content: UNITED STATES
                    SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549
  
  
  
                                 FORM 8-K
  
             Current Report Pursuant to Section 13 or 15(d) of
                      the Securities Exchange Act of 1934
  
  Date of report (Date of earliest event reported):  June 1, 2006
                                                     ------------
  
  
                TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
  
          (Exact Name of Registrant as Specified in its Charter)
  
  
               -----------------------------------------------
  
                Delaware                0-20303             13-2846796
                --------                -------             ----------
     (State or other jurisdiction    (Commission        (I.R.S. employer
           of incorporation)          file number)       identification no.)
  
  
         4 Hardscrabble Heights
             P.O. Box 382
             Brewster, NY                                      10509
         ----------------------                                -----
         (Address of principal                               (Zip Code)
           executive offices)
  
  
     Registrant's telephone number, including area codes: (845) 277-8100
                                                          --------------
  
  
  
                                NOT APPLICABLE
  
         (Former name or former address, if changed since last report)
  
  
  
        Check the appropriate box below if the Form 8-K filing is intended to
  simultaneously satisfy the filing obligation of the registrant under any of
  the following provisions (See General Instruction A.2 below):
  
  
  [  ]    Written communications pursuant to Rule 425 under the
          Securities Act (17 CFR 230.425)
  
  [  ]    Soliciting material pursuant to Rule 14a-12 under the
          Exchange Act (17 CFR 240.14a-12)
  
  [  ]    Pre-commencement communications pursuant to Rule 14d-2(b)
          under the Exchange Act (17 CFR 240.14d-2(b))
  
  [  ]    Pre-commencement communications pursuant to Rule 13e-4(c)
          under the Exchange Act (17 CFR 240.13e-4(c))
  
  
  <PAGE>
  
  ITEM 7.01.   REGULATION FD DISCLOSURE
               ------------------------
  
               Effective at the close of business on May 31, 2006,
  Touchstone Applied Science Associates, Inc. (the "Company")
  acquired all of the outstanding shares of Questar Educational
  Systems, Inc. ("Questar").  Questar provides test delivery,
  scoring and score analysis capabilities to state testing
  programs and also provides test material development.  The total
  consideration paid by the Company at closing for the Questar
  stock was $20,000,000, consisting of $15,000,000 in cash, the
  issuance of 222,222 shares of Series A-2 Convertible Preferred
  Stock of the Company (valued at $1,000,000, based on a price of
  $4.50 per share) and $4,000,000 in a subordinated promissory
  note issued for the benefit of the selling shareholders of
  Questar.  The Company has also agreed to pay additional
  consideration in 2010 if Questar achieves certain revenue goals
  during the three-year period following closing.  The maximum
  contingent earnout payment is $12,500,000, of which up to
  $10,000,000 shall be paid half in cash and half in shares of
  Series A-2 Convertible Preferred Stock (valued on the closing
  date at $4.50 per share), and $2,500,000 shall be paid, at the
  election of the Company, in cash or in additional shares of
  Series A-2 Convertible Preferred Stock, valued at fair market
  value at the time of issuance, or any combination thereof.
  
               The Company financed the acquisition of Questar through
  senior debt and private equity investment.  The Company entered
  into a loan agreement (the "Loan Agreement") with TD Banknorth,
  N.A., pursuant to which the Company borrowed a term loan in an
  aggregate principal amount of $9,600,000, obtained a revolving
  line of credit in the amount of $4,000,000 and had issued on its
  behalf a standby letter of credit in the original stated amount
  of $194,750 against availability under the revolving line of
  credit.  The term loan is interest-only for the first six months
  of the loan, and then is payable in forty-eight equal monthly
  installments of principal and interest on a five year
  amortization schedule.  The term loan balloons on May 30, 2011.
  Advances under the revolving line of credit are based on a
  borrowing base of eligible accounts receivable and eligible
  inventory.  The revolving line of credit is available for two
  years.  Both the term loan and the revolving loans are secured
  by the assets of the Company and by the assets of Questar.  The
  proceeds from the loans were used to pay a portion of the
  purchase price for the shares of Questar and closing costs for
  the transaction, and for working capital.
  
               The Company also entered into a securities purchase
  agreement (the "Series A Convertible Preferred Stock Purchase
  Agreement") with Camden Partners Strategic Fund III, L.P. and
  Camden Partners Strategic Fund III-A, L.P. (collectively, the
  "Investors"), pursuant to which the Company issued and sold to
  the Investors 1,666,667 shares of its Series A-1 Convertible
  Preferred Stock ("Series A-1 Preferred Stock") (valued at
  $7,500,000, based on a price of $4.50 per share).  The proceeds
  from the sale of stock were used to pay a portion of the
  purchase price for the shares of Questar and closing costs for
  the transaction, with the balance being retained by the Company
  for working capital.  Two members of the Company's Board of
  Directors, Donald W. Hughes and David L. Warnock are also
  principals of each of the Investors.
  
               The Company entered into an investor rights agreement
  (the "Investor Rights Agreement"), with the Investors pursuant to
  which the Company has granted the Investors rights to register
  under the Securities Act of 1933, as amended (the "Act"), the
  shares of Common Stock into which the Series A-1 Preferred Stock
  is convertible in accordance with provisions of the Investor
  Rights Agreement and the Certificate of Designations.
  
               In connection with the acquisition of Questar, the Company
  entered into an investor rights agreement with certain former
  shareholders of Questar pursuant to which the Company has
  granted to such persons rights to register under the Act the
  shares of Common Stock into which the Series A-2 Preferred Stock
  is convertible.
  
               The Company has entered into employment agreements for an
  initial twenty-four month term with the management of Questar.
  Such employment agreements with the Questar management team
  include non-competition covenants and proprietary rights
  agreements.
  
               On June 1, 2006, the Company issued a press release
  announcing its acquisition of Questar.  A copy of this press
  release is filed herewith.
  
  ITEM 9.01(d)    EXHIBITS.
                  ---------
  
                  The following Exhibit is filed as part of this Report:
  
                  99.1    Press Release dated June 1, 2006
  
  
  <PAGE>
  
                                   SIGNATURES
  
               Pursuant to 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 hereunto duly authorized.
  
  
  
  
                                             TOUCHSTONE APPLIED SCIENCE
                                             ASSOCIATES, INC.
  
  
  Date:   June 1, 2006                       By: /s/ ANDREW L. SIMON
                                                     ----------------------
                                                 Andrew L. Simon
                                                 President and Chief
                                                 Executive Officer and
                                                 Chief Financial Officer
  
  <PAGE>
  
                                   EXHIBIT INDEX
  
  Exhibit
  -------
  
   99.1      Press Release dated June 1, 2006
metadata_documents: [{"type": "8-K", "sequence": "1", "filename": "bdy8k601.txt", "description": "BODY OF 8-K", "secsgml_size_bytes": 7882}]
metadata_filer: {"company-data": {"conformed-name": "TOUCHSTONE APPLIED SCIENCE ASSOCIATES INC /NY/", "cik": "0000726603", "assigned-sic": "8200", "irs-number": "132846796", "state-of-incorporation": "DE", "fiscal-year-end": "1031"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-16689", "film-number": "06879020"}, "business-address": {"street1": "4 HARDSCRABBLE HEIGHTS ROAD", "street2": "P O BOX 382", "city": "BREWSTER", "state": "NY", "zip": "10509", "phone": "8452778100"}, "mail-address": {"street1": "4 HARDSCRABBLE HEIGHTS ROAD", "street2": "P.O. BOX 382", "city": "BREWSTER", "state": "NY", "zip": "10509"}, "former-company": {"former-conformed-name": "TOUCHSTONE APPLIED SCIENCE ASSOCIATES INC", "date-changed": "19920914"}}
text: UNITED STATES
                    SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C. 20549
  
                                 FORM 8-K
  
             Current Report Pursuant to Section 13 or 15(d) of
                      the Securities Exchange Act of 1934
  
  Date of report (Date of earliest event reported):  June 1, 2006
                                                     ------------
  
                TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.
  
          (Exact Name of Registrant as Specified in its Charter)
  
               -----------------------------------------------
  
                Delaware                0-20303             13-2846796
                --------                -------             ----------
     (State or other jurisdiction    (Commission        (I.R.S. employer
           of incorporation)          file number)       identification no.)
  
         4 Hardscrabble Heights
             P.O. Box 382
             Brewster, NY                                      10509
         ----------------------                                -----
         (Address of principal                               (Zip Code)
           executive offices)
  
     Registrant's telephone number, including area codes: (845) 277-8100
                                                          --------------
  
                                NOT APPLICABLE
  
         (Former name or former address, if changed since last report)
  
        Check the appropriate box below if the Form 8-K filing is intended to
  simultaneously satisfy the filing obligation of the registrant under any of
  the following provisions (See General Instruction A.2 below):
  
  [  ]    Written communications pursuant to Rule 425 under the
          Securities Act (17 CFR 230.425)
  
  [  ]    Soliciting material pursuant to Rule 14a-12 under the
          Exchange Act (17 CFR 240.14a-12)
  
  [  ]    Pre-commencement communications pursuant to Rule 14d-2(b)
          under the Exchange Act (17 CFR 240.14d-2(b))
  
  [  ]    Pre-commencement communications pursuant to Rule 13e-4(c)
          under the Exchange Act (17 CFR 240.13e-4(c))
  ITEM 7.01.   REGULATION FD DISCLOSURE
               ------------------------
  
               Effective at the close of business on May 31, 2006,
  Touchstone Applied Science Associates, Inc. (the "Company")
  acquired all of the outstanding shares of Questar Educational
  Systems, Inc. ("Questar").  Questar provides test delivery,
  scoring and score analysis capabilities to state testing
  programs and also provides test material development.  The total
  consideration paid by the Company at closing for the Questar
  stock was $20,000,000, consisting of $15,000,000 in cash, the
  issuance of 222,222 shares of Series A-2 Convertible Preferred
  Stock of the Company (valued at $1,000,000, based on a price of
  $4.50 per share) and $4,000,000 in a subordinated promissory
  note issued for the benefit of the selling shareholders of
  Questar.  The Company has also agreed to pay additional
  consideration in 2010 if Questar achieves certain revenue goals
  during the three-year period following closing.  The maximum
  contingent earnout payment is $12,500,000, of which up to
  $10,000,000 shall be paid half in cash and half in shares of
  Series A-2 Convertible Preferred Stock (valued on the closing
  date at $4.50 per share), and $2,500,000 shall be paid, at the
  election of the Company, in cash or in additional shares of
  Series A-2 Convertible Preferred Stock, valued at fair market
  value at the time of issuance, or any combination thereof.
  
               The Company financed the acquisition of Questar through
  senior debt and private equity investment.  The Company entered
  into a loan agreement (the "Loan Agreement") with TD Banknorth,
  N.A., pursuant to which the Company borrowed a term loan in an
  aggregate principal amount of $9,600,000, obtained a revolving
  line of credit in the amount of $4,000,000 and had issued on its
  behalf a standby letter of credit in the original stated amount
  of $194,750 against availability under the revolving line of
  credit.  The term loan is interest-only for the first six months
  of the loan, and then is payable in forty-eight equal monthly
  installments of principal and interest on a five year
  amortization schedule.  The term loan balloons on May 30, 2011.
  Advances under the revolving line of credit are based on a
  borrowing base of eligible accounts receivable and eligible
  inventory.  The revolving line of credit is available for two
  years.  Both the term loan and the revolving loans are secured
  by the assets of the Company and by the assets of Questar.  The
  proceeds from the loans were used to pay a portion of the
  purchase price for the shares of Questar and closing costs for
  the transaction, and for working capital.
  
               The Company also entered into a securities purchase
  agreement (the "Series A Convertible Preferred Stock Purchase
  Agreement") with Camden Partners Strategic Fund III, L.P. and
  Camden Partners Strategic Fund III-A, L.P. (collectively, the
  "Investors"), pursuant to which the Company issued and sold to
  the Investors 1,666,667 shares of its Series A-1 Convertible
  Preferred Stock ("Series A-1 Preferred Stock") (valued at
  $7,500,000, based on a price of $4.50 per share).  The proceeds
  from the sale of stock were used to pay a portion of the
  purchase price for the shares of Questar and closing costs for
  the transaction, with the balance being retained by the Company
  for working capital.  Two members of the Company's Board of
  Directors, Donald W. Hughes and David L. Warnock are also
  principals of each of the Investors.
  
               The Company entered into an investor rights agreement
  (the "Investor Rights Agreement"), with the Investors pursuant to
  which the Company has granted the Investors rights to register
  under the Securities Act of 1933, as amended (the "Act"), the
  shares of Common Stock into which the Series A-1 Preferred Stock
  is convertible in accordance with provisions of the Investor
  Rights Agreement and the Certificate of Designations.
  
               In connection with the acquisition of Questar, the Company
  entered into an investor rights agreement with certain former
  shareholders of Questar pursuant to which the Company has
  granted to such persons rights to register under the Act the
  shares of Common Stock into which the Series A-2 Preferred Stock
  is convertible.
  
               The Company has entered into employment agreements for an
  initial twenty-four month term with the management of Questar.
  Such employment agreements with the Questar management team
  include non-competition covenants and proprietary rights
  agreements.
  
               On June 1, 2006, the Company issued a press release
  announcing its acquisition of Questar.  A copy of this press
  release is filed herewith.
  
  ITEM 9.01(d)    EXHIBITS.
                  ---------
  
                  The following Exhibit is filed as part of this Report:
  
                  99.1    Press Release dated June 1, 2006
  SIGNATURES
  
               Pursuant to 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 hereunto duly authorized.
  
                                             TOUCHSTONE APPLIED SCIENCE
                                             ASSOCIATES, INC.
  
  Date:   June 1, 2006                       By: /s/ ANDREW L. SIMON
                                                     ----------------------
                                                 Andrew L. Simon
                                                 President and Chief
                                                 Executive Officer and
                                                 Chief Financial Officer
  EXHIBIT INDEX
  
  Exhibit
  -------
  
   99.1      Press Release dated June 1, 2006