FORM 10-QSB/A

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, 2005

[ ]  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)

            Nevada                            73-1621446
-------------------------------   ----------------------------------
(State or other jurisdiction of    (IRS Employer Identification No.)
incorporation or organization)

   7506 N. 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__

Indicate by check mark whether the registrant is a shell company (as defined
in Rule 12b-2 of the Exchange Act)                           YES__   NO X

Number of shares of the issuer's common stock outstanding as of August 31,
2005:                                                        14,133,461

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, 2005 and December 31, 2004                    3

           Consolidated Statements of Income
           For the Three Months Ended March 31, 2005
           and for the Three Months Ended March 31, 2004           4

           Consolidated Statements of Cash Flows
           For the Three Months Ended March 31, 2005
           and for the Three Months Ended March 31, 2004           5

           Notes to Interim Consolidated Financial
           Statements                                              6


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


Item 3     Controls and Procedures                                12


PART II - OTHER INFORMATION                                       13

SIGNATURE PAGES                                                   15




PART I - FINANCIAL INFORMATION

ITEM 1 - CONSOLIDATED BALANCE SHEETS

THE AMERICAN EDUCATION CORPORATION
CONSOLIDATED BALANCE SHEETS


                                               March 31      December 31
                                                 2005            2004
                                            ------------     -----------
                                             (unaudited)      (audited)

ASSETS
Current assets:
  Cash and cash equivalents                  $   664,930     $   549,343
  Accounts receivable, net of allowance
   for returns and uncollectible accounts
   of $200,000 and $200,000                    2,465,901       2,146,264
  Inventory                                       16,824          14,485
  Prepaid expenses and deposits                  348,358         305,897
  Deferred tax asset                              86,542          86,542
                                            ------------     -----------
     Total current assets                      3,582,555       3,102,531

Property and equipment, at cost                1,314,229       1,308,735
  Less accumulated depreciation and
   amortization                               (1,186,025)     (1,164,389)
                                            ------------     -----------
     Net property and equipment                  128,204         144,346

Other assets:
  Capitalized software costs, net of
   accumulated amortization of $8,025,485
   and $7,652,777                              3,791,914       3,815,680

Goodwill, net of impairment                    1,215,015       1,215,015
                                            ------------     -----------
     Total other assets                        5,006,929       5,030,695
                                            ------------     -----------
     Total assets                            $ 8,717,688     $ 8,277,572
                                            ============     ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable trade                     $  168,675      $   285,261
  Accrued liabilities                           806,823          693,122
  Deferred revenue                              605,795          654,337
  Notes payable and current portion of
   long-term debt                               683,761          371,862
                                            ------------     -----------
     Total current liabilities                2,265,054        2,004,582

Other long-term accrued liabilities             540,975          470,475
Deferred income tax liability - Long-term       147,579          103,921
Long-term debt                                  305,880          305,880
                                            ------------     -----------
     Total liabilities                        3,259,488        2,884,858
                                            ------------     -----------

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 - 14,133,461
    shares                                      359,186          359,186
  Additional paid in capital                  6,698,817        6,698,817
  Treasury stock, at cost, 234,000 shares      (319,125)        (319,125)
  Retained deficit                           (1,346,164)      (1,346,164)
  Year-to-date earnings                          65,486               -
                                            ------------     -----------
     Total stockholders' equity               5,458,200        5,392,714
                                            ------------     -----------
     Total liabilities and stockholders'
      equity                                $ 8,717,688       $8,277,572
                                            ===========       ==========



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



THE AMERICAN EDUCATION CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2005 AND 2004
(unaudited)

                                                 2005          2004
                                             -----------   -----------

Sales                                        $ 2,339,607   $ 2,530,266
Cost of goods sold                               341,849       340,866
                                             -----------   -----------

Gross profit                                   1,997,758     2,189,400

Operating expenses:
 Selling and marketing                           733,520     1,136,174
 Operations                                      158,471       108,958
 General and administrative                      525,481       428,284
 Amortization of capitalized software costs      372,708       332,071
                                             -----------   -----------

Total operating expenses                       1,790,180     2,005,487
                                             -----------   -----------

Operating income from continuing operations      207,578       183,913

Other income (expense):
 Interest expense                                (10,530)      (15,281)
                                             -----------   -----------

Income from continuing operations
 before income taxes                             197,048       168,632

Deferred income tax expense                       78,819        66,877
                                             -----------   -----------

Income from continuing operations                118,229       101,755

Loss from discontinued operations
 (net of tax benefits 2005 - $35,162;
 2004 - $0 ) (Note 14)                           (52,743)      (80,750)
                                             -----------   -----------

Net Income                                   $    65,486   $    21,005
                                             ===========   ===========

Earnings per share:
 Basic:
Continuing operations                        $      .008   $      .007
Discontinued operations                      $     (.004)  $     (.006)
Net income                                   $      .004   $      .001

  Diluted:
Continuing operations                        $      .007   $      .006
Discontinued operations                      $     (.003)  $     (.005)
Net income                                   $      .004   $      .001

Weighted average common shares outstanding:
  Basic                                       14,133,461    14,133,461
  Diluted                                     16,665,726    15,427,021



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, 2005 AND 2004
(unaudited)


                                                    2005          2004
                                                -----------   -----------

Cash flows from operating activities:
Net income                                      $    65,486   $    21,005
 Adjustments to reconcile net income to net
  cash provided by (used in) operating
  activities:
  Depreciation and amortization                     394,344       400,896
 Reserve for bad debts                                   --            --
 Deferred compensation                               70,500        46,500
 Other                                                   --        28,689

Changes in assets and liabilities:
 Accounts receivable                               (319,637)     (203,620)
 Inventories                                         (2,339)          854
 Prepaid expenses and other                         (42,461)       37,153
 Accounts payable and accrued liabilities            (2,885)      (46,402)
 Deferred revenue                                   (48,542)     (103,505)
 Deferred income taxes                               43,658        42,250
                                                -----------   -----------
 Net cash provided by operating activities          158,124       223,820
                                                -----------   -----------

Cash flow from investing activities:
 Software development costs capitalized            (348,942)     (340,667)
 Purchase of property and equipment                  (5,494)       (1,066)
                                                -----------   -----------

 Net cash used in investing activities             (354,436)     (341,733)
                                                -----------   -----------

Cash flows from financing activities:
 Proceeds from issuance of debt                     400,000            --
 Principal payments on notes payable                (88,101)      (54,597)
                                                -----------   -----------

 Net cash provided by (used in) financing
  activities                                        311,899       (54,597)
                                                -----------   -----------

Net increase (decrease) in cash                     115,587      (172,510)

Cash at beginning of the period                     549,343       216,676
                                                -----------   -----------

Cash at end of the period                       $   664,930   $    44,166
                                                ===========   ===========


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, 2005 AND 2004


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

1.    Description 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 two  subsidiaries,
Dolphin, Inc. ("Dolphin"), Voorhees, NJ and Learning Pathways, Ltd.
("LPL"), Derby, UK. Dolphin is a developer of educational software for
many of the nation's leading textbook and electronic publishers. LPL
modifies the Company's U.S. curriculum offering to conform to the UK's
educational system and markets these products directly to the UK and other
international markets. LPL is classified as an asset held for sale and as
such its results are shown as discontinued operations.

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, 2005, and for
the three-month periods ended March 31, 2005 and 2004 are unaudited, but
include all adjustments that the Company considers necessary for a fair
presentation.  The December 31, 2004 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, 2004.  The accompanying unaudited
interim financial statements for the three-month period ending March 31,
2005 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, 98-9 and
modifications thereto on software revenue recognition. The Company has
also adopted revenue recognition policies regarding sales with multiple
deliverables which comply with Emerging Issues Task Force Issue No. 00-21,
"Revenue Arrangements with Multiple Deliverables," which became effective
July 1, 2003. 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 represents the excess of the cost of purchased companies over the
fair value of their net assets at the date of acquisition and relates to
the acquisition of  Dolphin in 1999. Goodwill is reviewed for possible
impairment at least annually or more frequently upon the occurrence of an
event or when circumstances indicate that the carrying amount is greater
than its fair value.

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

Inventories are stated at the lower of cost (first-in, first-out), or
market, and consist of packaging and educational software materials.

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, usually
three to five years.

8.    Debt:
      ----

The Company had the following indebtedness under notes and loan
agreements:

                                           Current   Long-term   Total
                                          ---------  ---------  --------

Line of credit with bank, matures
November 30, 2005; payments of
$24,000 per month plus interest at
the bank's prime rate plus 1.5%
(7.25% at March 31, 2005)                  $183,761    $    --  $183,761

Line of credit with bank, matures
March 31, 2006; maximum line - $450,000,
interest at the bank's prime rate plus
2% (7.75% at March 31, 2005)                100,000         --   100,000

Subordinated debt due to unrelated
individual, originated March 30, 2005,
matures March 30, 2006 and may be renewed
for one year at the option of the holder;
interest at 8% payable at maturity;
convertible into the Company's common
stock at $.463 per share                    400,000         --   400,000

Subordinated debt due to shareholder
affiliates, originated April 1, 2003,
matures September 30, 2006; interest
at 8% payable quarterly, principal due
at maturity, convertible into the
Company's common stock at $.40 per share         --    305,880   305,880
                                          ---------  ---------  --------
                                           $683,761   $305,880  $989,641
                                          =========  =========  ========


9.    Stock Options
      -------------

The Company has historically measured compensation from issuing employee
stock options under the accounting prescribed by APB Opinion No. 25,
"Accounting for Stock Issued to Employees" which is an intrinsic value
method.  Subsequent accounting pronouncements SFAS No. 123 and SFAS No.
148, "Accounting for Stock Based Compensation," establish financial
accounting and reporting standards for stock-based employee compensation
plans.  SFAS No. 123 defines a fair value based method of accounting for
an employee stock option.  SFAS No. 148 amends SFAS No. 123 to provide
alternative methods of transition for an entity that voluntarily changes
to the fair value based method of accounting for stock-based employee
compensation.  The Company plans to continue to use the intrinsic value
method for stock-based compensation.  Accordingly, the compensation cost
for stock options has been measured as the excess, if any, of the quoted
market price of Company stock at the date of the grant over the amount the
employee must pay to acquire the stock.  The compensation cost is
recognized over the vesting period of the options.  Hence, no compensation
is incurred unless the market value is greater than the option exercise
price.

Pro forma information regarding net income and earnings per share is
required by SFAS No. 123, and has been determined as if the Company had
accounted for its employee stock options under the fair value method of
that Statement.  The Company is continuing to utilize the intrinsic value-
based method for accounting for employee stock options or similar equity
instruments; therefore, the Company has not recorded any compensation cost
in the statements of operations for stock-based employee compensation
awards.

For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period.  The
Company's pro forma income and earnings per share are as follows for the
quarter ended March 31:

                                                    2005          2004
                                                 --------      --------
Net income - as reported                         $ 65,486      $ 21,005
Stock -based employee compensation expense -
pro forma                                          11,825         5,550
                                                 --------      --------

Net income - pro forma                             53,661        15,455

Basic earnings per common share-as reported          $.01          $.01
Diluted earnings per common share as reported         .01           .01
Basic earnings per common share - pro forma          $.01          $.01
Diluted earnings per common share-pro forma           .01           .01

10.    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.

11.    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.

12.    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 conversions of
convertible debt and options to purchase common stock.

The weighted average number of basic and diluted common shares outstanding
is as follows:

                                           2005        2004
                                        ----------  ----------

     Basic                              14,133,461  14,133,461
     Diluted                            16,665,726  15,427,021

13.    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.

14.    Discontinued Operations:
       -----------------------

Effective December 31, 2004 Learning Pathways, Ltd. was deemed to be an
asset held for sale and an impairment loss of $1,150,000 was recognized.
Therefore, in the first quarter of 2005, its results are presented as
discontinued operations. The income statement for the prior year has
been restated to reflect the results as if LPL had been discontinued as of
the beginning of 2004. Assets and liabilities for the quarter ended March
31, 2005 were not material, and therefore no separate balance sheet
disclosure is deemed necessary.



ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS
--------------------------------------------------------------------

Overview
--------

The American Education Corporation is a developer of instructional content,
computer adaptive assessment testing software, and software management
technology specifically designed to manage the delivery of and record the
results of student progress in schools and other institutions.  Java-based
technology, the A+nyWhere Learning System, registered, ("A+LS") Versions 3.0
and 4.0 of educational software products, provides a research-based,
integrated curriculum offering of software for grade levels 1-12 for
Reading, Mathematics, Language Arts, Science, Writing, History, Government,
Economics and Geography.  In addition, the Company provides formative
assessment testing and formative instructional content for various segments
of the primary, secondary and post secondary educational markets.  All
company products are designed to provide for LAN, WAN and internet delivery
options.  The Company has developed computer adaptive, formative assessment
testing tools to provide educators with the resources to more effectively
use the Company's curriculum content, which is aligned to important state
and national academic standards.  Spanish-language versions are available
for Mathematics and Language Arts for grade levels 1-8.

The A+LS comprehensive family of educational software is now in use in over
11,000 schools, centers of adult literacy, colleges and universities, and
correctional institutions in the U.S., UK and other international locations.
A+dvancer, trademark, College Readiness Online, the Company's postsecondary
offering, identifies and assists students in attaining college entry-level
academic skills in Arithmetic, Elementary Algebra, Reading Comprehension,
and Sentence Skills.  A+dvancer reduces demand on institutional admissions
and developmental departments, while providing students with both improved
skills assessment and the alignment to developmental and remedial coursework
in an online, self-paced learning environment.

The Company is a technology-based publishing enterprise.  To remain
competitive it must constantly invest in the development of programming
technology to keep its product offering up-to-date and ensure that its
products maintain compatibility with constantly changing and revised
database and operating system platforms sold to schools by other
developers.  The Company must also update its content and underwrite
content revisions to realign its content with new, or updated state and
national educational standards to remain competitive.  To accomplish this
essential, ongoing corporate function requires retention and recruitment of
a highly skilled professional workforce.  These investments are essential,
recurring costs of doing business that impact the Company's operating cost
and margin structures.

The Company's business is subject to risks or uncertainties.  Among these
uncertainties are a dependency on funding for school technology purchases,
lengthy sales cycles, seasonal demand cycles and a dependency on retention
of key personnel.   Certain matters discussed herein (including the
documents incorporated herein by reference) may contain forward-looking
statements intended to qualify for the safe harbors from liabilities
established by the Private Securities Litigation Reform Act of 1995.
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 as a result
of factors such as future economic conditions, 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. Accordingly, investors should be alert to
the possibility that factors beyond the control of management may have
impact on the short or long-term operations of the business.  The Company
undertakes no duty to update forward-looking statements to reflect the
impact of events or circumstances that arise after the date the forward-
looking statement was made.

RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 2005
AS COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2004
---------------------------------------------------------

As of December 31, 2004, the Company's UK subsidiary, Learning Pathways,
was written down to zero value as impaired.  It is now held for sale and
therefore its operations are shown as discontinued.  The 2004 amounts have
been restated to reclassify the results of Learning Pathways as
discontinued. Therefore, the comparisons discussed here are only for the
Company and its Dolphin, Inc. subsidiary. Net sales for the three months
ended March 31, 2005 totaled $2,339,607 compared to $2,530,266 for the
same period in 2004.  This represents a decrease of 8% over the comparable
2004 quarter and is attributable to recording, in the previous 2004
quarter, a sale approximating $950,000 to schools in the State of New
Mexico. Sales at the Company's  Dolphin subsidiary were also down slightly
from the prior year.  The decrease in sales at Dolphin is customer driven
and depends on the number of projects its customers decide to outsource
and their desired delivery dates. The Company has announced that Dolphin
will be exiting the contract software development business and will begin
to provide additional development resources for the Company in the latter
half of 2005.

Cost of goods sold as a percentage of sales revenue for the three months
ending March 31, 2005 increased to 15% from 13% of sales revenues for the
same period in 2004 because of the sales decrease while actual dollar
amounts were virtually unchanged from the prior year. The Company's
principal product family, A+nyWhere Learning System, registered, provided
gross profit margins of 96% in the first quarter of 2005, consistent with
prior quarters.  Cost of goods sold represents the actual cost to produce
the software products and includes certain allocated overhead costs.

Total operating expenses, which include selling and marketing, general and
administrative, operations, and amortization of product development costs,
decreased to $1,790,180 for the three months ended March 31, 2005,
compared to $2,005,487 for the same 2004 quarter, a decrease of 11% and as
a percentage of sales revenue decreased from 79% in 2004 to 77% in 2005.
The decrease in total operating expenses is primarily due to a large
decrease in selling and marketing expenses offset by increases in
operations, general and administrative costs and amortization of product
development.

As a component of total operating expenses, selling and marketing costs
decreased by 35%, from $1,136,174 for the three months ended March 31,
2004, to $733,520 for the current period.  The decrease in the first
quarter 2005 selling expenses is largely attributable to changes in sales
mix, which resulted in decreased sales commissions approximating $488,000
paid as the Company billed direct to school customers a lower percentage
of orders. The Company recognizes sales revenue based upon the type of
customer.  If the sale is made to a distributor who in turn resells a
product to the end user, the amount of the sale is recorded and no
commission is due the distributor and the transaction is recorded as a net
sale.  If the sale is billed direct to the school or other end user, a
commission is paid to the distributor or a sales representative, which
increases amount of the sale, but a transaction of this nature would
directly increase marketing expense as a result of an obligation to pay a
commission.  These commissions paid may vary in the percentage of the sale
paid by the Company, depending up the type of sale and the status of the
individual or organization making the sale.  The decision to sell and to
bill direct to the customer and pay a subsequent commission can result
from a number of factors, including credit policy issues with individual
distributors as a result of payment history or limitations on authorized
limits. Additionally method of delivery of the product may necessitate
direct billing to the customer and the subsequent payment of a commission.
An example would be an online product sale that requires delivery from
company servers and related record keeping on licensed number of users
accessing the product online as well as the number of units delivered.
This level of record keeping requires company monitoring and billing
directly to the customer. These factors create a change in sales mix
affecting the amount of commission paid and the manner in which revenues
may be recorded by the Company.  Accordingly these factors, and the
source and nature of recorded revenue, can impact period revenue
recognition and related costs of securing revenue may vary from period to
period. Operating expenses increased by 45% from $108,958 for the three
months ended March 31, 2004 to $158,471 for the same period in 2005.
This increase results from increased compensation and benefits due to
additional technical support staff hired during the year.  General and
administrative costs for the three months ended March 31, 2005 were
$525,481 compared to $428,284 for the same 2004 period, an increase of
23%.  This increase results from increases in several areas.  General and
administrative salaries and benefits increased approximately $33,000 due
to the addition of personnel in several areas.  Deferred compensation
payable upon officers' and directors' retirement increased $24,000 because
additional employees were eligible for this benefit as compared to the
prior year. Outside consulting services increased approximately $26,000
because of fees paid for incorporating Learning Letter Sounds into our
product and consulting fees paid for advice regarding the future of
Dolphin.

Interest expense was $10,530 for the three months ended March 31, 2005
compared to $15,281 for the same 2004 quarter reflecting lower average
outstanding debt in 2005. Net income was $65,486 for the three months
ended March 31, 2005, compared to net income of $21,005 for the same
period in 2004.


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

The Company has invested significantly in 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, expand and keep
current the Company's extensive curriculum product offerings and to
position the Company for long-term growth.  To finance the business,
management has utilized secured bank revolving credit lines, bank financed
equipment loans and lease financing sources.

As of March 31, 2005 the Company's principal sources of liquidity included
cash and cash equivalents of $664,930, net accounts receivable of
$2,465,901 and inventory of $16,824. The Company's net cash provided by
operating activities during the three months ended March 31, 2005 was
$158,124 compared to $223,820 for the same period in 2004. Net cash used
in investing activities for the three months ended March 31 increased by
4% from $341,733 in 2004 to $354,436 in 2005, and was comprised primarily
of investment in capitalized software development costs. During the three
months ended March 31, 2005, debt due to financial institutions was
reduced by $88,101 or 24%, reflecting bank indebtedness of $283,761 at
March 31, 2005.

In April 2003, the Company borrowed $305,880 from major shareholder
affiliates, which is subordinated to the debt owed to the Company's senior
lender. This debt matures in September of 2006 and is convertible into the
Company's common stock at $.40 per share. On March 30, 2005, the Company
entered into a Convertible Note Purchase Agreement with an unaffiliated
individual.  Pursuant to the terms of the Convertible Note Purchase
Agreement, the Company issued the note purchaser an unsecured 8%
Subordinated Convertible Note in the original aggregate principal amount
of $400,000 (the "Note").  All principal and interest on the Note is due
and payable on March 30, 2006 (the "Initial Maturity Date"), subject to the
Note Purchaser's option to extend the Initial Maturity Date twelve months to
March 30, 2007 (the "Extended Maturity Date").  The Company may not prepay
principal or interest on the Note prior to the Initial Maturity Date.  The
Note is convertible at any time at the note purchaser's option into shares
of the Company's common stock at the initial conversion price of $0.463
per share, subject to certain anti-dilution adjustments.  Any shares of
common stock issued upon conversion of the Note will have "piggy-back"
registration rights. The proceeds from the subordinated convertible debt
were used to reduce accounts payable, bank debt and to support the normal
operations of the business.

At March 31, 2005, the Company had working capital of $1,317,501 compared
to $1,097,949 at December 31, 2004. The Company has a $450,000 revolving
line of credit that bears interest at a rate of 2.00% over the prime rate
(7.75% as of March 31, 2005) and matures on March 31, 2006.  At March 31,
2005, the Company had borrowed $100,000 under this line of credit.
Additionally, the Company has a term loan with an aggregate principal
balance of $183,761 as of March 31, 2005.  The term loan bears interest at
a rate of 1.5% over the prime rate (7.25% as of March 31, 2005) and
matures on November 30, 2005.  The Company is continuing to discuss future
borrowing arrangements with its current lender and several bank financing
sources.

There are no material operating covenants in either of the subordinated
debt agreements nor in the bank loan agreements.  The Company does not
believe that there are any covenants that affect the way the business
is operated or that would require material financial obligations.

With the expansion of the Company's product lines, the addition of new
products and markets and the increase in school spending that the Company
expects to see in 2005, management believes that the Company will return
to a pattern of annual growth similar to that demonstrated in prior years
(an average of approximately 20% per year). Management believes that it
can undertake this expansion with most of the Company's working capital
requirements secured from its operating cash flows.  If successful, the
Company should be able to enhance the liquidity of the business and the
overall strength of the Company's balance sheet and financial position.

Additional working capital beyond that available to the Company as a
result of internally generated cash flows has been and may be required to
expand operations.  Management has and will consider options available to
access such funding, including expanded debt and new equity financing as
dictated by the needs of the business.

Off-Balance Sheet Arrangements
------------------------------

The Company does not have any off-balance sheet arrangements.

Critical Accounting Policies
----------------------------

Management is responsible for the integrity of the financial information
presented herein.  The Company's financial statements have been prepared
in accordance with accounting principles generally accepted in the United
States of America.  Where necessary, they reflect estimates based on
management's judgment.  Significant accounting policies that are important
to the portrayal of the Company's financial condition and results, which
in some cases require management's judgment, are summarized in the Notes
to Interim Consolidated Financial Statements, which are included herein.


ITEM 3 - CONTROLS AND PROCEDURES
--------------------------------

It is the responsibility of the Chief Executive Officer and the Chief
Financial Officer to ensure that the Company maintains disclosure controls
and procedures designed to provide reasonable assurance that material
information, both financial and non-financial, and other information
required under the securities laws to be disclosed is identified and
communicated to senior management on a timely basis.  The Company's
disclosure controls and procedures include controls and other procedures
of the Company that are designed to ensure that information required to be
disclosed by the Company in its reports that it submits under the
Securities Exchange Act of 1934, as amended, is recorded, processed,
summarized and reported within the time periods specified in the
Securities and Exchange Commission's rules and forms.

As of March 31, 2005, management, including the Chief Executive Officer
and Chief Financial Officer, conducted an evaluation of disclosure
controls and procedures pursuant to Exchange Act Rule 13a-14 as of the end
of the period covered by this report.  Based on that evaluation, the Chief
Executive Officer and Chief Financial Officer have concluded the
disclosure controls and procedures currently in place are adequate to
ensure material information and other information requiring disclosure are
identified and communicated in a timely fashion and that such disclosure
controls and procedures were effective.  During the three months ended
March 31, 2005, there have been no changes in internal controls, or in
factors that have materially affected, or are reasonably likely to
materially affect, the Company's internal controls over financial
reporting.




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.  Unregistered Sales of Equity Securities and Use of Proceeds
         -----------------------------------------------------------

None.

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

Omitted from this report as inapplicable.

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

None.

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

Omitted from this report as inapplicable.

Item 6.  Exhibits
         --------

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

Exhibit
  No.                   Description of Exhibits
-------     ---------------------------------------------------------------
3.1         Articles of Incorporation of The American Education
            Corporation (incorporated by reference Annex B to the
            Definitive Proxy Statement filed with the Securities and
            Exchange Commission on October 12, 2001)

3.2         Bylaws of The American Education Corporation (incorporated by
            reference to Annex C to the Definitive Proxy Statement filed
            with the Securities and Exchange Commission on October 12,
            2001)

4.1         Form of Stock Certificate (incorporated by reference to Form
            8-A12G/A filed with the Securities and Exchange Commission on
            January 20, 2004)

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)

10.3        Convertible Note Purchase Agreement dated March 30, 2005 by
            and between The American Education Corporation and David J.
            Smith (incorporated by reference to the exhibit in the Current
            Report on Form 8-K filed with the Securities and Exchange
            Commission on April 11, 2005)

10.4        The American Education Corporation 8% Subordinated Convertible
            Promissory Note dated March 30, 2005 in favor of David J.
            Smith (incorporated by reference to the exhibit in the Current
            Report on Form 8-K filed with the Securities and Exchange
            Commission on April 11, 2005)

10.5        Promissory Note dated March 31, 2004 from The American
            Education Corporation in favor of UMB Bank, N.A. (incorporated
            by reference to the exhibit in the quarterly report 10-Q filed
            with the Securities and Exchange Commission on August 15,
            2005)

10.6        Promissory Note dated March 31, 2004 from The American
            Education Corporation in favor of UMB Bank, N.A. (incorporated
            by reference to the exhibit in the quarterly report 10-Q filed
            with the Securities and Exchange Commission on August 15,
            2005)

10.7        Employment Agreement with Jeffrey E. Butler dated December 5,
            1998 (incorporated by reference to the exhibit in the
            quarterly report 10-Q filed with the Securities and Exchange
            Commission on August 15, 2005)

10.8        Employment Agreement with Thomas A. Shively dated December 5,
            1998 (incorporated by reference to the exhibit in the
            quarterly report 10-Q filed with the Securities and Exchange
            Commission on August 15, 2005)

10.9        Employment Agreement with Neil R. Johnson dated December 5,
            1998 (incorporated by reference to the exhibit in the
            quarterly report 10-Q filed with the Securities and Exchange
            Commission on August 15, 2005)

10.10       Promissory Note dated October 16, 2000 from Jeffrey E. Butler
            in favor of the Company (incorporated by reference to the exhibit
            in the annual report 10-KSB/A filed with the Securities and
            Exchange Commission on September 9, 2005)

10.11       Promissory Note dated September 30, 2004 from the Company in
            favor of John Garber (incorporated by reference to the exhibit
            in the annual report 10-KSB/A filed with the Securities and
            Exchange Commission on September 9, 2005)

10.12       Promissory Note dated September 30, 2004 from the Company in
            favor of Janis L. Butler (incorporated by reference to the
            exhibit in the annual report 10-KSB/A filed with the Securities
            and Exchange Commission on September 9, 2005)

31.1        Certification of Chief Executive Officer pursuant to Section
            302 of the Sarbanes-Oxley Act of 2002.

31.2        Certification of Chief Financial Officer pursuant to Section
            302 of the Sarbanes-Oxley Act of 2002.

32.1        Certification of the Chief Executive Officer pursuant to 18
            U.S.C. Section 1350, as adopted pursuant to Section 906 of the
            Sarbanes-Oxley Act of 2002.

32.2        Certification of the Chief Financial Officer pursuant to 18
            U.S.C. Section 1350, as adopted pursuant to Section 906 of the
            Sarbanes-Oxley Act of 2002.



                                    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



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



                                    /s/ Neil R. Johnson
                                    -------------------
                                    Chief Financial Officer
                                    Chief Accounting Officer


Date: September 9, 2005



                             Exhibit 31.1

               CERTIFICATION OF CHIEF EXECUTIVE OFFICER
                      PURSUANT TO SECTION 302
                 OF THE SARBANES-OXLEY ACT OF 2002


I, Jeffrey E. Butler, certify that:

1.  I have reviewed this quarterly report on Form 10-QSB/A of The American
Education Corporation;

2.  Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this report;

3.  Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;

4.  The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:

  a)  designed such disclosure controls and procedures, or caused such
      disclosure controls and procedures to be designed under our
      supervision, to ensure that material information relating to the
      registrant, including its consolidated subsidiaries, is made known
      to us by others within those entities, particularly during the
      period in which this report is being prepared;

  b)  evaluated the effectiveness of the registrant's disclosure controls
      and procedures and presented in this report our conclusions about
      the effectiveness of the disclosure controls and procedures, as of
      the end of the period covered by this report based upon such
      evaluation; and

  c)  disclosed in this report any change in the registrant's internal
      control over financial reporting that occurred during the
      registrant's most recent fiscal quarter (the registrant's fourth
      fiscal quarter in the case of an annual report) that has materially
      affected, or is reasonably likely to materially affect, the
      registrant's internal control over financial reporting;

5.  The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

  a)  all significant deficiencies and material weaknesses in the design
      or operation of internal control over financial reporting which are
      reasonably likely to adversely affect the registrant's ability to
      record, process, summarize and report financial information; and

  b)  any fraud, whether or not material, that involves management or
      other employees who have a significant role in the registrant's
      internal controls over financial reporting.

Date:  September 9, 2005

/s/  Jeffrey E. Butler
----------------------
Signature
Title:  Chief Executive Officer



                          Exhibit 31.2

               CERTIFICATION OF CHIEF FINANCIAL OFFICER
                      PURSUANT TO SECTION 302
                 OF THE SARBANES-OXLEY ACT OF 2002


I, Neil R. Johnson, certify that:

1.  I have reviewed this quarterly report on Form 10-QSB/A of The American
Education Corporation;

2.  Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period
covered by this report;

3.  Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;

4.  The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant
and have:

  a)  designed such disclosure controls and procedures, or caused such
      disclosure controls and procedures to be designed under our
      supervision, to ensure that material information relating to the
      registrant, including its consolidated subsidiaries, is made known
      to us by others within those entities, particularly during the
      period in which this report is being prepared;

  b)  evaluated the effectiveness of the registrant's disclosure controls
      and procedures and presented in this report our conclusions about
      the effectiveness of the disclosure controls and procedures, as of
      the end of the period covered by this report based upon such
      evaluation; and

  c)  disclosed in this report any change in the registrant's internal
      control over financial reporting that occurred during the
      registrant's most recent fiscal quarter (the registrant's fourth
      fiscal quarter in the case of an annual report) that has materially
      affected, or is reasonably likely to materially affect, the
      registrant's internal control over financial reporting;

5.  The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):

  a)  all significant deficiencies and material weaknesses in the design
      or operation of internal control over financial reporting which are
      reasonably likely to adversely affect the registrant's ability to
      record, process, summarize and report financial information; and

  b)  any fraud, whether or not material, that involves management or
      other employees who have a significant role in the registrant's
      internal controls over financial reporting.

Date:  September 9, 2005

/s/  Neil R. Johnson
--------------------
Signature
Title:  Chief Financial Officer



                              Exhibit 32.1




                 CERTIFICATION BY CHIEF EXECUTIVE OFFICER
         PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
              SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



     In connection with the Quarterly Report on Form 10-QSB/A of The
American Education Corporation (the "Company") for the period ended March
31, 2005 as filed with the Securities and Exchange Commission on the date
hereof (the "Report"), I, Jeffrey E. Butler, Chief Executive Officer of
the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1)  The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

(2)  The information contained in the Report fairly presents, in all
material respects, the financial condition and result of the operations of
the Company.



By:  /s/ Jeffrey E. Butler
     ---------------------
     Jeffrey E. Butler
     Chief Executive Officer

     September 9, 2005



                              Exhibit 32.2




                 CERTIFICATION BY CHIEF FINANCIAL OFFICER
         PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
              SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



     In connection with the Quarterly Report on Form 10-QSB/A of The
American Education Corporation (the "Company") for the period ended March
31, 2005 as filed with the Securities and Exchange Commission on the date
hereof (the "Report"), I, Neil R. Johnson, Chief Financial Officer of the
Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1)  The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

(2)  The information contained in the Report fairly presents, in all
material respects, the financial condition and result of the operations of
the Company.



By:  /s/ Neil R. Johnson
     -------------------
     Neil R. Johnson
     Chief Financial Officer

     September 9, 2005