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, 1996

/ /     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 / /  NO /X/

Indicate by check mark if there is no disclosure of delinquent filers 
in response to Item 405 of Regulation SB contained in this form, and no 
disclosure will be contained, to the best of registrant's knowledge, in 
definitive proxy or information statements incorporated by reference in 
Part III of this Form 10-KSB or any amendment to this Form 10-KSB.								
YES / /  NO /X/

There is presently no market maker for shares of the Registrant's common 
stock.  Therefore, the Registrant is unable to determine the market value 
(if any) of the voting stock held by non affiliates of the Registrant.

Number of shares of the registrant's common stock outstanding as of 
December 1, 1996:                                             12,457,345

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, 1996 and December 31, 1995

           Statements of Operations                                4
           For the Quarter Ended March 31, 1996
           and for the Quarter Ended March 31, 1995

           Statements of Cash Flow                                 5
           For the Three Months Ended March 31, 1996
           and the Three Months Ended March 31, 1995

           Notes to Interim Financial Statements                   6

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


PART II - OTHER INFORMATION                                       10

SIGNATURE PAGE                                                    11


PART 1 - FINANCIAL INFORMATION
THE AMERICAN EDUCATION CORPORATION
BALANCE SHEETS

<TABLE>
                                                   March 31       December 31
                                                     1996            1995 
                                                   --------       -----------
ASSETS
<S>                                                <C>            <C>
Current assets:
   Cash                                             $ 102,222      $  56,882
   Accounts receivable, net of allowance for
     uncollectible accounts of $28,822                108,189        130,352
   Inventories, net of impairment reserve of 
    $10,000                                            18,452         19,986
   Prepaid expenses and deposits                        6,033          7,147
                                                    ----------     ----------
     Total current assets                             234,896        214,367

   Property and equipment, at cost                    143,254        135,115
     Less accumulated depreciation and amortization  (106,120)       (99,641)
                                                    ----------     ----------
      Net property and equipment                       37,134         35,474

Other assets:
   Capitalized software costs, net of accumulated
     amortization of $804,828 and $745,989            315,882        312,364
   Goodwill, net of accumulated amortization 
     of $165,883 and $154,264                          80,967         92,536
                                                    ----------     ----------
       Total other assets                             396,849        404,900
                                                    ----------     ----------
Total Assets                                        $ 668,879      $ 654,741
                                                    ==========     ==========

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
   Accounts payable and accrued liabilities         $1,021,783     $1,063,384
   Current maturities of notes payable
     and long term debt                                771,754        726,989
                                                    -----------    -----------
       Total current liabilities                     1,793,537      1,790,373

Long-term debt                                          62,503         65,000
                                                    -----------    -----------
Total liabilities                                    1,856,040      1,855,373

Commitments and contingencies                                -              -

Stockholders' Deficit
   Preferred Stock, $.001 par value; Authorized -
    50,000,000 shares; 
    issued and outstanding - none                            -              -
   Common Stock, $.025 par value; Authorized - 
    15,000,000 shares;
    issued and outstanding - 
    9,094,542 and 8,570,865 shares.                    227,244        214,272
   Additional paid-in capital                        4,157,821      4,083,616
   Retained deficit                                 (5,572,226)    (5,498,520)
                                                    -----------    -----------
       Total stockholders' deficit                  (1,187,161)    (1,200,632)
                                                    -----------    -----------
Total liabilities and stockholders' equity          $  668,879     $  654,741
                                                    ===========    ===========    

</TABLE>
The accompanying notes are an integral part of the financial statements.


THE AMERICAN EDUCATION CORPORATION
STATEMENTS OF OPERATIONS
QUARTERS ENDED MARCH 31, 1996 AND 1995

<TABLE>
                                                                                                                         
                                                     1996          1995 
                                                     ----          ----
<S>                                               <C>           <C>
Net Sales                                         $  315,239    $  166,217
Cost of goods sold                                    56,628        40,185
                                                  -----------   -----------
 Gross profit                                        258,611       126,032

Operating expenses:
   Sales and marketing                                84,719        52,253
   General and administrative                        165,226       179,239
   Amortization of capitalized software costs         58,840        53,009
                                                  -----------    ----------
   Total operating expenses                          308,785       284,501

   Operating loss                                    (50,174)     (158,469)
                                                  -----------    -----------
Other income (expense):
   Miscellaneous income                                   55             -
   Interest expense                                  (16,464)      (27,896)
   Factoring costs                                    (7,121)       (5,096)
                                                  -----------   -----------  
   Net loss                                       $  (73,704)   $ (191,461)
                                                  ===========   ===========

Weighted average common shares outstanding         8,660,593     8,397,218
                                                  ===========   ===========   
Loss per share                                       $(0.008)      $(0.023)

</TABLE>

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


THE AMERICAN EDUCATION CORPORATION
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995

<TABLE>
                                                                                                                      
                                                    March 31       March  31
                                                      1996            1995 
                                                    --------        ---------
<S>                                                <C>            <C>
Cash flows from operating activities:
   Net earnings (loss)                             $ (73,704)     $ (191,461)
   Adjustments to reconcile net loss to net cash
   provided by (used in) operating activities:
     Depreciation and amortization                    76,887          70,928
     Reserve for bad debts                                 -          (5,000)

   Changes in assets and liabilities:
     Accounts receivable                              22,163         (12,000)
     Inventories                                       1,534               -
     Prepaid expenses and other                        1,114             400
     Accounts payable and accrued liabilities        (34,426)         62,000
                                                   ----------      ----------
     Net cash used in operating activities            (6,432)        (75,133)

Cash flow from investing activities:
   Purchase of capitalized software costs            (62,357)        (41,000)
   Purchase of property and equipment                 (8,139)              -
                                                   ----------      ----------
    Net cash used in investing activities            (70,496)        (41,000)

Cash flows from financing activities:
   Proceeds received from issuance of debt            42,268         115,000
   Issuance of common stock for cash                  80,000               -
                                                   ----------      ----------
   Net cash provided by financing activities         122,268         115,000
                                                   ----------      ---------- 
Net increase (decrease) in cash                       45,340          (1,133)

Cash at beginning of the period                       56,882           2,746
                                                   ----------      ----------
Cash at end of the period                          $ 102,222       $   1,613
                                                   ==========      ==========
Supplemental Cash Flow Disclosures:
   Interest paid                                   $   5,600          $7,536
                                                   ==========      ==========

</TABLE>

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, 1996 AND 1995

1.  BASIS OF PRESENTATION

The interim financial statements at March 31, 1996, and 
for the three month periods ended March 31, 1996, and 
1995 are unaudited, but include all adjustments which 
the Company considers necessary for a fair 
presentation.  The December 31, 1995, 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, 1995.  The 
accompanying unaudited interim financial statements for 
the three month period ended March 31, 1996, are not 
necessarily indicative of the results which can be 
expected for the entire year.

The accompanying financial statements have been 
prepared on a going-concern basis which contemplates 
the realization of assets and the satisfaction of 
liabilities in the normal course of business.  The 
Company has incurred continuous losses and has not 
generated sufficient working capital to support its 
operations.  The Company's continued existence is 
dependent on its ability to generate positive cash flow 
from its operations and/or raise additional financing 
or capital.  In June 1996, $721,989 of current notes 
payable as of December 31, 1995, were converted to 
common stock and additional capital was raised through 
the sale of stock for cash.

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.

2.  EXERCISE OF OPTIONS TO PURCHASE COMMON STOCK

As of December 31, 1995, options for 100,000 shares of 
common stock at $.20 per share remained outstanding.  
These options were exercised in July 1996.  Outstanding 
warrants to purchase 286,517 shares of common stock at 
$.50 per share were outstanding at December 31, 1995.  
These warrants were exercised in September 1996.

3.  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.

The Company has various vendor claims pending on 
delinquent trade payables.  The Company uses the 
services of a professional firm to work out settlements 
with these creditors.  As a result, these payables may 
be settled for less than their recorded amounts.

4.  CORPORATE RESTRUCTURING

The Company issued 160,000 shares of common stock for 
cash at $.50 per share in March 1996.  In March 1996, 
the Company also issued 363,677 shares of common stock 
valued at $.02 per share in exchange for services 
provided by officers and directors of the Company.  
Notes payable and accrued interest totaling $976,710 at 
June 30, 1996, were converted to 2,666,274 shares of 
common stock at rates between $.20 and $.75 per share.  
Stock options to purchase 100,000 shares of common 
stock at $.20 per share were exercised for cash in July 
1996.  Warrants for 286,517 shares of common stock at 
$.50 per share were exercised in September 1996.  In 
October 1996, trade debt of $11,747 was converted to 
23,495 shares of common stock at a price of $.50 per 
share.

Summary of 1996 Equity Transactions

<TABLE>
                                                                   
                                      No. Shares                     Debt
Type of Transaction                     Issued        Cash       Conversion
-------------------                   ----------      ----       ----------
<S>                                   <C>           <C>          <C> 
Options and 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
                                      ==========    =========    ==========
</TABLE>

5.  INCOME TAXES

The Company accounts for income taxes in accordance 
with the provisions of Statement of Financial 
Accounting Standards No. 109, "Accounting for Income 
Taxes" ("SFAS 109"), which requires an asset and 
liability approach to accounting for income taxes.  
Under SFAS 109, deferred tax assets or liabilities are 
computed on the difference between the financial 
statement and income tax bases of assets and 
liabilities ("temporary differences") using the enacted 
marginal tax rate.  Deferred income tax expenses or 
benefits are based on the changes in the deferred tax 
asset or liability from period to period.

Management has determined that the Company most likely 
will not be able to realize all the tax benefits from 
available net operating loss carryforwards and has, 
therefore, provided a valuation allowance of an equal 
amount for the quarter ended March 31, 1996.

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 views accounts receivable, inventory, and 
cash as its principle 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 
November 22, 1996, $50,000 of convertible notes, with a 
conversion price per share of $.136, remained 
outstanding.

The Company's working capital was a deficit $1,558,641 
at March 31, 1996, an improvement of $17,367 from 
December 31, 1995.  This 1% improvement is associated 
with improving 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.

RESULTS OF OPERATIONS - QUARTER ENDED MARCH 31, 1996
AS COMPARED TO THE QUARTER ENDED MARCH 31, 1995

Net software revenues for the three months ended March 
31, 1996, totaled $315,239 compared to net software 
revenues of $166,217 for the same period in 1995.  This 
represents an increase of approximately 90% in 1996.  
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, 
1996, increased by approximately 41%, even though sales 
increased by 90%.  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 affects 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, 1996, were $308,785, compared to 
$284,501 for the previous year.  This represents an 
increase of approximately 9%.  Selling and marketing 
costs increased by approximately 62%, from $52,253 for 
the three months ended March 31, 1995 to $84,719 for 
the current period. The increase in 1996 is related 
to expanded sales and marketing efforts and higher 
commission costs related to the higher sales levels 
achieved.  General and administrative expenses 
decreased by approximately 8% during 1996, from 
$179,239 to $165,226.  This decrease is related to 
lower legal and professional fees incurred during the 
first three months of 1996 compared to the prior year.

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.  The cost of 
factoring is disclosed as a separate line item within 
the Statement of Operations.  Such costs increased by 
approximately 40% during the first three months of 1996 
compared to the prior year, from $5,096 to $7,121, 
reflecting the need for such financing during the 
initial portion of the year.

Interest expense decreased by approximately 41% during 
1996, from $27,896 in 1995 to $16,464 for 1996.  This 
decrease reflects the lower levels of interest bearing 
debt and the increased dependence on factoring during 
the year.

The net loss for the three months ended March 31, 1996, 
improved by approximately 62% as compared to the prior 
year.  This reduction of net loss from $191,461 in 1995 
to $73,704 in 1996, 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 enhanced 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 multimedia field 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 
this 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.

Item 2.     Changes in Securities

Summary of 1996 Equity Transactions

<TABLE>

                                       No. Shares                    Debt
Type of Transaction                      Issued         Cash      Conversion
-------------------                    ----------       ----      ----------
<S>                                    <C>           <C>          <C>
Options and 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
                                       =========     =========    ==========  

</TABLE>

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

December 10, 1996					By:   /s/  Jeffrey E. Butler										
                            ----------------------
           							          Chief Executive Officer
           							          Chairman of the Board
           							          Treasurer