FORM 10-QSB
U. S. 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 March 31, 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 84-0838184
(State or other jurisdiction (IRS Employer Identification
of number) incorporation, or organization)
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 March 31, 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 Consolidated Balance Sheets 3
March 31, 1998 and December 31, 1997
Consolidated Statements of Operations 4
For the Quarter Ended March 31, 1998 and for the Quarter Ended
March 31, 1997
Consolidated Statements of Cash Flows 5
For the Three Months Ended March 31, 1998 and for the Three
Months Ended March 31, 1997
Notes to Interim Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial
Conditions and Results of Operations 8
PART II - OTHER INFORMATION
Item 1 Legal Proceedings 10
Item 2 Changes in Securities 10
Item 3 Default on Senior Securities 11
Item 4 Submission of Matters to Vote of Securities
Holders 11
Item 5 Other Information 11
Item 6 Exhibits and Reports on Form 8-K 11
SIGNATURE PAGE 13
PART I - FINANCIAL INFORMATION
THE AMERICAN EDUCATION CORPORATION
CONSOLIDATED BALANCE SHEETS
31-Mar-98 31-Dec-97
Unaudited Audited
ASSETS
Current assets:
Cash $ 207,611 $ 283,636
Accounts receivable, net of
allowance for uncollectible
accounts of $26,439 and
$32,805 897,776 623,287
Inventory 48,382 8,168
Prepaid expenses and deposits 249,459 32,593
Deferred income taxes 11,801 13,122
--------- ---------
Total current assets 1,415,029 960,806
Property and equipment, at cost 331,510 314,998
Less accumulated depreciation
and amortization (160,073) (150,938)
--------- ---------
Net property and equipment 171,437 164,060
Other assets:
Capitalized software costs,
net of accumulated amortization
of $1,048,802 and $1,000,730 853,764 764,505
Organizational costs 31,564
Goodwill, net of accumulated
amortization of $6,021 234,814
Deferred income taxes net of
valuation 1,361,669 1,506,032
--------- ---------
Total other assets 2,481,811 2,270,537
Total Assets $ 4,068,277 $ 3,395,403
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable trade $ 216,846 $ 132,156
Accrued liabilities 358,462 319,818
Accounts payable - Affiliate 86,824 18,000
Customer Deposits 138,474 125,739
Current portion of long term debt 32,442 8,021
Income taxes payable 16,510 9,512
--------- ---------
Total current liabilities 849,558 613,246
Long-term debt 85,494 58,000
Capital lease obligation 49,466 46,761
--------- ---------
Total liabilities 984,518 718,007
Commitments and contingencies 0 0
Stockholders' Equity
Preferred Stock, $.001 par value;
Authorized - 50,000,000 shares
- issued and outstanding - none 0 0
Common Stock, $.025 par value
Authorized 15,000,000 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 211,114
--------- ---------
Total stockholders' equity 3,083,759 2,677,396
Total liabilities and stockholders' equity
$ 4,068,277 $ 3,395,403
--------- ---------
The accompanying notes are an integral part of the financial
statements.
THE AMERICAN EDUCATION CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED March 31, 1998 AND 1997
(unaudited)
31-Mar-98 31-Mar-97
Net Sales $ 1,170,220 $ 772,741
Cost of goods sold 121,454 87,591
---------- ---------
Gross profit 1,048,766 685,150
Operating expenses:
Sales and marketing 364,530 174,094
Operations 64,506
General and administrative 177,959 280,331
Amortization of capitalized
software costs 47,851 19,870
---------- ----------
Total operating expenses 654,846 474,295
Operating earnings 393,920 210,855
Other income / (expense)
Interest income 2,386 524
Interest expense (4,228) (1,693)
Other (28,280) 3,036
---------- ----------
Net earnings before taxes 363,798 212,722
Deferred income taxes 145,684 76,580
Valuation allowance -
change at beginning of year (76,580)
Current income taxes 7,000
---------- ----------
Net earnings $ 211,114 $ 212,722
---------- ----------
Earnings Per Share
Basic $ 0.017 $ 0.017
Diluted $ 0.016 $ 0.015
The accompanying notes are an integral part of the financial
statements.
THE AMERICAN EDUCATION CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(unaudited) 31-Mar-98 31-Mar-97
Cash flows from operating activities:
Net income $ 211,114 $ 212,721
Adjustments to reconcile net
income to net cash provided by
(used in) operating activities:
Depreciation and amortization 63,228 39,232
Reserve for bad debts (6,366) (3,010)
Stock issued for compensation 20,249
Changes in assets and liabilities:
Accounts receivable (183,019) (279,406)
Inventories (16,233) (1,716)
Prepaid expenses and deposits (206,562) 18,976
Deferred tax asset 145,684
Accounts payable and accrued
Liabilities 90,608 20,101
Accounts payable - Affiliate 68,824
Income taxes payable 6,998
Customers deposits (14,905) (46,736)
--------- ---------
Net cash provide by (used in)
operating activities 179,620 (39,838)
Cash flow from investing activities:
Acquisiton of net assets of
Subsidiary (70,275) -
Capitalized software costs (137,331) (92,044)
Capitalization of organizational
Costs (31,564) -
Net property additions (12,646) (6,286)
--------- ---------
Net cash used in investing
Activities (251,816) (98,330)
Cash flows from financing activities:
Payments on notes/lease
Obligations (3,829) -
--------- --------
Net cash provided by
financing activities (3,829) -
Net increase (decrease) in cash (76,025) (138,168)
Cash at beginning of the period 283,636 193,347
--------- --------
Cash at end of the period $ 207,611 $ 55,179
--------- --------
Supplemental Cash Flow Disclosures:
Interest paid $ - $ -
The accompanying notes are an integral part of the financial
statements.
THE AMERICAN EDUCATION CORPORATION
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIODS ENDED MARCH 31, 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 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 financial statements at March 31, 1998, and for the
three month periods ended March 31, 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-month period ended March 31, 1998 are
not necessarily indicative of the results that can be expected
for the entire year.
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets 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.
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 and consist primarily of raw materials.
7. Property and Equipment
Property and equipment is stated at cost. Depreciation is
provided on the straight-line basis over the estimated useful
life of the assets, 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:
March 31, 1998 March 31, 1997
Basic 12,206,985 12,170,828
Diluted 13,361,931 13,833,730
11. Stockholders' 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.
12. Commitments and Contingencies
The Company amortizes capitalized software costs over the
product's estimated useful life. Due to inherent technological
changes in the software development industry, the period over
which such capitalized software cost is being amortized may have
to be accelerated.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
This report contains forward-looking statements. These forward-
looking statements can generally be identified as such because
the context of the statement will include words such as the
Company "believes", "plans", "intends", "anticipates", "expects",
or words of similar import. Similarly, statements that describe
the Company's future plans, objectives, estimates, or goals
are also forward-looking statements. Such statements address
future events and conditions concerning capital expenditures,
earnings, litigation, liquidity, capital resources, and
accounting matters. Actual results in each case could differ
materially from those currently anticipated in such statements by
reason of factors such as economic conditions, including changes
in customer demands; future legislative, regulatory and
competitive developments in markets in which the Company
operates; and other circumstances affecting anticipated revenues
and costs.
LIQUIDITY AND CAPITAL RESOURCES
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 $.1346 to $.50 per common share. These loans
were converted into common stock of the Company in June of 1996.
At December 31, 1997 and March 31, 1998, $50,000 of convertible
notes, with a conversion price per share of $.1346, remain
outstanding.
The Company's working capital was $565,470 at March 31, 1998, an
improvement of $217,910 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.
RESULTS OF OPERATIONS - QUARTER ENDED MARCH 31, 1998
AS COMPARED TO THE QUARTER ENDED MARCH 31, 1997
Revenues
Net software revenues for the three months ended March 31, 1998,
totaled $1,170,220 compared to net software revenues of $772,741
for the same period in 1997. This represents an increase of
approximately 51% in 1998. The Company now has approximately
3,400 registered school users of its products.
Cost of Goods Sold
Cost of goods sold for the three months ended March 31, 1998,
increased by approximately 39%, from $87,591 in 1997 to $121,454
in 1998, even though sales increased by 51%. 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.
These improvements in overall gross margins were achieved with
the consolidation in the first quarter of 1998 of the results of
operations of Projected Learning Programs, Inc. Projected
Learning Programs, Inc. is a catalog reseller of specialty
educational products and normally earns gross margins of
approximately 45%. During the first quarter Projected Learning
Programs, Inc. produced sales revenue of $89,754, gross profits
of $39,934 which was 44% of sales, and net income of $7,370,
which was 8% of sales. Projected Learning Systems, Inc. was
acquired by the Company during the quarter ended March 31, 1998
with the effective date of this acquisition of January 1, 1998.
Total operating expenses recorded for the three months ended
March 31, 1998, were $654,846, compared to $474,295 for the
previous year. This represents an increase of approximately 38%.
Selling and marketing costs increased by approximately 109%, from
$174,095 for the three months ended March 31, 1997 to $364,530
for the current period. The increase in 1998 is related to
expanded sales and marketing efforts and higher commission costs
related to the higher sales levels achieved. General &
administrative expenses decreased by approximately 37% during
1998, from $280,331 to $177,959. In the first quarter of 1998,
for reporting purposes, the Company altered its form of
presentation of its Statements of Operations to highlight and
report separately General & Administrative and Operations
expenses to provide additional detail for its shareholders. The
combined total of General & Administrative and Operations
categories for the first quarter of 1998 was $242,465 which
represents a decline of 13% from the single line item General &
Administrative expense level for the comparable 1997 quarter.
This decrease is a function of management's control of costs and
expense levels during the period.
Operating earnings for the quarter ended March 31, 1998 were
$393,920 versus $210,855 for the comparable 1997 quarter
representing an increase of $183,065 or 87%. Charges to Other
Income during the quarter were primarily for interest and the
accrual of authorized amounts for the employee bonus and
incentive pool and totaled $30,122 resulting in pre-tax net
income of $363,799.
The Company's pre-tax net income for the period ending March 31,
1998 was $363,799, which was 71% higher than the pre-tax income
of $212,722 reported by the Company for the same period of 1997.
Net after-tax earnings for the three months ended March 31, 1998
decreased by approximately 1% as compared to the prior year as a
result of a change in the Company's tax status. This decline
from $212,722 in 1997 to $211,114 in 1998 reflects the fact that
the Company's earnings are now presented as being subject to
state and federal tax treatment.
Diluted earnings per share for the period ended March 31, 1998
were $0.016 versus $0.015 for the same 1997 period, on the basis
of the weighted average of 13,361,931 shares outstanding. At
December 31, 1997 the Company had 13,211,071 shares outstanding
on a diluted basis. The change in shares outstanding are a
primarily a result of shares issued for services and employee
options for which the initial qualifying 6 month period had
lapsed.
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 the Company's
products. The Company is now equipped with Macintosh and Windows
program shells that facilitate the rapid and inexpensive
development of new subject titles. Management also believes that
the Company is better positioned to compete in the educational
software market as a result of its software development tools and
capabilities and growing marketing strengths within the school
and home markets. In 1997, the Company initiated planning for
products and methods for electronic distribution through the
Internet. This area which is now emerging as a major market
channel, is under study and the Company is investigating sources
for intellectual property and potential partnerships with other
publishers on which it may base future Internet commerce.
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
the continued profitable expansion of the business.
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. As
of March 31, 1998 the Company was current with all filings with
the SEC through the end of the fiscal year December 31, 1997.
During July 1997, the Company filed a trademark infringement
action against Jostens Learning Corporation for unauthorized use
of the Company's registered A+ trademark. It is the belief of
the Company that Jostens' unauthorized use of its registered
trademark is damaging to the Company and is causing significant
confusion for the Company's customers. The Company has
historically and successfully defended its trademark position
when it became aware of illegal and unauthorized use.
Item 2. Changes in Securities
On January 23, 1998 the Company granted to several of its
employees options to purchase an aggregate of 230,500 shares of
the Common Stock at prices ranging from $0.50 to $0.75 per
share. Such options were issued in private transactions exempt
from the registration requirements of the Securities Act pursuant
to Section 4 (2) thereof.
On January 23, 1998 the Company issued the following number of
shares of Common Stock as bonus compensation to the following
individuals:
Jeffrey E. Butler 10,000
Thomas A. Shively 10,000
Jeffrey E. Butler, Jr. 10,000
Patrick A. Timmons 7,500
Newton Fink 1,000
Monty McCurry 1,000
Stephen Prust 1,000
Such shares of stock were issued in private transactions exempt
from the registration requirements of the Securities Act pursuant
to Section 4 (2) thereof.
On February 26, 1998 the Company acquired Projected Learning
Programs, Inc. in exchange for cash, a promissory note, and
175,000 shares of Common Stock, which were issued to Richard F.
Carle, Laura Carle, and James F. Cowee in an unregistered
transaction. Such shares were issued in private a transaction
exempt from the registration requirements of the Securities Act
pursuant to Section 4 (2) thereof.
Item 3. Default Upon Senior Securities
Omitted from this report as inapplicable.
Item 4. Submission of Matters to Vote of Securities Holders
The Company will hold its annual meeting of shareholders at 10:00
AM on May 29, 1998 at the Waterford Hotel, 6300 Waterford Blvd.,
Oklahoma City, OK 73118. Matters upon which the shareholders
will be asked to vote are: (i) Re-election of the current
directors, (ii) the expansion of the Company's authorized number
of common shares from 15,000,000 to 30,000,000 shares, (iii)
ratification of Steakley, Gilbert and Bozalis, P.C., as the
Company's auditors, and (iv) the approval of a Directors' Stock
Option Plan and the Company's Stock Option Plan for employees.
Item 5. Other Information
On February 26, 1998, the Company acquired the business of
Projected Learning Programs, Inc. ("P.L.P.") pursuant to the
terms of an Agreement and Plan of Merger, among the Company,
P.L.P., PLP Holdings, Inc. (a subsidiary of the Company formed to
accommodate the merger), and Richard Carle, Jr. and James F.
Cowee (the "Sellers"). The Company paid the Sellers for the
stock of P.L.P. as follows; 175,000 shares of the Company's $.025
par value common stock, cash of $100,000 and a $50,000 promissory
note. The note bears interest at 10% per annum and is payable in
24 monthly installments of $2,307 beginning March 26, 1998. The
business of P.L.P. is to produce, publish and distribute computer
software catalogs to various educational institutions throughout
the United States. The operations of P.L.P. were relocated from
California to Oklahoma City in March 1998 and will be operated as
a subsidiary of the Company. The closing date of the transaction
will be effective as of January 1, 1998.
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* Articles of Incorporation of The
American Education Corporation
Exhibit 3.2* Bylaws of The American Education
Corporation
Exhibit 4* Form of Certificate evidencing
ownership of common stock of
The American Education Corporation
Exhibit 10.1** The Directors' Stock Option Plan
Exhibit 10.2** The Stock Option Plan for
Employees
Exhibit 27.1*** Financial Data Schedule (filed
only electronically with the SEC)
* 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)
** Incorporated by reference as Exhibits B and C to that
Definitive Proxy Statement filed on April 24, 1998.
*** Filed herewith
B. Reports on Form 8-K
On March 12, 1998 the Company filed Form 8-K describing the
Company's acquisition of Projected Learning Programs, Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
The American Education Corporation
May 15, 1998 By: \s\Jeffrey E. Butler,
Chief Executive Officer
Chairman of the Board
Chief Financial Officer
Treasurer
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