SecProbe.io

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<TYPE>LETTER
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<FILENAME>filename1.txt
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								November 23, 2005

Jeffrey E. Butler
President and CEO
The American Education Corporation
7506 N. Broadway Extension, Suite 505
Oklahoma City, Oklahoma 73116

RE: 	Amendment No. 1 to Schedule 13E-3
	Filed October 19, 2005
	File No. 5-54041

	Form 10-KSB for fiscal year ended December 31, 2004, as
amended
	Form 10-QSB for the fiscal quarter ended March 31, 2005, as
amended
	Form 10-QSB for the fiscal quarter ended June 30, 2005
	File No. 0-10873

Dear Mr. Butler:

We have reviewed the filings referenced above and your response
letter dated October 18, 2005 and have the following additional
comments.

Schedule 13E-3

1. Please ensure that you include page numbers in the revised
version
you file via EDGAR.
We refer you to comment 1 of our letter dated July 27, 2005.
Please
revise to include the information required under Items 1003(c)(3)
and
(4) of Regulation M-A.

2. We refer you to comment 2 of our letter dated July 27, 2005.
Please update your response to this comment by providing the data
in
your table as of a more recent date.  We note that there is active
trading in your stock and that the calculations are affected by
the
passage of time.  Please also provide additional analysis of the
underlying assumptions or facts used to make your estimate that
one-
half of the shares held in street name are held by shareholders
with
less than 2,000 shares.  Further, your calculations indicate that
you
will have 280 holders of record after the reverse-split.  We note
that that calculation involves an estimate of the street name
holders
of record.  Please confirm, if true, that you are calculating
record
holders for purposes of this transaction in accord with Rule 12g-
5.
Also see interpretation M.30 of the July 1997 manual of publicly
available telephone interpretations for guidance concerning the
calculation of record shareholders under Rule 12g5-1.

3. We note your response to comment 5.  Please make any changes in
the document to be disseminated to security holders in your next
revised filing.

4. We refer you to comment 6 of our letter dated July 27, 2005.
We
note the information responsive to this comment contained in your
Form 10-KSB/A is as of June 30, 2005.   The information concerning
the trading markets, price of your common stock and dividends
required by Item 1002(c)&(d) of Regulation M-A should be presented
for each quarter during the past two years, including the quarter
ended September 30, 2005.  Further, we refer you to comments 1, 10
and 21 of our letter dated July 27, 2005.  For certain of your
responses it appears as if you will rely on the information
contained
in your Form 10-KSB/A.  However we note your Form 10-KSB/A was
last
revised on September 9, 2005, and that certain information, for
example security ownership should be presented as of a more recent
date that is as close as practicable to the mailing date of the
disclosure document.  Revise the document to be disseminated to
security holders to include this information directly in that
document, as of the most recent practicable date.  In addition,
revise your exhibit table to include all documents incorporated by
reference, as required by General Instruction F of Schedule 13E-3
and
Item 1016(a) of Regulation M-A.

Item 6.  Purpose of the Transaction

5. We reissue comment 9.  The disclosure on page 5 of the document
to
be disseminated to security holders states that you have "no plans
to
engage in any, [sic] of the activities set forth in Section
1000(c)(1)-(c)(8) of Regulation M-A, except as follows . . . ."
Recitation of the particular applicable Item from Regulation M-A
does
not provide security holders with meaningful disclosure.
Eliminate
the reference to the Item requirements and provide the requested
disclosure.  Refer to General Instruction E of Schedule 13E-3.
Also
note that this information is required by Item 1006 of Regulation
M-
A.

Item 13. Financial Statements

Comparative Financial Information
Consolidated Statements of Income: For the years ended December
31,
2004 and 2003

6. We note your brief response to comment 12 of our letter dated
July
27, 2005.  Please revise your analysis of why you determined
financial statements are not material; for example consider
providing
additional quantitative analysis on the results the transaction
will
have on your balance sheet.  We also note that many of your
unaffiliated security holders will remain security holders after
the
transaction, and many are able to purchase or sell securities
prior
to the transaction to determine whether or not they will be cashed
out.

Item 16.  Exhibits

7. We note your response to comment 16.  Revise the exhibit table
in
the Schedule 13e-3 to incorporate the relevant loan documents by
reference from the prior filing or file the loan documents as
exhibits, as required by Item 1016(b) of Regulation M-A.  Refer to
General Instruction F of Schedule 13E-3.

Exhibit A. Disclosure Statement

Summary Term Sheet, page 1

8. Please expand the text concerning the recent trading prices to
clarify whether the prices presented are bid or asked prices.  To
provide information that will be useful to shareholders in the
context of an involuntary sale transaction and to ensure
comparability of the data presented, it appears the range of bid
prices should be presented for each period.  This comment is also
applicable to the stock price information presented under the
heading
"Special Factors-Factors Considered by the Board of Directors".

Introduction, page 3

9. Please expand this section to provide a brief overview of the
proposed transaction concerning Learning Pathways, which is
referenced in Item 5(b) of the Schedule 13E-3 and in the Form 8-K
reporting an event of September 2, 2005.  Summarize the status of
the
proposed transaction, identify the proposed purchaser, describe
any
relationships between American Education and the proposed
purchaser
and their affiliates, and disclose the material terms of the
transaction that the parties propose.  Provide us a copy of any
letter of intent or similar written document concerning the
proposed
transaction.  Provide a summary of management`s views about the
financial and operational impact of the proposed transaction.
Please
also revise your "Purpose of the Transactions" section
accordingly.

Related Party Transactions

10. With respect to comment 7 of our letter dated July 27, 2005,
please disclose that the note of October 26, 2000, provided that
principal and interest payments on the note were to be paid only
in
cash in a lump sum on October 23, 2003.  Describe when the cash-
only
payment provision of the note was modified to allow repayment with
shares of stock and explain how this amendment to the loan terms
was
agreed to.  Discuss why the parties agreed that shares delivered
to
discharge the indebtedness should be valued at a market price in
effect when the loan was made.  Disclose that the market price for
the stock was $.60 per share when the loan was repaid and that the
implied market value of the shares delivered on the date the note
was
cancelled was $120,000.  Disclose the accrued interest on the loan
to
the time of repayment.  Expand to indicate the basis on which the
board of directors concluded that the modification of the terms of
the loan and the receipt of assets having a market value of
$120,000
in exchange for the cancellation of $300,000 of debt plus accrued
interest was fair and in the best interests of the company.
Explain
why forgiveness of indebtedness of $180,000 plus accrued interest
was
not included in the summary compensation table for the period.

Special Factors, page 4

11. Provide support for the statement in the first paragraph that
sales by affiliates caused the stock market capitalization to drop
to
a five-year low.  Tell us how you concluded that the market price
changes were a consequence of those sales and were not
significantly
affected by historical financial results of the company, investor
perceptions of the company`s future prospects or other factors.

12. In the second paragraph of this section you indicate that the
company considered opportunities that would allow it to "continue
to
operate profitably".  Please identify the period of profitable
operations to which you refer and put that period of operations in
an
appropriate context.

13. Clarify whether the discussions with Mr. Smith relating to his
investment in the company included discussions of the company`s
status as a reporting entity and the potential plan of the company
to
take steps to terminate its reporting obligations.  If discussed,
describe Mr. Smith`s views concerning this matter as well as any
relationship between the company`s plans in this respect and Mr.
Smith`s decision to invest.

Reasons for the Transaction

14. We note your response to prior comment 23 of our letter dated
July 27, 2005.  This section should include the additional
information contained in your supplemental response.  For example
please include the information contained in the second and fifth
paragraphs.

15. We note your response to prior comment 23 of our letter dated
July 27, 2005.  You disclose discussions were ongoing since "as
early
as 2000" but have disclosed almost no facts concerning those
conversations.  Identify the board meeting at which these
conversations were first discussed, when you first spoke with
outside
counsel concerning the proposed transactions, and if you
considered
seeking the advice of any third party concerning the proposed
transaction.

16. We note your response to prior comment 23 of our letter dated
July 27, 2005.  We note references to "various stockholder
suggestions," that Mr. Smith approached "principal stockholders"
concerning his interest in acquiring the Company and that the
Company`s "principal stockholders" were not interested in a sale
of
the Company to a third party.  Please revise to identify these
stockholders, as material, and disclose if all references to
principal stockholders refer to Messrs Garber, Schoolfield and
Weiss.
Consider discussing their relationship on a disaggregated basis if
their requests, discussions or opinions were not in unison.
Please
also provide specifics on the dates and discussions they had with
other affiliates, management and the full Board of Directors.

17. We note your response to prior comment 23 of our letter dated
July 27, 2005.  Advise why the stockholders were not interested in
the sale of the company to a third party and why the Board did not
pursue this alternative option.  Please revise your "Alternatives
to
the Transaction" section as well.

18. We note your response to prior comment 23 of our letter dated
July 27, 2005 and revised disclosure on the "established long-term
relationship" that Mr. Butler had with Mr. Smith.   Expand on the
specific nature of their relationship and also advise how this
relationship pertains to disclosure under "Factors Considered by
the
Board of Directors" that states Mr. Smith is considered an
unaffiliated person, who engaged in arms-length negotiations for
his
securities purchase.  If you believe the terms of that transaction
were no less favorable to the company than the terms of a
transaction
it could have effectuated with a non-affiliate, state this and
explain the basis of the statement.

19. We refer you to comment 23 of our letter dated July 27, 2005.
You have still have not described when and how specific proposals
were presented prior to the discussion of the structuring
transactions, who considered the proposals and the steps taken in
analyzing the proposals.

20. Provide additional details regarding the background of the
transaction with Mr. Smith.  For example, clarify whether the
going
private transaction was a condition or requirement arising from
the
transaction with Mr. Smith.  You state that the funds for this
transaction will come from working capital or your line of credit;
however, it appears from your background section that the
convertible
note recently issued to Mr. Smith, in an amount almost sufficient
to
cover the financing for this transaction, is related to the going-
private transaction.  Tell us Mr. Smith`s percentage of beneficial
ownership, including his beneficial ownership resulting from this
convertible note.  If Mr. Smith beneficially owns more than five
percent of your outstanding securities, be certain to include this
information in your beneficial ownership table.  Finally, because
Mr.
Smith has provided significant funds to the company, for which he
has
obtained a convertible note, provide us your detailed analysis
regarding whether he is an affiliate engaged in this Rule 13e-3
transaction.

21. For the most recent period provide specific details on Board
meetings held, and structuring discussions with counsel, with
reference to specific dates.  We note only a brief discussion on
the
events that led to the specific proposal that a reverse split
should
be implemented and the determination concerning the method that
would
be used.  The process whereby the reverse split ratio was selected
and the cash-out price was established should be described in
reasonable detail.

22. Please disclose the information provided in your response to
comment 26 of our letter dated July 27, 2005.

23. We note your response to comments 27 and 28 of our letter
dated
July 27, 2005.  Please revise to indicate whether there are any
provisions of state law that requires you to send or make
financial
or other information available to shareholders on a quarterly or
annual basis.  Please expand your statement of intent to provide
annual and quarterly financial statements to clarify how you will
"provide" the information, whether the annual financial statements
will be audited, and whether any additional analysis or narrative
will be provided.

Factors Considered by the Board of Directors

24. We note your response to comment 38.  The disclosure document
does not indicate a date when the board reached its fairness
determination.  Provide the date of the board`s fairness
determinations in your future filings or tell us when the board
plans
to finalize its determination.

25. We note your response to comment 30 of our letter dated July
27,
2005 that discusses your belief that this section encompasses a
discussion of fairness for each group of unaffiliated security
holders.  The board must provide a separate procedural and
substantive fairness determination with respect to each group of
unaffiliated security holders-the group that will be cashed out
and
the group that will remain security holders of the company.
Revise
the disclosure accordingly.  .

26. Consistent with prior comment 29 of our letter of July 27,
2005,
the factors considers should be enhanced to provide meaningful
information about how each factor considered was used in reaching
the
fairness determination with respect to each group of unaffiliated
shareholders, those  being cashed out, and those who will continue
to
hold your shares.  As previously noted in our comment 30, your
analysis encompasses unaffiliated shareholders within all
shareholders.  We note that unaffiliated shareholders have
different
interests than affiliated shareholders.

27. With respect to the board`s consideration of the difficulties
in
recruiting and retaining directors and the higher costs of
insurance
coverage for publicly-owned entities, state whether you have
experienced any significant difficulties in recruiting or
retaining
directors, and summarize any such difficulties.  Please tell us
whether there are any current plans, proposals or arrangements to
add
directors or otherwise modify the composition of your board of
directors if the company`s common stock is de-registered.

28. In your response to comments 29 and 48 of our letter dated
July
27, 2005, you emphasized historical price performance.  Due to
this
emphasis, please describe in additional detail the board`s
consideration that rece