10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2009

or

o	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:   -   001-33810

AMERICAN PUBLIC EDUCATION, INC.

(Exact name of registrant as specified in its charter)

Delaware	01-0724376
(State or other jurisdiction of	(I.R.S. Employer
Incorporation or organization)	Identification No.)

111 West Congress Street

Charles Town, West Virginia 25414

(Address, including zip code, of principal executive offices)

(304) 724-3700

(Registrant’s telephone number, including area code)

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 þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes o    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer þ
Non-accelerated filer o	Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

The total number of shares of common stock outstanding as of October 30, 2009 was 18,213,185.

AMERICAN PUBLIC EDUCATION, INC.

FORM 10-Q

INDEX

	Page
PART I – FINANCIAL INFORMATION
Item 1.     Financial Statements	3
Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations	10
Item 3.     Quantitative and Qualitative Disclosures About Market Risk	16
Item 4.     Controls and Procedures	16
PART II – OTHER INFORMATION
Item 1.     Legal Proceedings	17
Item 1A.  Risk Factors	17
Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 3.     Defaults Upon Senior Securities	17
Item 4.     Submission of Matters to a Vote of Security Holders	17
Item 5.     Other Information	17
Item 6.     Exhibits	17
SIGNATURES	19

2

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

AMERICAN PUBLIC EDUCATION, INC.

Consolidated Balance Sheets

(In thousands)

	As of September 30,		As of December 31,
	2009		2008
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	63,788	$	47,714
Accounts receivable, net of allowance of $680 in 2009 and $537 in 2008		8,427		6,188
Prepaid expenses		2,393		2,156
Income tax receivable		3,806		1,306
Deferred income taxes		1,235		640
Total current assets		79,649		58,004
Property and equipment, net		23,834		19,622
Other assets, net		1,622		1,187
Total assets	$	105,105	$	78,813
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,724	$	4,946
Accrued liabilities		5,726		5,250
Accrued bonus		2,559		1,825
Deferred revenue and student deposits		14,897		9,626
Total current liabilities		27,906		21,647
Deferred income taxes		4,550		3,691
Total liabilities		32,456		25,338
Commitments and contingencies (Note 2)
Stockholders’ equity:
Preferred stock, $.01 par value;
Authorized shares - 10,000; no shares issued or
outstanding		-		-
Common stock, $.01 par value;
Authorized shares - 100,000; 18,212 issued and
18,212 outstanding in 2009; 18,030 issued and
18,023 outstanding in 2008		182		180
Additional paid-in capital		135,391		132,078
Less cost of 6 shares of treasury stock		-		(295)
Accumulated deficit		(62,924)		(78,488)
Total stockholders’ equity		72,649		53,475
Total liabilities and stockholders' equity	$	105,105	$	78,813

The accompanying notes are an integral part of these consolidated financial statements.

3

AMERICAN PUBLIC EDUCATION, INC.

Consolidated Statements of Income

(In thousands, except share and per share amounts)

		Three Months Ended					Nine Months Ended
		September 30,					September 30,
		2009		2008			2009		2008
	(Unaudited)					(Unaudited)
Revenues		$	36,471	$	27,404		$	105,345	$	75,644
Costs and expenses:
Instructional costs and services			14,745		10,901			41,861		31,334
Selling and promotional			5,598		3,600			15,085		8,390
General and administrative			6,465		5,586			18,563		15,461
Depreciation and amortization			1,277		1,114			3,934		3,043
Total costs and expenses			28,085		21,201			79,443		58,228
Income from operations before
interest income and income taxes			8,386		6,203			25,902		17,416
Interest income, net			30		181			70		619
Income before income taxes			8,416		6,384			25,972		18,035
Income tax expense			3,404		2,568			10,408		6,889
Net income		$	5,012	$	3,816		$	15,564	$	11,146
Net Income per common share:
Basic		$	0.28	$	0.21		$	0.86	$	0.63
Diluted		$	0.27	$	0.20		$	0.82	$	0.59
Weighted average number of
common shares:
Basic			18,195,583		17,845,581			18,137,946		17,796,305
Diluted			18,910,456		18,850,558			18,899,522		18,805,922

The accompanying notes are an integral part of these consolidated financial statements.

4

AMERICAN PUBLIC EDUCATION, INC.

Consolidated Statements of Cash Flows

(In thousands)

		Nine Months Ended September 30
		2009			2008
	(Unaudited)
Operating activities
Net income		$	15,564		$	11,146
Adjustments to reconcile net income to net cash provided by operating activities
Provision for bad debt			143			240
Depreciation and amortization			3,934			3,043
Stock-based compensation			1,649			1,242
Stock issued for director compensation			142			147
Deferred income taxes			264			554
Changes in operating assets and liabilities:
Accounts receivable			(2,383	)		(2,232	)
Prepaid expenses			(237	)		(94	)
Income tax receivable			(2,500	)		(967	)
Accounts payable			(222	)		1,806
Accrued liabilities			476			1,624
Accrued bonus			734			426
Deferred revenue and student deposits			5,271			2,996
Net cash provided by operating activities			22,835			19,931
Investing activities
Capital expenditures			(7,758	)		(6,547	)
Capitalized program development costs and other assets			(823	)		(382	)
Net cash used in investing activities			(8,581	)		(6,929	)
Financing activities
Common stock issuance costs related to public offerings			-			(96	)
Cash received from issuance of common stock, net of issuance costs			505			488
Excess tax benefit from stock based compensation			1,315			1,005
Net cash provided by financing activities			1,820			1,397
Net increase in cash and cash equivalents			16,074			14,399
Cash and cash equivalents at beginning of period			47,714			26,951
Cash and cash equivalents at end of period		$	63,788		$	41,350
Supplemental disclosure of cash flow information
Income taxes paid		$	11,329		$	6,629

The accompanying notes are an integral part of these consolidated financial statements

5

AMERICAN PUBLIC EDUCATION, INC.

Notes to Consolidated Financial Statements

1. Nature of the Business

American Public Education, Inc. (“APEI”) together with its subsidiary (the “Company”) is a provider of exclusively online postsecondary education directed primarily at the needs of the military and public service communities that operates in one reportable segment. APEI has one subsidiary, American Public University System, Inc. (the “University System”), a West Virginia corporation, which is a regionally accredited post secondary education institution operating through two universities, American Military University and American Public University.

The University System achieved regional accreditation in May 2006 with The Higher Learning Commission of the North Central Association of Colleges and Schools and became eligible for federal student aid programs under Title IV for classes beginning in November 2006.

2. Basis of Presentation

The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).  All intercompany transactions have been eliminated in consolidation.   The financial statements do not include all of the information and footnotes required by GAAP for complete financial statement presentations. In the opinion of management, these statements include all adjustments (consisting of normal recurring adjustments) considered necessary to present a fair statement of our consolidated results of operations, financial position and cash flows. Operating results for any interim period are not necessarily indicative of the results that may be expected for the year ended December 31, 2009. This Quarterly Report on Form 10-Q should be read in conjunction with the Company’s consolidated financial statements and footnotes in its audited financial statements included in its Annual Report, on Form 10-K, for the year ended December 31, 2008.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Recent Accounting Pronouncements

In June 2009, the FASB issued Statement of Financial Accounting Standards No. 168, The FASB Accounting Standards CodificationTM and the Hierarchy of Generally Accepted Accounting Principles – a replacement of FASB Statement No. 162, (“SFAS 168”).  SFAS 168 establishes the FASB Accounting Standards Codification as the single source of authoritative non-governmental accounting principles recognized by the FASB to be applied in the preparation of financial statements in conformity with generally accepted accounting principles (GAAP).  SFAS 168 explicitly recognizes rules and interpretive releases of the Securities and Exchange Commission (SEC) under federal securities laws as authoritative GAAP for SEC registrants.  Effective September 15, 2009 we adopted FASB ASC Topic 105, which replaced SFAS 168.  The adoption of FASB ASC Topic 105 did not have a material impact on the Company’s financial statements.

In May 2009, the FASB issued Statement of Financial Accounting Standards No. 165, Subsequent Events, (“SFAS 165”).  SFAS 165 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued.  The effective date is for interim and annual periods ending after June 15, 2009.  Effective September 15, 2009 SFAS 165 was replaced by FASB ASC Topic 855.  We have reviewed our business activities through November 5, 2009, the issue date of our financial statements, and have no subsequent events to report.

6

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“SFAS 157”).  SFAS 157 defines and establishes a framework for measuring fair value.  In addition, SFAS 157 expands disclosures about fair value measurements.  In February 2009, FASB issued FASB Staff Position No. (FSP) 157-2 deferring the effective date of SFAS 157 to fiscal years beginning after November 15, 2008, and interim periods within those fiscal years for items within the scope of this FSP.  The effective date for the Company was January 1, 2009.  In April 2009, FASB issued FASB Staff Position No. (FSP) 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly.  FSP 157-4 reaffirms SFAS 157’s objective of fair value measurement to reflect how much an asset would be sold for in an orderly transaction.  Its effective date is for interim and annual periods ending after June 15, 2009 but it may be adopted early for the interim and annual periods ending after March 15, 2009.  Effective September 15, 2009, SFAS 157, FSP 157-2 and FSP 157-4 were replaced by FASB ASC Topic 820.

In April 2008, FASB issued FASB Staff Position No. (FSP) 142-3, Determination of the Useful Life of Intangible Assets.  This FSP amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, Goodwill and Other Intangible Assets.  The FSP is effective for financial statements issued for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years.  FSP 142-3 was effective for the Company on January 1, 2009.  Effective September 15, 2009 SFAS 142 was replaced by FASB ASC Topic 350 and FSP 142-3 was replaced by FASB ASC Topics 275 and 350.

In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141, (revised 2007), Business Combinations (“SFAS 141R”) which was amended and clarified in April 2009 when FASB issued FASB Staff Position No. (FSP) 141(R)-1.The Statement establishes revised principles and requirements for how the Company will recognize and measure assets and liabilities acquired in a business combination.  The Statement is effective for business combinations completed on or after the beginning of the first annual reporting period beginning on or after December 15, 2008.  In addition, in December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, Non-controlling Interests in Consolidated Financial Statements — An Amendment of ARB No. 51 (“SFAS 160”). SFAS 160 establishes new accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 requires non-controlling interests or minority interests to be treated as a separate component of equity and any changes in the parent’s ownership interest (in which control is retained) are to be accounted for as equity transactions. However, a change in ownership of a consolidated subsidiary that results in deconsolidation triggers gain or loss recognition, with the establishment of a new fair value basis in any remaining non-controlling ownership interests. SFAS 160 also establishes disclosure requirements that clearly identify and distinguish between the interests of the parent and the non-controlling interests.  SFAS 141R and 160 were effective for the Company on January 1, 2009.  Effective September 15, 2009 SFAS 141R and FSP 141R-1 were replaced by FASB ASC Topic 805 and SFAS 160 was replaced by FASB ASC Topic 810.

                The adoption of the above standards did not have a material impact on the financial statements for the three and nine months ended September 30, 2009 and is not expected to have a material impact on the Company’s financial statements.

Commitments and Contingencies

The Company accrues for costs associated with contingencies including, but not limited to, regulatory compliance and legal matters when such costs are probable and can be reasonably estimated. Liabilities established to provide for contingencies are adjusted as further information develops, circumstances change, or contingencies are resolved. The Company bases these accruals on management’s estimate of such costs, which may vary from the ultimate cost and expenses, associated with any such contingency.

From time to time the Company may be involved in litigation in the normal course of its business.  In the opinion of management, the Company is not aware of any pending or threatened litigation matters that will have a material adverse effect on the Company’s business, operations, financial condition or cash flows.   As of September 30, 2009, management believes there were no material commitments or contingencies requiring disclosure.

7

Concentration

Approximately 60% and 62% of the Company’s revenues for the three and nine months ended September 30, 2009, respectively, were derived from students who received tuition assistance from tuition assistance programs sponsored by the United States Department of Defense compared to approximately 64% and 65% of the Company’s revenues for the three and nine months ended September 30, 2008, respectively.  A reduction in this program by the United States Department of Defense could have a significant impact on the Company’s operations.

3. Net Income Per Common Share

Basic net income per common share is based on the weighted average number of shares of common stock outstanding during the period. Diluted net income per common share also increases the shares used in the per share calculation by the dilutive effects of options and restricted stock.  Stock options and restricted stock are not included in the computation of diluted earnings per share when their effect is anti-dilutive.  There were 98,587 anti-dilutive stock options excluded from the calculation for the three months ended September 30, 2009 and 84,809 anti-dilutive stock options excluded from the calculation for the nine months ended September 30, 2009 and there were none excluded for the three months and nine months ended September 30, 2008.

4. Income Taxes  

The Company is subject to U.S. Federal income taxes as well as income taxes of multiple state jurisdictions.  For Federal and state tax purposes, tax years 2005-2008 remain open to examination.  Currently, no examinations are open in any jurisdiction.

The actual combined effective tax rate for the three months and nine months ended September 30, 2009 was 40.5% and 40.1%, respectively.   These rates are in line with the 40.0% effective combined Federal and state statutory rate the Company was anticipating.

The Company does not anticipate any significant increases or decreases in unrecognized tax benefits within the next twelve months. 

5. Stock Based Compensation

On August 3, 2007, the Board of Directors adopted the American Public Education, Inc. 2007 Omnibus Incentive Plan (the “new equity plan”), and APEI’s stockholders approved the new equity plan on November 6, 2007. The new equity plan was effective as of August 3, 2007.  As of September 30, 2009 there were 629,772 shares available for grant under the plan.  Awards under the new equity plan may be stock options, which may be either incentive stock options or nonqualified stock options; stock appreciation rights; restricted stock; restricted stock units; dividend equivalent rights; performance shares; performance units; cash-based awards; other stock-based awards, including unrestricted shares; or any combination of the foregoing.

The Company has adopted the provisions of FASB Statement No. 123R — Share Based Payment, a revision of FASB Statement No. 123 — Accounting for Stock Based Compensation (“SFAS 123R”). This standard requires companies to recognize the expense related to the fair value of their stock-based compensation awards. The Company elected to use the modified prospective approach to transition to SFAS 123R, as allowed under the statement; therefore, the Company has not restated financial results for prior periods.

Stock-based compensation expense related to restricted stock grants is expensed over the vesting period using the straight-line method for Company employees and the graded-vesting method for members of the Board of Directors and is measured using APEI’s stock price on the date of grant. The fair value of each option award is estimated at the date of grant using a Black-Scholes option-pricing model that uses the assumptions noted in the following table. We calculate the expected term of stock option awards using the “simplified method” in accordance with Staff Accounting Bulletins (SAB) No. 107 and 110 because we lack historical data and are unable to make reasonable expectations regarding the future. We also estimate forfeitures of share-based awards at the time of grant and revise such estimates in subsequent periods if actual forfeitures differ from original projections. We make assumptions with respect to expected stock price volatility based on the average historical volatility of peers with similar attributes. In addition, we determine the risk free interest rate by selecting the U.S. Treasury three-year and five-year constant maturity, quoted on an investment basis in effect at the time of grant for that business day.

Effective September 15, 2009 SFAS 123R  and SABs 107 and 110 were replaced by FASB ASC Topics 505 and 718 in accordance with the adoption of SFAS 168 (Topic 105).

8

	September 30, 2009			September 30, 2008
Expected volatility		26.75%-29.20	%		26.23%-28.00	%
Expected dividends		0.00	%		0.00	%
Expected term, in years		4.0 - 4.5			4.0 - 4.5
Risk-free interest rate		1.00%-2.53	%		2.59% - 3.41	%
Weighted-average fair value of options
granted during the year	$	9.23		$	8.26

Options granted through September 30, 2009 vest ratably over periods of three to five years and expire in seven to ten years from the date of grant.  Option activity is summarized as follows (unaudited):

								Aggregate
				Weighted		Weighted-Average		Intrinsic
	Number			Average		Contractual		Value
	of Options			Exercise Price		Life (Yrs)		(In thousands)
Outstanding, December 31, 2008		1,257,441		$	7.02
Options granted		101,362		$	36.95
Awards exercised		(179,133	)	$	2.90
Awards forfeited		(4,665	)	$	30.23
Outstanding, September 30, 2009		1,175,005		$	10.13		6.19	$	29,118
Exercisable, September 30, 2009		634,521		$	5.79		6.28	$	18,365

The following table summarizes information regarding stock option exercises (unaudited):

	September 30, 2009		September 30, 2008
	(In thousands)
Proceeds from stock options exercised	$	519	$	322
Intrinsic value of stock options exercised	$	6,738	$	5,369
Tax benefit from exercises	$	1,699	$	1,047

The table below summarizes the restricted stock activity for the nine months ended September 30, 2009 (unaudited):

				Weighted-Average
	Number			Grant Price
	of Shares			and Fair Value
Non vested, December 31, 2008		48,988		$	22.27
Shares granted		30,177		$	36.88
Vested shares		(6,039	)	$	38.91
Shares forfeited		(2,182	)	$	33.23
Non vested, September 30, 2009		70,944		$	26.73

9

Stock based compensation cost charged against income during the three and nine month period ended September 30, 2009 and September 30, 2008 is as follows:

	Three Months Ended September 30,						Nine Months Edned September 30,
		2009			2008			2009			2008
		(Unaudited) (In thousands)						(Unaudited) (In thousands)
Instructional costs and services	$	123		$	55		$	356		$	167
Marketing and promotional		32			17			110			53
General and administrative		407			324			1,183			1,022
Stock-based compensation expense in operating income		562			396			1,649			1,242
Tax benefit		(203	)		(135	)		(589	)		(425	)
Stock-based compensation expense, net of tax	$	359		$	261		$	1,060		$	817

As of September 30, 2009, there was $2.8 million of total unrecognized compensation cost, representing $1.5 million of unrecognized compensation cost associated with share-based compensation arrangements, and $1.3 million of unrecognized compensation cost associated with non-vested restricted stock.  The total remaining cost is expected to be recognized over a weighted average period of  .82 years.

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

                The following discussion of our historical results of operations and our liquidity and capital resources should be read in conjunction with the consolidated financial statements and related notes that appear elsewhere in this report.

Forward-Looking Statements

Some of the statements contained in this Form 10-Q that are not historical facts are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”).  We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of the Exchange Act.  Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this Form 10-Q is filed with the Securities and Exchange Commission (“SEC”).  We may, in some cases, use words such as “project,” “believe,” “anticipate,” “plan,” “expect,” “estimate,” “intend,” “should,” “would,” “could,” “potentially,” “will,” or “may,” or other words that convey uncertainty of future events or outcomes to identify these forward-looking statements. The forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account information currently available to us.  These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us or are within our control.  If a change occurs, our business, financial condition and results of operations may vary materially from those expressed in our forward-looking statements.  There are a number of important factors that could cause actual results to differ materially from the results anticipated by these forward-looking statements.  These important factors include those that we discuss in this section of our Form 10-Q, in the “Risk Factors” section of our annual report on Form 10-K for the fiscal year ended December 31, 2008 (the “Annual Report”), in the “Risk Factors” section of our quarterly report on Form 10-Q for the quarter ended June 30, 2009 and in our various filings with the Securities and Exchange Commission.  You should read these factors and the other cautionary statements made in this Form 10-Q in combination with the more detailed description of our business in our Annual Report as being applicable to all related forward-looking statements wherever they appear in this quarterly report.  If one or more of these factors materialize, or if any underlying assumptions prove incorrect, our actual results, performance or achievements may vary materially from any future results, performance or achievements expressed or implied by these forward-looking statements.  We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

10

Overview

Background

American Public Education, Inc. is a provider of online postsecondary education directed primarily at the needs of the military and public service communities. We operate through two universities, American Military University, or AMU, and American Public University, or APU, which together constitute the American Public University System.

We were founded as American Military University, Inc. in 1991 and began offering graduate courses in January 1993. Following initial national accreditation by the Accrediting Commission of the Distance Education and Training Council, or DETC, in 1995, American Military University began offering undergraduate programs primarily directed to members of the armed forces. Over time, American Military University diversified its educational offerings in response to demand by military students for post-military career preparation. With its expanded program offerings, American Military University extended its outreach to the greater public service community, primarily police, fire, emergency management personnel and national security professionals. In 2002, we reorganized into a holding company structure, with American Public Education, Inc. serving as the holding company of American Public University System, Inc., which operates our two universities, AMU and APU. Our university system achieved regional accreditation in May 2006 with The Higher Learning Commission of the North Central Association of Colleges and Schools and became eligible for federal student aid programs under Title IV for classes beginning in November 2006.

The university system offers terms beginning on the first Monday of each month in either eight- or sixteen-week formats.  Semesters and academic years are established to manage requirements for participation in Title IV programs and to assist students who are utilizing Title IV programs in meeting eligibility requirements.

Summary

Net course registrations increased 42%  for the three month and nine month periods ended September 30, 2009 over the three month and nine month periods ended September 30, 2008.  Our revenue increased from $27.4 million to $36.5 million, or by 33%, and $75.6 million to $105.3 million, or by 39% for the three and nine month period ended September 30, 2009 over the three month and nine month period ended September 30, 2008, respectively.   Operating margins increased to 23.0% from 22.6% and to 24.6% from 23.1% for the three month and nine month period ended September 30, 2009 over the three and nine month period ended September 30, 2008, respectively.

Our difficulty in forecasting future growth rates and operating margins is in part due to our inability to fully estimate the actual impact of gaining access to Title IV programs. We first became eligible to use Title IV funds beginning with classes that started in November 2006.  Because of our limited history with Title IV programs and because we cannot estimate the growth of new students that may result from our participation in Title IV programs, estimating the costs and expenses associated with administering Title IV programs and complying with the associated regulations is difficult.  For the year ended December 31, 2008, 14% of our net course registrations were from students using financial aid under Title IV programs.  For the three and nine months ended September 30, 2009, 20% and 18%, or approximately 10,900 and 26,800, respectively, of our net course registrations were from students using financial aid under the Title IV programs compared to 14% and 13%, or approximately 5,600 and 13,800 for the three and nine months ended September 30, 2008, respectively.  This represents an increase of 94.6% and 94.2%, respectively.

Our results of operations normally fluctuate as a result of variations in our business, principally due to changes in enrollment, and we expect that going forward as our overall growth rate declines we will see a more pronounced seasonal fluctuation in new enrollments.  While our number of enrolled students has grown in each sequential quarter over the past three years, we believe that the growth in the number of enrolled students will tend to be slower in the first half of each year and the growth in the number of enrolled students will be proportionally greatest in the fourth quarter of each year.  Because a significant portion of our general and administrative expenses do not vary proportionately with fluctuations in revenues, we expect to see seasonal fluctuations in our results of operations. Due to our historical growth rates and our relatively new participation in Title IV programs, these patterns are hard to predict and may change, including as a result of new program introductions and increased enrollments of students.

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Regulation of our Business

American Public University System is accredited by The Higher Learning Commission of the North Central Association of Colleges and Schools, one of six regional accrediting agencies recognized by the Secretary of Education, and by the Accrediting Commission of the Distance Education and Training Council, or DETC, which is a national accrediting agency recognized by the Secretary of Education.  To remain accredited, American Public University System must continuously meet certain criteria and standards and comply with certain policies relating to, among other things, performance, governance, institutional integrity, educational quality, faculty, administrative capability, resources and financial stability.  Because the for-profit education sector is growing at such a rapid pace, it is possible that these accrediting bodies would respond to that growth by adopting additional criteria, standards and policies that are intended to monitor, regulate or limit the growth of for-profit institutions like us.  For example, in June 2009, The Higher Learning Commission adopted new policies related to institutional control, structure and organization.  Part of The Higher Learning Commission’s rationale for these changes was to better define the range of its oversight of transactions related to change of ownership at institutions. The new policies extend The Higher Learning Commission’s oversight to transactions that change, or have the potential to change, the control of an institution or its fundamental structure and organization. Under the new policies, The Higher Learning Commission also now extends its oversight to defined changes that occur in a parent or controlling entity, and not necessarily in the institution itself.  Actions by, or relating to, an accredited institution, including a significant acquisition of another institution, significant changes in board composition or organizational documents, and accumulations by one stockholder of greater than 25% of the capital stock, could open up an accredited institution to additional reviews by The Higher Learning Commission and possible change from an accredited status to candidate status, which enhances the risks of these types of actions.  In particular, the change from accredited status to candidate status could adversely impact an institution’s ability to participate in Title IV programs.  For profit institutions may also be less attractive acquisition candidates because of the enhanced scrutiny of change in control transactions, the explicit ability to move an institution from accredited status to candidate status and The Higher Learning Commission will now also be looking more closely at entities that own accredited institutions.

Additional information on the accreditation process and its impact on our operations is contained in our Annual Report on Form 10-K, including in the Regulation of Our Business section of Part I, Item 1.

Critical Accounting Policies

Critical accounting policies are disclosed in our consolidated financial statements and footnotes in the audited financial statements for the fiscal year ended December 31, 2008 included in our Annual Report on Form 10-K, for the fiscal year ended December 31, 2008.  There have been no significant changes in our critical accounting policies from those disclosed in the Form 10-K.

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The following table sets forth statements of operations data as a percentage of revenues for each of the periods indicated:

	Three Months						Nine Months
	Ended September 30,						Ended September 30,
	2009			2008			2009			2008
Revenues		100.0	%		100.0	%		100.0	%		100.0	%
Costs and expenses:
Instructional costs and services		40.4			39.8			39.7			41.4
Selling and promotional		15.4			13.1			14.3			11.1
General and administrative		17.7			20.4			17.7			20.4
Depreciation and amortization		3.5			4.1			3.7			4.0
Total costs and expenses		77.0			77.4			75.4			76.9
Income from operations before
interest income and income taxes		23.0			22.6			24.6			23.1
Interest income, net		0.1			0.7			0.1			0.7
Income from operations
before income taxes		23.1			23.3			24.7			23.8
Income tax expense		9.3			9.4			9.9			9.1
Net Income		13.8	%		13.9	%		14.8	%		14.7	%

Three Months Ended September 30, 2009 Compared to Three Months Ended September 30, 2008

Revenues. Our revenues for the three months ended September 30, 2009 were $36.5 million, an increase of $9.1 million, or 33%, compared to $27.4 million for the three months ended September 30, 2008. The increase was primarily a result of an increase in the number of net course registrations.

Costs and Expenses.  Costs and expenses were $28.1 million for the three months ended September 30, 2009, an increase of $6.9 million, or 33%, compared to $21.2 million for the three months ended September 30, 2008.  Costs and expenses as a percentage of revenues decreased to 77.0% for the three months ended September 30, 2009 from 77.4% for the three months ended September 30, 2008.   This percentage decrease resulted from the factors described below.

Instructional costs and services expenses. Our instructional costs and services expenses for the three months ended September 30, 2009 were $14.7 million, representing an increase of 35% from $10.9 million for the three months ended September 30, 2008.  This increase was directly related to an increase in the number of classes offered due to the increase in net course registrations.  Instructional costs and services expenses as a percentage of revenues were 40.4% for the three months ended September 30, 2009, compared to 39.8% for the three months ended September 30, 2008.   This increase was primarily due to the number of staff and expenses associated with an increase in the number of classes offered increasing at a more rapid rate than enrollment.

Selling and promotional expenses. Our selling and promotional expenses for the three months ended September 30, 2009 were $5.6 million, representing an increase of 56% from $3.6 million for the three months ended September 30, 2008.  This increase was primarily due to an increase in civilian outreach, online, and media advertising expenses.  Selling and promotional expenses as a percentage of revenues increased to 15.4% for the three months ended September 30, 2009 from 13.1% for the three months ended September 30, 2008.  This increase reflects additional marketing to expand awareness of the APU brand to the civilian market.

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General and administrative expenses. Our general and administrative expenses for the three months ended September 30, 2009 were $6.5 million representing an increase of 16% from $5.6 million for the three months ended September 30, 2008.  The increase in expense was a result of an increase in expenditures for stock-based compensation, recruiting, financial aid processing fees, and an increase in expenditures for technology, staffing, and facilities required to support a larger student body.  General and administrative expenses as a percentage of revenues decreased to 17.7% for the three months ended September 30, 2009 from 20.4% for the three months ended September 30, 2008.  The decrease was primarily due to efficiencies realized through a higher volume of students and the number of staff and related expenses increasing at a slower rate than enrollment.

Depreciation and amortization. Depreciation and amortization expenses were $1.3 million for the three months ended September 30, 2009, compared with $1.1 million for the three months ended September 30, 2008.  This represents an increase of 18%.  This increase resulted from greater capital expenditures and higher depreciation and amortization on a larger fixed asset base and from the amortization of a software license related to our learning management system.

Stock-based compensation expenses. Stock-based compensation expenses included in instructional costs and services, selling and promotional, and general and administrative expense for the three months ended September 30, 2009 were $562,000 in the aggregate, representing an increase of 42% from $396,000 for the three months ended September 30, 2008.  The increase in stock-based compensation for the three months ended September 30, 2009 is primarily attributable to stock options and restricted stock granted during the three months ended September 30, 2009 and continued vesting of prior grants.

Interest income, net. Our interest income, net decreased by $152,000 for the three months ended September 30, 2009 to $29,000 from $181,000 for the three months ended September 30, 2008, representing a decrease of  83%.  This decrease is due to lower investment returns because of a decline in interest rates and from the adoption of a more conservative investment strategy offset by increased cash on hand.

Income tax expense. We recognized income tax expense for the three months ended September 30, 2009 and 2008 of $3.4 million and $2.6 million, respectively, or effective tax rates of 40.5% and 40.2%, respectively.

Net income. Our net income was $5.0 million for the three months ended September 30, 2009, compared to net income of $3.8 million for the three months ended September 30, 2008, an increase of $1.2 million, or 31%.  This increase was related to the factors discussed above.

Nine Months Ended September 30, 2009 Compared to Nine Months Ended September 30, 2008

Revenues. Our revenues for the nine months ended September 30, 2009 were $105.3 million, an increase of $29.7 million, or 39%, compared to $75.6 million for the nine months ended September 30, 2008. The increase was primarily a result of an increase in the number of net course registrations.

Costs and Expenses.  Costs and expenses were $79.4 million for the nine months ended September 30, 2009; an increase of $21.2 million, or 36%, compared to $58.2 million for the nine months ended September 30, 2008.  Costs and expenses as a percentage of revenues decreased to 75.4% for the nine months ended September 30, 2009 from 76.9% for the nine months ended September 30, 2008.   This percentage decrease resulted from the factors described below.

Instructional costs and services expenses. Our instructional costs and services expenses for the nine months ended September 30, 2009 were $41.9 million, representing an increase of 34% from $31.3 million for the nine months ended September 30, 2008.  This increase was directly related to an increase in the number of classes offered due to the increase in net course registrations.  Instructional costs and services expenses as a percentage of revenues were 39.7% for the nine months ended September 30, 2009, compared to 41.4% for the nine months ended September 30, 2008.  The decrease was primarily due to efficiencies realized through a higher volume of students and the number of staff and expenses increasing at a slower rate than revenue.

Selling and promotional expenses. Our selling and promotional expenses for the nine months ended September 30, 2009 were $15.0 million, representing an increase of 79% from $8.4 million for the nine months ended September 30, 2008.  This increase was primarily due to an increase in civilian outreach, online, and media advertising expenses.  Selling and promotional expenses as a percentage of revenues increased to 14.3% for the nine months ended September 30, 2009 from 11.1% for the nine months ended September 30, 2008.  This increase reflects additional marketing to expand awareness of the APU brand to the civilian market.

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General and administrative expenses. Our general and administrative expenses for the nine months ended September 30, 2009 were $18.6 million representing an increase of 20% from $15.5 million for the nine months ended September 30, 2008.  The increase in expense was a result of an increase in stock-based compensation, recruiting, professional services, financial aid processing fees, and an increase in expenditures for technology, staffing, and facilities required to support a larger student body.  General and administrative expenses as a percentage of revenues decreased to 17.7% for the nine months ended September 30, 2009 from 20.4% for the nine months ended September 30, 2008.  The decrease was primarily due to efficiencies realized through a higher volume of students and the number of staff and related expenses increasing at a slower rate than revenue.

Depreciation and amortization. Depreciation and amortization expenses were $3.9 million for the nine months ended September 30, 2009, compared with $3.0 million for the nine months ended September 30, 2008.  This represents an increase of 30%.  This increase resulted from greater capital expenditures and higher depreciation and amortization on a larger fixed asset base and from the amortization of a software license related to our learning management system.

Stock-based compensation expenses. Stock-based compensation expenses included in instructional costs and services, selling and promotional, and general and administrative expense for the nine months ended September 30, 2009 was $1.6 million in the aggregate, representing an increase of 33% from $1.2 million for the nine months ended September 30, 2008.  The increase in stock-based compensation for the nine months ended September 30, 2009 is primarily attributable to expense for stock options and restricted stock granted subsequent to September 30, 2008 and continued vesting of prior grants.

Interest income, net. Our interest income, net decreased by $549,000 for the nine months ended September 30, 2009 to $70,000 from $619,000 for the nine months ended September 30, 2008, representing a decrease of 89%.  This decrease is due to lower investment returns because of a decline in interest rates and from the adoption of a more conservative investment strategy offset by increased cash on hand.

Income tax expense. We recognized income tax expense for the nine months ended September 30, 2009 and 2008 of $10.4 million and $6.9 million, respectively, or effective tax rates of 40.1% and 38.2%, respectively.  The increase was attributable to the fact that the tax due on the 2007 federal and state tax returns when filed was approximately $400,000 less than the 2007 tax liability estimated at December 31, 2007.  This adjustment was booked when the tax returns were finalized in the three months ended June 30, 2008 and resulted primarily from the effects of changes in the state income tax rates applied.

Net income. Our net income was $15.6 million for the nine months ended September 30, 2009, compared to net income of $11.1 million for the nine months ended September 30, 2008, an increase of $4.5 million, or 40%.  This increase was related to the factors discussed above.

Liquidity and Capital Resources

Liquidity

The Company financed operating activities and capital expenditures during the nine months ended September 30, 2009 and 2008 primarily through cash provided by operating income and proceeds received from the exercise of stock options.  Cash and cash equivalents were $63.8 million and $41.4 million at September 30, 2009 and September 30, 2008, respectively, representing an increase of $22.4 million, or 54%.

We derive a significant portion of our revenues from tuition assistance programs from the Department of Defense, or DoD.  Generally, these funds are received within 60 days of the start of the classes to which they relate.  A growing source of revenue is derived from our participation in Title IV programs, for which disbursements are governed by federal regulations.  We have typically received disbursements under Title IV programs within 30 days of the start of the applicable class.

These factors, together with the number of classes starting each month, affect our operational cash flow.  As a result, our costs and expenses have increased with the increase in student enrollment, and we expect to fund these expenses through cash generated from operations.

Through September 15, 2009 we had available to us a line of credit with a maximum borrowing amount of up to $5.0 million.  The line was to bear interest at LIBOR plus 200 basis points.  The line was secured by substantially all of our assets.  We had never borrowed under this line of credit facility and elected not to renew the line of credit at its expiration on September 15, 2009.

Based on our current level of operations and anticipated growth, we believe that our cash flow from operations and other sources of liquidity, including cash and cash equivalents, will provide adequate funds for ongoing operations and planned capital expenditures for the foreseeable future.

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We continue to evaluate our space needs and opportunities for continued physical growth; these include considering additions to existing structures and potential new construction projects.  In 2009, we acquired land for $0.8 million in Charles Town, West Virginia, with the intent of constructing a new 40,000 square foot facility on the site.  The project should result in an additional expenditure of approximately $10.0 million over the next 18 to 30 months. In the three months ended September 30, 2009 we also acquired two buildings and land for additional parking for $1.2 million.

Operating Activities

                Net cash provided by operating activities was $22.8 million and $19.9 million for the nine months ended September 30, 2009 and 2008, respectively.  As revenue and profits have grown, cash has increased.  Cash and cash equivalents were $63.8 million and $47.7 million at September 30, 2009 and December 31, 2008.

Investing Activities

Net cash used in investing activities was $8.6 million and $6.9 million for the nine months ended September 30, 2009 and 2008, respectively.  The increase is a result of an increase in capital expenditures as a result of the acquisition of existing structures and new construction projects due to our ongoing evaluation of space needs and opportunities for physical growth. As a result, capital expenditures could be significantly higher in the future.

Financing Activities

                Net cash provided by financing activities for the nine months ended September 30, 2009 was $1.8 million from cash received from the issuance of common stock and the excess tax benefit from stock based compensation.  Net cash provided by financing activities for the nine months ended September 30, 2008 was $1.4 million from cash received from the issuance of common stock including the net proceeds to us from the public offering, and the excess tax benefit from stock based compensation.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are subject to risk from adverse changes in interest rates, primarily relating to our investing of excess funds in cash equivalents bearing variable interest rates, which are tied to various market indices.  Our future investment income will vary due to changes in interest rates.  At September 30, 2009, a 10% increase or decrease in interest rates would not have a material impact on our future earnings or cash flows related to investments in cash equivalents. We have no derivative financial instruments or derivative commodity instruments as of September 30, 2009.  

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2009 as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon the evaluation, our Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2009.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

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Changes in Internal Control over Financial Reporting

                There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(f) and 15d-15(f) of the Exchange Act that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1.  Legal Proceedings

We currently have no material legal proceedings pending.

Item 1A. Risk Factors

An investment in our stock involves a high degree of risk. You should carefully consider the risks set forth in the Risk Factors section of our annual report on Form 10-K for the year ended December 31, 2008, the risk factor set forth in the Risk Factors section of our quarterly report on Form 10-Q for the quarter ended June 30, 2009, and all of the other information set forth in this Form 10-Q and our Form 10-K before deciding to invest in our common stock.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

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

None.

Item 5. Other Information

None.

Item 6. Exhibits

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Exhibit Description

Exhibit No.
10.01	Employment Agreement, dated as of August 3, 2009, among American Public University System, Inc., American Public Education, Inc. and Sharon van Wyk.
31.01	Certification of Chief Executive officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.02	Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.01	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
EX-101.INS **	XBRL Instance Document
EX-101.SCH **	XBRL Taxonomy Extension Schema Document
EX-101.CAL **	XBRL Taxonomy Extension Calculation Linkbase Document
EX-101.DEF **	XBRL Taxonomy Extension Definition Linkbase Document
EX-101.LAB **	XBRL Taxonomy Extension Label Linkbase Document
EX-101.PRE **	XBRL Taxonomy Extension Presentation Linkbase Document

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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.  

AMERICAN PUBLIC

EDUCATION, INC.

/s/ Wallace E. Boston, Jr.	November 5, 2009
Wallace E. Boston, Jr.
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Harry T.  Wilkins	November 5, 2009
Harry T. Wilkins
Executive Vice President and Chief Financial Officer
(Principal Financial and Principal Accounting Officer)

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EX-10.01

Exhibit 10.01

AMERICAN PUBLIC EDUCATION, INC.

AMERICAN PUBLIC UNIVERSITY SYSTEM, INC.

EXECUTIVE EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of this 24th day of August, 2009, by and between American Public University System, Inc., a West Virginia corporation (the “Company”), American Public Education, Inc., a Delaware corporation (the “Parent”) and Sharon van Wyk (the “Executive”).

WHEREAS, the Company is a wholly owned subsidiary of the Parent; and

WHEREAS, the Company desires to employ the Executive, and the Executive desires to be employed by the Company, on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto agree as follows:

1. Employment. On the terms and conditions set forth in this Agreement, the Parent agrees to cause the Company to, and the Company agrees to, employ the Executive, and the Executive agrees to be employed by the Company, for the term set forth in Section 2 hereof and in the position and with the duties set forth in Section 3 hereof.

2. Term. The employment of the Executive by the Company as provided in Section 1 hereof shall commence on August 3, 2009 and, unless sooner terminated as hereinafter set forth, shall end three (3) years thereafter; provided, however, that this Agreement will automatically renew for additional one (1) year periods (each a “Renewal Term”) on each anniversary thereof unless the Company and Parent deliver to the Executive written notice of intent not to renew at least thirty (30) days prior to the expiration of the Term or any Renewal Term. If this Agreement is renewed for one or more Renewal Terms, such Renewal Term shall be on the basis stated herein.

3. Position and Duties. The Executive shall serve as the Executive Vice President and Chief Operations Officer of the Company, or in another position of equal or greater title, authority and responsibility, as assigned by the board of directors of the Parent (the “Board”), with duties and responsibilities as the Chief Executive Officer of the Company may from time to time determine and assign to the Executive. The Executive shall devote the Executive’s best efforts and full business time to the performance of the Executive’s duties and the advancement of the business and affairs of the Company.

4. Place of Performance. In connection with the Executive’s employment by the Company, the Executive shall be based at the principal executive offices of the Company, which the Company retains the right to change in its discretion, or such other place as the Company and the Executive mutually agree.

5. Compensation.

5(a). Base Salary. The Company shall pay to the Executive an annual base salary (the “Base Salary”) at the rate of $275,000 per year. The Base Salary shall be reviewed no less frequently than annually and may be increased at the discretion of the Compensation Committee (the “Compensation Committee”) of the Board. If the Executive’s Base Salary is increased, the increased amount shall be the Base Salary for the remainder of the employment term hereunder, except that the Company may reduce the Executive’s Base Salary at any time as part of a general salary reduction applied to all employees of the Company with annual salaries in excess of $150,000 (the “Senior Executive Group”) in which case the Executive’s reduced Base Salary shall be the Base Salary for the remainder of the employment term hereunder. Any such reduction in the Executive’s Base Salary shall be no more than the lesser of the median percentage salary reduction applied to the Senior Executive Group or 20%. The Base Salary shall be payable biweekly or in such other installments as shall be consistent with the Company’s payroll procedures.

5(b). Annual Bonus. The Executive shall be eligible to receive a bonus of up to 50% of the Executive’s Base Salary for each year as determined by the Compensation Committee in its sole discretion (the “Annual Bonus”), based upon the achievement of certain performance goals established by the Compensation Committee for each year, which shall be prorated in the first year for the portion of the year the Executive is employed. Under the Company’s 2009 Annual Incentive Compensation Plan, the Executive will also be eligible to receive an additional percentage of up to 20% of the Executive’s Base Salary for 2009 as determined by the Compensation Committee in its sole discretion, based upon the achievement of certain performance goals established by the Compensation Committee for 2009, which percentage shall be prorated for the portion of the year the Executive is employed.

5(c). Other Benefits. The Executive shall be entitled to receive such other benefits approved by the Compensation Committee and made available to senior executives of the Company. The Executive also shall be entitled to participate in such plans and to receive such bonuses, incentive compensation and fringe benefits as may be granted or established by the Company from time to time. Nothing contained in this Agreement shall prevent the Company from changing carriers or from effecting modifications in insurance coverage for the Executive.

5(d). Vacation; Holidays. The Executive shall be entitled to all public holidays observed by the Company and vacation days in accordance with the applicable vacation policies for senior executives of the Company, which shall be taken at a reasonable time or times.

5(e) Stock Options. The Executive shall be granted a stock option (the “Option”) for the purchase of 12,500 shares of American Public Education, Inc. common stock pursuant to the terms of the American Public Education, Inc. 2007 Omnibus Incentive Plan. The Option shall vest one-third on the first anniversary of the date of grant and shall vest an additional one-third on each of the next two anniversaries of the date of grant thereafter. The Option exercise price shall be the fair market value of the shares on the date of grant. The Option shall be granted effective as of the Executive’s first date of employment with an exercise price equivalent to the closing price of the Parent’s common stock on the NASDAQ Stock Market and subject to the form of award agreement approved by the Compensation Committee of the Board of Directors.

5(f). Restricted Stock. The Executive shall be granted restricted stock (the “Restricted Stock”) of 2,500 shares of American Public Education, Inc. common stock pursuant to the terms of the American Public Education, Inc. 2007 Omnibus Incentive Plan. The Restricted Stock shall vest one-third on the first anniversary of the date of grant and shall vest an additional one-third on each of the next two anniversaries of the date of grant thereafter. The Restricted Stock shall be granted effective as of the Executive’s first date of employment and subject to the form of award agreement approved by the Compensation Committee of the Board of Directors.

5(g). Withholding Taxes and Other Deductions. To the extent required by law, the Company shall withhold from any payments due Executive under this Agreement any applicable federal, state or local taxes and such other deductions as are prescribed by law or Company policy.

6. Expenses. The Company shall reimburse the Executive for all reasonable expenses incurred by the Executive (in accordance with the policies and procedures in effect for senior executives of the Company) in connection with the Executive’s services under this Agreement. The Executive shall account to the Company for expenses in accordance with policies and procedures established by the Company.

7. Relocation Expenses. The Company will pay or reimburse the Executive for the customary and reasonable moving expenses incurred by the Executive in connection with Executive’s initial employment; provided, however, that such expenses in the aggregate shall not exceed $100,000 (the “Initial Reimbursement”). If the Internal Revenue Service or any state or local taxing authority takes the position that the relocation expenses paid or reimbursed subject to this Section 7 results in the receipt of taxable income to Executive, such expenses shall include an additional amount equal to the aggregate Federal, state and local income and employment taxes imposed on Executive as a direct result of the payment or reimbursement of the Initial Reimbursement.

8. Confidential Information.

8(a). Obligation of Confidentiality. The Executive covenants and agrees that the Executive will not ever, without the prior written consent of the Board or a person authorized by the Board or except as may be ordered by a court of competent jurisdiction, publish or disclose to any unaffiliated third party or use for the Executive’s personal benefit or advantage any confidential information with respect to the Company’s or Parent’s past, present, or planned business, including but not limited to all information and materials related to any Company or Parent business, business plan, product, service, procedure, strategy, method, technique, technology, research, strategy, plan, customer or supplier information, customer or supplier list, financial data, technical data, computer files, and computer software, including any of the foregoing that is in any stage of research, development, or planning, and any other information which the Executive obtained while employed by, or otherwise serving or acting on behalf of, the Company or the Executive or which the Executive may possess or have under her control, that is not generally known (except for unauthorized disclosures) to the public or within the industry in which the Company or Parent does business.

8(b). Reasonable Restrictions. The Executive acknowledges that the restrictions contained in Section 8(a) hereof are reasonable and necessary, in view of the nature of the Company’s or Parent business, in order to protect the legitimate interests of the Company or Parent, and that any violation thereof would result in irreparable injury to the Company or Parent. Therefore, the Executive agrees that in the event of a breach or threatened breach by the Executive of the provisions of Section 8(a) hereof, the Company or Parent shall be entitled to obtain from any court of competent jurisdiction, preliminary or permanent injunctive relief restraining the Executive from disclosing or using any confidential information. Nothing herein shall be construed as prohibiting the Company or Parent from pursuing any other remedies available to it for breach or threatened breach, including, without limitation, recovery of damages from the Executive.

8(c). Return of Materials. The Executive shall deliver promptly to the Company or Parent on termination of employment, or at any other time the Company or Parent may so request, all confidential materials, memoranda, notes, records, reports and other documents and materials (and all copies thereof), in whatever form or medium, that contain any of the foregoing, including but not limited to computer data, files, software, and hardware, relating to the Company’s, Parents or their respective affiliates’ respective businesses that the Executive obtained while employed by, or otherwise serving or acting on behalf of, the Company or Parent or which the Executive may then possess or have under her control.

9. Non-Competition.

9(a). Non-Competition. The Executive covenants and agrees that the Executive will not, during the Executive’s employment and for a period of one (1) year thereafter (to the extent permitted by law), in the United States or any other jurisdiction in which the Company or Parent is engaged or has reasonably firm plans to engage in business, (i) compete with the Company or the Parent on behalf of the Executive or any third party; (ii) participate as a director, agent, representative, stockholder or partner or have any direct or indirect financial interest in any enterprise which engages in any business in which the Company or the Parent is engaged; or (iii) participate as an employee or officer in any enterprise in which the Executive’s responsibility relates to any business in which the Company or the Parent is engaged; provided, however, that after the occurrence of both a Change of Control and the termination of the Executive’s employment, the foregoing will not prohibit the Executive from being employed by (1) a campus-based institution of higher education that derives no more than 20% of its revenues from online education, provided that, the Executive is not predominantly engaged in supporting the online education, or (2) an online learning company that does not provide higher education. The ownership by the Executive of less than one percent (1%) of the outstanding stock of any corporation listed on a national securities exchange shall not be deemed a violation of this Section 9(a).  For purposes of this Section 9(a), “Change of Control” means (i) the dissolution or liquidation of the Parent or a merger, consolidation, or reorganization of the Parent with one or more other entities in which the Parent is not the surviving entity, (ii) a sale of substantially all of the assets of the Parent to another person or entity, or (iii) any transaction (including without limitation a merger or reorganization in which the Parent is the surviving entity) which results in any person or entity owning 50% or more of the combined voting power of all classes of stock of the Parent.

9(b). Injunctive Relief. In the event the restrictions against engaging in a competitive activity contained in Section 9(a) hereof shall be determined by any court of competent jurisdiction to be unenforceable by reason of their extending for too great a period of time or over too great a geographical area or by reason of their being too extensive in any other respect, Section 9(a) hereof shall be interpreted to extend only over the maximum period of time for which it may be enforceable and over the maximum geographical area as to which it may be enforceable and to the maximum extent in all other respects as to which it may be enforceable, all as determined by the court in the action.

9(c). Non-Solicitation. The Executive covenants and agrees that the Executive will not, during the Executive’s employment and for a period of one (1) year thereafter solicit, induce, entice, or encourage or attempt to solicit, induce, entice, or encourage any employee of the Company or Parent or any of the Company’s or Parents respective affiliates to render services for any other person, firm, entity, or corporation or to terminate her employment with the Company, Parent or their respective affiliates.

10. Termination of Employment.

10(a). Death. The Executive’s employment hereunder shall terminate upon the Executive’s death.

10(b). By the Company. The Company or Parent may terminate the Executive’s employment hereunder under the following circumstances:

(i) The Company or Parent may terminate the Executive’s employment hereunder for “Disability.” For purposes of this Agreement, “Disability” shall mean the Executive shall have been unable to perform all of the Executive’s duties hereunder by reason of illness, physical or mental disability or other similar incapacity, which inability shall continue for more than three (3) consecutive months.

(ii) The Company or Parent may terminate the Executive’s employment hereunder for “Cause.” For purposes of this Agreement, “Cause” shall mean (A) refusal by the Executive to follow a lawful written order of the Chief Executive Officer, Chairman of the Board or the Board, (B) the Executive’s engagement in conduct materially injurious to the Company or Parent or their respective reputations, (C) dishonesty of a material nature that relates to the performance of the Executive’s duties under this Agreement, (D) the Executive’s conviction for any crime involving moral turpitude or any felony, or (E) the Executive’s continued failure to perform her duties under this Agreement (except due to the Executive’s incapacity as a result of physical or mental illness) to the satisfaction of the Board for a period of at least thirty (30) consecutive days after written notice is delivered to the Executive specifically identifying the manner in which the Executive has failed to perform her duties.

(iii) The Parent, in the sole discretion of the Board, may terminate the Executive’s employment hereunder at any time other than for Disability or Cause, for any reason or for no reason at all.

10(c). By the Executive. The Executive may terminate the Executive’s employment hereunder for “Good Reason.” For purposes of this Agreement, “Good Reason” shall mean:

(i) the assignment to the Executive of any duties inconsistent in any material respect with the Executive’s position as contemplated by Section 3 of this Agreement, excluding for this purpose an isolated, insubstantial and inadvertent action which is remedied by the Company promptly after receipt of notice thereof given by the Executive;

(ii) any material failure by the Company to comply with any of the provisions of this Agreement, other than an isolated, insubstantial and inadvertent failure which is remedied by the Company or Parent promptly after receipt of notice thereof given by the Executive;

(iii) there is a merger, acquisition or other similar affiliation with another entity and the Executive does not continue as the Chief Operating Officer, or any other office she holds at the time of the transaction, of the most senior resulting entity succeeding to the business of the Company; or

(iv) any material failure by the Company or Parent to comply with and satisfy Section 15(c) of this Agreement.

In order to constitute Good Reason, Executive must provide notice to the Company and Parent of the existence of the condition within ninety (90) days of the initial existence. None of the foregoing events shall constitute Good Reason if the Executive consents in writing to such event. The Executive further understands and agrees that none of the foregoing events shall constitute Good Reason unless the Company or Parent fails to cure such asserted grounds for Good Reason within thirty (30) days of its receipt of notice from the Executive. In order to terminate her employment, if at all, for Good Reason, Executive must terminate employment within thirty (30) days of the end of the cure period if the breach has not been cured.

10(d). Notice of Termination. Any termination of the Executive’s employment by the Company, the Parent or the Executive (other than pursuant to Section 10(a) hereof) shall be communicated by written “Notice of Termination” to the other party hereto in accordance with Section 12 hereof. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon, if any, and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated.

10(e). Date of Termination. For purposes of this Agreement, the “Date of Termination” shall mean (i) if the Executive’s employment is terminated by the Executive’s death, the date of the Executive’s death; (ii) if the Executive’s employment is terminated pursuant to Section 10(b)(i) hereof, thirty (30) days after Notice of Termination, provided that the Executive shall not have returned to the performance of the Executive’s duties on a full-time basis during this 30-day period; (iii) if the Executive’s employment is terminated pursuant to Section 10(b)(ii) or 10(b)(iii) hereof, the date specified in the Notice of Termination; (iv) if the Executive terminates the Executive’s employment for Good Reason pursuant to Section 10(c) hereof, the date specified in the Notice of Termination, provided however that such date must occur after the cure period provided in Section 10(c); and (v) if the Executive’s employment is terminated for any other reason, the date on which Notice of Termination is given. Notwithstanding the foregoing, the Executive will be deemed to have a Date of Termination for purposes of determining the timing of any payments or benefits hereunder that are classified as deferred compensation only upon a “separation from service” within the meaning of Code Section 409A.

11. Compensation Upon Termination.

11(a). If the Executive’s employment is terminated by the Executive’s death, the Company shall pay to the Executive’s estate, or as may be directed by the legal representatives of the estate, (i) the Executive’s full Base Salary through the Date of Termination and (ii) all other unpaid amounts, if any, to which the Executive is entitled as of the Date of Termination in connection with any fringe benefits or under any incentive compensation plan or program of the Company pursuant to Section 5(b) “Annual Bonus” and Section 5(c) “Other Benefits” hereof, at the time these payments are due and the Company shall have no further obligations to the Executive under this Agreement.

11(b). If the Company terminates the Executive’s employment for Disability as provided in Section 10(b)(i) hereof, the Company shall pay the Executive her full Base Salary through the Date of Termination and all other unpaid amounts, if any, to which the Executive is entitled as of the Date of Termination in connection with any fringe benefits or under any incentive compensation plan or program of the Company pursuant to Sections 5(b) and (c) hereof, at the time these payments are due, and the Company shall have no further obligations to the Executive under this Agreement; provided, that payments made to the Executive during the Disability Period shall be reduced by the sum of the amounts, if any, payable to the Executive at or prior to the time of any payment under disability benefit plans of the Company and which amounts were not previously applied to reduce any payment.

11(c). If the Company terminates the Executive’s employment for Cause as provided in Section 10(b)(ii) hereof, the Company shall pay the Executive the Executive’s full Base Salary through the Date of Termination and all other unpaid amounts, if any, to which Executive is entitled as of the Date of Termination in connection with any fringe benefits or under any incentive compensation plan or program of the Company pursuant to Section 5(c) hereof, and the Company shall have no further obligations to the Executive under this Agreement.

11(d). If the Executive terminates the Executive’s employment other than for Good Reason, the Company shall pay the Executive the Executive’s full Base Salary through the Date of Termination and all other unpaid amounts, if any, to which Executive is entitled as of the Date of Termination in connection with any fringe benefits or under any incentive compensation plan or program of the Company pursuant to Sections 5(b) and (c) hereof, and the Company shall have no further obligations to the Executive under this agreement.

11(e). If the Company or Parent terminates the Executive’s employment with the Company other than for Cause or Disability or the Executive terminates the Executive’s employment for Good Reason as provided in Section 10(c) hereof, at any time prior to the expiration of this Agreement or within the 12 month period following the expiration of this Agreement, upon execution of a general release by the Executive in favor of the Company and Parent in a form reasonably acceptable to and approved by the Company or Parent, the Company shall pay the Executive the following amounts and shall have no further obligations to the Executive:

(i) the sum of (1) the Executive’s Base Salary through the Date of Termination to the extent not theretofore paid, (2) the product of (x) the Annual Bonus (to the extent Company and Executive performance targets for the year in which employment terminates are satisfied, adjusted for the short period through the Date of Termination, for an Annual Bonus) and (y) a fraction, the numerator of which is the number of days in the current fiscal year through the effective date of termination of the Executive’s employment (the “Date of Termination”), and the denominator of which is 365, and (3) any compensation previously deferred by the Executive (together with any accrued interest or earnings thereon) and any accrued vacation pay, in each case, to the extent not theretofore paid, (the sum of the amounts described in clauses (1), (2), and (3) shall be hereinafter referred to as the “Accrued Obligations”) in a lump sum in cash within 30 days of the Date of Termination, except with regard to the Annual Bonus which will be paid at the same time Annual Bonuses for the year of termination are paid, but in no event later than March 15 of the year after the year of termination;

(ii) an amount equal to the sum of (x) the Executive’s Base Salary and (y) the Annual Bonus (to the extent Company and Executive performance were satisfying the performance targets, adjusted for the short period, after the Date of Termination to the end of the calendar year for an Annual Bonus and as to the remainder of the twelve month period following the Date of Termination, only if net income has increased from the same period in the prior year and the performance targets established for the successor Chief Operating Officer were being satisfied for that period), in substantially equal proportionate installments in accordance with the Company’s normal payroll practices, commencing with the first payroll period in the month following the month in which the Date of Termination occurs, for a period of twelve (12) months, except with regard to the Annual Bonus which will be paid at the same time Annual Bonuses for the year of termination are paid, but in no event later than March 15 of the year after the year of termination;

(iii) for twelve (12) months after the Date of Termination, or any longer period as may be provided by the terms of the appropriate plan, program, practice or policy, the Company shall continue benefits to the Executive and/or the Executive’s family at least equal to those which would have been provided to them in accordance with the welfare benefit plans, practices, policies and programs provided by the Company and its affiliated companies (including, without limitation, medical, prescription, dental, employee life, group life insurance plans and programs, but not including disability or accidental death and travel accident insurance plans and programs) to the extent applicable generally to other peer employees of the Company and its affiliated companies, as if the Executive’s employment had not been terminated; provided, however, that if the Executive becomes reemployed with another employer and is eligible to receive medical or other welfare benefits under another employer provided plan, the medical and other welfare benefits described herein shall be secondary to those provided under the other plan during the applicable period of eligibility; and

(iv) to the extent not theretofore paid or provided, for twelve (12) months after the Date of Termination, the Company shall timely pay or provide to the Executive any other amounts or benefits required to be paid or provided or which the Executive is eligible to receive under any plan, program, policy or practice or contract or agreement of the Company and its affiliated companies (these other amounts and benefits shall be hereinafter referred to as the “Other Benefits”).

11(f). No Duty to Mitigate. The Executive shall not be required to mitigate amounts payable pursuant to Section 11 hereof by seeking other employment.

11(g). No Additional Payments. Notwithstanding anything to the contrary in this Agreement, the Executive acknowledges and agrees that in the event of the termination of her employment, even if in breach of this Agreement, she will be entitled only to those payments specified herein for the circumstances of her termination, and not to any other payments by way of damages or claims of any nature, whether under this Agreement or under any other agreements between the Executive and the Company.

12. Notices. All notices, demands, requests or other communications required or permitted to be given or made hereunder shall be in writing and shall be delivered, telecopied or mailed by first class registered or certified mail, postage prepaid, addressed as follows:

(a)	If to the Company: American Public University System, Inc. 111 West Congress Street Charles Town, WV 25414 Telecopy: (304) 724-3801 Attention: Chief Executive Officer
(b)	If to the Parent: American Public Education, Inc. 111 West Congress Street Charles Town, WV 25414 Telecopy: (304) 724-3801 Attention: Chief Executive Officer
(c)	If to the Executive, to the Executive’s address set forth on the signature page to this Agreement, or to the home address of the executive in the official records of the Company;

or, in the case of the Company or Parent, to such other address as the Company or Parent may designate in a notice to the other. Each notice, demand, request or other communication that shall be given or made in the manner described above shall be deemed sufficiently given or made for all purposes three (3) days after it is deposited in the U.S. mail, postage prepaid, or at such time as it is delivered to the addressee (with the return receipt, the delivery receipt, the answer back or the affidavit of messenger being deemed conclusive evidence of delivery) or at such time as delivery is refused by the addressee upon presentation.

13. Severability. The invalidity or unenforceability of any one or more provisions of this Agreement shall not affect the validity or enforceability of the other provisions of this Agreement, which shall remain in full force and effect.

14. Survival. It is the express intention and agreement of the parties hereto that the provisions of Sections 8 and 9 hereof shall survive the termination of employment of the Executive and the expiration of this Agreement.  It is the express intention and agreement of the parties hereto that the provisions of Section 11(e) shall survive the expiration of this Agreement for a period of twelve (12) months.  In addition, all obligations of the Company to make payments hereunder shall survive any termination of this Agreement on the terms and conditions set forth herein.

15. Successors and Assigns.

15(a). This Agreement is personal to the Executive and without the prior written consent of the Company and the Parent shall not be assignable by the Executive otherwise than by will or the laws of descent and distribution. This Agreement shall inure to the benefit of and be enforceable by the Executive’s legal representatives.

15(b). This Agreement shall inure to the benefit of and be binding upon the Company and the Parent and their successors and assigns.

15(c). The Company and the Parent will require any successor or any party that acquires control of the Company and the Parent (whether direct or indirect, by purchase, merger, consolidation or otherwise) or all or substantially all of the business and/or assets of the Company or the Parent to assume expressly and agree to perform this Agreement in the same manner and to the same extent that the Company and the Parent would be required to perform it if no succession had taken place. As used in this Agreement, “Company” and “Parent” shall mean the Company or Parent, respectively, as hereinbefore defined and any successor to its business and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law, or otherwise.

16. Binding Effect. Subject to any provisions hereof restricting assignment, this Agreement shall be binding upon the parties hereto and shall inure to the benefit of the parties and their respective heirs, devisees, executors, administrators, legal representatives, successors and assigns.

17. Amendment; Waiver. This Agreement shall not be amended, altered or modified except by an instrument in writing duly executed by the parties hereto. Neither the waiver by either of the parties hereto of a breach of or a default under any of the provisions of this Agreement, nor the failure of either of the parties, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder, shall thereafter be construed as a waiver of any subsequent breach or default of a similar nature, or as a waiver of any provisions, rights or privileges hereunder.

18. Headings. Section and subsection headings contained in this Agreement are inserted for convenience of reference only, shall not be deemed to be a part of this Agreement for any purpose, and shall not in any way define or affect the meaning, construction or scope of any of the provisions hereof.

19. Governing Law. This Agreement, the rights and obligations of the parties hereto, and any claims or disputes relating thereto, shall be governed by and construed in accordance with the laws of the State of West Virginia (but not including the choice of law rules thereof).

20. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof, and it supersedes all prior oral or written agreements, commitments or understandings with respect to the matters provided for herein.

21. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be an original and all of which shall be deemed to constitute one and the same instrument.

22. Limitations Under Code Section 409A. Anything in this Agreement to the contrary notwithstanding, if (A) on the date of termination of Executive’s employment with the Company or a Subsidiary, any of the Company’s stock is publicly traded on an established securities market or otherwise (within the meaning of Section 409A(a)(2)(B)(i) of the Internal Revenue Code, as amended (the “Code”)), (B) if Executive is determined to be a “specified employee” within the meaning of Section 409A(a)(2)(B) of the Code, (C) the payments exceed the amounts permitted to be paid pursuant to Treasury Regulations section 1.409A-1(b)(9)(iii) and (D) such delay is required to avoid the imposition of the tax set forth in Section 409A(a)(1) of the Code as a result of such termination, the Executive would receive any payment that, absent the application of this Section 22, would be subject to interest and additional tax imposed pursuant to Section 409A(a) of the Code as a result of the application of Section 409A(2)(B)(i) of the Code, then no such payment shall be payable prior to the date that is the earliest of (1) 6 months after the Executive’s termination date, (2) the Executive’s death or (3) such other date as will cause such payment not to be subject to such interest and additional tax (with a catch-up payment equal to the sum of all amounts that have been delayed to be made as of the date of the initial payment).

It is the intention of the parties that payments or benefits payable under this Agreement not be subject to the additional tax imposed pursuant to Section 409A of the Code. To the extent such potential payments or benefits could become subject to such Section, the parties shall cooperate to amend this Agreement with the goal of giving the Executive the economic benefits described herein in a manner that does not result in such tax being imposed.

For purposes of Section 409A, the Executive’s right to receive installment payments pursuant to this Agreement including, without limitation, each severance payment and COBRA continuation reimbursement shall be treated as a right to receive a series of separate and distinct payments.

Any amount that the Executive is entitled to be reimbursed under this Agreement will be reimbursed to the Executive as promptly as practical and in any event not later than the last day of the calendar year after the calendar year in which the expenses are incurred. Any right to reimbursement or in kind benefits will not be subject to liquidation or exchange for another benefit. The amount of the expenses eligible for reimbursement during any taxable year will not affect the amount of expenses eligible for reimbursement in any other taxable year.

Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., “payment shall be made within thirty (30) days following the date of termination”), the actual date of payment within the specified period shall be within the sole discretion of the Company.

IN WITNESS WHEREOF, the undersigned have duly executed this Agreement, or have caused this Agreement to be duly executed on their behalf, as of the day and year first hereinabove written.

AMERICAN PUBLIC UNIVERSITY SYSTEM, INC.

By:  /s/ Wallace E. Boston, Jr.

Name:  Wallace E. Boston, Jr.

Title:  President

AMERICAN PUBLIC EDUCATION, INC.

By: /s/ Wallace E. Boston, Jr.

Name:  Wallace E. Boston, Jr.

Title:  CEO

THE EXECUTIVE:

/s/ Sharon van Wyk

Address:

EX-31.01

Exhibit 31.01

CERTIFICATIONS

I, Wallace E. Boston, Jr., certify that:

1.	I have reviewed this quarterly report on Form 10-Q of American Public Education, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
		a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
		b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
		c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
		d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
		a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
		b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 5, 2009	/s/ Wallace E. Boston, Jr.
	Wallace E. Boston, Jr.
	President and Chief Executive Officer
	(Principal Executive Officer)

EX-31.02

Exhibit 31.02

CERTIFICATIONS

I, Harry T. Wilkins, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of American Public Education, Inc.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
		a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
		b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
		c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
		d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
		a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
		b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 5, 2009	/s/ Harry T. Wilkins
	Harry T. Wilkins
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)

EX-32.01

Exhibit 32.01

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

In connection with the Quarterly Report of American Public Education, Inc. (the “registrant”) on Form 10-Q for the fiscal quarter ending June 30, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “report”), we, Wallace E. Boston, Jr. and Harry T. Wilkins, President and Chief Executive Officer and Executive Vice President and Chief Financial Officer, respectively, of the registrant, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to our knowledge, on the date hereof:

(1) The report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the registrant.

November 5, 2009

/s/ Wallace E. Boston, Jr.__________

Wallace E. Boston, Jr.

President and Chief Executive Officer

/s/ Harry T.  Wilkins__________

Harry T. Wilkins

Executive Vice President and Chief Financial Officer