TASA Research Note

Touchstone Applied Sciences (TASA)
By: Robert Davis

Possibly the most important news to come out of Touchstone Applied Sciences annual meeting in March was the Company's decision to "attempt to extricate ourselves" from the post-secondary proprietary school business - the Mildred Elley schools.

For a variety of reasons that have previously been discussed in the in-depth Analysis of TASA published on March 20th and in a Research Note on March 26th, the 1998 acquisition of the Mildred Elley schools has failed to meet original expectations. At the same time the Company's strategic thrust had moved away from Educational Delivery, to focus more strongly on Educational Assessment, which has emerged as a significant growth sector.

On May 20th TASA announced the signing of a letter of intent to sell its post-secondary proprietary school, Mildred Elley, back to Faith Takes, Mildred Elley's current president and former owner. The sale of Elley, which has campuses in the Albany, NY and Pittsfield, MA areas, is expected to be finalized by the end of the Company's third fiscal quarter, ending on July 31st. According to management, "The purchase by Ms. Takes should speed the regulatory approval process and provide continuity."

This transaction can be expected to have a positive impact on the Company's bottom line in future periods, as this non-core business has been a brake on profits in recent years.

J.M.Dutton & Associates, LLC. John M. Dutton, President and Supervisory Analyst, 1129 Manning Drive, Suite 310, El Dorado Hills, CA 95762 Phone (916) 941-4985, Fax (978) 418-6422 Email: [email protected] Web site: www.JMDutton.com

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