<PAGE>

                   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, 1998

     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, 4 Hardscrabble Heights, Brewster, New York  10509
----------------------------------------------------------------------------
               (Address of principal executive offices)

                             (914) 277-8100
----------------------------------------------------------------------------
            (Issuer's telephone number, including area code)

                                                                 
           (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 June 8, 1998: 8,527,222 shares of Common Stock, par value
------------------------------------------------------------
$0.0001 per share.
------------------

        Transitional Small Business Disclosure Format (check one):

Yes             No    X
      -----         ------

<PAGE>

                              PART I

                      FINANCIAL INFORMATION


ITEM 1.   FINANCIAL STATEMENTS

          The financial statements for the Company's fiscal
quarter ended April 30, 1998 are attached to this Report,
commencing at page F-1.


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

          Except for historical information, the material
contained in this Management's Discussion and Analysis or Plan of
Operation is forward-looking. For the purposes of the safe harbor
protection for forward-looking statements provided by the Private
Securities Litigation Reform Act of 1995, readers are urged to
review the list of certain important factors set forth in
"Cautionary Statement for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act of
1995" contained in the Company's Annual Report on Form 10-KSB for
the fiscal year ended October 31, 1997 ("Fiscal 1997"), which may
cause actual results to differ materially from those described.

COMPANY BACKGROUND

          TASA provides assessment and instructional products and
services to the educational markets.  Its customers include
individual states, schools, colleges, and universities, as well
as parents and individual teachers primarily in grades K-4.  For
the assessment markets, the Company develops, publishes, and
distributes a highly regarded, proprietary line of reading tests,
and custom designs tests specifically to meet clients'
measurement specifications.  In conjunction with Yale
University's Gesell Institute, it also publishes a line of books
on the Gesell child development scales, a predictor of a young
child's readiness to start kindergarten.  For the instructional
markets, a TASA subsidiary designs, publishes and distributes
affordable "consumable" student workbooks for grades K-4, and
creates and publishes books and pamphlets for elementary school
teachers, and parents, In March 1998, TASA announced execution of
a letter of intent to acquire its initial educational delivery
capability - The Drake Business Schools.  The acquisition is
anticipated to close by July 1, 1998, or as soon thereafter as
practicable.

          TASA's corporate headquarters are located at 4
Hardscrabble Heights, P.O. Box 382, Brewster, New York 10509. 
The Company's, telephone number is (914) 277-8100 and the Company
maintains its corporate website at www.tasa.com.  The terms
"Company" and "TASA " refer to Touchstone Applied Science
Associates, Inc. and its subsidiaries, unless the context
otherwise indicates.  TASA's subsidiaries are Modern Learning
Press, Inc., a Delaware corporation ("MLP"), and, Beck Evaluation
& Testing Associates, Inc., a New York corporation ("BETA").

          The Company's primary assessment products are reading
comprehension tests based on its internally developed proprietary
assessment methodology called the Degrees of Reading Power(R)
("DRP").  It publishes and sells its DRP tests to over 3,500
elementary and secondary schools, colleges and universities
throughout the United States and Canada.  Based on its
proprietary DRP methodology, the Company's products measure an
individual student's reading ability in a non-culturally biased
manner and allow tracking of an individual's reading development
over time.  In 1997, management estimates that over 4 million DRP
tests were administered in the United States and Canada in either
the test's secure form or in "shelf" form from the Company's
catalogs.

          Before Fiscal 1997, substantially all of the Company's
revenues were derived from assessment products, primarily from
the publishing and sale of DRP test products and the provision of
related services, such as test scoring.  In January 1997, the
Company purchased all of the outstanding capital stock of BETA,
which extended its assessment products into custom designed tests
for states and textbook publishers.  TASA's instructional
products were acquired in May 1997, when a TASA subsidiary, MLP,
purchased substantially all of the operating assets of Programs
for Education, Inc.  In addition, during Fiscal 1997, the Company
extended its assessment activities by purchasing the Maculaitis
test, a test designed to evaluate English proficiency for limited
English proficiency ("LEP") students.  TASA has also developed
and introduced computerized and Internet-based products and
services, such as DRP BOOKLINK., which are available to schools
and subscribers on floppy disk.

RESULTS OF OPERATIONS

          The following table sets forth, for the periods
indicated, certain financial data as a percentage of total
revenues.  The percentages presented are prepared on an EBITDA
(1) format.

<TABLE>
<CAPTION>


            RESULTS OF OPERATIONS FOR THE SECOND FISCAL QUARTER

          All of the following amounts are percentages.



                                    Six Months              Three Months
                                  Ended April 30           Ended April 30


    EBITDA(1) Format              1998     1997             1998    1997

<S>                          <C>       <C>              <C>      <C>
Revenues                          100%     100%             100%    100%

   Costs of Goods Sold             25%      26%              29%     35%


Gross Profit                       75%      74%              71%     65%


Operating Expenses:

   Selling expenses                30%      26%              36%     31%


   General and administrative      39%      28%              41%     36%


Operating income (EBITDA)          15%      20%              12%     -3%


Depreciation-amortization          18%      15%              21%     17%


Net Interest Expense (Income)      -4%       2%              -4%      2%


EBT(2)                             -8%       7%             -13%    -18%


Net income                         -8%       6%             -14%     -9%

<FN>
------------------
(1)  Earnings before interest, taxes, and depreciation and
     amortization 
(2)  Earnings (loss) before taxes
</FN>
</TABLE>

          The discussion below is presented on an EBITDA basis
with respect to both dollar amounts and percentages.


THREE MONTHS ENDED APRIL 30, 1998

          REVENUES.  Revenues of $1,117,000 for the second
quarter ended April 30, 1998 (the "Current Quarter") represented
an increase of 71%, or $462,000, over the prior year's second
quarter (the "Comparable Quarter") sales of $654,000.  This
increase reflected both the Company's internal growth as well as
sales included this year from one acquisition completed
subsequent to the Comparable Quarter.  Of this year's sales
increase of $462,000, approximately $144,000, or 31%, of the gain
resulted from a 22% internal growth during the quarter.  The
balance of the increase in revenues, or approximately $318,000,
resulted from the acquisition of MLP completed in May 1997.  The
following is a discussion of the four components of the Company's
revenues.

          Contract sales, reflecting sales of secure DRP tests to
the States of New York, Connecticut and Virginia, increased 19%
in the Current Quarter to $87,000 from approximately $73,000 in
the Comparable Quarter.  With the continuing growth of catalog
sales and the acquisition of MLP and BETA, contract sales as a
percentage of total revenues has been significantly reduced as
compared to prior years and prior quarters during those years.  

          Catalog sales, representing the sale of DRP tests, DRP
computerized tests, and TextSense increased 22% to
approximately $587,000 from approximately $482,000 in the
Comparable Quarter last year.  Management's sales and marketing
programs have resulted in substantially increased numbers of new
catalog customers over the past three years, which continue to
account for these volume increases.

          The revenues of BETA, the Company's educational
consulting subsidiary, increased 25% to $124,000 in the Current
Quarter as compared to revenues of $99,000 in the Comparable
Quarter.  During the Current Quarter, BETA received its sixth multi-
year state contract or subcontract for custom designed testing
services at the state level.  At April 30, 1998, BETA's backlog
of contract work had increased substantially as compared to the
Comparable Quarter and the end of Fiscal 1997.  Sales from
services performed under these contracts will vary by fiscal
quarter depending on timing of required contract services.

          MLP, the assets of which were acquired by the Company
in May 1997, had sales of $318,000 for the Current Quarter. 
There were no sales for MLP in the Comparable Quarter last year. 
Based on management's analysis, over 70% of MLP's annual sales
have historically occurred during the periods comprising TASA's
third and fourth fiscal quarters.  The Current Quarter generally
accounts for less than 15% of MLP's anticipated annual sales.
Management has implemented a strategic growth plan for MLP which
includes the introduction of new titles, the broadening of MLP's
product line for schools, parents and teachers, and a sales
program focused on expanding MLP's client base from among TASA
clients as well as new outside clients.  Management believes
there is only a 5% overlap between MLP's current customer base
and TASA's 3,500 educational institutions client base.

          COST OF GOODS SOLD AND GROSS PROFIT.  Cost of goods
sold, excluding amortization of the Company's Test Passage Bank,
decreased in the Current Quarter to 29% of sales as compared to
35% in the Comparable Quarter.  In the Current Quarter, after
cost of goods sold of $326,000, the Company's gross profit was 71%
of revenues or $791,000.  This compares favorably to the
Comparable Quarter, when gross profit after cost of goods sold of
$228,000 constituted 65% of revenues or $426,000, The increase in
gross profit in the Current Quarter is attributable to increased
revenues coupled with higher margin products and services.

          SELLING EXPENSES.  Selling expenses for the Current
Quarter increased 93% over the Comparable Quarter to $397,000 or
36% of revenues.  This compares with $206,000 or 31% of revenues
in the Comparable Quarter.  The $139,000 selling expenses of MLP
in the Current Quarter accounted for 73% of the Current Quarter
increase of $191,000.  As it had not yet commenced operations,
MLP was not included in last year's Comparable Quarter.  The
remaining increase in selling expenses was due to increased
selling expenses in support of DRP test sales.  Because of the
seasonality of the business, the Company "forward-spends" in
anticipation of offsetting revenues in the second half of the
Company's fiscal year.

          GENERAL AND ADMINISTRATIVE EXPENSES.  General and
administrative expenses for the Current Quarter, excluding
depreciation and amortization, increased as a result of the
acquisition of MLP, and the necessary expansion of the Company's
corporate infrastructure. Excluding depreciation and amortization,
the Company's general and administrative expenses for the Current
Quarter increased $219,000 or 92% to 41% of revenues or $457,000. 
This compares to general and administrative expenses in the
Comparable Quarter of $239,000, or 36% of revenues.  Over 54% of
this increase, or $118,000, is due to the inclusion of MLP. 
Management believes that, based on the Company's overall revenue
patterns and the relatively even distribution of general and
administrative expenses throughout the fiscal year, the
percentage of revenues utilized for general and administrative
expenses should decline in the latter quarters of the Company's
fiscal year

          BAD DEBT RECOVERY.  The Company's previous management
made a $400,000 loan to HGI, Inc. (formerly The Harriman Group,
Inc.), which declared bankruptcy during Fiscal 1997.  Conse-
quently, the Company wrote off the $400,000 note receivable in
Fiscal 1997.  During the 1998 second quarter, management
concluded a settlement of the note receivable with HGI. 
Settlement terms require payment of $200,000 on or before October
8, 1998, which payment is guaranteed by an irrevocable letter of
credit.

          OPERATING PROFIT ("EBITDA").  The Company's earnings
before depreciation, amortization, interest and taxes (EBITDA)
for the Current Quarter were $136,000, or 12% of revenues, as
compared to a loss of ($18,000), or -3% of revenues, in the
Comparable Quarter.

          DEPRECIATION AND AMORTIZATION.  Depreciation and
amortization expenses in the Current Quarter increased 100% to
$229,000 from $114,000 in the Comparable Quarter.  Of the Current
Quarter's $115,000 increase, $75,000 was due to the amortization
of acquisition costs attributable to MLP.  In the May 1997
acquisition of assets of Programs for Education Inc., $200,000 of
the purchase price was a one-year prepaid consulting contract
amortizing $50,000 per quarter, and terminating in May 1998.  Of
the Current Quarter's depreciation and amortization,
approximately $99,000 is categorized in cost of goods sold
representing amortization of TASA's Test Passage Bank, while the
remainder is reported as general and administrative expenses.

          EARNINGS BEFORE INTEREST AND TAXES ("EBIT").  The
Company's loss before interest and taxes decreased in the Current
Quarter to ($92,000), as compared to a loss of ($132,000) in the
Comparable Quarter.  This earnings increase is directly
attributable to the factors discussed above.

          NET INTEREST EXPENSE (INCOME).  The Company's two major
acquisitions completed in Fiscal 1997 were in part financed by
interest bearing notes issued to the sellers.  Therefore, total
interest expense in the Current Quarter rose to $66,000 from
$19,000 in the Comparable Quarter.  Concurrently, management has
continued to invest the Company's cash liquidity into the
Company's business from which it expects to derive higher returns
than previously earned in cash and equivalent investments. 
Consequently, reduced interest income of $16,000 was reported in
the Current Quarter as compared to $35,000 in the Comparable
Quarter.  This has resulted in a net interest expense for the
Current Quarter of $49,000 as compared to net interest earnings
of $16,000 in the Comparable Quarter, a difference of $65,000. 
Management expects that the Company will continue to have a net
interest expense, for the next several fiscal years.

          EARNINGS (LOSS) BEFORE TAXES ("EBT").  The Company had
a loss before taxes of $141,000 for the Current Quarter, as
compared to a loss of $120,000 in the Comparable Quarter.

          INCOME TAX PROVISION (CREDITS).  Because of the timing
differences between the Company's financial and tax accounting,
the Current Quarter had a tax provision of $19,000 as compared to a
tax credit of $59,000 in the Comparable Quarter.  The tax
provisions were computed at statutory tax rates.

SIX MONTHS ENDED APRIL 30, 1998

          REVENUES.  Revenues of $2,415,000 for the six months
ended April 30, 1998 (the "Current Period") represented an
increase of 52%, or $823,000, over the prior year's first six
months (the "Comparable Period") sales of $1,592,000.  This
increase reflected both the Company's internal growth as well as
revenues included in the Current Period from one acquisition completed
subsequent to the Comparable Quarter.  Of the Current Period's
revenue increase of $823,000, approximately $276,000, or 34%, of
the gain resulted from a 17% internal growth during the Current
Period.  The balance of the increase in revenues, or
approximately $547,000, resulted from the acquisition of MLP
completed in May 1997.  The following is a discussion or the four
components of the Company's revenues.

          Contract sales increased 8% in the Current Period to
$583,000 from approximately $539,000 in the Comparable Period. 
Catalog sales increased 15% to approximately $1,038,000 from
approximately $905,000 in the Comparable Period.  The revenues of
BETA increased 67% to $248,000 in the Current Period as compared
to revenues of $148,000 in the Comparable Period.  MLP had sales
of $547,000 for the Current Period.  There were no sales for MLP
in the Comparable Period, The Current Period generally accounts
for less than 25% of MLP's anticipated annual sales.

          COST OF GOODS SOLD AND GROSS PROFIT.  Cost of goods
sold, excluding amortization of the Company's Test Passage Bank,
remained approximately constant in the Current Period at 25% of
revenues, as compared to 26% in the Comparable Period.  In the
Current Period, after cost of goods sold of $605,000, the
Company's gross profit was 75% of revenues or $1,810,000.  This
compares to the Comparable Period when gross profit after cost of
goods sold of $415,000 constituted 74% of revenues or $1,178,000. 
The increase in gross profit in the Current Period is
attributable to increased revenues coupled with higher margin
products and services.

          SELLING EXPENSES.  Selling expenses for the Current
Period increased 74% to $720,000, equaling 30% of revenues.  This
compares to $415,000 or 26% of revenues in the Comparable Period. 
The Current Period's 74% or $305,000 increase over the Comparable
Period, is substantially due to inclusion of the $233,000 selling
expenses of MLP. MLP was not included in the Comparable Period.

          GENERAL AND ADMINISTRATIVE EXPENSES.  General and
administrative expenses for the Current Period, excluding
depreciation and amortization, increased as a result of the
acquisition of MLP, and the necessary expansion of the Company's
corporate infrastructure and periodic services.  Excluding
depreciation and amortization, the Company's general and
administrative expenses for the Current Period increased $486,000,
or 109%, to $931,000, or 39% of revenues.  This compares to general
and administrative expenses in the Comparable Period of $445,000,
or 28% of revenues.  Approximately $248,000, or 51%, of this
increase is from the inclusion of MLP.

          BAD DEBT RECOVERY. The Company's previous management
made a $400,000 loan to HGI, Inc. (formerly The Harriman Group,
Inc.), which declared bankruptcy during Fiscal 1997.  Conse-
quently, the Company wrote off the $400,000 note receivable in
Fiscal 1997.  During the Current Quarter, management
concluded a settlement of the note receivable with HGI. 
Settlement terms require payment of $200,000 on or before October
8, 1998, which payment is guaranteed by an irrevocable letter of
credit.

          OPERATING PROFIT ("EBITDA").  The Company's earnings
before depreciation, amortization, interest and taxes (EBITDA)
for the Current Period were $358,000, or 15% of revenues, as
compared to $318,000, or 20% of revenues, in the Comparable
Period.

          DEPRECIATION AND AMORTIZATION.  Depreciation and
amortization expenses in the Current Period increased 87% to
$442,000 from $237,000 in the Comparable Period.  Of the Current
Period's $206,000 increase, $152,000 was due to the amortization
of acquisition costs attributable to the acquisition of the
assets of Programs for Education, Inc. while $31,000 was
attributable to the amortization of acquisition goodwill of BETA. 
Of the Current Period's depreciation and amortization,
approximately $183,000 is categorized in cost of goods sold,
representing amortization of TASA's Test Passage Bank, while the
remainder is reported as general and administrative expenses.

          EARNINGS BEFORE INTEREST AND TAXES ("EBIT").  The
Company's earnings (loss) before interest and taxes decreased in
the Current Period to ($184,000), as compared to a profit of
$105,000 in the Comparable Period.  This change is directly
attributable to the factors discussed above,

          NET INTEREST EXPENSE (INCOME).  The Company's two major
acquisitions completed in Fiscal 1997 were in part financed by
interest bearing notes issued to the sellers.  Therefore, total
interest expense in the Current Period rose to $129,000 from
$36,000 in the Comparable Period, Concurrently, management has
continued to invest the Company's cash liquidity into the
Company's business from which it expects to derive higher returns
than previously earned in cash and equivalent investments. 
Consequently, reduced interest income of $28,000 was reported in
the Current Period as compared to $75,000 in the Comparable
Period.  This has resulted in a net interest expense for the
Current Period of $101,000 as compared to net interest earnings
of $39,000 in the Comparable Period.   Management expects that
the Company will continue to have a net interest expense, for the
next several fiscal years.

          EARNINGS (LOSS) BEFORE TAXES ("EBT").  The Company had
a loss before taxes of ($184,000) for the Current Period, as
compared to EBT of $105,000 in the Comparable Period.

          INCOME TAX PROVISION (CREDITS).  Because of the timing
differences between the Company's financial and tax accounting,
the Current Period had a tax provision of $9,000 as compared to 
$14,000 in the Comparable Period.  The tax provisions were
computed at statutory tax rates.

LIQUIDITY AND CAPITAL RESOURCES

          OPERATING ACTIVITIES.  The Company continues to
generate substantial cash from operations as measured by EBITDA. 
In the first half of Fiscal 1998, EBITDA was $358,000 as compared
to $318,000 in the Comparable Period.  Substantially all of the
$206,000 increase of depreciation and amortization charged to earnings
in the Current Period over the Comparable Period derives specifically
from the acquisition of MLP and BETA. As previously noted, the
$100,000 amortization charge of the consulting agreement executed
in connection with the acquisition by MLP of Programs for
Education, Inc. which was prepaid at the closing of the
acquisition ends in May 1998.

          In the Current Period, management continued its program
to control tightly the Company's operating assets, including
accounts receivable and inventory.  However, in the Current
Period, operating assets used $313,000 of cash versus generating
$95,000 of cash in the Comparable Period. In total, operations
used total cash of $286,000 during the Current Period as compared
to cash generated of $389,000 in the Comparable Period,

          INVESTING ACTIVITIES.  During the Current Period, the
Company invested cash of $278,000 in capital expenditures. 
including its proprietary Test Passage Bank and additional
software development.  This compares with $395,000 in the
Comparable Period.  Specifically, in the Current
Period, expenditures of $108,000 were made in the Company's
proprietary Test Passage Bank (versus $238,000 in the Comparable
Period), while software expenditures decreased to $69,000 from
$107,000 in Comparable Period.  Capital expenditures for
fixed assets increased slightly to $88,000 from $52,000 in
the Comparable Period.  Additionally, in the Current Period,
$105,000 was used for deferred acquisition costs, while in the
Comparable Period $174,000 was spent to acquire BETA and the
Maculaitis test.  Total expenditures in the Current Period,
excluding transactions in marketable securities, totaled $383,000
versus $559,000 in the Comparable Period.

          FINANCING ACTIVITIES.  The Company used a total of
$574,000 in cash for financing activities during the Current
Period versus $65,000 in the Comparable Period.  This results
from the Company's receipt of $45,000 from the exercise of
outstanding warrants and the expenditure of $619,000 to reduce
long-term debt.  This compares with approximately $65,000 used in
the Comparable Period primarily for debt reduction.

          NET CASH CHANGE.  As a result of the Company's
operating, investing, and financing activities for the Current
Period, the Company's cash and temporary investment balances were
reduced by $783,000 to $374,000.  The Company carried an
additional $380,000 of marketable securities at April 30, 1998. 
The Company's working capital at April 30, 1998 was $1,932,000,
with a current ratio of 4 to 1.  This compares to working capital
at the end of Fiscal 1997 of $2,244,000 with a then current ratio
of 3.7 to 1.  Management believes that its existing debt
obligations can be financed from the cash flow from operations.

SUBSEQUENT EVENTS

          CURRENT ACQUISITION FINANCING.  In March 1998, the
Company announced execution of a letter of intent to acquire all
of the outstanding capital stock of Drake Business Schools
Corporation and Drake Training Services Corporation for cash of
$2,500,000 (the "Drake Acquisition").  The Company is currently
in negotiations with lending and investment sources to finance
the Drake Acquisition.  Additionally, the Company has announced
that it intends to pursue a program of acquiring additional post
secondary schools.  Although the Company anticipates that the
schools to be acquired will have earnings and a positive EBITDA,
the schedule, rate and amount of capital available for its post
secondary school acquisition program will be determined partially
by the anticipated funding, as well as the earnings and cash
flows of the schools acquired and the terms of the acquisitions. 
The Company has no other material commitments for capital or
other expenditures and is not party to any arrangement that would
adversely impact the Company's liquidity.


                             PART II

                        OTHER INFORMATION


ITEM 1.   LEGAL PROCEEDINGS

          None.


ITEM 2.   CHANGES IN SECURITIES

          None.


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 27, 1998.  At the meeting, the stockholders took
          the following actions:

      (i)  The proposal to elect Walter B. Barbe as a director of
           the Company was approved by a vote of 12,414,232 votes
           in favor of his election, with 44,900 votes against and
           no abstentions and broker non-votes, representing a
           vote of 95.6% of the votes cast in favor of the
           election of Mr. Barbe.  

     (ii)  The proposal to elect Michael D. Beck as a director of
           the Company was approved by a vote of 12,414,232 votes
           in favor of his election, with 44,900 votes against and
           no abstentions and broker non-votes, representing a
           vote of 95.6% of the votes cast in favor of the
           election of Mr. Beck.  

    (iii)  The proposal to elect Steven R. Berger as a
           director of the Company was approved by a vote of
           12,414,232 votes in favor of his election, with
           44,900 votes against and no abstentions and broker
           non-votes, representing a vote of 95.6% of the
           votes cast in favor of the election of Mr. Berger.

     (iv)  The proposal to elect Stephen H. Ivens as a director of
           the Company was approved by a vote of 12,414,232 votes
           in favor of his election, with 44,900 votes against and
           no abstentions and broker non-votes, representing a
           vote of 95.6% of the votes cast in favor of the
           election of Mr. Ivens.    

      (v)  The proposal to elect Michael Milone as a director of
           the Company was approved by a vote of 12,414,232 votes
           in favor of his election, with 44,900 votes against and
           no abstentions and broker non-votes, representing a
           vote of 95.6% of the votes cast in favor of the
           election of Mr. Milone.

     (vi)  The proposal to elect Andrew L. Simon as a director of
           the Company was approved by a vote of 12,414,232 votes
           in favor of his election, with 44,900 votes against and
           no abstentions and broker non-votes, representing a
           vote of 95.6% of the votes cast in favor of the
           election of Mr. Simon.

     (vii) The proposal to elect Linda G. Straley as a
           director of the Company was approved by a vote of
           12,414,232 votes in favor of her election, with
           44,900 votes against and no abstentions and broker
           non-votes, representing a vote of 95.6% of the
           votes cast in favor of the election of Ms.
           Straley.

    (viii) The proposal to ratify the appointment of Lazar,
           Levine & Felix LLP as the independent auditors of
           the Company was adopted by a vote of 12,424,582
           votes in favor of the proposal, with 22,350 votes
           against, 12,200 votes abstaining and no broker
           non-votes, representing a vote of 95.7% of the
           votes cast in favor of the proposal, with 20,150
           votes against, 30,900 votes abstaining and no
           broker non-votes.  


ITEM 5.   OTHER INFORMATION

          None.


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          (a)  Exhibits


                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 on April 9, 1998
               (relating to the pending acquisition of Drake
               Training Services Corporation and Drake Business
               Schools Corporation).

<PAGE>


                 TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.

           INDEX TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                FOR THE FISCAL QUARTER ENDED APRIL 30, 1998



     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 SUBSIDIARIES
                                                                      Page 1 of 2
                           CONSOLIDATED BALANCE SHEETS

                                                   April 30,        October 31,
                                                    1 9 9 8           1 9 9 7
                                                    -------           -------
<S>                                           <C>              <C>
     ASSETS
     ------

Current assets:
  Cash and temporary investments                  $  373,725        $1,156,664
  Marketable securities                              380,027           377,560
  Note receivable (Note E)                           200,000               --               
  Accounts receivable                                725,883           803,021
  Inventories                                        404,889           360,227
  Prepaid expenses and other current assets          486,372           381,381
                                                  ----------        ----------

    Total current assets                           2,570,896         3,078,853

Property, plant and equipment - net of
  accumulated depreciation of $1,100,119
  and $1,029,417, respectively                     1,757,026         1,739,947
               
Other assets:
  Test passage bank, net of accumulated
    amortization of $1,324,768 and $1,175,235
    respectively                                   2,702,735         2,743,853
  Software development costs, net of
    accumulated amortization of $59,492 and
    $30,517, respectively                            381,362           340,930
  Goodwill, net of accumulated amortization of 
    $112,955 and $65,511                             749,302           796,746
  Noncompete agreements, net of accumulated
    amortization of $65,476 and $29,672              434,524           470,238
  Deferred income taxes                              357,664           335,722
  Other assets                                       194,856            86,596
                                                  ----------        ----------

    Total assets                                  $9,148,365        $9,592,885
                                                  ==========        ==========


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

<PAGE>         F-2
<TABLE>
<CAPTION>

                    TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
                                 AND SUBSIDIARIES
                                                                      Page 2 of 2
                           CONSOLIDATED BALANCE SHEETS

                                                   April 30,        October 31,
                                                    1 9 9 8           1 9 9 7
                                                    -------           -------

<S>                                           <C>              <C>
     LIABILITIES AND STOCKHOLDERS' EQUITY
     ------------------------------------

Current liabilities:
  Current portion of long-term debt               $  298,573        $   314,217
  Accounts payable and accrued expenses              340,305            520,148
                                                  ----------         ----------
               
    Total current liabilities                        638,878            834,365

Long-term debt less current portion                2,389,630          2,528,968
                                                  ----------         ----------

    Total liabilities                              3,028,508          3,363,333
                                                  ----------         ----------
               
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, 8,489,322 and 8,389,322 shares
    issued and outstanding, respectively                 849                839
  Additional paid-in capital                       4,410,990          4,365,875
  Stock subscription receivable                      (14,350)           (14,350)
  Unrealized holding gain                              7,379              8,601
  Unearned compensatory stock                        (67,233)          (107,046)
  Retained earnings                                1,782,222          1,975,633
                                                  ----------         ----------

    Total stockholders' equity                     6,119,857          6,229,552
                                                  ----------         ----------
               
    Total liabilities & stockholders' equity      $9,148,365         $9,592,885
                                                  ==========        ===========



<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>

                                       F - 2

<PAGE>         F-3
<TABLE>
<CAPTION>

                    TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
                                 AND SUBSIDIARIES

                         CONSOLIDATED STATEMENTS OF INCOME
               
                                            Six Months Ended          Three Months Ended
                                                April 30,                   April 30,
                                          1 9 9 8       1 9 9 7         1 9 9 8       1 9 9 7
                                          -------       -------         -------       -------

<S>                                 <C>           <C>            <C>            <C>
Contract income                         $  582,605   $  539,154      $   87,233    $   73,106
Catalog sales                            1,037,773      905,123         587,149       482,097
Consulting income                          247,673      147,890         124,354        99,453
Catalog sales -- MLP                       546,886           --         318,457            --
                                        ----------   ----------      ----------    ----------
       

Total net revenue                        2,414,937    1,592,167       1,117,193       654,656

Cost of goods sold                         788,791      564,236         425,195       304,124
                                        ----------   ----------      ----------    ----------

Gross profit                             1,626,146    1,027,931         691,998       350,532
                                        ----------   ----------      ----------    ----------
        
Operating expenses:
  Selling expenses                         719,997      414,979         397,170       205,747
  General and administrative expenses    1,189,420      531,748         587,439       276,896
  Bad debt recovery (Note E)              (200,000)          --        (200,000)           --
                                        ----------   ----------      ----------    ----------

Total operating expenses                 1,709,417      946,727         784,609       482,643
                                        ----------   ----------      ----------    ----------
                             
Income (loss) from operations              (83,271)      81,204         (92,611)     (132,111)

Other income (expense):
  Interest expense                        (128,779)     (36,059)        (65,557)      (18,812)
  Loss on sale of assets                        --      (15,083)             --        (3,383)
  Investment income                         27,569       74,635          16,705        34,580
                                        ----------   ----------      ----------    ----------

Income (loss) before income taxes         (184,481)     104,697        (141,463)     (119,726)

Income taxes (benefit)                       8,930       13,520          18,902       (59,461)
                                        ----------   ----------      ----------    ----------

Net income (loss)                       $ (193,411)  $   91,177      $ (160,365)   $  (60,265)
                                        ==========   ==========      ==========    ==========
               
Weighted average shares outstanding
  Basic                                  8,468,211    8,000,433       8,489,322     8,113,186
  Diluted                                8,468,211    8,072,618       8,489,322     8,113,186 
                             
Earnings per share
  Basic                                 $     (.02)  $      .01      $     (.02)   $     (.01)
  Diluted                               $     (.02)  $      .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 SUBSIDIARIES
                                                                      Page 1 of 2
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                           
                                                                           
                                                           Six Months Ended
                                                               April 30,        
                                                       1 9 9 8           1 9 9 7
                                                       -------           -------
<S>                                               <C>             <C>
OPERATING ACTIVITIES
 Net income (loss)                                   $(193,411)       $   91,177
 Adjustments to reconcile net income (loss) to net
  cash provided by (used in) operating activities:
   Depreciation and amortization                       442,152           236,618
   Deferred income taxes                               (21,942)          (47,379)
   Bad debt recovery                                  (200,000)               --
   Financial advisory services                              --             2,344
   Loss on sale of auto                                     --            11,700
Changes in operating assets and liabilities:
 Accounts receivable                                    77,136           216,308
 Inventories                                           (44,662)           25,826
 Other current assets                                 (165,405)          (44,851)
 Accounts payable                                     (179,842)         (102,759)
                                                     ---------        ----------

NET CASH FLOWS FROM OPERATING ACTIVITIES              (285,974)          388,984
                                                     ---------        ----------

INVESTING ACTIVITIES
 Acquisition of property, plant and equipment          (87,781)          (52,191)
 Test passage bank                                    (108,415)         (238,261)
 Software development costs                            (69,407)         (106,837)
 Pre-publication costs                                 (12,385)               --
 Purchase of marketable securities                          --            (3,797)
 Proceeds from sale of marketable securities           460,000           646,080
 Proceeds from sale of auto                                 --            10,000
 Acquisition of subsidiary                                  --          (143,975)
 Acquisition of test                                        --           (29,900)
 Deferred acquisition costs                           (105,431)               --
                                                     ---------        ----------

NET CASH FLOWS FROM INVESTING ACTIVITIES                76,581            81,119
                                                     ---------        ----------


<FN>
See notes to consolidated financial statements.
</FN>

                                       F - 4
<PAGE>         F-5

</TABLE>
<TABLE>
<CAPTION>

                    TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
                                 AND SUBSIDIARIES

                                                                      Page 2 of 2
                       CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                           Six Months Ended
                                                               April 30,
                                                       1 9 9 8           1 9 9 7
                                                       -------           -------
<S>                                             <C>               <C>
FINANCING ACTIVITIES
 Principal payments on industrial revenue
   bond obligation                                  $       --        $  (42,014)
 Repayment of long-term debt                          (154,982)               --
 Proceeds from exercise of warrants                     45,125                --
 Principal payments on long-term debt                 (463,689)          (17,438)
 Mortgage costs                                             --            (4,374)
 Organizational expenses of subsidiary                      --            (1,200)
                                                    ----------        ----------

NET CASH FLOWS FROM FINANCING ACTIVITIES              (573,546)          (65,026)
                                                    ----------        ----------

NET CHANGE IN CASH AND TEMPORARY INVESTMENTS          (782,939)          405,077

Cash and temporary investments at
  beginning of period                                1,156,664         1,049,819
                                                    ----------        ----------
         
CASH AND TEMPORARY INVESTMENTS AT END OF PERIOD     $  373,725        $1,454,896
                                                    ==========        ==========

SUPPLEMENTAL CASH FLOW INFORMATION:
 Interest paid                                      $  163,139        $   32,092
                                                    ==========        ==========

 Income taxes paid                                  $   41,200        $   55,167
                                                    ==========        ==========

 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>

                                       F - 5


<PAGE>         F-6

                    TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
                                 AND SUBSIDIARIES

                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



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

In the opinion of management, the accompanying consolidated financial 
statements of Touchstone Applied Science Associates, Inc. contain all 
adjustments necessary to present fairly the Company's consolidated 
financial position as of April 30, 1998 and October 31, 1997 and the 
consolidated results of operations for the six and three months ended April 
30, 1998 and 1997 and consolidated cash flows for the six months ended 
April 30, 1998 and 1997.

The consolidated results of operations for the six and three months ended 
April 30, 1998 and 1997 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 consolidated financial statements included 
in its Annual Report on Form 10-KSB for the year ended October 31, 1997.

Earnings per Share
------------------

Effective November 1, 1997, the Company adopted Financial Accounting 
Standards Board Statement of Financial Accounting Standards Number 128, 
"Earnings Per Share".  Under this standard, the method for calculation of 
earnings per share was changed and requires the presentation of "basic" and 
"diluted" earnings per share.  Prior period earnings per share have been 
restated to conform with these provisions.



                                       F - 6

<PAGE>         F-7

                    TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
                                 AND SUBSIDIARIES

                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE B -- STOCKHOLDERS' EQUITY
------------------------------

Consultants' Stock Options
--------------------------

In February 1998, the Company granted 5,000 options to a consultant 
pursuant to its Consultants Stock Incentive Plan.  The options are 
exercisable at $.781 per share.

Directors' Stock Options
------------------------

In March 1998, 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 $1.063 per share.

Employee Stock Options
----------------------

In March 1998, the Company granted an aggregate of 353,500 options to six 
of its officers pursuant to its Amended and Restated 1991 Stock Option 
Incentive Plan.  The options are exercisable at $1.063 per share.

In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based 
Compensation".  The Company currently accounts for its stock-based 
compensation plans using the accounting prescribed by Accounting Principles 
Board Opinion No. 25, "Accounting for Stock Issued to Employees". As the 
Company is not required to adopt the fair value based recognition 
provisions prescribed under SFAS No. 123, it has elected only to comply 
with the disclosure requirements set forth in the statement which includes 
disclosing pro forma net income and earnings per share as if the fair value 
based method of accounting had been applied.  The pro forma net loss and 
loss per share for the six months ended April 30, 1998 and 1997 would have 
been $(377,146) and $(.04) and $(115,704) and $(.01), respectively, had the 
new method been applied.

The fair value of each option grant was estimated on the date of the grant 
using the Black-Scholes option-pricing model with the following weighted 
average assumptions for 1998 and 1997, respectively: expected volatility 
of approximately 80% and 78%, respectively; risk free interest rate of 
6.75%; and expected lives of 5 to 10 years.


                                       F - 7
<PAGE>         F-8


                    TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
                                 AND SUBSIDIARIES

                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE B -- STOCKHOLDERS' EQUITY (Continued)
------------------------------------------

Employee Stock Options (continued)
----------------------------------

The effects of applying SFAS 123 in the above pro forma disclosures are not 
indicative of future amounts as they do not include the effects of awards 
granted prior to 1996.  Additionally, future amounts are likely to be 
affected by the number of grants awarded since additional awards are 
generally expected to be made at varying amounts.

Proposed Stock Repurchase
-------------------------

In April 1998, the Board of Directors authorized the Company to repurchase 
up to $250,000 worth of the Company's issued and outstanding common shares 
and warrants on the open market subject to the rules and regulations of the 
Securities and Exchange Commission.  As of the date of this report, no such 
purchases have been made.

NOTE C -- PENDING ACQUISITION
-----------------------------

On March 26, 1998, the Company entered into a letter of intent to purchase 
all of the issued and outstanding capital stock of each of Drake Training 
Services Corporation and Drake Business Schools Corporation for an 
aggregate purchase price equal to approximately $2,500,000.  The 
acquisition is currently scheduled for closing on or about July 1, 1998 and 
is subject to the execution of definitive documentation and the 
satisfaction of conditions precedent.

NOTE D -- IRS EXAMINATION
-------------------------

The Company has been notified that the Internal Revenue Service intends to 
review its corporation income tax returns for the year ended October 31, 
1995.



                                       F - 8

<PAGE>         F-9

                    TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
                                 AND SUBSIDIARIES

                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE E -- NOTE RECEIVABLE
-------------------------

In March 1998, the Company entered into an agreement with HGI, Inc. 
(formerly The Harriman Group Inc.) ("HGI") and one of its officers.  The 
agreement provides for the settlement of the note receivable plus accrued 
interest from HGI with a face amount of $400,000, for an aggregate of 
$200,000 which is to be paid prior to October 15, 1998.  Payment pursuant 
to the agreement is guaranteed by an irrevocable letter of credit.  The 
Company reflected the entire note balance as a bad debt during the year 
ended October 31, 1997 as a result of an involuntary bankruptcy proceeding 
against HGI.  The Company has reported the amount collectible pursuant to 
this agreement and related collateral as a bad debt recovery.

NOTE F -- RECENTLY ISSUED ACCOUNTING STANDARD
---------------------------------------------

The Financial Accounting Standards Board has issued Statement of Financial 
Accounting Standards Number 130 "Reporting Comprehensive Income".  This 
standard requires disclosures regarding comprehensive income,  the change 
in an entity's equity during a period from transactions and events other 
than those resulting from investments by and distributions to owners.  Had 
the new standard been adopted effective November 1, 1997, comprehensive 
income for the six months ended April 30, 1998 and 1997 would have been 
$(192,191) and $111,627, respectively.


                                       F - 9


<PAGE>
                                 
                              SIGNATURE

          In accordance with the requirements of the Securities
Exchange Act of 1934, the registrant has duly 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


                         By /s/ JOHN M. DUTTON
                            -----------------------------------
                            John M. Dutton
                            Chief Financial Officer


Date:     June __, 1998



</TABLE>