TASA Announces Record Revenues for the Third Quarter FY 2000.

Business Editors

BREWSTER, N.Y.--(BUSINESS WIRE)--Sept. 20, 2000

Touchstone Applied Science Associates (NASDAQ:TASA), Brewster, NY, announced today record revenues for the third quarter 2000: $3,625,527, up 7.9% from the prior year ago period. Revenues for the nine-month period were essentially flat ($8,545,115 in 2000 versus $8,559,485 in 1999). The company earned $45,262 or $.02 per share versus $99,317 or $.05 per share in 1999. For the nine-month period the company had an after-tax loss of ($.33) per share versus an after-tax loss of ($.05) in the Comparable Period in 1999. The book value of the company at the end of the third quarter was $2.59 per share.

TASA President and CEO Andrew Simon said, "There are several factors contributing to the decline in earnings. First, in July 2000, we received approximately $300,000 worth of orders for Modern Learning Press products that could not be shipped until the fourth quarter of the year (August). Since the gross profit margin on this business is more than 65%, significant revenues and income will accrue in the fourth quarter. Second, we saw an increase in general and administrative charges due to the buildup of our infrastructure, the establishment of more adequate reserves, and the write-off of due diligence expenses associated with failed acquisitions.

"On the positive side," Mr. Simon continued, "our revenues, across all units, are up for the quarter when factoring in the MLP business we were unable to ship. Further, as previously anticipated, we have now received a signed five-year contract for the continuance of the New York State Regents Competency Test. The total value of this contract is over $1.2 million, and the bulk of the first year revenues will be effected in the fourth quarter of this year.

"We also expect to begin to see e-commerce business by the beginning of our new fiscal year," Mr. Simon reported. "A Modern Learning Press `e-catalog' will be featured on the Simplexis e-commerce hub, which enables school systems to review and purchase education materials over the internet. As Simplexis `trading partners,' Pittsburgh, Pennsylvania, Nashville, Tennessee, and Kansas City, Missouri public schools systems will be able to make electronic purchases from MLP."

TASA CFO Denise Stefano said, "During our fourth quarter and for our fiscal year end, we expect to see further revenue increases for our BETA custom testing and Modern Learning Press instructional divisions. We expect our school division to report revenue fairly consistent with the prior year due to the counter-cyclical nature of this business, and we will have a moderate decline in our proprietary assessment unit due to delayed timing in launching our renormed DRP tests and the launch of our Signposts early childhood program. Preliminary forecasts for our upcoming fiscal year (Fiscal 2001) indicate increased revenue and profitability for the TASA organization."

On a related matter, Simon said that TASA has received a letter from the former owner of Mildred Elley School alleging certain defaults with respect to payments due. The company believes that it has counterclaims to such allegations and is pursuing to resolve these issues.

                                     QTR               QTR
                                July 31, '00      July 31, '99
                                ------------      ------------


Total Revenues                    $3,625,527       $3,359,553
Gross Profit                       2,343,358        2,098,849
Net Income (Loss)                     45,262          100,731
Earnings (Loss) per Share:
    Basic                               0.02             0.05
    Diluted                             0.02             0.04
Shares Outstanding (millions):
    Basic                          2,559,458        2,141,801
    Diluted                        2,650,716        2,402,730



                                       Nine Months Ended
                                 July 31, '00     July 31, '99
                                 ------------     ------------
Total Revenues                    $8,545,115       $8,559,485
Gross Profit                       5,155,677        5,326,803
Net Income (Loss)                   (784,117)        (108,973)
Earnings (Loss) per Share:
    Basic                              (0.33)           (0.05)(A)
    Diluted                            (0.33)           (0.05)(A)
Shares Outstanding (millions):
    Basic                          2,397,292        2,141,801(A)
    Diluted                        2,397,292        2,141,801(A)

      (A) after giving effect to the one-for-four reverse stock split
effected on March 4, 1999

TASA is an educational information and learning company. TASA provides the education market with assessment, instructional and delivery products and services. Visit the TASA website at www.tasa.com.

Statements contained in this release which are not historical facts are "forward-looking" statements as contemplated by the Private Securities Litigation Reform Act of 1995, as amended. Such forward-looking statements are subject to risks and uncertainties, which are enumerated in the Company's Annual Report on Form 10KSB for Fiscal Year ended October 31, 1999. These risks and uncertainties could cause actual results to differ materially from those projected or implied in the forward-looking statements.