FORM 10-QSB

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE     
     SECURITIES EXCHANGE  ACT OF 1934

For the Quarterly Period Ended June 30, 1997

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
     SECURITIES EXCHANGE  ACT OF 1934

For the Transition Period from  ________ to ________

Commission File #0-11078

THE AMERICAN EDUCATION CORPORATION
(Exact name of registrant as specified in its charter)

Colorado                                                        
(State or other jurisdiction of incorporation, or organization)

84-0838184
(IRS Employer Identification number)

7506 North Broadway Extension, Suite 505, Oklahoma City, OK  73116
(Address of principal executive offices)

(405) 840-6031
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: NONE

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.025 per share

Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to 
such filing requirements for the past 90 
days.			
								
YES [X]  NO [ ]

Number of shares of the registrant's common stock outstanding as of June 30, 
1997:          12,127,393

Transitional Small Business Disclosure Format

YES [ ]  NO [X]  


THE AMERICAN EDUCATION CORPORATION

INDEX                     
                                                    Page No.
                                                    --------
PART 1 - FINANCIAL INFORMATION

Item 1   Balance Sheets                                 3
         June 30, 1997 and December 31, 1996

         Statements of Operations                       4
         For the Quarter Ended June 30, 1997            
         and for the Quarter Ended June 30, 1996

         For the Six Months Ended June 30, 1997         5
         and for the Six Months Ended June 30, 1996

         Statements of Cash Flows                       6
         For the Six Months Ended June 30, 1997
         and for the Six Months Ended June 30, 1996

         Notes to Interim Financial Statements          7


Item 2   Management's Discussion and Analysis of        9
         Financial Conditions and Results of Operations


PART II - OTHER INFORMATION                            13

SIGNATURE PAGE                                         14



Part 1 - FINANCIAL INFORMATION
THE AMERICAN EDUCATION CORPORATION
BALANCE SHEETS

ASSETS                                         30-Jun-97        31-Dec-96

Current assets:
Cash                                           $  121,817       $  193,347
Accounts receivable, net of allowance
 for uncollectible accounts of $117,441 
 and $112,187                                   1,092,625          408,178  
Inventories, net of impairment reserve of          14,457           15,909
 $9,645
Prepaid expenses and deposits                      13,986           32,442
                                               ----------       ----------
 Total current assets                           1,242,885          649,876

Property and equipment, at cost                   187,875          175,097
Less accumulated depreciation and amortization   (139,776)        (125,838)
                                               -----------      ----------- 
 Net property and equipment                        48,099           49,259

Other assets:
 Capitalized software costs, net of                
 accumulated amortization of $919,767 
 and $879,033                                     446,900          322,036
Goodwill, net of accumulated amortization
 of $223,673 and $200,536                          23,127           46,264
                                               ----------       ---------- 
Total other assets                               470,027           368,300

Total Assets                                  $1,761,011        $1,067,435
                                              ==========        ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable trade                        $  338,211        $  280,196
Accrued liabilities                              348,286           360,697
Accounts Payable - Affiliate                      18,000            18,000
Customer Deposits                                119,178           194,480
                                              ----------        ----------
Total current liabilities                        823,675           853,373

Long-term debt                                    55,500            53,000

Total liabilities                                879,175           906,373

Commitments and contingencies                          0                 0

Stockholders' Equity
Preferred Stock, $.001 par value;
 Authorized-50,000,000 shares-issued and
 outstanding-none                                      0                 0
Common stock, $.025 par value
 Authorized 15,000,000 shares-issued and 
 outstanding-12,127,393 shares                   304,271           304,271
Additional paid-in capital                     5,232,630         5,232,630
Retained Earnings/(Deficit)                   (5,375,839)       (5,375,839)
Current Year Earnings                            720,774                 0
                                              -----------       -----------
 Total stockholders' equity                      881,836           161,062

Total liabilities and stockholders' equity    $1,761,011        $1,067,435   
                                              ==========        ==========

The accompanying notes are an integral part of the financial statements.


THE AMERICAN EDUCATION CORPORATION
STATEMENTS OF OPERATIONS
QUARTERS ENDED JUNE 30, 1997 AND 1996

                                                 30-Jun-97          30-Jun-96

Net Sales                                     $  1,237,332       $  1,044,698
Cost of goods sold                                 139,821            141,971
                                              ------------       ------------ 
Gross profit                                     1,097,511            902,727

Operating expenses:
 Sales and marketing                               174,038            151,351
 General administrative                            396,745            203,973 
 Amortization of capitalized software costs         20,864             61,957
                                              ------------       ------------
Total operating expenses                           591,647            417,281
                                              ------------       ------------
Operating earnings (loss)                          505,864            485,446

Other income/(expense)
 Interest and Dividend Income                           64             27,065 
 Miscellaneous income                                3,375            (18,516)
 Interest Expense                                   (1,250)            (6,467)
                                              -------------       ------------
Net earnings (loss) before taxes                   508,053            487,528

 Deferred income taxes                             182,899            175,510 
 Valuation allowance - change at 
 beginning of year                                (182,899)          (175,510)
                                              -------------       ------------
Net earnings (loss)                            $   508,053        $   487,528


Weighted average common shares outstanding      12,083,359          9,128,089

Earnings (loss) per share                      $     0.042        $     0.053

Weighted average common shares 
 outstanding-assuming dilution                  14,086,576         13,785,204

Earnings (loss) per share-assuming dilution    $     0.036         $    0.035


The accompanying notes are an integral part of the financial statements.



THE AMERICAN EDUCATION CORPORATION
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996

                                                 30-Jun-97          30-Jun-96

Net Sales                                      $ 2,010,073         $ 1,359,937 
Cost of goods sold                                 227,412             198,599
                                               -----------         -----------
Gross profit                                     1,782,661           1,161,338

Operating expenses:
 Sales and marketing                               348,133             236,070
 General administrative                            677,075             369,199
 Amortization of capitalized software costs         40,734             120,797
                                               -----------         ----------- 
Total operating expenses                         1,065,942             726,066
                                               -----------         -----------
Operating earnings (loss)                          716,719             435,272

Other income/(expense)
 Interest and Dividend Income                          586              27,120
 Miscellaneous income                                6,412             (34,980)
 Interest Expense                                   (2,943)            (13,588)
                                               ------------        ------------ 
Net earnings (loss) before taxes                   720,774             413,824

 Deferred income taxes                             259,479             148,977
 Valuation allowance - change at 
 beginning of year                                (259,479)           (148,977)
                                               ------------        ------------
Net earnings (loss)                            $   720,774         $   413,824
                                               ============        ============

Weighted average common shares outstanding      12,083,359            9,128,089

Earnings (loss) per share                      $     0.060         $      0.045

Weighted average common shares
 outstanding-assuming dilution                  14,086,576           13,785,204

Earnings (loss) per share-assuming dilution    $     0.051         $      0.030


The accompanying notes are an integral part of the financial statements.


THE AMERICAN EDUCATION CORPORATION
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996

                                                 30-Jun-97            30-Jun-96
Cash flows from operating activities:
Net earnings (loss)                            $   720,774         $    413,824
 Adjustments to reconcile net earnings/(loss) 
 to net cash provided by (used in) operating
 activities:
 Depreciation and amortization                      77,806              157,459
 Gain on debt settlement                                                (27,060)
 Reserve for bad debts                               5,254               49,534

Changes in assets and liabilities:
 Accounts receivable                              (689,698)           (707,283)
 Inventories                                         1,452               2,379
 Prepaid expenses and other                         18,456               1,593
 Accounts payable and accrued liabilities           48,104             124,579
 Customer Deposits                                 (75,302)                   -
                                               ------------       -------------
 Net cash provided by operation activities         106,846              15,025

Cash flow from investing activities:
 Purchase of capitalized software costs           (165,598)           (123,352)
 Purchase of property and equipment                (12,778)            (12,268)
                                               ------------       -------------
 Net cash used in investing activities            (178,376)           (135,620)
Cash flows from financing activities:
 Proceeds received from issuance of debt                 -               42,268
 Issuance of common stock for cash                       -               80,000
                                               ------------       -------------
 Net cash provided by financing activities               -              122,268

Net increase (decrease) in cash                    (71,530)               1,673

Cash at beginning of the period                    193,347               56,882
                                               ------------       -------------
Cash at end of the period                      $   121,817        $      58,555
                                               ============       =============

Supplemental Cash Flow Disclosures:
 Interest paid                                 $         -         $      5,600 


The accompanying notes are an integral part of the financial statements.

 
THE AMERICAN EDUCATION CORPORATION
NOTES TO INTERIM FINANCIAL STATEMENTS
FOR THE PERIODS ENDED JUNE 30, 1997 AND 1996


Summary of Significant Accounting Policies
------------------------------------------
The summary of significant accounting policies of 
The American Education Corporation (the Company), 
is presented to assist in understanding the Company's 
financial statements. These accounting policies conform 
to generally accepted accounting principles and have 
been consistently applied in the preparation of the 
financial statements.


1. BASIS OF PRESENTATION
------------------------

The interim financial statements at June 30, 1997, and 
for the three and six month periods ended June 30, 1997, 
and 1996 are unaudited, but include all adjustments which 
the Company considers necessary for a fair presentation.  
The December 31, 1996, balance sheet was derived from the 
Company's audited financial statements.

The accompanying unaudited financial statements are for the 
interim periods and do not include all disclosures normally 
provided in annual financial statements and should be read in 
conjunction with the Company's audited financial statements 
included in the Company's Form 10-KSB for the year ended 
December 31, 1996.  The accompanying unaudited interim 
financial statements for the three and six month periods 
ending June 30, 1997 is not necessarily indicative of the 
results which can be expected for the entire year.

The preparation of the financial statements in conformity 
with generally accepted accounting principles requires 
management to make estimates and assumptions that affect 
the reported amounts of assets and liabilities and disclosure 
of contingent assets and liabilities at the date of the 
financial statements and the reported revenues and 
expenses during the reporting period. Actual results could 
differ from those estimates.

The Company recognizes revenue in accordance with the American 
Institute of Certified Public Accountant's Statement of Position 
91-1 on software revenue recognition.

Capitalized software costs consist of licenses for the rights 
to produce and market computer software, salaries, and other 
direct costs incurred in the production of computer software. 
Costs incurred in conjunction with product development are 
charged to research and development expense until technological 
feasibility is established. Thereafter, all software development 
costs are capitalized and amortized on a straight-line basis over 
the product's estimated economic life of between three and five 
years.

Goodwill relates to the acquisition of the Company in 1991 and 
prior to 1993 was amortized over a period of 40 years. In 1993 
the estimated useful life was revised with the remaining goodwill 
amortized over five years.

Inventories are stated at the lower of cost (first-in, first-out), 
or market.

Property and equipment is stated at cost. Depreciation is provided 
on the straight-line basis over the estimated useful life of the 
assets, which is five years.

In the Statements of Cash Flows, cash and cash equivalents may 
include currency on hand, demand deposits with banks, or other 
financial institutions, treasury bills, commercial paper, mutual 
funds or other investments with original maturities of three months 
or less.

The Company accounts for income taxes in accordance with the 
provisions of SFAS No. 109. The Company has a net operating loss 
carryforward. A valuation allowance has been assessed for the full 
amount of the related deferred tax asset.


Shareholder's Equity
--------------------

In 1996 the Company issued 3,599,963 shares as common stock in 
exchange for $243,258 cash and $995,755 of debt retirement.

During the first quarter of 1996, the Company adopted a new 
non-qualified stock option plan. On March 11, 1996 the company 
granted options to employees, officers, and directors, to purchase 
1,301,195 shares of common stock at $.50 per share. The options 
expire March 11, 1999, or ninety days after termination of employment. 
No options have been exercised and 58,000 options have expired due 
to termination of employment.


2.  COMMITMENTS AND CONTINGENCIES
---------------------------------

The Company amortizes capitalized software costs over the 
product's estimated useful life.  Due to inherent technological 
changes in the software development industry, the period over 
which such capitalized software cost is being amortized may 
have to be accelerated.

In October 1996, the Company became a party to litigation in 
United States District Court for the District of Columbia 
entitled Securities and Exchange Commission, Plaintiff v. 
The American Education Corporation, Defendant (the "Action").  
In the Action, the Company admitted that, in violation of 
certain provisions of the Securities and Exchange Act of 1934, 
as amended (the "Exchange Act"), it failed to file, among other
things, certain annual and quarterly reports. The Company 
voluntarily entered into a Consent and Undertaking pursuant 
to which the Court will issue a Final Judgment of Permanent 
Injunction requiring the Company to (i) file all its delinquent 
Exchange Act reports and (ii) in the future, timely file all of 
its Exchange Act reports. The failure to file any required report 
could result in a contempt citation, the assessment of fines 
against the Company, or an action by the Securities and Exchange 
Commission to deregister the Company's common stock.

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
------------------------------------------------------------------
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

This document may contain forward-looking statements.  These 
forward-looking statements can generally be identified as such 
because the context of the statement will include words such as 
the Company "believes", "plans", "intends", "anticipates", "expects", 
or words of similar import. Similarly, statements that describe 
the Company's future plans, objectives, estimates, or goals are 
also forward-looking statements. Such statements address future 
events and conditions concerning capital expenditures, earnings, 
litigation, liquidity, capital resources, and accounting matters. 
Actual results in each case could differ materially from those 
currently anticipated in such statements by reason of factors such 
as economic conditions, including changes in customer demands; future 
legislative, regulatory and competitive developments in markets in 
which the Company operates; and other circumstances affecting 
anticipated revenues and costs.

The Company has invested significantly in personnel additions, 
the development of new products, and the acquisition and licensing 
of new products, to improve the ability of the organization and 
its published products to meet the needs of the marketplace. These 
changes were required to update the Company's product offerings. To 
finance the business, management has utilized long-term, subordinated 
debt from private investment sources, secured bank revolving credit 
lines, and accounts receivable financing sources.  Management 
anticipates that additional financing will be required to continue 
to develop and position the Company for the growth opportunities 
that exist in the electronic media for education industry.

At December 31, 1995, the Company had $791,989 of unpaid principal 
outstanding on convertible notes, including $33,201 owed to a vendor. 
Effective June 30, 1996, the Company exchanged 2,651,274 shares of 
common stock for $731,989 of principal and $233,471 of accrued interest 
related to these convertible notes. At December 31, 1996 and June 30, 
1997, $50,000 of convertible notes, with a conversion price per share 
of $.136, remained outstanding.

The Company's working capital was $419,210 at June 30, 1997, an 
improvement of $622,689 from a deficit of $203,479 at December 31, 
1996. This improvement is associated with higher levels of sales 
and subsequent cash flow during the period.

Additional working capital beyond that available within the Company 
has been and may be required to expand operations.  Management has 
and will consider options available in providing such funding, 
including debt and/or equity financing to provide necessary expansion 
capital. Management may also seek to raise additional equity capital
to provide for the financial resources to acquire other organizations
or intellectual property content that can accelerate the Company's
growth and strategic position.

The Company has been constrained by the lack of adequate capital 
and proper financing for the past several years.  In 1997, as 
sales of the A+dvanced Learning System registered product line have 
improved, and the Company has achieved both profitability and 
positive cash flows from operations, while management has taken 
action to reduce debt and improve the financial strength of the 
Company. The Company's financial position has been further improved 
through the private sale of restricted common stock and conversion 
of convertible debt to common stock by its principal shareholders.


RESULTS OF OPERATIONS - QUARTER ENDED JUNE 30, 1997
AS COMPARED TO THE QUARTER ENDED JUNE 30, 1996
---------------------------------------------------

Net software revenues for the three months ended June 30, 1997, 
totaled $1,237,332 compared to net software revenues of $1,044,698 
for the same period in 1996.  This represents an increase of 
approximately 18% in the 1997 quarter.  The rate of sales increase 
in revenues for the second quarter 1997 over the comparable quarter 
1996 was adversely affected by unusually large shipments in the 
second quarter of 1996.  The 1996 second quarter revenues were 
unusually high because of the initial shipments of an existing 
backlog of orders for new subject titles that were released in the 
second quarter of 1996.

Cost of goods sold for the three months ended June 30, 1997, 
decreased by approximately 1.5%, even though sales increased by 18%.  
This disproportionately low increase in direct costs reflects the 
efficiency in which software products are now produced on CD-ROM.  
The use of this medium also positively effects the cost of packaging, 
handling and freight associated with products that are marketed 
primarily to the school market, as opposed to traditional retail 
outlets.  Cost of goods sold represents the actual cost to produce 
the software products, including certain allocated overhead costs, 
a portion of which is fixed.  Actual component costs as well as the 
direct labor costs associated with the assembly of software products 
are now very low.  Excluding the costs of allocated overhead, product 
costs provide gross profit margins ranging from 75 to 95 percent on 
the Company's principal products.  As sales volumes increase, 
overall gross profit margins are expected to continue to increase, 
as total allocable overhead costs remain relatively fixed in relation 
to net revenues.

Total operating expenses recorded for the three months ended June 
30, 1997, were $591,647, compared to $417,281 for the previous year.  
This represents an increase of approximately 42%. Operating expenses 
for the quarter were impacted by the development costs associated 
with the release of 6 new secondary grade level titles and the 
expenses associated with the development costs attributable to the 
translation of 8 mathematics titles into Spanish. 

Selling and marketing costs increased by approximately 15%, from 
$151,351 for the three months ended June 30, 1996 to $174,038 for 
the current period.  The increase in 1997 is related to expanded 
sales, marketing, distributor training and commission costs related 
to the higher sales levels. 

General and administrative expenses increased by approximately 95% 
during 1997, from $203,973 to $396,745.  This increase is primarily 
related to unusual expenses related to the previously mentioned 
product development costs associated with the final development 
efforts associated with a total of 6 secondary grade level and 8 
Spanish language subject titles.  Research and development cost 
totaled $107,344 for the quarter.

Net income for the three months ended June 30, 1997, improved by 
approximately 4% as compared to the prior year.  This improvement 
from net income of $487,528 in 1996 to net income of $508,054 in 
1997, reflects the higher revenue levels providing coverage of 
essential fixed operating costs, as well as the improving gross 
margins related to previously described manufacturing efficiencies.  

Earnings per share (on a fully diluted basis) was $0.036 for the 
quarter ending June 30, 1997 compared to $0.035 for the same period 
in 1996. The number of fully diluted shares outstanding 
increased from 13,785,204 to 14,086,576 during the same period.

Total stockholder's equity improved substantially as a result of 
the accumulation of earnings during the quarter ended June 30, 1997.  
Shareholders' equity as a percent of total assets at December 31, 1996
was 15% compared to 50% at June 30, 1997. Other measures of liquidity 
and solvency  -  total debt as a percent of total assets declined from 
85% at December 31, 1996 to 50% at the end of the second quarter 1997; 
while current ratios have improved from 0.76 to 1.51 over the same 
period. 

RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 1997
AS COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1996
------------------------------------------------------

Net software revenues for the six months ended June 30, 1997, totaled 
$2,010,073 compared to net software revenues of $1,359,937 for the 
comparable 1996 period. This represents an increase of approximately 
48% for the 1997 six-month period. This significant increase in the 
1997 six month period total company revenues highlights the order 
backlog and rate of second quarter growth issues contained in the 
preceding quarterly discussion.

Cost of goods sold for the six months ended June 30, 1997, increased 
by approximately 15%, even though sales increased by 48%.  This 
disproportionately low increase in direct costs reflects the 
efficiency in which software products are now produced on CD-ROM.  
The use of this medium also reduces the cost of packaging, handling, 
and freight associated with products that are marketed primarily 
to the school market, as opposed to traditional retail outlets. 
Cost of goods sold represents the actual cost to produce the 
software products, including certain allocated overhead costs, a 
portion of which is fixed. Actual component costs as well as the 
direct labor costs associated with the assembly of software products 
are now very low.  Excluding the costs of allocated overhead, product 
costs provide gross profit margins ranging from 75 to 95 percent on 
the Company's principal products. As sales volumes increase, overall 
gross profit margins are expected to continue to increase,as total 
allocable overhead costs remain relatively fixed relative to sales.

Total operating expenses recorded for the six months ended June 30, 
1997, were $1,065,942, compared to $726,066 for the previous year.  
This represents an increase of approximately 47%. Total operating 
expenses for the six month period were also impacted by the development 
costs associated with the release of 6 new secondary grade level titles 
and the expenses associated with the development costs attributable to 
the translation of 8 mathematics titles into Spanish. 

Selling and marketing costs increased by approximately 47%, from 
$236,070 for the six months ended June 30, 1996 to $348,133 for 
the comparable 1997 period. The increase in the 1997 six month 
period is attributable to expanded sales, marketing, distributor 
training and commission costs related to the higher sales levels 
and the release of 14 new titles.

General and administrative expenses increased by approximately 
83% during the 1997 six-month period from $369,199 to $677,075.  
This increase is primarily related to higher expenses associated 
with the final development efforts associated with the 6 secondary 
grade level and 8 Spanish language subject titles completed during 
the period.  Research and development cost totaled $236,533 for the 
1997 six-month period representing an increase of 92% over the 
comparable 1996 period. The Company plans to invest in an 
aggressive new title development schedule, which will position the 
Company to take advantage of new and existing markets.

Net earnings for the six months ended June 30, 1997, improved by 
approximately 74% as compared to the prior 1996 period.  This 
improvement from net income of $413,824 in 1996 to net income of 
$720,774 in 1997, reflects the higher revenue levels providing 
coverage of essential fixed operating costs, as well as the 
improving gross margins related to previously described 
manufacturing efficiencies.  

Earnings per share (on a fully diluted basis) were $0.051 for the 
six months ending June 30, 1997 compared to $0.030 for the same 
period in 1996 which is an increase of 70%. The number of fully 
diluted shares outstanding increased from 13,785,204 to 14,086,576 
during the same period.

The Company has several marketing partnerships that were entered 
into in the fiscal 1996 and 1997 periods. Since mid 1995, the 
Company has been a Compaq/Microsoft Educational Partner and a 
Microsoft NT Solutions Partner. These two relationships provide 
the Company with significant advertising and promotional exposure 
in literature and various promotions directed to the school market 
place. On June 29, 1996, the Company entered into a marketing 
agreement with HomeQuest, Inc. to provide a private brand version 
of its A+dvanced Learning System? product family for the home market. 
HomeQuest is a direct seller of educational products to the home 
with approximately 400 marketing consultants. An agreement was 
entered into with Davidson & Associates, (a subsidiary of CUC 
International [NYSE]) on August 29, 1996, to provide certain 
elements of A+dvanced Learning System software technology and 
curriculum content to Davidson. By mutual agreement, the Company 
and Davidson agreed to withdraw from their initial agreement to 
modify certain of the Company content and technology under a private 
label agreement with Davidson. The Company was not willing under the 
terms of the initial agreement to undertake modification of its 
product to the degree and extent requested by Davidson for the 
compensation terms stipulated in the agreement. The Company's 
agreement to effect conversion of English to Spanish-language 
translation of certain of its current titles with National School 
Services (NSS) has been executed. The translation of 8-grade level 
1-9 A+dvanced Learning System mathematics subject titles into Spanish 
is complete, along with the sale and installation of these products in 
a number of schools. 

Company management believes that significant, future opportunities 
exist in both the school and home markets.  The Company is now 
equipped with Macintosh, DOS and Windows program shells that 
facilitate the rapid and less expensive development of new subject 
titles.  Management also believes that the Company is better 
positioned to compete in the educational software market as a 
result of its software development tools and capabilities, growing 
marketing strengths and its position within the school and home 
market places. In addition, the Company is investigating sources 
for intellectual property and potential partnerships with other 
publishers on which it may base future publications and Internet 
commercial activities.  Management believes that the Company can 
make significant progress within its existing product development 
and marketing budgets to position the Company to maintain the 
continued, profitable expansion of the business. 


THE AMERICAN EDUCATION CORPORATION

PART II - OTHER INFORMATION
---------------------------

Item 1.  Legal Proceedings

In October 1996, the Company became a party to litigation in 
United States District Court for the District of Columbia entitled 
Securities and Exchange Commission, Plaintiff v. The American 
Education Corporation, Defendant (the "Action").  In the Action, 
the Company admitted that, in violation of certain provisions of 
the Securities and Exchange Act of 1934, as amended (the "Exchange 
Act"), it failed to file, among other things, certain annual and 
quarterly reports.  The Company voluntarily entered into a Consent 
and Undertaking pursuant to which the Court will issue a Final 
Judgment of Permanent Injunction requiring the Company to (i) 
file all its delinquent Exchange Act reports and (ii) in the 
future, timely file all of its Exchange Act reports.  The failure 
to file any required report could result in a contempt citation, 
the assessment of fines against the Company, or an action by the 
Securities and Exchange Commission to deregister the Company's 
common stock. As of June 30, 1997 the Company was current with 
all filings with the SEC through the end of the fiscal year 
December 31, 1996 and the quarter ending March 30, 1997.

The Company filed a complaint on July 8, 1997 in The United 
States District Court for the Western District of Oklahoma against
Jostens Learning Corporation ("Jostens"). The complaint alleges, 
among other things, that Jostens has improperly adopted and used 
the mark "A+dvantage" in connection with its educational computer
programs. The complaint alleges, among other things, that Jostens'
confusingly similar mark has caused damage to the Company. The 
complaint requests, among other things, monetary damages and 
injunctive relief. Jostens has continued the unauthorized use of 
this mark.

Item 2. Changes in Securities
-----------------------------

Omitted from this report as inapplicable.

Item 3.  Default Upon Senior Securities
---------------------------------------
Omitted from this report as inapplicable.

Item 4.  Submission of Matters to Vote of Securities Holders
------------------------------------------------------------

No matters were submitted to a vote of security holders during the period.

Item 5.  Other Information
--------------------------

Omitted from this report as inapplicable.

Item 6.  Exhibits and Reports on Form 8-K
-----------------------------------------

A.  Exhibits
    Omitted from this report as inapplicable.

B.  Reports on Form 8-K
    In November 1996, the Company filed Form 8-K describing the     
    pertinent factors associated with a change in the Company's 
    independent auditing firm.


SIGNATURES

Pursuant to the requirements of Section 13, or 15(d) 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.

The American Education Corporation

July 30, 1997

By: /s/Jeffrey E. Butler 
    --------------------    
    Chief Executive Officer
    Chairman of the Board
    Treasurer