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, 1996

/ /     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) 
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from  ________ to ________

Commission File #0-11078

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

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

84-0838184
----------
(IRS Employer Identification number)

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

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

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

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

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

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

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

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

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


THE AMERICAN EDUCATION CORPORATION

INDEX
                                                                              
                                                             Page No.
                                                             --------

PART 1 - FINANCIAL INFORMATION

Item 1     Balance Sheets                                        3
           June 30, 1996 and December 31, 1995

           Statements of Operations                  
           For the Quarter Ended June 30, 1996                   4
           and for the Quarter Ended June 30, 1995

           For the Six Months Ended June 30, 1996                5
           and for the Six Months Ended June 30, 1995

           Statements of Cash Flows                              6
           For the Six Months Ended June 30, 1996
           and for the Six Months Ended June 30, 1995

           Notes to Interim Financial Statements                 7


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


PART II - OTHER INFORMATION                                     12

SIGNATURE PAGE                                                  13


PART 1 - FINANCIAL INFORMATION
THE AMERICAN EDUCATION CORPORATION
BALANCE SHEETS

<TABLE>
                                                                                                                       
                                                      June 30      December 31
                                                        1996           1995 
                                                      -------      -----------
ASSETS
<S>                                                  <C>           <C>                                   
Current assets:
   Cash                                              $   58,555    $   56,882
   Accounts receivable, net of allowance for
     uncollectible accounts of $28,822                  788,098       130,352
   Inventories, net of impairment reserve of $10,000     17,607        19,986
   Prepaid expenses and deposits                          5,554         7,147
                                                     ----------    ----------
     Total current assets                               869,814       214,367

   Property and equipment, at cost                      147,383       135,115
     Less accumulated depreciation and amortization    (113,167)      (99,641)
                                                     -----------   -----------   
       Net property and equipment                        34,216        35,474
                                                     -----------   -----------
Other assets:
   Capitalized software costs, net of accumulated
     amortization of $866,786 and $745,989              314,919       312,364
   Goodwill, net of accumulated amortization 
     of $177,400 and $154,264                            69,400        92,536
                                                     -----------   -----------
       Total other assets                               384,319       404,900
                                                     -----------   -----------  
Total Assets                                         $1,288,349    $  654,741
                                                     ===========   ===========

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:
   Accounts payable and accrued liabilities          $  842,521    $1,063,384
   Current maturities of notes payable
     and long term debt                                  70,000       726,989
                                                     ----------    ----------
       Total current liabilities                        912,521     1,790,373

Long-term debt                                           60,000        65,000
                                                     ----------    ----------
Total liabilities                                       972,521     1,855,373

Commitments and contingencies                                 -             -

Stockholders' Deficit
   Preferred Stock, $.001 par value; Authorized - 
   50,000,000 shares;
     issued and outstanding - none                            -             -
   Common Stock, $.025 par value; Authorized - 
   15,000,000 shares;
     issued and outstanding - 12,147,333 and 
     8,570,865 shares.                                  293,526       214,272
   Additional paid-in capital                         5,107,000     4,083,616
   Retained deficit                                  (5,084,698)   (5,498,520)
                                                     -----------   -----------
       Total stockholders' deficit                      315,828    (1,200,632)
                                                     -----------   -----------
Total liabilities and stockholders' equity           $ 1,288,349   $  654,741

</TABLE>

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

THE AMERICAN EDUCATION CORPORATION
STATEMENTS OF OPERATIONS
QUARTERS ENDED JUNE 30, 1996 AND 1995

<TABLE>
                                                                                                                
                                                   1996          1995 
                                                   ----          ----
<S>                                             <C>           <C>
Net Sales                                       $1,044,698    $  351,224
Cost of goods sold                                 141,971        89,948
                                                ----------    ----------
   Gross profit                                    902,727       261,276

Operating expenses:
   Sales and marketing                             151,351        85,194
   General and administrative                      203,973       194,805
   Amortization of capitalized software costs       61,957        53,009
                                                ----------    ----------
   Total operating expenses                        417,281       333,008

   Operating earnings (loss)                       485,446       (71,732)
                                                ----------    -----------
Other income (expense):
   Miscellaneous income                             27,065              -
   Interest expense                                (18,516)       (24,996)
   Factoring costs                                  (6,467)        (7,320)
                                                -----------   ------------
   Net earnings (loss)                          $  487,528    $  (104,048)
                                                ===========   ============
Weighted average common shares outstanding       9,128,089      8,397,218
                                                ===========   ============
Earnings (loss) per share                       $    0.053    $    (0.012)
                                                ===========   ============

</TABLE>

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


THE AMERICAN EDUCATION CORPORATION
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995

<TABLE>

                                                      1996           1995 
                                                      ----           ----
<S>                                               <C>            <C>
Net Sales                                         $ 1,359,937    $   517,441
Cost of goods sold                                    198,599        130,133
                                                  -----------    -----------
   Gross profit                                     1,161,338        387,308
 
Operating expenses:
   Sales and marketing                                236,070        137,447
   General and administrative                         369,199        374,044
   Amortization of capitalized software costs         120,797        106,018
                                                  -----------    -----------
   Total operating expenses                           726,066        617,509
                                                  -----------    ------------
   Operating earnings (loss)                          435,272       (230,201)
                                                  -----------    ------------
Other income (expense):
   Miscellaneous income                                27,120              -
   Interest expense                                   (34,980)       (52,892)
   Factoring costs                                    (13,588)       (12,416)
                                                   -----------   ------------
   Net earnings (loss)                             $  413,824    $  (295,509)
                                                   ===========   ============
Weighted average common shares outstanding          9,128,089      8,397,218
                                                   ===========   ============
Earnings (loss) per share                          $    0.045    $    (0.035)
                                                   ===========   ============

</TABLE>

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


THE AMERICAN EDUCATION CORPORATION
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995


<TABLE>
                                                                                                                           
                                                       1996           1995 
                                                       ----           ----
<S>                                                <C>            <C>
Cash flows from operating activities:
   Net earnings (loss)                             $  413,824     $  (295,509)
   Adjustments to reconcile net loss to net cash
   provided by (used in) operating activities:
     Depreciation and amortization                    157,459         141,856
     Gain on debt settlement                          (27,060)              -
     Reserve for bad debts                             49,534         (10,000)
 
   Changes in assets and liabilities:
     Accounts receivable                             (707,283)        (16,000)
     Inventories                                        2,379               -
     Prepaid expenses and other                         1,593             800
     Accounts payable and accrued liabilities         124,579         109,000
                                                     ---------      ----------  
     Net cash provide by (used in) operating 
     activities                                        15,025         (69,853)

Cash flow from investing activities:
   Purchase of capitalized software costs            (123,352)        (70,000)
   Purchase of property and equipment                 (12,268)         (6,000)
                                                     ---------       ---------
   Net cash used in investing activities             (135,620)        (76,000)

Cash flows from financing activities:
   Proceeds received from issuance of debt             42,268         150,000
   Principal payment on debt                                -          (6,500)
   Issuance of common stock for cash                   80,000               -  
                                                     ---------       ---------
   Net cash provided by financing activities          122,268         143,500
                                                     ---------       ---------
Net increase (decrease) in cash                         1,673          (2,353)

Cash at beginning of the period                        56,882           2,746

Cash at end of the period                            $ 58,555        $    393
                                                     =========       =========
Supplemental Cash Flow Disclosures:
   Interest paid                                     $  5,600        $ 15,050
                                                     =========       =========

</TABLE>

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


THE AMERICAN EDUCATION CORPORATION
NOTES TO INTERIM FINANCIAL STATEMENTS
FOR THE PERIODS ENDED JUNE 30, 1996 AND 1995

1.  BASIS OF PRESENTATION

The interim financial statements at June 30, 1996, and 
for the three month and six month periods ended June 
30, 1996, and 1995 are unaudited, but include all 
adjustments which the Company considers necessary for a 
fair presentation.  The December 31, 1995, balance 
sheet was derived from the Company's audited financial 
statements.

The accompanying unaudited financial statements are for 
the interim periods and do not include all disclosures 
normally provided in annual financial statements and 
should be read in conjunction with the Company's 
audited financial statements included in the Company's 
Form 10-KSB for the year ended December 31, 1995.  The 
accompanying unaudited interim financial statements for 
the three month and six month periods ended June 30, 
1996, are not necessarily indicative of the results 
which can be expected for the entire year.

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

The preparation of the financial statements in 
conformity with generally accepted accounting 
principles requires management to make estimates and 
assumptions that affect the reported amounts of assets 
and liabilities and disclosure of contingent assets and 
liabilities at the date of the financial statements and 
the reported revenues and expenses during the reporting 
period.  Actual results could differ from those 
estimates.

2.  EXERCISE OF OPTIONS TO PURCHASE COMMON STOCK

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

3.  COMMITMENTS AND CONTINGENCIES

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

In October 1996, the Company became a party to 
litigation in United States District Court for the 
District of Columbia entitled Securities and Exchange 
Commission, Plaintiff v. The American Education 
Corporation, Defendant (the "Action").  In the Action, 
the Company admitted that, in violation of certain 
provisions of the Securities and Exchange Act of 1934, 
as amended (the "Exchange Act"), it failed to file, 
among other things, certain annual and quarterly 
reports.  The Company voluntarily entered into a 
Consent and Undertaking pursuant to which the Court 
will issue a Final Judgment of Permanent Injunction 
requiring the Company to (i) file all its delinquent 
Exchange Act reports and (ii) in the future, timely 
file all of its Exchange Act reports.  The failure to 
file any required report could result in a contempt 
citation, the assessment of fines against the Company, 
or an action by the Securities and Exchange Commission 
to deregister the Company's common stock.

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

4.  CORPORATE RESTRUCTURING

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

Summary of 1996 Equity Transactions
-----------------------------------

<TABLE>
                                                                   
                                         No. Shares                   Debt
Type of Transaction                        Issued         Cash     Conversion
-------------------                      ----------       ----     ----------
<S>                                      <C>           <C>         <C>
Options and warrants exercised             546,517     $ 243,258   $        -
Accrued compensation                       363,377             -        7,298
Convertible notes and 
 accrued interest payable                2,651,274             -      965,460
Notes payable converted                     15,000             -       11,250
Accounts payable converted                  23,495             -       11,747
                                         ---------     ---------   ----------
                                         3,599,963     $ 243,258   $  995,755
                                         =========     =========   ==========
</TABLE>

5.  INCOME TAXES

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

Management has determined that the Company will most 
likely not be able to realize all the tax benefits from 
available net operating loss carryforwards and has, 
therefore, provided a valuation allowance of an equal 
amount for the three months and six months ended June 
30, 1996.

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

LIQUIDITY AND CAPITAL RESOURCES

The Company has invested significantly in personnel 
additions, the development of new products, and the 
acquisition and licensing of new products, to improve 
the ability of the organization and its published 
products to meet the needs of the marketplace.  These 
changes were required to update the Company's product 
offerings.  To finance the business, management has 
utilized long-term, subordinated debt from private 
investment sources, secured bank revolving credit 
lines, and accounts receivable financing sources.  
Management anticipates that additional financing will 
be required to continue to develop and position the 
Company for the significant growth opportunities that 
exist in the electronic media for education industry.

The Company has several marketing partnerships that 
were entered into in the fiscal 1995 and 1996 periods.  
Since mid 1995, the Company has been a Compaq/Microsoft 
Educational Partner and a Microsoft NT Solutions 
Partner.  These two relationships provide the Company 
with significant advertising and promotional exposure 
in literature and various promotions directed to the 
school market place.  On June 29, 1996, the Company 
entered into a marketing agreement with HomeQuest, Inc. 
to provide a private brand version of its A+dvanced 
Learning System product family for the home market.  
HomeQuest is a direct seller of educational products to 
the home with approximately 400 marketing consultants.

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

At December 31, 1995, the Company had $791,989 of 
unpaid principal outstanding on convertible notes, 
including $33,201 owed to a vendor.  Effective June 30, 
1996, the Company exchanged 2,651,274 shares of common 
stock for $731,989 of principal and $233,471 of accrued 
interest related to these convertible notes.  At 
November 22, 1996, $50,000 of convertible notes, with a 
conversion price per share of $.136, remained 
outstanding.

The Company's working capital was a deficit $42,707 at 
June 30, 1996, an improvement of $1,533,299 from 
December 31, 1995.  This significant improvement is 
associated with higher levels of sales and collection 
of sales proceeds during the period and conversion of 
debt for equity as of June 30, 1996.

Additional working capital beyond that available within 
the Company has been and may be required to expand 
operations.  Management has and will consider options 
available in providing such funding, including debt 
financing and capital enhancement.

RESULTS OF OPERATIONS - QUARTER ENDED JUNE 30, 1996
AS COMPARED TO THE QUARTER ENDED JUNE 30, 1995

Net software revenues for the three months ended June 
30, 1996, totaled $1,044,698 compared to net software 
revenues of $351,224 for the same period in 1995.  This 
represents an increase of approximately 197% in 1996.  
The dramatic increase in sales is primarily attributed 
to the acceptance of the A+dvanced Learning System 
family of products, following a lengthy period of 
development and technical improvement.

Cost of goods sold for the three months ended June 30, 
1996, increased by approximately 58%, even though sales 
increased by 197%.  This disproportionately low 
increase in direct costs reflects the efficiency in 
which software products are now produced on CD-ROM.  
The use of this medium also positively affects the cost 
of packaging, handling and freight associated with 
products that are marketed primarily into the school 
market, as opposed to traditional retail outlets.  Cost 
of goods sold represents the actual cost to produce the 
software products, including certain allocated overhead 
costs, a portion of which is fixed.  Actual component 
costs as well as the direct labor costs associated with 
the assembly of software products is now very low.  
Excluding the costs of allocated overhead, product 
costs provide gross profit margins ranging from 75 to 
95 percent on the Company's principal products.  As 
sales volumes increase, overall gross profit margins 
are expected to increase, as total allocable overhead 
costs remain relatively fixed.

Total operating expenses recorded for the three months 
ended June 30, 1996, were $417,281, compared to 
$333,008 for the previous year.  This represents an 
increase of approximately 25%.  Selling and marketing 
costs increased by approximately 78%, from $85,194 for 
the three months ended June 30, 1995 to $151,351 for 
the current period. The increase in 1996 is related 
to expanded sales and marketing efforts and higher 
commission costs related to the higher sales levels 
achieved.  General and administrative expenses 
increased by approximately 5% during 1996, from 
$194,805 to $203,973.  This increase is related to 
higher levels of product development and technical 
support during 1996 as a result of the larger installed 
base of products for the Company.

Due to restricted cash flows from operations, the 
Company entered into a factoring arrangement whereby it 
would assign from time to time, the payment of specific 
invoices to the factoring entity.  The cost of 
factoring is disclosed as a separate line item within 
the Statement of Operations.  Such costs decreased by 
approximately 12% during the three months ended June 
30, 1996 compared to the same period in 1995, from 
$7,320 to $6,467, reflecting the reduced need for such 
financing as the profitability of the Company has 
improved.

Interest expense decreased by approximately 26% during 
1996, from $24,996 in 1995 to $18,516 for 1996.  This 
decrease reflects the lower levels of interest bearing 
debt present during the 1996 period.

Net earnings for the three months ended June 30, 1996, 
improved by approximately 569% as compared to the prior 
year.  This improvement from a net loss of $104,048 in 
1995 to net earnings of $478,528 in 1996, reflects the 
higher sales levels noted above, as well as the 
improving gross margins related to concentration of 
sales in more profitable markets.  Management believes 
that with network problems resolved and with the 
expansion of sales and marketing efforts through third 
party organizations and independent dealers, the 
Company is now positioned to develop more dependable 
sales results from the home and school education 
markets.

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

Company management believes that significant, future 
opportunities exist in both the school and home 
markets.  The Company is now equipped with Macintosh, 
DOS and Windows program shells that facilitate the 
rapid and less expensive development of new subject 
titles.  Management also believes that the Company is 
better positioned to compete in the multimedia field as 
a result of its software development tools and 
capabilities, growing marketing strengths and its 
position within the school and home market places.  
Accordingly, this area which is now emerging as a major 
market, is under study and the Company is investigating 
sources for intellectual property and potential 
partnerships with other publishers on which it may base 
future publications.  Management believes that the 
Company can make significant progress within its 
existing product development and marketing budgets to 
position the Company to identify and plan products for 
this business. 

RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 1996
AS COMPARED TO THE SIX MONTHS ENDED JUNE 30, 1995

Net software revenues for the six months ended June 30, 
1996, totaled $1,359,937 compared to net software 
revenues of $517,441 for the same period in 1995.  This 
represents an increase of approximately 163% in 1996.  
The dramatic increase in sales is primarily attributed 
to the acceptance of the A+dvanced Learning System 
family of products, following a lengthy period of 
development and technical improvement.

Cost of goods sold for the six months ended June 30, 
1996, increased by approximately 53%, even though sales 
increased by 163%.  This disproportionately low 
increase in direct costs reflects the efficiency in 
which software products are now produced on CD-ROM.  
The use of this medium also positively effects the cost 
of packaging, handling and freight associated with 
products that are marketed primarily into the school 
market, as opposed to traditional retail outlets.  Cost 
of goods sold represents the actual cost to produce the 
software products, including certain allocated overhead 
costs, a portion of which is fixed.  Actual component 
costs as well as the direct labor costs associated with 
the assembly of software products is now very low.  
Excluding the costs of allocated overhead, product 
costs provide gross profit margins ranging from 75 to 
95 percent on the Company's principal products.  As 
sales volumes increase, overall gross profit margins 
are expected to increase, as total allocable overhead 
costs remain relatively fixed.

Total operating expenses recorded for the six months 
ended June 30, 1996, were $726,066, compared to 
$617,509 for the previous year.  This represents an 
increase of approximately 18%.  Selling and marketing 
costs increased by approximately 72%, from $137,447 for 
the six months ended June 30, 1995 to $236,070 for the 
current period.  The increase in 1996 is related to 
expanded sales and marketing efforts and higher 
commission costs related to the higher sales levels 
achieved.  General and administrative expenses 
decreased by approximately 1% during 1996, from 
$374,044 to $369,199.  This marginal decrease reflects 
higher levels of product development and technical 
support during 1996 as a result of the larger installed 
base of products for the Company, netted against lower 
legal and professional fees incurred during the initial 
portion of 1996.

The cost of factoring is disclosed as a separate line 
item within the Statement of Operations.  Such costs 
increased by approximately 9% during the six months 
ended June 30, 1996 compared to the same period in 
1995, from $12,416 to $13,588, reflecting higher use of 
factoring during the early portion of 1996 and reduced 
need for such financing as the profitability of the 
Company has improved during the second quarter of the 
year.

Interest expense decreased by approximately 34% during 
1996, from $52,892 in 1995 to $34,980 for 1996.  This 
decrease reflects the lower levels of interest bearing 
debt present during the 1996 period.

Net earnings for the six months ended June 30, 1996, 
improved by approximately 240% as compared to the prior 
year.  This improvement from a net loss of $295,509 in 
1995 to net earnings of $413,824 in 1996, reflects the 
higher sales levels noted above, as well as the 
improving gross margins related to concentration of 
sales in more profitable markets.


THE AMERICAN EDUCATION CORPORATION

PART II - OTHER INFORMATION


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

In October 1996, the Company became a party to 
litigation in United States District Court for the 
District of Columbia entitled Securities and Exchange 
Commission, Plaintiff v. The American Education 
Corporation, Defendant (the "Action").  In the Action, 
the Company admitted that, in violation of certain 
provisions of the Securities and Exchange Act of 1934, 
as amended (the "Exchange Act"), it failed to file, 
among other things, certain annual and quarterly 
reports.  The Company voluntarily entered into a 
Consent and Undertaking pursuant to which the Court 
will issue a Final Judgment of Permanent Injunction 
requiring the Company to (i) file all its delinquent 
Exchange Act reports and (ii) in the future, timely 
file all of its Exchange Act reports.  The failure to 
file any required report could result in a contempt 
citation, the assessment of fines against the Company, 
or an action by the Securities and Exchange Commission 
to deregister the Company's common stock.

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

Summary of 1996 Equity Transactions
-----------------------------------

<TABLE>
                                                                    
                                         No. Shares                  Debt
Type of Transaction                        Issued        Cash      Conversion
-------------------                      ----------      ----      ---------- 
<S>                                      <C>          <C>          <C>
Options and warrants exercised              546,517   $  243,258   $        -
Accrued compensation                        363,377            -        7,298
Convertible notes and 
accrued interest payable                  2,651,274            -      965,460
Notes payable converted                      15,000            -       11,250
Accounts payable converted                   23,495            -       11,747
                                          =========   ==========   ==========                          
                                          3,599,963   $  243,258   $  995,755

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

Omitted from this report as inapplicable.

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

No matters were submitted to a vote of security holders during the period.

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

Omitted from this report as inapplicable.

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

A.  Exhibits
    Omitted from this report as inapplicable.

B.  Reports on Form 8-K
    In November, 1996, the Company filed Form 8-K 
    describing the pertinent factors associated with a 
    change in the Company's independent auditing firm.


SIGNATURES


Pursuant to the requirements of Section 13, or 15(d) of the 
Securities Exchange Act of 1934, the registrant has duly 
caused this report to be signed on its behalf by the 
undersigned, thereunto duly authorized.

The American Education Corporation

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





</TABLE>