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 March 31, 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 March 31, 1997:          12,170,828

Transitional Small Business Disclosure Format			        

YES __ NO  X 

THE AMERICAN EDUCATION CORPORATION

INDEX

                                                 Page No.
PART 1 - FINANCIAL INFORMATION

Item 1   Balance Sheets                              3

         March 31, 1997 and December 31, 1996

         Statements of Operations                    4
         For the Quarter Ended March 31, 1997		
         and for the Quarter Ended March 31, 1996

         Statements of Cash Flows			                 5

         For the Three Months Ended March 31, 1997
         and for the Three Months Ended 
         March 31, 1996

         Notes to Interim Financial Statements       6

Item 2   Management's Discussion and Analysis of     8
         Financial Conditions and Results of 
         Operations

PART II - OTHER INFORMATION                         11

SIGNATURE PAGE                                      12


PART 1 - FINANCIAL INFORMATION
THE AMERICAN EDUCATION CORPORATION
BALANCE SHEETS

<TABLE>
                                                                                                                  
<S>                                                       <C>           
ASSETS

Current assets:
   Cash                                                   $    55,179
   Accounts receivable, net of allowance for
     uncollectible accounts of $109,177                       690,594
   Inventories, net of impairment reserve of $9,645            17,625        
   Prepaid expenses and deposits                               13,466         
                                                             ---------
     Total current assets                                     776,864       

   Property and equipment, at cost                            181,383       
     Less accumulated depreciation and amortization          (133,631)      
                                                            ----------
       Net property and equipment                              47,752        

Other assets:
   Capitalized software costs, net of accumulated
     amortization of $898,903                                 394,209
   Goodwill, net of accumulated amortization 
     of $212,105                                               34,695        
                                                            ----------
       Total other assets                                     428,904
                                                           ----------- 
Total Assets                                               $1,253,520    
                                                           ===========   

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
   Accounts payable trade                                  $  326,950
   Accrued liabilities                                        332,793
   Accounts payable - Affiliate                                18,000
   Customer Deposits                                          147,744
                                                           ===========
Total current liabilities                                     825,487

Long-term debt                                                 54,250
                                                           -----------  
Total liabilities                                             879,737   
                                                           -----------
Commitments and contingencies                                       -           

Stockholders' Equity
   Preferred Stock, $.001 par value
     Authorized - 50,000,000 shares;
     issued and outstanding - none;
     liquidation preference - $.02 per share                        -
   Common Stock
     Authorized - 15,000,000 shares;
     issued and outstanding - 12,170,829 shares               304,271 
     Additional paid-in capital                             5,232,630
     Retained earnings (deficit)                           (5,375,839)
     Current year earnings                                    212,721
                                                          ------------
Total stockholders' equity                                    373,783
                                                          ------------
Total liabilities and stockholders' equity                $ 1,253,520
                                                          ============
</TABLE>

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

THE AMERICAN EDUCATION CORPORATION
STATEMENTS OF OPERATIONS
THREE MONTH PERIOD ENDING MARCH 31, 1997 AND 1996

(UNAUDITED)


                                               03/31/97           03/31/96  
   
Net Sales                                   $   772,741          $  315,239    
Cost of goods sold                               87,591              56,628     
                                            -----------          ----------
Gross profit                                    685,150             258,611     
                
Operating expenses:
   Selling and marketing                        174,094              84,719     
   General and administrative                   280,331             165,226     
   Amortization of capitalized 
    software costs                               19,870              58,840     
                                            -----------           ---------
   Total operating expenses                     474,295             308,785 

   Operating Income                             210,855             (50,174)    

Other income/(Expense):
   Interest and Dividend Income                     524                  55    
   Miscellaneous income                           3,036             (16,464)   
   Interest expense                              (1,693)             (7,121) 
                                            ------------         -----------
Net earnings (loss) before taxes            $   212,722          $ (73,704)   

   Deferred income taxes                         76,580
   Valuation allowance - change at              (76,580)
   beginning of last year                   ------------         -----------

Net earnings (loss)                         $   212,722          $ (73,704)
                                            ============         ===========

Weighted average common shares outstanding   10,428,466           8,660,593   
                   
Earning (loss) per share                    $     0.017          $  (0.009)

Weighted average common shares               13,833,730
outstanding - assuming dilution

Earnings (loss) per share -                 $     0.015
assuming dilution 


The accoumpanying notes are in integral part of the financial statements.

THE AMERICAN EDUCATION CORPORATION
STATEMENTS OF CASH FLOWS
THREE MONTH ENDED MARCH 31, 1997 AND 1996

                                                     31-Mar-97        31-Mar-96
Cash flows from operating activities:
   Net Income                                      $   212,721      $  (73,704)

Adjustments to reconcile net income to net cash
provided by operating activities:
   Depreciation and amortization                        39,232          76,887 
   Reserve for bad debts                                (3,010)              -

Changes in assets and liabilities:
   Accounts receivable                                (279,406)         22,163
   Inventories                                          (1,716)          1,534
   Prepaid expenses and deposits                        18,976           1,114
   Accounts payable and accrued liabilities             20,101         (34,426)
   Customer deposits                                   (46,736)              -
                                                    -----------      ----------
   Net cash used in operating activities               (39,838)         (6,432)
                                                   
Cash flow from investing activities:       
   Purchase of capitalized software costs              (92,044)        (62,357)
   Purchase of property and equipment                   (6,286)         (8,139)
                                                    -----------      ----------
   Net cash used in investing activities               (98,330)        (70,496)

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                       (138,168)         45,340
         
Cash at beginning of the period                        193,347          56,882
                                                    -----------      ----------
Cash at end of the period                           $   55,179       $ 102,222
                                                    ===========      ==========
Supplemental Cash Flow Disclosure:
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 MARCH 31, 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 March 31, 1997, and for 
the three month periods ended March 31, 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 month period 
ended March 31, 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 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
-------------------------------

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 significant 
growth opportunities that exist in the electronic media 
for education industry.

The Company has several marketing partnerships that were 
entered into in the fiscal 1995 and 1996 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. In addition 
the company entered into verbal agreement with National 
School Services, Inc. (NSS) to work with that organization 
to convert certain A+dvanced Learning System subject 
content areas into Spanish and to license the new Spanish 
version in the United States. It is expected that the 
formal agreement with National School Products will
be signed during the second quarter of 1997.

The Company views accounts receivable, inventory, and cash 
as its principal measures of liquidity.  To supplement its 
anticipated short-term working capital requirements, the 
Company entered into various convertible loan agreements 
beginning in January 1991, with private investors. These 
loans were convertible into common stock of the Company at 
conversion prices ranging from $.136 to $.50 per common 
share. Loans of this nature were the only viable sources 
of borrowing for the Company during this 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 March 31, 1997 $50,000 of convertible notes, with a 
conversion price per share of $.136, remained outstanding.

The Company's working capital was a deficit $48,623 at 
March 31, 1997, an improvement of $154,623 from a deficit 
of $203,479 at December 31, 1996. This significant 
improvement is associated with higher levels of sales and 
collection of sales proceeds 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 financing and 
capital enhancement.

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 future 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.

RESULTS OF OPERATIONS - QUARTER ENDED MARCH 31, 1997
AS COMPARED TO THE QUARTER ENDED MARCH 31, 1996
----------------------------------------------------

Net software revenues for the three months ended March 31, 
1997, totaled $772,741 compared to net software revenues of 
$315,239 for the same period in 1996.  This represents an 
increase of approximately 145% in 1997. The dramatic increase in 
sales is primarily attributed to the acceptance of the 
A+dvanced Learning System family of products, following a 
lengthy period of development and technical improvement.

Cost of goods sold for the three months ended March 31, 
1997, increased by approximately 55%, even though sales 
increased by 145%.  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 into 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 is 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 increase, as total allocable 
overhead costs remain relatively fixed.

Total operating expenses recorded for the three months 
ended March 31, 1997, were $474,295, compared to $308,785 
for the previous year.  This represents an increase of 
approximately 54%. Selling and marketing costs increased by 
approximately 105%, from $84,719 for the three months ended 
March 31, 1996 to $174,094 for the current period.  The 
increase in 1997 is related to expanded sales and marketing 
efforts and higher commission costs related to the higher 
sales levels achieved.  General and administrative expenses 
increased by approximately 70% during 1997, from $165,226 
to $280,331.  This increase is related to higher levels of 
product development and technical support during 1996 as a 
result of the larger installed base of products for the 
Company.

Due to restricted cash flows from operations, the Company 
entered into a factoring arrangement whereby it would 
assign from time to time, the payment of specific invoices 
to the factoring entity. Such costs decreased by approximately 
76% during the three months ended March 31, 1997 compared to 
the same period in 1996, from $7,121 to $1,693, reflecting 
the reduced need for such financing as the cash flow of the 
Company has improved.

Net earnings for the three months ended March 31, 1997, 
improved by approximately 389% as compared to the prior 
year.  This improvement from a net loss of ($73,704) in 
1996 to net earnings of $212,722 in 1997, reflects the 
higher sales levels noted above, as well as the improving 
gross margins related to concentration of sales in more 
profitable markets. Management believes that with network 
problems resolved and with the expansion of sales and 
marketing efforts through third party organizations and 
independent dealers, the Company is now positioned to 
develop more dependable sales results from the home and 
school education markets.

The Company has been constrained by the lack of adequate 
capital and proper financing for the past several years.  
As sales of the advanced product line have improved, 
management has taken action to reduce debt and to 
supplement capital through the private sale of restricted 
common stock and conversion of convertible debt to common 
stock.

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.  Accordingly, this area which is now 
emerging as a major market, is under study and the Company 
is investigating sources for intellectual property and 
potential partnerships with other publishers on which it 
may base future publications.  Management believes that the 
Company can make significant progress within its existing 
product development and marketing budgets to position 
the Company to identify and plan products for 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 March 15, 1997 the Company
was current with all filings with the SEC through
the end of fiscal year December 31, 1996.

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

Summary of 1996 Equity Transactions

                                     Number of                     Debt
Type of Transaction                Shares Issued       Cash      Conversion
-------------------                -------------       ----      ----------
Options & Warrants 
  Exercised		                         546,517        $243,258
  Accrued Compensation                363,377                       $7,298
  Convertible Notes and					
   accrued interest payable	        2,651,274                     $965,460
   Notes Payable Converted             15,000                      $11,250
   Accounts Payable Converted          23,495                      $11,747
                                    ---------        --------     --------
                                    3,599,963        $243,258     $995,755
                                    =========        ========     ========

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

May 14, 1997

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