UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 1999


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

                    For the Transition Period From ___ to ___


                         Commission file number 33-42633


                              ViaGrafix Corporation
                              ---------------------
             (Exact name of registrant as specified in its charter)


          Oklahoma                                               73-1354168
          --------                                               ----------
(State or other jurisdiction                                  (I.R.S. Employer
      of incorporation)                                      Identification No.)


                     One American Way, Pryor, Oklahoma 74361
                     ---------------------------------------
               (Address of principal executive offices)(Zip Code)


       Registrant's telephone number, including area code: (918) 825-6700


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 [ ]

The number of shares  outstanding of the issuer's $.01 par value common stock as
of August 5, 1999 was 5,788,866.

<PAGE 2>
                              ViaGrafix Corporation

                                    FORM 10-Q


                       For the Quarter Ended June 30, 1999

                                      INDEX

Part 1. Financial Information

     Item 1. Consolidated Financial Statements                              Page
                                                                            ----
          (a)  Consolidated Statements of Operations for the
               Three and Six Months Ended June 30, 1999 and 1998              3

          (b)  Consolidated Balance Sheets
               as of June 30, 1999 and December 31, 1998                      4

          (c)  Consolidated Statements of Cash Flows
               for the Six Months Ended June 30, 1999 and 1998                5

          (d)  Notes to Consolidated Financial Statements                     6

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

     Item 3. Quantitative and Qualitative Disclosures About Market Risk      12


Part 2. Other Information

     Item 1. Legal Proceedings                                               13

     Item 2. Changes in Securities                                           13

     Item 4. Submission of Matters to a Vote of Security Holders             13

     Item 6. Exhibits and Reports on Form 8-K                                13


Signature                                                                    14


<PAGE 3>
                          Part 1. Financial Information

Item 1. Consolidated Financial Statements

<TABLE>
ViaGrafix Corporation
Consolidated Statements of Operations                       Three Months Ended          Six Months Ended
(Unaudited) (In thousands, except per share)                      June 30,                  June 30,
                                                              1999        1998          1999        1998
                                                              ----        ----          ----        ----
<CAPTION>
<S>                                                       <C>         <C>           <C>         <C>
Net sales                                                 $  5,959    $  4,187      $ 13,304    $  8,264
Cost of sales                                                1,788         990         3,651       1,964
                                                        ----------  ----------    ----------  ----------
Gross profit                                                 4,171       3,197         9,653       6,300
Selling, general and administrative                          2,636       1,338         4,927       2,457
Advertising                                                  1,824         787         5,201       1,607
Research & development                                         615         385         1,145         757
Depreciation & amortization                                    373         119           709         205
                                                        ----------  ----------    ----------  ----------
  Total operating expenses                                   5,448       2,629        11,982       5,026
                                                        ----------  ----------    ----------  ----------
Operating profit (loss)                                     (1,277)        568        (2,329)      1,274
Net interest income                                             98         161           212         163
                                                        ----------  ----------    ----------  ----------
Income (loss) before income taxes                           (1,179)        729        (2,117)      1,437
Provision (benefit) for income taxes                          (469)        227          (856)        398
                                                        ----------  ----------    ----------  ----------
Net income (loss)                                         $   (710)   $    502      $ (1,261)     $1,039

Basic earnings (loss) per share                             ($0.12)      $0.08        ($0.22)      $0.20
Weighted average common shares used in
  computing basic earnings (loss) per share                  5,788       6,144         5,814       5,272

Diluted earnings (loss) per share                           ($0.12)      $0.08        ($0.22)      $0.19
Weighted average common shares used in
  computing diluted earnings (loss) per share                5,788       6,248         5,814       5,586
</TABLE>



<PAGE 4>
<TABLE>
ViaGrafix Corporation                                                (Unaudited)
Consolidated Balance Sheets   (In Thousands)                            June 30,      December 31,
                                                                            1999              1998
                                                                            ----              ----
<CAPTION>
<S>                                                                   <C>               <C>
Assets
Current Assets:
   Cash and cash equivalents                                          $    7,203        $   10,046
   Short-term investments                                                  3,100             3,000
   Accounts receivable                                                     3,332             4,713
   Income taxes receivable                                                   690               205
   Inventories                                                             2,757             1,909
   Prepaid expenses                                                          640               518
   Deferred income taxes                                                     523                57
                                                                      ----------        ----------
Total current assets                                                      18,245            20,448

Property, plant and equipment                                              4,924             4,380
Accumulated depreciation                                                  (1,602)           (1,316)
                                                                      ----------        ----------
                                                                           3,322             3,064

Goodwill, net of amortization                                                 81                88
Capitalized customer lists, net of amortization                               29               207
Capitalized software, net of amortization                                     93               169
Prepaid royalties & licenses, net of amortization                            388               543
Note receivable-officer                                                      185               188
Deferred income taxes                                                        415               509
                                                                      ----------        ----------
Total assets                                                          $   22,758        $   25,216


Liabilities and stockholders' equity
Current liabilities:
   Trade accounts payable                                             $    1,403        $    1,767
   Accrued liabilities                                                       489               512
   Notes payable                                                               -               103
                                                                      ----------        ----------
Total current liabilities                                                  1,892             2,382

Minority interest in subsidiary                                               25                 -

Stockholders' equity:
Common stock, $.01 par value, authorized 40,000,000
shares; issued and outstanding 5,788,184 and
5,866,340 shares in 1999 and 1998, respectively                               58                59

Additional paid-in capital                                                19,760            20,506
Unearned Compensation                                                        (90)             (104)
Retained earnings                                                          1,113             2,373
                                                                      ----------        ----------
Total stockholders' equity                                                20,841            22,834
                                                                      ----------        ----------
Total liabilities and stockholders' equity                            $   22,758        $   25,216
</TABLE>


<PAGE 5>
<TABLE>
ViaGrafix Corporation                                                    Six Months Ended
Consolidated Statements of Cash Flows                                         June 30,
(In Thousands) (Unaudited)                                             1999          1998
                                                                       ----          ----
<CAPTION>
<S>                                                                <C>           <C>
Operating Activities
Net Income (loss)                                                  $ (1,261)     $  1,039

Adjustments to reconcile net income (loss) to
net cash  provided by (used in) operating activities:
   Depreciation and amortization                                        709           205
   Deferred income tax provision (benefit)                             (372)          141
   Non-cash compensation expense for sale of minority
       interest in subsidiary                                            34             -
   Minority interest in loss of subsidiary                               (9)            -
   Non-cash interest expense                                              -            45
   Loss on disposal of assets                                             2             2
   Bad debt expense                                                     166            66
   Amortization of unearned compensation                                 15            17

   Cash provided by (used in ) changes in
      operating assets and liabilities:
          Accounts receivable                                         1,215          (948)
          Inventories                                                  (848)          (99)
          Prepaid expenses                                             (122)          115
          Accounts payable                                             (364)          118
          Accrued liabilities                                           (23)           33
          Income taxes receivable                                      (485)         (169)
          Income taxes payable                                            -          (209)
                                                                    -------       -------
Net cash provided (used) by operating activities                     (1,343)          356

Investing Activities
Purchase of property, plant & equipment                                (585)         (841)
Proceeds from disposal of equipment                                      32             -
Maturity of short-term investments                                    3,000
Purchase of short-term investments                                   (3,100)            -
Note receivable-officer                                                   3             -
                                                                    -------       -------
Cash used in investing activities                                      (650)         (841)

Financing Activities
Initial public offering of common stock                                   -        20,491
Purchase and cancellation of common stock                              (808)            -
Repayments of debt                                                     (103)       (3,661)
Exercise of stock options                                                61            53
                                                                    -------       -------
Net cash provided by (used in) financing activities                    (850)       16,883
                                                                    -------       -------

Net increase (decrease) in cash and cash equivalents                 (2,843)       16,398
Cash and cash equivalents at beginning of year                       10,046           217
                                                                    -------       -------
Cash and cash equivalents at end of period                          $ 7,203       $16,615
</TABLE>


<PAGE 6>
                              ViaGrafix Corporation
                   Notes to Consolidated Financial Statements
                                   (Unaudited)


1. Basis of Presentation

In the opinion of management of ViaGrafix Corporation,  the accompanying balance
sheets and related  interim  statements of operations and cash flows reflect all
adjustments (consisting only of normal recurring items) necessary for their fair
presentation  in  conformity  with  generally  accepted  accounting  principles.
Preparing  financial  statements  requires  management  to  make  estimates  and
assumptions that affect the reported amounts of assets,  liabilities,  revenues,
and expenses.  Actual results may differ from these estimates. Net income (loss)
and  comprehensive   income  (loss)  are  the  same.  Interim  results  are  not
necessarily  indicative of results for a full year. The information  included in
this Form 10-Q should be read in conjunction  with  Management's  Discussion and
Analysis of  Financial  Condition  and Results of  Operations  and  consolidated
financial  statements and notes thereto  included in the ViaGrafix Form 10-K for
the fiscal  year  ended  December  31,  1998 as filed  with the  Securities  and
Exchange Commission.

2. Inventories

Inventories consist of the following:
                                                 (Unaudited)
                                                    June 30,        December 31,
                                                        1999                1998
                                                        ----                ----
Finished goods................................   $ 1,728,000         $   996,000
Raw materials.................................     1,029,000             913,000
                                                 -----------         -----------
                                                 $ 2,757,000         $ 1,909,000

3. Effective Tax Rate

During the three  months  ended June 30, 1999 the  effective  tax rate was 39.8%
compared to 31.1% for the second quarter of 1998. The higher  effective tax rate
in 1999 is due to the effect of tax  credits  being  added to the tax benefit as
compared to tax credits  being  subtracted  from the tax provision in the second
quarter of 1998.

During  the six  months  ended June 30,  1999 the  effective  tax rate was 40.4%
compared to 27.7% for the first half of 1998.  The higher  effective tax rate in
1999 is due to the  effect of tax  credits  being  added to the tax  benefit  as
compared to tax credits  being  subtracted  from the tax provision in the second
half of 1998. In addition,  in the first half of 1998 the effective tax rate was
reduced due to the  realization  of tax credits for 1995 through 1997  resulting
from credits for increasing research activities. The amount of available credits
was quantified and the benefit recorded in the first quarter of 1998.

4. Stockholders' Equity

ViaGrafix announced on September 1, 1998 that our board of directors  authorized
the repurchase of up to $3 million of our common stock. During the first quarter
of 1999 we  repurchased  124,200  shares of our common  stock for  approximately
$808,000.  Since September 1, 1998 ViaGrafix has repurchased  403,100 shares for
approximately  $2.3 million.  In the first half of 1999 and 1998,  our employees
exercised approximately 46,000 and 44,000 options for ViaGrafix common stock for
approximately $61,000 and $53,000 respectively.

<PAGE 7>
5. Earnings Per Share

Basic  earnings  per  share  are based on the  average  number of common  shares
outstanding during each period. Diluted earnings per share assumes conversion of
preferred stock to common stock and exercise of stock options  outstanding using
the treasury stock method.

6. Legal Contingencies

On May 22, 1998 a lawsuit was filed in the United States  District Court for the
Northern  District of Texas by Jonathan L. Gordon,  brought as a putative  class
action  against  ViaGrafix  and certain of its officers and  directors  claiming
violations  of the  Securities  Act of 1933 for alleged  misrepresentations  and
omissions  in the  Prospectus  issued  in  connection  with our  initial  public
offering  made in  March  1998.  Mr.  Gordon  and  certain  others  have  sought
designation as lead plaintiffs in the action.  We believe the lawsuit is without
merit. Our response is not yet due.

From time to time ViaGrafix is involved in litigation  arising out of operations
in the normal  course of business,  none of which is expected to have a material
adverse effect on our results of operations or financial position.

7. Acquisition

On July  31,  1998  ViaGrafix  acquired  certain  assets  of  eTracks.com,  Inc.
(formally  known as Make It So,  Inc.),  a privately  held company  based in San
Mateo,  California,  that  provides  interactive  email  broadcast  services for
businesses  that  rely on  web-based  commerce  and  transactions  and  operates
eTracks.com,  an online  community of currently more than 550,000  members,  for
approximately  $682,000. The transaction was financed with existing cash and was
accounted  for as a purchase.  The purchase  price and related  direct  expenses
associated with the  acquisition  have been allocated based on the fair value of
the assets  purchased.  The results of operations for this acquisition have been
included in ViaGrafix's consolidated results of operations since the acquisition
date. Pro forma  operating  results are not presented,  as they would not differ
materially from actual results for 1998. In January 1999 we issued common shares
equal to 5% ownership in eTracks.com to a key employee of eTracks.com. The value
per  share of the  issued  shares  equaled  the fair  value  per  share  paid by
ViaGrafix in July 1998.

8. Merger with Learn2.com, Inc.

On June 7, 1999 it was  announced  that the  ViaGrafix  Board of  Directors  had
approved a merger agreement which provides for the combination of ViaGrafix with
Learn2.com,  Inc.,  formerly known as 7th Level, Inc.  Shareholder  meetings for
both  companies  to vote on the merger will be held on August 23,  1999.  If the
merger  is  completed,  ViaGrafix  will  become  a  wholly-owned  subsidiary  of
Learn2.com,  and holders of ViaGrafix  common stock will receive 1.846 shares of
Learn2.com common stock for each share of ViaGrafix common stock held.

<PAGE 8>
Item 2. Management's  Discussion and Analysis of Financial Condition and Results
        of Operations

This  commentary  should be read in conjunction  with  ViaGrafix's  10-K for the
fiscal year ended  December 31, 1998 for a more  complete  understanding  of our
financial condition and results of operations. The following discussion contains
forward looking  statements  within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended.  Actual results could differ  materially from those  contemplated by
the forward looking statements as a result of certain factors, including but not
limited to those  disclosed  under  "Risk  Factors"  in our 10-K for fiscal year
ended December 31, 1998.

Results of Operations

ViaGrafix develops, produces and markets technology-based information technology
training products and graphics  software  products.  Our information  technology
training courses include  interactive  multimedia  training courses delivered on
CD-ROM, LANs,  intranets and the Internet,  and video tutorials for a variety of
computer software.  ViaGrafix has developed and markets more than 1,100 training
courses  for  most  major  PC  software  packages.  These  products  provide  an
audio-visual  environment  that is designed  to allow users to learn  faster and
increase retention and productivity.  Organizations that purchase our multimedia
training  products  can  offer  them  across a  network  to all  employees.  Our
principal graphics software product,  DesignCAD,  is a computer-aided design, or
CAD, package sold worldwide.  ViaGrafix also produces several other  CAD-related
software  packages,  and a line of  graphics  software  products  for the retail
market.  The primary  platform for both the  training  and software  products is
Microsoft Windows. Our subsidiary, eTracks.com, Inc., provides interactive email
broadcast   services  for  businesses  that  rely  on  web-based   commerce  and
transactions and operates eTracks.com,  an online community of more than 550,000
members.

Net Sales.  Net sales increased 42% to  approximately  $6.0 million in the three
months ended June 30, 1999 from approximately $4.2 million in the second quarter
of 1998.  This reflects an increase in sales from  existing and new  information
technology  training titles, and was primarily  attributable to increases in the
volume of products sold rather than increases in prices.  Net sales of more than
$1.0 million were contributed by our subsidiary eTracks.com, which was purchased
in July 1998.  Net sales  generated by eTracks.com in the second quarter of 1999
were 51% greater than their sales in the first quarter of 1999.

During  the  six  months  ended  June  30,  1999   ViaGrafix's  net  sales  were
approximately $13.3 million, a 61% increase over net sales of approximately $8.3
million  during  the  same  period  in  1998.  A  significant   portion  of  the
year-to-date  increase  in net sales was from sales to Internet  resellers.  Our
subsidiary,  eTracks.com, generated approximately $1.7 million of our first half
sales in 1999.

Cost of Sales. Cost of sales increased 81% to approximately  $1.8 million in the
three months ended June 30, 1999 from  approximately  $1.0 million for the three
months ended June 30, 1998. Cost of sales as a percentage of net sales increased
to 30.0% for the quarter ended June 30, 1999,  from 23.6% for the same period in
1998.  The  increase  in cost of sales as a  percentage  of net sales for 1999's
second quarter was primarily due to a higher cost of sales  percentage  realized
by  eTracks.com  on sales to its online  community  members,  along with a lower
overall mix of high margin graphics software sales in the quarter.

<PAGE 9>
Cost of  sales  for  the  six  months  ended  June  30,  1999  increased  86% to
approximately  $3.7 million from  approximately  $2.0 million for the six months
ended June 30,  1998.  Cost of sales as a percentage  of net sales  increased to
27.4% for the six months ended June 30, 1999,  from 23.8% for the same period in
1998.  The  increase in the cost of sales as a  percentage  of net sales for the
first  half of 1999  was  primarily  due to a higher  cost of  sales  percentage
realized by eTracks.com on sales to its online community members.

Selling, General and Administrative Expense. Selling, general and administrative
expense  increased 97% to  approximately  $2.6 million in the three months ended
June 30,  1999 from  approximately  $1.3  million  for the same  period in 1998.
Selling,  general  and  administrative  expense  as a  percentage  of net  sales
increased to 44.2% for the quarter  ended June 30,  1999,  from 32.0% during the
same period in 1998.  The increase was primarily a result of increased  staffing
and commission  expenditures,  which increased 89% to $1.8 million in the second
quarter of 1999 compared to approximately  $942,000 in 1998's second quarter. We
believe our staff additions will provide support for increased future sales. The
largest  employee  increases  were in marketing  and sales  teams.  ViaGrafix is
building an infrastructure to support our direct licensing and sales of training
courses to  corporations,  and we have increased our corporate  sales staff from
two  people at the end of the  second  quarter  of 1998 to 15 people on June 30,
1999.  Increased  commission  expenditures were a result of increased sales. The
balance of the increased selling,  general and  administrative  expenditures was
primarily to service the planned increased staffing and facilities.

Selling, general and administrative expense increased 101% to approximately $4.9
million in the six months  ended June 30, 1999 from  approximately  $2.5 million
for the same period in 1998.  Selling,  general and administrative  expense as a
percentage  of net sales  increased  to 37.0% for the first  half of 1999,  from
29.7% during the same period in 1998. The reasons for increased selling, general
and  administrative  expenditures  during the first half of 1999 compared to the
first half of 1998 were the same as in the second quarter explained above.

Advertising. Advertising expense increased 132% to approximately $1.8 million in
the three months ended June 30, 1999 compared to  approximately  $787,000 during
the second quarter of 1998.  Advertising as a percent of net sales  increased to
30.6%  during the second  quarter of 1999 from 18.8% in 1998's  second  quarter.
Advertising  expenditures are for cooperative  advertising,  advertising through
the channels of distribution,  direct advertising,  and print media advertising.
The majority of the increase in  advertising  is due to  additional  cooperative
advertising necessary to expand into Internet commerce. In addition, we expanded
our print media  advertising and special product  promotions during the quarter.
ViaGrafix expects our advertising expense to remain high in an effort to achieve
rapid growth in sales through Internet resellers.

Advertising  expense  increased  224% to  approximately  $5.2 million in the six
months ended June 30, 1999  compared to  approximately  $1.6 million  during the
first half of 1998.  Advertising  as a percent of net sales  increased  to 39.1%
during the first half of 1999 from 19.4% in 1998's  first half.  The reasons for
increased advertising  expenditures during the first six months of 1999 compared
to the same  period in 1998  were the same as in the  second  quarter  explained
above.

Research and Development Expense. Research and development expense increased 60%
to  approximately  $615,000 in the three months ended June 30, 1999  compared to
approximately   $385,000  during  the  second  quarter  of  1998.  Research  and
development  expense as a percentage of net sales  increased to 10.3% during the
quarter  ended  June 30,  1999 from 9.2%  during  the same  period in 1998.  The
increase in research and development dollars expended reflects our commitment to
expand  the  number of  information  technology  training  courses  offered.  In
addition,  the increase  reflects costs  associated with development of training
libraries in Spanish, French and German.  Research and development  expenditures
also included  development efforts on Internet online delivery of training along
with  research  and   development   expenditures   incurred  by  our  subsidiary
eTracks.com  to expand and enhance its  interactive  email  broadcast  services.
ViaGrafix  believes that  significant  investment in research and development is
required to remain  competitive in our markets and therefore,  expects  research
and development expense to continue to increase in future periods.

<PAGE 10>
Research and development  expense increased 51% to approximately $1.1 million in
the six months ended June 30, 1999 compared to approximately $757,000 during the
first half of 1998.  Research and  development  expense as a  percentage  of net
sales  decreased  to 8.6%  during the six months  ended June 30,  1999 from 9.2%
during  the  same  period  in 1998.  The  reasons  for  increased  research  and
development  expenditures  during  the first half of 1999  compared  to the same
period in 1998 were the same as in the second quarter explained above.

Depreciation  and  Amortization.   Depreciation  and  amortization  expense  was
approximately  $373,000 during the second quarter of 1999  representing  6.3% of
net sales,  compared to approximately  $119,000  representing  2.8% of net sales
during the second  quarter of 1998.  Depreciation  and  amortization  related to
eTracks.com  was  approximately  $138,000 during the second quarter of 1999. The
majority of the assets  purchased from eTracks.com in July 1998 have depreciable
lives of 12 to 18 months. As a result,  amortization related to eTracks.com will
be reduced significantly beginning in the third quarter of 1999. Amortization of
prepaid  royalties  to  Learn2.com,  Inc.,  formerly  Street  Technologies,  was
approximately  $78,000.  The Development and Licensing Agreement with Learn2.com
was  entered  into  in  September   1998.  The  remainder  of  the  increase  in
depreciation  and  amortization  expense  was  primarily  attributable  to asset
additions  during the past year for  expansion  of  facilities,  production  and
duplication equipment and computer hardware.

Depreciation  and  amortization  expense was  approximately  $709,000 during the
first half of 1999  representing  5.3% of net sales,  compared to  approximately
$205,000  representing  2.5%  of net  sales  during  the  first  half  of  1998.
Depreciation and amortization related to eTracks.com was approximately  $271,000
during the first six months of 1999, and  amortization  of prepaid  royalties to
Learn2.com, Inc., was approximately $155,000.

Net Interest Income.  Net interest income was  approximately  $98,000 or 1.6% of
net sales for the three  months  ended June 30, 1999  compared to  approximately
$161,000 or 3.8% of net sales during the second quarter of 1998. Interest income
was lower during the second quarter of 1999 due to lower  available  cash,  cash
equivalents and short-term investment balances in 1999's second quarter compared
to the  second  quarter  of  1998.  The  total  of cash,  cash  equivalents  and
short-term  investment  as of June 30,  1999  was  approximately  $10.3  million
compared to approximately $16.6 million as of June 30, 1998.

Net interest income was approximately  $212,000 or 1.6% of net sales for the six
months  ended June 30, 1999  compared to  approximately  $163,000 or 2.0% of net
sales  during the first half of 1998.  Net  interest  income was  greater in the
first six months of 1999 in spite of lower available cash, cash  equivalents and
short-term  investment  balances as a result of interest expense incurred during
the first quarter of 1998. A portion of the net proceeds from our initial public
offering  on March 4, 1998 was used to retire all  outstanding  long-term  debt.
Interest  expense incurred in the first half of 1999, was  approximately  $2,000
compared to approximately $54,000 in interest expense in the first six months of
1998.   Interest  income   generated  in  the  first  six  months  of  1999  was
approximately $214,000 compared to approximately $217,000 during the same period
in 1998.

<PAGE 11>
Liquidity and Financial Condition

ViaGrafix's   cash,  cash   equivalents  and  short-term   investments   totaled
approximately  $10.3 million at June 30, 1999. We announced on September 1, 1998
that our board of directors authorized the repurchase of up to $3 million of our
common stock.  During the first quarter of 1999 we repurchased 124,200 shares of
our common stock for approximately  $808,000.  Since September 1, 1998 ViaGrafix
has repurchased 403,100 shares for approximately $2.3 million. In the first half
of 1999 and 1998,  our  employees  exercised  approximately  46,000  and  44,000
options  for  ViaGrafix  common  stock for  approximately  $61,000  and  $53,000
respectively.

We believe that our cash, cash equivalents and short-term investment balances at
June 30,  1999 and cash  generated  from  future  operations  will  satisfy  our
anticipated working capital requirements for at least the foreseeable future.

ViaGrafix  operating  activities during the period ending June 30, 1999 used net
cash of approximately  $1.3 million,  attributable  primarily to the net loss of
$1.3 million,  increased  inventories due to increased  operations and decreased
accounts payable, offset by decreased accounts receivable.

ViaGrafix's   capital   expenditures   during   the  first  half  of  1999  were
approximately  $585,000.  Capital  expenditures  were primarily for expansion of
facilities, production and duplication equipment and computer hardware.

During the first  quarter of 1999 we broke  ground for a new 21,000  square-foot
building to expand our packaging, inventory handling and shipping operations. We
do  not  currently   have  any  other   significant   commitments   for  capital
expenditures,  and anticipate that we will continue to expand our facilities and
purchase  equipment as needed to support our product  research and  development,
production  of  our  products,   sales  and  marketing,   product  support,  and
administrative staff.

See note 3 and 8 for a  discussion  of  change  in  effective  tax rate  between
periods and the proposed merger with Learn2.com, Inc.

Year 2000 Impact

The Year 2000 issue is the result of computer  programs  being written using two
digits  rather than four to define the  applicable  year.  ViaGrafix's  computer
equipment   and  software  and  devices  with  embedded   technology   that  are
time-sensitive  may recognize a date using "00" as the year 1900 rather than the
year 2000.  This could  result in a system  failure or  miscalculations  causing
disruptions of operations,  including, among other things, a temporary inability
to process  transactions,  send invoices,  or engage in similar normal  business
activities.

ViaGrafix uses up-to-date,  PC-based software for internal  accounting and other
applications.  We have  completed  testing of our internal  accounting and other
significant  applications  and have found no Year 2000 defects.  We have checked
our training  products and graphics  software products for Year 2000 defects and
have found none.

ViaGrafix  may  encounter  some  Year  2000  defects  in the  software  it  uses
internally,  but it believes that these can be resolved as they are encountered.
We do not intend to do further  testing of our  internal  systems  for Year 2000
defects.  ViaGrafix intends to continue to evaluate its products and services to
ensure they perform  correctly in the year 2000.  We have no  contingency  plans
related to the Year 2000 issue.

<PAGE 12>
We could  encounter  some Year 2000  defects in the  products  and  services  we
produce and market. If Year 2000 defects are encountered, we could be liable for
substantial legal claims and litigation,  and the adverse publicity could have a
material  adverse effect on the future sales of our products and services,  even
after any Year 2000 defects are resolved.  However,  any material adverse effect
on our  financial  position and results of  operations  and cash flows cannot be
currently estimated.

ViaGrafix relies on outside  suppliers for raw materials,  outside  distributors
for its finished products,  financial institutions for its banking, and a number
of other third parties in its normal business  operations.  If these third-party
suppliers and service  providers have substantial  Year 2000 problems,  it could
have a  material  adverse  effect  on our  business.  We are not  requiring  our
suppliers and service providers to provide Year 2000 readiness information.

ViaGrafix has not incurred and does not anticipate  incurring  material costs in
addressing Year 2000 issues.

We believe our largest risk  regarding  the Year 2000 issue is from legal claims
and litigation.  ViaGrafix expects that there will be a large number of lawsuits
filed over Year 2000 issues in the United States because of the great  publicity
of the Year 2000 issue.  Even small Year 2000 problems  encountered by ViaGrafix
could result in substantial  legal claims,  lawsuits,  and class action lawsuits
against us, which in turn could have a material  adverse effect on our financial
position.

Risk Factors

ViaGrafix encourages you to read the Risk Factors discussed in our Form 10-K for
the fiscal  year  ended  December  31,  1998 as filed  with the  Securities  and
Exchange  Commission,  as well as the Rick Factors  discussed in the joint proxy
statement/prospectus  dated July 22, 1999  included as a part of the Form S-4 as
filed  with the  Securities  and  Exchange  Commission  in  connection  with our
proposed  merger with  Learn2.com,  Inc. Those risk factors are  incorporated in
this Form 10-Q by reference.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

ViaGrafix  is  exposed  to the  impact of  interest  rate and  foreign  currency
fluctuations.  Our  objective in managing this exposure to interest rate changes
is to maximize our potential interest income without sacrificing cash equivalent
and short-term investment quality. We will invest in instruments that are exempt
from Federal  income taxes if the taxable  equivalent  yield is more  attractive
than  alternative  fully taxed  investments.  ViaGrafix  does not currently have
interest rate exposure from borrowing as we do not have a line of credit.

In the first  half of 1999 and 1998  sales to  countries  other  than the United
States and Canada  accounted  for 3% and 4%,  respectively,  of total net sales.
These   international   net  sales  are   denominated  in  foreign   currencies.
Consequently a decrease in the value of a relevant  foreign currency in relation
to the U.S. dollar could  adversely  affect our net sales.  ViaGrafix's  foreign
currency transactional  exposures exist primarily with the United Kingdom Pound,
the French Franc, the German Mark and the Japanese Yen.

ViaGrafix does not utilize  interest rate swaps or hedge  exposures with foreign
currency forward contracts.

<PAGE 13>
                           Part II. Other Information

Item 1. Legal Proceedings

See Note 6 to Consolidated Financial Statements, which is incorporated herein by
reference.

Item 2. Changes in Securities

See Note 8 to Consolidated Financial Statements, which is incorporated herein by
reference.

Item 4. Submission of Matters to a Vote of Security Holders

At the Annual  Meeting  of  Shareholders  held on May 20,  1999,  the  following
proposals were adopted by the margins indicated:

1.     To elect  a Board of  Directors  to  hold  office  until the next  annual
       meeting of  shareholders  and until  their  successors  are  elected  and
       qualified.

                                                Number of Shares
                                               For          Withheld
       Michael Webster                      5,129,987        200,031
       Robert Webster                       5,129,987        200,031
       Roy Bliss                            5,129,987        200,031
       Stephen Gott                         5,129,987        200,031
       Gerald Harris                        5,129,987        200,031

2.     To approve an amendment to ViaGrafix's 1995 Stock Option Plan to increase
       the number of shares covered by the Plan from 1,000,000 to 2,000,000.

       For                                  3,447,641
       Against                                409,551
       Abstain                                 39,200
       Not voted                            1,433,626


Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits
    11.      Statement regarding computation of per share earnings (loss)
    27.      Financial data schedule

(b) Reports on Form 8-K
    No  reports on  Form 8-K were  filed by  ViaGrafix during the  quarter ended
    June 30, 1999

Items 3 and 5 are not applicable and have been omitted.


<PAGE 14>
                                    Signature

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.

                                   ViaGrafix Corporation

Date:    August 5, 1999            By: /s/ Robert C. Moore, Jr.
                                       ------------------------
                                           Robert C. Moore, Jr.,
                                           Treasurer and Chief Financial Officer

                                           (Principal Financial and Accounting
                                            Officer and Duly Authorized Officer)

<PAGE 15>
<TABLE>
                                   Exhibit 11.

ViaGrafix Corporation

Computation of Earnings (Loss) Per Share
(Unaudited) (In thousands, except per share)

The following sets forth the  computation of basic and diluted  earnings  (loss)
  per share for the three and six months ended June 30:
                                                                       1999          1998           1999           1998
                                                                       ----          ----           ----           ----
<CAPTION>
<S>                                                                <C>           <C>            <C>            <C>
Numerator for basic and diluted earnings (loss) per share:
   Income (loss) available to common shareholders                  $   (710)     $    502       $ (1,261)      $  1,039
                                                                 ==========    ==========     ==========     ==========

Denominator:
   Denominator for basic earnings (loss) per share -
      weighted average shares                                         5,788         6,144          5,814          5,272

Effect of dilutive securities:
   Employee stock options                                               N/A           104            N/A            125
   Series A convertible preferred stock                                 N/A             -            N/A            189
                                                                      -----         -----          -----          -----
Dilutive potential common shares                                        N/A           104            N/A            314
                                                                      -----         -----          -----          -----
Denominator for diluted earnings (loss) per share -
   adjusted weighted-average conversions                              5,788         6,248          5,814          5,586
                                                                 ==========    ==========     ==========     ==========

                                                                       1999          1998           1999           1998
                                                                       ----          ----           ----           ----
Basic earnings per share                                             $(0.12)       $ 0.08         $(0.22)         $0.20
Diluted earnings per share                                           $(0.12)       $ 0.08         $(0.22)         $0.19

</TABLE>