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 June 30, 1998

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
SECURITIES EXCHANGE  ACT OF 1934

For the Transition Period from  ________ to ________

Commission File #0-11078

THE AMERICAN EDUCATION CORPORATION
(Exact name of registrant as specified in its charter)

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

84-0838184
IRS Employer Identification number)

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

(405) 840-6031
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: 
NONE

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.025 per share

Indicate by check mark whether the registrant (1) has filed all 
reports required to be filed by Section 13 or 15(d) of the 
Securities Exchange Act of 1934 during the preceding 12 months 
(or for such shorter period that the registrant was required to 
file such reports), and (2) has been subject to such filing 
requirements for the past 90 days.	
											
		
YES  [X]   NO [ ]


Number of shares of the registrant's common stock outstanding as 
of June 30, 1998:          12,399,079

Transitional Small Business Disclosure Format				         

YES [ ]    NO  [X]


THE AMERICAN EDUCATION CORPORATION

                          INDEX                       Page No.

PART I - FINANCIAL INFORMATION

Item 1	     Balance Sheets                                    3
            June 30, 1998 and December 31, 1997

            Statements of Operations
            For the Quarter Ended June 30, 1998               4
            and for the Quarter Ended June 30, 1997

            For the Six Months Ended June 30, 1998            5
            and for the Six Months Ended June 30, 1997

            Statements of Cash Flows                          6
            For the Six Months Ended June 30, 1998
            and for the Six Months Ended June 30, 1997

            Notes to Interim Financial Statements             7


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


PART II - OTHER INFORMATION                                  13

SIGNATURE PAGE                                               14


Part 1 - FINANCIAL INFORMATION
THE AMERICAN EDUCATION CORPORATION
CONSOLIDATED BALANCE SHEETS

ASSETS                                          30-Jun-98        31-Dec-97
                                                ---------        ---------

Current assets:
Cash                                           $  220,518       $  283,636
Accounts receivable, net of allowance
 for uncollectible accounts of $94,342 
 and $32,805                                    1,701,720          623,287  
Inventories                                        55,652            8,168
Prepaid expenses and deposits                     171,346           32,593
Deferred income taxes                              15,748           13,122
                                               ----------       ----------
 Total current assets                           2,164,984          960,806

Property and equipment, at cost                   344,430          314,998
Less accumulated depreciation and amortization   (170,267)        (150,938)
                                               -----------      ----------- 
 Net property and equipment                       174,163          164,060

Other assets:
 Capitalized software costs, net of                
 accumulated amortization of $1,105,365
 and $1,000,730                                   967,725          764,505
Organizational costs                               35,728
Goodwill, net of accumulated amortization
 of $258,842 and $246,800                         228,793                0
Deferred income taxes                           1,124,177        1,506,032
                                               ----------       ---------- 
Total other assets                               2,356,423       2,270,537
                                               -----------     -----------
Total Assets                                   $ 4,695,570     $ 3,395,403
                                               ===========     ===========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable trade                        $   297,571      $   132,156
Accrued liabilities                               357,847          319,818
Accounts Payable - Affiliate                       86,824           18,000
Customer Deposits                                 105,951          125,739
Current portion of capital lease obligation        29,394            8,021
Income taxes payable                                7,600            9,512
                                               -----------      -----------
Total current liabilities                         885,187          613,246

Long-term debt                                     86,744           58,000
Capital lease obligation                           62,039           46,761
                                               -----------     -----------
Total liabilities                               1,033,970          718,007

Commitments and contingencies                           

Stockholders' Equity
Preferred Stock, $.001 par value;
 Authorized-50,000,000 shares-issued and
 outstanding-none                                       0                0
Common stock, $.025 par value
 Authorized 30,000,000 shares-issued and 
 outstanding-12,399,079 shares                    309,977          304,590
Additional paid-in capital                      5,426,955        5,237,093
Retained Earnings/(Deficit)                    (2,864,287)      (2,864,287)
Current Year Earnings                             788,955                0
                                              -----------      -----------
 Total stockholders' equity                     3,661,600        2,677,396
                                              -----------      -----------
Total liabilities and stockholders' equity    $ 4,695,570      $ 3,395,403   
                                              ===========      ===========

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


THE AMERICAN EDUCATION CORPORATION
STATEMENTS OF OPERATIONS
QUARTERS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
                                                30-Jun-98          30-Jun-97
                                                ---------          ---------

Net Sales                                     $  1,938,336      $   1,237,332
Cost of goods sold                                 214,311            139,821
                                              ------------      ------------- 
Gross profit                                     1,724,025          1,097,511

Operating expenses:
 Sales and marketing                               387,072            174,038
 Operations                                         90,348                  0
 General and administrative                        335,194            396,745 
 Amortization of capitalized software costs         40,449             20,864
                                              ------------       ------------
Total operating expenses                           853,063            591,647
                                              ------------       ------------
Operating earnings (loss)                          870,962            505,864

Other income/(expense)
 Interest and Dividend Income                        1,940                 64
 Miscellaneous income                                3,667              3,375
 Interest Expense                                   (2,802)            (1,250)
 Other                                             (55,830)                 0
                                              -------------       ------------
Net earnings (loss) before taxes                   817,937            508,053   

 Current income taxes                                1,260                  0
 Deferred income taxes                             238,836            182,899
 Valuation allowance - change at 
 beginning of year                                       0           (182,899)
                                              -------------       ------------
Net earnings (loss)                           $    577,841        $   508,053
                                              =============       ============
                                                
Basic                                           12,262,560         12,083,359

Earnings (loss) per share                     $      0.047        $     0.042

Diluted                                         13,447,887         14,086,576

Earnings (loss) per share                      $     0.043        $     0.036


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



THE AMERICAN EDUCATION CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
                                                 30-Jun-98          30-Jun-97
                                                 ---------          ---------

Net Sales                                      $  3,108,556       $  2,010,073
Cost of goods sold                                  335,764            227,412
                                               ------------       ------------
Gross profit                                      2,772,792          1,782,661

Operating expenses:
 Sales and marketing                                751,603            348,133
 Operations                                         166,627                  0
 General administrative                             513,153            677,075
 Amortization of capitalized software costs          76,527             40,734
                                               ------------        ----------- 
Total operating expenses                          1,507,910          1,065,942
                                               ------------        -----------
Operating earnings (loss)                         1,264,882            716,719

Other income/(expense)
 Interest and Dividend Income                         4,326                589
 Miscellaneous income                                 3,746              6,412
 Interest Expense                                    (7,030)            (2,943)
 Incentive Expense                                  (84,189)                 -
                                               -------------       ------------ 
Net earnings (loss) before taxes                  1,181,735            720,774

 Current income taxes                                 8,260                  0
 Deferred income taxes                              384,520            259,479
 Valuation allowance - change at 
 beginning of year                                        0           (259,479)
                                               -------------       ------------
Net earnings (loss)                            $    788,955        $   720,774
                                               ============        ============

Basic                                            12,262,560         12,083,359

Earnings (loss) per share                      $     0.064         $     0.060

Diluted                                         13,447,887          14,086,576

Earnings (loss) per share                      $     0.059        $      0.051


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


THE AMERICAN EDUCATION CORPORATION
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
                                                30-Jun-98          30-Jun-97
                                                ---------          ---------
Cash flows from operating activities:
Net earnings (loss)                            $   788,955        $   720,774
 Adjustments to reconcile net earnings/(loss) 
 to net cash provided by (used in) operating
 activities:
 Depreciation and amortization                     136,006             77,806
 Reserve for bad debts                              46,736              5,254
 Stock issued for compensation                      20,250                  0 

Changes in assets and liabilities:
 Accounts receivable                            (1,041,815)          (689,698)
 Inventories                                       (23,502)             1,452  
 Prepaid expenses and other                       (126,700)            18,456 
 Deferred tax asset                                379,229                  0
 Accounts payable and accrued liabilities          170,058             48,104
 Accounts payable - Affiliate                       68,824                  0
 Customer Deposits                                 (47,429)           (75,302) 
                                               ------------       -------------
 Net cash provided by operating activities         370,612            106,846

Cash flow from investing activities:
 Acquisition of net assets of subsidiary           (70,275)                 0 
 Current portion of notes and leases                15,540                  0
 Capitalization of organizational costs    
 and goodwill                                      (35,728)                 0
 Purchase or capitalized software costs           (307,856)          (165,598)
 Purchase of property and equipment                (29,433)           (12,778)
                                               ------------       ------------
 Net cash used in investing activities            (427,752)          (178,376)

Cash flows from financing activities:
 Proceeds received from issuance of debt              (250)                 0
 Principal payment on debt                          (5,773)                 0 
                                                -----------       ------------
 Net cash provided by financing activities          (5,978)                 0

Net increase (decrease) in cash                    (63,118)           (71,530)
 
Cash at beginning of the period                    283,636            193,347
                                               ------------       -----------
Cash at end of the period                      $   220,518        $   121,817
                                               ============       ===========

Supplemental Cash Flow Disclosures:
 Interest paid                                 $         -         $        - 


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 JUNE 30, 1998 AND 1997


NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


1. Nature of Business:

The American Education Corporation (the Company) and its 
subsidiary's business is the development of 
educational computer software, and its distribution to school 
districts nationally.

2. Basis of Presentation:

The summary of significant accounting policies of The American 
Education Corporation (the Company) is presented to assist in 
understanding the Company's financial statements. These 
accounting policies conform to generally accepted accounting 
principles and have been consistently applied in the preparation 
of the financial statements.

The Company's consolidated financial statements include the 
results from its wholly owned subsidiary, Projected Learning 
Programs, Inc. All material intercompany transactions have been 
eliminated.

The interim consolidated financial statements at June 30, 1998, 
and for the three and six month periods ended June 30, 1998, and 
1997 are unaudited, but include all adjustments which the Company 
considers necessary for a fair presentation.  The December 31, 
1997, 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, 1997.  The accompanying unaudited interim financial 
statements for the three and six month periods ending June 30, 
1998, are not necessarily indicative of the results which can be 
expected for the entire year.

The preparation of the financial statements in conformity with 
generally accepted accounting principles requires management to 
make estimates and assumptions that affect the reported 
amounts of assets, 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 
91-1 on software revenue recognition.

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 acquisition by the Company in 1998 of 
Projected Learning Programs, Inc. and is amortized over a period 
of 10 years.

6. Inventories:

Inventories are stated at the lower of cost (first-in, first-
out), or market.

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 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.

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 Income Per Share:

The Company has adopted Statement of Financial Accounting 
Standards No. 128 "Earnings Per Share" (SFAS 128) as required, 
effective November 1, 1997. SFAS 128 requires presentation of 
basic and diluted earnings per share, including a restatement of 
all prior periods presented. Basic earnings per share is 
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, warrants and convertible securities. 

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

                      June 30, 1998            June 30, 1997
                      -------------            -------------
	    Basic         12,262,560               12,083,359		
          Diluted       13,447,887               14,086,576	

11.	Shareholder's Equity:

On March 11, 1996 the Company granted options to employees, 
officers, and directors, to purchase 1,301,195 shares of common 
stock at $.50 per share.  The options expire March 11, 1999. 
Additional options were issued on January 23, 1998 to 24 
employees in the amount of 230,500 options. These options 
expire on January 23, 2001 or, like the previously issued 
options, ninety days after termination of employment. No options 
have been exercised and 103,000 options have expired due to 
termination of employment.

During the first quarter of 1998, the Board of Directors approved 
the issuance of a total of 40,500 shares of common stock as an 
annual bonus for contributions made to the Company in 1997.  The 
recipients of 10,000 shares each as a bonus award are: Jeffrey E. 
Butler, President; Thomas Shively, Executive Vice President; and 
Jeffrey E. Butler, Jr., Vice President of Marketing.  In 
addition, Patrick Timmons, Director of Programming was awarded 
7,500 shares and each of the outside directors Newton Fink, Monty 
McCurry and Stephen Prust were each awarded 1,000 shares of 
common stock. 

During the second quarter of 1998 58,000 additional stock options 
were issued to ten new employees. These options will be ratified 
by the Board of Directors to be included under the employee plan 
approved at the Annual Meeting of Shareholders held May 29, 1998. 

2.  COMMITMENTS AND CONTINGENCIES

The Company amortizes capitalized software costs over the 
product's estimated useful life.  Due to inherent technological 
changes in the software development industry, the period over 
which such capitalized software cost is being amortized may have 
to be accelerated.


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

The Company views accounts receivable, inventory, and cash as its 
principal measures of liquidity.  To supplement its anticipated 
short-term working capital requirements, the Company has, in the 
past, entered into various convertible loan agreements beginning 
in January 1991, with private investors. Several of these loans 
were convertible into common stock of the Company at conversion 
prices ranging from $0.1346 to $0.50 per common share. These 
loans were converted into common stock of the Company in 
June of 1996.  At December 31, 1997 and June 30, 1998, $50,000 of 
convertible notes, with a conversion price per share of $.1346, 
remain outstanding.

The Company's working capital was $1,279,797 at June 30, 1998, an 
improvement of $932,237 from $347,560 at December 31, 1997.  This 
significant improvement is associated with higher levels of 
sales, collection of sales proceeds, and retirement of short-term 
debt 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.

During the second quarter the Company closed a revolving line of 
credit facility establishing a $500,000 line of credit with the 
UMB Oklahoma Bank. The interest rate on borrowed funds is the 
national prime rate. The line of credit is based on the Company's 
accounts receivable and at June 30, 1998 the balance 
outstanding under the line was zero, with available credit under 
the line being $500,000.

RESULTS OF OPERATIONS - QUARTER ENDED JUNE 30, 1998
AS COMPARED TO THE QUARTER ENDED JUNE 30, 1997

Net software revenues for the three months ended June 30, 1998, 
totaled $1,938,336 compared to net software revenues of 
$1,237,332 for the same period in 1997.  This represents an 
increase of approximately 57% over the 1997 quarter.  The 
increase in revenues for the second quarter of 1998 over the 
comparable quarter in 1997 is attributable to the availability 
and customer acceptance of additional secondary grade level 
titles released in the latter part of fiscal 1997 and 
the first quarter of 1998 and expanded channels of distribution. 
The Company now has effective, trained distribution in 48 states 
that contributed to quarterly sales performance.

Cost of goods sold as a percentage of sales revenue for the three 
months ending June 30, 1998, remained the same (11%) as in the 
three-month period ending June 1997 even though the 1998 
statement of operations includes the lower gross margin software 
sold by Projected Learning Programs. This disproportionately low 
increase in direct production 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 to the school market, as opposed to traditional retail 
outlets.  Cost of goods sold represents the actual cost to 
produce the software products, including certain allocated 
overhead costs, a portion of which is fixed.  Excluding the costs 
of allocated overhead, product costs provide gross profit margins 
ranging from 75 to 95 percent on the Company's principal 
products.  Consolidated company gross margins are expected to 
trend down slightly as lower gross margins on PLP catalog sales 
become a higher percentage of total corporate revenues.

Total operating expenses; which include selling & marketing, 
general & administrative, operations, and amortization of product 
development costs, were $853,063 for the three months ended June 
30, 1998, compared to $591,647 for the previous year.  This 
represents an increase of approximately 44% but represents 44% of 
sales compared to 48% of sales for the comparable 1997 period. 
Operating expenses for the quarter were impacted by costs 
associated with development of a new version of the Company's 
software technology and the expenses associated with the ongoing 
curriculum development costs relating to the release of new 
elementary and middle school science titles achieved during the 
quarter.  During the quarter, the Company released A+Net TM, a new 
Internet curriculum management tool that is fully authorable 
by educators.

Selling and marketing costs increased by approximately 122%, from 
$174,038 for the three months ended June 30, 1997, to $387,072 
for the current period.  The increase in 1998 is related to 
expanded sales, marketing, distributor training and the 
commission costs related to the higher sales levels.

General & administrative and operations expenses increased by 
approximately 7% during the 1998 quarter, from $396,745 to 
$425,542.  This increase is primarily attributable to expenses 
related to the previously mentioned product development costs 
associated with the final development efforts associated with 
ongoing programming and curriculum development efforts to 
maintain and improve the Company's competitive position.

Net income for the three months ended June 30, 1998, improved by 
approximately 14% as compared to the prior year.  This 
improvement from net income of $508,053 in 1997 to net income of 
$577,841 in 1998, reflects the higher revenue levels providing 
coverage of essential fixed operating costs, higher revenues per 
employee, as well as the improving gross margins related to 
previously described manufacturing efficiencies.  Pre tax income 
for the 1998 period improved 61% from $508,053 in 1997 to 
$817,937 in 1998.  

Average earnings per diluted share were $0.043 for the quarter 
ending June 30, 1998 compared to $0.036 for the same period in 
1997.  The average number of diluted shares outstanding decreased 
from 14,086,576 to 13,447,887 during the same period as a result 
of expiration of previously issued stock options to former 
employees separated from the Company.

Shareholders' equity as a percent of total assets remained 
consistent with the December 31, 1997 level at 78%. The Company's 
current ratio has improved from 1.57 at December 31, 1997 to 
2.45 at June 30, 1998. 

RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 1998
AS COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1997

Net software revenues for the six months ended June 30, 1998, 
totaled $3,108,556 compared to net software revenues of 
$2,010,073 for the comparable 1997 period.  This represents an 
increase of approximately 55% for the 1998 six-month period.  
This significant increase in the 1998 total company 
revenues highlights the increasing acceptance of the Company's 
products by schools as the Company is now installed in over 4400 
U.S. and Puerto Rican schools.  Significantly, the Company 
penetrated new areas of the country with its expanded 
distribution force, but also enjoyed a strong re-order trend from 
existing customers.  Several districts expanded the scope of 
curriculum published by the company, or ordered additional 
software for deployment in other schools within their districts.  

Cost of goods sold for the six months ended June 30, 1998, 
increased by approximately 48%, even though sales increased by 
55%.  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 reduces the cost 
of packaging, handling, and freight associated with products that 
are marketed primarily to the school market, as opposed to 
traditional retail outlets.  Cost of goods sold represents the 
actual cost to produce the software products, including certain 
allocated overhead costs, a portion of which is fixed.  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, consolidated 
company gross margins are expected to trend down slightly as 
lower gross margins on PLP catalog sales become a higher 
percentage of total corporate revenues.

Total operating expenses; which include selling & marketing, 
general & administrative, operations, and amortization of product 
development costs were $1,507,910for the six months ended June 
30, 1998, compared to $1,065,942 for the previous year.  This 
represents an increase of approximately 41%.  During the six-
month period, revenue per employee increased from $136,000 to 
$153,000 (12%) demonstrating greater operating efficiencies.  In 
prior periods, the Company had to maintain a fixed support staff 
of technical and business professionals to provide for critical 
expansion functions as both an investment in its ability to 
service a rapidly growing customer base and its public company 
status.  Management believes that the operating expense 
category has now stabilized in its cost structure relationship to 
revenues and that higher revenue and business activities can be 
attained with modest incremental additions to operating costs.  
Accordingly, it is believed that with stringent control and 
planning, management has a high leverage category of expenditures 
to concentrate on to secure continuing efficiencies from the 
business in future periods.  Total operating expenses for the 
six-month period were also impacted by the ongoing development 
costs associated with the planned expansion and updating of the 
curriculum of the product line and continued investment into the 
Company software technology. 

Selling and marketing costs increased by approximately 116%, from 
$348,133 for the six months ended June 30, 1997 to $751,603 for 
the comparable 1998 period.  The increase for this category of 
expense in the 1998 six-month period is attributable to expanded 
sales, marketing, distributor training and commission costs 
related to the higher sales levels and the release of 14 new 
titles.

General & administrative and operations expenses increased by 
approximately 0.4% during the 1998 six month period from $677,075 
to $679,780. As a percentage of sales, general and administrative 
expenses (including "operations" in 1998) fell from 34% to 22%. 
This dollar increase is primarily related to higher expenses 
associated with the final development efforts associated with new 
title and curriculum content released during the period. During 
the period, the Company released eight new, updated titles; 
replacing its award winning elementary and middle school science 
family originally comprised of four titles that were released in 
1994. 10 new titles under its existing license with Humanities 
Software, Inc. were also released to expand the content offering 
and grade level range of this well received product family.  
Additional content development update work was initiated on the 
language arts and social studies product to bring these 
significant elements of the Company's product lines to a current 
level of conformity with recent national and state standards for 
release in future periods.  The Company plans to continue 
this investment into an aggressive new content title development 
schedule as well as its software programming technology.  These 
investments should position the Company to maintain its growth 
and penetration of existing and new markets.

Net after tax earnings for the six months ended June 30, 1998, 
improved by approximately 9% as compared to the prior 1997 
period.  This improvement from net income of $720,774 in 1997 to 
net income of $788,955 in 1998, reflects the higher revenue 
levels providing for greater efficiency in the coverage of 
essential fixed operating costs, as well as the improving gross 
margins related to previously described manufacturing 
efficiencies.  Pre tax net income improved 64% from $720,774 to 
$1,181,735 in the six-month period ending June 30, 1998 compared 
to the comparable 1997 period. Net cash provided by operating 
activities increase from $106,846 in the 1997 period to $370,612 
in the comparable 1998 period. This 247% increase reflects the 
Company's ability to generate additional profits without 
commensurate increases in overhead.

Average diluted earnings per share were $0.059 for the six months 
ending June 30, 1998 compared to $0.051 for the same period in 
1997 which is an increase of 15%.  The average number of diluted 
shares outstanding decreased from 14,086,576 to 13,447,887 during 
the same period.  This decrease is primarily attributable to a 
retirement of previously issued stock options to employees now 
separated from the Company.

Prior to 1996, the Company had incurred net operating losses 
since its inception in 1981.  As a result, there was substantial 
doubt as to the realization of the $4,900,000 net operating loss 
carryforwards at December 31, 1995.  The Company has subsequently 
utilized approximately $1,200,000 of net operating loss 
carryforwards during the years ending December 31, 1997 and 
1996 as a result of improvements in operations.  Management 
believes that the Company will be generating net income in future 
years, and therefore, a deferred tax asset resulting from the net 
operating loss carryforwards, in the amount of $1,373,470, has 
been recorded to the Company's financial statements.  No 
valuation allowance has been recorded against the deferred tax 
asset.

Company management believes that significant, future 
opportunities exist in both the school and home markets for its 
products. The Company is now equipped with Macintosh and Windows 
program shells that facilitate the rapid and less expensive 
development of new subject titles. Management also believes that 
the Company is well positioned to compete in the educational 
software market as a result of its ongoing investment in software 
development tools, experienced and stable professional staff, 
growing distribution coverage of key markets and a rapidly 
expanding installed base within the school market. Management 
believes that the Company can make significant progress within 
its existing product development and marketing budgets to allow 
the Company to maintain the continued, profitable expansion of 
the business.

The Company is investigating sources of intellectual property and 
potential partnerships with other publishers with whom it may 
base future publications, Internet commercial activities, or 
marketing alliances.  Some of these investigations may lead to 
discussions on possible Company acquisition opportunities and, 
increasingly, management views these potential acquisitions of 
other entities as a possible avenue for accelerating the growth 
of the Company.

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 has issued a Final Judgment of Permanent Injunction 
requiring the Company to (i) file all its delinquent Exchange Act 
reports and (ii) in the future, timely file all of its Exchange 
Act reports.  The failure to file any required report could 
result in a contempt citation, the assessment of fines against 
the Company, or an action by the Securities and Exchange 
Commission to deregister the Company's common stock. As of June 
30, 1998 the Company was current with all filings with the SEC 
through the end of the fiscal year December 31, 1997 and the 
quarter ending March 30, 1998. 

The Company filed a complaint on July 8, 1997 in the United 
States District Court for the Western District of Oklahoma 
against Jostens Learning Corporation ("Jostens").  The complaint 
alleges, among other things, that Jostens has improperly adopted 
and used the mark "A+dvantage" in connection with its 
educational computer programs.  The complaint alleges, among 
other things, that Jostens' confusingly similar mark has caused 
damage to the Company. The complaint requests, among other 
things, monetary damages, and injunctive relief. On June 24, 1998 
the Company and Jostens reached a verbal and the Court accepted a 
mediated settlement without proceeding to trial, in a resolution 
favorable to the Company.  Terms of this agreement will be 
disclosed upon execution of a formal, written settlement 
agreement.


Item 2.     Changes in Securities

None

Item 3.     Default Upon Senior Securities

Omitted from this report as inapplicable.

Item 4.     Submission of Matters to Vote of Securities Holders

On May 29, 1998 the Company held its annual meeting of 
shareholders. There were five proposals submitted to the 
shareholders for approval; one of which was the election of 
directors. The following four nominees, who were all of the 
current directors of the Company, were re-elected to serve on the 
Board of Directors until their successors are duly elected and 
qualified: Jeffrey E. Butler; Monty C. McCurry; Newton Fink; and 
Stephen E. Prust.

The following is a tabulation with respect to the votes for each 
nominee for office:

                                 FOR          WITHHELD
                              ----------      --------
Jeffrey E. Butler             10,540,836        1,944

Monty C. McCurry              10,541,176        1,604

Newton Fink                   10,540,920        1,860

Stephen E. Prust              10,540,920        1,860

The second proposal submitted to the shareholders at the annual 
meeting held on May 29, 1998 was a proposal to amend the 
Company's Articles of Incorporation to increase the 
Company's authorized common stock from 15,000,000 shares to 
30,000,000 shares. The proposal was approved by the following 
vote:

FOR              AGAINST           ABSTAIN
----------       -------           -------
10,487,603        43,029            12,148

The third proposal submitted to the shareholders at the annual 
meeting held on May 29, 1998 was a proposal to ratify the 
selection of Steakley, Gilbert & Bozalis, P.C. as the independent 
accountants for the Company for the fiscal year ending December 
31, 1998. The selection of Steakley, Gilbert & Bozalis, P.C. was 
ratified by the following vote:

FOR              AGAINST           ABSTAIN
----------       -------           -------
10,525,738         6,188            10,854

The fourth proposal submitted to the shareholders at the annual 
meeting held on May 29, 1998 was a proposal to approve the 
Company's Director's Stock Option Plan. The Director's Stock 
Option Plan was approved by the following vote:

FOR              AGAINST            ABSTAIN          NOT VOTED
----------       -------            -------          ---------
10,004,464        20,020             16,374            501,922

The fifth proposal submitted to the shareholders at the annual 
meeting held on May 29, 1998 was a proposal to approve the 
Company's Stock Option Plan for Employees. The Stock Option Plan 
for Employees was approved by the following vote:

FOR              AGAINST            ABSTAIN           NOT VOTED
----------       -------            -------           ---------
10,013,816        14,600             12,442             501,922


Item 5.     Other Information

Omitted from this report as inapplicable.

Item 6.     Exhibits and Reports on Form 8-K

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

Exhibit No.			Description

Exhibit 3.1*            Amended and Restated Articles of         
                        Incorporation of The American 
                        Education Corporation

Exhibit 3.2**           Bylaws of The American Education 
                        Corporation

Exhibit 4***            Form of Stock Certificate 

Exhibit 10.1****        Promissory Note of The American Education 
                        Corporation to Rich Carle

Exhibit 10.2*****       Directors' Stock Option Plan

Exhibit 10.3******      Stock Option Plan for Employees

Exhibit 10.4****        Loan Agreement between The American 
                        Education Corporation and 
                        UMB Oklahoma Bank

Exhibit 10.5****        Promissory Note between The American 
                        Education Corporation and 
                        UMB Oklahoma Bank

Exhibit 27.1*****	      Financial Data Schedule (filed only 
                        electronically with the SEC)


* Incorporated by reference to the same numbered exhibit in the 
Current Report on Form 8-K filed by the Company on June 25, 1998.

** Incorporated by reference to the registration statement on 
Form S-18 (File no. 2-78660-D) of the Company

***Previously filed with the Securities and Exchange Commission 
as an exhibit to the Company's registration statement on form S-
18 (File no. 2-78660-D).

**** Filed herewith.

***** Incorporated by reference to Exhibit B to the Definitive 
Proxy Statement filed on April 24, 1998.

****** Incorporated by reference to Exhibit C to the Definitive 
Proxy Statement filed on April 24, 1998.

B. Reports on Form 8-K

On June 25, 1998 the Company filed a Current Report on Form 8-K 
regarding the shareholders' approval of an amendment to the 
Company's Articles of Incorporation. Attached, as Exhibit 3.1 to 
such Form 8-K was a copy of the Amended and Re-stated Articles of 
Incorporation of the Company.

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

August 6, 1998					

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


Exhibit 10.1
Promissory Note of The American Education Corporation to 
Rich Carle

THE PAYMENT OF PRINCIPAL AND INTEREST ON THIS NOTE IS SUBJECT TO 
CERTAIN RECOUPMENT PROVISIONS SET FORTH IN AN AGREEMENT AND 
PLAN OF MERGER DATED AS OF FEBRUARY 26, 1998 (THE "PURCHASE 
AGREEMENT") BETWEEN THE MAKER OF THIS NOTE AND THE PERSON TO 
WHOM THIS NOTE ORIGINALLY WAS ISSUED. THIS NOTE WAS ORIGINALLY 
ISSUED ON FEBRUARY 26, 1998, AND HAS NOT BEEN REGISTERED UNDER 
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES 
LAWS. THE TRANSFER OF THIS NOTE IS SUBJECT TO CERTAIN 
RESTRICTIONS SET FORTH IN THE PURCHASE AGREEMENT. THE ISSUER OF 
THIS NOTE WILL FURNISH A COPY OF THESE PROVISIONS TO THE HOLDER 
HEREOF WITHOUT CHARGE UPON WRITTEN REQUEST.

PROMISSORY NOTE

$50,000.00                                                                      
Dated: February 26, 1998

FOR VALUE RECEIVED, The American Education Corporation, a 
Colorado corporation (the "Maker"), promises to pay to Rich Carle 
(the "Payee") the principal sum of Fifty Thousand Dollars 
($50,000.00), as set forth herein.

This Note shall be payable in twenty-four (24) equal monthly 
installments of principal and interest in the amount of $2,307.24 
commencing April 5, 1998, and continuing on the 5th day of each 
month thereafter through and including March 5, 2000. Payments of 
principal and interest are to be made in lawful money of the 
United States of America. All payments hereunder shall be applied 
first to interest and then to principal. Payments shall be made 
within ten (10) business days of the date specified above.

Subject to Maker's right of set-off, Maker's failure to pay when 
due any principal of or interest on this Note or any other 
amounts payable by Maker hereunder shall constitute an Event of 
Default under this Note, unless Maker has received approval 
from Payee to make a late payment.

Payee may pursue any rights or remedies as the holder of this 
Note independently or concurrently. All rights, remedies or 
powers conferred upon Payee shall, to the extent not prohibited 
by law, be deemed cumulative and not exclusive of any others 
thereof, or of any other rights, remedies, or powers available to 
Payee. No delay or omission of Payee to exercise any right, 
remedy or power shall impair the same or be construed to be a 
waiver of any Event of Default or an acquiescence thereto. No 
waiver of any Event of Default shall extend to or affect any 
subsequent Event of Default or impair any rights, remedies or 
powers available to Payee. No single or partial exercise of 
any right, remedy or power shall preclude other or future 
exercise thereof by Payee.

Maker may prepay the unpaid balance of this Note in whole or in 
part without penalty at any time and from time to time.

In any action brought by a party hereto to enforce the obligation 
of any other party hereto, the prevailing party shall be entitled 
to collect from the other party to such action such party's 
reasonable attorneys fees, court costs and other expenses 
incidental to such litigation.

This Note shall be construed, enforced and governed in accordance 
with the laws of the State of California.

Without limiting any rights of Maker at law or equity, Maker 
shall have the right to reduce any amounts due by Maker to Payee 
under this Note by the amount owed, at any time and from time to 
time, by Payee to Maker under that certain Agreement and Plan of 
Merger, dated as of February 26,1998. ALL SUBSEQUENT HOLDERS OF 
THIS NOTE SHALL TAKE THIS NOTE SUBJECT TO MAKER'S RIGHT OF 
SETOFF.

THE AMERICAN EDUCATION CORPORATION, a Colorado Corporation  

BY: /s/Jeffrey E. Butler, Sr.
       President


Exhibit 10.4
Loan Agreement between The American Education Corporation and 
UMB Oklahoma Bank


LOAN AGREEMENT

BORROWER-NAME and ADDRESS

The American Education Corporation
7506 N. Broadway Ext. Ste. 505
Oklahoma City, OK	73116

DATE OF AGREEMENT   06/09/98

LENDER NAME AND ADDRESS

UMB OKLAHOMA BANK
P 0 BOX 82427
OKLAHOMA CITY, OK 73148-0427

The undersigned Borrower, with principal office, place of record-
keeping and mailing address as shown above, hereby applies to the 
Lender named above for the following described loan and/or 
extensions of credit:

A Loan dated JUNE 9, 1998 in the amount of $500,000.00, with a 
final maturity of APRIL 30, 1999, and all renewals, 
extensions, and/or increases thereof.

In consideration of Lender making such loan(s) and/or credit 
extensions, or any part or renewals thereof, Borrower agrees 
with Lender as follows:

I. REPRESENTATIONS ND WARRANTIES. Borrower represents and 
warrants to Lender that:

A. Borrower is duly organized, existing and in good standing    
   under the laws of the state indicated above;

B. The borrowing hereunder and the execution, delivery and   
   performance by Borrower of this Agreement, any promissory 
   note payable to Lender or its order, or any other agreements    
   contemplated in connection herewith have been duly 
   authorized by all necessary action of Borrower and are not in   
   contravention of any law, rule or regulation or of the terms 
   of the Borrower's Articles of Incorporation (or Partnership)    
   or Bylaws, or of any agreement or instrument to which 
   Borrower is a party or by which Borrower may be bound;

C. All balance sheets, income statements, other financial 
   information and other representations which have been or may 
   hereafter be furnished to Lender fairly represent the   
   financial condition of Borrower as of the date and for the     
   period shown, have been prepared in conformity with generally 
   accepted accounting principles applied on a basis consistent 
   with that of previous such statements and include all of   
   Borrower's contingent liabilities; all other information, 
   reports, documents, papers and data furnished to Lender are or 
   shall be at the time furnished accurate and correct in all 
   material respects and complete insofar as completeness may be 
   necessary to give Lender a true and accurate knowledge of the 
   subject matter; there has been no material change in the   
   financial condition of Borrower since the effective date of   
   the last furnished financial information which has not been 
   reported to Lender in writing;

D. No litigation or governmental proceeding is pending or, to the  
   knowledge of the Borrower or any of its officers, threatened   
   against or affects Borrower which may result in any      
   material adverse change in Borrower's business, properties or  
   operation;

E. None of Borrower's assets are subject to any lien, security 
   interest, or other encumbrance except as has been disclosed in 
   writing to Lender; and

F. Proceeds of loans and extensions of credit arising hereunder 
   will be used only for the purposes shown below:

Working Capital

Form 04 0-M 1 (1/96)
@ Copyright a/89 American Bank Systems

II. AFFIRMATIVE AGREEMENTS. Borrower agrees to:

A. Maintain adequate records, in accordance with generally 
   accepted accounting practices, of all transactions so that 
   at any time and from time to time the true and complete   
   financial condition of Borrower may be readily determined;   
   make available at Lender's request such records for Lender's 
   inspection; furnish promptly to Lender and in such form as 
   Lender may request any additional financial or other  
   information concerning the assets, liabilities, operations and 
   transactions of Borrower, and permit Lender to make and obtain 
   copies of any such records or information;

B. Deliver to Lender within 45 days after the close of each 
   quarterly period of each fiscal year (except the last such 
   quarterly period in each fiscal year) an interim financial   
   statement consisting of Borrower's balance sheet, profit and 
   loss, and reconciliation of surplus reflecting the financial 
   condition of Borrower at the close of the quarter and the 
   results of operation for the quarter and since the beginning   
   of the fiscal year; prepare such financial statements in 
   conformity with generally accepted accounting principles on a  
   basis consistent with that of the preceding fiscal year, 
   such statements to be certified as true and correct by the 
   chief financial officer of Borrower and to include such other 
   financial and other information as Lender may reasonably   
   request;

C. Deliver to Lender within 90 days after the close of each 
   fiscal year of Borrower a copy of the annual audit report of 
   Borrower, prepared in conformity with generally accepted 
   accounting principles and applied on a basis consistent with 
   that of the preceding fiscal year, and signed by independent 
   certified public accountants satisfactory to Lender;

D. Deliver to Lender within 30 days after the close of each 
   fiscal year a certificate signed by Borrower's chief financial 
   officer containing a statement as to whether or not, to the   
   knowledge of such officer, a Default as hereinafter defined 
   has occurred and is continuing, or whether there exists any    
   event or condition which might become a Default after the 
   lapse of time, and if the certificate shows that a Default has 
   occurred and is continuing or such an event or condition 
   exist, the certificate shall also specify what steps are being 
   taken by Borrower to rectify the same;

E. Inform Lender promptly of any litigation, or of any claim or 
   controversy which might become the subject of litigation, 
   against Borrower or affecting any of Borrower's property, if 
   such litigation or potential litigation, in the event of an 
   unfavorable outcome, would have a material adverse effect on   
   Borrower's financial condition or might cause a Default;

F. Permit officers of Lender to visit and inspect any of the  
   properties of Borrower;

G. Pay promptly when due any and all taxes, assessments and 
   governmental charges upon Borrower or against any of 
   Borrower's property, unless the same is being contested in  
   good faith by appropriate proceedings and reserves deemed 
   adequate by Lender have been established therefor;

H. Pay promptly all lawful claims whether for labor, materials or 
   otherwise, which might or could, if unpaid, become a lien 
   or charge on any property or assets of Borrower, unless and to 
   the extent only that the same are being contested in good 
   faith by appropriate proceedings and reserves deemed adequate   
   by Lender have been established therefor;

1. Maintain existence of Borrower and promptly and properly 
   comply with all laws, statutes, ordinances and governmental 
   regulations applicable to it or to any of its property, business 
   operations and transactions;

Maintain with financially sound and reputable insurance companies 
or associations approved by Lender, insurance of the kinds and 
covering the risks and in the amounts usually carried by 
companies engaged in businesses similar to that of Borrower, 
which insurance in all events shall be satisfactory to Lender, 
and, at Lender's request deliver to Lender evidence of the 
maintenance of such insurance; 

Maintain all of its tangible property in good condition and 
repair, and make all necessary replacements thereof and operate 
the same properly and efficiently; and 

L. Preserve and maintain all licenses, privileges, franchises,  
   certificates and the like necessary for the operation of 
   Borrower's business.

Form 04 0708 1 (1/96)	Page 2	
Copyright 
9/89 American Bank Systems

III. NEGATIVE AGREEMENTS. Unless the prior written consent of 
     Lender has been obtained, Borrower agrees NOT to:

Permit its net working capital, being the excess of current 
assets over current liabilities, to be less than: 	N/A

Permit the ratio of current assets to current liabilities to be 
less than: 	N/A

Permit the net worth of Borrower to be less than: Two Million 
Seven Hundred Fifty Thousand 'Dollars ($2,750,000.00)

Permit the ratio of its total liabilities to net worth to exceed: 
I - 0: 1

Invest in fixed assets in any fiscal year an amount in excess of:   
N/A

Pay or contract to pay in any year in the aggregate any salaries, 
commissions, bonuses, or other compensation, either current or to 
be deferred, in excess of the following amounts for the following 
named persons or groups:

NAME OF PERSON OR GROUP                          AMOUNT

Declare or pay any dividends (other than stock dividends 
consisting of its own stock but not the stock of any subsidiary 
or affiliate) on any of its outstanding stock except as set forth 
herein;

Make any loans or advances or sell any of its accounts receivable 
with or without recourse, except as set forth herein;

Make any loans or advances to any officer or employee of Borrower 
or to any officer or employee of an affiliate or subsidiary 
except as set forth herein;

Incur or assume any indebtedness for borrowed money except only 
money borrowed from Lender pursuant to this agreement;

Endorse, guarantee or otherwise become surety for or contingently 
liable upon the obligations of any person, firm or corporation, 
provided, however, that the foregoing shall not apply to 
endorsements of negotiable instruments by borrower in the 
ordinary course of business;

Mortgage, assign, hypothecate, grant a security interest in, or 
encumber any of Borrower's assets except to Lender, provided, 
however, the foregoing shall not apply to liens for taxes not 
delinquent or being contested in good faith, mechanic's and 
materialmen's liens with respect to obligations not overdue or 
being contested in good faith, and liens resulting from deposits 
to secure the payment of workmen's compensation or other Social 
Security or to secure the performance of bids or contracts
in the ordinary course of business;

Reorganize, merge, or consolidate with, or acquire all or 
substantially all of the assets of any other company, firm or 
association, or make any other substantial change in the 
capitalization of Borrower or the general character of its 
business;

Sell any of its assets used or useful in its business, except in 
the regular course of business;

Sell any of its assets with the understanding or agreement that 
such assets shall be leased back to Borrower;

Enter into any lease in which the annual rental exceeds:

Permit the aggregate of all of its lease payments in any twelve-
month period to exceed:

Form 04 0708 1 (L/96)	Page 3      
(D Copyright 9/89 American Bank Systems


IV. EVENTS OF DEFAULT. Borrower shall be in Default under this 
Agreement upon the happening of any one or more of the following 
events or conditions, herein called "Default":

A. Any payment required by any note or obligation of Borrower to    
   Lender or to others is not made when due or in accordance with    
   the terms of the applicable contract, not in dispute.

B. Borrower defaults in the performance of any covenant, 
   obligation, warranty or provision contained in this or in any 
   agreement to which Borrower is a party or in any note, 
   obligation, contract or undertaking of Borrower to or with 
   Lender or others.

C. Any warranty, representation, financial information or 
   statement made or furnished to Lender by or in behalf of 
   Borrower proves to have been false in any material respect 
   when made or furnished.

D. The making of any levy against or seizure, garnishment or 
   attachment of any property of Borrower.

E. Failure by Borrower to pay any indebtedness at maturity, or 
   the occurrence of any event which results in acceleration of   
   the maturity of any obligation of Borrower to ender or to  
   others under any promissory note, agreement, or undertaking.

F. Death, dissolution or termination of existence of Borrower.

G. Appointment of a receiver over any part of the property of 
   Borrower, the assignment of property of Borrower for the 
   benefit of creditors, or the commencement of any proceedings 
   under any bankruptcy or insolvency laws by or against Borrower   
   or any guarantor or surety of Borrower.

Upon the occurrence or the existence of a Default, Lender may, at 
its option and without notice or demand to Borrower and without 
demand or presentment which are hereby waived, immediately 
declare due and payable all liabilities and obligations of 
Borrower to Lender, cease extending credit to Borrower, and 
exercise any and all rights and remedies possessed by Lender.

V. GENERAL PROVISIONS. Borrower agrees to the following:

A. No modification, consent or waiver of any provision of this 
   Agreement, nor consent by Lender to any departure by Borrower 
   therefrom, shall be effective unless the same shall be in  
   writing and signed by an officer of Lender, and then shall be 
   effective only in the specific instance and for the purpose 
   for which given;

B. No act, delay or omission, including Lender's waiver of remedy 
   because of any Default hereunder, shall constitute a waiver of   
   any of Lender's rights and remedies under this Agreement or   
   any other agreement between the parties. All rights and  
   remedies of Lender are cumulative and may be exercised singly 
   or concurrently, and the exercise of any one or more remedies 
   will not be a waiver of any other. No waiver, change, 
   modification or discharge of any of Lender's rights or of 
   Borrower's duties as so specified or allowed will be effective 
   unless in writing and signed by a duly authorized officer of 
   Lender, and any such waiver will not be a bar to the exercise 
   of any right or remedy on any subsequent Default;

C. This Agreement shall inure to the benefit of the successors 
   and assigns of Lender and shall be binding upon the heirs, 
   executors, administrators, successors and assigns of 
   Borrower;

D. Lender at any time at its option may pledge, transfer or 
   assign its rights under this Agreement in whole or in part, 
   and any pledgee, transferee, or assignee shall have all the 
   rights of Lender as to the rights or parts thereof so pledged,   
   transferred or assigned, provided, however, that Borrower  
   shall not assign any of its rights hereunder except with the   
   written consent of Lender;

E. If more than one Borrower executes this Agreement, their 
   responsibilities hereunder shall be joint and several and the   
   reference to Borrower herein shall be deemed to refer to 
   each borrower; 

F. If any provision of this Agreement shall for any reason be 
   held to be invalid or unenforceable, such invalidity or 
   unenforceability shall not affect any other provision 
   hereof, and this Agreement shall be construed as if such   
   invalid or unenforceable provision has never been contained 
   herein;

G. Any property, tangible or intangible, of Borrower in  
   possession of Lender at any time, or any indebtedness due from  
   Lender to Borrower, and any deposit or credit balances due 
   from Lender to Borrower, or any of the foregoing of any party 
   hereto, is pledged to secure the undertakings of Borrower 
   hereunder and may at any time while Borrower is indebted to 
   Lender be appropriated, held or applied toward the payment of 
   any obligation of Borrower to Lender; and

H. Borrower may at any time prepay any or all principal and/or 
   accrued interest without penalty.

VI. TERMINATION. This Agreement shall terminate, except as 
    otherwise provided herein, on the following date:

Any obligation of Lender to extend credit or to renew outstanding 
obligations of Borrower shall terminate on the termination date 
indicated above. However, such termination date shall not have 
application to borrower in the event that any obligation of 
Borrower to Lender is unpaid, in which event all of the 
provisions of this Agreement shall remain in full force and 
effect as they relate to Borrower until such obligation and all 
other liabilities of Borrower to Lender have been paid in full.

VII. ADDITIONAL PROVISIONS. Borrower agrees to the additional 
provisions attached hereto and made a part of this Agreement, 
which are controlling to the extent of any conflict with the 
preceding provisions.

LENDER SIGNATURE		         BORROWER(S)  SIGNATURE(S)
                           The American Education Corporation
UMB OKLAHOMA BANK

By: Richard J. Lehrter, EVP      Jeffrey E. Butler, Sr.
     	                           President  

Form 04 0708 1 (3/96)	
Page 4
@Copyright 8/89 

American Bank System;

Exhibit 10.5
Promissory Note between The American Education Corporation and 
UMB Oklahoma Bank

CUSTOMER COPY
PROMISSORY NOTE - Fixed or Variable Rate - Commercial 
REVOLVING

DEBTOR(S) NAME AND ADDRESS
The American Education Corporation
7506 N. Broadway Ext., Ste. 505
Oklahoma City, OK 73116

Accrued interest due and payable MONTHLY, beginning 06/30/98 and
MONTHLY thereafter, with outstanding principal balance plus 
unpaid accrued interest due and payable on 04/30/99.

NOTE NUMBER     DATE OF NOTE      MATURITY DATE
093088            06/09/98          04/30/99

PRINCIPAL AMOUNT                   $500,000.00

OFFICER
RJL

FIXED INTEREST RATE OF _____% PER ANNUM. INTEREST PAYABLE:
VARIABLE INTEREST RATE	of 0.00% ABOVE/BELOW 
UMB KC Prime Floating
INITIAL RATE 8.500 %INTEREST PAYABLE MONTHLY

COLLATERAL CATEGORIES:  
Accounts, Inventory, and General intangibles 

SOCIAL SECURITY/TIN NUMBER: 
840838184

PURPOSE:  
WORKING CAPITAL

PROMISE TO PAY. For value received, the undersigned Debtor, 
whether one or more, and jointly and severally if more than one, 
agrees to the terms of this Note and promises to pay to the order 
of the Lender named below at its place of business as indicated 
in this Note or at such other places as may be designated in 
writing by Lender, the Principal Amount of this Note together 
with interest on the unpaid Principal Amount until Maturity 
at the per annum interest rate or rates stated above and 
according to the Payment Terms stated in this Note. Interest on 
this Note is calculated on the actual number of days elapsed on a 
basis of a 360-day year unless otherwise indicated above. For 
purposes of computing interest and determining the date principal 
and interest payments are received, all payments will be deemed 
made only when received in collected funds. Payments are applied 
first to accrued and unpaid interest and other charges, and then 
to unpaid Principal Amount. In this Note, Debtor" includes any 
party liable under this Note, including endorsers, co-makers, 
guarantors and otherwise, and Lender" includes all subsequent 
holders.

VARIABLE RATE. If this is a Variable Rate transaction as 
indicated above, the interest rate shall vary from time to time 
with changes (whether increases or decreases) in the Index Rate 
shown above. The interest rate on this Note will be the Index 
Rate plus a Margin, if any, as indicated above. Each change will 
become effective on the same date the Index Rate changes unless a 
different effective date is indicated above. If the Index Rate is 
Lender's base or prime rate, it is determined by Lender in its 
sole discretion, primarily on a basis of its cost of funds, is 
not necessarily the lowest rate Lender is charging its customers, 
and is not necessarily a published rate.

PAYMENTS NOT MADE WHEN DUE. Any principal and/or interest amount 
not paid when due shall bear interest at a rate 6 percent per 
annum greater than the per annum interest rate prevailing on this 
Note at the time the unsaid amount came due, but in no event at a 
rate less than 15 percent per annum. In addition or in the 
alternative to the interest rate provided for in this paragraph 
Lender may assess a charge of $10.00 times the number of days 
late to cover cost of past due notices and other added expenses. 
In no event shall the interest rate and related charges either 
before or after maturity be greater than permitted by law.

ALL PARTIES PRINCIPAL. All Debtors shall each be regarded as a 
principal and each Debtor agrees that any party to this Note, 
with Lender's approval and without notice to any other party may 
from time to time renew this Note or consent to one or more 
extensions or deferrals of the Maturity date for any term(s) or 
to any other modification(s), and all debtors shall be liable in 
same manner as on the original note.

ADVANCES AND PAYMENTS. It is agreed that the sum of all advances 
under this Note may exceed the Principal Amount as shown above, 
but the unpaid balance shall never exceed said Principal Amount. 
Advances and payments on this Note shall be recorded on records 
of Lender and such records shall be prima facie evidence of such 
advances, payments and unpaid principal balance. Subsequent 
advances and the procedures described in this Note shall not be 
construed or interpreted as granting a continuing line of credit 
for Principal Amount. Lender reserves the right to apply any 
payment by Debtor, or for account of Debtor, toward this Note or 
any other obligation of Debtor to Lender.

PREPAYMENT. Except as otherwise provided in this Note, Debtor 
shall have the right to prepay all or any part of principal due 
under this Note at any time without penalty, subject to the 
following conditions: (a) all interest must be paid through the 
date of any prepayment; and (b) if this Note provides for monthly 
other periodic payments, there will be no changes in the due 
dates or amounts following any partial prepayment unless 
Lender agrees to such changes in writing.

COLLATERAL. This Note and all other obligations of Debtor to 
Lender, including renewals and extensions, are secured by all 
collateral securing this Note and by all other security interests 
and mortgages previously or later granted to Lender and by all 
money, deposits and other property owned by any debtor and in 
Lender's possession or control.

ACCELERATION. At option of Lender, the unpaid balance of this 
Note and all other obligations of Debtor to Lender, whether 
direct or indirect, absolute or contingent, now existing or later 
arising, shall become immediately due and payable without notice 
or demand, upon or after the occurrence or existence of any of 
the following In events or conditions: (a) Any payment required 
by this Note or by any other note or obligation of Debtor to 
Lender or to others is not made when due, or any event or 
condition occurs or exists which results in acceleration of the 
maturity of any Debtor's obligation to Lender or to others under 
any promissory note, agreement or undertaking; (b) Debtor 
defaults in performing any covenant, obligation, warranty or 
provision contained in any loan agreement or in any instrument or 
document securing or relating to this Note or any other note or 
obligation of Debtor to Lender or to others; (c) any warranty, 
representation, financial information or statement made or 
furnished to Lender by or on behalf of Debtor proves to have been 
false in any material respect when made, or furnished; (d) any 
levy, seizure, garnishment or attachment is made against any 
asset of any Debtor; (e) Lender determines, at any time and in 
Lender's sole discretion, that the prospect or payment of this 
Note is impaired; (f) whenever, in Lender's sole judgment, 
the collateral for the debt evidenced by this Note becomes 
unsatisfactory or insufficient either in character or value and, 
upon request, Debtor fails to provide additional collateral as 
required by Lender; (g) all or any part of the collateral for the 
debt evidenced by this Note is lost, stolen, substantially 
damaged or destroyed; (h) death, incompetency, dissolution, 
change in ownership or senior management, or termination of 
existence of any Debtor; or (i) a receiver is appointed over all 
or part of any Debtor's property, or any Debtor makes an 
assignment for the benefit of creditors, files for relief under 
any bankruptcy or insolvency laws , or becomes subject to an 
involuntary proceeding under such laws.

RIGHT OF OFFSET. Except as otherwise restricted by law, any 
indebtedness due from Lender to Debtor, including, without 
limitation, any deposits or credit balances due from 
Lender, is pledged to secure payment of this Note and any other 
obligation to Lender of Debtor, and may at any time while the 
whole or any part of such obligation(s) remain(s) unpaid, either 
before or after Maturity of this Note, be set off, appropriated, 
held or applied toward the payment of this Note or any other 
obligation to Lender by any Debtor.

ADDITIONAL PROVISIONS. (1) Debtor agrees, if requested, to 
furnish to Lender copies of income tax returns as well as balance 
sheets and income statements for each fiscal year following Date 
of Note and at more frequent intervals as Lender may require. 
(2) No waiver by Lender of any payment or other right under this 
Note or any related agreement or documentation shall operate as a 
waiver of any other payment or right. All Debtors waive 
presentment, notice of acceleration, notice of dishonor and 
protest and consent to substitutions, releases and failure to 
perfect as to collateral and to additions or releases of any 
Debtor. (3) This Note and the obligations evidenced by it are to 
be construed and governed by the laws of the state indicated in 
Lender's address shown in this Note. (4) All Debtors agree to pay 
costs of collection, including, as allowed by law, an attorney's 
fee equal to a minimum of 15% of all sums due upon default or 
such other maximum fee as allowed by law. (5) All parties signing 
below acknowledge receiving a completed copy of this Note and 
related documents, which contain the complete and entire 
agreement between Lender and any party liable for payment under 
this Note. No variation, condition, modification, change or 
amendment to this Note or related documents shall be binding 
unless in writing and signed by all parties. No legal 
relationship is created by the execution of this Note and related 
documents except that of debtor and creditor or as stated in 
writing.

LENDER NAME AND ADDRESS 
UMB OKLAHOMA BANK 	

DEBTOR(S)  SIGNATURE(S)
The American Education Corporation
P 0 BOX 82427			
OKLAHOMA CITY, OK 73148-0427	

Jeffrey E. Butler, Sr., 
President