FORM 10-QSB

U. S. 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 September 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 
September 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
         September 30, 1997 and December 31, 1996

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

         For the Nine months Ended September 30, 1997        5
         and for the Nine months Ended September 30, 1996

         Statements of Cash Flows                            6
         For the Nine months Ended September 30, 1997
         and for the Nine months Ended September 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-Sep-97        31-Dec-96

Current assets:
Cash                                           $  380,382       $  193,347
Accounts receivable, net of allowance
 for uncollectible accounts of $71,634 
 and $112,187                                     912,199          408,178  
Inventories, net of impairment reserve of          12,634           15,909
 $9,645
Prepaid expenses and deposits                      20,197           32,442
                                               ----------       ----------
 Total current assets                           1,325,412          649,876

Property and equipment, at cost                   201,762          175,097
Less accumulated depreciation and amortization   (143,975)        (125,838)
                                               -----------      ----------- 
 Net property and equipment                        57,787           49,259

Other assets:
 Capitalized software costs, net of                
 accumulated amortization of $944,626 
 and $879,033                                     519,995          322,036
Goodwill, net of accumulated amortization
 of $235,241 and $200,536                          11,559           46,264
                                               ----------       ---------- 
Total other assets                                531,554          368,300

Total Assets                                  $ 1,914,753      $ 1,067,435
                                              ===========      ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable trade                        $   202,173      $   280,196
Accrued liabilities                               399,858          360,697
Accounts Payable - Affiliate                       18,000           18,000
Customer Deposits                                 130,747          194,480
                                              -----------      -----------
Total current liabilities                         750,778          853,373

Long-term debt                                     56,750           53,000
                                               ----------      -----------
Total liabilities                                 807,528          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                             946,163                0
                                              -----------      -----------
 Total stockholders' equity                     1,107,225          161,062
                                              -----------      -----------
Total liabilities and stockholders' equity    $ 1,914,753      $ 1,067,435   
                                              ===========      ===========

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


THE AMERICAN EDUCATION CORPORATION
STATEMENTS OF OPERATIONS
QUARTERS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
                                                30-Sep-97          30-Sep-96

Net Sales                                     $  1,081,084      $     695,537
Cost of goods sold                                  17,680            102,358
                                              ------------      ------------- 
Gross profit                                     1,063,404            593,179

Operating expenses:
 Sales and marketing                               510,714            152,874
 General and administrative                        283,281            213,379 
 Amortization of capitalized software costs         24,858             65,007
                                              ------------       ------------
Total operating expenses                           818,853            431,260
                                              ------------       ------------
Operating earnings (loss)                          244,551            161,919

Other income/(expense)
 Interest and Dividend Income                          625                  -
 Miscellaneous income                                1,101                250
 Interest Expense                                   (1,443)            (7,994)
 Incentive Expense                                 (19,444)                 -
                                              -------------       ------------
Net earnings (loss) before taxes                   225,390            154,175   

 Deferred income taxes                              81,140             55,503
 Valuation allowance - change at 
 beginning of year                                 (81,140)           (55,503)
                                              -------------       ------------
Net earnings (loss)                           $    225,390        $   154,175
                                              =============       ============
                                                
Weighted average common shares outstanding      12,127,393         12,185,412

Earnings (loss) per share                     $      0.019        $     0.013

Weighted average common shares 
 outstanding-assuming dilution                  13,694,155         13,785,204

Earnings (loss) per share-assuming dilution    $     0.016        $     0.011


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



THE AMERICAN EDUCATION CORPORATION
STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
                                                 30-Sep-97          30-Sep-96

Net Sales                                      $  3,091,157       $  2,055,474
Cost of goods sold                                  245,092            300,957
                                               ------------       ------------
Gross profit                                      2,846,065          1,754,517

Operating expenses:
 Sales and marketing                                858,847            388,944
 General administrative                             960,356            582,578
 Amortization of capitalized software costs          65,593            185,804
                                               ------------        ----------- 
Total operating expenses                          1,884,796          1,157,326
                                               ------------        -----------
Operating earnings (loss)                           961,269            597,191

Other income/(expense)
 Interest and Dividend Income                         1,213                  -
 Miscellaneous income                                 7,511             27,370
 Interest Expense                                    (4,386)           (56,562)
 Incentive Expense                                  (19,444)                 -
                                               -------------       ------------ 
Net earnings (loss) before taxes                    946,163            567,999

 Deferred income taxes                              340,619            204,480
 Valuation allowance - change at 
 beginning of year                                 (340,619)          (204,480)
                                               -------------       ------------
Net earnings (loss)                            $    946,163        $   567,999
                                               ============        ============

Weighted average common shares outstanding       12,127,393         12,185,412

Earnings (loss) per share                      $     0.078         $      0.047

Weighted average common shares
 outstanding-assuming dilution                  13,694,155           13,785,204

Earnings (loss) per share-assuming dilution    $     0.069        $      0.041


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


THE AMERICAN EDUCATION CORPORATION
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
                                                30-Sep-97          30-Sep-96
Cash flows from operating activities:
Net earnings (loss)                            $   946,163        $   567,999
 Adjustments to reconcile net earnings/(loss) 
 to net cash provided by (used in) operating
 activities:
 Depreciation and amortization                     118,435            235,274
 Gain on debt settlement                                              (27,060)
 Reserve for bad debts                             (40,553)            87,593

Changes in assets and liabilities:
 Accounts receivable                              (463,465)          (694,733)
 Inventories                                         3,275             (4,990) 
 Prepaid expenses and other                         12,244            (12,982)
 Accounts payable and accrued liabilities          (35,111)            48,388
 Customer Deposits                                 (63,733)                 -  
                                               ------------       -------------
 Net cash provided by operating activities         477,255            199,489

Cash flow from investing activities:
 Purchase of capitalized software costs           (263,552)          (181,109)
 Purchase of property and equipment                (26,668)           (27,472)
                                               ------------       ------------
 Net cash used in investing activities            (290,220)          (208,581)

Cash flows from financing activities:
 Proceeds received from issuance of debt                 -             42,268
 Principal payment on debt                               -             (2,499)
 Issuance of common stock for cash                       -            100,000
                                               ------------       ------------
 Net cash provided by financing activities               -            139,769

Net increase (decrease) in cash                    187,035            130,677

Cash at beginning of the period                    193,347             56,882
                                               ------------       -----------
Cash at end of the period                      $   380,382        $   187,559
                                               ============       ===========

Supplemental Cash Flow Disclosures:
 Interest paid                                 $         -         $   11,200 


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

 
THE AMERICAN EDUCATION CORPORATION
NOTES TO INTERIM FINANCIAL STATEMENTS
FOR THE PERIODS ENDED SEPTEMBER 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 September 30, 1997, and 
for the three and nine month periods ended September 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 nine month periods 
ending September 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 statements 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 demand; 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 Company and its 
published products to meet the needs of its customers. These 
changes were required to update the Company's products. To finance 
these changes, 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.

The Company's working capital was $574,634 at September 30, 1997, an 
improvement of $778,131 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.

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 September
30, 1997, $50,000 of convertible notes, with a conversion price per 
share of $.136, remained outstanding.

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 continues to demonstrate improvements in liquidity and 
capital resources. In 1997, sales of the A+dvanced Learning System 
registered product line continued to improve. This has provided the 
Company with relatively consistent quarter to quarter gains in sales 
revenue and cash flow. Management continues to reduce debt and improve 
the financial strength of the Company. The Company's financial position 
continues to benefit from the re-capitalization that took place in 
June of 1996, which included the private sale of restricted common
stock and conversion of convertible debt to common stock by its 
principal shareholders.

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

Net software revenues for the three months ended September 30, 1997, 
totaled $1,081,084 compared to net software revenues of $695,537
for the same period in 1996.  This represents an increase of 
approximately 55% in the 1997 quarter. 

Cost of goods sold for the three months ended September 30, 1997, 
decreased by approximately 83%, even though sales increased by 55%.  
This disproportionately low increase in costs of goods sold relative
to sales revenue is attributable to a one-time adjustment to the 
cost of goods calculation that was recorded to more properly reflect
the Company's true costs in this area. The use of the CD-ROM delivery
system also positively affects 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.

Total operating expenses recorded for the three months ended 
September 30, 1997, were $818,853, compared to $431,260 for the 
previous year. This represents an increase of approximately 90%. 
Operating expenses for the quarter were impacted by an increase in
marketing costs, one-time relocation expenses for two senior executives,
certain increased payroll costs associated with maintaining and 
recruiting key managerial staff. In addition, the Company continued
to fund the development costs associated with the release of 15 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 234%, from 
$152,874 for the three months ended September 30, 1996 to $510,714 
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 33% 
during 1997, from $213,379 to $283,281.  This increase was caused by 
the previously mentioned product development costs associated with the 
final development costs incurred with a total of 15 secondary grade level 
and 8 Spanish language subject titles.  In addition, there were the 
disproportionate, one-time expenses detailed in the above paragraph
on operating expenses. Research and development cost totaled 
$142,087 for the quarter.

Net income for the three months ended September 30, 1997, improved by 
approximately 46% as compared to the prior year.  This improvement 
from net income of $154,175 in 1996 to net income of $225,390 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 $0.016 for the 
quarter ending September 30, 1997 compared to $0.011 for the same 
period in 1996. The number of fully diluted shares outstanding 
decreased from 13,785,204 to 13,694,155 during the same period due
to options expiring.

Total stockholder's equity improved substantially as a result of 
the accumulation of earnings during the quarter ended September 30, 
1997. Shareholders' equity as a percent of total assets at December 
31, 1996 was 15% compared to 58% at September 30, 1997. The Company's
current ratio has improved from 0.76 to 1.77 over the same period.

RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1997
AS COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996
------------------------------------------------------

Net software revenues for the nine months ended September 30, 1997, 
totaled $3,091,157 compared to net software revenues of $2,055,474
for the comparable 1996 period. This represents an increase of 
approximately 50% for the 1997 nine month period. This significant 
increase in the 1997 nine month period total company revenues 
highlights the order backlog and rate of third quarter growth issues 
contained in the preceding quarterly discussion.

Cost of goods sold for the nine months ended September 30, 1997, 
decreased by approximately 19%, even though sales increased by 50%.  
This disproportionately low increase in direct costs reflects the 
efficiency in which software products are now produced on CD-ROM and
certain one time accounting adjustments made in the third quarter.
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 nine months ended September 
30, 1997, were $1,884,796, compared to $1,157,326 for the previous year.  
This represents an increase of approximately 63%. Total operating 
expenses for the nine month period were also impacted by the development 
costs associated with the release of 15 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 121%, from 
$388,944 for the nine months ended September 30, 1996 to $858,847 for 
the comparable 1997 period. The increase in the 1997 nine month 
period is attributable to expanded sales, marketing, distributor 
training and commission costs related to the higher sales levels 
and the release of 23 new titles.

General and administrative expenses increased by approximately 
65% during the 1997 nine month period from $582,578 to $960,356.  
This increase is primarily related to higher expenses associated 
with the final development efforts associated with the 15 secondary 
grade level and 8 Spanish language subject titles completed during 
the period.  In addition, nine month costs were impacted by certain
one-time relocation expenses and recruitment costs that occurred in 
the third quarter. Research and development costs totaled $378,620
for the 1997 nine month period. The Company plans to invest in a
new title development schedule, which will position the Company 
to take advantage of new and existing markets.

Net earnings for the nine months ended September 30, 1997, improved 
by approximately 67% as compared to the prior 1996 period.  This 
improvement from net income of $567,999 in 1996 to net income of 
$946,164 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 $0.067 for the 
nine months ending September 30, 1997 compared to $0.041 for the same 
period in 1996 which is an increase of 63%. The number of fully 
diluted shares outstanding decreased from 13,785,204 to 13,694,155 
during the same period due to expiring options.

The Company has several marketing partnerships that were entered 
into during 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 registered 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 September 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 June 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.

The mutual discovery process is underway with an initial hearing
being scheduled for November 4, 1997 in the United States District
Court for the Western District of Oklahoma.

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.


SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 
1934, the registrant has caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

The American Education Corporation

November 5, 1997

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