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, 1999

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

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 7, 1999: 2,141,801 shares of Common Stock, par
       ----------------------------------------------------------
value $0.0001 per share
-----------------------

      Transitional Small Business Disclosure Format (check one):

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

<PAGE>


                                 PART 1

                        FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

The financial statements for the Company's fiscal
quarter ended April 30, 1999 are attached to this Report,
commencing at page F-1.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

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, 1998 ("Fiscal 1998"), which may
cause actual results to differ materially from those described.

BACKGROUND

For over 20 years, TASA served the educational market
with essentially one type of assessment product.  Beginning in
1997 and through November 1998, through a series of acquisitions,
the Company has expanded into, and now serves, three segments of
the educational market: (1) the educational assessment and
evaluation market with our standardized assessment products,
including the Degrees of Reading Power (DRP) tests, and through
Beck Evaluation and Testing Associates, Inc. ("BETA"), the
Company's custom test design division; (2) the instructional
market through Modern Learning Press, Inc. ("MLP"); and (3) the
educational delivery market through the Company's post-secondary
proprietary school division, which is now known as TASA
Educational Services Corp. ("TESC"), a subsidiary of the Company
which operates as a holding company for the school division, and
which operates the Mildred Elley Schools through MESI Acquisition
Corp. ("MESI").  In an effort to report the revenues in each of
these areas in a more meaningful manner, the Company is reporting
revenues in these three discrete categories and prior periods
will be recharacterized into these segments for comparative
purposes.


RESULTS OF OPERATIONS

The following table compares the revenues for each of
the assessment division, the instructional division and the
educational delivery division for the six-month period ended
April 30, 1999 versus the six-month period ended April 30, 1998
and for the second quarter ended April 30, 1999 versus the second
quarter ended April 30, 1998.

<TABLE>
<CAPTION>

           RESULTS OF OPERATIONS FOR THE SECOND FISCAL QUARTER
            AND FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 1999


                                     Six Months                     Three Months
                                   Ended April 30,        %        Ended April 30,       %
                                  1999        1998     Change     1999        1998    Change
                                  ----        ----     ------     ----        ----    ------
                                   (in thousands                   (in thousands
                                    of dollars)                      of dollars)

<S>                          <C>        <C>          <C>      <C>         <C>       <C>
Assessment Products Revenues    $2,077.9   $1,868.0     +11.2    $1,034.2    $798.7    +29.5
Instructional Revenues             573.5      546.9      +4.9       371.6     318.5    +16.7
Educational Delivery Revenues    2,548.5         --       N/A     1,437.9        --      N/A
                                --------   --------    ------    --------  --------   ------
Total Revenues                  $5,199.9   $2,414.9    +115.3    $2,843.7  $1,117.2   +154.5
</TABLE>

The following are selected ratios as a percentage of revenues on the Company's
financial statements:


                                        Six Months              Three Months
                                      Ended April 30,          Ended April 30,
                                    1999          1998       1999          1998
                                    ----          ----       ----          ----
                                                 (in percentages)


      Revenues                      100%          100%       100%          100%
      Gross Profit Margin            62            67         65            62
      Operating Expense:
        Selling Expense              21            30         20            36
        General &  Administrative    42            49         40            52
        Bad Debt Recovery             0            (8)         0           (18)
      Income (Loss) from Operations  (1)           (4)         5            (8)
        Other (Expense)              (5)           (4)        (5)           (4)
      Pre-Tax (Loss)                 (6)           (8)        (0)          (12)
      Net (Loss)                     (4)           (8)        (0)          (14)



FOR THE THREE MONTHS ENDED APRIL 30, 1999

      REVENUES.  For the three-month period ended April 30,
      --------
1999 (the "Current Quarter"), revenues were $2,843,805,
representing a 155% increase, or $1,726,612, over $1,117,193 for
the three-month period ended April 30, 1998 (the "Comparable
Quarter").  This increase resulted from the acquisition of the
Mildred Elley Schools in November 1998 as well as increases in
revenues in the Company's assessment and instructional divisions
during the Current Quarter.

      Revenues for assessment products and services increased
29%, or $235,494, to $1,034,230 in the Current Quarter from
$798,736 in the Comparable Quarter.  Of this increase, the
Company's proprietary test division featuring DRP products
reflected a revenue increase of 2% while the custom test design
division, BETA, increased its revenues by 180%. During the
Current Quarter, the Company announced that it had received two
contracts, through BETA, amounting to approximately $1 million in
revenue which will be fulfilled during the third and fourth
quarters of the current fiscal year.

      Instructional revenues increased 17% in the Current
Quarter from the Comparable Quarter (or $371,631 in the Current
Quarter versus $318,457 in the Comparable Quarter). In late 1998,
management made the decision to shift its marketing focus and
direct sales representation as well as to engage in cooperative
marketing efforts.  Management believes that the results from
these efforts will be seen in the third and fourth fiscal
quarters, traditionally peak sales periods for the instructional
division, MLP.

      The educational delivery division contributed
$1,437,944 to the Company's Current Quarter revenues, which
represented 83% of the Current Quarter revenue increase over the
Comparable Quarter.  There were no revenues for this division in
the Comparable Quarter.

      COST OF GOODS SOLD.  Cost of goods sold in the Current
      ------------------
Quarter increased 136%, or $580,207, from $425,195 in the
Comparable Quarter to $1,005,402 in the Current Quarter.  Cost of
goods sold as a percentage of revenues remained fairly constant
with a minimal decrease of approximately 3% in the Current
Quarter versus the Comparable Quarter (or 35% in the Current
Quarter versus 38% in the Comparable Quarter).

      GROSS PROFIT.  In the Current Quarter, gross profit
      ------------
increased by 166%, or $1,146,405, from $691,998 in the Comparable
Quarter to $1,838,403 in the Current Quarter.  The increase in
gross profit is attributable to an increase in revenues resulting
primarily from the acquisition of the Mildred Elley Schools.  The
gross profit margin percentage also increased in the Current
Quarter to approximately 65% from 62% in the Comparable Quarter.

      SELLING EXPENSES.  Selling expenses for the Current
      ----------------
Quarter increased by 41%, or $163,186, from $397,170 in the
Comparable Quarter to $560,356 in the Current Quarter.  However,
for the Current Quarter, selling expenses were 20% of revenues
versus 36% for the Comparable Quarter.  This decline of selling
expenses as a percentage of revenues is due to increased revenues
for BETA and the Company's educational delivery division, both of
which require lower marketing expenditures than the proprietary
test division.

      GENERAL AND ADMINISTRATIVE EXPENSES.  The Company's
      -----------------------------------
general and administrative expenses increased 96%, or $562,558,
from $587,439 in the Comparable Quarter to $1,149,997 in the
Current Quarter.  However, general and administrative expenses
were 40% of revenues in the Current Quarter versus 52% in the
Comparable Quarter.  This decrease is the result of revenue
increases contributed primarily through BETA and the Company's
educational delivery division.  Management believes that this
percentage will continue to decrease throughout the current
fiscal year as the Company moves into its higher sales volume
periods.

      BAD DEBT RECOVERY.  In the Comparable Quarter, the
      -----------------
Company recovered $200,000 from a settlement of a $400,000 loan
made by previous management. There was no bad debt recovery in
the Current Period.

      INCOME (LOSS) FROM OPERATIONS.  Income from operations
      -----------------------------
for the Current Quarter was $128,050 versus a loss from
operations of ($92,611) in the Comparable Quarter.  This increase
is primarily attributable to increased revenues in both the
Company's educational delivery and custom test design divisions.

      EBITDA.  Earnings before interest, taxes, depreciation,
      ------
and amortization increased $283,390 to $374,957 or 13% of
revenues in the Current Quarter from $136,567 or 12% of revenues
in the Comparable Quarter.  This increase was primarily
attributable to the additional earnings contributed through the
Mildred Elley Schools acquisition and the Company's custom test
design division.

      OTHER INCOME (EXPENSE).  Other expense increased to
      ----------------------
($145,371) in the Current Quarter from ($48,852) in the
Comparable Quarter.  This increase was directly attributable to
additional interest expense incurred in funding the Mildred Elley
Schools acquisition.

      LOSS BEFORE INCOME TAXES.  The Company had a loss of
      ------------------------
($17,321) for the Current Quarter versus a loss of ($141,463) for
the Comparable Quarter.  This decrease in the loss is largely
attributable to the Company's revenue increase in the Current
Quarter as a result of the Mildred Elley Schools acquisition,
combined with fixed operating expenses remaining fairly constant.

      NET LOSS AND EARNINGS PER SHARE.  Net loss after taxes
      -------------------------------
was ($9,347) for the Current Quarter versus a loss of ($160,365)
for the Comparable Quarter.  Loss per share was ($.00) based on
weighted average shares outstanding of 2,141,801. After giving
effect to the Company's one-for-four reverse stock split which
was effected on March 4, 1999, the Comparable Quarter loss per
share was ($.08) based upon 2,122,331 shares outstanding.

FOR THE SIX MONTHS ENDED APRIL 30, 1999

      REVENUES.  For the six-month period ended April 30,
      --------
1999 (the "Current Period") revenues were $5,199,932,
representing a 115% increase, or $2,784,995, over $2,414,937 for
the six-month period ended April 30, 1998 (the "Comparable
Period"). The overall increase was due to the acquisition of the
Mildred Elley Schools in November 1998 as well as increases in
the revenues of the Company's assessment and instructional
divisions during the period.

      Revenues for assessment products and services increased
11%, or $209,814, from $1,868,051 in the Comparable Period to
$2,077,865 during the Current Period.  Revenues from the
Company's proprietary test division, featuring DRP products, fell
6.3% due to the expected elimination of the New York State Grades
3 and 6 PEP tests.  This decrease was offset by growth in the
Company's custom test design division, BETA, which posted a
revenue increase of 122%.

      Instructional revenues increased 4.9% in the Current
Period, totaling $573,532, which is $26,646 over the Comparable
Period's revenues of $546,886.

      Revenues from the Company's educational delivery
division were $2,548,535 for the Current Period, which
represented 92% of the Current Period revenue increase over the
Comparable Period.  There were no revenues for this division in
the Comparable Period.

      COST OF GOODS SOLD.  Cost of goods sold in the Current
      ------------------
Period increased by 150%, or $1,183,187, from $788,791 in the
Comparable Period to $1,971,978 in the Current Period.  Cost of
goods sold as a percentage of revenues increased to 38% in the
Current Period from 33% in the Comparable Period.  This increase
was the result of the increased costs required to deliver
assessment products and services further resulting from the
increase in BETA revenues, and the costs associated with
generating revenues from the educational delivery division.

      GROSS PROFIT.  For the Current Period, gross profit
      ------------
increased by 99%, or $1,601,808, from $1,626,146 in the
Comparable Period, to $3,227,954.  The increase in gross profit
is attributable to an increase in revenues resulting primarily
from the Mildred Elley Schools acquisition.  The gross profit
margin decreased in the Current Period to 62% versus 67% in the
Comparable Period as a result of the Company's change in product
mix particularly within the assessment division during the first
quarter of the Company's current fiscal year.

      SELLING EXPENSE.  Selling expenses for the Current
      ---------------
Period increased by 54%, or $385,718, from $719,997 in the
Comparable Period to $1,105,715 in the Current Period.  However,
for the Current Period, selling expenses were 21% of revenues
versus 30% for the Comparable Period.  This decline of selling
expenses as a percentage of revenues is a function of the
increase in BETA revenues and the revenue increase in the
Company's educational delivery division, both of which require
lower marketing expenditures than the proprietary test division.

      GENERAL AND ADMINISTRATIVE. The Company's general and
      --------------------------
administrative expenses increased 84%, or $994,435, from
$1,189,420 in the Comparable Period to $2,183,855 in the Current
Period.  However, general and administrative expenses as a
percentage of sales fell to 42% in the Current Period from 49% in
the Comparable Period.  This decrease is the result of revenue
increases contributed primarily through the Company's custom test
design division, BETA, and the Company's educational delivery
division, TESC.  Management believes that this percentage will
continue to decrease during the third and fourth quarters of the
current fiscal year as the Company approaches its higher sales
volume periods.

      BAD DEBT RECOVERY.  In the Comparable Period, the
      -----------------
Company recovered $200,000 from a settlement of a $400,000 loan
made by previous management. There was no bad debt recovery in
the Current Period.

      INCOME (LOSS) FROM OPERATIONS.  Loss from operations
      -----------------------------
for the Current Period was ($61,616) versus a loss from
operations of ($83,271) in the Comparable Period.  Due to the
non-recurring bad debt recovery of $200,000, which was recognized
in the Comparable Period, there was a real increase in income
(loss) from operations of $221,655.  Such increase was primarily
attributable to increased revenues in both the Company's
educational delivery and custom test design divisions.

      EBITDA.  Earnings before interest, taxes, depreciation,
      ------
and amortization increased $40,837 to $399,718, or 8% of
revenues, for the Current Period versus $358,881, or 15% of
revenues, for the Comparable Period.  However, due to the
non-recurring bad debt recovery of $200,000, which was recognized
in income (loss) from operations for the Comparable Period, there
was a real increase in EBITDA for the Current Period of $240,837.
This increase is primarily attributable to the additional
earnings contributed through the Mildred Elley Schools
acquisition and the Company's custom test design division.

      OTHER INCOME (EXPENSE).  Other expense increased to
      ----------------------
($278,103) in the Current Period versus ($101,210) in the
Comparable Period. The increase in expenses is directly
attributable to the interest expense incurred with the
acquisition of Mildred Elley Schools.

      LOSS BEFORE INCOME TAXES.  The Company had a loss
      ------------------------
before taxes of ($339,719) for the Current Period versus a loss
before taxes of ($184,481) in the Comparable Period.

      NET LOSS AND EARNINGS PER SHARE.  Net loss after taxes
      -------------------------------
was ($209,704) for the Current Period versus a loss of ($193,411)
for the Comparable Period.  Due to the non-recurring bad debt
recovery of $200,000 which occurred in the Comparable Period,
there was a real decrease in the Company=s loss after taxes for
the Current Period of ($183,707).  Loss per share was ($.10)
based on weighted average shares outstanding of 2,141,801.  After
giving effect to the Company's one-for-four reverse stock split
which occurred on March 4, 1999, the Comparable Period loss per
share was ($.09) based upon 2,117,053 shares outstanding.

LIQUIDITY AND CAPITAL RESOURCES

      WORKING CAPITAL.  Working capital at the end of the
      ---------------
Current Period was $3,341,867, down from $5,824,816 at the
beginning of the fiscal year. The $2.5 million decrease was due
to the acquisition of the Mildred Elley schools in November 1998.
The ratio of current assets to current liabilities was 2.62 to
1.0 at the end of the Current Period.

      CASH FLOW FROM OPERATING ACTIVITIES.  For the Current
      -----------------------------------
Period, the Company had a negative cash flow from operations of
($915,555) versus ($285,974) in the Comparable Period.  The
factors contributing to this negative flow were the paydown of
accounts payable ($501,747) and an increase in tuition
receivables of ($266,969), as the Mildred Elley Schools must
extend its students loans for tuition until the schools are
reinstated into the Federal loan program, and a decrease in
deferred revenue of ($512,808) as a result of tuition revenue
recognized during the Current Period.

      CASH FLOW FROM INVESTING ACTIVITIES.  For the Current
      -----------------------------------
Period, the Company had a net cash outflow from investing
activities of ($2,443,451) versus a net cash inflow of $76,581 in
the Comparable Period, which is primarily attributable to the
acquisition of the Mildred Elley Schools during the current
fiscal year.

      CASH FLOW FROM FINANCING ACTIVITIES.  For the Current
      -----------------------------------
Period, the Company had a net cash outflow from financing
activities of ($490,678) versus ($573,546) in the Comparable
Period. The outflow was essentially attributable to the paydown
of certain debt ($150,000) relating to the Mildred Elley Schools
acquisition as well as the servicing of long-term debt ($352,920)
associated with the MLP and Mildred Elley Schools acquisitions.

      YEAR 2000 MATTERS.  In Fiscal 1998, the Company
      -----------------
developed and implemented a program to resolve the potential
impact of the year 2000 on the ability of the Company's
computerized information systems to accurately process
information that may be date-sensitive. Accordingly, the Company
believes that its financial and information systems are now Year
2000 compliant.  As to third-party relationships, the Company
believes that most of these parties intend to be Year 2000
compliant by January 1, 2000; however, there can be no assurance
that this will be the case. The costs incurred during Fiscal 1998
were not material and the Company believes that any further costs
to be incurred will also not be material.  Any of the Company's
programs that recognize a date using "00" as other than the year
2000 could result in errors or system failures.  The Company
utilizes a number of computer programs across its entire
operation. However, if the Company and third parties upon which
it relies are unable to address this issue in a timely manner, it
could result in a material financial risk to the Company.


                                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

        None.


ITEM 5.	OTHER INFORMATION

        None.


ITEM 6.	EXHIBITS AND REPORTS ON FORM 8-K

        (a)   Exhibits


        Exhibit 10.1 --  Employment Agreement, dated as of March 26, 1999,
                         between the Company and Denise Stefano

        Exhibit 11   --  Computation of Earnings per Common Share

        Exhibit 27   --  Financial Data Schedule

        (b)   Reports on Form 8-K

              None.


                 TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.

          INDEX TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
               FOR THE FISCAL QUARTER ENDED APRIL 30, 1999



Consolidated Balance Sheets                                     F-1

Consolidated Results of Operations and Comprehensive 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 9           1 9 9 8
                                                    -------           -------
<S>                                           <C>              <C>
             ASSETS
             ------

Current assets:
  Cash and temporary investments                  $1,130,546        $ 4,980,230
  Marketable securities                              186,178            186,376
  Accounts receivable                                941,786          1,287,264
  Tuition receivable, net of allowance             2,248,549                 --
  Inventories                                        490,066            478,869
  Prepaid expenses and other current assets          408,439            173,679
                                                  ----------        -----------

     Total current assets                          5,405,564          7,106,418

Property, plant and equipment, net of
  accumulated depreciation of $1,279,678
  and $1,179,297, respectively                     2,107,896          1,753,811

Other assets:
  Deferred acquisition costs                           6,718            353,406
  Tuition receivable, net of current
    portion and allowance                            483,930                 --
  Notes and interest receivable                      159,327                 --
  Test passage bank, net of accumulated
    amortization of $1,642,243 and $1,474,302,
       respectively                                2,745,910          2,675,624
  Software development costs, net of
    accumulated amortization of $132,290
      and $88,702, respectively                      307,202            350,790
  Goodwill, net of accumulated amortization of
    $201,135 and $122,993, respectively            3,618,797            739,264
  Noncompete agreements, net of accumulated
    amortization of $136,488 and $101,095,
       respectively                                  363,512            398,905
  Deferred income taxes                              478,549            390,148
  Other assets                                       315,795            306,274
                                                  ----------         ----------

     Total assets                                $15,993,200        $14,074,640
                                                 ===========        ===========
<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 9          1 9 9 8
                                                     -------          -------
<S>                                           <C>              <C>
     LIABILITIES AND STOCKHOLDERS' EQUITY
     ------------------------------------



Current liabilities:
  Note payable to bank                           $   400,000        $        --
  Current portion of long-term debt                  316,423            261,034
  Accounts payable and accrued expenses            1,347,274          1,020,568
                                                  ----------         ----------

     Total current liabilities                     2,063,697          1,281,602

Long-term debt:
  Subordinated debt                                4,000,000          4,000,000
  Long-term debt less current portion              3,530,456          2,267,198
                                                  ----------         ----------

     Total liabilities                             9,594,153          7,548,800
                                                  ----------         ----------

Stockholders' equity: (Note 4)
  Preferred stock, $.0001 par value, 5,000,000
    shares authorized, none and 1,500 shares
    issued and outstanding, respectively                  --                 --
  Common stock, $.0001 par value, 20,000,000
    shares authorized, 2,141,801 shares issued
    and outstanding                                      214                214
  Additional paid-in capital                       5,052,479          5,052,479
  Deferred interest                                 (529,751)          (588,075)
  Stock subscription receivable                           --            (14,350)
  Unearned compensatory stock                        (24,643)           (37,187)
  Retained earnings                                1,897,131          2,106,835
  Accumulated other comprehensive income               3,617              5,924
                                                 -----------         ----------

     Total stockholders' equity                    6,399,047          6,525,840
                                                 -----------         ----------

     Total liabilities & stockholders' equity    $15,993,200        $14,074,640
                                                 ===========        ===========


<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 9      1 9 9 8         1 9 9 9       1 9 9 8
                                         -------      -------         -------       -------

<S>                                 <C>          <C>            <C>           <C>
Assessment products revenues           $2,077,865   $1,868,051      $1,034,230   $  798,736
Educational delivery revenues           2,548,535           --       1,437,944           --
Instructional revenues                    573,532      546,886         371,631      318,457
                                        ---------    ---------       ---------    ---------

Total net revenue                       5,199,932    2,414,937       2,843,805    1,117,193

Cost of goods sold                      1,971,978      788,791       1,005,402      425,195
                                        ---------    ---------       ---------    ---------

Gross profit                            3,227,954    1,626,146       1,838,403      691,998
                                        ---------    ---------       ---------    ---------

Operating expenses:
  Selling expenses                      1,105,715      719,997         560,356      397,170
  General and
    administrative expenses             2,183,855    1,189,420       1,149,997      587,439
  Bad debt recovery                            --     (200,000)             --     (200,000)
                                        ---------    ---------       ---------    ---------

Total operating expenses                3,289,570    1,709,417       1,710,353      784,609
                                        ---------    ---------       ---------    ---------

(Loss) income from operations             (61,616)     (83,271)        128,050      (92,611)

Other income (expense):
  Interest expense                       (415,063)    (128,779)       (199,089)     (65,557)
  Loss on sale of assets                  (14,137)          --              --           --
  Other income                             75,200           --          18,631           --
  Investment income                        75,897       27,569          35,087       16,705
                                        ---------    ---------       ---------    ---------

Loss before income taxes                 (339,719)    (184,481)        (17,321)    (141,463)

Income taxes (benefit)                   (130,015)       8,930          (7,974)      18,902
                                        ---------    ---------       ---------    ---------

Net loss                                 (209,704)    (193,411)         (9,347)    (160,365)

Other comprehensive loss, net of tax:
  Unrealized holding loss on
   securities arising during
    the period                             (2,307)      (1,222)         (1,446)      (1,163)
                                        ---------    ---------       ---------    ---------

Total comprehensive loss               $ (212,011)  $ (194,633)     $  (10,793)  $ (161,528)
                                       ==========   ==========      ==========   ==========

Weighted average shares outstanding
  Basic                                 2,141,801    2,117,053       2,141,801    2,122,331
  Diluted                               2,141,801    2,117,053       2,141,801    2,122,331
Earnings per share
  Basic                                $     (.10)  $     (.09)     $       --   $     (.08)
  Diluted                              $     (.10)  $     (.09)     $       --   $     (.08)

<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 9         1 9 9 8
                                                    -------         -------
<S>                                          <C>              <C>
OPERATING ACTIVITIES
  Net loss                                       $  (209,704)    $  (193,411)
  Adjustments to reconcile net income
    (loss) to net cash used in
    operating activities:
  Depreciation and amortization                      461,334         442,152
  Deferred interest                                   58,324              --
  Deferred income taxes                              (88,401)        (21,942)
  Bad debt recovery                                       --        (200,000)
  Financial advisory services                         12,544              --
  Loss on sale of auto                                14,137              --
Changes in operating assets and liabilities:
  Accounts receivable                                349,797          77,136
  Inventories                                        (11,197)        (44,662)
  Other assets                                      (220,865)       (165,405)
  Tuition receivable                                (266,969)             --
  Deferred revenue                                  (512,808)             --
  Accounts payable                                  (501,747)       (179,842)
                                                  ----------      ----------

NET CASH FLOWS FROM OPERATING ACTIVITIES            (915,555)       (285,974)
                                                  ----------      ----------

INVESTING ACTIVITIES
  Acquisition of property, plant and equipment      (278,179)        (87,781)
  Test passage bank                                 (241,449)       (108,415)
  Software development costs                              --         (69,407)
  Pre-publication costs                                   --         (12,385)
  Proceeds from sale of marketable securities             --         460,000
  Proceeds from sale of auto                          13,200              --
  Acquisition of subsidiary                       (1,930,305)             --
  Deferred acquisition costs                          (6,718)       (105,431)
                                                  ----------      ----------

NET CASH FLOWS FROM INVESTING ACTIVITIES          (2,443,451)         76,581
                                                  ----------      ----------


<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 9         1 9 9 8
                                                    -------         -------

<S>                                          <C>              <C>
FINANCING ACTIVITIES
  Net borrowings on loan payable                 $   (2,108)     $ (154,982)
  Net borrowings on note payable to bank           (150,000)             --
  Proceeds from exercise of warrants                     --          45,125
  Repayment of long-term debt                      (352,920)       (463,689)
  Stock subscriptions received                       14,350              --
                                                  ---------       ---------

NET CASH FLOWS FROM FINANCING ACTIVITIES           (490,678)       (573,546)
                                                  ---------       ---------

NET CHANGE IN CASH AND TEMPORARY INVESTMENTS     (3,849,684)       (782,939)

Cash and temporary investments at
       beginning of period                        4,980,230       1,156,664
                                                 ----------      ----------

CASH AND TEMPORARY INVESTMENTS AT
       END OF PERIOD                             $1,130,546      $  373,725
                                                 ==========      ==========

SUPPLEMENTAL CASH FLOW INFORMATION:
  Interest paid                                  $  416,445      $  163,139
                                                 ==========      ==========

  Income taxes paid                              $   31,379      $   41,200
                                                 ==========      ==========

SUMMARY OF ACQUIRED SUBSIDIARY:
  Assets acquired consisting primarily
      of Goodwill                                $6,916,234      $       --

  Liabilities assumed                             3,562,828              --
                                                 ----------      ----------

  Net purchase price                             $3,353,406      $       --
                                                 ==========      ==========




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


                 TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
                              AND SUBSIDIARIES

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------------

In the opinion of management, the accompanying consolidated
financial statements of Touchstone Applied Science Associates,
Inc. ("TASA") and subsidiaries contain all adjustments
necessary to present fairly the Company's consolidated financial
position as of April 30, 1999 and October 31, 1998 and the
consolidated results of operations and comprehensive income for
the six and three months ended April 30, 1999 and 1998 and
consolidated cash flows for the six months ended April 30, 1999
and 1998.

The consolidated results of operations for the six and three
months ended April 30, 1999 and 1998 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 1 to the Company's consolidated
financial statements included in its Annual Report on Form 10-KSB
for the fiscal year ended October 31, 1998.

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

The consolidated financial statements include the accounts of the
Company and its directly and indirectly wholly-owned
subsidiaries, Beck Evaluation & Testing Associates Inc.
("BETA"), Modern Learning Press, Inc. ("MLP"), TASA
Educational Services Corp. ("TESC") and MESI Acquisition Corp.
("MESI").  All material intercompany transactions have been
eliminated in consolidation.

Goodwill
--------

Included in the MESI acquisition is goodwill totaling $2,957,675.
The goodwill is being amortized over a 30-year period.

Concentration of Credit Risk
----------------------------

As part of the acquisition of The Mildred Elley Schools, Inc.
("Elley") by MESI, the Company acquired unsecured student
loans, which are being reflected at net realizable value.  The
risk of loss to the Company is the balance owed by the student at
the time of any default.  The Company plans to monitor these
loans as closely as possible to mitigate the potential risk.


                                       F - 6


                 TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
                              AND SUBSIDIARIES

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)
---------------------------------------------------------

Tuition Receivable
------------------

MESI provides alternate financing arrangements for those students
who do not qualify for federal and state financial aid to cover
their tuition.  Since student contracts acquired as part of the
Elley acquisition have varying repayment terms which extend
beyond the next 12 month period, these receivables have been
classified as current and non-current with the portion to be
collected beyond the next 12 month period being the non-current
portion.

Revenue Recognition
-------------------

The Company recognizes tuition revenue at the point in which the
Company has no exposure to future tuition refunds associated with
the respective academic semester.

Reclassifications
-----------------

Certain prior year information has been reclassified to conform to
the current year's reporting presentation.

NOTE 2 - ISSUANCE OF STOCK OPTIONS
----------------------------------

On March 4 1999, the Company granted options to three directors
pursuant to the Company's Directors Option Plan to purchase 2,500
shares each (625 after giving effect to the one-for-four reverse
stock split) at an exercise price of $.50 per share ($2.00 per
share after giving effect to the one for four reverse stock split).

On May 3, 1999, the Company granted an option to purchase 15,000
shares pursuant to the Company's Amended and Restated 1991 Stock
Option Incentive Plan at an exercise price of $1.438 per share.

NOTE 3 - REVERSE STOCK SPLIT
----------------------------

On March 4, 1999, the Company effected a one-for-four reverse
split.  The effect of the split is being presented retroactively
for all periods presented.

                                       F - 7




                            SIGNATURES

      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 and Chief Executive Officer



                              By: /s/ DENISE M. STEFANO
                                 ----------------------------------------
                                 Denise M. Stefano
                                 Chief Financial Officer


Date:   June 14, 1999