SecProbe.io

<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.txt
<TEXT>
McAfee & Taft                                                  W. Chris Coleman
A Professional Corporation                                      ATTORNEY AT LAW

10th Floor  Two Leadership Square                                 WRITER DIRECT
211 N. Robinson  Oklahoma City, OK  73102-7103                   (405) 552-2234
(405) 235-9621  FAX (405) 235-0439                           FAX (405) 228-7434
www.mcafeetaft.com                                 chris.coleman@mcafeetaft.com

                                October 29, 2004

Ms. Barbara C. Jacobs
Assistant Director
Securities Exchange Commission
Washington, DC  20549

                                     Re:  TMS, Inc.
                                          PREM14A filed on September 16, 2003
                                          Supplemental material received on
                                            October 11, 2004
                                          File No. 33-22780

Dear Ms. Jacobs:

     This letter is in response to your comment letter of October 28, 2004 with
respect to the above Proxy Statement and our supplemental material received on
October 11, 2004 in response to your comment letter of October 5, 2004. We
appreciate your comments and assistance in enhancing and improving our
disclosure and have modified our disclosure accordingly. The following are our
specific responses to each of your comments.

General
-------

1.   We refer to the staff's conversation with Chris Coleman on October 25,
     2004. Please revise your proxy to disclose the information required by Item
     14(c)(1) of Schedule 14A.

          Response: We confirm our conversation with staff that without
          conceding the requirements to include such financial information, we
          will incorporate the referenced financial information for the
          Registrant, and will deliver copies of the annual report on Form
          10-KSB for the fiscal year ended August 31, 2003, the quarterly report
          on Form 10-QSB for the quarter ended May 31, 2004, as well as an
          unaudited balance sheet of the Registrant as of August 31, 2004 and
          2003, attached as Appendix B to the Proxy Statement. See Pages 9-10
          and 38.

2.   We refer you to prior comment 3. We note that you disclose that the
     company, as of yet, has not received a solvency opinion regarding your plan
     of liquidation. Please disclose the risks to shareholders as a result of
     your decision not to obtain a solvency opinion. For example, discuss the
     potential for creditors of the company to pursue the assets distributed to
     stockholders under state law.

          Response: Under the heading "Contingency; Creditors; Litigation" at
          Pages 34-35 of the attached, we have disclosed that to the extent a
          distribution is made to shareholders without an adequate contingent
          claim reserve, each shareholder could be held liable for payment to
          creditors of their pro rata amount of any excess.

3.   We refer you to prior comment 5. Please supplementally provide us with a
     copy of your agreement with Pegasus.

          Response: We are as of this date filing as Exhibits to a Current
          Report on Form 8-K, copies of the Asset Purchase Agreement with
          Pegasus, and the Letter Agreement extending the closing date. We
          understand that you will access this information from EDGAR.

Questions and Answers about the Proposed Plan of Liquidation
------------------------------------------------------------

4.   Your disclosure states that you will receive an estimated $2.45 million
     from the sale of CPT and VSC Technologies. Please clarify whether the
     company has any other assets that will be sold as a result of the plan of
     liquidation. For example, is the DMR patent separate from CPT and VSC
     Technologies.

          Response: We have clarified this information in both the Summary under
          "What will I receive in the liquidation?" at Page 2 as well as adding
          a paragraph to this effect under "Description of the Plan of
          Liquidation - Liquidation of Assets" at Page 23.

5.   You disclose that the estimated costs of the liquidation will not exceed
     $415,000. Does this amount include compensation to be received by officers
     and/or directors that will continue through liquidation? If so, please
     disclose and quantify. If not, please advise.

          Response: This information is included in the table which itemizes the
          estimated cost of liquidation at Page 25.

6.   Your disclosure states that you will distribute all liquidation proceeds at
     one time. Please clarify and prominently state that you will not distribute
     any liquidation proceeds prior to the conclusion of the NCS litigation and
     the sale of the DMR patent, if true.

          Response: We have clarified and added disclosure with regard to the
          time periods in the Summary under "What is the expected timing for
          distribution of the liquidation proceeds?" at Page 2, clarified this
          under the table of the estimate of proceeds at Pages 25-26 and this
          information is included under "Contingency; Creditors; Litigations"
          (see the fourth paragraph) at Pages 34-35.

7.   We note that your distribution is dependent upon your ability to be
     dismissed from the NCS litigation. Please disclose the basis for your
     belief that the litigation will be dismissed. Is there a possibility that
     the litigation will not be dismissed? Is there a possibility that TMS may
     be liable?

          Response: We have clarified and added disclosure with regard to the
          time periods in the Summary under "What is the expected timing for
          distribution of the liquidation proceeds?" at Page 2, clarified this
          under the Estimate of Proceeds at Pages 25-26 and this information is
          included under "Contingency; Creditors; Litigations" (see the fourth
          paragraph) at Pages 34-35.

8.   Please expand your disclosure to discuss the impact of your potential
     liability on the estimated range of distribution of $0.145 and $0.16. For
     example, to the extent known, explain and quantify how potential judgments
     against TMS may change shareholders' anticipated liquidation proceeds.
     Also, clarify whether the estimated range of distribution takes into
     account reserves created for estimated contingencies such as the NCS
     litigation. If so, disclose at what point the estimated range of
     distribution may be impacted by the NCS litigation.

          Response: We have clarified our disclosure to address these questions
          in the Summary under "What will I receive in the liquidation?" at Page
          2, as well as in the discussions under "Description of the Plan of
          Liquidation - Distribution to Shareholders" at Page 24.

Description of Asset Purchase Agreement with Pegasus
----------------------------------------------------

9.   You disclose that the terms surrounding the purchase price were based on
     negotiations between the company and Pegasus. Please expand your disclosure
     to discuss the negotiation process between the parties and the criteria
     relied upon to derive the purchase price of the CPT business.

          Response: The Board of Directors did not use any multiples or formulas
          to value the assets and we are unaware of any used by Pegasus. It is
          our understanding that Pegasus used certain historical information
          from the financial statements of the Company to derive its estimates
          of future cash flows from the assets purchased, however, this
          information was not shared with the Company. The disclosures at Pages
          18-19 identify the matters considered by the Board of Directors.

10.  You disclose that the note must be paid either fifteen days after the date
     on which the company sets the liquidation dates or July 15, 2004, whichever
     is earlier. In light of the fact that July 15, 2004 has passed, please
     revise. Also, explain the right of offset or reduction that protects the
     buyer against the accounts receivables that is purchased by the buyer if
     not collected or collectible

          Response: We have made appropriate changes and additions at Page 18 of
          the attached.

Description of the Plan of Liquidation
--------------------------------------

11.  We refer you to your table on page 24. Please revise to clarify whether the
     sale of your assets to Pegasus and the sale of your interest in Measurement
     will be your only sources of proceeds. Does TMS have any other assets? Is
     the DMR patent included within the sale of assets of Pegasus or the sale of
     your interest in Measurement?

          Response: We have clarified this information in both the Summary under
          "What will I receive in the liquidation?" at Page 2 as well as adding
          a paragraph to this effect under "Description of the Plan of
          Liquidation - Liquidation of Assets" at Page 23.

12.  Please revise to disclose your supplemental response to prior comment 20.

          Response: This information is included at Page 26.

13.  We refer you to your supplemental response to prior comment 23. Please
     disclose your current intention with regard to your ongoing reporting
     requirements. For example, disclose your request for no-action and current
     status of your request. Also, revise to explain the consequences to
     shareholders if your request is granted and if your request is denied.

          Response: We have included a new section under "Description of the
          Plan of Liquidation" entitled "Reports to Shareholders" addressing
          this information. See Page 28 of the attached.

     We believe that we have addressed the concerns raised by staff and desire
to be in a position to submit a final proxy statement as soon as possible.
Separately we will submit a statement from the Company acknowledging the matters
requested in your Closing Comments.

                                     Very truly yours,

                                     W. CHRIS COLEMAN
                                     W. Chris Coleman

WCC/slf

<PAGE>

                                    TMS, INC.
                               206 WEST 6TH AVENUE
                           STILLWATER, OKLAHOMA 74074

                         SPECIAL MEETING OF SHAREHOLDERS

                                December 14, 2004

                                                                November 5, 2004

Dear Fellow Shareholder:

     You are cordially invited to attend a special meeting of shareholders of
TMS, Inc. (the "Company") to be held in Room 119 of the Stillwater Public
Library, 1107 South Duck, Stillwater, Oklahoma, on December 14, 2004, at 10:00
a.m., local time.

     At the special meeting, we will ask you to approve the sale of our
Component Products Technologies business (the "CPT Business") to Pegasus Imaging
Corporation ("Pegasus") and a plan of liquidation for the Company.

     The Board of Directors approved the sale of the CPT Business, subject to
shareholder approval, and in connection with such approval, also adopted a plan
of liquidation. Under the plan of liquidation, the board of directors will file
a certificate of dissolution for the Company, wind up the Company's affairs,
endeavor to convert all of the assets of the Company into cash or cash
equivalents, pay from Company funds all Company liabilities, including
establishing a reserve to fund contingent liabilities in an amount to be
determined as information concerning such contingencies becomes available, and
distribute the net proceeds of the liquidation to shareholders. In connection
with approving the plan of liquidation, we estimate that you will receive total
liquidation proceeds of between $0.145 and $0.16 per share of common stock.
However, no assurance can be given as to the actual amount of liquidation
proceeds that will be available for distribution.

     The affirmative vote of at least two-thirds (2/3) of the outstanding shares
of our common stock is required to approve the sale of the CPT Business to
Pegasus and the plan of liquidation.

     In connection with approving the sale of the CPT Business to Pegasus and
the plan of liquidation the board determined that the sale to Pegasus and plan
of liquidation are in the best interests of the shareholders and recommends that
you vote "FOR" approval of the sale and plan. You should carefully read the
description of the sale to Pegasus in the proxy statement and the plan of
liquidation, a copy of which is attached as Appendix A to the accompanying proxy
statement.

     At the special meeting, you will also be asked to transact such other
business as may properly come before the meeting or any adjournment or
postponement thereof. It is not anticipated that any other matter will be
brought before the special meeting. If other matters are properly presented,
however, proxies will be voted in accordance with the discretion of the proxy
holders.

     Your vote is important. Whether or not you plan to attend the special
meeting, you are requested to promptly sign, date and mail the enclosed proxy
card in the postage-paid envelope provided. Returning a signed proxy card will
not prevent you from voting your shares in person if you subsequently choose to
attend the special meeting, but your presence, without further action, at the
special meeting will not constitute revocation of a previously delivered proxy.

     On behalf of your board of directors, thank you for your continued support.

                                      Sincerely,

                                      DEBORAH D. MOSIER
                                      President and Chief Financial Officer

                                    TMS, INC.

                    NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
                         TO BE HELD ON DECEMBER 14, 2004

To the Shareholders of
TMS, Inc.

     This special meeting of shareholders of TMS, Inc.. will be held on Friday,
December 14, 2004, in Room 119 of the Stillwater Public Library, 1107 South
Duck, Stillwater, Oklahoma, at 10:00 a.m., local time, and at any adjournment or
adjournments thereof, for the following purposes:

     1.   To consider and vote upon a sale of the Company's Component Products
          Technologies business to Pegasus Imaging Corporation and the Asset
          Purchase Agreement entered into by the Company, Pegasus, and PIC
          Acquisition, Inc., a subsidiary of Pegasus; and

     2.   To consider and vote upon a plan of liquidation, and to ratify and
          approve the transactions described in the accompanying proxy statement
          which the Company and its board of directors have undertaken in
          connection with the plan of liquidation;

     3.   To transact such other business as may properly come before the
          meeting.

     The board of directors currently knows of no other business to be presented
by or on behalf of TMS.

     Only shareholders of record at the close of business on October 22, 2004
will be entitled to notice of, and to vote at, the special meeting or any
adjournment or postponement of the meeting.

                                    IMPORTANT

     Your proxy is important to assure a quorum at the meeting. Whether or not
you expect to attend the meeting, please vote in any one of the following ways:

Please note that all votes cast  o call 1-800-758-6973 from the U.S. or  Canada
via telephone or the internet
must be cast before 11:59 p.m.   o log on to http://www.eproxyvote.com/tmss; or
(Central Time) on
December 12, 2004.               o mark, sign, date and p