U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

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

For the Quarterly Period Ended March 31, 2001

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the Transition Period from ________ to ________

Commission File #0-11078

THE AMERICAN EDUCATION CORPORATION
----------------------------------
(Exact name of small business issuer as specified in its charter)


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

84-0838184
----------
(IRS Employer Identification No.)


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

(405) 840-6031
--------------
(Issuer's telephone number)

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

Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the  Exchange Act during the past 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 issuer's common stock outstanding as of May 1,
2001:               14,110,461

Transitional Small Business Disclosure Format
YES / /   NO /X/


THE AMERICAN EDUCATION CORPORATION

INDEX                                                      Page No.


PART I - FINANCIAL INFORMATION

Item 1      Consolidated Balance Sheets
            March 31, 2001 and December 31, 2000               3

            Consolidated Statements of Income
            For the Three Months Ended March 31, 2001
            and for the Three Months Ended March 31, 2000      4


            Consolidated Statements of Cash Flows
            For the Three Months Ended March 31, 2001
            and for the Three Months Ended March 31, 2000      5


            Notes to Interim Consolidated Financial
            Statements                                         6


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


PART II - OTHER INFORMATION                                   11

SIGNATURE PAGE                                                13


PART 1 - FINANCIAL INFORMATION

THE AMERICAN EDUCATION CORPORATION
CONSOLIDATED BALANCE SHEETS


                                     March 31               December 31
                                       2001                     2000
                                   ------------             -----------
                                    (unaudited)              (audited)

ASSETS

Current assets:
Cash and cash equivalents          $   584,782              $   763,967
Accounts receivable, net of
 allowance for returns and
 uncollectible accounts of
 $182,723 and $186,012               2,958,767                3,465,448
Inventory                              399,794                  424,828
Prepaid expenses and deposits          338,659                  348,955
Deferred tax asset                     224,476                  175,865
                                   -----------              -----------
     Total current assets            4,506,478                5,179,063

Note receivable from officer           300,000                  300,000

Property and equipment, at cost      1,151,954                1,117,141

  Less accumulated depreciation
   and amortization                   (551,203)                (497,475)
                                   -----------              -----------

     Net property and equipment        600,751                  619,666


Other assets:

  Capitalized software costs,
   net of accumulated amortization
   of $2,290,163 and $2,155,713      3,222,982                2,914,604
  Goodwill, net of accumulated
   amortization of $328,112 and
   $286,795                          2,206,431                2,247,748
                                   -----------              -----------
     Total other assets              5,429,413                5,162,352
                                   -----------              -----------
     Total assets                  $10,836,642              $11,261,081
                                   ===========              ===========


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable trade           $   357,745              $   414,003
  Accrued liabilities                  773,050                  809,644
  Deferred revenue                     118,413                  104,623
  Notes payable and current
   portion of long-term debt           822,994                  838,057
  Foreign income taxes payable         144,184                  139,132
  Income taxes payable                   7,731                    7,731


                                   -----------              -----------
     Total current liabilities       2,224,117                2,313,190

Other long-term accrued liabilities     64,500                   54,825
Deferred income tax liability -
 Long-term                             551,398                  676,119
Long-term debt                       1,184,002                1,174,791
                                   -----------              -----------
     Total liabilities               4,024,017                4,218,925
                                   -----------              -----------

Commitments and contingencies               -                        -

Stockholders' Equity:
 Preferred Stock, $.001 par value;
  Authorized - 50,000,000 shares-
  issued and outstanding-none               -                        -
 Common Stock, $.025 par value
  Authorized 30,000,000 shares
  Issued and outstanding -
  14,110,461 shares                    352,761                  352,078
 Additional paid in capital          6,587,799                6,582,221
 Treasury stock, at cost,
  34,000 shares                        (19,125)                 (19,125)
 Retained earnings                     126,982                  126,982
 Year-to-date earnings (loss)         (235,792)                      -
                                   -----------              -----------
     Total stockholders' equity      6,812,625                7,042,156
                                   -----------              -----------
     Total liabilities and
      stockholders' equity         $10,836,642              $11,261,081
                                   ===========              ===========

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


THE AMERICAN EDUCATION CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(unaudited)

                                                 2001          2000
                                             ------------  ------------

Sales                                        $  1,819,678  $  2,524,297
Cost of goods sold                                668,709       724,682
                                             ------------  ------------

Gross profit                                    1,150,969     1,799,615

Operating expenses:
 Selling and marketing                            534,867       660,658
 Operations                                        54,495        48,211
 General and administrative                       803,543       705,595
 Amortization of capitalized software costs       135,221       110,594
                                             ------------  ------------
Total operating expenses                        1,528,126     1,525,058
                                             ------------  ------------

Operating income (loss)                          (377,157)      274,557

Other income (expense):
 Interest income                                    7,581         8,789
 Interest expense                                 (31,301)      (35,492)
                                             ------------  ------------
Net income (loss) before income taxes            (400,877)      247,854

 Current income tax provision                       9,336        41,732
 Deferred income tax provision                   (174,421)       42,983
                                             ------------  ------------
Net Income (loss)                            $   (235,792) $    163,139
                                             ============  ============

Basic                                          14,096,187    13,911,754

Earnings per share                           $     (0.017) $      0.012

Diluted                                        14,384,589    14,547,982

Earnings per share                           $     (0.016) $      0.011

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


THE AMERICAN EDUCATION CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(unaudited)

                                                    2001         2000
                                                 ---------   -----------

Cash flows from operating activities:
Net income (loss)                                $(235,792)  $   163,139
 Adjustments to reconcile net income
  to net cash provided by (used in)
  operating activities:
 Depreciation and amortization                     229,495       193,520
 Reserve for bad debts                              (3,289)       29,951
 Services rendered for common stock                  7,380        11,500
 Deferred compensation                               9,675         9,675
 Other                                              (1,118)       (6,430)

Changes in assets and liabilities:
 Accounts receivable                               509,970      (594,858)
 Inventories                                        25,034         9,524
 Prepaid expenses and other                         10,296        29,649
 Accounts payable and accrued liabilities          (92,853)      219,143
 Accounts payable - Affiliate                          --          1,298
 Deferred revenue                                   13,790           --
 Income taxes payable                                5,052        56,469
 Deferred income taxes                            (173,332)       50,728
                                                 ---------   -----------
Net cash provided by operating activities          304,308       173,308
                                                 ---------   -----------

Cash flow from investing activities:
 Capitalization of goodwill                            --        (14,528)
 Software development costs capitalized           (442,828)     (385,750)
 Purchase of property and equipment                (34,813)      (44,563)
                                                 ---------   -----------
Net cash used in investing activities             (477,641)     (444,841)
                                                 ---------   -----------

Cash flows from financing activities:
 Proceeds received from issuance of debt            60,594           --
 Principal payments on notes payable               (66,446)      (25,284)
 Issuance of common stock for cash                     --        149,163
                                                 ---------   -----------
Net cash provided by financing activities           (5,852)      123,879
                                                 ---------   -----------

Net increase (decrease) in cash                   (179,185)     (147,654)

Cash at beginning of the period                    763,967     1,138,711
                                                 ---------   -----------
Cash at end of the period                        $ 584,782   $   991,057
                                                 =========   ===========

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



THE AMERICAN EDUCATION CORPORATION
Part I
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIODS ENDED MARCH 31, 2001 AND 2000


NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
-----------------------------------------------------------------

1. Nature of Business:
   ------------------

The American Education Corporation's ("the Company") business is the
development and marketing of educational software to elementary, middle
and secondary schools, adult literacy centers and vocational, junior and
community colleges.  In addition, the Company has three subsidiaries,
Projected Learning Programs, Inc. ("PLP") , Learning Pathways, Ltd.
("LPL") and Dolphin, Inc. ("Dolphin").  PLP is a direct mail catalog
reseller of primarily other publishers' products to high schools and
colleges.  LPL is the exclusive schools and libraries distributor of the
print, multimedia and online versions of the World Book Encyclopedia in
Great Britain. Dolphin is a developer of educational software for many
of the nation's leading textbook and electronic publishers.


2. Basis of Presentation:
   ---------------------

The summary of significant accounting policies of 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.

The Company's consolidated financial statements include the Company and
its wholly-owned subsidiaries.  All material intercompany transactions
have been eliminated.

The interim consolidated financial statements at March 31, 2001, and for
the three month periods ended March 31, 2001 and 2000 are unaudited, but
include all adjustments that the Company considers necessary for a fair
presentation.  The December 31, 2000 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.  They 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, 2000.  The accompanying
unaudited interim financial statements for the three month period ending
March 31, 2001 are not necessarily indicative of the results that 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, 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.


3. Revenue Recognition:
   -------------------

The Company recognizes revenue in accordance with the American Institute
of Certified Public Accountant's Statement of Position 97-2 and
modifications thereto on software revenue recognition. Revenue for
software design services at Dolphin is recognized on the percentage-of-
completion method.

4. Capitalized Software Costs:
   --------------------------

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.


5. Goodwill:
   --------

Goodwill relates to the acquisitions in 1998 of PLP and LPL, and in 1999
for Dolphin, and is amortized over a period of fifteen (15) years.


6. Inventories:
   -----------

Inventories are stated at the lower of cost (first-in, first-out), or
market, and consist primarily of educational software materials,
packing materials and World Book Encyclopedia print and multimedia
products.


7. Property and Equipment:
   ----------------------

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.


8. Statements of Cash Flows:
   ------------------------

In the Consolidated 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 carrying values of the Company's assets and liabilities approximate
fair value due to their short-term nature.


9. Income Taxes:
   ------------

The Company has adopted the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS 109).
SFAS 109 requires recognition of deferred tax liabilities and assets for
the expected future tax consequences of events that have been included
in the financial statements or tax returns, determined by using the
enacted tax rates in effect for the year in which the differences are
expected to reverse.


10. Computation of Earnings Per Share:
    ---------------------------------

The Company has adopted Statement of Financial Accounting Standards No.
128 "Earnings Per Share" (SFAS 128).  SFAS 128 requires presentation of
basic and diluted earnings per share.  Basic earnings per share are
calculated based only upon the weighted average number of common shares
outstanding during the period.  Diluted earnings per share are
calculated based upon the weighted average number of common and, where
dilutive, potential common shares outstanding during the period,
utilizing the treasury stock method.  Potential common shares include
options to purchase common stock.


11. Stockholders' Equity:
    --------------------

During the quarter ended March 31, 2001, the Board of Directors approved
the issuance of 27,333 shares of common stock to major distributors in
recognition of contributions made to the Company.

At March 31, 2001, paid-in capital includes $22,838 of foreign currency
translation adjustments.


12. 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.


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

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


Liquidity and Capital Resources
-------------------------------

As of March 31, 2001 the Company's principal sources of liquidity
included cash and cash equivalents of $584,782, net accounts
receivable of $2,958,767 and inventory of $399,794. The Company's net
cash provided by operating activities during the first quarter
increased from $173,308 in 2000 to $304,308 in 2001. Net cash used in
investing activities for the same period increased by 7% from
$444,841 in 2000 to $477,641 in 2001, and was comprised primarily of
investment in capitalized software development costs. The majority
of the cash for the Dolphin acquisition in late 1999 was borrowed under
a portion of the Company's lines of credit, and is recorded as
long-term debt as of March 31, 2001.

At March 31, 2001, the Company had working capital of $2,282,361
compared to $2,865,873 at December 31, 2000.   The Company
believes that cash flows from operations will be adequate to finance its
normal financing and investing activities for the remainder of 2001.

Additional working capital beyond that available within the Company is
available, if required, to expand operations.  Management has and
will consider options available in providing such funding, including
debt financing and capital enhancement.  At March 31, 2001, the
Company had available bank credit lines for working capital totaling
$1,000,000, subject to borrowing base limitations,  of which $425,000
was unused.


RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 2001
AS COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2000
---------------------------------------------------------

Net sales for the three months ended March 31, 2001, totaled $1,819,678
compared to $2,524,297 for the same period in 2000.  This represents a
decrease of 27.9% over the comparable 2000 quarter. Each of the
Company's three primary operating units experienced events during the
first quarter that contributed to this decrease. In the case of AEC and
Learning Pathways, Ltd. ("LPL"), the Company believes that a portion of
anticipated product sales were deferred to subsequent quarters because
final customer approval on several major orders could not be obtained
during the quarter. In addition, the Company believes that the
announced February 2001 shipping date for the new A+nyWhere Learning
System Version 3.0 caused additional order delays as school customers
examined their options related to the availability of this new
internet-deliverable technology. With respect to Dolphin, Inc.
("Dolphin"), a leading educational publisher that had notified Dolphin
of a major contract award early in the first quarter unexpectedly
closed a publishing unit during the period and canceled what would have
been significant 2001 revenues for the division.

Cost of goods sold as a percentage of sales revenue for the three
months ending March 31, 2001 increased to 36.7% from 28.7% for the
same period in 2000. This change is attributed primarily to the results
of Dolphin, which has lower gross margins than the Company's primary
business. The Company's principal product family, A+dvanced Learning
System(r) (A+LS), provided gross profit margins of 91% in the first
quarter of 2001.  Cost of goods sold represents the actual cost to produce
the software products, or in the case of Projected Learning Programs ("PLP")
or LPL the cost to acquire software from other publishers, and includes
certain allocated overhead costs.

Total operating expenses, which include selling and marketing, general
and administrative, operations, and amortization of product development
costs, were virtually unchanged at $1,528,126 for the three months
ended March 31, 2001, compared to $1,525,058 for the same 2000 quarter.
As a percentage of sales revenue, operating expenses increased from
60.4% in 2000 to 84.0% in 2001. This increase in operating expenses as a
percentage of revenues primarily arises because a large percentage of the
costs are a level amount and do not fluctuate with increases or decreases in
revenue. As revenue increases, these costs will decrease as a percentage.
As a component of total operating expenses, selling and marketing costs
decreased by 19.0%, from $660,658 for the three months ended March 31, 2000,
to $534,867 for the current period.  The decrease in 2001 selling expenses
is a result of efforts to control sales promotion costs and advertising
expense during the period.

General and administrative expenses, including operations, increased
from $753,806 to $858,038. The dollar increase is primarily
attributable to modest increases in support staff over the prior year
and increased royalty payments.

Interest expense for the quarter ended March 31, decreased from $35,492
in 2000 to $31,301 in 2001 reflecting interest rate reductions on the
debt incurred in late 1999 for the acquisition of Dolphin. There is a
net loss of $235,792  for the three months ended March 31, 2001,
compared to net income of $163,139 for the same period in 2000.

Company management believes that significant future growth
opportunities exist in the school, adult literacy and home or self-
directed education markets on a worldwide basis.  These markets may be
accessed by not only the Company's traditional distribution-based
methods of selling and marketing, but also by new, rapidly emerging
electronic learning delivery of content business models, or e-learning.
The Company's ongoing investment in content, academic assessment tools,
programming technology, and server infrastructure provide a broad
platform to secure new business partners and address the many
opportunities that are believed to be emerging in the educational
technology industry on a global basis.  The Company's investment into
the United Kingdom through its acquisition of Learning Pathways,
Ltd. in 1998 underscores management's conviction that the Company is
engaged in a global marketplace.  In this global market, the Company's
English-language content, suitable for both the U.S. and the UK's
instructional systems, will meet the instructional requirement
for many countries where English is a primary instructional
requirement. Additionally, strategic partnerships such as the recently
announced letter of intent with Tengtu International, Inc. give the
Company the opportunity to expand its worldwide presence in Asia.   The
Company's investment into technology and the e-learning business model
should provide for expanded growth opportunities on a worldwide basis.

The Company's future competitive position has been enhanced as a result
of its investment in personnel, facilities, additional content and
infrastructure as well as its entry into international markets.  The
most significant of these investments has been the sustained spending
on the Company's new Java2-based A+nyWhere Learning System trademark.
In its planning of the future, management believes that the Internet
will become a principal method for the future delivery of its products
to its customers.  These investments combine to form a stronger overall
corporate foundation that, combined with what management believes to be
favorable world market conditions, provide a basis for sustained
growth.



THE AMERICAN EDUCATION CORPORATION

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

Item 1. Legal Proceedings
        -----------------

Management knows of no pending or threatened litigation involving the
Company that is considered material to the on-going operations and
viability of the Company.

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

During the quarter ended March 31, 2001, the Board of Directors approved
the issuance of 27,333 shares of common stock to major distributors in
recognition of contributions made to the Company.


Item 3. Default Upon Senior Securities
        ------------------------------

Omitted from this report as inapplicable.


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

None.


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

Omitted from this report as inapplicable.


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

The following exhibits have been filed as a part of this report:


Exhibit
  No.         Description of Exhibits
-------       -----------------------
3.1 Amended and Restated Articles of Incorporation of The
              American Education Corporation (incorporated by reference
              to the exhibit in the Current Report on Form 8-K filed
              with the Securities and Exchange Commission on June 25,
              1998)

3.2 Bylaws of The American Education Corporation (incorporated
              by reference to the Company's registration statement on
              Form S-8 filed with the Securities and Exchange Commission
              on October 22, 1999)

4.1 Form of Stock Certificate (incorporated by reference to
              the Company's registration statement on Form S-8 filed
              with the Securities and Exchange Commission on October 22,
              1999)

4.2 Directors' Stock Option Plan (incorporated by reference to
              Exhibit B to the Definitive Proxy Statement filed with the
              Securities and Exchange Commission on April 24, 1998)

4.3 First Amendment to the Directors' Stock Option Plan
              (incorporated by reference to the Company's registration
              statement on Form S-8 filed with the Securities and
              Exchange Commission on October 22, 1999)

4.4 Stock Option Plan for Employees (incorporated by reference
              to Exhibit C to the Definitive Proxy Statement filed with
              the Securities and Exchange Commission on April 24, 1998)

4.5 First Amendment to the Stock Option Plan for Employees
              (incorporated by reference to the Company's registration
              statement on Form S-8 filed with the Securities and
              Exchange Commission on October 22, 1999)

4.6 Second Amendment to the Stock Option Plan for Employees
              (incorporated by reference to Exhibit 4.7 to the Company's
              registration statement on Form S-8 filed with the
              Securities and Exchange Commission on September 29, 2000)

10.1 Purchase Agreement for the acquisition by the Company of
              Learning Pathways, Limited (incorporated by reference to
              the exhibit in the Current Report on Form 8-K filed with
              the Securities and Exchange Commission on December 15,
              1998)

10.2 Stock Purchase Agreement for the acquisition by the
              Company of Dolphin, Inc. (incorporated by reference to the
              exhibit in the Current Report on Form 8-K filed with the
              Securities and Exchange Commission on January 10, 2000)


(b)  Reports on Form 8-K

              None



SIGNATURES
----------

Pursuant to the requirements 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, 2001                        By:      Jeffrey E. Butler
                                             -----------------
                                             Jeffrey E. Butler,
                                             Chief Executive Officer
                                             Chairman of the Board
                                             Treasurer