Retained earnings                                      3,430,622                  3,339,444
                                                        ----------                 ----------
	
     Total stockholders' equity                          7,668,762                  7,383,735
                                                        ----------                 ----------

     Total liabilities & stockholders' equity           $9,201,422                 $8,975,542
                                                        ==========                 ==========
	


<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
                               F - 2
<PAGE>          F - 3
<TABLE>
<CAPTION>
                    TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
                                   AND SUBSIDIARY

                          CONSOLIDATED STATEMENTS OF INCOME
	
                                              Six Months Ended                            Three Months Ended
                                                   April 30,                                    April 30,
                                         1 9 9 7             1 9 9 6                   1 9 9 7             1 9 9 6
                                         -------             -------                   -------             -------
<S>                                 <C>                 <C>                       <C>                 <C>
Contract income                        $  539,154          $  527,480                $   73,106          $   60,000
Catalog sales                             905,123             757,606                   482,097             449,470 
Consulting income                         147,890                  --                    99,453                  --
                                       ----------          ----------                ----------          ----------

Total net revenue                       1,592,167           1,285,086                   654,656             509,470

Cost of goods sold                        564,236             363,961                   304,124             160,615
                                       ----------          ----------                ----------          ----------

Gross profit                            1,027,931             921,125                   350,532             348,855
                                       ----------          ----------                ----------          ----------

Operating expenses:
  Selling expenses                        414,979             319,820                   205,747             165,792
  General and administrative expenses     531,748             403,724                   276,896             225,254  
  Product development                          --              21,180                        --              21,180
                                       ----------          ----------                ----------          ----------   

Total operating expenses                  946,727             744,724                   482,643             412,226
                                       ----------          ----------                ----------          ----------

Income (loss) from operations              81,204             176,401                  (132,111)            (63,371)

Other income (expense):
  Interest expense                        (36,059)            (31,060)                  (18,812)            (13,260)
  Loss on sale of assets                  (15,083)                 --                    (3,383)                 --
  Investment income                        74,635              81,900                    34,580              46,104
                                        ---------          ----------                ----------           ---------

Income (loss) before income taxes         104,697             227,241                  (119,726)            (30,527)

Income taxes (benefit)                     13,520              67,130                   (59,461)            (24,089)
                                        ---------          ----------                ----------           ---------

Net income (loss)                      $   91,177          $  160,111               $   (60,265)        $    (6,438)
                                       ==========          ==========               ===========         ===========
	
Weighted average shares outstanding
  Primary                               8,072,618           7,827,429                 8,113,186           7,604,322 
  Fully diluted                         8,072,618           7,827,429                 8,113,186           7,604,322 
Earnings per share
  Primary                              $      .01          $      .02               $      (.01)        $        -- 
  Fully diluted                        $      .01          $      .02               $      (.01)        $        --

<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
                               F - 3
<PAGE>          F - 4
<TABLE>
<CAPTION>
                    TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
                                   AND SUBSIDIARY

                       CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                 Six Months Ended
                                                                      April 30,
                                                         1 9 9 7                 1 9 9 6
                                                         -------                 -------
<S>                                                <C>                      <C>
OPERATING ACTIVITIES
 Net income                                           $    91,177              $  160,111 
 Adjustments to reconcile net income to net
   cash provided by operating activities:
     Depreciation and amortization                        236,618                 190,192
     Deferred income taxes                                (47,379)                (40,470)
     Financial advisory services                            2,344                  52,750
     Loss on sale of auto                                  11,700                      --
 Changes in operating assets and liabilities:
   Accounts receivable                                    216,308                  51,502
   Inventories                                             25,826                 (46,942)
   Other current assets                                   (44,851)                119,439          
   Accounts payable                                      (102,759)                (64,487)
                                                      -----------              ----------

NET CASH FLOWS FROM OPERATING ACTIVITIES                  388,984                 422,095
                                                      -----------              ----------

INVESTING ACTIVITIES
Acquisition of property, plant and equipment              (52,191)                (28,835)
Test passage bank                                        (238,261)               (166,168)
Software development costs                               (106,837)                (56,023)
Purchase of marketable securities                          (3,797)               (106,102)
Proceeds from sale of marketable securities               646,080                      --
Proceeds from sale of auto                                 10,000                      --
Acquisition of subsidiary                               (143,975)                      --
Acquisition of test                                      (29,900)                      --
                                                      -----------              ----------
		

NET CASH FLOWS FROM INVESTING ACTIVITIES                  81,119                 (357,128)
                                                      -----------              ----------

FINANCING ACTIVITIES
Principal payments on industrial revenue
 bond obligation                                         (42,014)                 (37,500)
Proceeds from exercise of options                             --                  542,167
Deferred offering costs                                       --                 (144,182)
Proceeds from exercise of warrants                            --                   52,000
Principal payments on long-term debt                     (17,438)                      --
Mortgage costs                                            (4,374)                      --
Organizational expenses of subsidiary                     (1,200)                      --
                                                      -----------              ----------

NET CASH FLOWS FROM FINANCING ACTIVITIES                 (65,026)                 412,485
                                                      -----------              ----------

NET CHANGE IN CASH AND TEMPORARY
  INVESTMENTS                                            405,077                  477,452

Cash and temporary investments
 at beginning of period                                1,049,819                  617,305
                                                      ----------               ----------

CASH AND TEMPORARY INVESTMENTS
  AT END OF PERIOD                                    $1,454,896               $1,094,757
                                                      ==========               ==========
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
                               F - 4
<PAGE>          F - 5
<TABLE>
<CAPTION>

                    TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
                                   AND SUBSIDIARY

                       CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                 Six Months Ended
                                                                      April 30,
                                                         1 9 9 7                 1 9 9 6
                                                         -------                 -------
<S>                                               <C>                       <C>
SUPPLEMENTAL CASH FLOW INFORMATION:
  Interest paid                                       $     32,092             $   31,557
                                                      ============             ==========

  Income taxes paid                                   $     55,167             $   25,000
                                                      ============             ==========

  Stock issued for prepaid consulting costs (Note B)  $     93,750             $       --
                                                      ============             ==========

SUMMARY OF ACQUIRED SUBSIDIARY:
  Assets acquired consisting primarily of Goodwill    $    374,067             $       --
  Liabilities assumed, including cash payment to
   prior shareholders                                     (294,417)                    --
                                                      ------------             ----------

  Fair value of common stock issued                   $     79,650             $       --
                                                      ============             ==========


<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
                               F - 5
<PAGE>          F - 6

           TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
                           AND SUBSIDIARY

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE A - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------------

In the opinion of management, the accompanying financial 
statements of Touchstone Applied Science Associates, Inc. contain 
all adjustments necessary to present fairly the Company's 
financial position as of April 30, 1997 and October 31, 1996 and 
the results of operations for the six and three months ended 
April 30, 1997 and 1996 and cash flows for the six months ended 
April 30, 1997 and 1996.

The results of operations for the six and three months ended 
April 30, 1997 and 1996 are not necessarily indicative of the 
results to be expected for the full year.

Except as follows, the accounting policies followed by the 
Company are set forth in Note A to the Company's financial 
statements included in its Annual Report on Form 10-KSB for the 
fiscal year ended October 31, 1996 (as amended by amendment 
number 1 on Form 10-KSB/A-1).

Principles of Consolidation
---------------------------

The consolidated financial statements include the accounts of the 
Company and its wholly-owned subsidiary, Beck Evaluation & 
Testing Associates, Inc.  All material intercompany transactions 
have been eliminated in consolidation.

Goodwill
--------

Included in the purchase of the Company's subsidiary is goodwill 
totaling $374,067.  This goodwill is being amortized over a 
period of six years.  The Company will continue to evaluate 
goodwill for potential impairment.

                               F - 6
<PAGE>          F - 7

            TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
                           AND SUBSIDIARY

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE B - CONSULTING AGREEMENTS
------------------------------

In February 1997, the Company entered into a written consulting 
agreement with a financial consulting firm.  The consultant is to 
receive 100,000 shares of the Company's common stock and a 
warrant to purchase 250,000 shares of the Company's common stock 
for $0.469 per share for a period of five years, in exchange for 
consulting services.  The cost of these services has been valued 
at $46,900, the market value for the 100,000 shares on the date 
of issuance and will be expensed over a period of two years.

In March 1997, the Company entered into a written consulting 
agreement with a financial consulting firm.  The consultant is to 
receive a warrant to purchase 250,000 shares of the Company's 
common stock in exchange for consulting services.  The warrants 
are exercisable for $.50 per share for a period of five years. 

NOTE C - CONSULTANTS STOCK INCENTIVE PLAN
-----------------------------------------

The Company has adopted a Consultants Stock Incentive Plan (the  
"Plan") whereby options to purchase up to 200,000 shares of the 
Company's common stock may be granted to consultants or advisors 
of the Company.  Subject to the terms of the Plan, a committee of 
the Board of Directors is authorized to select participants and 
determine the number of shares covered by each option, its 
exercise price and other terms.  The exercise price, however, may 
not be less than the fair market value of the Company's common 
stock on the date of the grant.

In March 1997, the Company entered into a consulting agreement 
with a director of the Company.  In exchange for certain 
consulting services, the Company granted options, under the Plan 
to purchase 30,000 shares of the Company's common stock.  The 
options are exercisable at $.44 per share.

NOTE D - DIRECTORS' STOCK OPTION
--------------------------------

In March 1997, the Company granted an aggregate of 5,000 options 
to two nonemployee directors pursuant to its Directors Stock 
Option Plan.  The options are exercisable at $.719 per share.

                               F - 7
<PAGE>          F - 8
             TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
                            AND SUBSIDIARY

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE E - ACQUISITION OF ASSETS
------------------------------

In May 1997, a newly formed wholly owned subsidiary of the 
Company (the "Subsidiary") purchased certain assets of Programs 
for Education, Inc.  In addition to assuming certain liabilities, 
the Subsidiary purchased the assets for $3,200,000.  The purchase 
price to be paid by the Subsidiary consists of $2,200,000 in cash 
and a secured promissory note for $1,000,000 bearing interest at 
a rate of 9% per annum and payable in equal quarterly 
installments over a five year period.  The promissory note is 
guaranteed by the Company.

NOTE F - EARNINGS PER SHARE
---------------------------

In February 1997, the Financial Accounting Standards Board issued 
SFAS No. 128 - Earnings Per Share which changes the method for 
calculating earnings per share.  SFAS No. 128 requires 
presentation of  "basic" and "diluted" earnings per share, as 
opposed to "primary" and "fully diluted" earnings per share and 
is effective for periods ending after December 15, 1997.  Early 
adoption is not permitted.  Management does not believe that 
earnings per share reported in accordance with SFAS No. 128 will 
materially differ from earnings per share as currently reported.


                               F - 8
<PAGE>

                               SIGNATURE

        In accordance with the requirements of the Securities
Exchange Act of 1934, the registrant has caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.


                       TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC. 



                       By /s/ ANDREW L. SIMON
                         ----------------------------------------
               
                           Andrew L. Simon
                           President, Chief Executive Officer and Treasurer
                           (principal financial officer)


Date:   June 11, 1997