UNITED STATES
                  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 January 31, 2002

[ ]  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)

                              (845) 277-8100
------------------------------------------------------------------------------
                      (Issuer's telephone number)


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

        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 March 13, 2002: 2,594,453 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 January 31, 2002 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, 2001 ("Fiscal 2001"),
which may cause actual results to differ materially from those
described.

BACKGROUND

        For over twenty years, TASA has served the rapidly
expanding education market, primarily through the publishing and
sale of its highly regarded proprietary reading tests.  Since
1994, new management has implemented a strategy to broaden the
Company's services within the educational marketplace.  As a
result, the Company has completed four acquisitions since the
beginning of Fiscal 1997 and now serves three educational
markets:  (1) educational assessment and evaluation, (2)
educational instruction, and (3) educational delivery.  TASA
revenues in Fiscal 1996 were $2.5 million and have increased by
acquisition and internal growth to $14.4 million in Fiscal 2001.

        Prior to 1997, the Company's revenues derived from the
publishing and distribution of its proprietary line of reading
tests.  During Fiscal 1997, the Company acquired Beck Evaluation
and Testing Associates, Inc. ("BETA"), which operates as the
Company's custom test design division.  In that same fiscal year,
the Company organized Modern Learning Press, Inc. ("MLP"), which
purchased substantially all of the assets of Programs for
Education, Inc., and marked the Company's entrance into the
instructional marketplace.  MLP designs, publishes and
distributes affordable "consumable" student workbooks that target
grades K-6, and creates and publishes books and pamphlets for
elementary school teachers and parents.  Also in Fiscal 1997, the
Company purchased the Maculaitis Assessment of Competencies test
(the "Maculaitis Test") which is a comprehensive language
assessment and evaluation program for English as a second
language.  In Fiscal 1998, the Company organized a wholly-owned
subsidiary, TASA Educational Services Corp. ("TESC"), to operate
and acquire post-secondary proprietary schools.  TESC completed
its first acquisition in, the educational delivery field through
its acquisition in November 1998 of the 750-student Mildred Elley
Schools ("Elley").

        Accordingly, in an effort to report revenues in a more
meaningful manner, the Company has segregated revenues into three
discrete segments:  (1) assessment products and services
revenues, (2) instructional revenues, and (3) educational
delivery revenues.  All prior periods have been recharacterized
into these three 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 first quarter ended January
31, 2002 versus the first quarter ended January 31, 2001.
RESULTS OF OPERATIONS FOR THE FIRST FISCAL QUARTER




                                     2002           2001      % Change
                                     ----           ----      --------
                                      (in thousands of
                                          dollars)


Assessment Products Revenues       1,452.9        1,093.1       32.9

Instructional Revenues               258.7          203.1       27.4

Educational Delivery Revenues        846.9          602.1       40.7
                                   -------        -------       ----

        Total Revenues             2,558.5        1,898.3       34.8

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

                                           January 31,     January 31,
                                              2002            2001
                                           ----------      ----------



Revenues                                      100%            100%


        Gross Profit Margin                    46              49

Operating Expense:

        Selling Expense                        23              30

        General & Administrative               48              66

(Loss) from Operations                        (25)            (46)

        Other (Expense)                        (6)            (10)

Pre-Tax Loss                                  (31)            (56)

Net (Loss)                                    (19)            (34)

        REVENUES.  For the three-month period ended January 31,
        --------
2002 (the "Current Quarter"), revenues were $2,558.5M,
representing a 35% increase, or $660.2M, from $1,898.3M for the
three-month period ended January 31, 2001 (the "Comparable
Quarter").

        Revenues for assessment products and services increased
33%, or $359.8M, from $1,093.1M in the Comparable Quarter to
$1,452.9M during the Current Quarter.  Revenues from the
Company's proprietary test unit, featuring DRP products decreased
9% primarily as a result of timing in the receipt of purchase
orders and the fact that several large school districts converted
to our newly normed test series in the 1st quarter of 2001, which
precludes their purchase this fiscal year.  Revenues from the
Company's custom test design unit, BETA, grew 90% during the
Current Quarter. This increase was anticipated with the execution
of the Michigan five-year special education contract.

        Instructional revenues increased 27% in the Current
Quarter from the Comparable Quarter, or $258.7M in the Current
Quarter versus $203.1M in the Comparable Quarter.  A portion of
these increases was due to the receipt of orders delayed in the mail
by the anthrax postal scare in the Fall.

        The educational delivery division contributed $846.9M
to the Company's Current Quarter revenues, which amount
represented an increase of 41%, or $244.8M from the Comparable
Quarter revenues for this division of $602.1M.  This increase was
the result of a strong November 2001 enrollment at both the
Pittsfield and Albany locations as well as a tuition increase at
Albany.

        COST OF GOODS SOLD.  Cost of goods sold increased to
        ------------------
$1,372.2M in the Current Quarter, or 42%, versus $968.8M in the
Comparable Quarter.  Cost of goods sold as a percentage of
revenues increased from 51% in the Comparable Quarter to 54% in
the Current Quarter.  This percentage increase is due to a change
in volume mix.

        GROSS PROFIT.  In the Current Quarter, gross profit
        ------------
increased by 28%, or $256.8M, from $929.5M in the Comparable
Quarter to $1,186.3M in the Current Quarter.  The increase in
gross profit is due to both an increase in revenues as well as a
change in product mix.

        SELLING EXPENSES.  Selling expenses for the Current
        ----------------
Quarter remained fairly flat increasing minimally from $561.0M in
the Comparable Quarter to $582.7M in the Current Quarter.
However, selling expenses as a percentage of sales decreased to
23% in the Current Quarter from 30% in the Comparable Quarter.
This decrease is due to efficiencies as revenues increase.


        GENERAL AND ADMINISTRATIVE EXPENSES.  The Company's
        -----------------------------------
general and administrative expenses were also flat across both
years, or from $1,249.0M in the Comparable Quarter to $1,240.5M in
the Current Quarter.  General and administrative expenses as a
percentage of sales also decreased from 65% in the Comparable
Quarter to 48% in the Current Quarter.  These decreases occurred
as the organization was able to hold fixed expenses as it
witnessed revenue gains.

        (LOSS) FROM OPERATIONS.  Loss from operations
        ----------------------
decreased ($243.6M) from ($880.5M) in the Comparable Quarter to
($636.9M) in the Current Quarter.  This decrease resulted
primarily from increased revenues.

        EBITDA.  Earnings before interest, taxes, depreciation,
        ------
and amortization increased $296.0M to ($382.8M) in the Current
Quarter from ($678.8M) in the Comparable Quarter.  As a
percentage of sales, EBITDA increased to (15%) in the Current
Quarter versus (36%) in the Comparable Quarter.

        OTHER (EXPENSE).  Other (expense) decreased ($36.5M) to
        ---------------
($148.2M) in the Current Quarter from ($184.7M) in the Comparable
Quarter. This decrease is due to decreases in borrowings as well
as a decline in interest rates.

        (LOSS) BEFORE INCOME TAXES.  The Company had a (loss)
        --------------------------
before income taxes of ($785.1M) for the Current Quarter versus a
loss of ($1,065.2M) for the Comparable Quarter.  The primary
reason for the positive variance is a revenue increase.

        NET (LOSS) AND (LOSS) PER SHARE.  Net (loss) after taxes was
        -------------------------------
($496.5M) for the Current Quarter versus a net (loss) of ($644.0M)
for the Comparable Quarter. (Loss) per share in the Current Quarter
was ($0.19) based on weighted average shares outstanding of 2,565,606.
In the Comparable Quarter, net (loss) per share was ($0.25). The
reduction in our net loss was due to increases in revenues while we
maintained our fixed expenses at the same level as in the Comparable
Quarter.

LIQUIDITY AND CAPITAL RESOURCES

        WORKING CAPITAL. Working capital decreased by $603,189
        ---------------
during the Current Quarter from $1,698,592 at October 31, 2001,
to $1,095,403, at January 31, 2002. This decrease resulted
primarily from the increase in deferred revenue, offset in part
by an increase in prepaid expenses and tuition receivables. The
ratio of current assets to current liabilities was approximately
1.3 to 1.0 at the end of the Current Quarter.

        CASH FLOW FROM OPERATING ACTIVITIES. During the Current
        -----------------------------------
Quarter, the Company had net cash provided by operating
activities of $490,039, as compared to $87,728 in the Comparable
Quarter. The increase in cash provided by operating activities
resulted from the lower net loss reported in the Current Quarter
as well as a decrease in accounts receivable, and increase in
deferred revenue and noncash deductions for depreciation and
amortization offset in part by an increase in tuition receivable.

        The first quarter of our fiscal year is historically
our weakest quarter since schools generally place fewer
orders for assessment products and instructional materials
during that quarter. The Current Quarter was significantly
stronger than the Comparable Quarter, and allowed us to fund
our operations for the Current Quarter out of operating cash
flow rather than from borrowings with respect to the core
business.

        CASH FLOW FROM INVESTING ACTIVITIES. During the Current
        -----------------------------------
Quarter, the Company had net cash used in investing activities of
$104,544, as compared to $99,907 for the Comparable Quarter. The
increase in cash used in investing activities resulted primarily
from costs relating to several new products, which the Company
expects to launch during the latter half of the current fiscal
year.

        CASH FLOW FROM FINANCING ACTIVITIES. During the Current
        -----------------------------------
Quarter, the Company had net cash used in financing activities of
$88,356 as compared to $482,828 from financing activities during
the Comparable Quarter.  The decrease in cash used for financing
activities resulted from the Company repaying certain debt during
the Comparable Quarter.

        CAPITAL COMMITMENTS. At January 31, 2002, the Company
        -------------------
had an aggregate of $400,000 outstanding under bank lines of
credit. These borrowings relate to the operation of the
educational delivery segment. These lines have been extended
through May 28, 2002.


<PAGE>

                             PART II

                        OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

        In January 2000, a former employee of Mildred
Elley commenced an action against the Company, MESI and an
executive officer of MESI in the Supreme Court of the State
of New York in the County of Albany.  The complaint alleges
claims of wrongful termination of employment and seeks
damages as compensation.  The Company believes that the
allegations are without merit and is vigorously defending
the action.  The Company maintains directors and officers
liability insurance which, subject to a policy deductible,
insures the defendant officer, but not the Company, against
such claims.  An agreement to settle this action has been
reached with the complainant, subject to completion of
definitive documentation.  The Company's obligations under
such settlement are not material.

        See Item 3, "Defaults Upon Senior Securities" for a
description of an action brought against the Company with
respect to outstanding notes related to an asset purchase
agreement.

ITEM 2. CHANGES IN SECURITIES

        None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

        The former owner of the Mildred Elley School, Inc.
commenced an action alleging defaults in the payment of
certain amounts under the asset purchase agreement between
the Company and Mildred Elley School, Inc. and the
accompanying promissory notes of MESI (TASA's wholly-owned
subsidiary).  The complaint also alleges certain defaults by
MESI in the employment agreement between MESI and Faith
Takes, the former owner of the Mildred Elley School, Inc.
who is currently MESI's president and chief executive
officer.  The Company has defended primarily based on
offsets related to breaches of warranties in the asset
purchase agreement.  Cross-motions for partial summary
judgment were made and the court issued a decision which
granted summary judgment to plaintiff on two demand notes in
the total principal amount of $67,000 plus attorneys fees of
$7,690.  The enforcement of the judgment is stayed pending
appeal of the court decision.  The court also recognized the
right of offset and granted summary judgment in favor of
MESI on one issue, but found a triable issue of fact on the
parties' intentions on another issue.  Cross-appeals of the
lower court's decision are pending currently in the New York
State Appellate Division.  The Company continues to defend
vigorously this action.

        The foregoing alleged defaults trigger a potential cross
default under the Company's outstanding 8% Subordinated
Debentures, in the outstanding principal amount of
$3,530,141 (as of October 31, 2001) held by Cahill Warnock
Strategic Partners Fund, L.P. and Strategic Associates, L.P.
The Company has not received a notice of default from the
holders of such Debentures.

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 11 -- Computation of Earnings per Common Share

        (b) Reports on Form 8-K

            None.

               TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.

        INDEX TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
             FOR THE FISCAL QUARTER ENDED JANUARY 31, 2002

     Consolidated Balance Sheets                              F-1

     Consolidated Statements of Operations and Comprehensive
       Income                                                 F-3

     Consolidated Statements of Cash Flows                    F-4

     Notes to Consolidated Financial Statements               F-6

<PAGE>   F - 1



                 TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
                              AND SUBSIDIARIES

<TABLE>
<CAPTION>

                                                                    Page 1 of 2
                        CONSOLIDATED BALANCE SHEETS
                                                           January 31,   October 31,
                                                             2 0 0 2       2 0 0 1
                                                             -------       -------
                                                           (Unaudited)
<S>                                                    <C>            <C>
        ASSETS
        ------

Current assets:
  Cash and temporary investments                         $   374,104     $    76,965
  Accounts receivable, net of allowance for doubtful
    accounts of  $70,814 and $70,891, respectively           582,882       1,630,432
  Tuition receivable, net of allowance for doubtful
    accounts of $338,123 and $331,689,
      respectively                                         2,770,009       2,234,908
  Inventories                                                683,241         633,473
  Prepaid expenses and other current assets                  655,371         259,154
                                                         -----------     -----------

          Total current assets                             5,047,607       4,834,932

Property, plant and equipment - net of
  accumulated depreciation of $1,856,321 and
  $1,804,880, respectively                                 1,831,218       1,867,705

Other assets:
  Noncurrent tuition receivable, net of allowance for
    doubtful accounts of $274,495 and $256,495               684,405         702,409
  Test passage bank and test development, net of
    accumulated amortization of $2,095,134 and
    $1,993,978, respectively                               2,310,909       2,357,997
  Goodwill, net of accumulated amortization of $668,019
    and  $621,902, respectively                            3,603,013       3,649,130
  Deferred income taxes                                    1,367,105       1,078,027
  Other assets                                               800,454         818,767
                                                         -----------     -----------

          Total assets                                   $15,662,711     $15,308,967
                                                         ===========     ===========


</TABLE>

See notes to consolidated financial statements.




                              F - 1

<PAGE>   F - 2

                 TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
                              AND SUBSIDIARIES

<TABLE>
<CAPTION>

                                                                    Page 2 of 2
                        CONSOLIDATED BALANCE SHEETS

                                                           January 31,   October 31,
                                                             2 0 0 2       2 0 0 1
                                                             -------       -------
                                                           (Unaudited)
<S>                                                   <C>            <C>

        LIABILITIES AND STOCKHOLDERS' EQUITY
        ------------------------------------


Current liabilities:
  Lines of credit                                         $   400,000    $   400,000
  Current maturities of long-term debt                        401,270        514,265
  Current maturities of capitalized lease obligations          29,342         34,096
  Deferred tuition revenue                                  1,107,690             --
  Accounts payable and accrued expenses                     2,031,902      2,187,979
                                                          -----------    -----------

        Total current liabilities                           3,970,204      3,136,340

Long-term debt:
  Subordinated debt                                         3,530,141      3,530,141
  Long-term debt, net of current portion                    1,931,092      1,958,319
  Long-term capitalized lease obligations, net of
    current portion                                            29,509         32,889
                                                          -----------    -----------

        Total liabilities                                   9,460,946      8,657,689
                                                          -----------    -----------

Commitments and contingencies

Stockholders' equity:
  Preferred stock, $.0001 par value, 5,000,000
   authorized, 0  shares
   issued and outstanding, respectively                            --             --
  Common stock, $.0001 par value, 20,000,000 shares
   authorized, 2,594,453 shares and 2,559,453 shares
   issued and outstanding, respectively                           259            256
  Additional paid-in capital                                5,538,393      5,522,296
  Deferred interest                                          (205,908)      (235,553)
  Unearned compensatory stock                                      --         (1,251)
  Retained earnings                                           869,021      1,365,530
                                                          -----------    -----------

        Total stockholders' equity                          6,201,765      6,651,278
                                                          -----------    -----------

        Total liabilities and stockholders' equity        $15,662,711    $15,308,967
                                                          ===========    ===========

</TABLE>

See notes to consolidated financial statements.

                              F - 2

<PAGE>   F - 3

                 TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
                              AND SUBSIDIARIES

                    CONSOLIDATED STATEMENTS OF OPERATIONS

                                                     Three Months Ended
                                                         January 31,
                                                  2 0 0 2        2 0 0 1
                                                  -------        -------
                                                (Unaudited)    (Unaudited)

Assessment products and services revenues       $1,452,922     $1,093,079
Educational delivery revenues                      846,911        602,101
Instructional revenues                             258,684        203,154
                                                ----------     ----------

Total net revenues                               2,558,517      1,898,334

Cost of goods sold                               1,372,237        968,840
                                                ----------     ----------

Gross profit                                     1,186,280        929,494
                                                ----------     ----------

Operating expenses:
  Selling expenses                                 582,702        560,954
  General and administrative expenses            1,240,456      1,249,026
                                                ----------     ----------

Total operating expenses                         1,823,158      1,809,980
                                                ----------     ----------

Loss from operations                              (636,878)      (880,486)

Other income (expense):
  Interest expense, net                           (148,184)      (184,723)
                                                ----------     ----------

  Loss before income taxes                        (785,062)    (1,065,209)

  Income tax benefit                              (288,553)      (421,166)
                                                ----------     ----------

  Net loss                                      $ (496,509)    $ (644,043)
                                                ----------     ----------

Weighted average shares outstanding
  Basic                                          2,565,606      2,559,453
  Diluted                                        2,565,606      2,559,453

Loss per share
  Basic                                         $     (.19)    $     (.25)
  Diluted                                       $     (.19)    $     (.25)



See notes to consolidated financial statements.

                              F - 3

<PAGE>   F - 4

                 TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
                              AND SUBSIDIARIES
                                                                    Page 1 of 2
                    CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                      Three Months Ended
                                                           January 31,
                                                     2 0 0 2         2 0 0 1
                                                     -------         -------
                                                   (Unaudited)     (Unaudited)


OPERATING ACTIVITIES
  Net loss                                        $  (496,509)    $  (644,043)
  Adjustments to reconcile net loss to net
   cash provided (used) by operating activities:
  Depreciation and amortization                       254,096         201,674
  Deferred income taxes                              (289,078)       (419,421)
  Financial advisory services                           1,251           2,339
  Deferred interest                                    29,645          29,646
  Bad debt expense                                     32,877          31,050
Changes in operating assets and liabilities:
  Accounts receivable                               1,047,627         514,341
  Tuition receivable                                 (549,974)         32,196
  Inventories                                         (49,768)         26,193
  Prepaid expenses                                   (396,214)       (221,686)
  Other assets                                         (1,550)         (9,792)
  Deferred revenue                                  1,107,690         464,288
  Accounts payable and accrued expenses              (200,054)         80,943
                                                   ----------      ----------

NET CASH FLOWS FROM OPERATING ACTIVITIES              490,039          87,728
                                                   ----------      ----------

INVESTING ACTIVITIES
  Test passage bank and test development              (54,068)        (75,515)
  Software development costs                           (6,611)         (9,420)
  Acquisition of fixed assets                         (14,954)        (14,202)
  Prepublication costs                                (28,911)        (17,770)
  Proceeds from sale of auto                               --          17,000
                                                   ----------      ----------

NET CASH FLOWS FROM INVESTING ACTIVITIES             (104,544)        (99,907)
                                                   ----------      ----------

FINANCING ACTIVITIES
  Net repayment of loan payable                            --        (400,000)
  Repayment of capitalized lease obligations               --          (3,736)
  Repayment of long-term debt                         (88,356)        (79,092)
                                                   ----------      ----------

NET CASH FLOWS FROM FINANCING ACTIVITIES              (88,356)       (482,828)
                                                   ----------      ----------


NET CHANGE IN CASH AND TEMPORARY INVESTMENTS          297,139        (495,007)

CASH AND TEMPORARY INVESTMENTS
AT BEGINNING OF PERIOD                                 76,965         512,088
                                                   ----------      ----------

CASH AND TEMPORARY INVESTMENTS AT END OF PERIOD   $   374,104     $    17,081
                                                  ===========     ===========


See notes to consolidated financial statements.


                              F - 4

<PAGE>   F - 5

                 TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
                              AND SUBSIDIARIES
                                                                    Page 2 of 2
                    CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                      Three Months Ended
                                                         January 31,
                                                  2 0 0 2          2 0 0 1
                                                  -------          -------
                                                (Unaudited)      (Unaudited)


SUPPLEMENTAL CASH FLOW INFORMATION:
  Interest paid                                  $162,344         $209,467
                                                 ========         ========

  Income taxes paid                              $  4,418         $  1,204
                                                 ========         ========




























See notes to consolidated financial statements.

                              F - 5


<PAGE>   F - 6

                 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 its subsidiaries contain all adjustments
necessary to present fairly the Company's consolidated financial
position as of January 31, 2002 and October 31, 2001, the
consolidated results of operations for the three months ended
January 31, 2002 and 2001 and consolidated cash flows for the
three months ended January 31, 2002 and 2001.

The consolidated results of operations for the three months ended
January 31, 2002 and 2001 are not necessarily indicative of the
results to be expected for the full year.

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, 2001.

NOTE 2 -  SEGMENT INFORMATION
-----------------------------

<TABLE>
<CAPTION>
                                         Assessment       Delivery      Instructional        Total
                                         ----------       --------      -------------        -----

<S>                                  <C>            <C>             <C>                <C>
Three Months Ended January 31, 2002:
  Revenues                              $1,452,922      $  846,911       $  258,684       $ 2,558,517
  Loss before income tax                   (94,464)       (574,086)        (116,512)         (785,062)
  Total segment assets                   6,665,608       7,043,273        1,953,830        15,662,711

Three Months Ended January 31, 2001:
  Revenues                              $1,093,079      $  602,101       $  203,154       $ 1,898,334
  Loss before income tax                  (152,654)       (769,578)        (142,977)       (1,065,209)
  Total segment assets                   6,750,291       6,783,278        2,121,425        15,654,994

</TABLE>


Included in the assessment segment reporting are corporate
overhead expenses of approximately  $87,000 and $101,000 for the
three months ended January 31, 2002 and 2001, respectively.

The Company's operations are primarily conducted in the United
States.  Information about the Company's operations in different
geographic areas for the three months ended January 31, 2002 and
2001, is not considered material to the financial statements.



                              F - 6

<PAGE>   F - 7

                 TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
                              AND SUBSIDIARIES

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




NOTE 3 - LINES OF CREDIT EXTENSIONS
-----------------------------------

As of January 31, 2002, the Company owed an aggregate of $400,000 to a bank,
which is the maximum availability under lines of credit promissory notes.
These lines have been extended through May 28, 2002.

NOTE 4 - DEFERRED TUITIION REVENUE
----------------------------------

Tuition revenue from the Company's educational delivery division are
recognized at the point in time in which the Company has no exposure to
future tuition refunds associated with the respective academic semester.
At January 31, 2002 deferred tuition revenue aggregating $1,107,690 has
been recorded since the Company still has exposure for tuition refunds
as of that date.


NOTE 5 - STOCK ISSUED FOR BONUSES
---------------------------------

In January 2002, the Company paid approximately $16,000 of bonuses due to
certain officers for the year ended October 31,2001 through the issuance
of 35,000 shares of restricted common stock.


NOTE 6 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
--------------------------------------------------

In June 2001, the Financial Accounting Standards Board issued
Statements of Financial Accounting Standards No. 141, "Business
Combinations", and No. 142, "Goodwill and Other Intangible
Assets", effective for fiscal years beginning after December 15,
2001.  Under the new rules, the pooling of interests method of
accounting for acquisitions is no longer allowed and goodwill and
intangible assets deemed to have indefinite lives will no longer
be amortized but will be subject to annual impairment tests in
accordance with the Statements.

The Company will apply the new rules for goodwill and other
intangible assets beginning in the first quarter of the fiscal
year ending October 31, 2003.  Application of the nonamortization
provisions of the Statement is expected to result in an increase
in net income of approximately $171,000 per year.  During the
fiscal year ending October 31, 2003, the Company will perform the
first of the required impairment tests of goodwill as of November
1, 2002 and has not yet determined what the effect of these tests
will be on the earnings and financial position of the Company.



                              F - 7

<PAGE>   F - 8


                 TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
                              AND SUBSIDIARIES

                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (CONTINUED)
--------------------------------------------------

On October 3, 2001, the FASB issued Statement of Financial
Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" ("SFAS 144"), that is applicable to
financial statements issued for fiscal years beginning after
December 15, 2001.  The FASB's new rules on asset impairment
supercede SFAS 121 "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of", and portions
of Accounting Principles Board Opinion 30, "Reporting the Results
of Operations".  This standard provides a single accounting model
for long-lived assets to be disposed of and significantly changes
the criteria that would have to be met to classify an asset as held-
for-sale.  Classification as held-for-sale is an important
distinction since such assets are not depreciated and are stated at
the lower of fair value and carrying amount.  This standard also
requires expected future operating losses from discontinued
operations to be displayed in the periods in which the losses are
incurred, rather than as of the measurement date as previously
required.  The Company is currently assessing the potential impact
of SFAS 144 on its operating results and financial position.

NOTE 7 - LEGAL PROCEEDINGS
--------------------------

In January 2000, a former employee of Mildred Elley commenced an action
against the Company, MESI and an executive officer of MESI in the Supreme
Court of the State of New York in the County of Albany.  The complaint
alleges claims of wrongful termination of employment and seeks damages
as compensation.  The Company believes that the allegations are without
merit and is vigorously defending the action.  The Company maintains
directors and officers liability insurance which, subject to a policy
deductible, insures the defendant officer, but not the Company, against
such claims.  An agreement to settle this action has been reached with
the complainant, subject to completion of definitive documentation.
The Company's obligations under such settlement are not material.

The former owner of the Mildred Elley School, Inc. commenced an action
alleging defaults in the payment of certain amounts under the asset purchase
agreement between the Company and Mildred Elley School, Inc. and the
accompanying promissory notes of MESI (TASA's wholly-owned subsidiary).
The complaint also alleges certain defaults by MESI in the employment
agreement between MESI and Faith Takes, the former owner of the Mildred
Elley School, Inc. who is currently MESI's president and chief executive
officer.  The Company has defended primarily based on offsets related to
breaches of warranties in the asset purchase agreement.  Cross-motions
for partial summary judgment were made and the court issued a decision
which granted summary judgment to plaintiff on two demand notes in the
total principal amount of $67,000 plus attorneys fees of $7,690.  The
enforcement of the judgment is stayed pending appeal of the court decision.
The court also recognized the right of offset and granted summary judgment
in favor of MESI on one issue, but found a triable issue of fact on the
parties' intentions on another issue.  Cross-appeals of the lower court's
decision are pending currently in the New York State Appellate Division.
The Company continues to defend vigorously this action.










                              F - 8



<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 and Chief Executive Officer
                                 and Principal Financial Officer

Date:   March 13, 2002