<SEC-DOCUMENT>0000950123-11-098343.txt : 20111114
<SEC-HEADER>0000950123-11-098343.hdr.sgml : 20111111
<ACCEPTANCE-DATETIME>20111114143716
ACCESSION NUMBER:		0000950123-11-098343
CONFORMED SUBMISSION TYPE:	10-K/A
PUBLIC DOCUMENT COUNT:		7
CONFORMED PERIOD OF REPORT:	20101231
FILED AS OF DATE:		20111114
DATE AS OF CHANGE:		20111114

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			Grand Canyon Education, Inc.
		CENTRAL INDEX KEY:			0001434588
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-EDUCATIONAL SERVICES [8200]
		IRS NUMBER:				203356009
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-K/A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-34211
		FILM NUMBER:		111201137

	BUSINESS ADDRESS:	
		STREET 1:		3300 W. CAMELBACK ROAD
		CITY:			PHOENIX
		STATE:			AZ
		ZIP:			85017
		BUSINESS PHONE:		602-639-7500

	MAIL ADDRESS:	
		STREET 1:		3300 W. CAMELBACK ROAD
		CITY:			PHOENIX
		STATE:			AZ
		ZIP:			85017
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K/A
<SEQUENCE>1
<FILENAME>c24244e10vkza.htm
<DESCRIPTION>FORM 10-K/A
<TEXT>
<HTML>
<HEAD>
<TITLE>e10vkza</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
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<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>




<DIV align="center" style="font-size: 14pt; margin-top: 10pt"><B>UNITED STATES SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>Washington, D.C. 20549</B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 10pt"><B>Form&nbsp;10-K/A</B>
</DIV>

 <DIV align="center" style="font-size: 12pt; margin-top: 10pt">
<b>Amendment No. 1 to Form 10-K</b>
</div>
<DIV align="left" style="font-size: 10pt; margin-top: 10pt">(Mark One)

</DIV>
<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" style="font-size: 12pt">
<TR style="font-size: 0pt">
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD align="center"><FONT face="Wingdings">&#254;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934</B></TD>
</TR>
</TABLE>
</DIV>
<!-- xbrl,dc -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 12%"><B><B>For the fiscal year ended: December&nbsp;31, 2010</B>
</B>
</DIV>
<!-- /xbrl,dc -->

<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>OR</B>

</DIV>
<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" style="font-size: 12pt">
<TR style="font-size: 10pt">
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD align="center"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 12%"><B><B>For the transition period from &#091;</B><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><B>&#093; to &#091;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&#093;</B>
</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>Commission file number: 001-34211</B>

</DIV>
<DIV align="center" style="font-size: 24pt; margin-top: 10pt"><B>GRAND CANYON EDUCATION, INC.</B>
</DIV>

<DIV align="center" style="font-size: 10pt"><I>(Exact name of registrant as specified in its charter)</I></DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><B>DELAWARE</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>20-3356009</B></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><I>(State or other jurisdiction of</I>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><I>(I.R.S. Employer</I></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><I>incorporation or organization)</I>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><I>Identification No.)</I></TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>3300 W. CAMELBACK ROAD, PHOENIX, ARIZONA 85017</B><BR>
<I>(Address of principal executive offices, including zip code)</I>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>Registrant&#146;s telephone number, including area code:<BR>
(602)&nbsp;639-7500</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>Securities registered pursuant to Section 12(b) of the Act:</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>
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<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><B>(Title of Each Class)</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>(Name of Each Exchange on Which Registered)</B></TD>
</TR>
<TR style="font-size: 1px">
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><B>Grand Canyon Education, Inc.</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>The NASDAQ Global Market</B></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top"><B>Common stock, $.01 par value</B></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>Securities registered pursuant to Section 12(g) of the Act:<BR>
None</B><BR>
<I>(Title of class)</I>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act. <FONT style="white-space: nowrap">Yes <FONT face="Wingdings">&#111;</FONT> No <FONT face="Wingdings">&#254;</FONT></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Indicate by check mark if the registrant is not required to file reports pursuant to Section
13 or Section 15(d) of the Act. <FONT style="white-space: nowrap">Yes <FONT face="Wingdings">&#111;</FONT> No <FONT face="Wingdings">&#254;</FONT></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Indicate by check mark whether the registrant: (1)&nbsp;has filed all reports required to be filed
by Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12&nbsp;months (or
for such shorter period that the registrant was required to file such reports), and (2)&nbsp;has been
subject to such filing requirements for the past 90&nbsp;days. <FONT style="white-space: nowrap">Yes <FONT face="Wingdings">&#254;</FONT> No <FONT face="Wingdings">&#111;</FONT></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">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&nbsp;405 of Regulation&nbsp;S-T (&#167;232.405 of this chapter) during the preceding 12&nbsp;months
(or for such shorter period that the registrant was required to submit and post such files). <FONT style="white-space: nowrap">Yes
<FONT face="Wingdings">&#111;</FONT> No <FONT face="Wingdings">&#111;</FONT></FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Indicate by check mark if disclosure of delinquent filers pursuant to Item&nbsp;405 of Regulation
S-K is not contained herein, and will not be contained, to the best of registrant&#146;s knowledge, in
definitive proxy or information statements incorporated by reference in Part&nbsp;III of this Form 10-K
or any amendment to this Form 10-K. <FONT face="Wingdings">&#111;</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of &#147;large
accelerated filer,&#148; &#147;accelerated filer&#148; and &#147;smaller reporting company&#148; in Rule&nbsp;12b-2 of the
Exchange Act. (Check one):
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="22%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="22%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top" nowrap>Large accelerated filer <FONT face="Wingdings">&#254;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>Accelerated filer <FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>Non-accelerated filer <FONT face="Wingdings">&#111;</FONT>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>Smaller reporting company <FONT face="Wingdings">&#111;</FONT></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top" nowrap>(Do not check if a smaller reporting company)</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Indicate by check mark whether the registrant is a shell company (as defined in Rule&nbsp;12b-2 of
the Securities Exchange Act). <FONT style="white-space: nowrap">Yes <FONT face="Wingdings">&#111;</FONT> No <FONT face="Wingdings">&#254;</FONT></FONT>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">The total number
 of shares of common stock outstanding as of November 1, 2011 was 44,331,047.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As of June&nbsp;30, 2010, the last business day of the registrant&#146;s most recently completed second
fiscal quarter, the registrant&#146;s common stock was listed on the NASDAQ Global Market. As of June
30, 2010, the aggregate market value of the registrant&#146;s common stock held by nonaffiliates was
approximately $743.1&nbsp;million.
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 10pt"><B>DOCUMENTS INCORPORATED BY REFERENCE</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Certain portions of the registrant&#146;s Definitive Proxy Statement for its 2011 Annual Meeting of
Stockholders (which is expected to be filed with the Commission within 120&nbsp;days after the end of
the registrant&#146;s 2010 fiscal year) are incorporated by reference into Part&nbsp;III of this Report.
</DIV>

<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>






<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>


<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">


<DIV align="left">
<!-- TOC -->
</DIV>
<DIV align="left">
<A name="C24244tocpage"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt">GRAND CANYON EDUCATION, INC.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt">FORM 10-K/A
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt">INDEX
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="86%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Page</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C24244101"><B>PART I</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C24244102">Special Note Regarding Forward-Looking Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#C24244103">Item&nbsp;1. Business</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#C24244104">Item&nbsp;1A. Risk Factors</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#C24244105">Item&nbsp;1B. Unresolved Staff Comments</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#C24244106">Item&nbsp;2. Properties</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#C24244107">Item&nbsp;3. Legal Proceedings</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#C24244108">Item&nbsp;4. (Removed and Reserved)</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C24244109"><B>PART II</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#C24244110">Item&nbsp;5. Market for Registrant&#146;s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#C24244111">Item&nbsp;6. Selected Financial and Other Data</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#C24244112">Item&nbsp;7. Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#C24244113">Item&nbsp;7A. Quantitative and Qualitative Disclosures About Market Risk</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">94</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#C24244114">Item&nbsp;8. Financial Statements and Supplementary Data</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">95</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#C24244115">Item&nbsp;9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">134</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#C24244116">Item&nbsp;9A. Controls and Procedures</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">134</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#C24244117">Item&nbsp;9B. Other Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">135</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C24244118"><B>PART III</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#C24244119">Item&nbsp;10. Directors, Executive Officers and Corporate Governance</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">135</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#C24244120">Item&nbsp;11. Executive Compensation</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">136</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#C24244121">Item&nbsp;12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">153</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#C24244122">Item&nbsp;13. Certain Relationships and Related Transactions, and Director Independence</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">153</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#C24244123">Item&nbsp;14. Principal Accounting Fees and Services</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">153</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C24244124"><B>PART IV</B></A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#C24244125">Item&nbsp;15. Exhibits, Financial Statement Schedules</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">155</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C24244126">SIGNATURES</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">158</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C24244127">Exhibit&nbsp;Index</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">159</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c24244exv23w1.htm">Exhibit 23.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c24244exv31w1.htm">Exhibit 31.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c24244exv31w2.htm">Exhibit 31.2</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c24244exv32w1.htm">Exhibit 32.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="c24244exv32w2.htm">Exhibit 32.2</A></FONT></TD></TR>
</TABLE>
</DIV>

<DIV align="left">
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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">



<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Explanatory Note</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">This Amendment No.&nbsp;1 to Form 10-K (&#147;Amendment No.&nbsp;1&#148;) is being filed by Grand Canyon
Education, Inc. (the &#147;Company&#148;) to amend and restate its Annual Report on Form 10-K for the year
ended December&nbsp;31, 2010 filed with the United States Securities and Exchange Commission (&#147;SEC&#148;) on
February&nbsp;22, 2011 (the &#147;Initial Form 10-K&#148;). For purposes of this Annual Report on Form 10-K/A,
and in accordance with Rule&nbsp;12b-15 under the Securities Exchange Act of 1934 (Exchange Act), Items
1, 1A, 6, 7, 8, 9A and 11 of our Initial Form 10-K have been amended and restated in their entirety.
Pursuant to the rules of the SEC, Item&nbsp;15 has also been amended and restated in its entirety to
include currently dated certifications of the Company&#146;s principal executive officer and principal
financial officer as required by Sections&nbsp;302 and 906 of the Sarbanes-Oxley Act of 2002. Other
than the Items outlined above, there are no changes to the Initial Form 10-K. However, for the
convenience of the reader, this Amendment No.&nbsp;1 sets forth those items in the Initial Form 10-K
that are not being amended and restated in their entirety. Except as otherwise specifically noted,
all information contained herein is as of December&nbsp;31, 2010 and does not reflect any events or
changes that have occurred subsequent to that date. We are not required to and we have not updated
any forward-looking statements previously included in the Initial Form 10-K filed on February&nbsp;22,
2011. Our previously issued financial statements included in the Initial Form 10-K
should no longer be relied upon.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We
are filing this Amendment No.&nbsp;1 as a result of the correction of
an error in
our
methodology relating to
the manner in which we estimate our allowance for doubtful accounts,
which requires us to restate our  financial statements for the year ended
December&nbsp;31, 2010 and our unaudited interim financial statements for the quarters ended
June 30, 2010, September 30, 2010,
March&nbsp;31, 2011 and
June&nbsp;30, 2011.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In recent periods, we experienced a significant change in the composition of our receivable
balances since our transition to the borrower-based financial aid model in the second quarter of
2010 in which the receivables due from former students had grown as a percentage of the total
amount outstanding. However, our historical process for estimating the allowance for doubtful
accounts did not consider the disaggregation of receivable balances by student based on enrollment
status. As a result, the growth in the inactive student receivables was not evident when making our
allowance estimate in prior periods. As our collection experience indicates that receivables from
former students carry a higher risk, this disaggregated information should have been considered
 in determining the probability of loss within our receivables. If such information had
been evaluated, we would have increased the allowance for doubtful accounts to reflect the
increased risk profile of the receivables in prior periods. Accordingly, the Audit Committee of
the Board of Directors, together with management and in consultation with Ernst &#038; Young LLP, our
independent registered public accounting firm, determined that, because management should have taken
the additional steps necessary to develop the disaggregated information for use in the analysis of
reserve requirements and resulting allowance for doubtful accounts, the financial statements
identified above should be restated to correct the allowance for doubtful accounts.
</DIV>


<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As
a result,
we have concluded that we understated our bad debt
expense, and overstated our operating income and net income, by approximately
$15.2&nbsp;million, $15.4&nbsp;million and $9.2 million, respectfully, for the year ended
December&nbsp;31, 2010. Accordingly, we have restated:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%; text-indent: 4%"><b>&#149;</b> Our balance
sheet as of December&nbsp;31, 2010 by increasing our allowance for
doubtful accounts by $15.2&nbsp;million; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%; text-indent: 4%"><b>&#149;</b>
Our income statement for the year ended December&nbsp;31, 2010 by
decreasing revenues by $0.2 million, increasing
instructional costs and services expense by $15.2&nbsp;million and decreasing operating income and net income by
$15.4&nbsp;million and $9.2 million, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As a result of this restatement, amounts in our statements of cash flows and stockholders&#146;
equity for the year ended December&nbsp;31, 2010 have also been restated. Our total cash flows from
operations for the year ended December&nbsp;31, 2010 remains unchanged. A summary of the effects of
this restatement to our financial statements included within this Amendment to our Annual Report on
Form 10-K/A is presented in Note 2 in the accompanying notes to financial statements.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">
In connection with the restatement, we have assessed the effectiveness of our disclosure controls
and procedures and have included revised disclosure in this Form 10-K/A under Item 9A of Part
II, &#147;Controls and Procedures.&#148; We identified a material weakness in our internal control
over financial reporting with respect to our calculation of the allowance for doubtful accounts,
as described under Item 9A of Part II, &#147;Management&#146;s Report on Internal Control over
Financial Reporting.&#148; Solely as a result of this material weakness, our Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls and procedures were
not effective at a reasonable assurance level as of December&nbsp;31, 2010. As of the date of
this Form 10-K/A, we have adopted a new methodology to calculate the allowance for doubtful
accounts that incorporates additional information about the composition of our accounts receivable. We have taken steps, as described under Item 9A
 of Part II, &#147;Remediation Steps to Address Material Weakness,&#148; to remediate the
material weakness in our internal control over financial reporting. We believe that, as a result of our in-depth review of our accounting processes and the additional procedures we have implemented, there are no material inaccuracies or omissions of material fact in this Form 10-K/A and, to the best of our knowledge, we
believe that the financial statements in this Form 10-K/A fairly present in all material aspects the financial condition, results of operations and cash flows of the Company in conformity with generally accepted accounting principles.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">This
Amendment No.&nbsp;1 also includes changes in &#147;Item&nbsp;11
&#151; Executive Compensation&#148; to reflect
the impact of the restatement on the targets
under our incentive compensation plan that was in effect for 2010. See &#147;Item&nbsp;11 &#151; Executive Compensation.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">
Throughout this Amendment to our Annual Report on Form 10-K/A, all
referenced amounts reflect the balances and amounts on a restated
basis.
</div>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">
<DIV align="left">
<A name="C24244102"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Special Note Regarding Forward-Looking Statements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">This Annual Report on Form 10-K/A, including Item&nbsp;1, <I>Business</I>; Item&nbsp;1A, <I>Risk Factors</I>; and Item
7, <I>Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</I>, contains
certain &#147;forward-looking statements,&#148; which include information relating to future events, future
financial performance, strategies, expectations, competitive environment, regulation, and
availability of resources. These forward-looking statements include, without limitation, statements
regarding: proposed new programs; expectations that regulatory developments or other matters will
not have a material adverse effect on our financial position, results of operations, or liquidity;
statements concerning projections, predictions, expectations, estimates, or forecasts as to our
business, financial and operational results, and future economic performance; and statements of
management&#146;s goals and objectives and other similar expressions concerning matters that are not
historical facts. Words such as &#147;may,&#148; &#147;should,&#148; &#147;could,&#148; &#147;would,&#148; &#147;predicts,&#148; &#147;potential,&#148;
&#147;continue,&#148; &#147;expects,&#148; &#147;anticipates,&#148; &#147;future,&#148; &#147;intends,&#148; &#147;plans,&#148; &#147;believes,&#148; &#147;estimates&#148; and
similar expressions, as well as statements in future tense, identify forward-looking statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Forward-looking statements should not be read as a guarantee of future performance or results,
and will not necessarily be accurate indications of the times at, or by, which such performance or
results will be achieved. Forward-looking statements are based on information available at the time
those statements are made or management&#146;s good faith belief as of that time with respect to future
events, and are subject to risks and uncertainties that could cause actual performance or results
to differ materially from those expressed in or suggested by the forward-looking statements.
Important factors that could cause such differences include, but are not limited to:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our failure to comply with the extensive regulatory framework applicable to our
industry, including Title IV of the Higher Education Act and the regulations thereunder,
state laws and regulatory requirements, and accrediting commission requirements;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the results of the ongoing program review being conducted by the Department of
Education of our compliance with Title IV program requirements, and possible fines or
other administrative sanctions resulting therefrom;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the ability of our students to obtain federal Title IV funds, state financial
aid, and private financing;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>potential damage to our reputation or other adverse effects as a result of
negative publicity in the media, in the industry or in connection with governmental
reports or investigations or otherwise, affecting us or other companies in the
for-profit postsecondary education sector;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>risks associated with changes in applicable federal and state laws and
regulations and accrediting commission standards including pending rulemaking by the
Department of Education;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to hire and train new, and develop and train existing, enrollment
counselors;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the pace of growth of our enrollment;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to convert prospective students to enrolled students and to retain
active students;</TD>
</TR>

</TABLE>
</DIV>
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<DIV style="margin-top: 10pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our success in updating and expanding the content of existing programs and
developing new programs in a cost-effective manner or on a timely basis;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>industry competition, including competition for qualified executives and other
personnel;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>risks associated with the competitive environment for marketing our programs;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>failure on our part to keep up with advances in technology that could enhance the
online experience for our students;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the extent to which obligations under our loan agreement, including the need to
comply with restrictive and financial covenants and to pay principal and interest
payments, limits our ability to conduct our operations or seek new business
opportunities;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>potential decreases in enrollment, the payment of refunds or other negative
impacts on our operating results as a result of our change from a &#147;term-based&#148; financial
aid system to a &#147;borrower-based, non-term&#148; or &#147;BBAY&#148; financial aid system;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to manage future growth effectively;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>general adverse economic conditions or other developments that affect job
prospects in our core disciplines; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>other factors discussed under the headings &#147;Risk Factors,&#148; &#147;Management&#146;s
Discussion and Analysis of Financial Condition and Results of Operations,&#148; &#147;Business,&#148;
and &#147;Regulation.&#148;</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Forward-looking statements speak only as of the date the statements are made. You should not
put undue reliance on any forward-looking statements. We assume no obligation to update
forward-looking statements to reflect actual results, changes in assumptions, or changes in other
factors affecting forward-looking information, except to the extent required by applicable
securities laws. If we do update one or more forward-looking statements, no inference should be
drawn that we will make additional updates with respect to those or other forward-looking
statements.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->6<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">
<DIV align="left">
<A name="C24244101"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Part I</B>
</DIV>

<DIV align="left">
<A name="C24244103"></A>
</DIV>

<DIV align="left" style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>Item&nbsp;1. </B></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify"><B><I>Business</I></B></DIV></TD>
</TR>
</TABLE>
</DIV>




<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Overview</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We are a regionally accredited provider of postsecondary education services focused on
offering graduate and undergraduate degree programs in our core disciplines of education, business,
healthcare, and liberal arts. We offer programs online as well as ground programs at our
approximately 100 acre traditional campus in Phoenix, Arizona and onsite at the facilities of
employers. We are committed to providing an academically rigorous educational experience with a
focus on career-oriented programs that meet the objectives of our students. We utilize an
integrated, innovative approach to marketing, recruiting, and retaining students, which has enabled
us to increase enrollment from approximately 3,000 students at the end of 2003 to approximately
41,500 students at December&nbsp;31, 2010. At December&nbsp;31, 2010, 91.0% of our students were enrolled in
our online programs, and of those students, 45.5% were pursuing master&#146;s or doctoral degrees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We primarily focus on recruiting and educating working adults, whom we define as students age
25 or older who are pursuing a degree while employed. As of December&nbsp;31, 2010, approximately 92.2%
of our online students were age 25 or older. We believe that working adults are attracted to the
convenience and flexibility of our online programs because they can study and interact with faculty
and classmates during times that suit their schedules. We also believe that working adults
represent an attractive student population because they are better able to finance their education,
more readily recognize the benefits of a postsecondary degree, and have higher persistence and
completion rates than students generally.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We have experienced significant growth in enrollment, net revenue, and operating income over
the last several years. Our enrollment at December&nbsp;31, 2010 was approximately 41,500, representing
an increase of approximately 10.0% over our enrollment at December&nbsp;31, 2009. Our net revenue and
operating income for the year ended December&nbsp;31, 2010 were
$385.6&nbsp;million and $58.2&nbsp;million,
respectively, representing increases of 47.2% and 24.9%, respectively, over the year ended December
31, 2009. Our net revenue and operating income for the year ended December&nbsp;31, 2009 were $261.9
million and $46.6&nbsp;million, respectively, representing increases of 62.4% and 264%, respectively,
over the year ended December&nbsp;31, 2008. We seek to achieve continued growth in a manner that
reinforces our reputation for providing academically rigorous, career-oriented educational programs
that advance the careers of our students. As part of our efforts to ensure that our students
graduate with the knowledge, competencies, and skills that will enable them to succeed following
graduation, we have an Office of Assessment to monitor student and faculty performance and improve
student satisfaction.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We have been regionally accredited by the Higher Learning Commission of the North Central
Association of Colleges and Schools and its predecessor since 1968, and we were reaccredited in
2007 for the maximum term of ten years. We are regulated by the Department of Education as a result
of our participation in the federal student financial aid programs authorized by Title IV of the
Higher Education Act (hereafter, Title IV), and, at the state level, we are licensed to operate and
offer our programs by the Arizona State Board for Private Postsecondary Education and the Arizona
Department of Education for Institutional Recommendation Programs. In addition, we have specialized
accreditations for certain programs from the Association of Collegiate Business Schools and
Programs, the Commission on Collegiate Nursing Education, and the Commission on Accreditation of
Athletic Training Education. We believe that our institution-wide state authorization and regional
accreditation, together with these specialized accreditations, reflect the quality of our programs,
enhance their marketability, and improve the employability of our graduates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We believe that our online capabilities, combined with our 60-year heritage as a traditional
campus-based university, differentiate us in the for-profit postsecondary market and enhance the
reputation of our degree programs among students and employers. Our online students benefit from
our flexible, interactive online platform, which we believe offers a highly effective delivery
medium for our programs, yet are enrolled in a university with a traditional campus, faculty,
facilities, and athletic programs. We require our online faculty to undergo training in the
delivery of online programs before teaching their initial course, while our full-time ground
faculty and select online faculty help maintain the consistency and quality of our online programs
by supervising and conducting peer reviews of our
online faculty, and participating as subject matter experts in the development of our online
curricula. Our campus also offers our ground students, faculty and staff an opportunity to
participate in a traditional college experience.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->7<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>History</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Grand Canyon College was founded in Prescott, Arizona in 1949 as a traditional, private,
non-profit college and moved to its existing campus in Phoenix, Arizona in 1951. Established as a
Baptist-affiliated institution with a strong emphasis on religious studies, the school initially
focused on offering bachelor&#146;s degree programs in education. Over the years, the school expanded
its curricula to include programs in the sciences, nursing, business, music, and arts. The college
obtained regional accreditation in 1968 from the Commission on Institutions of Higher Education,
North Central Association of Colleges and Schools, the predecessor to the Higher Learning
Commission, and began offering nursing programs and master&#146;s degree programs in education and
business in the 1980s. In 1989, it achieved university status and became Grand Canyon University.
The university introduced its first distance learning programs in 1997, and launched its first
online programs in 2003 in business and education. In early 2000, it discontinued its Baptist
affiliation and became a non-denominational Christian university.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In late 2003, the school&#146;s Board of Trustees initiated a process to evaluate alternatives as a
result of the school&#146;s poor financial condition and, in February&nbsp;2004, several of our current
stockholders acquired the assets of the school and converted its operations to a for-profit
institution.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Since February&nbsp;2004, we have enhanced our senior management team, expanded our online platform
and programs, initiated an infrastructure and technology improvement plan and launched a marketing
and branding effort to further differentiate us in the markets in which we operate and support our
continued growth. We have also made investments to enhance our student and technology support
services and added additional infrastructure including an additional dormitory and classroom
building, a recreation center and an arena to support our growing traditional on-campus student
population. We believe these investments, combined with our management expertise, provide a
platform that will support continued enrollment and revenue growth. We have also maintained our
non-denominational Christian identity, with many of our undergraduate programs including Christian
study requirements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Our Approach to Academic Quality</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">Some of the key elements that we focus on to promote a high level of academic quality include:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Academically rigorous, career oriented curricula. </I>We create academically rigorous
curricula that are designed to enable all students to gain the foundational knowledge,
professional competencies, and demonstrable skills required to be successful in their
chosen fields. Our curriculum is designed and delivered by faculty that are committed to
delivering a high quality, rigorous education. We design our curricula to address
specific career-oriented objectives that we believe working adult students in the
disciplines we serve are seeking. Through this combination, we believe that we produce
graduates that can compete and become leaders in their chosen fields.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Qualified faculty. </I>We demonstrate our commitment to high quality education by
hiring qualified faculty with relevant practical experience. Substantially all of our
current faculty members hold at least a master&#146;s degree in their respective field and
30% of our faculty members hold a doctoral degree. Faculty members are able to integrate
relevant, practical experiences from their professional careers into the courses they
teach. We invest in the professional development of our faculty members by providing
training in traditional and online teaching techniques, hosting events and discussion
forums that foster sharing of best practices, and continually assessing teaching
effectiveness through assessment, peer reviews, and student evaluations.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Standardized course design. </I>We employ a standardized curriculum development
process to ensure a consistent learning experience with frequent faculty-student
interaction in our courses. We thereafter continuously review our programs in an effort
to ensure that they remain consistent, up-to-date, and effective in producing the
desired learning outcomes. We also regularly review student surveys to identify
opportunities for course modifications and upgrades.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->8<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV style="margin-top: 10pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Effective student services. </I>We establish teams comprised of enrollment, academic
and finance personnel that act as the primary support contact point for each of our
students, beginning at the application stage and continuing through graduation. In
recent years, we have also concentrated on improving the
technology used to support student learning, including enhancing our online learning
platform and further improving student services through the implementation of online
interfaces. As a result, many of our support services, including academic, administrative,
library, and career services, are accessible online, generally allowing users to access
these services at a time and in a manner that is generally convenient to them.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Continual academic oversight. </I>We have centralized the assessment functions for
all of our programs through our Office of Assessment, which continuously evaluates the
desired learning outcomes for each of our programs. We continuously assess outcomes data
to determine whether our students graduate with the knowledge, competencies, and skills
that are necessary to succeed in the workplace. The Office of Assessment also initiates
and manages periodic examinations of our curricula by internal and external reviewers to
evaluate and verify program quality and workplace applicability. Based on these
processes and student feedback, we determine whether to modify or discontinue programs
that do not meet our standards or market needs, or to create new programs. The Office of
Assessment also oversees assessment of mission-based competencies.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We also offer the following features in an effort to enrich the academic experience of current
and prospective students:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Flexibility in program delivery. </I>We also seek to meet market demands by providing
students with the flexibility to take courses exclusively online or to combine online
coursework with various campus and onsite options. For example, based on market demand,
particularly in connection with our nursing programs, we have established satellite
locations at multiple hospitals that allow nursing students to take clinical courses
onsite while completing other course work online. We have established similar onsite
arrangements with other major employers, including schools and school districts through
which students can pursue student teaching opportunities. This flexibility raises our
profile among employers, encourages students to take and complete courses and eliminates
inconveniences that tend to lessen student persistence.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Small class size. </I>At December&nbsp;31, 2010, over 98.0% of our online classes had 25
or fewer students. These class sizes provide each student with the opportunity to
interact directly with course faculty and to receive individualized feedback and
attention while also affording our faculty with the opportunity to engage proactively
with a manageable number of students. We believe this interaction enhances the academic
quality of our programs by promoting opportunities for students to participate actively
and thus build the requisite knowledge, competencies, and skills.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->9<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Accreditation and Program Approvals</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We believe that the quality of our academic programs is evidenced by the college- and
program-specific accreditations and approvals that we have pursued and obtained. Grand Canyon
University has been continually accredited by the Higher Learning Commission and its predecessor
since 1968, obtaining its most recent ten-year reaccreditation in 2007. We are licensed in Arizona
by the Arizona State Board for Private Postsecondary Education. In addition, we have obtained the
following specialized accreditations and approvals for our core program offerings:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="39%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="37%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="18%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Specialized Accreditations and Program</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>College</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Approvals</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Current Period</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>College of Education</I>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; The Arizona State Board of
Education approves our College of
Education to offer Institutional
Recommendations for the certification
of elementary, secondary, and special
education teachers (B.S./M.Ed.) and
school principals (M.Ed.).
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">2010 &#150; 2013
(teacher)&nbsp;2010-2012
(principal)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>Ken Blanchard College of Business</I>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; The Association of Collegiate
Business Schools and Programs
accredits our Executive Master of
Business Administration degree
program, Master of Business
Administration degree program, and
our Bachelor of Science degree
programs in Accounting, Business
Administration, Marketing, Finance
and Economics, and Entrepreneurial
Studies.</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">2007 &#150; 2017</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px"><I>College of Nursing and Health Sciences</I>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; The Commission on Collegiate
Nursing Education accredits our
Bachelor of Science in Nursing and
Master of Science in Nursing degree
programs.</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">2006 &#150; 2016 (B.S.)<br>
2006 &#150; 2011 (M.S.)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; The Arizona State Board of Nursing
approves our Bachelor of Science in
Nursing and Master of Science in
Nursing degree programs.</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">2006 &#150; 2016 (B.S.)<br>
2006 &#150; 2011 (M.S.)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; The Commission on Accreditation of
Athletic Training Education accredits
our Athletic Training Program.</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">2008 &#150; 2013</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our regional accreditation with the Higher Learning Commission, and our specialized
accreditations and approvals for our core programs, reflect the quality of, and standards we set
for, our programs, enhance their marketability, and improve the employability of our graduates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Curricula</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We offer the degrees of Doctorate of Education, Doctor of Business Administration, Doctor of
Philosophy in General Psychology, Master of Arts, Master of Education, Master of Business
Administration, Executive MBA, Master of Public Health, Master of Science, Bachelor of Arts, and
Bachelor of Science and a variety of programs leading to each of these degrees. Many of our degree
programs also offer the opportunity to obtain one or more emphases. We require students to take a
minimum of three designated courses to achieve a given emphasis. We also offer certificate
programs, which consist of a series of courses focused on a particular area of study, for students
who seek to enhance their skills and knowledge.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">We offer our academic programs through our six distinct colleges:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the College of Doctoral Studies, which utilizes innovative technology,
collaboration, and learning communities to develop expert practitioners and researchers
who can become leaders in the disciplines and communities they serve;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the College of Education, which has a 60-year history as one of Arizona&#146;s leading
teacher&#146;s colleges and consistently graduates teachers who meet or exceed state averages
on the Arizona Educator Proficiency Assessment exams;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Ken Blanchard College of Business, which has a well-known brand among our
target student population, an advisory board that includes nationally recognized
business leaders, and a reputation for offering career-oriented degree programs,
including an Executive MBA and programs in leadership, business, and entrepreneurship;</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->10<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">


<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the College of Nursing and Health Sciences, which has a strong reputation within
the Arizona healthcare community and is the second largest nursing program in Arizona;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the College of Liberal Arts, which develops and provides many of the general
education course requirements in our other colleges and also serves as one of the
vehicles through which we offer programs in additional targeted disciplines; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the College of Fine Arts and Production, which was reintroduced in 2010 and which
continues the long and highly regarded tradition that the University has in the Fine
Arts.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We license the right to utilize the name of Ken Blanchard in connection with our business
school and Executive MBA Programs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Under the overall leadership of our senior academic affairs personnel and the deans of the
individual colleges, each of the colleges organizes its academic programs through various
departments and schools. At December&nbsp;31, 2010, we offered 107 academic degree program and emphasis
combinations, as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="36%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="59%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>College of Doctoral Studies</B></TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Degree Program</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Emphasis</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Doctor of Education
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Organizational Leadership &#151;
Organizational Development</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Organizational Leadership &#151; Higher
Education Leadership</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Organizational Leadership &#151;
Effective Schools</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Organizational Leadership &#151;
Behavioral Health</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Organizational Leadership &#151;
Instructional Leadership</DIV></TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="16%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="33%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="32%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>College of Education</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Ken Blanchard College of Business</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Degree Program</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Emphasis</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Degree Program</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Emphasis</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Master of Arts
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Teaching &#151; Professional Learning<br>
Communities</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Ken Blanchard<BR>
Executive MBA</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Teaching &#151; Teaching Leadership</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Master of Education
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:17px; text-indent:-17px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Education Administration &#151;
Institutional Recommendation (&#147;IR&#148;)</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Master of Business
Administration
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Accounting</DIV>
<DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Corporate</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Educational Leadership &#151; Non-IR </DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Finance</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Health Systems Management</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Elementary Education &#151; IR</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Marketing</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Elementary Education &#151; Non-IR</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Leadership</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:17px; text-indent:-17px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Curriculum and Instruction: Reading&#151;
Elementary</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Strategic Human Resources Management</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:17px; text-indent:-17px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Curriculum and Instruction: Reading
&#151; Secondary</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Master of Public
Administration
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Government and Policy</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Curriculum and Instruction: Technology</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Health Care Management</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Secondary Education &#151; IR</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Secondary Education &#151; Non-IR</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Master of Science
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Leadership</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:17px; text-indent:-17px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Special Education for Certified
Special <br>Educators</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:17px; text-indent:-17px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Leadership &#151; Disaster
Preparedness &#038; Executive Fire Leadership</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:17px; text-indent:-17px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Teaching English to Speakers of Other
Languages</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Special Education &#151; IR</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Special Education &#151; Non-IR</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Bachelor of Science
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Accounting</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Early Childhood Education &#151; IR</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Business Administration</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Early Childhood Education &#151; Non-IR</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Applied Management</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Finance and Economics</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Entrepreneurial Studies</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Marketing</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Public Safety Administration</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Sports Management</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Public Safety and Emergency
Management</DIV></TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->11<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">


<DIV align="center">
<TABLE style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="15%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="34%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="31%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>College of Education</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>College of Fine Arts and Production</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Degree Program</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Emphasis</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Degree Program</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Emphasis</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->

<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Bachelor of Science
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Elementary/Special Education</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Bachelor of Arts
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Dance Education*</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Elementary Education &#151; Early Childhood</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Digital Film &#151; Production*</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Education
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Digital Film &#151; Screenwriting*</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Elementary Education &#151; English</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Music Education*</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Elementary Education &#151; Math</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Music &#151; Piano*</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Elementary Education &#151; Science</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Music &#151; Voice*</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Secondary Education &#151; Biology*</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Theatre and Drama*</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Secondary Education &#151; Business
Education</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Secondary Education &#151; Chemistry*</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Secondary Education &#151; Mathematics</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Secondary Education &#151; Social Studies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Secondary Education &#151; Physical
Education*</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Secondary Education &#151; English</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Early Childhood Education</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
</table>
</DIV>
<DIV align="center">
<TABLE style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="15%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="34%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="31%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>College of Nursing and Health Sciences</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>College of Liberal Arts</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Degree Program</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Emphasis</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Degree Program</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Emphasis</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Master of Science
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Nursing &#151; Family Nurse Practitioner*</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Master of Science
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Criminal Justice &#151; Law Enforcement</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Nursing &#151; Acute Care Nurse
Practitioner</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Nursing &#151; Leadership in Healthcare
Systems</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Criminal Justice &#151; Legal Studies</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:17px; text-indent:-17px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Nursing &#151; Clinical Nurse Specialist<br>
(Education Focus)*</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Psychology &#151; Industrial and
Organizational Psychology</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Nursing &#151; Clinical Nurse Specialist*</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Psychology &#151; General Psychology</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Nursing &#151; Nursing Education</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Professional Counseling </DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Master of Arts
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Christian Studies</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Addiction Counseling</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Christian Studies &#151; Pastoral
Ministry</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Marriage and Family Therapy</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Christian Studies &#151; Urban Ministry</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Health Care Administration </DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Christian Studies &#151; Youth Ministry</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Health Care Informatics</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Christian Studies &#151; Christian
Leadership</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Master of Public Health
Science</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Bachelor of Science
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Nursing* </DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Bachelor of Science
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Justice Studies</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Biology &#151; Pre-Medicine*</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Psychology</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Biology &#151; Pre-Pharmacy*</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Sociology</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Biology &#151; Pre-Physician Assistant*</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:17px; text-indent:-17px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Health Science: Professional
Development and Advanced Patient Care</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Respiratory Care</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Bachelor of Arts
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Communications</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Medical Imaging Sciences</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; English Literature</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Athletic Training*</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Interdisciplinary Studies</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Addiction Counseling</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Christian Studies</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Exercise Science &#151; Athletic Coaching</DIV>
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; History</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Exercise Science &#151; Health Education</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Exercise Science &#151; Physical Education</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Exercise Science &#151; Pre-Physical
Therapy</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><DIV style="margin-left:21px; text-indent:-21px"><B>&#149;</B>&nbsp;&nbsp;&nbsp; Health Care Administration</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>



<DIV align="left"><DIV style="font-size: 10pt; margin-top: 10pt; width: 18%; border-bottom: 1px solid #000000">&nbsp;</DIV></DIV>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Indicates program was offered on ground only</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We have established relationships with health care systems, school districts, emergency
services providers, and other employers through which we offer programs onsite to provide
flexibility and convenience to students and their employers. For example, for our nursing programs,
we offer clinical courses onsite at hospitals and other healthcare centers with which we have
relationships, and also arrange to allow these students to complete their clinical work onsite. We
refer to students attending a program with us through such relationships as professional studies
students.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We currently offer our ground-based programs to traditional students through three 16-week
semesters in a calendar year and to online students in five, seven or eight week courses throughout
the calendar year. Traditional students generally enroll in three or four courses per semester
while online students typically concentrate on one
course at a time. While there is no explicit requirement, we communicate to our online
students our expectation that they access their online student classroom at least four times each
week in order to maintain an active dialogue with their professors and classmates. Our online
programs provide a digital record of student interactions for the course instructor to assess
students&#146; levels of engagement and demonstration of required competencies.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->12<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>New Program Development</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We typically identify a potential new degree program or emphasis area through market demand or
from proposals developed by faculty, staff, students, alumni, or partners, and then perform an
analysis of the development cost and the long-term demand for the program. If, following this
analysis, we decide to proceed with the program, our Curriculum Design and Development Team
designates a subject matter expert who works with other faculty and our curriculum development
personnel to design a program that is consistent with our academically rigorous, career-oriented
program standards. The program is then reviewed by the dean of the applicable college, the Program
Standards and Evaluation Committee, Academic Affairs Committee, our Provost and Chief Academic
Officer, and finally, our President. Upon approval, the subject matter expert develops a course
syllabus and our Marketing Department creates a marketing plan to publicize the new program. Our
average program development process is six months from proposal to course introduction. The
development process is typically longer if we are expanding into a new field or offering a new
level of degree.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Assessment</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our Office of Assessment serves as our central resource for assessing and continually
improving our curricula, student satisfaction and learning outcomes. Among other things, the
assessment team reviews student course satisfaction surveys; analyzes archived student assignments
to assess whether a given program is developing students&#146; foundational knowledge, professional
competencies, and skills to achieve the expected learning outcomes; and provides feedback as to
program effectiveness. Based on this data and the conclusions of the assessment team, we modify
programs as necessary to meet our student satisfaction and educational development standards and
make recommendations as to adding or modifying programs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Faculty</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our faculty includes full-time faculty who teach under a nine-month or twelve-month teaching
contract, as well as adjunct faculty whom we employ to teach on a course-by-course basis for a
specified fee. As of December&nbsp;31, 2010, we employed 111 full-time faculty members and we maintain a
pool of over 2,500 adjunct faculty members, all of whom had completed our required training.
Substantially all of our current faculty members hold at least a master&#146;s degree in their
respective field and 30% of our faculty members hold a doctoral degree. On occasion, we engage a
limited number of faculty members who may not hold a graduate degree, but who evidence significant
professional experience and achievement in their respective subject areas.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We believe that the quality of our faculty is critical to our success, particularly because
faculty members have more interaction with our students than any other university employee.
Accordingly, we regularly review the performance of our faculty, including, but not limited to,
engaging our full-time faculty and other specialists to conduct peer reviews of our adjunct
faculty, monitoring the amount of contact and the quality of feedback that faculty have with
students in our online programs, reviewing student feedback, and evaluating the learning outcomes
achieved by students. If we determine that a faculty member is not performing at the level that we
require, we work with the faculty member to improve performance, including, among other things,
assigning him or her a mentor or through other means. If the faculty member&#146;s performance does not
improve, we terminate the faculty member&#146;s contract and employment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Student Support Services</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Encouraging students that enter Grand Canyon University to complete their degree programs is
critical to the success of our business. We focus on developing and providing resources that
support the student educational experience, simplify the student enrollment process, acclimate
students to our programs and our online environment, and track student performance toward degree
completion. Many of our support services, including academic, administrative, and library services,
are accessible online and are available to our online and ground students, allowing users to access
these services at a time and in a manner that is generally convenient to them. The student support
services we provide include:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Academic services. </I>We provide students with a variety of services designed to support their
academic studies. Our Center for Learning and Advancement offers research services, writing
services, and other tutoring services.
</DIV>

<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->13<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Administrative services. </I>We provide students with the ability to access a variety of
administrative services both telephonically and via the Internet. For example, students can
register for classes, apply for financial aid, pay their tuition, and access their transcripts
online. We believe this online accessibility provides the convenience and self-service capabilities
that our students value. Our academic and finance counselors provide personalized online and
telephonic support to our students.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Library services. </I>We provide a mix of online and ground resources, services, and instruction
to support the educational and research endeavors of all students, faculty, and staff, including
ground and online libraries and a qualified library staff that is available to help faculty and
students with research, teaching, and library resource instruction. Collectively, our library
services satisfy the criteria established by the Higher Learning Commission and other accrediting
and approving bodies for us to offer undergraduate, master&#146;s, and doctoral programs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Career services. </I>For those students seeking to change careers or explore new career
opportunities, we offer career services support, including resume review and evaluation, career
planning workshops, and access to career services specialists for advice and support. Other
resources that we offer include a Job Readiness Program, which advises students on matters such as
people skills, resumes and cover letters, mock interviews, and business etiquette; a job board,
which advertises employment postings and career exploration opportunities; career counseling
appointments and consultations; and career fairs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Technology support services. </I>We provide online technical support 16 hours per day during the
week and 14 hours per day on weekends to help our students remedy technology-related issues. We
also provide online tutorials and &#147;Frequently Asked Questions&#148; for students who are new to online
coursework.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Marketing, Recruitment, and Retention</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Marketing. </I>We engage in a range of marketing activities designed to position us as a provider
of academically rigorous, career-oriented educational programs, build strong brand recognition in
our core disciplines, differentiate us from other educational providers, raise awareness among
prospective students, generate enrollment inquiries, and stimulate student and alumni referrals. We
target our online programs to working adults focused on program quality, convenience, and career
advancement goals. We target our ground programs to traditional college students, working adults
seeking a high quality education in a traditional college setting, and working adults seeking to
take classes with a cohort onsite at their employer&#146;s facility. In marketing our programs to
prospective students, we emphasize the value of the educational experience and the academic rigor
and career orientation of the programs, rather than the cost or speed to graduation. We believe
this approach reinforces the qualities that we want associated with our brand and also attracts
students who tend to be more persistent in starting and finishing their programs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Recruitment. </I>Once a prospective student has indicated an interest in enrolling in one of our
programs, our lead management system identifies and directs an enrollment counselor to initiate
immediate communication. The enrollment counselor serves as the primary, direct contact for the
prospective student and the counselor&#146;s goal is to help that individual gain sufficient knowledge
and understanding of our programs so that he or she can assess whether there is a good match
between our offerings and the prospective student&#146;s goals. Upon the prospective student&#146;s
submission of an application, the enrollment counselor, together with our student services
personnel, works with the applicant to gain acceptance, arrange financial aid, if needed, register
for courses, and prepare for matriculation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Retention. </I>A key component in retaining our students is providing an outstanding learning
experience. We feel that our team-based, proactive approach to recruitment and enhanced student
services results in increased retention due to our systematic approach to contacting students at
key milestones during their enrollment, providing encouragement and highlighting their
achievements. Our financial advisors proactively assist each student with the student&#146;s selection
of an appropriate payment option, and monitors the student&#146;s progress and account balance to ensure
a smooth financial aid experience and to help ensure our students are well prepared for their
financial obligations incurred. Our academic advisors assist their students with their academic
schedules and regularly monitor &#147;triggering events,&#148; such as the failure to participate in the
classroom or failure to matriculate in a timely
manner, which signal that a student may be at-risk for dropping out. Upon identifying an
at-risk student, academic advisors proactively interact with the student to resolve any issues and
encourage the student to continue with his or her program. We have found that personally involving
our employees in the student educational process, and proactively seeking to resolve issues before
they become larger problems, can significantly increase retention rates among students. These
frequent interactions between financial and academic advisors and students are a key component to
our retention strategy.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->14<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Admissions</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Admission to Grand Canyon University is available to qualified students who are at least 16
years of age. Undergraduate applicants may qualify in various ways, including by having a high
school diploma, certain minimum grade point average levels, a composite score of 920 or
greater on the Scholastic Aptitude Test, or a passing score of 520 or greater on the General
Education Development (GED)&nbsp;tests. Some of our programs require a higher grade point average and/or
other criteria to qualify for admission. Applicants to our graduate programs must generally have an
undergraduate degree from an accredited college, university, or program with a grade point average
of 2.8 or greater, or a graduate degree from such a college, university, or program. In addition,
some students who do not meet the qualifications for admission may be admitted at our discretion. A
student being considered for such admission may be asked to submit additional information such as
personal references and an essay addressing academic history. Students may also need to schedule an
interview to help clarify academic goals and help us make an informed decision.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Enrollment</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">At December&nbsp;31, 2010, we had 41,482 students enrolled in our courses, of which 37,734, or
91.0%, were enrolled in our online programs, and 3,748, or 9.0%, were enrolled in our ground
programs. Of our online students, which were geographically distributed throughout all 50 states of
the United States, and Canada, 92.2% were age 25 or older. Of our traditional on-campus students,
which, although we draw students from throughout the United States, were predominantly comprised of
students from Arizona, 22.0% were age 25 or older.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following is a summary of our student enrollment at December&nbsp;31, 2010 and December&nbsp;31,
2009 (which included fewer than 275 students pursuing non-degree certificates) by degree type and
by instructional delivery method:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>December 31, 2010</B><SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>December 31, 2009</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B># of Students</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>% of Total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B># of Students</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>% of Total</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Graduate degree <SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,732</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">42.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,097</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">42.7</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Undergraduate degree</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">57.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,612</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">57.3</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,482</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,709</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>December 31, 2010</B><SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>December 31, 2009</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B># of Students</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>% of Total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B># of Students</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>% of Total</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Online<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,734</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">91.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,596</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">91.7</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ground <SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,748</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">9.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,113</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">8.3</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,482</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,709</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Enrollment at December&nbsp;31, 2010 represents individual students who attended a course
during the last two months of the calendar quarter. Prior to our transition to BBAY,
enrollment had been defined as individual students that attended a course in a term that was
in session as of the end of the quarter.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Includes 1,186 and 315 students pursuing doctoral degrees at December&nbsp;31, 2010 and
2009, respectively.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>As of December&nbsp;31, 2010 and 2009, 45.5% and 44.5%, respectively, of our online
students were pursuing graduate or doctoral degrees.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Includes our traditional on-campus students, as well as our professional studies
students.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->15<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Tuition and Fees</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our tuition rates vary by type and length of program and by degree level. For all graduate and
undergraduate programs, tuition is determined by the number of courses taken by each student. For
our 2010-11 academic year (the academic year that began in May&nbsp;2010), our prices per credit hour
are $435 for undergraduate online and professional studies courses, $465 for graduate online
courses (other than graduate business and graduate nursing), $510 for graduate business courses,
$560 for graduate online nursing courses, $575 for doctoral courses, and $688 for undergraduate
courses for traditional on-campus students. For our active duty and active reserve online and
professional studies students, our prices per credit hour are $250 for undergraduate and $370 for
graduate. The overall price of each course varies based upon the number of credit hours per course
(with most courses representing four credit hours), the degree level of the program, and the
discipline of the course. In addition, we charge a fixed $8,250 &#147;block tuition&#148; for undergraduate
ground students taking between 12 and 18 credit hours per semester, with an additional $688 per
credit hour for credits in excess of 18. A traditional undergraduate degree typically requires a
minimum of 120 credit hours. The minimum number of credit hours required for a master&#146;s degree and
overall cost for such a degree varies by program although such programs typically require
approximately 36 credit hours. The doctoral programs require approximately 60 credit hours.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We offer tuition scholarships to select students, including online students, athletes,
employees, and participants in programs we offer through relationships with employers. For the
years ended December&nbsp;31, 2010, 2009, and 2008, our revenue was reduced by approximately $55.8
million, $34.2&nbsp;million, and $18.4&nbsp;million, respectively, as a result of scholarships that we
offered to our students. The increase in scholarships is due to increased revenues and a
significant increase in the use of academic scholarships to attract high performing students.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We have established a refund policy for tuition and fees based upon individual course start
dates. Under our policy, for courses offered through a non-traditional modality, generally if a
student drops or withdraws from a course before the first week, 100% of the charges for tuition and
fees are refunded. If a student drops or withdraws from a course during the first week of the
course, 75% of the charges for tuition are refunded. If a student drops or withdraws from a course
during or after the second week of a course, tuition charges and fees are not refunded. All fees,
including materials fees, are non-refundable for non-traditional students after the start of a
course. We will refund tuition and fees according to the above policy unless a student attending
courses online is a resident of a state that requires us to comply with different, state specific
guidelines. For traditional students attending 16-week courses, generally if a student withdraws
before the first week 100% of the charges for tuition and fees are refunded. If a student withdraws
during the first week of the course, 90% of the charges for tuition are refunded and instructional
fees and ground campus-related fees are refunded. If a student drops or withdraws from a course
during the second week of a course, 75% of the tuition charges are refunded and all fees are
non-refundable. If a student drops during the third week of a course, 50% of the tuition charges
are refunded and during or after the fourth week, there are no refunds for tuition charges or fees.
Fees charged by us include graduation fees as well as fees for access to certain educational
resources such as online materials. This tuition and fees refund policy is different from, and
applies in addition to, the return of Title IV funds policy we are required to follow as a
condition of our participation in the Title IV programs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Sources of Student Financing</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">Our students finance their education through a combination of methods, as follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Title IV programs. </I>The federal government provides for grants and loans to students under the
Title IV programs, and students can use those funds at any institution that has been certified as
eligible by the Department of Education. Student financial aid under the Title IV programs is
primarily awarded on the basis of a student&#146;s financial need, which is generally defined as the
difference between the cost of attending the institution and the amount the student and the
student&#146;s family can reasonably contribute to that cost. All students receiving Title IV program
funds must maintain satisfactory academic progress toward completion of their program of study. In
addition, each school must ensure that Title IV program funds are properly accounted for and
disbursed in the correct amounts to eligible students.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->16<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">During fiscal 2010 and 2009, we derived approximately 84.9% and 82.5%, respectively, of our
revenue (calculated on a cash basis in accordance with Department of Education standards that were
in effect prior to the
August&nbsp;2008 reauthorization of the Higher Education Act) from tuition financed under the Title
IV programs. During fiscal year 2010, the Health Care and Education Reconciliation Act was enacted
and signed into law. This legislation, among other things, eliminated the Federal Family Education
Loan Program, or FFEL, and required all Title IV federal student loans to be administered through
the Federal Direct Loan Program, or FDL Program, commencing July&nbsp;1, 2010. We completed the
transition of loan origination and related servicing from the FFEL to the FDL Program during the
third quarter of fiscal year 2010. The primary Title IV programs that our students receive funding
from are the FDL Program, and the Federal Pell Grant, or Pell, Program.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Student loans are currently the most significant source of U.S. federal student aid and are
administered through the FDL Program. Previously, these loans were also available under the FFEL.
Annual and aggregate loan limits apply based on the student&#146;s grade level. There are two types of
federal student loans: subsidized loans, which are based on the U.S. federal statutory calculation
of student need, and unsubsidized loans, which are not need-based. Neither type of student loan is
based on creditworthiness. Students are not responsible for interest on subsidized loans while the
student is enrolled in school. Students are responsible for the interest on unsubsidized loans
while enrolled in school, but have the option to defer payment while enrolled. Repayment on
federal student loans begins six months after the date the student ceases to be enrolled. The
loans are repayable over the course of 10&nbsp;years and, in some cases, longer. Both graduate and
undergraduate students are eligible for loans. During 2010, federal student loans (both subsidized
and unsubsidized) represented approximately 87.1% of the gross Title IV funds received by the
University.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Pell Grants are awarded based on need and only to undergraduate students who have not earned a
bachelor&#146;s or professional degree. Unlike loans, Pell Grants are not repayable. During fiscal
year 2010, Pell Grants represented approximately 11.8% of the gross Title IV funds received by the
University. The eligibility requirements for, and the maximum amount available under, Pell Grants
have increased in each of the past three years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our students also receive funding under other Title IV programs, including the Federal Perkins
Loan Program, the Federal Supplemental Educational Opportunity Grant Program, the Federal
Work-Study Program, the National Science and Mathematics Access to Retain Talent Grant Program, the
Academic Competitiveness Grant Program, and the Teacher Education Assistance for College and Higher
Education Grant Program.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Other financial aid programs. </I>In addition to the Title IV programs listed above, eligible
students may participate in several other financial aid programs or receive support from other
governmental sources. These include veterans educational benefits administered by the U.S.
Department of Veterans Affairs and state financial aid programs. During fiscal 2010 and 2009, we
derived an immaterial amount of our net revenue from tuition financed by such programs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Private loans. </I>Some of our students also use private loan programs to help finance their
education. Students can apply to a number of different lenders for private loans at current market
interest rates. Private loans are intended to fund a portion of students&#146; cost of education not
covered by the Title IV programs and other financial aid. During fiscal 2010 and 2009, payments
derived from private loans constituted less than 1% of our net revenues for each year respectively.
Third-party lenders independently determine whether a loan to a student is classified as subprime,
and, based on these determinations, we did not derive any payments from subprime loans during
fiscal year 2010 or 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Other sources. </I>We derived the remainder of our net revenue from tuition that is self-funded or
attributable to employer tuition reimbursements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Technology Systems and Management</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We believe that we have established a secure, reliable, scalable technology system that
provides a high quality online educational environment and gives us the capability to substantially
grow our online programs and enrollment.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->17<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Online course delivery and management. </I>Our online learning management system is the ANGEL
Learning Management Suite, which is a web-based system and collaboration portal that stores,
manages, and delivers course content; provides interactive communication between students and
faculty; enables assignment uploading; and
supplies online evaluation tools. The system also provides centralized administration features
that support the implementation of policies for content format and in-classroom learning tools.
During 2010, we entered into an agreement with an affiliated entity to develop a new learning
management system for use by the University Through this agreement we prepaid perpetual license
fees, acquired source code rights for the software developed, and prepaid maintenance and service
fees for the first seven years of use, for an aggregate amount of $4.9&nbsp;million. We anticipate full
conversion to this new learning management platform for our online delivered coursework by the
third quarter of 2011. We continually seek to develop and implement features that enhance the
online classroom experience, such as delivering course content through streaming video,
simulations, and other interactive enhancements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Internal administration. </I>We utilize a commercial customer relations management package to
distribute, manage, track, and report on all prospective student leads developed, both internally
and externally. This package is scalable to capacity levels well in excess of current requirements.
We also utilize a commercial software package to track Title IV funds, student records, grades,
accounts receivable, and accounts payable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Infrastructure. </I>We operate two data centers, one at our campus and one at our Peoria Avenue
location. All of our servers are networked and we have redundant data backup. We manage our
technology environment internally. Our wide area network uses multi-protocol label switching
technology for maximum availability and flexibility. Student access is load balanced for maximum
performance. Real-time monitoring provides current system status across server, network, and
storage components.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Ground Campus</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We own our ground campus, which is located on approximately 100 acres in the center of the
Phoenix, Arizona metropolitan area, near downtown Phoenix. Our on-campus facilities currently
consist of 43 buildings with more than 700,000 square feet of space, which include 64 classrooms,
two lecture halls, a 300-seat theater, four student computer labs with 125 computers that are
available to students 18 hours per day, a 155,000-volume library, a media arts complex that
provides communications students with audio and video equipment, and a 55,000 square foot
recreation center for both student-athletes and on-campus students. We house our ground students in
an on-campus student apartment complex and two dormitories that can collectively hold up to 1,200
students. A new 140,000 square foot arena will open in September&nbsp;2011, and a new 500-bed dormitory
and a food court restaurant will be completed in August&nbsp;2011.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We have 22 intercollegiate athletic teams that compete in Division II of the National
Collegiate Athletic Association (&#147;NCAA&#148;). Our athletic facilities include a competition/practice
gymnasium, which accommodates basketball, volleyball, and wrestling competitive events. In
addition, the University has a student recreation center that has state of the art training
facilities for our 400 student-athletes plus practice space and locker rooms for men&#146;s and women&#146;s
basketball and wrestling. Our baseball, softball, soccer and lacrosse programs utilize on-campus
practice and competition sites. Golf, tennis, cross-country, track and field and swimming programs
utilize off-campus sites for practice and competition. Our baseball program has produced 13 Major
League Baseball players while the men&#146;s basketball program has produced a pair of NBA players.
Baseball, basketball, tennis and soccer have combined to produce nine National Association of
Intercollegiate Athletics (&#147;NAIA&#148;) or NCAA National Championship teams.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We believe our ground-based programs and traditional campus not only offer our ground
students, faculty, and staff an opportunity to participate in a traditional college experience, but
also provide our online students, faculty, and staff with a sense of connection to a traditional
university. Additionally, our full-time ground faculty play an important role in integrating online
faculty into our academic programs and ensuring the overall consistency and quality of the ground
and online student experience. We believe our mix of a rapidly growing online program, anchored by
a traditional ground-based program with a 60-year history and heritage, differentiates us from most
other for-profit postsecondary education providers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We intend to continue to expand the size and enhance the profile and reputation of our ground
campus by, among other things, adding faculty and expanding upon and modernizing our campus
infrastructure and technological capabilities over the next several years. These activities may
require significant capital expenditures and may cause us to incur significant expenses.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->18<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Employees</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In addition to our faculty, as of December&nbsp;31, 2010, we employed approximately 2,600 staff and
administrative personnel in university services, academic advising and academic support, enrollment
services, university administration, financial aid, information technology, human resources,
corporate accounting, finance, and other administrative functions. None of our employees is a party
to any collective bargaining or similar agreement with us. We consider our relationships with our
employees to be good.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Competition</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">There are more than 4,000 U.S. colleges and universities serving traditional and adult
students. Competition is highly fragmented and varies by geography, program offerings, modality,
ownership, quality level, and selectivity of admissions. No one institution has a significant share
of the total postsecondary market.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our ground program competes with Arizona State University, Northern Arizona University, and
the University of Arizona, the in-state public universities, as well as two-year colleges within
the state community college system. To a limited extent, our ground program also competes with
geographically proximate universities with similar religious heritages, including Azusa Pacific
University, Baylor University, and Seattle Pacific University. Our online programs compete with
local, traditional universities geographically located near each of our prospective students, and
with other for-profit postsecondary schools that offer online degrees, particularly those schools
that offer online graduate programs within our core disciplines, including Capella University,
University of Phoenix, and Walden University. In addition, many public and private schools,
colleges, and universities, including most major colleges and universities, offer online programs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Non-profit institutions receive substantial government subsidies, and have access to
government and foundation grants, tax-deductible contributions and other financial resources
generally not available to for-profit schools. Accordingly, non-profit institutions may have
instructional and support resources that are superior to those in the for-profit sector. In
addition, some of our competitors, including both traditional colleges and universities and other
for-profit schools, have substantially greater name recognition and financial resources than we
have, which may enable them to compete more effectively for potential students. We also expect to
face increased competition as a result of new entrants to the online education market, including
established colleges and universities that had not previously offered online education programs.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">We believe that the competitive factors in the postsecondary education market include:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>availability of career-oriented and accredited program offerings;</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the types of degrees offered and marketability of those degrees;</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>reputation, regulatory approvals, and compliance history of the school;</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>convenient, flexible and dependable access to programs and classes;</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>qualified and experienced faculty;</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>level of student support services;</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>cost of the program;</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>marketing and selling effectiveness; and</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the time necessary to earn a degree.</TD>
</TR>

</TABLE>
</DIV>
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<DIV style="margin-top: 10pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Proprietary Rights</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">We own or are licensed to use various intellectual property rights, including copyrights,
trademarks, service marks, trade secrets and domain names. We license the right to utilize the
name of Ken Blanchard in connection with our business school and Executive MBA programs and have
spent significant resources in related branding efforts. The license agreement with Ken Blanchard
has a current term that expires on June&nbsp;30, 2014. While such intellectual property rights are
important to us, we do not believe that the loss of any individual property right or group of
related rights would have a material adverse effect on our overall business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Available Information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our Internet address is <U>www.gcu.edu</U>. We make available free of charge on our website
our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Forms
3, 4, and 5 filed on behalf of directors and executive officers, and all amendments to those
reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as
reasonably practicable after such reports are electronically filed with, or furnished to, the
Securities and Exchange Commission (hereafter, the SEC). In addition, our earnings conference calls
and presentation to the financial community are web cast live via our website. In addition to
visiting our website, you may read and copy any document we file with the SEC at the SEC&#146;s Public
Reference Room at 100 F. Street NE, Washington, D.C. 20549 or at www.sec.gov. Please call the SEC
at 1-800-SEC-0330 for information on the Public Reference Room.
</DIV>
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<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>REGULATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We are subject to extensive regulation by state education agencies, accrediting commissions,
and the federal government through the Department of Education under the Higher Education Act. The
regulations, standards, and policies of these agencies cover the vast majority of our operations,
including our educational programs, facilities, instructional and administrative staff,
administrative procedures, marketing, recruiting, financial operations, and financial condition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As an institution of higher education that grants degrees and certificates, we are required to
be authorized by appropriate state education authorities. These state education authorities also
exercise regulatory oversight of our institution. In addition, in order to participate in the
federal student financial aid programs, we must be accredited by an accrediting commission
recognized by the Department of Education. Accreditation is a non-governmental process through
which an institution submits to qualitative review by an organization of peer institutions, based
on the standards of the accrediting commission and the stated aims and purposes of the institution.
The Higher Education Act requires accrediting commissions recognized by the Department of Education
to review and monitor many aspects of an institution&#146;s operations and to take appropriate action if
the institution fails to meet the accrediting commission&#146;s standards.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our operations are also subject to regulation by the Department of Education due to our
participation in the federal student financial aid programs under Title IV of the Higher Education
Act. Those Title IV programs include educational loans with below-market interest rates that are
issued by the federal government under the Federal Direct Loan program (the &#147;FDL Program&#148;), as well
as grant programs for students with demonstrated financial need. To participate in the Title IV
programs, a school must receive and maintain authorization by the appropriate state education
agency or agencies, be accredited by an accrediting commission recognized by the Department of
Education, and be certified as an eligible institution by the Department of Education.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our business activities are planned and implemented to comply with the standards of these
regulatory agencies. We employ a Vice President of Student Financial Aid Compliance who is
knowledgeable about regulatory matters relevant to student financial aid programs and our Chief
Financial Officer, Chief Compliance Officer, and General Counsel also provide oversight designed to
ensure that we meet the requirements of our regulated operating environment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>State Education Licensure and Regulation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We are authorized to offer our educational programs by the Arizona State Board for Private
Postsecondary Education, the regulatory agency governing private postsecondary educational
institutions in the State of Arizona, where we are located. We do not presently have campuses in
any states other than Arizona. We are required by the Higher Education Act to maintain
authorization from the Arizona State Board for Private Postsecondary Education in order to
participate in the Title IV programs. This authorization is very important to us and our business.
To maintain our state authorization, we must continuously meet standards relating to, among other
things, educational programs, facilities, instructional and administrative staff, marketing and
recruitment, financial operations, addition of new locations and educational programs, and various
operational and administrative procedures. Our failure to comply with the requirements of the
Arizona State Board for Private Postsecondary Education could result in us losing our authorization
to offer our educational programs, which would cause us to lose our eligibility to participate in
the Title IV programs and could force us to cease operations. Alternatively, the Arizona State
Board for Private Postsecondary Education could restrict our ability to offer certain degree and
non-degree programs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Most other states impose regulatory requirements on out-of-state educational institutions
operating within their boundaries, such as those having a physical facility or conducting certain
academic activities within the state. State laws establish standards in areas such as instruction,
qualifications of faculty, administrative procedures, marketing, recruiting, financial operations,
and other operational matters, some of which are different than the standards prescribed by the
Department of Education or the Arizona State Board for Private Postsecondary Education. Laws in
some states limit schools&#146; ability to offer educational programs and award degrees to residents of
those states. Some states also prescribe financial regulations that are different from those of the
Department of Education, and many require the posting of surety bonds.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Several states have sought to assert jurisdiction over educational institutions offering
online degree programs that have no physical location or other presence in the state but that have
some activity in the state, such as enrolling or offering educational services to students who
reside in the state, employing faculty who reside in the state, or advertising to or recruiting
prospective students in the state. In addition, the Department of Education has adopted new
regulations that require online providers to meet any such state requirements and, thus, the
Department of Education would seem to have authority, in addition to that of the states, to enforce
applicable state law requirements. See &#147;New and Pending Regulations &#151; State authorization.&#148;
Because state regulatory requirements for online education vary among the states, are not well
developed in many states, are imprecise or unclear in some states, and can change frequently, it is
unclear how the new Department of Education regulation will be enforced and what impact it will
have on us. New laws, regulations, or interpretations related to doing business over the Internet
could also increase our cost of doing business and affect our ability to recruit students in
particular states, which could, in turn, negatively affect enrollments and revenues and have a
material adverse effect on our business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We have determined that our activities in certain states constitute a presence requiring
licensure or authorization under the requirements of the applicable state education agency in those
states and we have obtained such licensure. In other states, we have obtained approvals as we have
determined necessary in connection with our marketing and recruiting activities or where we have
determined that our licensure or authorization can facilitate the teaching certification process in
a particular state for graduates of our College of Education. We review the licensure or
authorization requirements of other states when appropriate to determine whether our activities in
those states constitute a presence or otherwise require licensure or authorization by the
applicable state education agencies. Because state regulatory requirements, including agency
interpretations, can change frequently, and because we enroll students in all 50 states and the
District of Columbia, we expect that state regulatory authorities in states where we are not
currently licensed or authorized will request that we seek licensure or authorization in their
states in the future. Although we believe that we will be able to comply with additional state
licensing or authorization requirements that may arise or be asserted in the future, including
under the new Department of Education regulation, if we fail to comply with state licensing or
authorization requirements for a state, or fail to obtain licenses or authorizations when required,
we could lose our state licensure or authorization by that state or be subject to other sanctions,
including restrictions on our activities in, and fines and penalties imposed by, that state, as
well as fines, penalties, and sanctions imposed by the Department of Education. While we do not
believe that any of the states in which we are currently licensed or authorized, other than
Arizona, are individually material to our operations, the loss of licensure or authorization in any
state could prohibit us from recruiting prospective students or offering services to current
students in that state, which could significantly reduce our enrollments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>State Professional Licensure</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Many states have specific requirements that an individual must satisfy in order to be licensed
as a professional in specified fields, including fields such as education and healthcare. These
requirements vary by state and by field. A student&#146;s success in obtaining licensure following
graduation typically depends on several factors, including the background and qualifications of the
individual graduate, as well as the following factors, among others:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>whether the institution and the program were approved by the state in
which the graduate seeks licensure, or by a professional association;</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>whether the program from which the student graduated meets all
requirements for professional licensure in that state;</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>whether the institution and the program are accredited and, if so, by
what accrediting commissions; and</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>whether the institution&#146;s degrees are recognized by other states in
which a student may seek to work.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Many states also require that graduates pass a state test or examination as a prerequisite to
becoming certified in certain fields, such as teaching and nursing. Many states will certify
individuals if they have already been certified in another state.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our College of Education is approved by the Arizona State Board of Education to offer
Institutional Recommendations (credentials)&nbsp;for the certification of elementary, secondary, and
special education teachers and school administrators. Our College of Nursing and Health Services is
approved by the Arizona State Board of Nursing for the Bachelor of Science in Nursing and Master of
Science in Nursing degrees. Due to varying requirements for professional licensure and
certification in states other than Arizona, we inform students of the risks associated with
obtaining professional licensure or certification and that it is each student&#146;s responsibility to
determine what state, local or professional licensure and certification requirements are necessary
in his or her individual state.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Accreditation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We have been continuously accredited since 1968 by the Higher Learning Commission and its
predecessor, each a regional accrediting commission recognized by the Department of Education. Our
accreditation was reaffirmed in 2007, and the next scheduled comprehensive evaluation will be
conducted in 2016-2017. Accreditation is a private, non-governmental process for evaluating the
quality of educational institutions and their programs in areas including student performance,
governance, integrity, educational quality, faculty, physical resources, administrative capability
and resources, and financial stability. To be recognized by the Department of Education,
accrediting commissions must adopt specific standards for their review of educational institutions,
conduct peer-review evaluations of institutions, and publicly designate those institutions that
meet their criteria. An accredited school is subject to periodic review by its accrediting
commissions to determine whether it continues to meet the performance, integrity and quality
required for accreditation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">There are six regional accrediting commissions recognized by the Department of Education, each
with a specified geographic scope of coverage, which together cover the entire United States. Most
traditional, public and private non-profit, degree-granting colleges and universities are
accredited by one of these six regional accrediting commissions. The Higher Learning Commission,
which accredits Grand Canyon University, is the same regional accrediting commission that accredits
such universities as the University of Arizona, Arizona State University, and other degree-granting
public, private non-profit, and proprietary colleges and universities in the states of Arizona,
Arkansas, Colorado, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, New
Mexico, North Dakota, Ohio, Oklahoma, South Dakota, West Virginia, Wisconsin, and Wyoming.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Accreditation by the Higher Learning Commission is important to us for several reasons,
including the fact that it enables our students to receive Title IV financial aid. Other colleges
and universities depend, in part, on an institution&#146;s accreditation in evaluating transfers of
credit and applications to graduate schools. Employers rely on the accredited status of
institutions when evaluating candidates&#146; credentials, and students and corporate and government
sponsors under tuition reimbursement programs look to accreditation for assurance that an
institution maintains quality educational standards. If we fail to satisfy the standards of the
Higher Learning Commission, we could lose our accreditation by that agency, which would cause us to
lose our eligibility to participate in the Title IV programs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The reauthorization of the Higher Education Act in 2008 and final regulations thereunder
issued by the Department of Education that became effective July&nbsp;1, 2010 require accreditors to
monitor the growth of programs at institutions that are experiencing significant enrollment growth.
The Higher Learning Commission requires all affiliated institutions to complete an annual data
report. If the non-financial data, particularly enrollment information, and any other information
submitted by the institution indicate problems, rapid change, or significant growth, the Higher
Learning Commission staff may require that the institution address any concerns arising from the
data report in the next self-study and visit process. The Higher Learning Commission staff may also
recommend that its Institutional Actions Council require additional monitoring. In addition, the
Department of Education has issued final regulations that became effective July&nbsp;1, 2010 that
require the Higher Learning Commission to notify the Department of Education if an institution it
accredits that offers distance learning programs experiences an increase in its headcount
enrollment of 50% or more in any fiscal year, and the Department of Education may consider that
information in connection with its own regulatory oversight activities.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In addition to institutional accreditation by the Higher Learning Commission, there are
numerous specialized accrediting commissions that accredit specific programs or schools within
their jurisdiction, many of which are in healthcare and professional fields. Accreditation of
specific programs by one of these specialized accrediting
commissions signifies that those programs have met the additional standards of those agencies.
In addition to being accredited by the Higher Learning Commission, we also have the following
specialized accreditations:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Association of Collegiate Business Schools and Programs accredits
our Executive Master of Business Administration degree program, Master
of Business Administration degree program and our Bachelor of Science
degree programs in Accounting, Business Administration, Marketing, and
Entrepreneurship;</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Commission on Collegiate Nursing Education accredits our Bachelor
of Science in Nursing and Master of Science in Nursing degree
programs; and</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Commission on Accreditation of Athletic Training Education
accredits our Athletic Training Program.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">If we fail to satisfy the standards of any of these specialized accrediting commissions, we
could lose the specialized accreditation for the affected programs, which could result in
materially reduced student enrollments in those programs and prevent our students from seeking and
obtaining appropriate licensure in their fields.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Regulation of Federal Student Financial Aid Programs</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">To be eligible to participate in the Title IV programs, an institution must comply with
specific requirements contained in the Higher Education Act and the regulations issued thereunder
by the Department of Education. An institution must, among other things, be licensed or authorized
to offer its educational programs by the state in which it is physically located (in our case,
Arizona) and maintain institutional accreditation by an accrediting commission recognized by the
Department of Education (in our case, the Higher Learning Commission). We submitted our application
for recertification to participate in the Title IV programs to the Department of Education in March
2008 in anticipation of the expiration of our provisional certification on June&nbsp;30, 2008. The
Department of Education did not make a decision on our recertification application by June&nbsp;30,
2008, and therefore our participation in the Title IV programs has been automatically extended on a
month-to-month basis until the Department of Education makes its decision.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The substantial amount of federal funds disbursed to schools through the Title IV programs,
the large number of students and institutions participating in these programs, and allegations of
fraud and abuse by certain for-profit educational institutions have caused Congress to require the
Department of Education to exercise considerable regulatory oversight over for-profit educational
institutions. As a result, our institution is subject to extensive oversight and review. Because
the Department of Education periodically revises its regulations and changes its interpretations of
existing laws and regulations, we cannot predict with certainty how the Title IV program
requirements will be applied in all circumstances.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Significant factors relating to the Title IV programs that could adversely affect us include
the following:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Congressional action. </I>Congress must reauthorize the Higher Education Act on a periodic basis,
usually every five to six years, and the most recent reauthorization occurred in August&nbsp;2008. The
reauthorized Higher Education Act reauthorized all of the Title IV programs in which we
participate, but made numerous revisions to the requirements governing the Title IV programs,
including provisions relating to student loan default rates and the formula for determining the
maximum amount of revenue that institutions are permitted to derive from the Title IV programs.
In 2010, Congress enacted legislation, which became effective July&nbsp;1, 2010, that eliminated the
federally guaranteed student loan program and required all such student loans to be made through
the FDL Program. We are not in a position to predict with certainty whether any other pending, or
any proposed, legislation affecting our business will be enacted. Although we are approved to
participate in the FDL Program, because a significant percentage of our revenue is derived from the
Title IV programs, any action by Congress that significantly reduces Title IV program funding or
our ability or the ability of our students to participate in the Title IV programs could increase
our costs of compliance, reduce the ability of some students to finance their education at our
institution, require us to seek to arrange for other sources of financial aid for our students and
materially decrease our student enrollment.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In addition, Congress must determine the funding levels for the Title IV programs on an annual
basis through the budget and appropriations process, and may adjust those levels at other times. A
reduction in federal funding levels for the Title IV programs could reduce the ability of some of
our students to finance their education. The loss of or a significant reduction in Title IV program
funds available to our students could reduce our enrollments and revenue.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">During 2010 and since, there has been increased focus by the Congress on the role that
for-profit educational institutions play in higher education. Each of the Congressional education
committees held one or more hearings examining various aspects of the proprietary education
industry, including the manner in which accrediting agencies review higher education institutions&#146;
policies on credit hours and program length, student recruitment practices, and the debt levels
incurred by, and drop-out rates of, students attending for-profit colleges. In addition, at the
request of the Chairmen of each of these committees, the Government Accountability Office (&#147;GAO&#148;)
conducted reviews and prepared reports with recommendations regarding various aspects of the
proprietary sector, including recruitment practices, educational quality, student outcomes, the
sufficiency of integrity safeguards against waste, fraud and abuse in federal student aid programs
and the degree to which proprietary institutions&#146; revenue is composed of Title IV and other federal
funding sources. Finally, in August&nbsp;2010, the Health, Education, Labor and Pensions (&#147;HELP&#148;)
Committee of the U.S. Senate sent requests to approximately 30 for-profit colleges, including us
and all of the other publicly-traded companies that operate for-profit colleges, seeking
information about such matters as graduation and loan default rates, as well as internal recruiting
documents and details about the use of third-party companies, such as lead generators, in the
recruiting process. The request sought information concerning how we use federal resources,
including how we recruit and enroll students, set program price or tuition, determine financial aid
including private or institutional loans, track attendance, handle withdrawals of students and
return of Title IV dollars and manage compliance with the requirement that no more than 90% of
revenues come from Title IV dollars (calculated on a cash basis). The request also sought an
understanding of the number of students who complete or graduate from programs we offer, how many
of those students find new work in their educational area, the debt levels of students enrolling
and completing programs and how we track and manage the number of students who risk default within
the cohort default rate window. In furtherance of this, the HELP Committee requested that we
provide information about a broad spectrum of our business, including detailed information relating
to financial results, management, operations, personnel, recruiting, enrollment, graduation,
student withdrawals, receipt of Title IV funds, institutional accreditation, regulatory compliance
and other matters. We complied with the HELP Committee&#146;s request and believe that we have completed
the document production necessary to satisfy the request. We cannot predict the extent to which, or
whether, these hearings and review will result in additional legislation, further rulemaking or
other administrative actions affecting our participation in Title IV programs. To the extent that
any laws or regulations are adopted, or other administrative actions are taken, that limit our
participation in Title IV programs or the amount of student financial aid for which the students at
our institutions are eligible, our enrollments, revenues and results of operation could be
materially and adversely affected.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Pending regulatory changes. </I>In May&nbsp;2009, the Department of Education announced its intent to
initiate a round of negotiated rulemaking to address Title IV program integrity issues. Negotiated
rulemaking is a process whereby the Department of Education consults with members of the
postsecondary education community to identify issues of concern and attempts to agree on proposed
regulatory revisions to address those issues before the Department of Education formally proposes
any regulations. If the Department of Education and negotiators cannot reach consensus on their
entire package of draft regulations, the Department of Education is authorized to propose
regulations without being bound by any agreements made in the negotiation process. That process was
concluded for a significant number of regulatory topics in January&nbsp;2010 and addressed a number of
significant issues, including: compensation paid by institutions to persons or entities engaged in
student recruiting or admission activities; the determination of satisfactory academic progress
under different academic calendars; state authorization as a component of institutional
eligibility; the definition of a credit hour for purposes of determining program eligibility
status, particularly in the context of awarding Pell Grants; verification of information included
on student aid applications; the definition of a high school diploma as a condition of a student&#146;s
receipt of Title IV aid and requirements that an institution be able to demonstrate that its
graduates obtain gainful employment, as measured against certain metrics such as student loan debt
and salaries of graduates. Of the proposed revisions to the regulations being considered in this
negotiated rulemaking, the negotiators did not reach consensus on the proposals to modify the
standards relating to the payment of incentive compensation to employees involved in student
recruitment and enrollment and to adopt a definition of &#147;gainful employment&#148; for purposes of the
requirement placed on proprietary schools that participate in Title IV programs that a program of
study prepare students for
gainful employment in a recognized occupation. Accordingly, under the negotiated rulemaking
protocol, the Department of Education became authorized to propose regulations with respect to
these topics without regard to the concerns of institutions as expressed during the negotiated
rulemaking process.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On June&nbsp;18, 2010, the Department of Education issued a Notice of Proposed Rulemaking (&#147;NPRM&#148;)
in respect of the incentive compensation rule and other program integrity issues, other than the
metrics for determining compliance with the gainful employment requirement. The final rules on
these topics were published on October&nbsp;29, 2010 and will become effective on July&nbsp;1, 2011. The
changes to the incentive compensation rule and other program integrity issues are discussed below
under &#147;New and Pending Regulations &#151; Revised incentive compensation rule,&#148; &#147;New and Pending
Regulations &#151;Misrepresentation,&#148; and &#147;New and Pending Regulations &#151;State authorization.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On July&nbsp;26, 2010, the Department of Education issued an NPRM in respect of the proposed
gainful employment requirement, While the Department of Education previously stated that its goal
was to publish final rules related to the gainful employment requirement by November&nbsp;1, 2010 and to
have the final rules be effective July&nbsp;1, 2011 with certain provisions to be effective July&nbsp;1,
2012, due to the unprecedented volume of comments received regarding the proposed rules, on
September&nbsp;24, 2010, the Department of Education announced that it would delay issuing final rules
until early 2011 in order to give interested parties more time to clarify their comments and
respond to questions from Department of Education officials. The final gainful employment rules
have yet to be released. The proposed gainful employment rules are discussed below under &#147;New and
Pending Regulations &#151; Proposed gainful employment rule.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We are still assessing the impact of the final regulations, including those implementing
changes to the incentive compensation rule, and the possible impact of the proposed gainful
employment rules on our financial aid policies and practices and on our other operations, plans,
and strategies. At this time, we cannot predict with any certainty whether compliance with such
new requirements will result in a material adverse effect on our enrollments and operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Eligibility and certification procedures. </I>Each institution must apply periodically to the
Department of Education for continued certification to participate in the Title IV programs. Such
recertification generally is required every six years, but may be required earlier, including when
an institution undergoes a change in control. An institution may also come under the Department of
Education&#146;s review when it expands its activities in certain ways, such as opening an additional
location, adding a new educational program or modifying the academic credentials it offers. The
Department of Education may place an institution on provisional certification status if it finds
that the institution does not fully satisfy all of the eligibility and certification standards and
in certain other circumstances, such as when an institution is certified for the first time or
undergoes a change in control. During the period of provisional certification, the institution must
comply with any additional conditions included in the school&#146;s program participation agreement with
the Department of Education. In addition, the Department of Education may more closely review an
institution that is provisionally certified if it applies for recertification or approval to open a
new location, add an educational program, acquire another school, or make any other significant
change. If the Department of Education determines that a provisionally certified institution is
unable to meet its responsibilities under its program participation agreement, it may seek to
revoke the institution&#146;s certification to participate in the Title IV programs without advance
notice or opportunity for the institution to challenge the action. Students attending provisionally
certified institutions remain eligible to receive Title IV program funds.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Since May&nbsp;2005, we have been certified to participate in Title IV programs on a provisional
basis. We submitted our application for recertification in March&nbsp;2008 in anticipation of the
expiration of our provisional certification on June&nbsp;30, 2008. The Department of Education did not
make a decision on our recertification application by June&nbsp;30, 2008, and therefore our provisional
certification to participate in the Title IV programs has been automatically extended since that
time on a month-to-month basis until the Department of Education makes its decision. Since June
2008, we have filed updates with the Department of Education and communicated with Department of
Education personnel in order to update our pending recertification application with relevant
information, such as our status as a publicly-traded corporation, the identity of the members of
our Board of Directors, and the termination of the voting agreements in January&nbsp;2011. Based on our
provisional certification, the Department of Education may more closely review any application we
may file for recertification, new locations, new educational programs, acquisitions of other
schools, or other significant</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 10pt">changes. For a school that is certified on a provisional basis, the Department of Education may revoke the institution&#146;s certification
without advance notice or advance opportunity for the institution to challenge that action. For a
school that is provisionally certified on a month-to-month basis, like we are, the Department of
Education may allow the institution&#146;s certification to expire at the end of any month without
advance notice, and without any formal procedure for review of such action. To our knowledge, such
action is very rare and has only occurred upon a determination that an institution is in
substantial violation of material Title IV requirements. To date,
we do not believe that our continued provisional certification on a month-to-month basis has had or
will have any material impact on our day-to-day operations. However, there can be no assurance that
the Department of Education will recertify us or that it will not impose conditions or other
restrictions on us as a condition of granting us provisional certification following a change in
control or approving our pending recertification application or with respect to any future
recertification. If the Department of Education does not renew or withdraws our certification to
participate in the Title IV programs at any time, our students would no longer be able to receive
Title IV program funds. Similarly, the Department of Education could renew our certification, but
restrict or delay our students&#146; receipt of Title IV funds, limit the number of students to whom we
could disburse such funds, or place other restrictions on us. Any of these outcomes would have a
material adverse effect on our enrollments and us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Administrative capability. </I>Department of Education regulations specify extensive criteria by
which an institution must establish that it has the requisite &#147;administrative capability&#148; to
participate in the Title IV programs. To meet the administrative capability standards, an
institution must, among other things:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>comply with all applicable Title IV program requirements;</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>have an adequate number of qualified personnel to administer the Title IV programs;</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>have acceptable standards for measuring the satisfactory academic progress of its students;</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>not have student loan cohort default rates above specified levels;</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>have various procedures in place for awarding, disbursing and safeguarding Title IV funds
and for maintaining required records;</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>administer the Title IV programs with adequate checks and balances in its system of
internal controls;</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>not be, and not have any principal or affiliate who is, debarred or suspended from federal
contracting or engaging in activity that is cause for debarment or suspension;</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>provide financial aid counseling to its students;</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>refer to the Department of Education&#146;s Office of Inspector General any credible
information indicating that any student, parent, employee, third-party servicer or other
agent of the institution has engaged in any fraud or other illegal conduct involving the
Title IV programs;</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>submit all required reports and financial statements in a timely manner; and</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>not otherwise appear to lack administrative capability.</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 4%">If an institution fails to satisfy any of these criteria, the Department of Education may:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>require the institution to repay Title IV funds its students previously received;</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>transfer the institution from the advance method of payment of Title IV funds to
heightened cash monitoring status or the reimbursement system of payment;</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>place the institution on provisional certification status; or</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>commence a proceeding to impose a fine or to limit, suspend or terminate the
institution&#146;s participation in the Title IV programs.</TD>
</TR>

</TABLE>
</DIV>
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<DIV style="margin-top: 10pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">If we are found not to have satisfied the Department of Education&#146;s administrative capability
requirements, our students could lose, or be limited in their access to, Title IV program funding.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">New Department of Education regulations that became effective July&nbsp;1, 2010 revised the
administrative capability regulations to, among other things (i)&nbsp;require reporting to the
Department of Education of any reasonable reimbursements paid or provided by a lender to
institutional employees with loan or other financial aid responsibilities and (ii)&nbsp;implement the
new three year cohort default rate rules. See &#147;Regulation of Student Financial Aid Programs &#151;
Student loan defaults.&#148; We have had to make certain administrative and reporting changes to adapt
our systems and practices to meet the requirements of these new regulations. In addition, as part
of our transition from a &#147;term-based&#148; financial aid system (where all students, including online
students, begin programs and are eligible to receive financial aid at periodic start dates pursuant
to a calendar-based term system) to a &#147;borrower-based&#148; financial aid system (where each student may
begin a program and be eligible to receive financial aid at any time throughout the year) in the
spring of 2010, we converted our back office system from Datatel, Inc. to a series of programs
developed by Campus Management Corp., including CampusVue and CampusPortal. This conversion is
intended to allow us to manage our non-traditional online students with greater ease and
flexibility by providing for rolling and flexible start dates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Financial responsibility. </I>The Higher Education Act and Department of Education regulations
establish extensive standards of financial responsibility that institutions such as Grand Canyon
University must satisfy in order to participate in the Title IV programs. The Department of
Education evaluates institutions for compliance with these standards on an annual basis based on
the institution&#146;s annual audited financial statements, as well as when the institution applies to
the Department of Education to have its eligibility to participate in the Title IV programs
recertified. The most significant financial responsibility standard is the institution&#146;s composite
score, which is derived from a formula established by the Department of Education based on three
financial ratios:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>equity ratio, which measures the institution&#146;s capital resources, financial viability and ability to
borrow;</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>primary reserve ratio, which measures the institution&#146;s ability to support current operations from
expendable resources; and</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>net income ratio, which measures the institution&#146;s ability to operate at a profit or within its means.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Department of Education assigns a strength factor to the results of each of these ratios
on a scale from negative 1.0 to positive 3.0, with negative 1.0 reflecting financial weakness and
positive 3.0 reflecting financial strength. The Department of Education then assigns a weighting
percentage to each ratio and adds the weighted scores for the three ratios together to produce a
composite score for the institution. The composite score for the institution&#146;s most recent fiscal
year must be at least 1.5 for the institution to be deemed financially responsible without the need
for further Department of Education oversight. Our composite scores for our fiscal years ended
December&nbsp;31, 2009 and 2008 were 2.9 each year and, therefore, we are considered financially
responsible for purposes of these regulations. We have not yet submitted our financial statements
to the Department of Education for our most recent fiscal year, but have calculated that our
composite score for fiscal year 2010 will be at least 2.5.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In addition to having an acceptable composite score, an institution must, among other things,
provide the administrative resources necessary to comply with Title IV program requirements, meet
all of its financial obligations, including required refunds to students and any Title IV
liabilities and debts, be current in its debt payments, and not receive an adverse, qualified, or
disclaimed opinion by its accountants in its audited financial statements. If the Department of
Education were to determine that we did not meet the financial responsibility standards due to a
failure to meet the composite score or other factors, we would expect to be able to establish
financial responsibility on an alternative basis permitted by the Department of Education, which
could include, in the Department of Education&#146;s discretion, posting a letter of credit, accepting
provisional certification, complying with additional Department of Education monitoring
requirements, agreeing to receive Title IV program funds under
an arrangement other than the Department of Education&#146;s standard advance funding arrangement,
such as the reimbursement system of payment or heightened cash monitoring, and complying with or
accepting other limitations on our ability to increase the number of programs we offer or the
number of students we enroll.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The requirement to post a letter of credit or other sanctions imposed by the Department of
Education could increase our cost of regulatory compliance and adversely affect our cash flows. If
we are unable to meet the minimum composite score or comply with the other standards of financial
responsibility, and could not post a required letter of credit or comply with the alternative bases
for establishing financial responsibility, our students could lose their access to Title IV program
funding.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Return of Title IV funds for students who withdraw. </I>When a student who has received Title IV
program funds withdraws from school, the institution must determine the amount of Title IV program
funds the student has &#147;earned&#148; and then must return the unearned Title IV program funds (a &#147;return
to Title IV&#148;) to the appropriate lender or the Department of Education in a timely manner, which is
generally no later than 45&nbsp;days after the date the institution determined that the student
withdrew. If such payments are not timely made, the institution will be required to submit a letter
of credit to the Department of Education equal to 25% of the Title IV funds that the institution
should have returned for withdrawn students in its most recently completed fiscal year. Under
Department of Education regulations, the letter of credit requirement is triggered by late returns
of Title IV program funds for 5% or more of the withdrawn students in the audit sample in the
institution&#146;s annual Title IV compliance audit for either of the institution&#146;s two most recent
fiscal years or in a Department of Education program review. We did not exceed this 5% threshold in
our annual Title IV compliance audits for 2009 (the most recent year for which we have completed a
Title IV compliance audit), 2008 or 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Prior to spring 2010, we operated in a term-based environment in which, in accordance with
Department of Education regulations, we calculated our returns to Title IV based on the number of
completed days in a term as a percentage of the total days in the term, with the exception that,
with respect to courses offered in a modular setting (i.e. those offered to nontraditional students
as two eight-week courses, or modules, in a term), if a student completed the first course but
withdrew prior to the second course, then the full financial aid award was earned by and paid to
the student and no return to Title IV calculation was done.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In April&nbsp;2010, we converted from a term-based environment to a non-term, borrower-based
environment. In a non-term, borrower-based environment, we operate on a 24-credit academic
year/12-credit payment period for our undergraduate students, who must take three courses during
each payment period, and a 12-credit academic year/6-credit payment period for our graduate
students, who must take two courses during each payment period, and, as a result, we now calculate
returns to Title IV based on the percentage of the payment period attended in comparison to the
full payment period (there is no module concept in a non-term, borrower-based environment). In
this environment, a student (whether undergraduate or graduate) must complete greater than 60% of
the payment period in order to earn the full financial aid award. Thus, if a student completes the
first course but withdraws prior to the second one and therefore does not complete greater than 60%
of the payment period, then the full financial aid award is not earned by the student. In such
case, we must perform a return to Title IV calculation and most, if not all of the funds for future
courses, would be returned to the lender or the Department of Education. If the student withdraws
after the 60% threshold, then the student is deemed to have earned 100% of the Title IV program
funds he or she received. Since, under the non-term, borrower-based system, a student generally
must complete two of the courses in a payment period to earn the full financial aid award, as
opposed to just a single course under the term-based module approach, we have experienced an
increase in the Title IV funds that needed to be returned to lenders or the Department of
Education.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>The &#147;90/10 Rule.&#148; </I>A requirement of the Higher Education Act, commonly referred to as the
&#147;90/10 Rule,&#148; that is applicable only to for-profit, postsecondary educational institutions like
us, provides that an institution loses its eligibility to participate in the Title IV programs if
the institution derives more than 90% of its revenue for each of two consecutive fiscal years from
Title IV program funds. For purposes of the 90/10 Rule, revenue is calculated under a complex
regulatory formula that requires cash basis accounting and other adjustments to the calculation of
an institution&#146;s revenue under generally accepted accounting principles that appears in its
financial statements. This rule provides that an institution that violates this revenue limit
becomes ineligible to participate in the Title IV programs as of the first day of the fiscal year
following the second consecutive fiscal year in which it exceeds the 90% threshold, and its period
of ineligibility extends for at least two consecutive fiscal years. If an institution
exceeds the 90% threshold for two consecutive fiscal years and it and its students have
received Title IV funds during the period of ineligibility, the institution will be required to
return those Title IV funds to the applicable lender or the Department of Education. If an
institution&#146;s rate exceeds 90% for any single fiscal year, it will be placed on provisional
certification for at least two fiscal years.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The August&nbsp;2008 reauthorization of the Higher Education Act included significant revisions to
the 90/10 Rule that became effective upon the date of the law&#146;s enactment, including provisions
that allow institutions, when calculating their compliance with this revenue test, to exclude from
their Title IV program revenue for a three-year period ending June&nbsp;30, 2011 the additional federal
student loan amounts that became available through the Unsubsidized Stafford Loan Program starting
in July&nbsp;2008, and to include more non-Title IV revenue, such as revenue from institutional loans
under certain circumstances. Given the level of complexity of this calculation we are unable to
quantify precisely the benefit that we have derived or will derive in the 90/10&nbsp;percentage from
these temporary exclusions. As such, our reported rates below exclude the benefits from these
exclusions. Using the Department of Education&#146;s cash-basis, regulatory formula under the &#147;90/10
Rule&#148; that was in effect prior to the August&nbsp;2008 reauthorization of the Higher Education Act, for
our 2010, 2009 and 2008 fiscal years, we derived approximately 84.9%, 82.5%, and 78.6%,
respectively, of our 90/10 Rule revenue from Title IV program funds. These rates have been reviewed
by our financial accounting firm as reflected in the notes to our audited financial statements for
each fiscal year. As a result of recent changes in federal law that increased Title IV grant and
loan limits, as well as the recent economic downturn, which has adversely affected the employment
circumstances of our students and their parents and increased their reliance on Title IV programs,
we expect the percentage of our revenue that we receive from the Title IV programs to continue to
increase in the future, making it more difficult for us to satisfy this requirement. Exceeding the
90% threshold such that we lost our eligibility to participate in the Title IV programs would have
a material adverse effect on our business, prospects, financial condition, and results of
operations
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Student loan defaults. </I>Under the Higher Education Act, an educational institution may lose its
eligibility to participate in some or all of the Title IV programs if defaults by its students on
the repayment of their federal student loans exceed certain levels. For each federal fiscal year,
the Department of Education calculates a rate of student defaults for each institution (known as a
&#147;cohort default rate&#148;). An institution&#146;s cohort default rate for a federal fiscal year historically
has been calculated by determining the rate at which borrowers who became subject to their
repayment obligation in one federal fiscal year default in that same year or by the end of the
following federal fiscal year (the &#147;two-year method&#148;). The reauthorization of the Higher Education
Act in 2008 extended the measurement period for cohort default rates so that the rate is calculated
by determining the rate at which borrowers who became subject to their repayment obligation in one
federal fiscal year default in that same year or by the end of the second following federal fiscal
year (the &#147;three-year method&#148;), which is expected to increase cohort default rates for most if not
all institutions. In December&nbsp;2009 and February&nbsp;2010, the Department of Education issued &#147;trial&#148;
cohort default rates that were calculated for federal fiscal years 2005, 2006, 2007 and 2008 as if
the extended period to count student defaults already applied to those prior years. The Department
of Education stated that it released this data for informational purposes only, to assist
institutions in anticipating how the extended period to count student defaults might affect their
future cohort default rates when that extended period is actually implemented. Based on the
Department of Education&#146;s release of this information, our default rates for these prior years
increased, as set forth below. While the trial cohort default rates are informative for prior
periods, they do not enable us to predict or estimate with any degree of certainty the extent of
the expected increase in our cohort default rates for future federal fiscal years when the new
extended period to measure student defaults is put into effect, or whether any such increase will
affect our participation in the Title IV programs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Department of Education has issued a final regulation indicating that it will begin to
implement this extended measurement period for the cohort default rates that will be calculated for
loans that enter repayment in federal fiscal year 2009, which is the year that ended on September
30, 2009. The Department of Education has included a transition period of three years during which
it will calculate two cohort default rates for each institution for each of federal fiscal years
2009, 2010 and 2011, with one such rate measured under the two-year method and the other such rate
measured under the three-year method. The cohort default rates for federal fiscal years 2009, 2010
and 2011, as calculated under the new three-year method, are not expected to be published until
calendar years 2012, 2013 and 2014.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Department of Education will apply different legal thresholds to measure an institution&#146;s
compliance under each set of rates. If the Department of Education notifies an institution that its
cohort default rates exceed 25%, as calculated under the two-year method, for each of its three
most recent federal fiscal years, or exceed 30%, as calculated under the three-year method, for
each of its three most recent federal fiscal years, the institution&#146;s participation in the the FDL
Program and the Pell grant program will end 30&nbsp;days after that notification, unless the institution
appeals that determination in a timely manner on specified grounds and according to specified
procedures. In addition, an institution&#146;s participation in the FDL Program will end 30&nbsp;days after
notification by the Department of Education that its most recent cohort default rate, as calculated
under either the two-year method or the three-year method, is greater than 40%, unless the
institution timely appeals that determination on specified grounds and according to specified
procedures. An institution whose participation ends under either of these provisions may not
participate in the relevant programs for the remainder of the fiscal year in which the institution
receives the notification or for the next two fiscal years. If an institution&#146;s cohort default rate
for any single federal fiscal year equals or exceeds 25% under the two-year method, or 30% under
the three-year method, the Department of Education may place the institution on provisional
certification status.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our cohort default rates, under the two-year method, on federal student loans for the 2008,
2007, and 2006 federal fiscal years, the three most recent years for which such rates have been
calculated, were 3.4%, 1.4%, and 1.6%, respectively. Our trial cohort default rates, under the
three-year method, for the 2008, 2007, 2006 and 2005 federal fiscal years, as issued by the
Department of Education, were 8.4%, 2.9%, 2.7% and 3.0%, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Incentive compensation rule. </I>An institution that participates in the Title IV programs may not
provide any commission, bonus, or other incentive payment based directly or indirectly on success
in securing enrollments or financial aid to any person or entity engaged in any student
recruitment, admissions, or financial aid awarding activity. Under current Department of Education
regulations, there are 12 &#147;safe harbors&#148; that describe payments and arrangements that do not
violate the incentive compensation rule. For example, one of these safe harbors permits
adjustments to fixed salary for enrollment personnel provided that such adjustments are not made
more than twice during any twelve month period, and that any adjustment is not based solely on the
number of students recruited, admitted, enrolled, or awarded financial aid, but the regulations do
not address other practices, such as the provision of non-cash awards to enrollment personnel. The
restrictions of the incentive compensation rule also extend to any third-party companies that an
educational institution contracts with for student recruitment, admissions, or financial aid
awarding services. Historically, we have relied on several of these safe harbors to ensure that
our compensation and recruitment practices comply with the applicable requirements, and the
Department of Education&#146;s regulations made clear that the safe harbors were not a complete list of
permissible practices under this law. In the final rules issued by the Department of Education in
respect of the incentive compensation rule and other program integrity issues described above,
which will become effective on July&nbsp;1, 2011, the 12 safe harbors under the incentive compensation
rule were eliminated. See &#147;New and Pending Regulations &#151; Revised incentive compensation rule.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In recent years, several for-profit education companies have been faced with whistleblower
lawsuits, known as &#147;qui tam&#148; cases, brought by current or former employees alleging that their
institution had made impermissible incentive payments. A <I>qui tam </I>case is a civil lawsuit brought by
one or more individuals (a &#147;relator&#148;) on behalf of the federal government for an alleged submission
to the government of a false claim for payment. The relator, often a current or former employee, is
entitled to a share of the government&#146;s recovery in the case. A <I>qui tam </I>action is always filed
under seal and remains under seal until the government decides whether to intervene in the case. If
the government intervenes, it takes over primary control of the litigation. If the government
declines to intervene in the case, the relator may nonetheless elect to continue to pursue the
litigation at his or her own expense on behalf of the government. On September&nbsp;11, 2008, we were
served with a <I>qui tam </I>lawsuit that had been filed against us in August&nbsp;2007, in the United States
District Court for the District of Arizona by a then-current employee on behalf of the federal
government. This <I>qui tam </I>lawsuit has now been settled. See &#147;Item&nbsp;3 &#151; Legal Proceedings.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Office of Inspector General of the Department of Education is responsible for, among other
things, promoting the effectiveness and integrity of the Department of Education&#146;s programs and
operations, including compliance with applicable statutes and regulations. The Office of Inspector
General performs investigations of alleged violations of law, including cases of alleged fraud and
abuse, or other identified vulnerabilities, in programs administered or financed by the Department
of Education, including matters related to the incentive compensation rule. On August&nbsp;14, 2008, the
Office of Inspector General, in connection with the <I>qui tam </I>case described above, served an
administrative subpoena on Grand Canyon University requiring us to provide certain records and
information related to performance reviews and salary adjustments for all of our enrollment
counselors and managers from January&nbsp;1, 2004 to August&nbsp;2008. We cooperated with the OIG to
facilitate its investigation and completed our rolling responsive document production, which
commenced in September&nbsp;2008, in June&nbsp;2009. In light of the settlement of the <I>qui tam </I>litigation
described below, we believe that this investigation has effectively ended. See &#147;Item&nbsp;3 &#151; Legal
Proceedings.&#148;
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Compliance reviews. </I>We are subject to announced and unannounced compliance reviews and audits
by various external agencies, including the Department of Education, its Office of Inspector
General, state licensing agencies, the applicable state approving agencies for financial assistance
to veterans, and accrediting commissions. As part of the Department of Education&#146;s ongoing
monitoring of institutions&#146; administration of the Title IV programs, the Higher Education Act also
requires institutions to annually submit to the Department of Education a Title IV compliance audit
conducted by an independent certified public accountant in accordance with applicable federal and
Department of Education audit standards. In addition, to enable the Department of Education to make
a determination of an institution&#146;s financial responsibility, each institution must annually submit
audited financial statements prepared in accordance with Department of Education regulations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In July&nbsp;2010, the Department of Education initiated a program review of Grand Canyon
University covering the 2008-2009 and 2009-2010 award years. As part of this program review, a
Department of Education program review team conducted a site visit on our campus and reviewed, and
in some cases requested further information regarding, our records, practices and policies relating
to, among other things, financial aid, enrollment, enrollment counselor compensation, program
eligibility and other Title IV compliance matters. Upon the conclusion of the site visit, we were
informed by the program review team that it would (i)&nbsp;conduct further review of our documents and
records offsite, (ii)&nbsp;upon completion of such review, schedule a formal exit interview to be
followed by a preliminary program review report in which any preliminary findings of non-compliance
would be presented, and (iii)&nbsp;conclude the review by issuance of a final determination letter. The
program review team has not yet scheduled a formal exit interview with us. Accordingly, at this
point, the program review remains open and we intend to continue to cooperate with the review team
until the program review is completed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">While we have not yet received notification of the timing of our exit interview or the
Department of Education&#146;s preliminary program review report or final determination letter, as a
result of concerns first raised by a member of the program review team at the conclusion of the
site visit and subsequently stated in an affidavit by such member filed in connection with the
August&nbsp;2010 hearing in our <I>qui tam </I>case, we became aware that the program review team had two
preliminary findings of concern. The first issue is whether a compensation policy in use during
part of the period under review improperly rewarded some enrollment counselors based on success in
enrolling students in violation of applicable law. As we have previously disclosed in the context
of our now-settled <I>qui tam </I>action, while we believe that our compensation policies and practices
are not based on success in enrolling students in violation of applicable law, the Department of
Education&#146;s regulations and interpretations of the incentive compensation law do not establish
clear criteria for compliance in all circumstances and some of our practices in prior years were
not within the scope of any specific &#147;safe harbor&#148; provided in the compensation regulations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The second issue is whether, during the award years under review, certain programs offered
within our College of Liberal Arts provided students with training to prepare them for gainful
employment in a recognized occupation. This &#147;gainful employment&#148; standard has been a requirement
for Title IV eligibility for programs offered at proprietary institutions of higher education such
as Grand Canyon University although, pursuant to legislation passed in 2008 and effective as of
July&nbsp;1, 2010, this requirement no longer applies to designated liberal arts programs offered by us
and certain other institutions that have held accreditation by a regional accrediting agency since
a date on or before October&nbsp;1, 2007 (we have held a regional accreditation since 1968). Subsequent
to the filing of the affidavit by the program review team member expressing this preliminary
finding, the program review team submitted a written request to us in which the program review team
stated the view that, prior to July&nbsp;1, 2010, traditional liberal arts programs were not considered
as being eligible under Title IV but then requested additional information from us that would help
the Department of Education determine whether the programs offered within our College of Liberal
Arts were eligible under Title IV because they did provide training to prepare students for gainful
employment in a recognized occupation. While we were not informed as to which specific programs
offered within our College of Liberal Arts the program review team believes may be ineligible, in
August&nbsp;2010 we provided the Department of Education with the requested information which we believe
demonstrates that the programs
offered within our College of Liberal Arts met this requirement. We have received no further
communications from the Department of Education regarding the program review.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our policies and procedures are planned and implemented to comply with the applicable
standards and regulations under Title IV. If and to the extent the Department of Education&#146;s final
determination letter identifies any compliance issues, we are committed to resolving such issues
and ensuring that Grand Canyon University operates in compliance with all Department of Education
requirements. Program reviews may remain unresolved for months or years with little or no
communication from the Department of Education, and may involve multiple exchanges of information
following the site visit. We cannot presently predict whether or if further information requests
will be made, when the exit interview will take place, when the preliminary program review report
or final determination letter will be issued, or when the program review will be closed. If the
Department of Education were to make significant findings of non-compliance in the final program
review determination letter, including any finding related to the two issues discussed above, then,
after exhausting any administrative appeals available to us, we could be required to pay a fine,
return Title IV monies previously received, or be subjected to other administrative sanctions, any
of which outcomes could damage our reputation in the industry and have a material adverse effect on
our business, results of operations, cash flows and financial position.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Privacy of student records. </I>The Family Educational Rights and Privacy Act of 1974, or FERPA,
and the Department of Education&#146;s FERPA regulations require educational institutions to protect the
privacy of students&#146; educational records by limiting an institution&#146;s disclosure of a student&#146;s
personally identifiable information without the student&#146;s prior written consent. FERPA also
requires institutions to allow students to review and request changes to their educational records
maintained by the institution, to notify students at least annually of this inspection right, and
to maintain records in each student&#146;s file listing requests for access to and disclosures of
personally identifiable information and the interest of such party in that information. If an
institution fails to comply with FERPA, the Department of Education may require corrective actions
by the institution or may terminate an institution&#146;s receipt of further federal funds. In addition,
educational institutions are obligated to safeguard student information pursuant to the
Gramm-Leach-Bliley Act, or GLBA, a federal law designed to protect consumers&#146; personal financial
information held by financial institutions and other entities that provide financial services to
consumers. GLBA and the applicable GLBA regulations require an institution to, among other things,
develop and maintain a comprehensive, written information security program designed to protect
against the unauthorized disclosure of personally identifiable financial information of students,
parents, or other individuals with whom such institution has a customer relationship. If an
institution fails to comply with the applicable GLBA requirements, it may be required to take
corrective actions, be subject to monitoring and oversight by the FTC, and be subject to fines or
penalties imposed by the FTC. For-profit educational institutions are also subject to the general
deceptive practices jurisdiction of the FTC with respect to their collection, use, and disclosure
of student information. The institution must also comply with the FTC Red Flags Rule, a section of
the federal Fair Credit Reporting Act, that requires the establishment of guidelines and policies
regarding identity theft related to student credit accounts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Potential effect of regulatory violations. </I>If we fail to comply with the regulatory standards
governing the Title IV programs, the Department of Education could impose one or more sanctions,
including transferring us to the reimbursement or cash monitoring system of payment, requiring us
to repay Title IV program funds, requiring us to post a letter of credit in favor of the Department
of Education as a condition for continued Title IV certification, taking emergency action against
us, initiating proceedings to impose a fine or to limit, suspend, or terminate our participation in
the Title IV programs, or referring the matter for civil or criminal prosecution. Since we are
provisionally certified to participate in the Title IV programs on a month-to-month basis, the
Department of Education could allow our certification to expire at the end of any month without
advance notice and without any formal procedure for review of such action. If such sanctions or
proceedings were imposed against us and resulted in a substantial curtailment or termination of our
participation in the Title IV programs, our enrollments, revenues, and results of operations would
be materially and adversely affected.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">If we lost our eligibility to participate in the Title IV programs, or if the amount of
available Title IV program funds was reduced, we would seek to arrange or provide alternative
sources of revenue or financial aid for students. We believe that one or more private organizations
would be willing to provide financial assistance to our students, but there is no assurance that
this would be the case. The interest rate and other terms of such financial aid would likely not be
as favorable as those for Title IV program funds, and we might be required to guarantee all or part
of such alternative assistance or might incur other additional costs in connection with securing
such alternative
assistance. It is unlikely that we would be able to arrange alternative funding on any terms
to replace all the Title IV funding our students receive. Accordingly, our loss of eligibility to
participate in the Title IV programs, or a reduction in the amount of available Title IV program
funding for our students, would have a material adverse effect on our results of operations, even
if we could arrange or provide alternative sources of revenue or student financial aid.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In addition to the actions that may be brought against us as a result of our participation in
the Title IV programs, we are also subject to complaints and lawsuits relating to regulatory
compliance brought not only by our regulatory agencies, but also by other government agencies and
third parties, such as present or former students or employees and other members of the public.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>New and Pending Regulations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Revised incentive compensation rule</I>. In the final rules issued by the Department of Education
in respect of the incentive compensation rule and other program integrity issues described above,
which will become effective on July&nbsp;1, 2011, the 12 safe harbors under the incentive compensation
rule were eliminated as the Department of Education took the position that any commission, bonus or
other incentive payment based in any part, directly or indirectly, on securing enrollments or
awarding financial aid is inconsistent with the incentive payment prohibition in the Higher
Education Act. The Department of Education contends that institutions do not need to rely on safe
harbors to protect compensation that complies with the Higher Education Act, and that institutions
can readily determine if a payment or compensation is permissible under the Higher Education Act by
analyzing (1)&nbsp;whether it is a commission, bonus or other incentive payment, defined as an award of
a sum of money or something of value (other than a fixed salary or wages), paid to or given to a
person or entity for services rendered, and (2)&nbsp;whether the commission, bonus or other incentive
payment is provided to any person based in any part, directly or indirectly, upon success in
securing enrollments or the award of financial aid, which are defined as activities engaged in for
the purpose of the admission or matriculation of students for any period of time or the award of
financial aid. The Department of Education maintains that an institution can still make merit-based
adjustments to employee compensation, provided that such adjustments are not based in any part,
directly or indirectly, upon success in securing enrollments or the award of financial aid.
Accordingly, among other things, the Department of Education states that (1)&nbsp;an institution may
maintain a hierarchy of recruitment personnel with different levels of responsibility, with salary
scales that reflect an added amount of responsibility, (2)&nbsp;an institution may promote or demote
recruitment personnel based on merit, and (3)&nbsp;an institution may make a compensation decision based
on seniority or length of employment, provided that in each case compensation decisions are
consistent with the Higher Education Act&#146;s prohibition on incentive compensation. The final rules
further clarify that this prohibition may extend to individuals holding a managerial position at
any level of the company, to the extent that a particular individual has responsibility for
recruitment or admission of students, or makes decisions about awarding Title IV program funds. The
Department of Education states that an institution still would be able to make merit-based
adjustments to employee compensation, but would not be permitted to consider nor base compensation
decisions directly or indirectly, in any part, on factors such as an employee&#146;s success in securing
student enrollments, the award of financial aid or institutional goals based on that success.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">While it is anticipated that the Department of Education may issue certain guidance on
incentive compensation issues prior to July&nbsp;1, 2011, we believe the changes imposed by the final
rules, including the elimination of the safe harbors, increase the uncertainty about what
constitutes incentive compensation and which employees are covered by the regulation. In light of
such uncertainty, we have changed some of our compensation practices for enrollment counselors and
other employees, as well as the terms of our arrangements with certain third parties whom we pay
for Internet-based services related to lead generation and marketing and whose activities are also
subject to the incentive compensation rules. The changes in these practices and arrangements could
adversely affect our ability to compensate our enrollment counselors, other employees, and third
parties in a manner that appropriately reflects their relative merit, which in turn could reduce
their effectiveness and make it more difficult to attract and retain staff with the desired talent
and motivation to succeed at Grand Canyon University. In addition, this lack of certainty could
increase the risk of future federal False Claims Act <I>qui tam </I>lawsuits in which private plaintiffs
assert that our compensation practices violate the incentive compensation rules and, therefore,
that our receipt of Title IV funds constitutes a submission to the government of a false claim for
payment.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Misrepresentation. </I>The final rules on program integrity adopted October&nbsp;29, 2010 and effective
July&nbsp;1, 2011 include provisions that strengthen the Department of Education&#146;s authority to sanction
institutions for misrepresentations made by employees and certain third parties with which such
institutions maintain service agreements (such as for the provision of educational programs or
marketing, advertising, recruiting or admissions services). Considering the breadth of this
prohibition, it is possible that, despite our efforts to prevent such misrepresentations, our
employees or service providers may make statements that could be construed as misrepresentations.
As a result, we may face complaints from students, prospective students and employees over
statements made by us and our agents throughout the enrollment, admissions and financial aid
process, as well as throughout attendance at Grand Canyon University, which would expose us to
increased risk of litigation and enforcement action and applicable sanctions or other penalties up
to and including termination of Title IV eligibility.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>State authorization. </I>States have the authority to assert jurisdiction, to the extent they so
choose, over educational institutions offering online degree programs in a state but that otherwise
have no physical location or other presence in that state. The final program integrity rules
adopted October&nbsp;29, 2010 and effective July&nbsp;1, 2011 include a provision that requires online
providers to meet any such state requirements and, thus, the Department of Education would seem to
have authority, in addition to that of the states, to enforce applicable state law requirements. It
is unclear how this rule will be enforced and what impact it will have on us. In addition to
Arizona, we have determined that our activities in certain states constitute a presence requiring
licensure or authorization under the requirements of the state education agency in those states,
which we have obtained, while in other states we have determined that we are exempt under
applicable state law from licensure or authorization requirements due to our regional accreditation
or for other reasons. In still other states, we have obtained approvals to operate as we have
determined necessary in connection with our marketing and recruiting activities. Although we have a
process for evaluating the compliance of our online educational programs with state requirements
regarding distance and correspondence learning, and have experienced no significant restrictions on
our educational activities to date as a result of such requirements, state regulatory requirements
for online education vary among the states, are not well developed in many states, are imprecise or
unclear in some states and are subject to change. Moreover, it is also unclear whether and to what
extent state agencies may augment or change their regulations in this area as a result of these new
Department of Education regulations and increased scrutiny. If we fail to comply with licensing or
authorization requirements for a particular state, or fail to obtain licenses or authorizations
when required, we could lose our licensure or authorization from that state or be subject to other
sanctions, including restrictions on our activities in that state, and fines and penalties,
including Department of Education sanctions. The loss of licensure or authorization in a state
other than Arizona could prohibit us from recruiting prospective students or offering educational
services to current students in that state, which could significantly reduce our enrollments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Approval of new programs. </I>The final program integrity rules adopted October&nbsp;29, 2010 and
effective July&nbsp;1, 2011 include provisions regarding the approval of new programs. Although the
final rules relaxed the program approval standard originally proposed, the rules still impose
various new requirements on, and could adversely affect, our ability to add new academic programs.
In addition, the Department of Education has published no definite standards by which schools can
determine the likelihood that any program will be approved. As such, we believe this rule adds
uncertainty regarding new program approval, which could adversely affect our ability to respond to
emerging employment trends and add programs that are responsive to those trends, which in turn
could decrease our attractiveness to certain students. In addition, a lack of certainty could
increase the risk of future federal False Claims Act qui tam lawsuits in which private plaintiffs
assert that students improperly received Title IV aid while attending a program that has not been
approved.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Additional final rules</I>. In addition to the program integrity issues specifically addressed
above, the final rules issued by Department of Education on October&nbsp;29, 2010 and effective July&nbsp;1,
2011 include provisions regarding the definition of a credit hour; written agreements between
institutions, particularly institutions under common ownership or control; the administration of
ability-to-benefit examinations; requirements regarding an institution&#146;s return of Title IV program
funds; and certain other issues pertaining to a student&#146;s eligibility to receive Title IV program
funds. We are in the process of reviewing all of the final rules. We cannot predict how the
recently released or any other resulting regulations will be interpreted, and therefore whether we
will be able to comply with these requirements by the effective date. Insufficient time, or lack
of sufficient guidance, for compliance with the final rules, could have a material adverse effect
on our business. Uncertainty surrounding the application of the final rules, interpretive
regulations, and guidance from Department of Education may continue for some period of time
and could reduce our enrollment, increase our cost of doing business, and have a material
adverse effect on our business, financial condition, results of operations and cash flows.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Proposed gainful employment rule. </I>Under the Higher Education Act, proprietary schools are
eligible to participate in Title IV programs in respect of educational programs that lead to
&#147;gainful employment in a recognized occupation,&#148; with the limited exception of qualified programs
leading to a bachelor&#146;s degree in liberal arts. Historically, this concept has not been defined in
detail. The proposed definition of gainful employment in the July&nbsp;26, 2010 NPRM described above
would take into consideration whether former students are repaying their federal student loans and
the relationship between total student loan debt and average earnings after completing a
postsecondary program. As proposed in the NPRM, individual educational programs would be divided
into three groups based on the proposed metrics:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Programs with at least 45% of their former students paying down the
principal on their federal loans, or with graduates having a
debt-to-earnings ratio of less than 20% of discretionary income or 8%
of total income, would be deemed fully eligible for Title IV funding.
These programs would be required to disclose both their repayment
rates and debt-to-earnings ratios unless they pass both of the
preceding tests.</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Programs with less than 35% of their former students paying down the
principal on their federal loans, and with graduates having a
debt-to-earnings ratio above 30% of discretionary income and 12% of
total income, would be deemed ineligible for Title IV funding. Such
programs would have lost Title IV eligibility as of July&nbsp;1, 2012,
although institutions would have been required to warn students in the
programs about the high debt-to-earnings ratio effective July&nbsp;1, 2011.
In order to mitigate against large and immediate displacements of
students as of the July&nbsp;1, 2012 deadline, the Department of Education
further proposed that no more than 5% of a single institution&#146;s
programs would be declared ineligible as of that date, with the
lowest-performing programs immediately losing eligibility and the
remaining non-compliant programs losing eligibility one year later.</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Programs that are not fully eligible or ineligible under the above
standards would be restricted programs and subject to limits on
enrollment growth. Such institutions also would be required to
demonstrate employer support for the program and warn consumers and
current students of high debt levels.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Due to the unprecedented volume of comments received to the gainful employment NPRM, on
September&nbsp;24, 2010, the Department of Education announced that it would delay issuing final rules
regarding the gainful employment standard until early 2011 in order to give interested parties more
time to clarify their comments and respond to questions from Department of Education officials.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">While there remain many open questions and interpretive issues with respect to this gainful
employment NPRM, including when it will go into effect and questions as to the availability of, and
the ability of education companies to obtain, the information needed to calculate the applicable
metrics, if this regulation is adopted in a form similar to the Department of Education&#146;s proposal
in the NPRM, it could render some of our programs ineligible for Title IV funding if we do not meet
the test to be considered &#147;fully eligible.&#148; In addition, the continuing eligibility of our
educational programs for Title IV funding would be at risk due to factors beyond our control, such
as changes in the income level of persons employed in specific occupations or sectors, increases in
interest rates, changes in student mix to persons requiring higher amounts of student loans to
complete their programs, changes in student loan delinquency rates and other factors. If a
particular program ceased to be eligible for Title IV funding, in most cases it would not be
practical to continue offering that course under our current business model. Regulations in the
form proposed in the NPRM could result in a significant realignment of the types of educational
programs that are offered by us and by proprietary institutions in general, in order to comply with
the rules or to avoid the uncertainty associated with compliance over time. Furthermore, we may be
required for certain programs to warn consumers and current students of high debt levels and
provide the most recent debt measures for the program. Such changes in our business practices could
reduce our enrollment, perhaps materially, which could have a material adverse effect on our
business, prospects, financial condition and results of operations and could adversely affect our
stock price.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Regulatory Standards that May Restrict Institutional Expansion or Other Changes</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Many actions that we may wish to take in connection with expanding our operations or other
changes are subject to review or approval by the applicable regulatory agencies. In addition to
those matters described in detail below, most state education agencies impose regulatory
requirements on educational institutions operating within their boundaries. See &#147;State Educational
Licensure and Authorization&#148; and &#147;New and Pending Regulations &#151; State authorization.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Adding teaching locations, implementing new educational programs, and increasing enrollment.</I>
The requirements and standards of state education agencies, accrediting commissions, and the
Department of Education limit our ability in certain instances to establish additional teaching
locations, implement new educational programs, or increase enrollment in certain programs. Many
states require review and approval before institutions can add new locations or programs, and
Arizona also limits the number of undergraduate nursing students we may enroll (which represents a
small portion of our overall nursing program). The Arizona State Board for Private Postsecondary
Education, the Higher Learning Commission, and other state education agencies and specialized
accrediting commissions that authorize or accredit us and our programs generally require
institutions to notify them in advance of adding new locations or implementing new programs, and
upon notification may undertake a review of the quality of the facility or the program and the
financial, academic, and other qualifications of the institution.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">With respect to the Department of Education, if an institution participating in the Title IV
programs plans to add a new location or educational program, the institution must generally apply
to the Department of Education to have the additional location or educational program designated as
within the scope of the institution&#146;s Title IV eligibility. Historically, a degree-granting
institution such as us was not required to obtain the Department of Education&#146;s approval of
additional programs that lead to an associate, bachelor&#146;s, professional, or graduate degree at the
same degree level as programs previously approved by the Department of Education, and, similarly,
an institution was not required to obtain advance approval for new programs that prepare students
for gainful employment in the same or a related recognized occupation as an educational program
that has previously been designated by the Department of Education as an eligible program at that
institution if it meets certain minimum-length requirements. However, as a condition for an
institution to participate in the Title IV programs on a provisional basis, the Department of
Education can require prior approval of such programs or otherwise restrict the number of programs
an institution may add or the extent to which an institution can modify existing educational
programs. If an institution that is required to obtain the Department of Education&#146;s advance
approval for the addition of a new program or new location fails to do so, the institution may be
liable for repayment of the Title IV program funds received by the institution or students in
connection with that program or enrolled at that location. In addition, as part of the final
rules adopted by the Department of Education on October&nbsp;29, 2010 and effective July&nbsp;1, 2011, the
Department of Education issued final regulations imposing new requirements with respect to the
approval of new programs. See &#147;New and Pending Regulations &#151; Approval of new programs.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Acquiring other schools. </I>While we have not acquired any other schools in the past, we may seek
to do so in the future. The Department of Education and virtually all state education agencies and
accrediting commissions require a company to seek their approval if it wishes to acquire another
school. In our case, we would need to obtain the approval of the Arizona State Board for Private
Postsecondary Education or other state education agency that licenses the school being acquired,
the Higher Learning Commission, any other accrediting commission that accredits the school being
acquired, and the Department of Education. The level of review varies by individual state and
accrediting commission, with some requiring approval of such an acquisition before it occurs while
others only consider approval after the acquisition has occurred. The Higher Learning Commission
would require us to obtain its advance approval of such an acquisition. The approval of the
applicable state education agencies and accrediting commissions is a necessary prerequisite to the
Department of Education certifying the acquired school to participate in the Title IV programs
under our ownership. The restrictions imposed by any of the applicable regulatory agencies could
delay or prevent our acquisition of other schools in some circumstances.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Provisional certification. </I>Each institution must apply to the Department of Education for
continued certification to participate in the Title IV programs at least every six years, or when
it undergoes a change in control, and an institution may come under the Department of Education&#146;s
review when it expands its activities in certain
ways, such as opening an additional location, adding an educational program, or modifying the
academic credentials that it offers.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Department of Education may place an institution on provisional certification status if it
finds that the institution does not fully satisfy all of the eligibility and certification
standards. In addition, if a company acquires a school from another entity, the acquired school
will automatically be placed on provisional certification when the Department of Education approves
the transaction. During the period of provisional certification, the institution must comply with
any additional conditions or restrictions included in its program participation agreement with the
Department of Education. If the Department of Education finds that a provisionally certified
institution is unable to meet its responsibilities under its program participation agreement, it
may seek to revoke the institution&#146;s certification to participate in the Title IV programs without
advance notice or advance opportunity for the institution to challenge that action. In addition,
the Department of Education may more closely review an institution that is provisionally certified
if it applies for recertification or approval to open a new location, add an educational program,
acquire another school, or make any other significant change. Students attending provisionally
certified institutions remain eligible to receive Title IV program funds.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We are currently provisionally certified to participate in the Title IV programs on a
month-to-month basis. The Department of Education issued our current program participation
agreement in May&nbsp;2005, after an extended review following the change in control that occurred in
February&nbsp;2004. The Department of Education&#146;s 2005 recertification imposed certain conditions on us,
including a requirement that we post a letter of credit, accept restrictions on the growth of our
program offerings and enrollment, and receive Title IV funds under the heightened cash monitoring
system of payment rather than by advance payment. In October&nbsp;2006, the Department of Education
eliminated the letter of credit requirement and allowed the growth restrictions to expire, and in
August&nbsp;2007, it eliminated the heightened cash monitoring restrictions and returned us to the
advance payment method. We submitted our application for recertification in March&nbsp;2008 in
anticipation of the expiration of our provisional certification on June&nbsp;30, 2008. The Department of
Education did not make a decision on our recertification application by June&nbsp;30, 2008 and therefore
our provisional certification to participate in the Title IV programs has been automatically
extended on a month-to-month basis until the Department of Education makes its decision. Since June
2008, we have filed updates with the Department of Education and communicated with Department of
Education personnel in order to update our pending recertification application with relevant
information, such as our status as a publicly-traded corporation after the initial public offering,
the identity of the members of our Board of Directors, and the termination of the voting agreements
in January&nbsp;2011. There can be no assurance that the Department of Education will recertify us or
that it will not impose restrictions as a condition of approving our pending recertification
application or with respect to any future recertification.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Change in ownership resulting in a change in control. </I>The Department of Education, as well as
many accrediting commissions and states, require institutions of higher education to report or
obtain approval of certain changes in control and changes in other aspects of institutional
organization or control. With respect to publicly-traded corporations, like us, Department of
Education regulations provide that a change in control occurs if, among other things, the
corporation has a stockholder that owns, or has voting control over, at least 25% of the total
outstanding voting stock of the corporation and is the largest stockholder of the corporation
(defined in the regulations as a &#147;controlling shareholder&#148;), and that controlling shareholder
ceases to own, or have voting control over, at least 25% of such stock or ceases to be the largest
stockholder. Under Department of Education regulations, an institution that undergoes a change in
control as defined by the Department of Education loses its eligibility to participate in the Title
IV programs and must apply to the Department of Education in order to reestablish such eligibility.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Since May&nbsp;2005, we have been certified to participate in Title IV programs on a provisional
basis. We submitted our application for recertification in March&nbsp;2008 in anticipation of the
expiration of our provisional certification on June&nbsp;30, 2008. The Department of Education did not
make a decision on our recertification application by June&nbsp;30, 2008, and therefore our provisional
certification to participate in the Title IV programs has been automatically extended since that
time on a month-to-month basis until the Department of Education makes its decision. For a school
that is certified on a provisional basis, the Department of Education may revoke the institution&#146;s
certification without advance notice or advance opportunity for the institution to challenge that
action. For a school that is provisionally certified on a month-to-month basis, like we are, the
Department of Education may allow the institution&#146;s certification to expire at the end of any month
without advance notice, and without any formal
procedure for review of such action. To our knowledge, such action is very rare and has only
occurred upon a determination that an institution is in substantial violation of material Title IV
requirements.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In connection with our initial public offering in November&nbsp;2008 and our secondary offering in
September&nbsp;2009, Brent D. Richardson, our Executive Chairman, and Christopher C. Richardson, our
General Counsel and a director (collectively, the &#147;Richardson Voting Group&#148;), had entered into
voting agreements with certain stockholders. Pursuant to these agreements, certain of our
stockholders granted to the Richardson Voting Group a five-year irrevocable proxy to exercise
voting authority with respect to certain shares of our common stock held by such persons, for so
long as such shares are held by such persons. The voting agreements do not apply to any shares
held by any such person that are transferred in open-market or other transactions. The number of
shares over which the Richardson Voting Group continues to hold voting power will decrease over
time as shares held by other parties to the voting agreement are sold, which sales we may be not be
aware of since many of the shares held by such other parties are held in &#147;street name.&#148; Pursuant
to these agreements, however, following each offering and through January&nbsp;11, 2011, the Richardson
Voting Group continued to control the voting power of more than 25% of our total outstanding voting
stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">To avoid an unplanned change in control from occurring and to allow the Richardsons and other
stockholders party to the agreements flexibility to sell shares without causing an unplanned change
in control, we submitted a notice to the Department of Education informing it of the Richardson
Voting Group&#146;s intention to terminate the voting agreements, which would trigger a change in
control because it would cause the Richardson Voting Group to own and control less than 25% of our
outstanding voting stock, and requesting that the Department of Education review such proposed
terminations and advise us as to the effect of such terminations on our eligibility to participate
in the Title IV programs, particularly in light of our pending application for recertification
(discussed below). In December&nbsp;2010, the Department of Education responded to our request in
writing and informed us that, consistent with Department of Education regulations, if we notified
the Department of Education of the change in control and filed a timely and materially complete
application within ten business days after the change in control occurred, the Department of
Education may temporarily certify us on a provisional basis following the change in control, so
that our students would retain access to Title IV program funds until the Department of Education
completed its full review. In addition, the Department of Education informed us that it may extend
our temporary provisional certification if we timely filed other required materials by the last day
of the month following the month in which the change in control occurred, including any approval of
the change in control by the Higher Learning Commission (our accrediting commission) and the
Arizona State Board for Private Postsecondary Education (our state licensing agency), as required,
and certain required financial information (consisting of our recent SEC filings) showing our
financial condition. The Department of Education&#146;s letter did not indicate any intention to impose
any conditions (such as any letter of credit requirement) or other restrictions on us as a result
of the change in control. Accordingly, following receipt of the Department of Education&#146;s letter,
the approval of the Higher Learning Commission to terminate the voting agreements and confirmation
from the Arizona State Board for Private Postsecondary Education that terminating the voting
agreements would not be considered a change in control, the Richardson Voting Group terminated the
voting agreements effective January&nbsp;12, 2011. On that same day, we filed our complete application
and all other required information with the Department of Education.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Following the completion of the Department of Education&#146;s review of the information that we
have provided in connection with the termination of the voting agreements, it would normally
certify us on a provisional basis for a period of up to approximately three years. The precise
conditions and restrictions, if any, and duration of any provisional certification granted in this
circumstance, however, are difficult to predict because we already are, and have been for an
extended period, provisionally certified on a month-to-month basis. We do not believe that our
continued provisional certification on a month-to-month basis, following the change in control or
otherwise, has had or will have any material impact on our day-to-day operations. However, there
can be no assurance that the Department of Education will recertify us or that it will not impose
conditions or other restrictions on us as a condition of granting us provisional certification
following the change in control or approving our pending recertification application or with
respect to any future recertification. If the Department of Education does not renew or withdraws
our certification to participate in the Title IV programs at any time, our students would no longer
be able to receive Title IV program funds. Similarly, the Department of Education could renew our
certification, but restrict or delay our students&#146; receipt of Title IV funds, limit the number of
students to whom we could disburse such funds, or place other restrictions on us. Any of these
outcomes would have a material adverse effect on our enrollments and us.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Higher Learning Commission provides that an institution must obtain its approval in
advance of a change in ownership, corporate control or structure in order for the institution to
retain its accredited status. In June&nbsp;2009, the Higher Learning Commission adopted new policies and
standards for the review of transactions that may constitute such a change in control. One standard
provides that a transaction may be considered a change in control if an individual, entity or group
increases or decreases its control of shares to greater than or less than 25% of the total
outstanding shares of the stock of a parent corporation that owns or controls the accredited
institution. In addition, in the event of a change in control, the Higher Learning Commission
requires the institution to obtain its approval in advance of the change, and in certain
circumstances that process may require several weeks or several months or more to complete. In
addition, following a change in control, the Higher Learning Commission will conduct an onsite
evaluation within six months in order to continue the institution&#146;s accreditation. As noted
above, we informed the Higher Learning Commission of the Richardson Voting Group&#146;s intent to
terminate the voting agreements and/or Endeavour Capital Fund IV, LP and its affiliates&#146; intent to
sell shares that, in either case, would cause the Richardson Voting Group to own and control less
than 25% of our outstanding voting stock. The Higher Learning Commission has informed us that such
event may occur, provided that we provide an update to the Higher Learning Commission confirming
the facts of the termination or other transaction, identifying investors who continue to hold 5% or
more of our outstanding voting stock, and explaining the impact thereof, if any, on us and our
Board of Directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Many states include the sale of a controlling interest of common stock in the definition of a
change in control requiring approval, but their thresholds for determining a change in control vary
widely. The standards of the Arizona State Board for Private Postsecondary Education provide that
an institution that is owned by a publicly-traded company whose control is vested in the voting
members of the board of directors, such as Grand Canyon Education, undergoes a change in control if
50% or more of the voting members of the board of directors change within a 12-month period or the
chief executive officer of the corporation changes. A change in control under the definition of one
of the other state agencies that regulate us might require us to obtain approval of a change in
control in order to maintain our authorization to operate in that state, and in some cases such
states could require us to obtain advance approval of the change in control. If we were to undergo
a change in control under the standards of the Arizona State Board of Private Postsecondary
Education at any time in the future, we would be required to file an application with the Arizona
State Board for Private Postsecondary Education in order to obtain approval for such change in
control. We cannot predict whether the Arizona State Board for Private Postsecondary Education
would impose any limitations or conditions on us, or identify any compliance issues related to us
in the context of the change in control process, that could result in our loss of authorization in
Arizona. Any such loss would result in our loss of eligibility to participate in the Title IV
programs which would cause a significant decline in our student enrollments. As noted above, we
informed the Arizona State Board of Private Postsecondary Education of the Richardson Voting
Group&#146;s intent to terminate the voting agreements and/or Endeavour Capital Fund IV, LP and its
affiliates&#146; intent to sell shares that, in either case, would cause the Richardson Voting Group to
own and control less than 25% of our outstanding voting stock. The Arizona State Board of Private
Postsecondary Education has informed us that it does not consider such event to be a change of
control under its standards.
</DIV>
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<A name="C24244104"></A>
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    <TD></TD>
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    <TD nowrap align="left"><B>Item&nbsp;1A.</B></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify"><B><I>Risk Factors</I></B></DIV></TD>
</TR>
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</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>You should carefully consider the risks and uncertainties described below and all other
information contained in this Annual Report on </I><I>Form 10-K</I><I>. In order to help assess the major risks
in our business, we have identified many, but not all, of these risks. Due to the scope of our
operations, a wide range of factors could materially affect future developments and performance.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">If any of the following risks, or risks that we did not anticipate, are realized, our
business, financial condition, cash flow or results of operations could be materially and adversely
affected, and as a result, the trading price of our common stock could be materially and adversely
impacted. These risk factors should be read in conjunction with other information set forth in this
Annual Report, including Item&nbsp;7, <I>Management&#146;s Discussion and Analysis of Financial Condition and
Results of Operations</I>, and Item&nbsp;8, <I>Financial Statements and Supplementary Data, </I>including the
related Notes to Financial Statements<I>.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Risks Related to the Regulation of Our Industry</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Our failure to comply with the extensive regulatory requirements governing our school could result
in financial penalties, restrictions on our operations or growth, or loss of external financial aid
funding for our students.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">To participate in the Title IV programs, a school must be authorized by the appropriate state
education agency or agencies, be accredited by an accrediting commission recognized by the
Department of Education, and be certified as an eligible institution by the Department of
Education. In addition, our operations and programs are regulated by other state education agencies
and additional accrediting commissions. As a result of these requirements, we are subject to
extensive regulation by the Arizona State Board for Private Postsecondary Education and education
agencies of other states, the Higher Learning Commission, which is our primary accrediting
commission, specialized accrediting commissions, and the Department of Education. These regulatory
requirements cover the vast majority of our operations, including our educational programs,
instructional and administrative staff, administrative procedures, marketing, recruiting, financial
operations, and financial condition. These regulatory requirements also affect our ability to open
additional schools and locations, add new educational programs, change existing educational
programs, and change our corporate or ownership structure. The agencies that regulate our
operations periodically revise their requirements and modify their interpretations of existing
requirements. Regulatory requirements are not always precise and clear, and regulatory agencies may
sometimes disagree with the way we have interpreted or applied these requirements. Any
misinterpretation by us of regulatory requirements could materially adversely affect us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">During fiscal 2010 and 2009, we derived approximately 84.9% and 82.5%, respectively, of our
revenue (calculated on a cash basis in accordance with Department of Education standards that were
in effect prior to the August&nbsp;2008 reauthorization of the Higher Education Act) from tuition
financed under the Title IV programs. Accordingly, if we fail to comply with any of these
regulatory requirements, we could suffer financial penalties, limitations on our operations, loss
of accreditation, termination of or limitations on our ability to grant degrees and certificates,
or limitations on or termination of our eligibility to participate in the Title IV programs, each
of which could materially adversely affect us. In addition, if we are charged with regulatory
violations, our reputation could be damaged, which could have a negative impact on our stock price
and our enrollments. We cannot predict with certainty how all of these regulatory requirements will
be applied, or whether we will be able to comply with all of the applicable requirements in the
future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>If the Department of Education does not recertify us to continue participating in the Title IV
programs, our students would lose their access to Title IV program funds, or we could be
recertified but required to accept significant limitations as a condition of our continued
participation in the Title IV programs.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Department of Education certification to participate in the Title IV programs lasts a maximum
of six years, and institutions are thus required to seek recertification from the Department of
Education on a regular basis in order to continue their participation in the Title IV programs. An
institution must also apply for recertification by the Department of Education if it undergoes a
change in control, as defined by Department of Education regulations, and may be subject to similar
review if it expands its operations or educational programs in certain ways.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Since May&nbsp;2005, we have been certified to participate in Title IV programs on a provisional
basis. We submitted our application for recertification in March&nbsp;2008 in anticipation of the
expiration of our provisional certification on June&nbsp;30, 2008. The Department of Education did not
make a decision on our recertification application by June&nbsp;30, 2008 and therefore our provisional
certification to participate in the Title IV programs has been automatically extended since that
time on a month-to-month basis until the Department of Education makes its decision. See Item&nbsp;1,
<I>Business &#151; Regulation &#151; Regulation of Federal Student Financial Aid Programs &#151; Eligibility and
certification procedures</I>. There can be no assurance that the Department of Education will recertify
us or that it will not impose conditions or other restrictions on us as a condition of granting us
provisional certification following our pending change in control or approving our pending
recertification application or with respect to any future recertification. See Item&nbsp;1A, <I>Risk
Factors &#151; If any of the education regulatory agencies that regulate us do not approve or delay
their approval of any transaction involving us that constitutes a &#147;change in control,&#148; our ability
to operate or participate in the Title IV programs may be impaired. </I>If the Department of Education
does not renew or withdraws our certification to participate in the Title IV programs at any time,
our students would no longer be able to receive Title IV program funds. Similarly, the Department
of Education could renew our certification, but restrict or delay our students&#146; receipt of Title IV
funds, limit the number of students to whom we could disburse such funds, or place other
restrictions on us. Any of these outcomes would have a material adverse effect on our enrollments
and us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>The Department of Education is conducting a program review of Grand Canyon University, which may
result in the repayment of a substantial amount of Title IV funds and may lead to fines, penalties,
or other sanctions, and damage to our reputation in the industry.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In connection with its administration of the Title IV federal student financial aid programs,
the Department of Education periodically conducts program reviews at selected schools that receive
Title IV funds. In July&nbsp;2010, the Department of Education initiated a program review of Grand
Canyon University covering the 2008-2009 and 2009-2010 award years. As part of this program review,
a Department of Education program review team conducted a site visit on our campus and reviewed,
and in some cases requested further information regarding, our records, practices and policies
relating to, among other things, financial aid, enrollment, enrollment counselor compensation,
program eligibility and other Title IV compliance matters. Upon the conclusion of the site visit,
we were informed by the program review team that it would (i)&nbsp;conduct further review of our
documents and records offsite, (ii)&nbsp;upon completion of such review, schedule a formal exit
interview to be followed by a preliminary program review report in which any preliminary findings
of non-compliance would be presented, and (iii)&nbsp;conclude the review by issuance of a final
determination letter. The program review team has not yet scheduled a formal exit interview with
us. Accordingly, at this point, the program review remains open and we intend to continue to
cooperate with the review team until the program review is completed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">While we have not yet received notification of the timing of our exit interview or the
Department of Education&#146;s preliminary program review report or final determination letter, as a
result of concerns first raised by a member of the program review team at the conclusion of the
site visit and subsequently stated in an affidavit by such member filed in connection with an
August&nbsp;13, 2010 hearing related to our recently settled <I>qui tam </I>case, we became aware that the
program review team had two preliminary findings of concern. The first issue is whether a
compensation policy in use during part of the period under review improperly rewarded some
enrollment counselors based on success in enrolling students in violation of applicable law. As we
have previously disclosed in the context of our now-settled <I>qui tam </I>action, while we believe that
our compensation policies and practices at issue in the program review were not based on success in
enrolling students in violation of applicable law, the Department of Education&#146;s regulations and
interpretations of the incentive compensation law do not establish clear criteria for compliance in
all circumstances and some of our practices in prior years were not within the scope of any of the
specific &#147;safe harbors&#148; provided in the compensation regulations and applicable during that period.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The second issue is whether, during the award years under review, certain programs offered
within our College of Liberal Arts provided students with training to prepare them for gainful
employment in a recognized occupation. This &#147;gainful employment&#148; standard has been a requirement
for Title IV eligibility for programs offered at proprietary institutions of higher education such
as Grand Canyon University although, pursuant to legislation passed in 2008 and effective as of
July&nbsp;1, 2010, this requirement no longer applies to designated liberal arts programs offered by us
and certain other institutions that have held accreditation by a regional accrediting agency since
a date on or before October&nbsp;1, 2007 (we have held a regional accreditation since 1968). Subsequent
to the filing of the affidavit by the program review team member expressing this preliminary
finding, the program review
team submitted a written request to us in which the program review team stated the view that,
prior to July&nbsp;1, 2010, traditional liberal arts programs were not considered as being eligible
under Title IV but then requested additional information from us that would help the Department of
Education determine whether the programs offered within the University&#146;s College of Liberal Arts
were eligible under Title IV because they did provide training to prepare students for gainful
employment in a recognized occupation. While we were not informed as to which specific programs
offered within our College of Liberal Arts the program review team believes may be ineligible, in
August&nbsp;2010 we provided the Department of Education with the requested information which we believe
will demonstrates that the programs offered within our College of Liberal Arts met this
requirement. We have received no further communications from the Department of Education regarding
the program review.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our policies and procedures are planned and implemented to comply with the applicable
standards and regulations under Title IV. If and to the extent the Department of Education&#146;s final
determination letter identifies any compliance issues, we are committed to resolving such issues
and ensuring that Grand Canyon University operates in compliance with all Department of Education
requirements. Program reviews may remain unresolved for months or years with little or no
communication from the Department of Education, and may involve multiple exchanges of information
following the site visit. We cannot presently predict whether or if further information requests
will be made, when the exit interview will take place, when the preliminary program review report
or final determination letter will be issued, or when the program review will be closed. If the
Department of Education were to make significant findings of non-compliance in the final program
review determination letter, including any finding related to the two issues discussed above, then,
after exhausting any administrative appeals available to us, we could be required to pay a fine,
return Title IV monies previously received, or be subjected to other administrative sanctions, any
of which outcomes could damage our reputation in the industry and have a material adverse effect on
our business, results of operations, cash flows and financial position.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Rulemaking by the U.S. Department of Education has resulted in regulatory changes that materially
and adversely affect our business.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In May&nbsp;2009, the Department of Education announced its intent to initiate a round of
negotiated rulemaking to address Title IV program integrity issues. Negotiated rulemaking is a
process whereby the Department of Education consults with members of the postsecondary education
community to identify issues of concern and attempts to agree on proposed regulatory revisions to
address those issues before the Department of Education formally proposes any regulations. If the
Department of Education and negotiators cannot reach consensus on their entire package of draft
regulations, the Department of Education is authorized to propose regulations without being bound
by any agreements made in the negotiation process. That process was concluded for a significant
number of regulatory topics in January&nbsp;2010 and addressed a number of significant issues,
including: compensation paid by institutions to persons or entities engaged in student recruiting
or admission activities; the determination of satisfactory academic progress under different
academic calendars; state authorization as a component of institutional eligibility; the definition
of a credit hour for purposes of determining program eligibility status, particularly in the
context of awarding Pell Grants; verification of information included on student aid applications;
the definition of a high school diploma as a condition of a student&#146;s receipt of Title IV aid and
requirements that an institution be able to demonstrate that its graduates obtain gainful
employment, as measured against certain metrics such as student loan debt and salaries of
graduates. Of the proposed revisions to the regulations being considered in this negotiated
rulemaking, the negotiators did not reach consensus on the proposals to modify the standards
relating to the payment of incentive compensation to employees involved in student recruitment and
enrollment and to adopt a definition of &#147;gainful employment&#148; for purposes of the requirement placed
on proprietary schools that participate in Title IV programs that a program of study prepare
students for gainful employment in a recognized occupation. Accordingly, under the negotiated
rulemaking protocol, the Department of Education became authorized to propose regulations with
respect to these topics without regard to the concerns of institutions as expressed during the
negotiated rulemaking process. The most significant proposals for our business were the following:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A proposal to modify the standards relating to the payment of
incentive compensation to employees involved in student recruitment
and enrollment;</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A proposal to modify the standards relating to misrepresentations by
employees and third parties on behalf of institutions;</TD>
</TR>





</TABLE>
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<DIV style="margin-top: 10pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A proposal to modify state authorization of online programs; and</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>A proposal to adopt a definition of &#147;gainful employment&#148; for purposes
of the requirement placed on proprietary schools that participate in
Title IV student financial aid programs that a program of study
prepare students for gainful employment in a recognized occupation.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Incentive compensation rule. </I>An institution that participates in the Title IV programs may not
provide any commission, bonus, or other incentive payment based directly or indirectly on success
in securing enrollments or financial aid to any person or entity engaged in any student
recruitment, admissions, or financial aid awarding activity. Under current Department of Education
regulations, there are 12 &#147;safe harbors&#148; that describe payments and arrangements that do not
violate the incentive compensation rule. The Department of Education&#146;s regulations make clear that
the safe harbors are not a complete list of permissible practices under this law. For example, one
of these safe harbors permits adjustments to fixed salary for enrollment personnel provided that
such adjustments are not made more than twice during any twelve month period, and that any
adjustment is not based solely on the number of students recruited, admitted, enrolled, or awarded
financial aid, but the regulations do not address other practices, such as the provision of
non-cash awards to enrollment personnel. The restrictions of the incentive compensation rule also
extend to any third-party companies that an educational institution contracts with for student
recruitment, admissions, or financial aid awarding services. Historically, we have relied on
several of these safe harbors to ensure that our compensation and recruitment practices comply with
the applicable requirements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On June&nbsp;18, 2010, the Department of Education issued a Notice of Proposed Rulemaking (&#147;NPRM&#148;)
in respect of the incentive compensation rule and other program integrity issues, other than the
metrics for determining compliance with the gainful employment requirement. The final rules on
these topics were published on October&nbsp;29, 2010 and will become effective on July&nbsp;1, 2011. In the
final rules, the 12 safe harbors under the incentive compensation rule were eliminated as the
Department of Education took the position that any commission, bonus or other incentive payment
based in any part, directly or indirectly, on securing enrollments or awarding financial aid is
inconsistent with the incentive payment prohibition in the Higher Education Act. The Department of
Education contends that institutions do not need to rely on safe harbors to protect compensation
that complies with the Higher Education Act, and that institutions can readily determine if a
payment or compensation is permissible under the Higher Education Act by analyzing (1)&nbsp;whether it
is a commission, bonus or other incentive payment, defined as an award of a sum of money or
something of value (other than a fixed salary or wages), paid to or given to a person or entity for
services rendered, and (2)&nbsp;whether the commission, bonus or other incentive payment is provided to
any person based in any part, directly or indirectly, upon success in securing enrollments or the
award of financial aid, which are defined as activities engaged in for the purpose of the admission
or matriculation of students for any period of time or the award of financial aid. The Department
of Education maintains that an institution can still make merit-based adjustments to employee
compensation, provided that such adjustments are not based in any part, directly or indirectly,
upon success in securing enrollments or the award of financial aid. Accordingly, among other
things, the Department of Education states that (1)&nbsp;an institution may maintain a hierarchy of
recruitment personnel with different levels of responsibility, with salary scales that reflect an
added amount of responsibility, (2)&nbsp;an institution may promote or demote recruitment personnel
based on merit, and (3)&nbsp;an institution may make a compensation decision based on seniority or
length of employment, provided that in each case compensation decisions are consistent with the
Higher Education Act&#146;s prohibition on incentive compensation. The final rules further clarify that
this prohibition may extend to individuals holding a managerial position at any level of the
company, to the extent that a particular individual has responsibility for recruitment or admission
of students, or makes decisions about awarding Title IV program funds. The Department of Education
states that an institution still would be able to make merit-based adjustments to employee
compensation, but would not be permitted to consider nor base compensation directly or indirectly,
in any part, on factors such as an employee&#146;s success in securing student enrollments, the award of
financial aid or institutional goals based on that success.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">While it is anticipated that the Department of Education may issue certain guidance on
incentive compensation issues prior to July&nbsp;1, 2011, we believe the changes imposed by the final
rules, including the elimination of the safe harbors, increase the uncertainty about what
constitutes incentive compensation and which employees are covered by the regulation. In light of
such uncertainty, we have changed some of our compensation practices for enrollment counselors and
other employees, as well as the terms of our arrangements with certain third parties whom we pay
for Internet-based services related to lead generation and marketing and whose activities are also
subject to the incentive compensation rules. The changes in these practices and arrangements could
adversely affect our ability to
compensate our enrollment counselors, other employees, and third parties in a manner that
appropriately reflects their relative merit, which in turn could reduce their effectiveness and
make it more difficult to attract and retain staff with the desired talent and motivation to
succeed at Grand Canyon University. This could also increase marketing costs, decrease quality of
leads provided, decrease efficiency and reduce revenues if we are unable to maintain or increase
the rate of student enrollment. In addition, this lack of certainty could increase the risk of
future Federal False Claims Act <I>qui tam </I>lawsuits in which private plaintiffs assert that our
compensation practices violate the incentive compensation rules and, therefore, that our receipt of
Title IV funds constitutes a submission to the government of a false claim for payment.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Misrepresentation. </I>The final rules on program integrity adopted October&nbsp;29, 2010 and effective
July&nbsp;1, 2011 include provisions that strengthen the Department of Education&#146;s authority to sanction
institutions for misrepresentations made by employees and certain third parties with which such
institutions maintain service agreements (such as for the provision of educational programs or
marketing, advertising, recruiting or admissions services). Considering the breadth of this
prohibition, it is possible that, despite our efforts to prevent such misrepresentations, our
employees or service providers may make statements that could be construed as misrepresentations.
As a result, we may face complaints from students, prospective students and employees over
statements made by us and our agents throughout the enrollment, admissions and financial aid
process, as well as throughout attendance at Grand Canyon University, which would expose us to
increased risk of litigation and enforcement action and applicable sanctions or other penalties up
to and including termination of Title IV eligibility.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>State Authorization. </I>States have the authority to assert jurisdiction, to the extent they so
choose, over educational institutions offering online degree programs in a state but that otherwise
have no physical location or other presence in that state. The final program integrity rules
adopted October&nbsp;29, 2010 and effective July&nbsp;1, 2011 include a provision that requires online
providers to meet any such state requirements and, thus, the Department of Education would seem to
have authority, in addition to that of the states, to enforce applicable state law requirements. It
is unclear how this rule will be enforced and what impact it will have on us. In addition to
Arizona, we have determined that our activities in certain states constitute a presence requiring
licensure or authorization under the requirements of the state education agency in those states,
which we have obtained, while in other states we have determined that we are exempt under
applicable state law from licensure or authorization requirements due to our regional accreditation
or for other reasons. In still other states, we have obtained approvals to operate as we have
determined necessary in connection with our marketing and recruiting activities. Although we have a
process for evaluating the compliance of our online educational programs with state requirements
regarding distance and correspondence learning, and have experienced no significant restrictions on
our educational activities to date as a result of such requirements, state regulatory requirements
for online education vary among the states, are not well developed in many states, are imprecise or
unclear in some states and are subject to change. Moreover, it is also unclear whether and to what
extent state agencies may augment or change their regulations in this area as a result of these new
Department of Education regulations and increased scrutiny. If we fail to comply with licensing or
authorization requirements for a particular state, or fail to obtain licenses or authorizations
when required, we could lose our licensure or authorization from that state or be subject to other
sanctions, including restrictions on our activities in that state, and fines and penalties,
including Department of Education sanctions. The loss of licensure or authorization in a state
other than Arizona could prohibit us from recruiting prospective students or offering educational
services to current students in that state, which could significantly reduce our enrollments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Approval of new programs. </I>The final program integrity rules adopted October&nbsp;29, 2010 and
effective July&nbsp;1, 2011 include provisions regarding the approval of new programs. Although the
final rules relaxed the program approval standard originally proposed, the rules still impose
various new requirements on, and could adversely affect, our ability to add new academic programs.
In addition, the Department of Education has published no definite standards by which schools can
determine the likelihood that any program will be approved. As such, we believe this rule adds
uncertainty regarding new program approval, which could adversely affect our ability to respond to
emerging employment trends and add programs that are responsive to those trends, which in turn
could decrease our attractiveness to certain students. In addition, a lack of certainty could
increase the risk of future Federal False Claims Act qui tam lawsuits in which private plaintiffs
assert that students improperly received Title IV aid while attending a program that has not been
approved.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Additional final rules</I>. In addition to the program integrity issues specifically addressed
above, the final rules issued by Department of Education on October&nbsp;29, 2010 and effective July&nbsp;1,
2011 include provisions regarding the
definition of a credit hour; written agreements between institutions, particularly
institutions under common ownership or control; the administration of ability-to-benefit
examinations; requirements regarding an institution&#146;s return of Title IV program funds; and certain
other issues pertaining to a student&#146;s eligibility to receive Title IV program funds. We are in the
process of reviewing all of the final rules. We cannot predict how the recently released or any
other resulting regulations will be interpreted, and therefore whether we will be able to comply
with these requirements by the effective date. Insufficient time, or lack of sufficient guidance,
for compliance with the final rules, could have a material adverse effect on our business.
Uncertainty surrounding the application of the final rules, interpretive regulations, and guidance
from Department of Education may continue for some period of time and could reduce our enrollment,
increase our cost of doing business, and have a material adverse effect on our business, financial
condition, results of operations and cash flows.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Proposed gainful employment rule. </I>Under the Higher Education Act, proprietary schools are
eligible to participate in Title IV programs only to the extent that their educational programs
lead to &#147;gainful employment in a recognized occupation,&#148; with the limited exception of qualified
programs leading to a bachelor&#146;s degree in liberal arts. Historically, this concept has not been
defined in detail. On July&nbsp;26, 2010, the Department of Education issued an NPRM in respect of the
proposed gainful employment requirement. While the Department of Education previously stated that
its goal was to publish final rules related to the gainful employment requirement by November&nbsp;1,
2010 and to have the final rules be effective July&nbsp;1, 2011 with certain provisions to be effective
July&nbsp;1, 2012, due to the unprecedented volume of comments received regarding the proposed rules, on
September&nbsp;24, 2010, the Department of Education announced that it would delay issuing final rules
until early 2011 in order to give interested parties more time to clarify their comments and
respond to questions from Department of Education officials. The final gainful employment rules
have yet to be released.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The proposed definition of gainful employment in the July&nbsp;26, 2010 NPRM described above would
take into consideration whether former students are repaying their federal student loans and the
relationship between total student loan debt and average earnings after completing a postsecondary
program. As proposed in the NPRM, individual educational programs would be divided into three
groups based on the proposed metrics:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Programs with at least 45% of their former students paying down the
principal on their federal loans, or with graduates having a
debt-to-earnings ratio of less than 20% of discretionary income or 8%
of total income, would be deemed fully eligible for Title IV funding.
These programs would be required to disclose both their repayment
rates and debt-to-earnings ratios unless they pass both of the
preceding tests.</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Programs with less than 35% of their former students paying down the
principal on their federal loans, and with graduates having a
debt-to-earnings ratio above 30% of discretionary income and 12% of
total income, would be deemed ineligible for Title IV funding. Such
programs would have lost Title IV eligibility as of July&nbsp;1, 2012,
although institutions would have been required to warn students in the
programs about the high debt-to-earnings ratio effective July&nbsp;1, 2011.
In order to mitigate against large and immediate displacements of
students as of the July&nbsp;1, 2012 deadline, the Department of Education
further proposed that no more than 5% of a single institution&#146;s
programs would be declared ineligible as of that date, with the
lowest-performing programs immediately losing eligibility and the
remaining non-compliant programs losing eligibility one year later.</TD>
</TR>

<TR style="font-size: 8pt">
    <TD>&nbsp;</TD>
</TR> <TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Programs that are not fully eligible or ineligible under the above
standards would be restricted programs and subject to limits on
enrollment growth. Such institutions also would be required to
demonstrate employer support for the program and warn consumers and
current students of high debt levels.</TD>
</TR>

</TABLE>
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">While there remain many open questions and interpretive issues with respect to this gainful
employment NPRM, including when it will go into effect and questions as to the availability of, and
the ability of education companies to obtain, the information needed to calculate the applicable
metrics, if this regulation is adopted in a form similar to the Department of Education&#146;s proposal
in the NPRM, it could render some of our programs ineligible for Title IV funding if we do not meet
the test to be considered &#147;fully eligible.&#148; In addition, the continuing eligibility of our
educational programs for Title IV funding would be at risk due to factors beyond our control, such
as changes in the income level of persons employed in specific occupations or sectors,
increases in interest rates, changes in student mix to persons requiring higher amounts of student
loans to complete their programs, changes in student loan delinquency rates and other factors. If a
particular program ceased to be eligible for Title IV funding, in most cases it would not be
practical to continue offering that course under our current business model. Regulations in the
form proposed in the NPRM could result in a significant realignment of the types of educational
programs that are offered by us and by proprietary institutions in general, in order to comply with
the rules or to avoid the uncertainty associated with compliance over time. Furthermore, we may be
required for certain programs to warn consumers and current students of high debt levels and
provide the most recent debt measures for the program. Such changes in our business practices could
reduce our enrollment, perhaps materially, which could have a material adverse effect on our
business, prospects, financial condition and results of operations and could adversely affect our
stock price.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We are still assessing the impact of the final regulations, including those implementing
changes to the incentive compensation rule, and the possible impact of the proposed gainful
employment rules on our financial aid policies and practices and on our other operations, plans,
and strategies. At this time, we cannot predict with any certainty whether we will be able to
comply with such new requirements or whether compliance with such new requirements will result in a
material adverse effect on our enrollments and operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Increased disclosure and recordkeeping requirements could result in lower enrollment or growth
rates in a manner that materially and adversely affects our business.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The final rules issued by Department of Education on October&nbsp;29, 2010 and effective July&nbsp;1,
2011 also require that, for each program leading to &#147;gainful employment&#148; in a recognized
occupation, institutions must provide prospective students with information concerning the
occupation that the program prepares students to enter; the program&#146;s on-time graduation rate; the
tuition and fees it charges a student for completing the program within normal time, along with the
costs of books, supplies, room, and board; the placement rate for students completing the program,
and the median loan debt incurred by students who completed the program. Institutions must also
provide the Department of Education with information that will allow determination of student debt
levels and incomes after program completion. It is unclear at this time the level of administrative
burden, increased costs, or effect on growth and enrollments that may result from the new reporting
and disclosure requirements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>The U.S. Congress has recently commenced an examination of the for-profit education sector that
could result in legislation or further U.S. Department of Education rulemaking restricting Title IV
program participation by proprietary schools in a manner that materially and adversely affects our
business.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">During 2010 and since, there has been increased focus by Congress on the role that for-profit
educational institutions play in higher education. Each of the Congressional education committees
held one or more hearings examining various aspects of the proprietary education industry,
including the manner in which accrediting agencies review higher education institutions&#146; policies
on credit hours and program length, student recruitment practices, and the debt levels incurred by,
and drop-out rates of, students attending for-profit colleges. In addition, at the request of the
Chairmen of each of these committees, the Government Accountability Office (&#147;GAO&#148;) conducted
reviews and prepared reports with recommendations regarding various aspects of the proprietary
sector, including recruitment practices, educational quality, student outcomes, the sufficiency of
integrity safeguards against waste, fraud and abuse in federal student aid programs and the degree
to which proprietary institutions&#146; revenue is composed of Title IV and other federal funding
sources. Finally, in August&nbsp;2010, the Health, Education, Labor and Pensions (&#147;HELP&#148;) Committee of
the U.S. Senate sent requests to approximately 30 for-profit colleges, including us and all of the
other publicly-traded companies that operate for-profit colleges, seeking information about such
matters as graduation and loan default rates, as well as internal recruiting documents and details
about the use of third-party companies, such as lead generators, in the recruiting process. The
request sought information concerning how we use federal resources, including how we recruit and
enroll students, set program price or tuition, determine financial aid including private or
institutional loans, track attendance, handle withdrawals of students and return of Title IV
dollars and manage compliance with the requirement that no more than 90% of revenues come from
Title IV dollars. The request also sought an understanding of the number of students who complete
or graduate from programs we offer, how many of those students find new work in their educational
area, the debt levels of students enrolling and completing programs and how we track and manage the
number of students who risk default within the cohort default rate window. In furtherance of this,
the HELP Committee requested that we provide information about a broad spectrum of our business,
including detailed information relating to financial results, management, operations,
personnel, recruiting, enrollment, graduation, student withdrawals, receipt of Title IV funds,
institutional accreditation, regulatory compliance and other matters. We complied with the HELP
Committee&#146;s request and believe that we have completed the document production necessary to satisfy
the request. We cannot predict the extent to which, or whether, these hearings and review will
result in additional legislation, further rulemaking or other administrative actions affecting our
participation in Title IV programs. To the extent that any laws or regulations are adopted, or
other administrative actions are taken, that limit our participation in Title IV programs or the
amount of student financial aid for which the students at our institutions are eligible, our
enrollments, revenues and results of operation could be materially and adversely affected.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Proposed legislation, additional rulemaking or additional examinations from US Congress may impact
general public perception of the industry in a negative manner resulting in a material and adverse
impact on our business.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Criticisms of the overall student lending and postsecondary education sectors may impact
general public perceptions of educational institutions, including us, in a negative manner. Adverse
media coverage regarding other educational institutions or regarding us directly could damage our
reputation. The environment surrounding access to and the costs of student loans remains in a state
of flux. The uncertainty surrounding these issues, and any resolution of these issues that
increases loan costs or reduces students&#146; access to Title IV loans or to student extended payment
plans such as the ones we make available to our students, could reduce student demand for our
programs, adversely impact our revenues and operating profit or result in increased regulatory
scrutiny.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Congress may change the eligibility standards or reduce funding for the Title IV programs, which
could reduce our student population, revenue, and profit margin.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Political and budgetary concerns significantly affect the Title IV programs. The Higher
Education Act, which is the federal law that governs the Title IV programs, must be periodically
reauthorized by Congress, and was most recently reauthorized in August&nbsp;2008. See Item&nbsp;1, <I>Business
&#151; Regulation &#151; Regulation of Federal Student Financial Aid Programs</I>. In addition, Congress must
determine funding levels for the Title IV programs on an annual basis through the budget and
appropriations process, and can change the laws governing the Title IV programs at any time.
Because a significant percentage of our revenue is derived from the Title IV programs, any action
by Congress that significantly reduces Title IV program funding or our ability or the ability of
our students to participate in the Title IV programs, or otherwise requires us to modify our
practices with respect to the Title IV programs, could increase our costs of compliance, reduce the
ability of some students to finance their education at our institution, require us to seek to
arrange for other sources of financial aid for our students, and materially decrease our student
enrollment, each of which could have a material adverse effect on us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>If we do not meet specific financial responsibility standards established by the Department of
Education, we may be required to post a letter of credit or accept other limitations in order to
continue participating in the Title IV programs, or we could lose our eligibility to participate in
the Title IV programs.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">To participate in the Title IV programs, an institution must either satisfy specific
quantitative standards of financial responsibility prescribed by the Department of Education, or
post a letter of credit in favor of the Department of Education and possibly accept operating
restrictions as well. These financial responsibility tests are applied to each institution on an
annual basis based on the institution&#146;s audited financial statements, and may be applied at other
times, such as if the institution undergoes a change in control. These tests may also be applied to
an institution&#146;s parent company or other related entity. The operating restrictions that may be
placed on an institution that does not meet the quantitative standards of financial responsibility
include being transferred from the advance payment method of receiving Title IV program funds to
either the reimbursement or the heightened cash monitoring system, which could result in a
significant delay in the institution&#146;s receipt of those funds. If, in the future, we fail to
satisfy the Department of Education&#146;s financial responsibility standards, we could experience
increased regulatory compliance costs or delays in our receipt of Title IV program funds because we
could be required to post a letter of credit or be subjected to operating restrictions, or both.
Our failure to secure a letter of credit in these circumstances could cause us to lose our ability
to participate in the Title IV programs, which would materially adversely affect us.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>If we do not comply with the Department of Education&#146;s administrative capability standards, we
could suffer financial penalties, be required to accept other limitations in order to continue
participating in the Title IV programs, or lose our eligibility to participate in the Title IV
programs.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">To continue participating in the Title IV programs, an institution must demonstrate to the
Department of Education that the institution is capable of adequately administering the Title IV
programs under specific standards prescribed by the Department of Education. These administrative
capability criteria require, among other things, that the institution has an adequate number of
qualified personnel to administer the Title IV programs, has adequate procedures for disbursing and
safeguarding Title IV funds and for maintaining records, submits all required reports and financial
statements in a timely manner, and does not have significant problems that affect the institution&#146;s
ability to administer the Title IV programs. If we fail to satisfy any of these criteria, the
Department of Education may assess financial penalties against us, restrict the manner in which we
receive Title IV funds, require us to post a letter of credit, place us on provisional
certification status, or limit or terminate our participation in the Title IV programs, any of
which could materially adversely affect us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>We would lose our ability to participate in the Title IV programs if we fail to maintain our
institutional accreditation, and our student enrollments could decline if we fail to maintain any
of our accreditations or approvals.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">An institution must be accredited by an accrediting commission recognized by the Department of
Education in order to participate in the Title IV programs. We have institutional accreditation by
the Higher Learning Commission, which is an accrediting commission recognized by the Department of
Education. To remain accredited, we must continuously meet accreditation standards relating to,
among other things, performance, governance, institutional integrity, educational quality, faculty,
administrative capability, resources, and financial stability. We were reaccredited by the Higher
Learning Commission in 2007, and the next scheduled comprehensive evaluation will be conducted in
2016-2017. If we fail to satisfy any of the Higher Learning Commission&#146;s standards, we could lose
our accreditation by the Higher Learning Commission, which would cause us to lose our eligibility
to participate in the Title IV programs and could cause a significant decline in our total student
enrollments and have a material adverse effect on us. In addition, many of our individual
educational programs are also accredited by specialized accrediting commissions or approved by
specialized state agencies. If we fail to satisfy the standards of any of those specialized
accrediting commissions or state agencies, we could lose the specialized accreditation or approval
for the affected programs, which could result in materially reduced student enrollments in those
programs and have a material adverse effect on us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In December&nbsp;2009, the Department of Education issued an &#147;Alert Memorandum,&#148; calling into
question the Higher Learning Commission&#146;s compliance with the applicable Department of Education
regulations related to the Higher Learning Commission&#146;s status as recognized by the Department of
Education. Specifically, in matters unrelated to us, the Department of Education Office of
Inspector General asserted that the Higher Learning Commission did not make appropriate assessments
as to credit hours with respect to the distance education programs of one of Higher Learning
Commission&#146;s accredited institutions and, as such, the Office of Inspector General recommended that
the Department of Education take action to terminate the Higher Learning Commission&#146;s recognition
by the Secretary of Education. At this point, we do not know if this matter will be resolved and we
are unable to speculate as to the impact on us or other institutions accredited by the Higher
Learning Commission if the Higher Learning Commission were to be de-recognized as an accrediting
commission by the Department of Education.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>If we do not maintain our state authorization in Arizona, we may not operate or participate in the
Title IV programs.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">A school that grants degrees or certificates must be authorized by the relevant education
agency of the state in which it is located. We are located in the state of Arizona and are
authorized by the Arizona State Board for Private Postsecondary Education. State authorization is
also required for our students to be eligible to receive funding under the Title IV programs. To
maintain our state authorization, we must continuously meet standards relating to, among other
things, educational programs, facilities, instructional and administrative staff, marketing and
recruitment, financial operations, addition of new locations and educational programs, and various
operational and administrative procedures. If we fail to satisfy any of these standards, we could
lose our authorization by the Arizona State Board
for Private Postsecondary Education to offer our educational programs, which would also cause
us to lose our eligibility to participate in the Title IV programs and have a material adverse
effect on us.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>If any of the education regulatory agencies that regulate us do not approve or delay their approval
of any transaction involving us that constitutes a &#147;change in control,&#148; our ability to operate or
participate in the Title IV programs may be impaired.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">If we experience a change in control under the standards of the Department of Education, the
Higher Learning Commission, the Arizona State Board for Private Postsecondary Education, or any
other applicable state education agency or accrediting commission, we must notify and/or seek the
approval of each such agency. These agencies do not have uniform criteria for what constitutes a
change in control. Transactions or events that typically constitute a change in control include
significant acquisitions or dispositions of the voting stock of an institution or its parent
company and significant changes in the composition of the board of directors of an institution or
its parent company. With respect to publicly-traded corporations, like us, they also may include
cases where a corporation has a stockholder that owns, or has voting control over, at least 25% of
the total outstanding voting stock of the corporation and is the largest stockholder of the
corporation (defined in the regulations as a &#147;controlling shareholder&#148;), and that controlling
shareholder ceases to own, or have voting control over, at least 25% of such stock or ceases to be
the largest stockholder, or other transactions or events may be beyond our control. Our failure to
obtain, or a delay in receiving, approval of any change in control from the Department of
Education, the Higher Learning Commission, or the Arizona State Board for Private Postsecondary
Education could impair our ability to operate or participate in the Title IV programs, which could
have a material adverse effect on our business, prospects, financial condition, and results of
operations. Our failure to obtain, or a delay in receiving, approval of any change in control from
any other state in which we are currently licensed or authorized, or from any of our specialized
accrediting commissions, could require us to suspend our activities in that state or suspend
offering the applicable programs until we receive the required approval, or could otherwise impair
our operations. The potential adverse effects of a change in control could influence future
decisions by us and our stockholders regarding the sale, purchase, transfer, issuance, or
redemption of our stock, which could discourage bids for your shares of our stock and could have an
adverse effect on the market price of your shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Since May&nbsp;2005, we have been certified to participate in Title IV programs on a provisional
basis. We submitted our application for recertification in March&nbsp;2008 in anticipation of the
expiration of our provisional certification on June&nbsp;30, 2008. The Department of Education did not
make a decision on our recertification application by June&nbsp;30, 2008, and therefore our provisional
certification to participate in the Title IV programs has been automatically extended since that
time on a month-to-month basis until the Department of Education makes its decision. For a school
that is certified on a provisional basis, the Department of Education may revoke the institution&#146;s
certification without advance notice or advance opportunity for the institution to challenge that
action. For a school that is provisionally certified on a month-to-month basis, like we are, the
Department of Education may allow the institution&#146;s certification to expire at the end of any month
without advance notice, and without any formal procedure for review of such action. To our
knowledge, such action is very rare and has only occurred upon a determination that an institution
is in substantial violation of material Title IV requirements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In connection with our initial public offering in November&nbsp;2008 and our secondary offering in
September&nbsp;2009, Brent D. Richardson, our Executive Chairman, and Christopher C. Richardson, our
General Counsel and a director (collectively, the &#147;Richardson Voting Group&#148;), had entered into
voting agreements with certain stockholders. Pursuant to these agreements, certain of our
stockholders granted to the Richardson Voting Group a five-year irrevocable proxy to exercise
voting authority with respect to certain shares of our common stock held by such persons, for so
long as such shares are held by such persons. The voting agreements do not apply to any shares
held by any such person that are transferred in open-market or other transactions. The number of
shares over which the Richardson Voting Group continues to hold voting power will decrease over
time as shares held by other parties to the voting agreement are sold, which sales we may be not be
aware of since many of the shares held by such other parties are held in &#147;street name.&#148; Pursuant
to these agreements, however, following each offering and through January&nbsp;11, 2011, the Richardson
Voting Group continued to control the voting power of more than 25% of our total outstanding voting
stock.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">To avoid an unplanned change in control from occurring and to allow the Richardsons and other
stockholders party to the agreements flexibility to sell shares without causing an unplanned change
in control, we submitted a
notice to the Department of Education informing it of the Richardson Voting Group&#146;s intention
to terminate the voting agreements, which would trigger a change in control because it would cause
the Richardson Voting Group to own and control less than 25% of our outstanding voting stock, and
requesting that the Department of Education review such proposed terminations and advise us as to
the effect of such terminations on our eligibility to participate in the Title IV programs,
particularly in light of our pending application for recertification (discussed below). In
December&nbsp;2010, the Department of Education responded to our request in writing and informed us
that, consistent with Department of Education regulations, if we notified the Department of
Education of the change in control and filed a timely and materially complete application within
ten business days after the change in control occurs, the Department of Education may temporarily
certify us on a provisional basis following the change in control, so that our students would
retain access to Title IV program funds until the Department of Education completed its full
review. In addition, the Department of Education informed us that it may extend our temporary
provisional certification if we timely filed other required materials by the last day of the month
following the month in which the change in control occurred, including any approval of the change
in control by the Higher Learning Commission (our accrediting commission) and the Arizona State
Board for Private Postsecondary Education (our state licensing agency), as required, and certain
required financial information (consisting of our recent SEC filings) showing our financial
condition. The Department of Education&#146;s letter did not indicate any intention to impose any
conditions (such as any letter of credit requirement) or other restrictions on us as a result of
the change in control. Accordingly, following receipt of the Department of Education&#146;s letter, the
approval of the Higher Learning Commission to terminate the voting agreements and confirmation from
the Arizona State Board for Private Postsecondary Education that terminating the voting agreements
will not be considered a change in control, the Richardson Voting Group terminated the voting
agreements effective January&nbsp;12, 2011. On that same day, we filed our complete application and all
other required information with the Department of Education.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Following the completion of the Department of Education&#146;s review of the information that we
have provided in connection with the termination of the voting agreements, it would normally
certify us on a provisional basis for a period of up to approximately three years. The precise
conditions and restrictions, if any, and duration of any provisional certification granted in this
circumstance, however, are difficult to predict because we already are, and have been for an
extended period, provisionally certified on a month-to-month basis. We do not believe that our
continued provisional certification on a month-to-month basis, following the change in control or
otherwise, has had or will have any material impact on our day-to-day operations. However, there
can be no assurance that the Department of Education will recertify us or that it will not impose
conditions or other restrictions on us as a condition of granting us provisional certification
following the change in control or approving our pending recertification application or with
respect to any future recertification. If the Department of Education does not renew or withdraws
our certification to participate in the Title IV programs at any time, our students would no longer
be able to receive Title IV program funds. Similarly, the Department of Education could renew our
certification, but restrict or delay our students&#146; receipt of Title IV funds, limit the number of
students to whom we could disburse such funds, or place other restrictions on us. Any of these
outcomes would have a material adverse effect on our enrollments and us. See Item&nbsp;1, <I>Business &#151;
Regulation &#151; Regulatory Standards that May Restrict Institutional Expansion or Other Changes &#151;
Change in ownership resulting in a change in control</I>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Our failure to comply with the regulatory requirements of states other than Arizona could result in
actions taken by those states or the Department of Education that could have a material adverse
effect on our enrollments.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Almost every state imposes regulatory requirements on educational institutions that have
physical facilities located within the state&#146;s boundaries. These regulatory requirements establish
standards in areas such as educational programs, facilities, instructional and administrative
staff, marketing and recruitment, financial operations, addition of new locations and educational
programs, and various operational and administrative procedures, some of which are different than
the standards prescribed by the Department of Education or the Arizona State Board for Private
Postsecondary Education. Several states have sought to assert jurisdiction over educational
institutions offering online degree programs that have no physical location in the state but that
have some activity in the state, such as enrolling or offering educational services to students who
reside in the state, employing faculty who reside in the state, or advertising to or recruiting
prospective students in the state. In addition, the Department of Education has adopted new
regulations that require online providers to meet any such state requirements and, thus, the
Department of Education would seem to have authority, in addition to that of the states, to enforce
applicable state law requirements. See Item&nbsp;1. <I>Business &#151; Regulation &#151; New and Pending
Regulations &#151; State authorization</I>. Because state regulatory requirements for online education
vary among the states, are not well developed in many states, are imprecise or unclear in some
states, and can change frequently, it is unclear how the new Department of Education
regulation will be enforced and what impact it will have on us. New laws, regulations, or
interpretations related to doing business over the Internet could also increase our cost of doing
business and affect our ability to recruit students in particular states, which could, in turn,
negatively affect enrollments and revenues and have a material adverse effect on our business. In
the future, states could coordinate their efforts in order to more aggressively attempt to regulate
or restrict schools&#146; offering of online education.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In addition to Arizona, we have determined that our activities in certain states constitute a
presence requiring licensure or authorization under the requirements of the state education agency
in those states, which we have obtained. In certain other states, we have obtained approvals to
operate as we have determined necessary in connection with our marketing and recruiting activities
or where we have determined that our licensure or authorization can facilitate the teaching
certification process in a particular state for graduates of our College of Education. We review
the licensure or authorization requirements of other states when appropriate to determine whether
our activities in those states constitute a presence or otherwise require licensure or
authorization by the applicable state education agencies. Because state regulatory requirements,
including agency interpretations, can change frequently, and because we enroll students in all 50
states and the District of Columbia, we expect that state regulatory authorities in states where we
are not currently licensed or authorized will request that we seek licensure or authorization in
their states in the future. Although we believe that we will be able to comply with additional
state licensing or authorization requirements that may arise or be asserted in the future,
including under the new Department of Education regulation, if we fail to comply with state
licensing or authorization requirements for a state, or fail to obtain licenses or authorizations
when required, we could lose our state licensure or authorization by that state or be subject to
other sanctions, including restrictions on our activities in, and fines and penalties imposed by,
that state, as well as fines, penalties, and sanctions imposed by the Department of Education. The
loss of licensure or authorization in a state other than Arizona could prohibit us from recruiting
prospective students or offering educational services to current students in that state, which
could significantly reduce our enrollments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">State laws and regulations are not always precise or clear, and regulatory agencies may
sometimes disagree with the way we have interpreted or applied these requirements. Any
misinterpretation by us of these regulatory requirements or adverse changes in regulations or
interpretations thereof by regulators could materially adversely affect us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>The inability of our graduates to obtain a professional license or certification in their chosen
field of study could reduce our enrollments and revenues, and potentially lead to student claims
against us that could be costly to us.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Many of our students, particularly those in our education and healthcare programs, seek a
professional license or certification in their chosen fields following graduation. A student&#146;s
ability to obtain a professional license or certification depends on several factors, including
whether the institution and the student&#146;s program were accredited by a particular accrediting
commission or approved by a professional association or by the state in which the student seeks
employment. Additional factors are outside the control of the institution, such as the individual
student&#146;s own background and qualifications. If one or more states refuse to recognize a
significant number of our students for professional licensing or certification based on factors
relating to our institution or programs, the potential growth of those programs would be negatively
impacted and we could be exposed to claims or litigation by students or graduates based on their
inability to obtain their desired professional license or certification, each of which could
materially adversely affect us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Government agencies, regulatory agencies, and third parties may conduct compliance reviews, bring
claims, or initiate litigation against us based on alleged violations of the extensive regulatory
requirements applicable to us, which could cause us to pay monetary damages, be sanctioned or
limited in our operations, and expend significant resources to defend against those claims.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Because we operate in a highly regulated industry, we are subject to program reviews, audits,
investigations, claims of non-compliance, and lawsuits by government agencies, regulatory agencies,
students, employees, stockholders, and other third parties alleging non-compliance with applicable
legal requirements, many of which are imprecise and subject to interpretation. Item&nbsp;1, <I>Business &#151;
Regulation &#151; Regulation of Federal Student Financial Aid Programs. </I>As we grow larger, this
scrutiny of our business may increase. See Item&nbsp;1A, <I>Risk Factors &#151; The Department of Education is
conducting a program review of Grand Canyon University, which may result in fines, penalties, other
sanctions, and damage to our reputation in the industry. </I>If the result of any such</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 10pt"> proceeding is unfavorable to us, we may lose or have limitations imposed on our state licensing, accreditation,
or Title IV program participation; be required to pay monetary damages (including triple damages in
certain whistleblower suits); or be subject to fines, injunctions, or other penalties, any of which
could have a material adverse effect on our business, prospects, financial condition, and results
of operations. Claims and lawsuits brought against us, even if they are without merit, may also
result in adverse publicity, damage our reputation, negatively affect the market price of our
stock, adversely affect our student enrollments, and reduce the willingness of third parties to do
business with us. Even if we adequately address the issues raised by any such proceeding and
successfully defend against it, we may have to devote significant financial and management
resources to address these issues, which could harm our business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>A decline in the overall growth of enrollment in postsecondary institutions, or in the number of
students seeking degrees online or in our core disciplines, could cause us to experience lower
enrollment at our schools, which could negatively impact our future growth.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Based on industry analyses, we believe that enrollment growth in degree-granting,
postsecondary institutions is slowing and that the number of high school graduates that are
eligible to enroll in degree-granting, postsecondary institutions is expected to decrease over the
next few years. In order to maintain current growth rates, we will need to attract a larger
percentage of students in existing markets and expand our markets by creating new academic
programs. In addition, if job growth in the fields related to our core disciplines is weaker than
expected, as a result of any regional or national economic downturn or otherwise, fewer students
may seek the types of degrees that we offer. Our failure to attract new students, or the decisions
by prospective students to seek degrees in other disciplines, would have an adverse impact on our
future growth.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>If our students were unable to obtain private loans from third-party lenders, or the costs for such
loans increase, our business could be adversely affected given our students&#146; reliance on such loans
to satisfy their educational expenses.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Some of our students finance their education through private loans that are not subsidized.
During the fiscal year ended December&nbsp;31, 2010 and 2009, private loans to students at our school
represented less than 1% of our net revenues (calculated based on net revenues from our income
statement). These loans were provided pursuant to private loan programs and were made available to
eligible students to fund a portion of the students&#146; costs of education not covered by the Title IV
programs and state financial aid sources. Private loans are made to our students by lending
institutions and are non-recourse to us. The 2008 reauthorization of the Higher Education Act and
related proposed and final regulations place significant new restrictions on the relationships
between institutions and the providers of private loans, and require that certain specific terms
and disclosures accompany such loans. If our students&#146; or our students&#146; parents&#146; employment
circumstances are adversely affected by regional or national economic downturns, our students may
become more heavily dependent on student loans. At the same time, however, the increased
regulatory burden has resulted, and could continue to result, in providers of private loans
reducing the availability of or increasing the costs associated with providing private loans to
postsecondary students. In particular, loans to students with low credit scores who would not
otherwise be eligible for credit-based private loans have become increasingly difficult to obtain.
Prospective students may find that these increased financing costs make borrowing prohibitively
expensive and abandon or delay enrollment in postsecondary education programs. If any of these
scenarios were to occur, our students&#146; ability to finance their education could be adversely
affected and our student population could decrease, which could have a material adverse effect on
our business,
prospects, financial condition, and results of operations. In addition, interest rates have
reached relatively low levels in recent years, creating a favorable borrowing environment for
students. However, in the event interest rates increase or Congress decreases the amount available
for federal student aid, our students may have to pay higher interest rates on their loans. Any
future increase in interest rates will result in a corresponding increase in educational costs to
our existing and prospective students, which could result in a significant reduction in our student
population and revenues. Higher interest rates could also contribute to higher default rates with
respect to our students&#146; repayment of their education loans. Higher default rates may in turn
adversely impact our eligibility to participate in some or all of the Title IV programs, which
could result in a significant reduction in our student population and our profitability.</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Our reputation and our stock price may be negatively affected by adverse publicity or by the
actions of other postsecondary educational institutions.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In addition to the Congressional and regulatory activities focused on for-profit educational
institutions in 2010 and since, in recent years, regulatory proceedings and litigation have been
commenced against various postsecondary educational institutions relating to, among other things,
deceptive trade practices, false claims against the government, and non-compliance with Department
of Education requirements, state education laws, and state consumer protection laws. These
proceedings have been brought by the Department of Education, the U.S. Department of Justice, the
SEC, and state governmental agencies, among others. These allegations have attracted adverse media
coverage and have been the subject of legislative hearings and regulatory actions at both the
federal and state levels, focusing not only on the individual schools but in some cases on the
for-profit postsecondary education sector as a whole. Adverse media coverage regarding other
for-profit education companies or other educational institutions could damage our reputation,
result in lower enrollments, revenues, and operating profit, and have a negative impact on our
stock price. Such coverage could also result in increased scrutiny and regulation by the Department
of Education, Congress, accrediting commissions, state legislatures, state attorneys general, or
other governmental authorities of all educational institutions, including us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>If the percentage of our revenue that is derived from the Title IV programs is too high, we may
lose our eligibility to participate in those programs.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">A requirement of the Higher Education Act, commonly referred to as the &#147;90/10 Rule,&#148; that is
applicable only to for-profit, postsecondary educational institutions like us provides that an
institution loses its eligibility to participate in the Title IV programs if the institution
derives more than 90% of its revenue for each of two consecutive fiscal years from Title IV program
funds. For purposes of the 90/10 Rule, revenue is calculated under a complex regulatory formula
that requires cash basis accounting and other adjustments to the calculation of an institution&#146;s
revenue under generally accepted accounting principles that appears in its financial statements.
This rule provides that an institution that violates this revenue limit becomes ineligible to
participate in the Title IV programs as of the first day of the fiscal year following the second
consecutive fiscal year in which it exceeds the 90% threshold, and its period of ineligibility
extends for at least two consecutive fiscal years. If an institution exceeds the 90% threshold for
two consecutive fiscal years and it and its students have received Title IV funds during the period
of ineligibility, the institution will be required to return those Title IV funds to the applicable
lender or the Department of Education. If an institution&#146;s rate exceeds 90% for any single fiscal
year, it will be placed on provisional certification for at least two fiscal years. The August
2008 reauthorization of the Higher Education Act included significant revisions to the 90/10 Rule
that became effective upon the date of the law&#146;s enactment, including provisions that allow
institutions, when calculating their compliance with this revenue test, to exclude from their Title
IV program revenue for a three-year period ending June&nbsp;30, 2011 the additional federal student loan
amounts that became available through the Unsubsidized Stafford Loan Program starting in July&nbsp;2008,
and to include more non-Title IV revenue, such as revenue from institutional loans under certain
circumstances. Given the level of complexity of this calculation we are unable to quantify
precisely the benefit that we have derived or will derive in the 90/10&nbsp;percentage from these
temporary exclusions. As such, our reported rates below exclude the benefits from these exclusions.
Using the Department of Education&#146;s cash-basis, regulatory formula under the &#147;90/10 Rule&#148; that was
in effect prior to the August&nbsp;2008 reauthorization of the Higher Education Act, for our 2010, 2009
and 2008 fiscal years, we derived approximately 84.9%, 82.5%, and 78.6%, respectively, of our 90/10
Rule revenue from Title IV program funds. As a result of recent changes in federal law that
increased Title IV grant and loan limits, as well as the recent economic downturn, which has
adversely affected the employment circumstances of our students and their parents and increased
their reliance on Title IV programs, we expect the percentage of our revenue that we receive from
the Title IV programs to continue to increase in the future, making it more difficult for us to
satisfy this requirement. Exceeding the 90% threshold such that we lost our eligibility to
participate in the Title IV programs would have a material adverse effect on our business,
prospects, financial condition, and results of operations.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>We may lose our eligibility to participate in the Title IV programs if our student loan default
rates are too high.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">An institution may lose its eligibility to participate in some or all of the Title IV programs
if, for three consecutive years, 25% or more of its students who were required to begin repayment
on their student loans in one year default on their payment by the end of the following year. In
addition, an institution may lose its eligibility to participate in some or all of the Title IV
programs if the default rate of its students exceeds 40% for any single year. The August&nbsp;2008
reauthorization of the Higher Education Act extends by one year the period for which students&#146;
defaults on their loans will be included in the calculation of an institution&#146;s default rate, a
change that is expected to increase our cohort default rates. The new law also increases the
threshold for an institution to lose its eligibility to participate in the relevant Title IV
programs from 25% to 30% over three consecutive years, while leaving the threshold at 40% for a
single year. These changes to the law take effect for institutions&#146; cohort default rates for
federal fiscal year 2009, which are expected to be calculated and issued by the Department of
Education in 2012. While our cohort default rates have historically been significantly below these
levels, we cannot assure you that this will continue to be the case. For example, we expect our
cohort default rate for the 2009 federal fiscal year to increase (but remain well below the
Department of Education&#146;s thresholds) due primarily to the impact of current economic conditions on
our students and former students. Our cohort default rates, under the two-year method, on federal
student loans for the 2008, 2007, and 2006 federal fiscal years, the three most recent years for
which such rates have been calculated, were 3.4%, 1.4%, and 1.6%, respectively. Our trial cohort
default rates, under the three-year method, for the 2008, 2007, and 2006 federal fiscal years, as
issued by the Department of Education in January&nbsp;2011, were 8.4%, 2.9%, and 2.7%, respectively.
Increases in interest rates or declines in income or job losses for our students could contribute
to higher default rates on student loans. Exceeding the student loan default rate thresholds and
losing our eligibility to participate in the Title IV programs would have a material adverse effect
on our business, prospects, financial condition, and results of operations. Any future changes in
the formula for calculating student loan default rates, economic conditions, or other factors that
cause our default rates to increase, could place us in danger of losing our eligibility to
participate in some or all of the Title IV programs and materially adversely affect us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>We are subject to sanctions if we fail to correctly calculate and timely return Title IV program
funds for students who withdraw before completing their educational program.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">A school participating in the Title IV programs must calculate the amount of unearned Title IV
program funds that it has disbursed to students who withdraw from their educational programs before
completing such programs and must return those unearned funds to the appropriate lender or the
Department of Education in a timely manner, generally within 45&nbsp;days of the date the school
determines that the student has withdrawn. If the unearned funds are not properly calculated and
timely returned for a sufficient percentage of students, we may have to post a letter of credit in
favor of the Department of Education equal to 25% of the Title IV program funds that should have
been returned for such students in the prior fiscal year, we may be liable for repayment of Title
IV program funds and related interest and we could be fined or otherwise sanctioned by the
Department of Education, which could increase our cost of regulatory compliance and materially
adversely affect us. Further, a failure to comply with these regulatory requirements could result
in termination of our ability to participate in the Title IV programs, which would materially
affect us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>We cannot offer new programs, expand our operations into certain states, or acquire additional
schools if such actions are not timely approved by the applicable regulatory agencies, and we may
have to repay Title IV funds disbursed to students enrolled in any such programs, schools, or
states if we do not obtain prior approval.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our expansion efforts include offering new educational programs. In addition, we may increase
our operations in additional states and seek to acquire existing schools from other companies. If
we are unable to obtain the necessary approvals for such new programs, operations, or acquisitions
from the Department of Education, the Higher Learning Commission, the Arizona State Board for
Private Postsecondary Education, or any other applicable state education agency or accrediting
commission, or if we are unable to obtain such approvals in a timely manner, our ability to
consummate the planned actions and provide Title IV funds to any affected students would be
impaired, which could have a material adverse effect on our expansion plans. If we were to
determine erroneously that any such action did not need approval or that we had all required
approvals, we could be liable for repayment of the Title IV program funds provided to students in
that program or at that location.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Government regulations relating to the Internet could increase our cost of doing business, affect
our ability to grow or otherwise have a material adverse effect on our business.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The increasing popularity and use of the Internet and other online services has led and may
lead to the adoption of new laws and regulatory practices in the United States or foreign countries
and to new interpretations of existing laws and regulations. These new laws and interpretations may
relate to issues such as online privacy, copyrights, trademarks and service marks, sales taxes,
fair business practices, and the requirement that online education institutions qualify to do
business as foreign corporations or be licensed in one or more jurisdictions where they have no
physical location or other presence. New laws and regulations or interpretations thereof related to
doing business over the Internet could increase our costs and materially and adversely affect our
business, prospects, financial condition, and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Risks Related to Our Business</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Our success depends, in part, on the effectiveness of our marketing and advertising programs in
recruiting new students.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Building awareness of Grand Canyon University and the programs we offer is critical to our
ability to attract prospective students. It is also critical to our success that we convert
prospective students to enrolled students in a cost-effective manner and that these enrolled
students remain active in our programs. Some of the factors that could prevent us from successfully
recruiting, enrolling, and retaining students in our programs include:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the reduced availability of, or higher interest rates and other costs associated
with, Title IV loan funds or other sources of financial aid;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the emergence of more successful competitors;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>factors related to our marketing, including the costs and effectiveness of
Internet advertising and broad-based branding campaigns and recruiting efforts;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>performance problems with our online systems;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>failure to maintain institutional and specialized accreditations;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the requirements of the education agencies that regulate us which restrict
schools&#146; initiation of new programs and modification of existing programs;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the requirements of the education agencies that regulate us which restrict the
ways schools can compensate their recruitment personnel;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>increased regulation of online education, including in states in which we do not
have a physical presence;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>restrictions that may be imposed on graduates of online programs that seek
certification or licensure in certain states;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>student dissatisfaction with our services and programs;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the results of the ongoing program review by the Department of Education, and
possible remedial actions or other liability resulting therefrom;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>damage to our reputation or other adverse effects as a result of negative
publicity in the media, in industry or governmental reports, or otherwise, affecting us
or other companies in the for-profit postsecondary education sector;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>price reductions by competitors that we are unwilling or unable to match;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a decline in the acceptance of online education;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an adverse economic or other development that affects job prospects in our core
disciplines; and</TD>
</TR>

<TR>
    <TD style="font-size: 8pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a decrease in the perceived or actual economic benefits that students derive from
our programs.</TD>
</TR>

</TABLE>
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</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">If we are unable to continue to develop awareness of Grand Canyon University and the programs
we offer, and to recruit, enroll, and retain students, our enrollments would suffer and our ability
to increase revenues and maintain profitability would be significantly impaired.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Our business may be adversely affected by a general economic slowdown or recession in the U.S. or
abroad or by an economic recovery in the U.S.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The U.S. and many other industrialized countries are experiencing challenging economic
circumstance, including increases in unemployment, uncertainty about financial markets and, in many
cases, economic recession. In addition, homeowners in the U.S. have experienced a significant
reduction in their net worth due to continued declines in residential real estate values across the
U.S. We believe the economic downturn in the U.S., in particular the high unemployment rate, has
contributed to a portion of our increased enrollment growth as an increase number of working adults
seek to continue to advance their education to improve job security or new employment prospects.
This effect cannot be quantified. However, to the extent that the economic downturn and increased
unemployment have increased demands for our programs, an improving economy and increased employment
may negate this effect and reduce such demand as fewer learners seek to advance their education.
This decline could have a material adverse effect on our business, financial condition, results of
operations and cash flows. Alternatively, a worsening of economic and employment conditions may
reduce the ability for employers to sponsor educational opportunities for their employees, which
could adversely impact our enrollment. In addition, continued deterioration in our economy and
employment opportunities could adversely affect the ability of our former students to repay student
loans, which could increase our bad debt expense and our student loan cohort default rate, which
would require increased focus and attention to manage these defaults, which could have a material
adverse effect on our business.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>If students fail to pay their outstanding balances owed to us, our business may be harmed.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">From time to time, students, including former students, may carry balances on
portions of their education expense not covered by financial aid programs. Students may also carry balances  related to financial aid funds we have advanced to them that are in excess of the student&#146;s cost and related
fees.  These balances are
unsecured and not guaranteed. We have historically been successful in collecting our accounts
receivable, including those due from former students as a result of the return to Title IV
requirement, because the amount owed by a particular student that is in excess of the amount of
financial aid that the student earned and that we are entitled to retain is often quite small. Due
primarily to the ongoing economic conditions, we believe that the level of motivation that former
students have to pay off their balances due to us, based on such factors as being able to receive
transcripts or protecting their credit, has lessened over time. As our collection history in recent
periods demonstrated that receivables due from former students are now becoming much more likely to
go uncollected, we concluded that our allowance for doubtful accounts needed to be adjusted. Thus,
we have changed our allowance calculation methodology such that receivables due from former
students are treated as a separate pool and are reserved for and written off in a much more
accelerated timeframe. The methodology for reserving for receivables due from current students
remains similar to our prior methodology given that we have not seen a change in the payment
patterns for this pool of students. See &#147;Management&#146;s Discussion and Analysis of Financial
Condition and Results of Operations &#151; Restatement of Financial Statements.&#148; If the United States
continues to experience reduced economic activity and high unemployment, it could continue to have
an adverse affect on the ability or willingness of our former students to repay amounts due to us.
As a result, losses related to unpaid student balances in excess of our allowance for doubtful
accounts, or the failure of students to repay their debt obligations, could have a material adverse
effect on our business, financial condition and results of operations.
</DIV>




<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>We operate in a highly competitive industry, and competitors with greater resources could harm our
business.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The postsecondary education market is highly fragmented and competitive. We compete for
students with traditional public and private two-year and four-year colleges and universities and
other for-profit schools, including those that offer online learning programs. Many public and
private schools, colleges, and universities, including most major colleges and universities, offer
online programs. We expect to experience additional competition in the future as more colleges,
universities, and for-profit schools offer an increasing number of online programs. Each of these
competitors may develop platforms or other technologies, including technologies such as streaming
video, that allow for greater levels of interactivity between faculty and students and that are
superior to the platform and technology we use, and these differences may affect our ability to
recruit and retain students. Public institutions receive substantial government subsidies, and
public and private non-profit institutions have access to government and foundation grants,
tax-deductible contributions, and other financial resources generally not available to for-profit
schools. Accordingly, public and private non-profit institutions may have instructional and support
resources superior to those in the for-profit sector, and public institutions can offer
substantially lower tuition prices. Some of our competitors in both the public and private sectors
also have substantially greater financial and other resources than we do. We may not be able to
compete successfully against current or future competitors, including with respect to our ability
to acquire or compete with technologies being developed by our competitors, and may face
competitive pressures that could adversely affect our business, prospects, financial condition, and
results of operations. These competitive factors could cause our enrollments, revenues, and
profitability to significantly decrease and could render our online delivery format less
competitive or obsolete.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Capacity constraints, system disruptions, or security breaches in our online computer networks
could have a material adverse effect on our ability to attract and retain students.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The performance and reliability of the infrastructure of our online operations are critical to
our reputation and to our ability to attract and retain students. Any computer system disruption or
failure, or a sudden and significant increase in traffic on the servers that host our online
operations, may result in our online courses and programs being unavailable for a period of time.
In addition, any significant failure of our computer networks or servers, whether as
a result of third-party actions or in connection with planned upgrades and conversions, could
disrupt our on-campus operations. Individual, sustained, or repeated occurrences could
significantly damage the reputation of our online operations and result in a loss of potential or
existing students. Additionally, our online operations are vulnerable to interruption or
malfunction due to events beyond our control, including natural disasters and network and
telecommunications failures. Our computer networks may also be vulnerable to unauthorized access,
computer hackers, computer viruses, and other security problems. A user who circumvents security
measures could misappropriate proprietary information or cause interruptions to or malfunctions in
operations. As a result, we may be required to expend significant resources to protect against the
threat of these security breaches or to alleviate problems caused by these incidents. Any
interruption to our online operations could have a material adverse effect on our ability to
attract students to our online programs and to retain those students.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Our conversion to a borrower-based, non-term financial aid system has resulted in lower enrollments
in a manner that materially and adversely affects our business.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">A significant portion of our net revenue is derived from tuition financed by the Title IV
programs. Federal regulations dictate the timing of disbursements under the Title IV programs. In
April&nbsp;2010, we began transitioning our online and professional studies students from a &#147;term-based&#148;
financial aid system (where all students, including online students, begin programs and are
eligible to receive financial aid at periodic start dates pursuant to a calendar-based term system)
to a &#147;borrower-based, non-term&#148; or &#147;BBAY&#148; financial aid system (where each student may begin a
program and be eligible to receive financial aid at any time throughout the year). We believe BBAY
provides greater ease and flexibility for our students by providing for rolling and flexible start
dates. It also assists in ensuring that students do not over borrow in the early years of a
program, which could result in aggregate loan limits being exceeded prior to graduation. The move
to BBAY has, in some circumstances, significantly reduced the amount of living expenses a student
is eligible to receive. Therefore, we believe that the conversion to BBAY, although positive for
the student in many respects, has caused some of our existing students to leave Grand Canyon
University and some potential new students to look for educational opportunities elsewhere. The
increased flexibility of BBAY has also resulted in our students more frequently taking breaks
between classes which has the effect of reducing the revenues we earn in the short term. This
consequence of the move to BBAY was particularly apparent during the period of time between
Thanksgiving and New Years Day when a number of previously active students chose to delay the
continuation of their studies until after the holidays.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Management&#146;s determination that a material weakness exists in our internal controls over financial
reporting could have a material adverse impact on our ability to produce timely and accurate
financial statements.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We are required to maintain internal controls over financial reporting to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of our financial
statements for external purposes in accordance with generally accepted accounting principles. As of
December&nbsp;31, 2010, we concluded that a material weakness existed in our internal control over
financial reporting as discussed in Part&nbsp;II, Item&nbsp;9A of this Form 10-K/A. As a result of this
material weakness, our disclosure controls and procedures were not effective and failed to timely
prevent or detect errors in our  financial statements which led to a restatement. If
not remediated, this material weakness could result in future misstatements of account balances or
in disclosure that could result in a material misstatement to our annual or interim consolidated
financial statements.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>We may not be able to successfully implement our growth strategy if we are not able to improve the
content of our existing academic programs or to develop new programs on a timely basis and in a
cost-effective manner, or at all.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We continually seek to improve the content of our existing programs and develop new programs
in order to meet changing market needs. The success of any of our programs and courses, both ground
and online, depends in part on our ability to expand the content of our existing programs, develop
new programs in a cost-effective manner, and meet the needs of existing and prospective students
and employers in a timely manner, as well as on the acceptance of our actions by existing or
prospective students and employers. We developed many of our online programs based on our existing
ground programs. In the future, we may develop programs solely, or initially, for online use, which
may pose new challenges, including the need to develop course content without having an existing
program on which such content can be based. Even if we are able to develop acceptable new programs,
we may not be able to introduce these new programs in a timely fashion or as quickly as our
competitors are able to introduce competing programs. If we do not respond adequately to changes in
market conditions, our ability to attract and retain students could be impaired and our business,
prospects, financial condition, and results of operations could suffer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The development and approval of new programs and courses, both ground and online, are subject
to requirements and limitations imposed by the Department of Education, state licensing agencies,
and the relevant accrediting commissions, and in certain cases, such as with doctoral programs,
involves a process that can take several years to complete. The imposition of restrictions on the
initiation of new educational programs by any of our regulatory agencies, or delays in obtaining
approvals of such programs, may delay our expansion plans. Establishing new academic programs or
modifying existing academic programs may also require us to make investments in specialized
personnel, increase marketing efforts, and reallocate resources. We may have limited experience
with the subject matter of new programs.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">If we are unable to expand our existing programs, offer new programs on a timely basis or in a
cost-effective manner, or otherwise manage effectively the operations of newly established
programs, our business, prospects, financial condition, and results of operations could be
adversely affected.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Our failure to keep pace with changing market needs and technology could harm our ability to
attract students.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our success depends to a large extent on the willingness of employers to employ, promote, or
increase the pay of our graduates. Increasingly, employers demand that their new employees possess
appropriate technical and analytical skills and also appropriate interpersonal skills, such as
communication, and teamwork skills. These skills can evolve rapidly in a changing economic and
technological environment. Accordingly, it is important that our educational programs evolve in
response to those economic and technological changes. The expansion of existing academic programs
and the development of new programs may not be accepted by current or prospective students or by
the employers of our graduates. Even if we are able to develop acceptable new programs, we may not
be able to begin offering those new programs in a timely fashion or as quickly as our competitors
offer similar programs. If we are unable to adequately respond to changes in market requirements
due to regulatory or financial constraints, unusually rapid technological changes, or other
factors, the rates at which our graduates obtain jobs in their fields of study could suffer, our
ability to attract and retain students could be impaired, and our business, prospects, financial
condition, and results of operations could be adversely affected.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>If we do not maintain existing, and develop additional, relationships with employers, our future
growth may be impaired.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We currently have relationships with large school districts and healthcare systems, primarily
in Arizona, and also have relationships with national and international employers, to provide their
employees with the opportunity to obtain degrees through us while continuing their employment.
These relationships are an important part of our strategy as they provide us with a steady source
of potential working adult students for particular programs and also serve to increase our
reputation among high-profile employers. As a result of economic conditions, a number of employers
we work with have reduced the extent to which they reimburse their employees for participating in
our programs. If we are unable to develop new relationships, or if our existing relationships
deteriorate or end as a result of current or future economic conditions affecting employers or
otherwise, our efforts to seek these sources of potential working adult students will be impaired,
and this could materially and adversely affect our business, prospects, financial condition, and
results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Our failure to effectively manage our growth could harm our business.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our business continues to experience rapid growth. Growth and expansion of our operations
place a significant strain on our resources and increase demands on our executive management team,
management information and reporting systems, financial management controls and personnel, and
regulatory compliance systems and personnel. We may not be able to maintain or accelerate our
current growth rate, effectively manage our expanding operations, or achieve planned growth on a
timely or profitable basis. If we are unable to manage our growth effectively, we may experience
operating inefficiencies and our earnings may be materially adversely affected.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>We may be unable to finance our expansion activities, and interest and other expenses may increase.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We intend to expand the size and enhance the profile and reputation of our ground campus by,
among other things, adding faculty and expanding upon and modernizing our campus infrastructure and
technological capabilities over the next several years. These activities may require significant
capital expenditures and may cause us to incur significant expenses, and there can be no guarantee
that we will be able, or that it will be advantageous, to fund such expenditures or expenses with
cash flow from operations. If we do not fund such activities with cash flow from operations, we
will be required to finance such activities. Financing may take the form of, among other things,
loans under a credit facility, sale-leaseback transactions, the issuance of equity securities, or a
combination of the foregoing. There can be no guarantee that any such financing will be available
on terms acceptable to us, or at all. Furthermore, our existing loan agreement contains covenants
that restrict our ability to incur debt, and there can be no guarantee that we will be able to
secure the consent of our lender for any financing.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">If we obtain financing, we may incur increased interest or lease expenses, or other financing
charges, that could have an adverse effect on our cash flow. In addition, any financing
accomplished through the issuance of any additional equity securities could be dilutive to holders
of our common stock. If we are unable to fund our expansion activities, our ability to implement
our business plan will be adversely affected.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Our success depends upon our ability to recruit and retain key personnel.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our success to date has largely depended on, and will continue to depend on, the skills,
efforts, and motivation of our executive officers, who generally have significant experience with
our University and within the education industry. Our success also largely depends on our ability
to attract and retain highly qualified faculty, school administrators, and additional corporate
management personnel. We may have difficulties in locating and hiring qualified personnel and in
retaining such personnel once hired. In addition, because we operate in a highly competitive
industry, our hiring of qualified executives or other personnel may cause us or such persons to be
subject to lawsuits alleging misappropriation of trade secrets, improper solicitation of employees,
or other claims. Other than non-compete agreements of limited duration that we have with certain
executive officers, we have not historically sought non-compete agreements with key personnel and
they may leave and subsequently compete against us. The loss of the services of any of our key
personnel, many of whom are not party to employment agreements with us, or our failure to attract
and retain other qualified and experienced personnel on acceptable terms, could cause our business
to suffer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>The protection of our operations through exclusive proprietary rights and intellectual property is
limited, and from time to time we encounter disputes relating to our use of intellectual property
of third parties, any of which could harm our operations and prospects.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In the ordinary course of our business we develop intellectual property of many kinds that is
or will be the subject of copyright, trademark, service mark, patent, trade secret, or other
protections. This intellectual property includes but is not limited to courseware materials and
business know-how and internal processes and procedures developed to respond to the requirements of
operating our business and to comply with the rules and regulations of various education regulatory
agencies. We rely on a combination of copyrights, trademarks, service marks, trade secrets, domain
names, and agreements to protect our intellectual property. We rely on service mark and trademark
protection in the United States to protect our rights to the mark &#147;Grand Canyon University,&#148; as
well as distinctive logos and other marks associated with our services. We rely on agreements under
which we obtain rights to use course content developed by faculty members and other third party
content experts, as well as license agreements pursuant to which we license the right to brand
certain of our program offerings. We cannot assure you that the measures that we take will be
adequate or that we have secured, or will be able to secure, appropriate protections for all of our
proprietary rights in the United States or select foreign jurisdictions, or that third parties will
not infringe upon or violate our proprietary rights. Unauthorized third parties may attempt to
duplicate or copy the proprietary aspects of our curricula, online resource material, and other
content, and offer competing programs to ours.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In particular, we license the right to utilize the name of Ken Blanchard in connection with
our business school and Executive MBA programs and have spent significant resources in related
branding efforts. Nevertheless, our license agreement with Blanchard Education, LLC has a fixed
term and may not necessarily be extended in the future. In addition, third parties may attempt to
develop competing programs or copy aspects of our curriculum, online resource material, quality
management, and other proprietary content. The termination of this license agreement, or attempts
to compete with or duplicate our programs, if successful, could adversely affect our business.
Protecting these types of intellectual property rights can be difficult, particularly as it relates
to the development by our competitors of competing courses and programs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We may from time to time encounter disputes over rights and obligations concerning
intellectual property, and we may not prevail in these disputes. In certain instances, we may not
have obtained sufficient rights in the content of a course. Third parties may raise a claim against
us alleging an infringement or violation of the intellectual property of that third party. Some
third-party intellectual property rights may be extremely broad, and it may not be possible for us
to conduct our operations in such a way as to avoid those intellectual property rights. Any such
intellectual property claim could subject us to costly litigation and impose a significant strain
on our financial resources and management personnel regardless of whether such claim has merit, and
we may be required to alter the content of our classes or pay monetary damages, which may be
significant.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>We are subject to laws and regulations as a result of our collection and use of personal
information, and any violations of such laws or regulations, or any breach, theft, or loss of such
information, could adversely affect our reputation and operations.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Possession and use of personal information in our operations subjects us to risks and costs
that could harm our business. We collect, use, and retain large amounts of personal information
regarding our applicants, students, faculty, staff, and their families, including social security
numbers, tax return information, personal and family financial data, and credit card numbers. We
also collect and maintain personal information of our employees in the ordinary course of our
business. Our services can be accessed globally through the Internet. Therefore, we may be subject
to the application of national privacy laws in countries outside the U.S. from which applicants and
students access our services. Such privacy laws could impose conditions that limit the way we
market and provide our services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our computer networks and the networks of certain of our vendors that hold and manage
confidential information on our behalf may be vulnerable to unauthorized access, employee theft or
misuse, computer hackers, computer viruses, and other security threats. Confidential information
may also inadvertently become available to third parties when we integrate systems or migrate data
to our servers following an acquisition of a school or in connection with periodic hardware or
software upgrades.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Due to the sensitive nature of the personal information stored on our servers, our networks
may be targeted by hackers seeking to access this data. A user who circumvents security measures
could misappropriate sensitive information or cause interruptions or malfunctions in our
operations. Although we use security and business controls to limit access and use of personal
information, a third party may be able to circumvent those security and business controls, which
could result in a breach of student or employee privacy. In addition, errors in the storage, use,
or transmission of personal information could result in a breach of privacy for current or
prospective students or employees. Possession and use of personal information in our operations
also subjects us to legislative and regulatory burdens that could require us to implement certain
policies and procedures, such as the procedures we adopted to comply with the Red Flags Rule that
was promulgated by the Federal Trade Commission, or FTC, under the federal Fair Credit Reporting
Act and that requires the establishment of guidelines and policies regarding identity theft related
to student credit accounts, and could require us to make certain notifications of data breaches and
restrict our use of personal information. A violation of any laws or regulations relating to the
collection or use of personal information could result in the imposition of fines against us. As a
result, we may be required to expend significant resources to protect against the threat of these
security breaches or to alleviate problems caused by these breaches. A major breach, theft, or loss
of personal information regarding our students and their families or our employees that is held by
us or our vendors, or a violation of laws or regulations relating to the same, could have a
material adverse effect on our reputation and result in further regulation and oversight by federal
and state authorities and increased costs of compliance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>We may incur liability for the unauthorized duplication or distribution of class materials posted
online for class discussions.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In some instances, our faculty members or our students may post various articles or other
third-party content on class discussion boards. Third parties may raise claims against us for the
unauthorized duplication of material posted online for class discussions. Any such claims could
subject us to costly litigation and impose a significant strain on our financial resources and
management personnel regardless of whether the claims have merit. Our general liability insurance
may not cover potential claims of this type adequately or at all, and we may be required to alter
the content of our courses or pay monetary damages, which may be significant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Our loan agreement may restrict our operations and our ability to complete certain transactions.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our loan agreement, which we entered into in connection with the purchase of our campus in
April&nbsp;2009, imposes certain operating and financial restrictions on us. Without the consent of our
lender, these restrictions generally limit our ability to, among other things:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>incur additional indebtedness or liens;</TD>
</TR>

<TR>
    <TD style="font-size: 8pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>sell, assign, lease, transfer or otherwise dispose of any part of our assets
other than in the ordinary course of business;</TD>
</TR>


</TABLE>
</DIV><P align="center" style="font-size: 10pt">&nbsp;

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</DIV>

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<DIV style="margin-top: 10pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>make investments or capital contributions to any individual or entity;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>enter into any consolidation, merger, or other combination, or become a partner
in a partnership, a member of a joint venture, or a member of a limited liability
company;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>acquire or purchase a business or all or substantially all of the assets of a
business in an aggregate amount exceeding an amount equal to 25% of our tangible net
worth; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>engage in any business activities substantially different from our present
business.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In addition, the loan agreement requires us to maintain a maximum funded debt to adjusted
EBITDA ratio, a minimum basic fixed charge coverage ratio and a minimum tangible net worth ratio,
in each case as such terms are defined in the loan agreement. We cannot assure you that these
covenants will not adversely affect our ability to finance our future operations or capital needs
or to pursue available business opportunities. A breach of any of these covenants or our inability
to maintain the required financial ratios could result in a default in respect of the related
indebtedness. If a default occurs, the affected lenders could elect to declare the indebtedness,
together with accrued interest and other fees, to be immediately due and payable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Our current success and future growth depend on the continued growth in users seeking educational
services on the Internet.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our business relies in part on the Internet for its success. A number of factors could inhibit
the continued acceptance of the Internet and adversely affect our profitability, including:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>inadequate Internet infrastructure;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>security and privacy concerns;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the unavailability of cost-effective Internet service and other technological
factors; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in government regulation of Internet use.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">If the number of Internet users seeking educational services on the Internet does not continue
to increase, our business may not grow as planned.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Our failure to comply with environmental laws and regulations governing our activities could result
in financial penalties and other costs.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We use hazardous materials at our ground campus and generate small quantities of waste, such
as used oil, antifreeze, paint, car batteries, and laboratory materials. As a result, we are
subject to a variety of environmental laws and regulations governing, among other things, the use,
storage, and disposal of solid and hazardous substances and waste, and the clean-up of
contamination at our facilities or off-site locations to which we send or have sent waste for
disposal. In the event we do not maintain compliance with any of these laws and regulations, or are
responsible for a spill or release of hazardous materials, we could incur significant costs for
clean-up, damages, and fines, or penalties which could adversely impact our business, prospects,
financial condition, and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Our failure to obtain additional capital in the future could adversely affect our ability to grow.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We believe that funds from operations, cash on hand, and investments will be adequate to fund
our current operating and growth plans for the foreseeable future. However, we may need additional
financing in order to finance our continued growth, particularly if we pursue any acquisitions. The
amount, timing, and terms of such additional financing will vary principally depending on the
timing and size of new program offerings, the timing and size of acquisitions we may seek to
consummate, and the amount of cash flows from our operations. To the extent
that we require additional financing in the future, such financing may not be available on
terms acceptable to us or at all, and, consequently, we may not be able to fully implement our
growth strategy.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

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</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>If we are not able to integrate acquired schools, our business could be harmed.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">From time to time, we may pursue acquisitions of other schools. Integrating acquired
operations into our institution involves significant risks and uncertainties, including:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>inability to maintain uniform standards, controls, policies, and procedures;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>distraction of management&#146;s attention from normal business operations during the
integration process;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>inability to obtain, or delay in obtaining, approval of the acquisition from the
necessary regulatory agencies, or the imposition of operating restrictions or a letter
of credit requirement on us or on the acquired school by any of those regulatory
agencies;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>expenses associated with the integration efforts; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>unidentified issues not discovered in our due diligence process, including legal
contingencies.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">If we complete one or more acquisitions and are unable to integrate acquired operations
successfully, our business could suffer.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Risks Related to Owning our Common Stock</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Your percentage ownership in us may be diluted by future issuances of capital stock, which could
reduce your influence over matters on which stockholders vote.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our Board of Directors has the authority, without action or vote of our stockholders, to issue
all or any part of our authorized but unissued shares of common stock, including shares issuable
upon the exercise of options, shares that may be issued to satisfy our payment obligations under
our incentive plans, or shares of our authorized but unissued preferred stock. Issuances of common
stock or voting preferred stock would reduce your influence over matters on which our stockholders
vote, and, in the case of issuances of preferred stock, likely would result in your interest in us
being subject to the prior rights of holders of that preferred stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Provisions in our charter documents and the Delaware General Corporation Law could make it more
difficult for a third party to acquire us and could discourage a takeover and adversely affect
existing stockholders.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Anti-takeover provisions of our certificate of incorporation, bylaws, the Delaware General
Corporation Law, or DGCL, and regulations of state and federal education agencies could diminish
the opportunity for stockholders to participate in acquisition proposals at a price above the
then-current market price of our common stock. For example, while we have no present plans to issue
any preferred stock, our Board of Directors, without further stockholder approval, may issue shares
of undesignated preferred stock and fix the powers, preferences, rights, and limitations of such
class or series, which could adversely affect the voting power of your shares. In addition, our
bylaws provide for an advance notice procedure for nomination of candidates to our Board of
Directors that could have the effect of delaying, deterring, or preventing a change in control.
Further, as a Delaware corporation, we are subject to provisions of the DGCL regarding &#147;business
combinations,&#148; which can deter attempted takeovers in certain situations. The approval requirements
of the Department of Education, our regional accrediting commission, and state education agencies
for a change in control transaction could also delay, deter, or prevent a transaction that would
result in a change in control. We may, in the future, consider adopting additional anti-takeover
measures. The authority of our board to issue undesignated preferred or other capital stock and the
anti-takeover provisions of the DGCL, as well as other current and any future anti-takeover
measures adopted by us, may, in certain circumstances, delay, deter, or prevent takeover attempts
and other changes in control of the company not approved by our Board of Directors.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>The price of our common stock may be volatile, and as a result returns on an investment in our
common stock may be volatile.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We completed our initial public offering in November&nbsp;2008. Given the relatively limited public
float since that time, trading in our common stock has also been limited and, at times, volatile.
An active trading market for our common stock may not be sustained, and the trading price of our
common stock may fluctuate substantially.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The market price of our common stock could fluctuate significantly for various reasons, which
include:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our quarterly or annual earnings or earnings of other companies in our industry;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the public&#146;s reaction to our press releases, our other public announcements, and
our filings with the SEC;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in earnings estimates or recommendations by research analysts who track
our common stock or the stocks of other companies in our industry;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in our number of enrolled students;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>new or proposed laws or regulations or new or proposed interpretations of laws or
regulations applicable to our business;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>seasonal variations in our student population;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>damage to our reputation or other adverse effects as a result of negative
publicity in the media, in industry or governmental reports, or otherwise, affecting us
or other companies in the for-profit postsecondary education sector;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the availability and cost of Title IV funds, other student financial aid, and
private loans;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the failure to maintain or keep in good standing our regulatory approvals and
accreditations;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in accounting standards, policies, guidance, interpretations, or
principles;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in general conditions in the U.S. and global economies or financial
markets, including those resulting from war, incidents of terrorism, or responses to
such events;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an adverse economic or other development that affects job prospects in our core
disciplines;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>litigation involving our University, or investigations or audits by regulators
into the operations of our University or our competitors, including the ongoing program
review being conducted by the Department of Education; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>sales of common stock by our directors, executive officers, and significant
stockholders.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In addition, in recent years, the stock market has experienced extreme price and volume
fluctuations. This volatility has had a significant impact on the market price of securities issued
by many companies, including companies in our industry. The changes frequently appear to occur
without regard to the operating performance of these companies. The price of our common stock could
fluctuate based upon factors that have little or nothing to do with our University, and these
fluctuations could materially reduce our stock price.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In the past, following periods of volatility in the market price of a company&#146;s securities,
securities class action litigation has often been brought against that company. Because of the
potential volatility of our stock price, we may become the target of securities litigation in the
future. Securities litigation could result in substantial costs and divert management&#146;s attention
and resources from our business.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->64<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>If securities analysts do not publish research or reports about our business or if they downgrade
their evaluations of our stock, the price of our stock could decline.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The trading market for our common stock depends in part on the research and reports that
industry or financial analysts publish about us or our business. If one or more of the analysts
covering us downgrade their estimates or evaluations of our stock, the price of our stock could
decline. If one or more of these analysts cease coverage of our University, we could lose
visibility in the market for our stock, which in turn could cause our stock price to decline.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>We currently do not intend to pay dividends on our common stock and, consequently, your only
opportunity to achieve a return on your investment is if the price of our common stock appreciates.</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We do not expect to pay dividends on shares of our common stock in the foreseeable future and
intend to use cash to grow our business. The payment of cash dividends in the future, if any, will
be at the discretion of our Board of Directors and will depend upon such factors as earnings
levels, capital requirements, our overall financial condition, and any other factors deemed
relevant by our Board of Directors. Consequently, your only opportunity to achieve a positive
return on your investment in us will be if the market price of our common stock appreciates.
</DIV>
<DIV align="left">
<A name="C24244105"></A>
</DIV>

<DIV align="left" style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>Item&nbsp;1B.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B><I>Unresolved Staff Comments</I></B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">None.
</DIV>
<DIV align="left">
<A name="C24244106"></A>
</DIV>

<DIV align="left" style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>Item&nbsp;2.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B><I>Properties</I></B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We own our ground campus, which is located on approximately 100 acres in the center of the
Phoenix, Arizona metropolitan area, near downtown Phoenix. Our campus facilities currently consist
of 43 buildings with more than 700,000 square feet of space, which include 64 classrooms, two
lecture halls, a 300-seat theater, four student computer labs with 125 computers that are available
to students 18 hours per day, a 155,000-volume library, a media arts complex that provides
communications students with audio and video equipment, and a 55,000 square foot recreation center
for both student-athletes and on-campus students. We house our ground students in an on-campus
student apartment complex and dormitories that can collectively hold up to 1,200 students. A new
140,000 square foot arena will open in September&nbsp;2011, a new 500 bed dormitory and a food court
will be completed in August&nbsp;2011. We also lease four additional facilities for employees in
Arizona. We may add additional space in our Arizona locations to accommodate our growth plans in
2011 and beyond.
</DIV>
<DIV align="left">
<A name="C24244107"></A>
</DIV>

<DIV align="left" style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>Item&nbsp;3.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B><I>Legal Proceedings</I></B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On August&nbsp;14, 2008, the U. S. Department of Education, Office of Inspector General (&#147;OIG&#148;)
served an administrative subpoena on Grand Canyon University requiring us to provide certain
records and information related to performance reviews and salary adjustments for all of our
enrollment counselors and managers from January&nbsp;1, 2004 to August&nbsp;2008. We cooperated with the OIG
to facilitate its investigation and completed our rolling responsive document production, which
commenced in September&nbsp;2008, in June&nbsp;2009. In light of the settlement of the <I>qui tam </I>litigation
described below, we believe that this investigation has effectively ended.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On September&nbsp;11, 2008, we were served with a <I>qui tam </I>lawsuit that had been filed against us in
August&nbsp;2007, in the United States District Court for the District of Arizona (the &#147;Court&#148;) by a
then-current employee on behalf of the federal government. All proceedings in the lawsuit had been
under seal until September&nbsp;5, 2008, when the court unsealed the first amended complaint, which had
been filed on August&nbsp;11, 2008. A <I>qui tam </I>case is a civil lawsuit brought under the federal False
Claims Act by one or more individuals (a &#147;relator&#148;) on behalf of the federal government for an
alleged submission to the government of a false claim for payment. The relator, often a current or
former employee, is entitled to a share of the government&#146;s recovery in the case. A <I>qui tam </I>action
is always filed under seal and remains under seal until the government decides whether to intervene
in the case. If the government intervenes, it takes over primary control of the litigation. If the
government declines to intervene in the case, the relator may nonetheless elect to continue to
pursue the litigation at his or her own expense on behalf of the government. In our case, the <I>qui
tam </I>lawsuit was initially filed under seal in August&nbsp;2007 and was unsealed and served on us
following the government&#146;s decision not to intervene at that time.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->65<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The <I>qui tam </I>lawsuit alleged, among other things, that we violated the False Claims Act by
knowingly making false statements, and submitting false records or statements, from at least 2001
to the present, to get false or fraudulent claims paid or approved, and asserted that we improperly
compensated certain of our enrollment counselors in violation of the Title IV law governing
compensation of such employees, and as a result, improperly received Title IV program funds. The
complaint specifically alleged that some of our compensation practices with respect to our
enrollment personnel, including providing non-cash awards, violated the Title IV law governing
compensation. While we believe that the compensation policies and practices at issue in the
complaint were not based on success in enrolling students in violation of applicable law, the
Department of Education&#146;s regulations and interpretations of the incentive compensation law do not
establish clear criteria for compliance in all circumstances, and some of these practices,
including the provision of non-cash awards, were not within the scope of any explicit &#147;safe harbor&#148;
provided in the compensation regulations. The complaint sought treble the amount of unspecified
damages sustained by the federal government in connection with our receipt of Title IV funding, a
civil penalty for each violation of the False Claims Act, attorneys&#146; fees, costs, and interest. We
filed a motion to dismiss this case in November&nbsp;2008, which was denied by the Court in February
2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Pursuant to the court&#146;s mandatory scheduling order, the University entered into settlement
discussions with respect to the <I>qui tam </I>matter with the relator and, in October&nbsp;2009, reached a
settlement in principle with the relator pursuant to which the University agreed to pay $5.2
million to finally resolve the <I>qui tam </I>case and thereby avoid the cost and distraction of a
potentially protracted trial. Thus, in the third quarter of 2009, the University accrued $5.2
million for the estimated litigation loss. This settlement in principle was conditioned upon
obtaining the approval of the U.S. Department of Justice (which has authority to approve settlement
of False Claims Act matters) and the Department of Education with respect to the issuance to the
University of a full three-year Title IV program participation agreement (the University&#146;s
application for which has been pending since March&nbsp;2008), resolving the OIG investigation, and
finalizing the settlement terms that would release the University from other False Claims Act cases
based upon the conduct covered by the settlement. Following unsuccessful attempts to finalize a
settlement agreement among the University, the relator and the United States, on April&nbsp;28, 2010,
the University and the relator submitted a proposed settlement agreement to the Court for approval.
In accordance with a scheduling order set by the Court, the United States filed certain objections
to the proposed settlement agreement to which the University and the relator responded. The Court
then held a hearing regarding the proposed settlement agreement, and the United States&#146; objections
thereto, on June&nbsp;10, 2010.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Following the June&nbsp;10, 2010 hearing, the Court ruled that, notwithstanding the United States&#146;
objections, the Court would not object to the provisions of the settlement agreement proposed by
the University and the relator that provide, among other things, (a)&nbsp;that the $5.2&nbsp;million
settlement amount would be payable by the University on the earlier of September&nbsp;1, 2011 or the
issuance by the Department of Education to the University of a full three-year Title IV program
participation agreement, and (b)&nbsp;that the University would receive a release from future False
Claims Act claims (i.e. <I>qui tam </I>actions) with respect to all conduct which is of the same subject
matter as the conduct that is at issue in the current <I>qui tam </I>litigation (the &#147;covered conduct&#148;)
through April&nbsp;28, 2010 (the date that the settlement agreement was submitted to the Court). The
Court asked for further briefing and a final hearing on August&nbsp;13, 2010 on the issue of whether the
Court had jurisdiction to approve the settlement agreement, over the United States&#146; objections, if
it included (i)&nbsp;within the scope of the release provision, a release, given by the relator acting
on behalf of the Department of Education to the fullest extent permitted by applicable law, from
future Department of Education administrative actions with respect to the covered conduct, and (ii)
a provision confirming that the University had fully complied with the OIG subpoena.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Following the August&nbsp;13, 2010 hearing, on August&nbsp;17, 2010 the Court filed an order approving a
settlement agreement between the University and the relator. In its August&nbsp;17, 2010 order, the
Court approved the inclusion of the administrative release provision in the settlement agreement,
but stated that it lacked a basis for making a finding regarding the University&#146;s compliance with
the OIG subpoena. As a result, the settlement agreement provided a release to the University, given
by the relator acting on behalf of the Department of Education to the fullest extent permitted by
law, from future Department of Education administrative actions with respect to the covered conduct
for the period from January&nbsp;1, 2001 to April&nbsp;28, 2010, although the Department of Education does
retain the power it currently possesses to initiate other administrative actions against the
University. On August&nbsp;20, 2010, the Court filed an order dismissing the matter with prejudice
pursuant to the settlement. As required by the settlement agreement, the University promptly
deposited $5.2&nbsp;million into an interest-bearing segregated account controlled by the University,
for payment to the United States and the relator in accordance with the terms of the settlement
agreement, as described above.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->66<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On September&nbsp;16, 2010, the United States filed a notice with the Court that it intended to
appeal, before the U.S. Court of Appeals for the Ninth Circuit, the Court&#146;s June&nbsp;10, 2010 and
August&nbsp;17, 2010 orders overruling the United States&#146; objections to the settlement and the Courts&#146;
August&nbsp;20, 2010 order dismissing that matter with prejudice pursuant to the settlement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On December&nbsp;27, 2010, the United States filed a motion with the Court of Appeals seeking to
voluntarily dismiss its appeal of the District Court&#146;s orders. The Court of Appeals granted this
motion on December&nbsp;28, 2010. As a result the settlement agreement previously approved by the
District Court will take effect on the terms previously disclosed. Subject to the distribution of
the settlement amount from escrow in accordance with the terms of the settlement agreement, the <I>qui
tam </I>matter, which was originally filed in 2007 and unsealed in 2008, is now finally resolved.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">From time to time, we are subject to ordinary and routine litigation incidental to our
business. While the outcomes of these matters are uncertain, management does not expect that the
ultimate costs to resolve these matters will have a material adverse effect on our financial
position, results of operations or cash flows.
</DIV>
<DIV align="left">
<A name="C24244108"></A>
</DIV>

<DIV align="left" style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>Item&nbsp;4.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B><I>(Removed and Reserved)</I></B></TD>
</TR>
</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->67<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">



<DIV align="left">
<A name="C24244109"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>PART II</B>
</DIV>

<DIV align="left">
<A name="C24244110"></A>
</DIV>

<DIV align="left" style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>Item&nbsp;5.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B><I>Market for Registrant&#146;s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities</I></B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Market Information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our common stock trades on the Nasdaq Global Market under the symbol &#147;LOPE.&#148; The holders of
our common stock are entitled to one vote per share on any matter to be voted upon by stockholders.
All shares of common stock rank equally as to voting and all other matters. The shares of common
stock have no preemptive or conversion rights, no redemption or sinking fund provisions, are not
liable for further call or assessment and are not entitled to cumulative voting rights.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The table below sets forth the high and low sales prices for our common stock, as reported by
the Nasdaq Global Market.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Low</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>2009</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">First Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">20.80</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12.53</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Second Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">17.35</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12.74</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Third Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">19.52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15.69</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fourth Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">19.88</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15.96</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>2010</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">First Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">27.23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">18.15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Second Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">28.46</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">22.83</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Third Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">24.70</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15.33</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fourth Quarter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">23.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">16.90</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Holders</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As of December&nbsp;31, 2010, there were approximately 21 registered holders of record of common
stock. A substantially greater number of holders of common stock are &#147;street name&#148; or beneficial
holders, whose shares are held of record by banks, brokers and other financial institutions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Dividends</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On November&nbsp;19, 2008, our registration statement for our initial public offering of common
stock became effective. In the initial public offering, we sold 10,500,000 shares of common stock
at a price to the public of $12.00 per share, before underwriting discounts and commissions. On
November&nbsp;26, 2008, the underwriters elected to exercise in full their option to purchase an
additional 1,575,000 shares at the initial public offering price to cover over-allotments.
Aggregate net proceeds to us were approximately $134.8&nbsp;million, after deducting underwriting
discounts and commissions and before offering expenses. On September&nbsp;26, 2008, our Board of
Directors approved the payment of a special distribution to our stockholders of record immediately
prior to the initial public offering to be paid from the proceeds of the initial public offering
(including any proceeds resulting from sales of shares pursuant to the exercise of the
over-allotment option) in the amount of 75% of the gross offering proceeds. On November&nbsp;25, 2008,
we distributed $94.5&nbsp;million in the initial public offering and, on December&nbsp;3, 2008, we
distributed an additional $14.2&nbsp;million in connection with the underwriters&#146; exercise of their
over-allotment option. The special distribution was paid on an as converted basis to our common and
preferred shareholders of record as of November&nbsp;18, 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We currently intend to retain all future earnings for the operation and expansion of our
business and do not anticipate paying cash dividends on our common stock in the foreseeable future.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->68<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Recent Sales of Unregistered Securities</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">None.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Securities Authorized for Issuance under Equity Compensation Plans</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The information required by Item 201(d) of Regulation&nbsp;S-K is provided under Item&nbsp;12, <I>Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters</I>, &#147;Equity
Compensation Plan Information,&#148; which is incorporated herein by reference.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Purchases of Equity Securities by the Issuer and Affiliated Purchasers</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On August&nbsp;14, 2010, our Board of Directors adopted a stock repurchase program, pursuant to
which we are authorized to repurchase up to $25.0&nbsp;million of shares of common stock, from time to
time, depending on market conditions and other considerations. The expiration date on the
repurchase authorization is September&nbsp;30, 2011 and repurchases occur at our discretion.
Repurchases may be made in the open market or in privately negotiated transactions, pursuant to the
applicable SEC rules. The amount and timing of future share repurchases, if any, will be made as
market and business conditions warrant. No repurchases of our common stock were made in the fourth
quarter of fiscal 2010.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->69<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>University Stock Performance</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following graph compares the cumulative 25-month return of holders of our common stock
with the cumulative total returns of the S&#038;P 500 Index, the NASDAQ Composite index, our a peer
group of six companies that includes: Capella Education Company, American Public Education, Inc.,
Apollo Group Inc., Strayer Education Inc; Education Management Corporation and Bridgepoint
Education, Inc. This chart assumes that an investment of $100 was made in our common stock, in the
index, and in the peer group on November&nbsp;20, 2008 and that all dividends paid by us (other than the
special distribution) and such companies were reinvested, and tracks the relative performance of
such investments through December&nbsp;31, 2010.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><IMG src="c24244c2424401.gif" alt="(BAR GRAPH)">
</DIV>




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96%">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>$100 invested on 11/20/08 in stock or 10/31/08 in index, including reinvestment of dividends. Fiscal year ending December 31.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Copyright&#169; 2011 S&#038;P, a division of The McGraw-Hill Companies Inc. All rights reserved.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->70<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="36%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>11/08</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>11/08</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>12/08</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>1/09</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2/09</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>3/09</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>4/09</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>5/09</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Grand Canyon Education, Inc.</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>100.00</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>125.23</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>158.48</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>146.24</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>143.63</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>145.65</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>137.97</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>114.43</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>S&#038;P 500</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>100.00</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>92.83</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>93.81</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>85.91</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>76.76</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>83.48</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>91.47</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>96.59</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>NASDAQ Composite</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>100.00</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>89.99</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>92.81</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>87.08</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>81.62</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>89.96</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>100.59</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>104.30</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>New Peer Group</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>100.00</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>112.86</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>110.37</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>114.62</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>103.04</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>91.28</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>77.84</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>74.49</B></TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="37%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>6/09</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>7/09</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>8/09</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>9/09</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>10/09</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>11/09</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>12/09</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Grand Canyon Education, Inc.</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>141.60</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>147.76</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>146.84</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>150.46</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>136.88</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>161.77</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>160.42</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>S&#038;P 500</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>96.78</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>104.10</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>107.86</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>111.88</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>109.80</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>116.39</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>118.64</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>NASDAQ Composite</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>108.02</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>116.39</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>118.59</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>125.08</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>120.89</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>126.96</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>134.06</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>New Peer Group</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>89.68</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>87.84</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>84.18</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>91.49</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>76.19</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>75.97</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>80.07</B></TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="37%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>1/10</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2/10</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>3/10</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>4/10</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>5/10</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>6/10</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>7/10</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Grand Canyon Education, Inc.</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>168.52</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>183.54</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>220.59</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>204.05</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>207.26</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>197.72</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>204.81</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>S&#038;P 500</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>114.37</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>117.91</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>125.03</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>127.00</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>116.86</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>110.74</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>118.50</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>NASDAQ Composite</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>127.40</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>132.92</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>142.25</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>145.46</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>133.36</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>125.34</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>133.98</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>New Peer Group</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>77.94</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>80.92</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>86.97</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>84.01</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>79.13</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>64.69</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>71.06</B></TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>8/10</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>9/10</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>10/10</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>11/10</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>12/10</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Grand Canyon Education, Inc.</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>143.88</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>185.06</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>158.73</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>160.68</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>165.32</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>S&#038;P 500</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>113.15</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>123.25</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>127.94</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>127.96</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>136.51</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>NASDAQ Composite</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>126.21</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>141.37</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>149.55</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>148.93</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>158.26</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>New Peer Group</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>52.47</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>66.91</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>51.37</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>50.97</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>60.29</B></TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Copyright<SUP style="FONT-size: 85%; vertical-align: text-top">&#169;</SUP> 2011 Standard &#038; Poor&#146;s, a division of The McGraw-Hill Companies Inc. All rights
reserved. (www.researchdatagroup.com/S&#038;P.htm)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The information contained in the performance graph shall not be deemed &#147;soliciting
material&#148; or to be &#147;filed&#148; with the SEC nor shall such information be deemed incorporated by
reference into any future filing under the Securities Act or the Exchange Act, except to the extent
that we specifically incorporate it by reference into such filing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The stock price performance included in this graph is not necessarily indicative of future
stock price performance.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->71<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">
<DIV align="left">
<A name="C24244111"></A>
</DIV>

<DIV align="left" style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>Item&nbsp;6.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B><I>Selected Financial and Other Data</I></B></TD>
</TR>
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The balance sheet as of, and the income statement for the year ended, December&nbsp;31, 2010 have
been restated as set forth below. See Note 2 in the Notes to Financial Statements in this Form
10-K/A for further information.


The following selected financial and other data should be read in conjunction with Item&nbsp;8,
<I>Financial Statements and Supplementary Data</I>, and Item&nbsp;7, <I>Management&#146;s Discussion and Analysis of
Financial Condition and Results of Operations</I>, to fully understand factors that may affect the
comparability of the information presented below. The selected income statement data and other
data, excluding period end enrollment, for the years ended December&nbsp;31, 2010, 2009, and 2008, and
the selected balance sheet data as of December&nbsp;31, 2010, and 2009, have been derived from our
audited financial statements for such years, which are included herein. The selected income
statement data and other data, excluding period end enrollment, for the years ended December&nbsp;31,
2007 and 2006, and the selected balance sheet data as of December&nbsp;31, 2007, and 2006, have been
derived from our audited financial statements for such years, which are not included herein. Our
historical results are not necessarily indicative of our results for any future period.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000"><B>Year Ended December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center"><b>Restated</b></TD>
    <TD nowrap align="center" colspan="16"><B><I>(In thousands, except per share data)</I></B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Income Statement Data:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">385,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">261,902</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">161,309</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">99,326</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">72,111</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Costs and expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Instructional costs and services<SUP style="FONT-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">178,548</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">101,608</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62,915</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,307</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,951</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Selling and promotional</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112,493</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85,405</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65,551</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,148</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,093</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and administrative<SUP style="FONT-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,621</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,603</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,360</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,744</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,347</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Contract termination fee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,233</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Litigation loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Estimated exit costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">258</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,218</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Royalty to former owner</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">296</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">296</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,686</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,782</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,678</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total costs and expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">327,449</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">215,330</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">148,512</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">94,981</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69,069</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58,176</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,572</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,797</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,345</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,042</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(889</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,613</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,897</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,975</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,827</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">168</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">324</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">640</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,172</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">912</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,455</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,283</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,540</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,542</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,127</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,249</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,979</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,855</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,016</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">529</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,206</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,685</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,526</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">598</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Preferred dividends</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(938</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(349</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(527</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income available to common stockholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">35,206</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">27,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,747</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,177</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">71</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Earnings per common share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.77</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.06</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.76</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shares used in computing earnings per
common share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,722</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,184</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,185</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,923</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,853</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,396</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,503</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,430</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,143</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,858</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000"><B>Year Ended December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center"><b>Restated</b></TD>
    <TD nowrap align="center" colspan="18"><B><I>(In thousands)</I></B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Other Data:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital expenditures</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">62,627</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">60,265</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,374</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,406</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,387</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11,812</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,664</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,095</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,396</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjusted
EBITDA<SUP style="FONT-size: 85%; vertical-align: text-top">(2)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">85,824</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">65,119</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">25,675</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11,723</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">9,074</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Period end
enrollment<SUP style="FONT-size: 85%; vertical-align: text-top">(3)</SUP>:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Online</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,734</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,596</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,955</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,497</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,406</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Ground</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,748</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,113</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,681</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,257</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,256</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->72<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="18" style="border-bottom: 1px solid #000000"><B>As of December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2007</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2006</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center"><b>Restated</b></TD>
    <TD nowrap align="center" colspan="16"><B><I>(In thousands)</I></B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Balance Sheet Data:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents and marketable
securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">33,637</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">63,101</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">35,627</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">18,930</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11,535</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Restricted cash, cash equivalents and investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,938</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,233</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,125</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,578</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,900</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">275,096</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">174,738</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">116,990</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">88,568</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,232</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital lease obligations (including short-term)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,824</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,619</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,509</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,228</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,728</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Notes payable (including short-term)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,907</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,088</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,744</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,408</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,462</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Preferred stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,948</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,390</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total stockholders&#146;/members&#146; equity (deficit)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">127,501</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">86,028</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53,590</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,386</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,723</TD>
    <TD nowrap>)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 10pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96%">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>All amounts presented reflect the reclassification of bad
debt expense from General and administrative expense to Instructional
costs and services expense as disclosed in Note&nbsp;3 to our
financial statements included herein.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>
<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Adjusted EBITDA is defined as net income plus interest expense net of interest income,
plus income tax expense, and plus depreciation and amortization (EBITDA), as adjusted for
(i)&nbsp;the amortization of prepaid royalty payments recorded in conjunction with a settlement
of a dispute with our former owner, as discussed in Note 3 to our financial statements that
are included in Item&nbsp;8, <I>Financial Statements and Supplementary Data</I>; (ii)&nbsp;management fees
and expenses that are no longer paid; (iii)&nbsp;contributions made to Arizona school tuition
organizations in lieu of the payment of state income taxes, which we typically make in the
fourth quarter of a fiscal year; (iv)&nbsp;litigation losses, if any; (v)&nbsp;exit costs, if any;
(vi)&nbsp;contract termination fees, if any; and (vii)&nbsp;share-based compensation.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Enrollment at December&nbsp;31, 2010 represents individual students who attended a course
during the last two months of the calendar quarter. Prior to our transition to BBAY,
enrollment had been defined as individual students that attended a course in a term that
was in session as of the end of the quarter.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We present Adjusted EBITDA because we consider it to be an important supplemental measure of
our operating performance. We also make certain compensation decisions based, in part, on our
operating performance, as measured by Adjusted EBITDA, and our loan agreement requires us to comply
with covenants that include performance metrics substantially similar to Adjusted EBITDA. All of
the adjustments made in our calculation of Adjusted EBITDA are adjustments to items that management
does not consider to be reflective of our core operating performance. Management considers our core
operating performance to be that which can be affected by our managers in any particular period
through their management of the resources that affect our underlying revenue and profit generating
operations during that period. Royalty expenses paid to our former owner, contributions made to
Arizona school tuition organizations in lieu of the payment of state income taxes, estimated
litigation losses, exit costs, share-based compensation, and contract termination fees are not
considered reflective of our core performance. We believe Adjusted EBITDA allows us to compare our
current operating results with corresponding historical periods and with the operational
performance of other companies in our industry because it does not give effect to potential
differences caused by variations in capital structures (affecting relative interest expense,
including the impact of write-offs of deferred financing costs when companies refinance their
indebtedness), tax positions (such as the impact on periods or companies of changes in effective
tax rates or net operating losses), the book amortization of intangibles (affecting relative
amortization expense), and other items that we do not consider reflective of underlying operating
performance. We also present Adjusted EBITDA because we believe it is frequently used by
securities analysts, investors, and other interested parties as a measure of performance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In evaluating Adjusted EBITDA, investors should be aware that in the future we may incur
expenses similar to the adjustments described above. Our presentation of Adjusted EBITDA should
not be construed as an inference that our future results will be unaffected by expenses that are
unusual, non-routine, or non-recurring. Adjusted EBITDA has limitations as an analytical tool, and
you should not consider it in isolation, or as a substitute for net income, operating income, or
any other performance measure derived in accordance with and reported under GAAP or as an
alternative to cash flow from operating activities or as a measure of our liquidity. Some of these
limitations are that it does not reflect:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>cash expenditures for capital expenditures or contractual commitments;</TD>
</TR>

<TR>
    <TD style="font-size: 8pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in, or cash requirement for, our working capital requirements;</TD>
</TR>

</TABLE>
</DIV><P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->73<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">


<DIV style="margin-top: 10pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>interest expense, or the cash required to replace assets that are being
depreciated or amortized; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the impact on our reported results of earnings or charges resulting from the
items for which we make adjustments to our EBITDA, as described above and set forth in
the table below.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In addition, other companies, including other companies in our industry, may calculate these
measures differently than we do, limiting the usefulness of Adjusted EBITDA as a comparative
measure. Because of these limitations, Adjusted EBITDA should not be considered as a substitute
for net income, operating income, or any other performance measure derived in accordance with GAAP,
or as an alternative to cash flow from operating activities or as a measure of our liquidity. We
compensate for these limitations by relying primarily on our GAAP results and using Adjusted EBITDA
only supplementally. For more information, see our financial statements and the notes to those
statements included elsewhere in this Annual Report on Form 10-K.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table presents data relating to Adjusted EBITDA, for the periods indicated:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year Ended December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B><I>(In thousands)</I></B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000"><B>Restated</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">35,206</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">27,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,685</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Plus: interest expense net of interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">721</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,289</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,257</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Plus: income tax expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,249</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,979</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,855</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Plus: depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,812</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,664</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,095</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">EBITDA</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69,988</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54,236</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,892</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Plus: royalty to former owner<SUP style="FONT-size: 85%; vertical-align: text-top">(a)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">296</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">296</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,686</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Plus: management fees and expenses<SUP style="FONT-size: 85%; vertical-align: text-top">(b)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">356</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Plus: contributions made in lieu of state income taxes<SUP style="FONT-size: 85%; vertical-align: text-top">(c)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">750</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Plus: litigation loss<SUP style="FONT-size: 85%; vertical-align: text-top">(d)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Plus: exit costs<SUP style="FONT-size: 85%; vertical-align: text-top">(e)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">258</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,218</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Plus: contract termination fee<SUP style="FONT-size: 85%; vertical-align: text-top">(f)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,233</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Plus: share-based compensation<SUP style="FONT-size: 85%; vertical-align: text-top">(g)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,049</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,419</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,991</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjusted EBITDA</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">85,824</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">65,119</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">25,675</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 10pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96%">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(a)</TD>
    <TD>&nbsp;</TD>
    <TD>Reflects the royalty fee arrangement with the former owner of Grand Canyon University in
which we agreed to pay a stated percentage of cash revenue generated by our online programs.
As a result of the settlement of a dispute with the former owner, we are no longer obligated
to pay this royalty, although the settlement includes a prepayment of future royalties that we
amortize over time. See Note 3 to our financial statements that are included in Item&nbsp;8,
<I>Financial Statements and Supplementary Data</I>.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(b)</TD>
    <TD>&nbsp;</TD>
    <TD>Reflects management fees and expenses to the general partner of Endeavour Capital Fund IV,
L.P., one of our significant stockholders. Concurrent with the completion of the initial
public offering in November&nbsp;2008, the professional services agreement pursuant to which these
fees and expenses were paid terminated by its terms.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(c)</TD>
    <TD>&nbsp;</TD>
    <TD>Reflects contributions made to various Arizona school tuition organizations to assist with
funding for education. In connection with such contributions made we received a
dollar-for-dollar state income tax credit, which resulted in a reduction in our effective
income tax rate to 39.1%, 39.7% and 36.6% for the years ended December&nbsp;31, 2010, 2009 and
2008, respectively. Had these contributions not been made, our effective tax rate would have
been 39.9%, 40.7% and 40.8%, for 2010, 2009 and 2008, respectively. Such contributions are
viewed by our management to be made in lieu of payments of state income taxes and are
therefore excluded from evaluation of our core operating performance.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(d)</TD>
    <TD>&nbsp;</TD>
    <TD>Reflects an accrual of $5.2&nbsp;million for the litigation settlement on our <I>qui tam </I>matter,
which became final in December&nbsp;2010. See Item&nbsp;8, <I>Financial Statements and Supplementary Data</I>,
and Part&nbsp;I, Item&nbsp;3, <I>Legal Proceedings</I>.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(e)</TD>
    <TD>&nbsp;</TD>
    <TD>Represents exit costs related to the closure of a student services facility in Utah,
including termination benefits, relocation expenses and the future lease payments, plus the
write off of leasehold improvements associated with the leased space.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(f)</TD>
    <TD>&nbsp;</TD>
    <TD>Represents contract termination fees related to the termination of our Mind Streams revenue
sharing arrangement, which was reached in December&nbsp;2010. See Item&nbsp;8, <I>Financial Statements and
Supplementary Data.</I></TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(g)</TD>
    <TD>&nbsp;</TD>
    <TD>Reflects share-based compensation expense relating to stock and option grants made to
employees and directors in connection with our initial public offering and thereafter.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->74<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">





<DIV align="left">
<A name="C24244112"></A>
</DIV>

<DIV align="left" style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>Item&nbsp;7.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B><I>Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</I></B></TD>
</TR>
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following discussion and analysis of our financial condition and results of operations has
been restated to reflect the restatement of the balance sheet and statements of income,
stockholders&#146; equity and cash flows for the year ended December&nbsp;31, 2010 and should be read in
conjunction with our financial statements and related notes that appear in Item&nbsp;8, <I>Financial
Statements and Supplementary Data</I>. In addition to historical information, the following
discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our
actual results could differ materially from those discussed in the forward-looking statements.
Factors that could cause or contribute to these differences include those discussed below and
elsewhere in this Annual Report on Form 10-K/A, particularly in Item&nbsp;1A, <I>Risk Factors </I>and
<I>Forward-Looking Statements</I>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Restatement of Financial Statements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">We are filing this Amendment No.&nbsp;1 as a result of
the correction of an error
in the methodology we use to estimate our allowance for doubtful
accounts, which requires us to restate our  financial statements for the year ended
December&nbsp;31, 2010 and our unaudited interim financial statements for the
quarters ended June&nbsp;30, 2010, September&nbsp;30, 2010, March&nbsp;31, 2011 and
June&nbsp;30, 2011.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In recent periods, we experienced a significant change in the composition of our receivable
balances since our transition to the borrower-based financial aid model in the second quarter of
2010 in which the receivables due from former students had grown as a percentage of the total
amount outstanding. However, our historical process for estimating the allowance for doubtful
accounts did not consider the disaggregation of receivable balances by student based on enrollment
status. As a result, the growth in the inactive student receivables was not evident when making our
allowance estimate in prior periods. As our collection experience indicates that receivables from
former students carry a higher risk, this disaggregated information should have been
considered in determining the probability of loss within our receivables. If such information had
been evaluated, we would have increased the allowance for doubtful accounts to reflect the
increased risk profile of the receivables in prior periods. Accordingly, the Audit Committee of
the Board of Directors, together with management and in consultation with Ernst &#038; Young LLP, our
independent registered public accounting firm, determined that, because management should have taken
the additional steps necessary to develop the disaggregated information for use in the analysis of
reserve requirements and resulting allowance for doubtful accounts, the financial statements
identified above should be restated to correct the allowance for doubtful accounts.
</DIV>


<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->75<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">




<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As a result, we have concluded that we understated our bad debt
expense, and overstated our operating income and net income, by
approximately $15.2&nbsp;million, $15.4&nbsp;million and $9.2 million, respectfully, for the year ended
December&nbsp;31, 2010. Accordingly, we have restated:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%; text-indent: 4%"><b>&#149;</b> Our balance sheet as of December&nbsp;31, 2010 by increasing our allowance for
doubtful accounts by $15.2&nbsp;million; and
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; margin-left: 8%; text-indent: 4%"><b>&#149;</b>
Our income statement for the year ended December&nbsp;31, 2010 by
decreasing revenues by $0.2 million, increasing
instructional costs and services expense by $15.2&nbsp;million and decreasing operating income and net income by
$15.4&nbsp;million and $9.2 million, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As a result of this restatement, amounts in our statements of cash flows and stockholders&#146;
equity for the year ended December&nbsp;31, 2010 have also been restated. Our total cash flows from
operations for the year ended December&nbsp;31, 2010 remains unchanged. A summary of the effects of
this restatement to our financial statements included within this Amendment to our Annual Report on
Form 10-K/A is presented in Note 2 in the accompanying notes to financial statements.
</DIV>




<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Executive Overview</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We are a regionally accredited provider of postsecondary education services focused on
offering graduate and undergraduate degree programs in our core disciplines of education, business,
healthcare, and liberal arts. We offer programs online as well as ground programs at our
approximately 100-acre traditional campus in Phoenix, Arizona and onsite at the facilities of
employers. At December&nbsp;31, 2010, we had approximately 41,500 students. At December&nbsp;31, 2010, 91.0%
of our students were enrolled in our online programs and, of those students 45.5% were pursuing
master&#146;s or doctoral degrees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Key Trends, Developments and Challenges</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The following circumstances and trends present opportunities, challenges and risks.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>Evolving Postsecondary Education Market</B>. The U.S. is in the midst of an economic downturn
that has caused an increased number of individuals to consider advancing their education.
Additionally, we believe the number of non-traditional students who work, are raising a family, or
are doing both while trying to earn a college degree continues to grow. Given these trends, we
believe that many individuals will be attracted to our high quality academic programs at affordable
tuition rates. However we believe that competition for students, especially graduate students,
continues to increase.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>Regulation and Oversight. </B>We are subject to extensive regulation by federal and state
governmental agencies and accrediting bodies. In particular, the Higher Education Act of 1965, as
amended (the &#147;Higher Education Act&#148;), and the regulations promulgated thereunder by the Department
of Education subject us to significant regulatory scrutiny on the basis of numerous standards that
schools must satisfy in order to participate in the various federal student financial assistance
programs under Title IV of the Higher Education Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>Final Rules&nbsp;Adopted by the Department of Education. </B>In October&nbsp;2010, the Department of
Education issued new rules regarding the incentive compensation rule and certain other &#147;program
integrity&#148; issues. These rules, which we describe below, will largely become effective on July&nbsp;1,
2011.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Revised incentive compensation rule</I>. As described above in &#147;Item&nbsp;1 &#151; Business &#151;
Regulation,&#148; under current Department of Education regulations, there are 12 &#147;safe harbors&#148; that
describe payments and arrangements that do not violate the incentive compensation rule. In the
final rules, the 12 safe harbors under the incentive compensation rule were eliminated as the
Department of Education took the position that any commission, bonus or other incentive payment
based in any part, directly or indirectly, on securing enrollments or awarding financial aid is
inconsistent with the incentive payment prohibition in the Higher Education Act. The Department of
Education contends that institutions do not need to rely on safe harbors to protect compensation
that complies with the Higher Education Act, and that institutions can readily determine if a
payment or compensation is permissible under the Higher Education Act by analyzing (1)&nbsp;whether it
is a commission, bonus or other incentive payment, defined as an award of a sum of money or
something of value (other than a fixed salary or wages), paid to or given to a person or entity for
services rendered, and (2)&nbsp;whether the commission, bonus or other incentive payment is provided to
any person based in any part, directly or indirectly, upon success in securing enrollments or the
award of financial aid, which are defined as activities engaged in for the purpose of the admission
or matriculation of students for any period of time or the award of financial aid. The Department
of Education maintains that an institution can still make merit-based adjustments to employee
compensation, provided that such adjustments are not based in any part, directly or indirectly,
upon success in securing enrollments or the award of financial aid. Accordingly, among other
things, the Department of Education states that (1)&nbsp;an institution may maintain a hierarchy of
recruitment personnel with different levels of</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 10pt"> responsibility, with salary scales that reflect an added amount of
responsibility, (2)&nbsp;an institution may promote or demote recruitment personnel based on merit, and
(3)&nbsp;an institution may make a compensation decision based on seniority or length of employment,
provided that in each case compensation decisions are consistent with the Higher Education Act&#146;s
prohibition on incentive compensation. The final rules further clarify that this prohibition may
extend to individuals holding a managerial position at any level of the company, to the extent that
a particular individual has responsibility for recruitment or admission of students, or makes
decisions about awarding Title IV program funds. The Department of Education states that an
institution still would be able to make merit-based adjustments to employee compensation, but would
not be permitted to consider nor base compensation directly or indirectly, in any part, on factors
such as an employee&#146;s success in securing student enrollments, the award of financial aid or
institutional goals based on that success.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">While it is anticipated that the Department of Education may issue certain guidance on
incentive compensation issues prior to July&nbsp;1, 2011, we believe the changes imposed by the final
rules, including the elimination of the safe harbors, increase the uncertainty about what
constitutes incentive compensation and which employees are covered by the regulation. In light of
such uncertainty, we have changed some of our compensation practices for enrollment counselors and
other employees, as well as the terms of our arrangements with certain third parties whom we pay
for Internet-based services related to lead generation and marketing and whose activities are also
subject to the incentive compensation rules. The changes in these practices and arrangements could
adversely affect our ability to compensate our enrollment counselors, other employees, and third
parties in a manner that appropriately reflects their relative merit, which in turn could reduce
their effectiveness and make it more difficult to attract and retain staff with the desired talent
and motivation to succeed at Grand Canyon University. In addition, this lack of certainty could
increase the risk of future federal False Claims Act <I>qui tam </I>lawsuits in which private plaintiffs
assert that our compensation practices violate the incentive compensation rules and, therefore,
that our receipt of Title IV funds constitutes a submission to the government of a false claim for
payment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Misrepresentation. </I>The final rules include provisions that strengthen the Department of
Education&#146;s authority to sanction institutions for misrepresentations made by employees and certain
third parties with which such institutions maintain service agreements (such as for the provision
of educational programs or marketing, advertising, recruiting or admissions services). Considering
the breadth of this prohibition, it is possible that, despite our efforts to prevent such
misrepresentations, our employees or service providers may make statements that could be construed
as misrepresentations. As a result, we may face complaints from students, prospective students and
employees over statements made by us and our agents throughout the enrollment, admissions and
financial aid process, as well as throughout attendance at Grand Canyon University, which would
expose us to increased risk of litigation and enforcement action and applicable sanctions or other
penalties up to and including termination of Title IV eligibility.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>State authorization. </I>States have the authority to assert jurisdiction, to the extent they so
choose, over educational institutions offering online degree programs in a state but that otherwise
have no physical location or other presence in that state. The final rules include a provision
that requires online providers to meet any such state requirements and, thus, the Department of
Education would seem to have authority, in addition to that of the states, to enforce applicable
state law requirements. It is unclear how this rule will be enforced and what impact it will have
on us. In addition to Arizona, we have determined that our activities in certain states constitute
a presence requiring licensure or authorization under the requirements of the state education
agency in those states, which we have obtained, while in other states we have determined that we
are exempt under applicable state law from licensure or authorization requirements due to our
regional accreditation or for other reasons. In still other states, we have obtained approvals to
operate as we have determined necessary in connection with our marketing and recruiting activities.
Although we have a process for evaluating the compliance of our online educational programs with
state requirements regarding distance and correspondence learning, and have experienced no
significant restrictions on our educational activities to date as a result of such requirements,
state regulatory requirements for online education vary among the states, are not well developed in
many states, are imprecise or unclear in some states and are subject to change. Moreover, it is
also unclear whether and to what extent state agencies may augment or change their regulations in
this area as a result of these new Department of Education regulations and increased scrutiny. If
we fail to comply with licensing or authorization requirements for a particular state, or fail to
obtain licenses or authorizations when required, we could lose our licensure or authorization from
that state or be subject to other sanctions, including restrictions on our activities in that
state, and fines and penalties, including Department of Education sanctions. The loss of licensure
or authorization in a state other than Arizona could prohibit us from
recruiting prospective students or offering educational services to current students in that
state, which could significantly reduce our enrollments.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Approval of new programs. </I>The final rules include provisions regarding the approval of new
programs. Although the final rules relaxed the program approval standard originally proposed, the
rules still impose various new requirements on, and could adversely affect, our ability to add new
academic programs. In addition, the Department of Education has published no definite standards by
which schools can determine the likelihood that any program will be approved. As such, we believe
this rule adds uncertainty regarding new program approval, which could adversely affect our ability
to respond to emerging employment trends and add programs that are responsive to those trends,
which in turn could decrease our attractiveness to certain students. In addition, a lack of
certainty could increase the risk of future federal False Claims Act qui tam lawsuits in which
private plaintiffs assert that students improperly received Title IV aid while attending a program
that has not been approved.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Additional final rules</I>. In addition to the program integrity issues specifically addressed
above, the final rules include provisions regarding the definition of a credit hour; written
agreements between institutions, particularly institutions under common ownership or control; the
administration of ability-to-benefit examinations; requirements regarding an institution&#146;s return
of Title IV program funds; and certain other issues pertaining to a student&#146;s eligibility to
receive Title IV program funds. We are in the process of reviewing all of the final rules. We
cannot predict how the recently released or any other resulting regulations will be interpreted,
and therefore whether we will be able to comply with these requirements by the effective date.
Insufficient time, or lack of sufficient guidance, for compliance with the final rules, could have
a material adverse effect on our business. Uncertainty surrounding the application of the final
rules, interpretive regulations, and guidance from Department of Education may continue for some
period of time and could reduce our enrollment, increase our cost of doing business, and have a
material adverse effect on our business, financial condition, results of operations and cash flows.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Pending gainful employment rule. </I>Under the Higher Education Act, proprietary schools are
eligible to participate in Title IV programs in respect of educational programs that lead to
&#147;gainful employment in a recognized occupation,&#148; with the limited exception of qualified programs
leading to a bachelor&#146;s degree in liberal arts. Historically, this concept has not been defined in
detail. The proposed definition of gainful employment in the July&nbsp;26, 2010 NPRM described above
would take into consideration whether former students are repaying their federal student loans and
the relationship between total student loan debt and average earnings after completing a
postsecondary program. As proposed in the NPRM, individual educational programs would be divided
into three groups based on the proposed metrics:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Programs with at least 45% of their former students paying down the
principal on their federal loans, or with graduates having a
debt-to-earnings ratio of less than 20% of discretionary income or 8%
of total income, would be deemed fully eligible for Title IV funding.
These programs would be required to disclose both their repayment
rates and debt-to-earnings ratios unless they pass both of the
preceding tests.</TD>
</TR>

<TR>
    <TD style="font-size: 8pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Programs with less than 35% of their former students paying down the
principal on their federal loans, and with graduates having a
debt-to-earnings ratio above 30% of discretionary income and 12% of
total income, would be deemed ineligible for Title IV funding. Such
programs would have lost Title IV eligibility as of July&nbsp;1, 2012,
although institutions would have been required to warn students in the
programs about the high debt-to-earnings ratio effective July&nbsp;1, 2011.
In order to mitigate against large and immediate displacements of
students as of the July&nbsp;1, 2012 deadline, the Department of Education
further proposed that no more than 5% of a single institution&#146;s
programs would be declared ineligible as of that date, with the
lowest-performing programs immediately losing eligibility and the
remaining non-compliant programs losing eligibility one year later.</TD>
</TR>

<TR>
    <TD style="font-size: 8pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Programs that are not fully eligible or ineligible under the above
standards would be restricted programs and subject to limits on
enrollment growth. Such institutions also would be required to
demonstrate employer support for the program and warn consumers and
current students of high debt levels.</TD>
</TR>

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<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Due to the unprecedented volume of comments received to the gainful employment NPRM, on
September&nbsp;24, 2010, the Department of Education announced that it would delay issuing final rules
regarding the gainful employment standard until early 2011 in order to give interested parties more
time to clarify their comments and respond to questions from Department of Education officials.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">While there remain many open questions and interpretive issues with respect to this gainful
employment NPRM, including when it will go into effect and questions as to the availability of, and
the ability of education companies to obtain, the information needed to calculate the applicable
metrics, if this regulation is adopted in a form similar to the Department of Education&#146;s proposal
in the NPRM, it could render some of our programs ineligible for Title IV funding if we do not meet
the test to be considered &#147;fully eligible.&#148; In addition, the continuing eligibility of our
educational programs for Title IV funding would be at risk due to factors beyond our control, such
as changes in the income level of persons employed in specific occupations or sectors, increases in
interest rates, changes in student mix to persons requiring higher amounts of student loans to
complete their programs, changes in student loan delinquency rates and other factors. If a
particular program ceased to be eligible for Title IV funding, in most cases it would not be
practical to continue offering that course under our current business model. Regulations in the
form proposed in the NPRM could result in a significant realignment of the types of educational
programs that are offered by us and by proprietary institutions in general, in order to comply with
the rules or to avoid the uncertainty associated with compliance over time. Furthermore, we may be
required for certain programs to warn consumers and current students of high debt levels and
provide the most recent debt measures for the program. Such changes in our business practices could
reduce our enrollment, perhaps materially, which could have a material adverse effect on our
business, prospects, financial condition and results of operations and could adversely affect our
stock price.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>Department of Education Program Review</B>. In connection with its administration of the Title IV
federal student financial aid programs, the Department of Education periodically conducts program
reviews at selected schools that receive Title IV funds. In July&nbsp;2010, the Department of Education
initiated a program review of Grand Canyon University covering the 2008-2009 and 2009-2010 award
years. As part of this program review, a Department of Education program review team conducted a
site visit on our campus and reviewed, and in some cases requested further information regarding,
our records, practices and policies relating to, among other things, financial aid, enrollment,
enrollment counselor compensation, program eligibility and other Title IV compliance matters. Upon
the conclusion of the site visit, we were informed by the program review team that it would (i)
conduct further review of our documents and records offsite, (ii)&nbsp;upon completion of such review,
schedule a formal exit interview to be followed by a preliminary program review report in which any
preliminary findings of non-compliance would be presented, and (iii)&nbsp;conclude the review by
issuance of a final determination letter. The program review team has not yet scheduled a formal
exit interview with us. Accordingly, at this point, the program review remains open and we intend
to continue to cooperate with the review team until the program review is completed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">While we have not yet received notification of the timing of our exit interview or the
Department of Education&#146;s preliminary program review report or final determination letter, as a
result of concerns first raised by a member of the program review team at the conclusion of the
site visit and subsequently stated in an affidavit by such member filed in connection with the
August&nbsp;13, 2010 hearing in our <I>qui tam </I>case, we became aware that the program review team had two
preliminary findings of concern. The first issue is whether a compensation policy in use during
part of the period under review improperly rewarded some enrollment counselors based on success in
enrolling students in violation of applicable law. As we have previously disclosed in the context
of our now-settled <I>qui tam </I>action, while we believe that our compensation policies and practices
are not based on success in enrolling students in violation of applicable law, the Department of
Education&#146;s regulations and interpretations of the incentive compensation law do not establish
clear criteria for compliance in all circumstances and some of our practices in prior years were
not within the scope of any specific &#147;safe harbor&#148; provided in the compensation regulations.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The second issue is whether, during the award years under review, certain programs offered
within our College of Liberal Arts provided students with training to prepare them for gainful
employment in a recognized occupation. This &#147;gainful employment&#148; standard has been a requirement
for Title IV eligibility for programs offered at proprietary institutions of higher education such
as Grand Canyon University although pursuant to legislation passed in 2008 and effective as of July
1, 2010, this requirement no longer applies to designated liberal arts programs offered by us and
certain other institutions that have held accreditation by a regional accrediting agency since a
date
on or before October&nbsp;1, 2007 (we have held a regional accreditation since 1968). Subsequent to
the filing of the affidavit by the program review team member expressing this preliminary finding,
the program review team submitted a written request to us in which the program review team stated
the view that, prior to July&nbsp;1, 2010, traditional liberal arts programs were not considered as
being eligible under Title IV but then requested additional information from us that would help the
Department of Education determine whether the programs offered within our College of Liberal Arts
were eligible under Title IV because they did provide training to prepare students for gainful
employment in a recognized occupation. While we were not informed as to which specific programs
offered within our College of Liberal Arts the program review team believes may be ineligible, in
August&nbsp;2010 we provided the Department of Education with the requested information which we believe
demonstrates that the programs offered within our College of Liberal Arts met this requirement. We
have received no further communications from the Department of Education regarding the program
review.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our policies and procedures are planned and implemented to comply with the applicable
standards and regulations under Title IV. If and to the extent the Department of Education&#146;s final
determination letter identifies any compliance issues, we are committed to resolving such issues
and ensuring that Grand Canyon University operates in compliance with all Department of Education
requirements. Program reviews may remain unresolved for months or years with little or no
communication from the Department of Education, and may involve multiple exchanges of information
following the site visit. We cannot presently predict whether or if further information requests
will be made, when the exit interview will take place, when the preliminary program review report
or final determination letter will be issued, or when the program review will be closed. If the
Department of Education were to make significant findings of non-compliance in the final program
review determination letter, including any finding related to the two issues discussed above, then,
after exhausting any administrative appeals available to us, we could be required to pay a fine,
return Title IV monies previously received, or be subjected to other administrative sanctions, any
of which outcomes could damage our reputation in the industry and have a material adverse effect on
our business, results of operations, cash flows and financial position.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>Congressional Hearings</B>. During 2010 and since, there has been increased focus by Congress on
the role that for-profit educational institutions play in higher education. Each of the
Congressional education committees held one or more hearings examining various aspects of the
proprietary education industry, including the manner in which accrediting agencies review higher
education institutions&#146; policies on credit hours and program length, student recruitment practices,
and the debt levels incurred by, and drop-out rates of, students attending for-profit colleges. In
addition, at the request of the Chairmen of each of these committees, the Government Accountability
Office (&#147;GAO&#148;) conducted reviews and prepared reports with recommendations regarding various
aspects of the proprietary sector, including recruitment practices, educational quality, student
outcomes, the sufficiency of integrity safeguards against waste, fraud and abuse in federal student
aid programs and the degree to which proprietary institutions&#146; revenue is composed of Title IV and
other federal funding sources. Finally, in August&nbsp;2010, the Health, Education, Labor and Pensions
(&#147;HELP&#148;) Committee of the U.S. Senate sent requests to approximately 30 for-profit colleges,
including us and all of the other publicly-traded companies that operate for-profit colleges,
seeking information about such matters as graduation and loan default rates, as well as internal
recruiting documents and details about the use of third-party companies, such as lead generators,
in the recruiting process. The request sought information concerning how we use federal resources,
including how we recruit and enroll students, set program price or tuition, determine financial aid
including private or institutional loans, track attendance, handle withdrawals of students and
return of Title IV dollars and manage compliance with the requirement that no more than 90% of
revenues come from Title IV dollars. The request also sought an understanding of the number of
students who complete or graduate from programs we offer, how many of those students find new work
in their educational area, the debt levels of students enrolling and completing programs and how we
track and manage the number of students who risk default within the cohort default rate window. In
furtherance of this, the HELP Committee requested that we provide information about a broad
spectrum of our business, including detailed information relating to financial results, management,
operations, personnel, recruiting, enrollment, graduation, student withdrawals, receipt of Title IV
funds, institutional accreditation, regulatory compliance and other matters. We complied with the
HELP Committee&#146;s request and believe that we have completed the document production necessary to
satisfy the request. We cannot predict the extent to which, or whether, these hearings and review
will result in additional legislation, further rulemaking or other administrative actions affecting
our participation in Title IV programs. To the extent that any laws or regulations are adopted, or
other administrative actions are taken, that limit our participation in Title IV programs or the
amount of student financial aid for which the students at our institutions are eligible, our
enrollments, revenues and results of operation could be materially and adversely affected.
</DIV>
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<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B>Conversion to Borrower Based, Non-Term Financial Aid System</B>. A significant portion of our net
revenue is derived from tuition financed by the Title IV programs. Federal regulations dictate the
timing of disbursements under the Title IV programs. In April&nbsp;2010, we began transitioning our
online and professional studies students from a &#147;term-based&#148; financial aid system (where all
students, including online students, begin programs and are eligible to receive financial aid at
periodic start dates pursuant to a calendar-based term system) to a &#147;borrower-based, non-term&#148; or
&#147;BBAY&#148; financial aid system (where each student may begin a program and be eligible to receive
financial aid at any time throughout the year). We believe BBAY provides greater ease and
flexibility for our students by providing for rolling and flexible start dates. It also assists in
ensuring the student does not over borrow in the early years of a program, which could result in
aggregate loan limits being exceeded prior to graduation. The move to BBAY has, in some
circumstances, significantly reduced the amount of living expenses a student is eligible to
receive. We believe that the conversion to BBAY, although positive for the student in many
respects, has caused some of our existing students to leave the University and some potential new
students to look for educational opportunities elsewhere. The flexibility of BBAY has also allowed
our students to take more frequent breaks between classes which has reduced the revenues we earn in
the short term. The consequence of the move to BBAY was particularly apparent during the period of
time between Thanksgiving and New Years Day when a number of previously active students chose to
delay the continuation of their studies until after the holidays.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Under the BBAY financial aid system, loan funds are generally provided by the Federal Direct
Loan Program in two disbursements for each academic year. The disbursements are usually received
two to four weeks into the first course of a payment period. These factors, together with the
timing of students beginning their programs, affect our operating cash flow. In a term-based Title
IV environment, Title IV disbursements are generally based on three academic terms per year and
institutions operating on this basis are generally allowed to bring in depending on which term the
student begins in anywhere from 33% to 100% of a student&#146;s academic year financial aid at the start
of a term, with the majority of such amounts being treated as unrestricted cash and deferred
revenue (or a student deposit liability depending on if the course had begun or not) until the
revenue is recognized. In BBAY, Title IV disbursements are generally based on a 24-credit academic
year/12-credit payment period for undergraduate students and a 12-credit academic year/6-credit
payment period for graduate students. Institutions operating on this basis are generally allowed
to bring in up to 50% of a student&#146;s academic year financial aid at the start of a program. If
this financial aid is received for courses that have begun, then it is treated as unrestricted cash
and deferred revenue until the revenue is recognized. If the financial aid is received for courses
that have not yet begun, then it is treated as restricted cash and a student deposit liability. As
a result of our move to BBAY, we receive a greater proportion of student financial aid prior to the
time courses have begun, which has resulted in the shift of unrestricted cash to restricted cash
and caused a significant increase in our restricted cash amount between December&nbsp;31, 2009 and
December&nbsp;31, 2010.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">




In accordance with University policy, all prospective students are required to select both a
primary and secondary payment option with respect to amounts due to the University for tuition,
fees and other expenses. In instances where a student selects financial aid as the primary payment
option, he or she often selects personal cash as the secondary option. If a student that has
selected financial aid as his or her primary payment option withdraws prior to the end of a course
but after the date that our institutional refund period has expired, the student will have incurred
the obligation to pay the full cost of the course.




When a student who has received Title IV program funds withdraws from school, the institution
must determine the amount of Title IV program funds the student has &#147;earned&#148; and then must return
the unearned Title IV program funds (a &#147;return to Title IV&#148;) to the appropriate lender or the
Department of Education in a timely manner, which is generally no later than 45&nbsp;days after the date
the institution determined that the student withdrew. In a term based environment, the return to
Title IV is calculated based on the number of completed days in a term as a percentage of the total
days in the term, with the exception that, with respect to courses offered in a modular setting
(i.e. those offered to nontraditional students as two eight week courses in a term), if a student
completed the first course but withdrew prior to the second course, then the full financial aid
award was earned by and paid to the student and no return to Title IV calculation was done. In
BBAY, we calculate returns to Title IV based on the percentage of the payment period attended in
comparison to the full payment period (there is no module concept in a BBAY environment). In this
environment, a student (whether undergraduate or graduate) must complete greater than 60% of the
payment period in order to earn the full financial aid award. Thus, if a student completes the
first course but withdraws prior to the second course and therefore does not complete greater than
60% of the payment period, then the full financial aid award is not earned by the student. In such
case, we must perform a return to Title IV calculation and most, if not all, of the refund would be
returned to the lender or the Department of Education. If the student withdraws after the 60%
threshold, then the student is deemed to have earned 100% of the Title IV program funds he or she
received. Because under BBAY, a student generally must complete two of the courses in a payment
period to earn the full financial aid award, as opposed to just a single course under the
term-based module approach, we have experienced an increase in the Title IV program funds that will
need to be returned to lenders or the Department of Education. This
has resulted in an increase in the amounts we need to collect from
inactive students which has led to an increase in bad debt expense,
from 5.4% of revenue in 2009 to 10.0% of revenue in 2010.
</DIV>


<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Fiscal Year 2010 Events</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In addition to the items mentioned above, we experienced the following significant events in
2010:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><I>Enrollment, Net Revenue, and Operating Income Growth</I></U> &#151; We achieved
significant enrollment growth for the fiscal year ended December&nbsp;31, 2010 as compared
to the fiscal year ended December&nbsp;31, 2009 despite a change in our enrollment
calculation that reduces our reported enrollment count. As part of our transition to
BBAY, we calculate period end enrollment as including only individual students who
attended a course during the last two months of the calendar quarter. Prior to our
transition to BBAY, enrollment had been defined as individual students that attended a
course in a term that was in session as of the end of the quarter. Another factor
contributing to the 47.3% increase in net revenue over the same period was the
significant increase in the revenue per student as a result of the number of students
taking four credit courses between years, which was slightly offset by lower tuition
increases. For our 2010-11 academic year, which began in May&nbsp;2010, we increased tuition
for students in our online and professional studies programs from 0.0% to 5.7%,
depending on the program, with an estimated blended rate increase of 3.5% as compared
to increases of 2.3% to 15.5%, depending on the program, with an estimated blended rate
increase of 5.0% for the prior academic year. Tuition for our traditional ground
programs had no increase for our 2010-11 academic year, as compared to 6.6% increase
for the prior academic year. Tuition increases have not historically been, and may not
in the future be, consistent across our programs due to market conditions and
differences in operating costs of individual programs. Operating income was $73.5
million for the fiscal year ended December&nbsp;31, 2010, an increase of 57.9% over the
$46.6&nbsp;million in operating income for 2009.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><I>Capital Expenditures</I></U> &#151; Our capital expenditures in 2010 of $62.6&nbsp;million
were primarily related to the expansion of our physical campus and significant
investments in technology innovation to support our students and staff. In 2010, we
completed construction on our 55,000 square foot recreation center for both
student-athletes and on-campus students, a new dormitory that can hold up to 600
students, and a new College of Education classroom building. We started development on
a 140,000 square foot arena that will open in September&nbsp;2011, a new 500-bed dormitory
and a food court restaurant that will be completed in August&nbsp;2011. These investments
are to support our growing on-campus student population as well as enhance the brand of
the University.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><I>Investing in Innovative Educational Tools</I></U> &#151; During 2010, we entered into an
agreement with an affiliated entity to develop a new learning management system for use
by Grand Canyon University. Through this agreement we prepaid perpetual license fees,
acquired source code rights for the software developed, and prepaid maintenance and
service fees for the first seven years of use for an aggregate amount of $4.9&nbsp;million.
We anticipate the conversion to this new learning management platform for our online
delivered coursework by the third quarter of 2011.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><I>Conversion to Borrower Based, Non-Term Financial Aid System</I></U> &#151; In the second
quarter of 2010, we completed the conversion of our students records system from
DataTel to Campus Vue. As described above, the move to BBAY has, in some
circumstances, significantly reduced the amount of living expenses a student is
eligible to receive, while allowing our students to take more frequent breaks between
classes. We estimate that the conversion to BBAY resulted in lower net revenues
between
approximately $30&nbsp;million to $37&nbsp;million during the second half of 2010. In connection
with this conversion, we incurred approximately $4.0&nbsp;million of costs due to
unanticipated delays in information processing which are included in instructional costs
and services in 2010. In addition as a result of our move to BBAY, we receive a greater
proportion of student financial aid prior to the time courses have begun, which has
resulted in the shift of unrestricted cash to restricted cash and caused a significant
increase in our restricted cash amount between December&nbsp;31, 2009 and December&nbsp;31, 2010.</TD>
</TR>

</TABLE>
</DIV><P align="center" style="font-size: 10pt">&nbsp;

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">


<DIV style="margin-top: 10pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><I>Settlement of Qui Tam Law Suit</I></U> &#151; In recent years, several for-profit
education companies have been faced with whistleblower lawsuits, known as <I>&#147;qui tam&#148;</I>
cases, brought by current or former employees alleging that their institution had made
impermissible incentive payments to admissions employees. In this regard, on September
11, 2008, we were served with a <I>qui tam </I>lawsuit that had been filed against us in
August&nbsp;2007 in the United States District Court for the District of Arizona by a
then-current employee on behalf of the federal government. During the third quarter of
fiscal year 2009, we accrued $5.2&nbsp;million for the proposed settlement of this
litigation, which became final in December&nbsp;2010. Subject to the distribution of the
settlement amount from escrow in accordance with the terms of the settlement agreement,
this matter is now resolved. See Item&nbsp;8, <I>Financial Statements and Supplementary Data</I>,
and Part&nbsp;I, Item&nbsp;3, <I>Legal Proceedings</I>.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><I>Contract termination fees with a related party</I></U> &#151; We were a party to a
Collaboration Agreement with Mind Streams, L.L.C., which is a company owned and
operated, in part, by Gail Richardson, the father of Brent D. Richardson, the
University&#146;s Executive Chairman, and Christopher C. Richardson, the University&#146;s
General Counsel and a director. Under this agreement, Mind Streams identified
qualified applicants for admission to the University in return for which it was paid a
stated percentage of the net revenue (calculated as tuition actually received, less
scholarships, refunds, and allowances) derived by us from those identified applicants
that matriculated at the University. As a result of new rules adopted by the U.S.
Department of Education and effective July&nbsp;1, 2011, we determined that revenue sharing
arrangement like the Collaboration Agreement, and the manner in which we pay amounts
due Mind Streams under the Collaboration Agreement, will most likely no longer be
permitted. Accordingly, we and Mind Streams entered into a termination agreement,
dated December&nbsp;30, 2010. The amount paid by us settles both the future amounts that
would have been due to Mind Streams&#146; under the original terms of the agreement as well
as the value of an acquired database of student leads. In the aggregate, we expensed
$9.2&nbsp;million in 2010 relating to the termination of this contract.</TD>
</TR>
</TABLE>
</DIV>





<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><I>Internal control over financial reporting</I></U>. As of December&nbsp;31, 2010, in
connection with the restatement of our 2010 financial statements discussed above, we
concluded that a material weakness existed in our internal control over financial
reporting. See <I>Item&nbsp;9A &#151; Controls and Procedures</I>. We have implemented certain changes in
our internal controls in an effort to remediate this material weakness. As of the date of this filing, we believe
 the
measures we have under taken have remediated the material weakness we have identified.</TD>
</TR>

</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Key financial metrics</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Net revenue</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Net revenue consists principally of tuition, room and board charges attributable to students
residing on our ground campus, application and graduation fees, and fees from educational resources
such as access to online materials or commissions we earn from bookstore and publication sales,
less scholarships. Factors affecting our net revenue include: (i)&nbsp;the number of students who are
enrolled and who remain enrolled in our courses; (ii)&nbsp;the number of credit hours per student; (iii)
our degree and program mix; (iv)&nbsp;changes in our tuition rates; (v)&nbsp;the amount of the scholarships
that we offer; and (vi)&nbsp;the number of students housed in, and the rent charged for, our on-campus
student apartments and dormitories.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Prior to our transition to BBAY, enrollment had been defined as individual students that
attended a course in a term that was in session as of the end of the period. We now define
enrollment as individual students who attended a course during the last two months of the calendar
quarter. We offer three 16-week semesters in a calendar year with one start available per semester
for our traditional ground students. Online and professional studies students have more frequent
class starts in five-, seven- or eight-week courses through the calendar year. Enrollments are a
function of the number of continuing students at the beginning of each period and new enrollments
during the period, which are offset by graduations, withdrawals, and inactive students during the
period. Inactive students for a particular period include students who are not registered in a
class and, therefore, are not generating net revenue for that period, but who have not withdrawn
from Grand Canyon University.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->83<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We believe that the principal factors that affect our enrollments and net revenue are the
number and breadth of the programs we offer; the attractiveness of our program offerings and
learning experience, particularly for career-oriented adults who are seeking pay increases or job
opportunities that are directly tied to higher educational attainment; the effectiveness of our
marketing, recruiting and retention efforts, which is affected by the number and seniority of our
enrollment counselors and other recruiting personnel; the quality of our academic programs and
student services; the convenience and flexibility of our online delivery platform; the availability
and cost of federal and other funding for student financial aid; the seasonality of our net
revenue, which is enrollment driven and is typically lowest in our second fiscal quarter and
highest in our fourth fiscal quarter; and general economic conditions, particularly as they might
affect job prospects in our core disciplines.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following is a summary of our student enrollment at December&nbsp;31, 2010, 2009, and 2008
(which included fewer than 275 students pursuing non-degree certificates in each period) by degree
type and by instructional delivery method:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2010</B><SUP style="FONT-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B># of Students</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>% of Total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B># of Students</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>% of Total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B># of Students</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>% of Total</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Graduate degree<SUP style="FONT-size: 85%; vertical-align: text-top">(2)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,732</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">42.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,097</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">42.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,031</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">52.9</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Undergraduate
degree</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">57.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,612</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">57.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,605</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">47.1</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,482</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,709</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,636</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2010</B><SUP style="FONT-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B># of Students</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>% of Total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B># of Students</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>% of Total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B># of Students</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>% of Total</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Online<SUP style="FONT-size: 85%; vertical-align: text-top">(3)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,734</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">91.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,596</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">91.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,955</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">89.1</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Ground<SUP style="FONT-size: 85%; vertical-align: text-top">(4)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,748</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">9.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,113</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">8.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,681</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">10.9</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,482</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,709</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,636</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 10pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96%">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="FONT-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Enrollment at December&nbsp;31, 2010 represents individual students who attended a course
during the last two months of the calendar quarter. Prior to our transition to BBAY,
enrollment had been defined as individual students that attended a course in a term that was
in session as of the end of the quarter.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="FONT-size: 85%; vertical-align: text-top">(2)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Includes 1,186, 315 and 56 students pursuing doctoral degrees at December&nbsp;31, 2010,
2009 and 2008, respectively.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="FONT-size: 85%; vertical-align: text-top">(3)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>As of December&nbsp;31, 2010 and 2009, 45.5% and 44.5%, respectively, of our online
students were pursuing graduate or doctoral degrees.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left"><SUP style="FONT-size: 85%; vertical-align: text-top">(4)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD>Includes our traditional on-campus students, as well as our professional studies
students.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">For the 2010-11 academic year (the academic year that began in May&nbsp;2010), our prices per
credit hour are $435 for undergraduate online and professional studies courses, $465 for graduate
online courses (other than graduate business and graduate nursing), $510 for graduate business
courses, $560 for graduate online nursing courses, $575 for doctoral programs, and $688 for
undergraduate courses for ground students. For our active duty and active reserve online and
professional studies students, our prices per credit hour are $250 for undergraduate and $370 for
graduate. The overall price of each course varies based upon the number of credit hours per course
(with most courses representing four credit hours), the degree level of the program, and the
discipline. In addition, we charge a fixed $8,250 &#147;block tuition&#148; for undergraduate ground students
taking between 12 and 18 credit hours per semester, with an additional $688 per credit hour for
credits in excess of 18. A traditional undergraduate degree typically requires a minimum of 120
credit hours. The minimum number of credit hours required for a master&#146;s degree and overall cost
for such a degree varies by program, although such programs typically require approximately 36
credit hours. The doctoral program requires approximately 60 credit hours.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Based on current tuition rates, tuition for a full program would equate to between $16,500 and
$20,000 for an online master&#146;s program, approximately $52,200 for a full four-year online
bachelor&#146;s program, and approximately $57,750 for a full four-year bachelor&#146;s program taken on our
ground campus. The tuition amounts referred to above assume no reductions for transfer credits or
scholarships, which many of our students utilize to reduce their total program costs. Additionally,
tuition is reduced for some of our students by scholarships. For the years ended
December&nbsp;31, 2010, 2009 and 2008, revenue was reduced by approximately $55.8&nbsp;million, $34.2
million and $18.4&nbsp;million, respectively, as a result of scholarships that we offered to our
students. The increase in scholarships is due to increased revenues and a significant increase in
the use of academic scholarships to attract high performing students.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->84<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Revenue per student increased between periods as we increased tuition prices for students in
our online and professional studies programs by 0.0% to 5.7%, depending on the program, with an
estimated blended rate increase of 3.5% for our 2010-11 academic year, as compared to tuition price
increases for students in our online and professional studies programs from 2.3% to 15.5%,
depending on the program, with an estimated blended rate increase of 5.0% for the prior academic
year. Tuition for our traditional ground programs had no increase for our 2010-11 academic year,
as compared to an increase of 6.6% for the prior academic year. Tuition increases have not
historically been, and may not in the future be, consistent across our programs due to market
conditions and differences in operating costs of individual programs. The lower increases for our
programs for the current academic year generally reflect the ongoing leverage caused by increased
online enrollment and a concerted effort to control costs so that debt levels of students are
reasonable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We derive a majority of our net revenue from tuition financed by the Title IV programs. For
the years ended December&nbsp;31, 2010, 2009 and 2008, we derived cash receipts equal to approximately
84.9%, 79.9%, and 74.4%, respectively, of our net revenue from Title IV programs. Our students also
rely on scholarships, personal savings, private loans, and employer tuition reimbursements to pay a
portion of their tuition and related expenses. During fiscal 2010, payments derived from private
loans constituted less than 1% of our net revenues from our income statement. Third party lenders
independently determine whether a loan to a student is classified as subprime, and, based on these
determinations, we derived no payments from subprime loans during the year ended December&nbsp;31, 2010.
Our future revenues could be affected if and to the extent the Department of Education restricts
our participation in the Title IV programs, as it did during the period between 2005 and 2007.
Current conditions in the credit markets have adversely affected the environment surrounding access
to and cost of student loans. The legislative and regulatory environment is also changing, and new
federal legislation was recently enacted or has been proposed that could have an impact on us. See
&#147;Risk Factors&#148; and &#147;Regulation &#151; Regulation of Federal Student Financial Aid Programs.&#148; We cannot
predict whether the new legislation will limit access to Title IV funding or the impact of any of
these developments on future performance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Costs and expenses</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Instructional cost and services</I>. Instructional cost and services consist primarily of costs
related to the administration and delivery of our educational programs, including electronic media.
This expense category includes salaries and benefits for full-time and adjunct faculty and
administrative personnel, information technology costs, bad debt
expense, curriculum and new program development
costs, and costs associated with other support groups that provide service directly to the
students. This category also includes an allocation of depreciation, amortization, rent, and
occupancy costs attributable to the provision of educational services. Classroom facilities are
leased or, in some cases, are provided by the students&#146; employers at no charge to us. We continue
to increase our spending on student and academic services, and we expect instructional costs and
services as a percentage of tuition and other net revenue to remain relatively consistent as these
additional costs are offset by leverage of our support services that are in place over a larger
tuition and enrollment base.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Selling and promotional</I>. Selling and promotional expenses include salaries and benefits of
personnel engaged in the marketing, recruitment, and retention of students, as well as advertising
costs associated with purchasing leads, hosting events and seminars, producing marketing materials,
and our ad campaigns in Arizona. Our selling and promotional expenses are generally affected by the
cost of advertising media and leads, the efficiency of our marketing and recruiting efforts,
salaries, and benefits for our enrollment personnel, and expenditures on advertising initiatives
for new and existing academic programs. This category also includes an allocation of depreciation,
amortization, rent, and occupancy costs attributable to selling and promotional activities. Selling
and promotional costs are expensed as incurred.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>General and administrative</I>. General and administrative expenses include salaries, benefits,
and share-based compensation of employees engaged in corporate management, finance, human
resources, facilities, compliance, insurance, audit fees and other corporate functions. General and
administrative expenses also include an allocation of depreciation,
amortization, rent and occupancy costs attributable to general and administrative functions.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->85<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Interest expense</I>. Interest expense consists primarily of interest charges on our notes payable
and capital lease obligations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Critical Accounting Policies and Estimates</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The discussion of our financial condition and results of operations is based upon our
financial statements, which have been prepared in accordance with U.S. generally accepted
accounting principles, or GAAP. During the preparation of these financial statements, we are
required to make estimates and assumptions that affect the reported amounts of assets, liabilities,
revenues, costs and expenses, and related disclosures. On an ongoing basis, we evaluate our
estimates and assumptions, including those discussed below. We base our estimates on historical
experience and on various other assumptions that we believe are reasonable under the circumstances.
The results of our analysis form the basis for making assumptions about the carrying values of
assets and liabilities that are not readily apparent from other sources. Actual results may differ
from these estimates under different assumptions or conditions, and the impact of such differences
may be material to our financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We believe that the following critical accounting policies involve our more significant
judgments and estimates used in the preparation of our financial statements:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B><I>Revenue recognition</I></B>. Net revenues consist primarily of tuition and fees derived from courses
taught by us online, at our approximately 100-acre traditional campus in Phoenix, Arizona, and
onsite at facilities of employers, as well as from related educational resources such as access to
online materials. Tuition revenue and most fees and related educational resources are recognized
pro-rata over the applicable period of instruction, net of scholarships awarded by us. Generally,
we will refund all or a portion of tuition already paid pursuant to our refund policy, dependent
upon length of course and modality and subject to certain state specific refund requirements. If a
student withdraws at a time when only a portion, or none of the tuition is refundable, then we
continue to recognize the tuition that was not refunded pro-rata over the term of the course and as
the amount subject to refund is never greater than the amount of revenue that has been deferred,
under our accounting policies revenue is not recognized with respect to amounts that could
potentially be refunded. While our change in April&nbsp;2010 to a non-term borrower-based institution
from a term based institution for federal student financial aid funding purposes impacts the timing
of our cash flows, it does not impact the timing and recognition of revenues. Deferred revenue and
student deposits in any period represent the excess of tuition, fees and other student payments
received as compared to amounts recognized as revenue on the statement of operations and are
reflected as current liabilities in the accompanying balance sheet. Our educational programs have
starting and ending dates that differ from our quarters. Therefore, at the end of each fiscal
quarter, a portion of revenue from these programs is not yet earned. Other revenues may be
recognized as sales occur or services are performed.
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B><I>Allowance for doubtful accounts</I></B>. In accordance with our policy, all prospective students are
required to select both a primary and secondary payment option with respect to amounts due to us
for tuition, fees and other expenses.
The most common payment option for our students is financial aid but students may also choose
personal cash, tuition reimbursement, or direct bill to their employer. Financial aid loan funds
are generally provided by the Federal Direct Loan Program in two disbursements for each academic
year. The disbursements are usually received two to four weeks after the start of the first course
in a payment period. These factors, together with the timing of students&#146; beginning their programs,
affect our operating cash flow including our accounts receivable balance. In
instances where a student selects financial aid as the primary payment option, he or she often
selects personal cash as the secondary option. If a student that has selected financial aid as his
or her primary payment option withdraws prior to the end of a course but after the date that our
institutional refund period has expired, the student will have incurred the obligation to pay the
full cost of the course. If the withdrawal occurs before the date at which the student has earned
100% of his or her financial aid, we will have a return to Title IV requirement and the student
will owe us all amounts incurred that are in excess of the amount of financial aid that the student
earned and that we are entitled to retain. In this case, we must collect the receivable using the
student&#146;s second payment option. In instances in which the student chose to receive living
expense funds as part of his or her financial aid disbursement, we are required to return the
unearned portion of these funds as well and then collect these amounts from the student.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We record an allowance for doubtful accounts for estimated losses resulting from the
inability, failure or refusal of its students to make required payments, which includes the recovery of financial aid funds advanced to a student for amounts in excess of the student&#146;s
cost of tuition and related fees. We determine the adequacy
of our allowance for doubtful accounts based on an analysis of our historical bad debt experience,
current economic trends, and the aging of the accounts receivable and student status. We apply a reserve to our
receivables based upon an estimate of the risk presented by the age of the receivables and student status. We have
historically written off accounts receivable at the earlier of the time the balance is deemed
uncollectible, or one year after the revenue is generated. We monitor our collections and
write-off experience to assess whether adjustments are necessary.
</DIV>





 <P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->86<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B><I>Long-Lived Assets (other than goodwill)</I></B>. We evaluate the recoverability of our long-lived
assets for impairment whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to undiscounted future net cash flows expected to be
generated by the assets. If such assets are considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying amount of the assets exceeds the fair
value of the assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B><I>Loss Contingencies</I></B>. We are subject to various claims and contingencies in the ordinary course
of business and incidental to our industry, including those related to regulation, litigation,
business transactions and taxes, among others. We accrue for contingent obligations when it is
probable that a liability has been incurred and the amount is reasonably estimable. When we become
aware of a claim or potential claim, the likelihood of any loss exposure is assessed. If it is
probable that a loss will result and the amount of the loss is estimable, we accrue for the
estimated amount of the loss. If the loss is not probable or the amount of the potential loss is
not estimable, we disclose the claim if the likelihood of a potential loss is reasonably possible
and that the amount of the potential loss could be material. Estimates that are particularly
sensitive to future changes include tax, legal, and other regulatory matters, which are subject to
change as events evolve, and as additional information becomes available during the administrative
and litigation process.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><B><I>Income taxes</I></B>. We recognize the amount of taxes payable or refundable for the current year and
deferred tax assets and liabilities for future tax consequences of events that have been recognized
in our financial statements or tax returns. Deferred tax assets and liabilities are measured using
enacted tax rates in effect for the year in which the temporary differences are expect to be
realized. Our deferred tax assets are subject to periodic recoverability assessments. Valuation
allowances are established, when necessary, to reduce deferred tax assets to the amount that more
likely than not will be realized. Realization of the deferred tax assets is principally dependent
upon achievement of projected future taxable income offset by deferred tax liabilities. We evaluate
the realizability of the deferred tax assets annually. Since becoming a taxable corporation in
August&nbsp;2005, we have not recorded any valuation allowances to date on our deferred income tax
assets. Commencing in January&nbsp;2008, we evaluate and account for uncertain tax positions using a two
step approach. Recognition occurs when we conclude that a tax position based solely on its
technical merits, is more-likely-than-not to be sustained upon examination. Measurement determines
the amount of benefit that is greater than 50% likely to be realized upon the ultimate settlement
with a taxing authority that has full knowledge of the facts. Derecognition of a tax position that
was previously recognized occurs when we determine that a tax position no longer meets the
more-likely-than-not threshold of being sustained upon examination.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Results of Operations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The following table sets forth statements of
operations data as a percentage of net
revenue for each of the periods indicated:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year Ended December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Instructional cost and services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Selling and promotional</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Litigation loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Contract termination fees to related party</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Exit costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Royalty to former owner</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.8</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Year Ended December&nbsp;31, 2010 Compared to Year Ended December&nbsp;31, 2009</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Net
revenue</I>. Our net revenue for the year ended December&nbsp;31, 2010 was $385.6&nbsp;million, an
increase of $123.9&nbsp;million, or 47.2%, as compared to net revenue of $261.9&nbsp;million for the year
ended December&nbsp;31, 2009. This increase was primarily due to increased online enrollment and, to a
lesser extent, increases in the average tuition per student as a result of tuition price increases
and an increase in the number of students taking four credit courses between years, partially
offset by an increase in institutional scholarships. End-of-period enrollment increased to
approximately 41,500, as we were able to continue our growth and increase our recruitment,
marketing, and enrollment operations. We are anticipating increased pressure on new and continuing
enrollments due primarily to the increasing challenges presented in the economy, the impact of new
and proposed regulations, and increased competition, as well as the change to BBAY.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Instructional costs and services expenses</I>. Our instructional costs and services expenses for
the year ended December&nbsp;31, 2010 were $178.5&nbsp;million, an
increase of $76.9&nbsp;million, or 75.7%, as
compared to instructional costs and services expenses of $101.6&nbsp;million for the year ended December
31, 2009. This increase was primarily due to increases in bad debt
expense, instructional compensation and related
expenses, faculty compensation, instructional supplies, non-capitalizable system conversion costs,
depreciation and amortization, share-based compensation, and other miscellaneous instructional
costs and services of $24.5 million, $16.8&nbsp;million, $13.9&nbsp;million, $4.3&nbsp;million, $4.0&nbsp;million, $3.3&nbsp;million, $1.2
million, and $8.9&nbsp;million, respectively.
The increase is primarily due to bad debt expense increasing to $38.5
million for the year ended December 31, 2010 from $14.0 million for
the year ended December 31, 2009 as a result of an increase in net
revenues and the increase in aged receivables between periods as a
result of current economic conditions and the conversion to BBAY,
which has caused an increase in receivables due from former students.
These increases are also attributable to the
increased headcount (both staff and faculty) needed to provide student instruction and support
services, including increased occupancy and equipment costs for the increased headcount, to support
the increase in enrollments and non-capitalizable system conversion costs of $4.0&nbsp;million. Our
instructional costs and services expenses as a percentage of net
revenue increased by 7.5% to 46.3%
for the year ended December&nbsp;31, 2010, as compared to 38.8% for the year ended December&nbsp;31, 2009.
This increase was a result of

an increase in bad debt expense as a percentage of revenue from 5.4%
in the year ended December 31, 2009 to 10.0% for the year ended
December 31, 2010,

the non-capitalizable system conversion costs, an increase in faculty
compensation as a percentage of revenue as we have seen decreases in class size as the result of
increasing the number of starts during 2010 and increased instructional supplies and miscellaneous
instructional costs due to increased licensing fees related to educational resources and continued
improvement in curriculum development and new and enhanced innovative educational tools, partially
offset by our ability to leverage the fixed cost structure of our campus-based facilities and
ground faculty across an increasing revenue base.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Selling and promotional expenses</I>. Our selling and promotional expenses for the year ended
December&nbsp;31, 2010 were $112.5&nbsp;million, an increase of $27.1&nbsp;million, or 31.7%, as compared to
selling and promotional expenses of $85.4&nbsp;million for the year ended December&nbsp;31, 2009. This
increase was primarily due to increases in selling and promotional employee compensation and
related expenses, advertising, and other selling and promotional related costs of $12.2&nbsp;million,
$11.9&nbsp;million and $3.0&nbsp;million, respectively. These increases were driven by a continued
substantial expansion in our marketing efforts, which resulted in an increase in recruitment,
marketing, and enrollment staffing, and expenses related to our revenue sharing arrangement. Our
selling and promotional expenses as a percentage of net revenue decreased by 3.4% to 29.2% for the
year ended December&nbsp;31, 2010, from 32.6% for the year ended December&nbsp;31, 2009. This decrease
occurred as a result of slowing the growth of our enrollment counselor hiring such that our new
enrollment counselors as a percentage of total enrollment counselors is less in 2010 than in 2009.
In this regard, we incur immediate expenses in connection with hiring new enrollment counselors
while these individuals undergo training, and typically do not achieve full productivity or
generate enrollments from these enrollment counselors until four to six months after their dates of
hire. We plan to continue to add additional enrollment counselors in the future, although the
number of additional hires as a percentage of the total headcount is expected to remain flat or
decrease.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>General and administrative expenses</I>. Our general and administrative expenses for the year
ended December&nbsp;31, 2010 were $26.6&nbsp;million, an increase of
$5.0&nbsp;million, or 23.2%, as compared to
general and administrative expenses of $21.6&nbsp;million for the year ended December&nbsp;31, 2009. This
increase was primarily due to increases in employee compensation, increases in
legal, audit and corporate insurance expenses and other general and administrative expenses of $2.5&nbsp;million, $1.0&nbsp;million, and $1.5&nbsp;million, respectively.
 Employee
compensation increased primarily as a result of headcount increases in departments such as
accounting and human resources to support the increasing number of students and staff. Our general
and administrative expenses as a percentage of net revenue
decreased by 1.3% to 6.9% for the year ended December&nbsp;31, 2010,
from 8.2% for the year ended
December&nbsp;31, 2009. This decrease was primarily due to our ability to leverage our costs over an
increasing revenue base.
</DIV>
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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Contract termination fees to related party. </I>As a result of new rules adopted by the Department
of Education and effective July&nbsp;1, 2011, we determined that revenue sharing arrangements like the
Collaboration Agreement, and the manner in which we pay amounts due Mind Streams under the
Collaboration Agreement, will most likely no longer be permitted. Accordingly, we and Mind Streams
entered into an agreement, dated December&nbsp;30, 2010, pursuant to which we agreed to pay Mind Streams
an amount equal to (a) $8.5&nbsp;million, plus (b)&nbsp;Mind Streams&#146; applicable share of any net revenue
actually received by us on or before February&nbsp;28, 2011 with respect to any qualified applicant
identified by Mind Streams that matriculated at the University and began a course prior to November
1, 2010. In return, Mind Streams agreed to (i)&nbsp;accept such amounts in full and complete
satisfaction of all amounts owed by us to Mind Streams under the Collaboration Agreement, and (ii)
transfer to us a proprietary database of potential student leads. In the aggregate, we have
expensed $9.2&nbsp;million in 2010 relating to the termination of this contract.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Litigation loss. </I>During the third quarter of fiscal year 2009, we recorded an accrual of $5.2
million for the estimated settlement of the <I>qui tam </I>lawsuit. This settlement became final in
December&nbsp;2010. See Item&nbsp;8, <I>Financial Statements and Supplementary Data</I>, and Part&nbsp;I, Item&nbsp;3, <I>Legal
Proceedings</I>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Exit costs. </I>In 2009, we recorded $1.2&nbsp;million for exit costs related to the closure of the
student services facility in Utah, including termination benefits, relocation expenses and the
future lease payments, net of estimated sublease rentals, plus the write off of leasehold
improvements associated with the leased space. During 2010, we recorded an additional $0.3&nbsp;million
for exit costs primarily related to our unused lease space in Utah and technology related costs
that could not be utilized in other locations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Interest expense</I>. Our interest expense for the year ended December&nbsp;31, 2010 was $0.9&nbsp;million,
a decrease of $0.7&nbsp;million from $1.6&nbsp;million for the year ended December&nbsp;31, 2009, as the average
level of borrowings and related interest rates were significantly lowered as a result of the
repurchase of the campus land and buildings and the conversion from a capital lease obligation at
an effective interest rate of approximately 8.7% to a variable rate debt with an effective interest
rate of 3.8% beginning in the second quarter of 2009. Additionally, in June&nbsp;2010 the loan
agreement was amended to reduce the interest rate on unpaid amounts to 30-day LIBOR plus 2.25% from
30-day LIBOR plus 3.5%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Income
tax expense</I>. Income tax expense for the year ended
December&nbsp;31, 2010 was $22.2&nbsp;million,
an increase of $4.2&nbsp;million from $18.0&nbsp;million for the year ended December&nbsp;31, 2009. This increase
was primarily attributable to increased income before income taxes. Our effective tax rate was
38.7% during the year ended December&nbsp;31, 2010 compared to 39.7% during the year ended December&nbsp;31,
2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Net
income</I>. Our net income for the year ended December&nbsp;31, 2010
was $35.2&nbsp;million, an increase
of $7.9&nbsp;million, as compared to $27.3&nbsp;million for the year ended December&nbsp;31, 2009, due to the
factors discussed above.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Year Ended December&nbsp;31, 2009 Compared to Year Ended December&nbsp;31, 2008</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Net revenue</I>. Our net revenue for the year ended December&nbsp;31, 2009 was $261.9&nbsp;million, an
increase of $100.6&nbsp;million, or 62.4%, as compared to net revenue of $161.3&nbsp;million for the year
ended December&nbsp;31, 2008. This increase was primarily due to increased enrollment and, to a lesser
extent, increases in the average tuition per student caused primarily by tuition price increases,
partially offset by an increase in institutional scholarships. End-of-period enrollment increased
53.1% between December&nbsp;31, 2009 and 2008, as we continued our growth and increased our recruitment,
marketing, and enrollment operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Instructional cost and services expenses</I>. Our instructional cost and services expenses for the
year ended December&nbsp;31, 2009 were $101.6&nbsp;million, an
increase of $38.7&nbsp;million, or 61.5%, as
compared to instructional cost and services expenses of $62.9&nbsp;million for the year ended December
31, 2008. This increase was primarily due to increases in instructional compensation and related
expenses, faculty compensation, bad debt expense, instructional supplies, depreciation and amortization, occupancy
and other miscellaneous instructional costs and services of
$16.3&nbsp;million, $7.6&nbsp;million, $5.6&nbsp; million, $2.6
million, $2.2&nbsp;million, $2.2&nbsp;million, and $2.2&nbsp;million, respectively. These increases are primarily
attributable to the increased headcount (both staff and faculty) needed to provide student
instruction and support services, including increased occupancy and equipment costs for the
increased headcount, as a result of the increase in enrollments.
Bad debt expense
increased to $14.0&nbsp;million for the year ended December&nbsp;31, 2009 from $8.5&nbsp;million for the year
ended December&nbsp;31, 2008 as a result of an increase in net revenues and the increase in aged
receivables between periods.

Our instructional cost and
services expenses as a percentage of net revenue increased by 5.0% to
38.8% for the year ended
December&nbsp;31, 2009, as compared to 33.8% for the year ended December&nbsp;31, 2008.

This increase is primarily due to an increase in employee
compensation and related expenses as a percentage of revenue as we
have increased the support personnel to student ratios to further
improve the customer service to our students, as well as an increase
in bad debt expense due to current economic conditions, a higher
percentage of aged receivables are not being paid. However, this
deterioration in collections of aged receivables has recently been
more than offset by changes that have been implemented with respect
to our student accounts receivable collection process, which has
resulted in fewer accounts reaching aged status. Thus the amount of
aged receivable and bad debt expense as a percentage of revenue has
remained comparable between years. These increases are partially
offsets as a result of the continued shift of our student population
to online programs and our ability to leverage the relatively fixed
cost structure of our campus-based facilities and ground faculty
across an increasing revenue based, as well as increased class sizes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Selling and promotional expenses</I>. Our selling and promotional expenses for the year ended
December&nbsp;31, 2009 were $85.4&nbsp;million, an increase of $19.9&nbsp;million, or 30.3%, as compared to
selling and promotional expenses of $65.5&nbsp;million for the year ended December&nbsp;31, 2008. This
increase was primarily due to increases in selling and promotional employee compensation and
related expenses, advertising and revenue sharing expense, occupancy, and other selling and
promotional related costs of $11.0&nbsp;million, $7.1&nbsp;million, $1.5&nbsp;million, and $0.3&nbsp;million,
respectively. These increases were driven by the continued expansion in our marketing efforts,
which resulted in an increase in recruitment, marketing, and enrollment staffing, and expenses
related to our revenue sharing arrangement. Our selling and promotional expenses as a percentage of
net revenue decreased by 8.0% to 32.6% for the year ended December&nbsp;31, 2009, from 40.6% for the
year ended December&nbsp;31, 2008. This decrease occurred as a result of an increase in the productivity
of our enrollment counselors that were hired during 2008 and early 2009, coupled with a focus on
higher quality leads. In this regard, we incur immediate expenses in connection with hiring new
enrollment counselors while these individuals undergo training, and typically do not achieve full
productivity or generate enrollments from these enrollment counselors until four to six months
after their dates of hire.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>General and administrative expenses</I>. Our general and administrative expenses for the year
ended December&nbsp;31, 2009 were $21.6&nbsp;million, an increase of
$3.2&nbsp;million, or 17.7%, as compared to
general and administrative expenses of $18.4&nbsp;million for the year ended December&nbsp;31, 2008. This
increase was primarily due to increases in, employee compensation, and share-based
compensation, which were partially offset by decreases in legal, audit and corporate insurance of
$5.5&nbsp;million, $3.5&nbsp;million, $0.6&nbsp;million, and $0.8&nbsp;million, respectively.

 Employee compensation increased primarily as a result of the full year
impact of the additions made in July&nbsp;2008 to our executive management team and the subsequent
hiring of other personnel needed to operate as a public company. The decrease in legal, audit, and
corporate insurance is primarily related to legal costs associated with the Sungard matter incurred
in 2008 and subsequently settled in 2009. Our general and administrative expenses as a percentage
of net revenue decreased by 3.2% to 8.2% for the year ended
December&nbsp;31, 2009, from 11.4% for the
year ended December&nbsp;31, 2008, primarily due to a decrease in our legal costs as a percentage of net
revenue between periods during 2008 to 1.5% of net revenue during 2009 from 2.9% in 2008 and our
ability to leverage our fixed infrastructure over higher net revenue.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->90<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Litigation loss. </I>During the third quarter of 2009, we recorded an accrual of $5.2
million for the estimated settlement of the <I>qui tam </I>lawsuit that was settled in December&nbsp;2010. See
Item&nbsp;8, <I>Financial Statements and Supplementary Data</I>, and Part&nbsp;I, Item&nbsp;3, <I>Legal Proceedings</I>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Exit costs. </I>During the fourth quarter of 2009, we recorded $1.2&nbsp;million for exit costs related
to the closure of the student services facility in Utah, including termination benefits, relocation
expenses and the future lease payments, net of estimated sublease rentals, plus the write off of
leasehold improvements associated with the leased space.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Royalty to former owner</I>. In connection with our royalty fee arrangement with the former owner
related to online revenue, we incurred royalty expenses for the year ended December&nbsp;31, 2009 of
$0.3&nbsp;million, a decrease of $1.4&nbsp;million, or 82.4%, as compared to royalty expenses incurred of
$1.7&nbsp;million for the year ended December&nbsp;31, 2008 as a result of the elimination of the obligation
to pay royalties to the former owner effective April&nbsp;15, 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Interest expense</I>. Our interest expense for the year ended December&nbsp;31, 2009 was $1.6&nbsp;million,
a decrease of $1.3&nbsp;million, or 44.3%, from $2.9&nbsp;million for the year ended December&nbsp;31, 2008, as
the average level of borrowings and related interest rates changed as a result of the purchase of
the campus land and buildings in late April&nbsp;2009 from an effective borrowing rate of approximately
8.7% to the 3.8% variable rate note payable as of December&nbsp;31, 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Interest income</I>. Our interest income for the year ended December&nbsp;31, 2009 was $0.3&nbsp;million, a
decrease of $0.3&nbsp;million from $0.6&nbsp;million for the year ended December&nbsp;31, 2008, as a result of
decreased short-term interest rates in 2009 partially offset by higher cash balance in 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Income tax expense</I>. Income tax expense for the year ended December&nbsp;31, 2009 was $18.0&nbsp;million,
an increase of $14.2&nbsp;million from $3.8&nbsp;million for the year ended December&nbsp;31, 2008. This increase
was primarily attributable to increased income before income taxes. Our effective tax rate
increased from 36.6% in 2008 to 39.7% in 2009 as the $0.8&nbsp;million in contributions made to various
Arizona school tuition organization in lieu of the payment of state income taxes had a greater
impact on the 2008 effective tax rate than the 2009 effective tax rate due to higher income before
taxes in 2009. Excluding the contributions made in lieu of state income taxes the effective tax
rate would have been 40.7% and 40.8% in 2009 and 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Net income</I>. Our net income for the year ended December&nbsp;31, 2009 was $27.3&nbsp;million, an increase
of $20.6&nbsp;million, or 308%, as compared to net income of $6.7&nbsp;million for the year ended December
31, 2008, due to the factors discussed above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Seasonality</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our net revenue and operating results normally fluctuate as a result of seasonal variations in
our business, principally due to changes in enrollment. Student population varies as a result of
new enrollments, graduations, and student attrition. The majority of our traditional ground
students do not attend courses during the summer months (May through August), which affects our
results for our second and third fiscal quarters. Since a significant amount of our campus costs
are fixed, the lower revenue resulting from the decreased ground student enrollment has
historically contributed to lower operating margins during those periods. As we have increased the
relative proportion of our online students, we expect this summer effect to continue to lessen.
Partially offsetting this summer effect in the third quarter has been the sequential quarterly
increase in enrollments that has occurred as a result of the traditional fall school start. This
increase in enrollments also has occurred in the first quarter, corresponding to calendar year
matriculation. In addition, we typically experience higher net revenue in the fourth quarter due to
its overlap with the semester encompassing the traditional fall school start and in the first
quarter due to its overlap with the first semester of the calendar year. A portion of our expenses
do not vary proportionately with these fluctuations in net revenue, resulting in higher operating
income in the first and fourth quarters relative to other quarters. We expect quarterly fluctuation
in operating results to continue as a result of these seasonal patterns.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->91<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Liquidity, Capital Resources, and Financial Position</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Liquidity</I>. During 2010, we financed our operating activities and capital expenditures
primarily through cash provided by operating activities. Our unrestricted cash, cash equivalents,
and marketable securities were $33.6&nbsp;million at December&nbsp;31, 2010 and our restricted cash, cash
equivalents and investments were $52.9&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">During 2010, we completed construction on our 55,000 square foot recreation center for both
student-athletes and on-campus students, a new dormitory that can hold up to 600 students, and a
new College of Education Classroom building. We started development for a 140,000 square foot
arena that will open in September&nbsp;2011, a new 500 bed dormitory and a food court restaurant that
will be completed in August&nbsp;2011. These investments are to support our growing on-campus student
population as well as enhance the brand of the University.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">A significant portion of our net revenue is derived from tuition financed by the Title IV
programs. Federal regulations dictate the timing of disbursements under the Title IV programs.
Under the BBAY financial aid system, loan funds are generally provided by the Federal Direct Loan
Program in two disbursements for each academic year. The disbursements are usually received two to
four weeks into the first course of a payment period. These factors, together with the timing of
students beginning their programs, affect our operating cash flow. In a term-based Title IV
environment, Title IV disbursements are generally based on three academic terms per year and
institutions operating on this basis are generally allowed to bring in up to 33% of a student&#146;s
academic year financial aid at the start of each term, with the majority of such amounts being
treated as unrestricted cash and deferred revenue (or a student deposit liability depending on if
the course had begun or not) until the revenue is recognized. In a non-term, borrower-based
environment, Title IV disbursements are generally based on a 24-credit academic year/12-credit
payment period for undergraduate students and a 12-credit academic year/6-credit payment period for
graduate students. Institutions operating on this basis are generally allowed to bring in up to
50% of a student&#146;s academic year financial aid at the start of a program. If this financial aid is
received for courses that have begun, then it is treated as unrestricted cash and deferred revenue
until the revenue is recognized. If the financial aid is received for courses that have not yet
begun, then it is treated as restricted cash and a student deposit liability. As a result of our
move to BBAY, we receive a greater proportion of student financial aid prior to the time courses
have begun, which has resulted in the shift of unrestricted cash to restricted cash and has caused
a significant increase in the restricted cash amount between December&nbsp;31, 2009 and December&nbsp;31,
2010.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">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, planned capital expenditures, and working capital
requirements for at least the next 24&nbsp;months.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Cash Flows</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Operating Activities</I>. Net cash provided by operating activities for the year ended December
31, 2010 and 2009 was $84.1&nbsp;million and $61.2&nbsp;million, respectively. Cash provided by operations in
2010 and 2009 resulted from our net income plus non-cash charges for provision for bad debts,
depreciation and amortization, estimated settlement loss, exit costs, share-based compensation and
improvement in our working capital management. Net cash provided by operating activities for the
year ended December&nbsp;31, 2008 was $10.2&nbsp;million. Excluding the payment of $19.5&nbsp;million that was
made to our former owner in April&nbsp;2008 to satisfy in full all past royalties due under the royalty
agreement and the elimination of the existing obligation to pay royalties for online student
revenues in perpetuity, net cash provided by operating activities for the year ended December&nbsp;31,
2008 would have been $22.5&nbsp;million.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Investing Activities</I>. Net cash used in investing activities was $111.8&nbsp;million, $58.4&nbsp;million,
and $6.3&nbsp;million for the years ended December&nbsp;31, 2010, 2009, and 2008, respectively. Our cash used
in investing activities is primarily related to the purchase of property and equipment, leasehold
improvements, and changes in restricted cash and cash equivalents. In 2009, cash used in investing
activities was primarily related to the acquisition of our campus land and buildings from Spirit,
for $35.5&nbsp;million. Other capital expenditures were $62.6&nbsp;million, $24.8&nbsp;million and $8.4&nbsp;million
for the years ended December&nbsp;31, 2010, 2009, and 2008, respectively. Capital expenditures primarily
consisted of campus improvements to support our growing on-campus student population, purchases of
computer equipment, leasehold improvements, infrastructure licenses and software development costs
to facilitate our transition from Datatel to CampusVue and Great Plains, and office furniture and
fixtures to support our increasing employee headcounts. We anticipate capital expenditures as a
percentage of revenue to remain at levels comparable
to 2010 in 2011 and 2012 to support the continued increase in ground campus students,
innovative education tools and ground campus building projects.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->92<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Financing Activities</I>. Net cash (used in) provided by financing activities was $(1.2) million,
$24.7&nbsp;million, and $12.3&nbsp;million for the years ended December&nbsp;31, 2010, 2009, and 2008,
respectively. During 2009, the proceeds from the note payable associated with the acquisition of
our ground campus and buildings and proceeds from our September&nbsp;2009 offering of stock were
partially offset by the repurchase of our shares from Spirit. During 2008, principal payments on
notes payable, capital lease obligations and our line of credit were offset by private placements
of securities to our stockholders, and the net proceeds from our initial public offering of common
stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Contractual Obligations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table sets forth, as of December&nbsp;31, 2010, the aggregate amounts of our
significant contractual obligations and commitments with definitive payment terms due in each of
the periods presented (in millions):
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="30%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14" style="border-bottom: 1px solid #000000"><B>Payments Due by Period</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Less than</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>More than</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>1 Year</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2-3 Years</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>4-5 Years</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>5 Years</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long term notes payable<SUP style="FONT-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">23.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">18.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital lease obligations<SUP style="FONT-size: 85%; vertical-align: text-top">(2)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchase obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating lease obligations<SUP style="FONT-size: 85%; vertical-align: text-top">(3)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total contractual obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">123.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">50.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">18.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">30.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">24.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96%">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>See Note 8, &#147;Notes Payable and Other Noncurrent Liabilities,&#148; to our financial statements,
included in Item&nbsp;8, <I>Financial Statements and Supplementary Data</I>, for a discussion of our long
term notes payable and other obligations.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>See Note 9, &#147;Capital Lease Obligations,&#148; to our financial statements, included in Item&nbsp;8,
<I>Financial Statements and Supplementary Data</I>, for a discussion of our capital lease
obligations.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>See Note 10, &#147;Commitments and Contingencies,&#148; to our financial statements, included in Item&nbsp;8,
<I>Financial Statements and Supplementary Data</I>, for a discussion of our operating lease
obligations.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The foregoing obligations exclude potential royalty payments to Blanchard Education, LLC under
our license agreement, the amounts of which are contingent on tuition revenue from certain of our
business programs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Off-Balance Sheet Arrangements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We do not have any off-balance sheet arrangements that have had or are reasonably likely to
have a material current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital
resources.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Non-GAAP Discussion</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In addition to our GAAP results, we use Adjusted EBITDA as a supplemental measure of our
operating performance and as part of our compensation determinations. Adjusted EBITDA is not
required by or presented in accordance with GAAP and should not be considered as an alternative to
net income, operating income, or any other performance measure derived in accordance with GAAP, or
as an alternative to cash flow from operating activities or as a measure of our liquidity. See
Item&nbsp;6, <I>Selected Financial and Other Data, </I>for a discussion of our Adjusted EBITDA computation and
reconciliation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Recent Accounting Pronouncements</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">See
Note 3, Summary of Significant Accounting Policies, in Item&nbsp;8, <I>Financial Statements and
Supplementary Data</I>
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->93<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">
<DIV align="left">
<A name="C24244113"></A>
</DIV>

<DIV align="left" style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>Item&nbsp;7A.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B><I>Quantitative and Qualitative Disclosures about Market Risk</I></B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Impact of inflation. </I>We believe that inflation has not had a material impact on our results of
operations for the years ended December&nbsp;31, 2010, 2009, or 2008. There can be no assurance that
future inflation will not have an adverse impact on our operating results and financial condition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Market risk</I>. On June&nbsp;30, 2009, we entered into two derivative agreements to manage our 30-day
LIBOR interest exposure from the variable rate note payable. A corridor instrument hedges our
variable interest rate risk from July&nbsp;1, 2009 through April&nbsp;30, 2014 with a notional amount of
$11.5&nbsp;million as of December&nbsp;31, 2010 and permits us to hedge our interest rate risk at several
thresholds. Under this arrangement, in addition to the credit spread we will pay variable interest
rates based on the 30-day LIBOR rates monthly until that index reaches 4%. If 30-day LIBOR is equal
to 4% through 6%, we will continue to pay 4%. If the 30-day LIBOR exceeds 6%, we will pay actual
30-day LIBOR less 2%. In addition, an interest rate swap commenced on May&nbsp;1, 2010, continues each
month thereafter until April&nbsp;30, 2014, and has a notional amount of $11.5&nbsp;million as of December
31, 2010. Under this arrangement, we will receive 30-day LIBOR and pay 3.245% fixed rate on the
amortizing notional amount plus the credit spread.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Except with respect to the foregoing, we have no derivative financial instruments or
derivative commodity instruments. We invest cash in excess of current operating requirements in
short term certificates of deposit and money market instruments in multiple financial institutions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Interest rate risk</I>. We manage interest rate risk through the instruments noted above and by
investing excess funds in cash equivalents and AAA rated marketable securities bearing variable
interest rates, which are tied to various market indices. Our future investment income may fall
short of expectations due to changes in interest rates or we may suffer losses in principal if we
are forced to sell securities that have declined in market value due to changes in interest rates.
At December&nbsp;31, 2010, a 10% increase or decrease in interest rates would not have a material impact
on our future earnings, fair values, or cash flows. For information regarding our variable rate
notes payable, see &#147;Market risk&#148; above.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->94<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">
<DIV align="left">
<A name="C24244114"></A>
</DIV>

<DIV align="left" style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>Item&nbsp;8.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B><I>Financial Statements and Supplementary Data</I></B></TD>
</TR>
</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="86%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Page</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C24244301">Report of Independent Registered Public Accounting Firm</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">96</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">

<TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C24244303">Balance
Sheets as of December&nbsp;31, 2010 (restated) and 2009</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">98</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C24244304">Income
Statements for the years ended December&nbsp;31, 2010 (restated), 2009 and 2008</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">99</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C24244305">Statements
of Comprehensive Income for the years ended December&nbsp;31, 2010
(restated), 2009 and 2008</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C24244306">Statements of Preferred Stock and Stockholders&#146; Equity (Deficit) for the years ended December&nbsp;31,
2010 (restated), 2009 and 2008</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">101</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C24244307">Statements
of Cash Flows for the years ended December&nbsp;31, 2010 (restated), 2009 and 2008</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#C24244308">Notes to Financial Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->95<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left">
<A name="C24244301"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Report of Independent Registered Public Accounting Firm</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The Board of Directors and Stockholders<BR>
Grand Canyon Education, Inc.

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We have audited the accompanying balance sheets of Grand Canyon Education, Inc. (the
&#147;Company&#148;) as of December&nbsp;31, 2010 (restated) and 2009, and the related statements of income, comprehensive
income, preferred stock and stockholders&#146; equity (deficit), and cash flows for each of the three
years in the period ended December&nbsp;31, 2010 (restated). These financial statements are the responsibility of
the Company&#146;s management. Our responsibility is to express an opinion on these financial statements
based on our audits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In our opinion, the financial statements referred to above present fairly, in all material
respects, the financial position of Grand Canyon Education, Inc. at
December&nbsp;31, 2010 (restated) and 2009, and
the results of its operations and its cash flows for each of the three years in the period ended
December&nbsp;31, 2010 (restated), in conformity with U.S. generally accepted accounting principles.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As
discussed in Note 2, the accompanying financial statements as of and for
the year ended December 31, 2010 have been
restated for the correction of an error in the Company&#146;s calculation of its allowance for doubtful accounts.
</div>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We also have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), Grand Canyon Education, Inc.&#146;s internal control over financial
reporting as of December&nbsp;31, 2010, based on criteria established in Internal Control &#151; Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our
report dated February&nbsp;22, 2011, except for the effects of the
material weakness described in the sixth paragraph of that report, as
to which the date is November 14,
2011, expressed an adverse opinion thereon.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="65%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Ernst &#038; Young LLP
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Phoenix, Arizona<BR>
February&nbsp;22, 2011, except for Note 2, as to which the date is
November 14, 2011

</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->96<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>

<DIV align="left">
<A name="C24244303"></A>
</DIV>

<!-- xbrl,bs -->
<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Balance Sheets</B>
</DIV>

<!-- xbrl,body -->

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>As of December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><I>(In thousands, except par value)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000"><B>Restated</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD colspan="9" align="center"><B>ASSETS:</B><BR></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Current assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">33,637</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">62,571</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Restricted cash, cash equivalents and investments (of which $170 is
unrestricted at December&nbsp;31, 2009)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,178</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,403</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts
receivable, net of allowance for doubtful accounts of $30,112 (Restated) and
$7,553 at December&nbsp;31, 2010 and 2009, respectively</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,983</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,802</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income taxes receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,078</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,685</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,834</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,785</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total current assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">133,125</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90,246</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property and equipment, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">123,999</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67,370</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Restricted cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">760</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">360</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Prepaid royalties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,579</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,311</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Goodwill</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,941</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,941</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,956</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,892</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">554</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">275,096</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">174,738</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD colspan="9" align="center"><B>LIABILITIES AND STOCKHOLDERS&#146; EQUITY:</B><BR></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Current liabilities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15,693</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,762</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accrued compensation and benefits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,633</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,898</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accrued liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,477</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,205</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accrued litigation loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,200</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accrued exit costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">832</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income taxes payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">829</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,261</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Student deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,873</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,149</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,034</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,055</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Due to related parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,346</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,174</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current portion of capital lease obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,673</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">751</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Current portion of notes payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,026</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,105</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total current liabilities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">122,848</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62,392</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital lease obligations, less current portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">151</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">868</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other noncurrent liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,715</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,467</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Notes payable, less current portion and other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,881</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,983</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total liabilities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">147,595</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">88,710</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commitments and contingencies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Stockholders&#146; equity</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Preferred stock, $0.01 par value, 10,000 shares authorized; 0 shares issued
and outstanding at December&nbsp;31, 2010 and 2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common stock, $0.01 par value, 100,000 shares authorized; 45,811 and 45,658
shares issued and 45,761 and 45,658 shares outstanding at December&nbsp;31, 2010
and 2009, respectively</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">458</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">457</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Treasury stock, at cost, 50 and 0 shares of common stock at December&nbsp;31,
2010 and 2009, respectively</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(782</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additional paid-in capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77,449</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,100</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accumulated other comprehensive loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(445</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(144</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accumulated earnings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,821</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,615</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total stockholders&#146; equity</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">127,501</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">86,028</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total liabilities and stockholders&#146; equity</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">275,096</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">174,738</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The accompanying notes are an integral part of these financial statements.
</DIV>
<!-- /xbrl,bs -->

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->98<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">




<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>

<DIV align="left">
<A name="C24244304"></A>
</DIV>

<!-- xbrl,in -->
<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Income Statements</B>
<!-- xbrl,body -->
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year Ended December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><I>(In thousands, except per share amounts)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000"><b>Restated</b></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net revenue</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">385,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">261,902</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">161,309</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Costs and expenses:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Instructional costs and services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">178,548</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">101,608</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62,915</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Selling and promotional, including $8,777
in 2010; $6,736 in 2009; and $5,895 in
2008, to related parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112,493</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85,405</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65,551</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,621</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,603</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,360</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Litigation loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Contract termination fees to related party</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,233</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Exit costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">258</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,218</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Royalty to former owner</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">296</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">296</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,686</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total costs and expenses</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">327,449</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">215,330</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">148,512</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Operating income</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58,176</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,572</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,797</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(889</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,613</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,897</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">168</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">324</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">640</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Income before income taxes</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,455</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,283</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,540</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,249</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,979</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,855</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net income</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,206</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,685</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Preferred dividends</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(938</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net income available to common stockholders</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">35,206</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">27,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,747</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Earnings per share:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Basic income per share</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.77</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.26</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Diluted income per share</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.76</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.17</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Basic weighted average shares outstanding</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,722</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,184</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,185</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Diluted weighted average shares outstanding</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,396</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,503</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,430</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The accompanying notes are an integral part of these financial statements.
</DIV>
<!-- /xbrl,in -->

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->99<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">




<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>

<DIV align="left">
<A name="C24244305"></A>
</DIV>

<!-- xbrl,in -->
<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Statements of Comprehensive Income</B>
<!-- xbrl,body -->
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year Ended December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><I>(In thousands)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="padding-top: 1px; font-size: 10pt"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000"><B>Restated</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net income</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">35,206</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">27,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,685</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Other comprehensive income (loss), net of tax:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unrealized losses on hedging derivatives</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(278</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(167</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unrealized gains (losses)&nbsp;on available for sale securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(63</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Realized gains on available for sale securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(19</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Comprehensive income</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">34,905</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">27,144</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,622</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The accompanying notes are an integral part of these financial statements.
</DIV>
<!-- /xbrl,in -->



<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->100<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><!-- LANDSCAPE -->
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>


<DIV align="left">
<A name="C24244306"></A>
</DIV>

<!-- xbrl,se -->
<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Statements of Preferred Stock and Stockholders&#146; Equity (Deficit)<BR>
<!-- xbrl,body -->
(In thousands)</B>
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="16%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000"><B>Preferred Stock</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000"><B>Stockholders&#146; (Deficit) Equity</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Accumulated</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Series A Convertible</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"><B>Series C</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Additional</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Other</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Preferred Stock</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Preferred Stock</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Common Stock</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Treasury Stock</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Paid-in</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Comprehensive</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Accumulated</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Amount</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Capital</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Income (Loss)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Earnings (Deficit)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
    <TD>&nbsp;</TD>
</TR>




<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at December&nbsp;31, 2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">18,610</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">13,338</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,036</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">190</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,719</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">79</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(18,374</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(10,386</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</div></td>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,685</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,685</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unrealized losses on available for-sale securities,
net of taxes of $42</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(63</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(63</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Undeclared dividends on Series&nbsp;C Preferred
Stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">938</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(938</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(938</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Issuance of Blanchard shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">183</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,994</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,996</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cancellation of IAS warrant, net of $2,316
deferred taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,684</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,684</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercise of warrant</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">909</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">517</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">526</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Conversion of Series&nbsp;A and Series&nbsp;C Convertible
Preferred Stock to Common Stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18,610</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14,276</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,104</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">131</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,755</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,886</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock issued in initial public offering, net of
issuance costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,075</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">121</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">128,635</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">128,756</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Special distribution to stockholders from initial
public offering proceeds</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(108,675</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(108,675</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Restricted stock granted to Chief Executive
Officer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">109</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,310</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,311</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Share-based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,563</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,563</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercise of stock options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">591</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">592</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Excess tax benefit from share-based
compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at December&nbsp;31, 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,465</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">455</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">64,808</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(11,689</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">53,590</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,304</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unrealized losses on hedging derivatives, net of
taxes of $111</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(167</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(167</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unrealized gains on available for-sale securities,
net of taxes of $5</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Repurchase and retirement of the Company&#146;s common
stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(909</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14,486</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14,495</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock issued in offering, net of issuance costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,870</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,880</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Share-based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,419</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,419</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercise of stock options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,225</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,226</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Excess tax benefit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">264</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">264</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at December&nbsp;31, 2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,658</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">457</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">70,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(144</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">15,615</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">86,028</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income
(Restated)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,206</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,206</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unrealized losses on hedging derivatives, net of
taxes of $273</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(278</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(278</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unrealized losses on available for-sale securities,
net of taxes of $3</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Realized gains on available for-sale securities,
net of taxes of $12</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(19</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(19</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common stock purchased for treasury</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(782</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(782</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Share-based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,049</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,049</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercise of stock options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">144</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,747</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Excess tax benefits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">554</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">554</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at
December&nbsp;31, 2010 (Restated)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,811</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">458</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(782</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">77,449</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(445</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">50,821</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">127,501</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The accompanying notes are an integral part of these financial statements.
</DIV>
<!-- /xbrl,se -->




<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->101<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">




<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>

<DIV align="left">
<A name="C24244307"></A>
</DIV>

<!-- xbrl,cf -->
<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Statements of Cash Flows</B>
<!-- xbrl,body -->
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year Ended December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><I>(In thousands)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="padding-top: 1px; font-size: 10pt"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000"><B>Restated</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash flows provided by operating activities:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">35,206</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">27,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,685</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjustments to reconcile net income to net cash provided by
operating activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Share-based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,049</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,419</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,991</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Excess tax benefits from share-based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(736</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(247</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(21</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amortization of notes payable issuance costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Provision for bad debts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,511</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,016</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,465</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,108</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,960</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,095</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Non-capitalizable system conversion costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,013</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Litigation loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Exit costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(768</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">832</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">(6,013</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,523</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(245</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(106</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Changes in assets and liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accounts receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(46,705</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18,376</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(10,793</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Prepaid expenses and other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,746</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(377</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(751</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Due to/from related parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,172</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(23</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">468</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,510</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,155</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">927</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Accrued liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,928</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,596</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Income taxes receivable/payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(9,293</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,929</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,624</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Deferred revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,021</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,419</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,392</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Student deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,724</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,523</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,499</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Prepaid royalties to former owner</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5,920</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Royalty payable to former owner</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,428</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Deposit with former owner</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net cash provided by operating activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,104</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,167</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,232</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash flows used in investing activities:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Capital expenditures</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(62,627</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(60,265</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,374</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Change in restricted cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(49,666</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,844</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,083</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchases of investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,627</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from sale or maturity of investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">487</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,570</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net cash used in investing activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(111,806</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(58,421</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,348</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash flows (used in) provided by financing activities:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Principal payments on notes payable and capital lease obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,933</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,415</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,357</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Repayment on line of credit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from notes payable and line of credit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,547</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Notes payable issuance costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(317</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Repurchase of outstanding shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(782</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14,495</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Repurchase of Institute Warrant</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Repayment of Institute Note Payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,250</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from related party payable on preferred stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,725</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net proceeds from issuance of common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,880</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">128,756</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Payment of special distribution</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(108,675</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from exercise of warrant</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">526</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Net proceeds from exercise of stock options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,747</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,226</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">592</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Excess tax benefits from share-based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">736</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">247</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net cash (used in) provided by financing activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,232</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,673</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,338</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net (decrease)&nbsp;increase in cash and cash equivalents</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(28,934</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,419</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,222</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash and cash equivalents, beginning of year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62,571</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,152</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,930</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash and cash equivalents, end of year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">33,637</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">62,571</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">35,152</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->102<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>



<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Statement of Cash Flows (continued)</B>
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year Ended December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><I>(In thousands)</I></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Supplemental disclosure of cash flow information</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash paid during the year for interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">769</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,802</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,709</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash paid during the year for income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">37,703</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">16,307</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,274</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Supplemental disclosure of non-cash investing and financing activities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchase of equipment through notes payable and capital lease
obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">957</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,116</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,481</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchases of property and equipment included in accounts payable
and deferred rent</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,421</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,098</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,292</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Settlement of capital lease obligation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">30,020</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Removal of Utah leasehold improvements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">274</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accretion of dividends on Series&nbsp;C convertible preferred stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">938</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Value assigned to Blanchard shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,996</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Assumption of future obligations under gift annuities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">887</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred tax on repurchase of Institute Warrant</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,316</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Conversion of Series&nbsp;A and Series&nbsp;C convertible preferred stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">32,886</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt">The accompanying notes are an integral part of these financial statements.
</DIV>

<!-- /xbrl,cf -->



<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->103<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>

<!-- xbrl,ns -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>

<DIV align="left">
<A name="C24244308"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Notes to Financial Statements<BR>
(In thousands of dollars, except share and per share data)</B>
</DIV>


<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>1. Nature of Business</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Grand Canyon Education, Inc. (the &#147;University&#148;) was formed in Delaware in November&nbsp;2003 as a
limited liability company, under the name Significant Education, LLC, for the purpose of acquiring
the assets of Grand Canyon University from a non-profit foundation on February&nbsp;2, 2004. On August
24, 2005, the University converted from a limited liability company to a corporation and changed
its name to Significant Education, Inc. On May&nbsp;9, 2008, the University changed its name to Grand
Canyon Education, Inc.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The University is a regionally accredited provider of postsecondary education services focused
on offering graduate and undergraduate degree programs in its core disciplines of education,
business, healthcare, and liberal arts. In addition to online programs, the University offers
courses at its campus in Phoenix, Arizona and onsite at the facilities of employers. The University
is accredited by the Higher Learning Commission of the North Central Association of Colleges and
Schools.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Except as otherwise indicated, all information presented in the accompanying financial
statements has been adjusted to reflect the 1,826 for one split of common stock and conversion of
formerly outstanding shares of preferred stock into common stock, both of which occurred in
connection with the University&#146;s November&nbsp;18, 2008 initial public offering of common stock.
</DIV>


<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>2. Restatement of Financial Statements</B>
</DIV>

<!-- xbrl,body -->


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On November&nbsp;3, 2011, the University determined that there was an error in the methodology it
used to estimate its allowance for doubtful accounts and that its financial statements for the year
ended December&nbsp;31, 2010 needed to be restated. The restatement adjustments also affect the
unaudited quarterly financial information for the quarters ended June&nbsp;30, 2010, September&nbsp;30, 2010,
and December&nbsp;31, 2010 presented in Note 18 of these financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In recent periods, the University experienced a significant change in the composition of its
receivable balances since its transition to the borrower-based financial aid model in the second
quarter of 2010 in which the receivables due from former students had grown as a percentage of the
total amount outstanding. However, the University&#146;s historical process for estimating the
allowance for doubtful accounts did not consider the disaggregation of receivable balances by
student based on enrollment status. As a result, the growth in the inactive student receivables was
not evident when making the allowance estimate in prior periods. As the University&#146;s collection
experience indicates that receivables from former students carry a higher risk, this disaggregated
information should have been considered in determining the probability of loss within the
University&#146;s receivables. If such information had been evaluated, management would have increased
the allowance for doubtful accounts to reflect the increased risk profile of the receivables in
prior periods. Accordingly, the Audit Committee of the Board of Directors, together with
management, determined that, because management should have taken the additional steps
necessary to develop the disaggregated information for use in the analysis of reserve requirements
and resulting allowance for doubtful accounts, the financial statements for the fiscal year ended
December&nbsp;31, 2010 should be restated to correct the allowance for doubtful accounts.
</DIV>


<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->104<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>

<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The
following table summarizes the impact of the restatement on the
University&#146;s annual results of operations  for the year ended
December&nbsp;31, 2010.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6"  style="border-bottom: 1px solid #000000"><B>2010</B></TD>

    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Twelve Months</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Twelve Months</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Ended</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>As Reported(1)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>As Restated</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net revenue</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">385,825</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">385,625</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Costs and expenses:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Instructional costs and services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">163,396</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">178,548</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Selling and promotional</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112,493</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112,493</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,621</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,621</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Contract termination fees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,233</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,233</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Royalty to former owner</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">296</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">296</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Estimated exit costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">258</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">258</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total costs and expenses</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">312,297</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">327,449</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Operating income</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73,528</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58,176</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(721</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(721</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Income before income taxes</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">72,807</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,455</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,442</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,249</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net income available to common
stockholders</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">44,365</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">35,206</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Earnings per share:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Basic income per share(1)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.97</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.77</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Diluted income per share(1)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.96</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.76</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Basic weighted average shares
outstanding</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,722</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,722</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Diluted weighted average shares
outstanding</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,396</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,396</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96%">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">
The As Reported amounts reflect the reclassification of bad debt expense  from General and administrative to
Instructional costs and services as disclosed in Note 3.</DIV></TD>
</TR>
</TABLE>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The following is a summary of the changes on the University&#146;s balance sheet.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>As of December 31, 2010</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>As Reported</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>As Restated</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accounts
receivable, net of allowance for doubtful accounts of $14,961 (as
reported) and $30,112 (as restated)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">33,334</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,983</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred income taxes &#151; current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,886</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,078</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">142,284</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">133,125</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">284,255</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">275,096</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accumulated earnings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59,980</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,821</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total stockholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">136,660</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">127,501</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total liabilities and
stockholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">284,255</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">275,096</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="justify" style="font-size: 10pt; margin-top: 10pt">The following is a summary of the changes on the University&#146;s statement of cash flows.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Year Ended December 31, 2010</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>As Reported</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>As Restated</B></TD>
    <TD>&nbsp;</TD>
</TR>


<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">44,365</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,206</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision for bad debts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,360</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,511</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">179</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(6,013</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Changes in
accounts receivable
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">(46,905</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">(46,705</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by
operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,104</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,104</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->105<!-- /Folio -->
</DIV>
<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>

<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">



<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>3. Summary of Significant Accounting Policies</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Formation and Transactions with Former Owner</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On January&nbsp;29, 2004, the University entered into an asset purchase agreement (the &#147;Purchase
Agreement&#148;) with the Grand Canyon University Institute for Advanced Studies (the &#147;Institute&#148; or
&#147;former owner&#148;), an Arizona nonprofit corporation, pursuant to which the University acquired
substantially all of the operating assets (excluding the ground campus and related buildings) of
Grand Canyon University (the &#147;University&#148;), including all accreditations, licensures, and approvals
necessary to offer its ground and online education programs. In consideration for the purchase of
such assets, the University paid the Institute $500 in cash, assumed certain liabilities, and
agreed to pay the Institute a royalty equal to 5% of the revenue generated by the University
through its online education program for each year in the period 2004 through 2008 and 4% for each
year thereafter, in perpetuity (the &#147;Royalty Agreement&#148;). The consideration paid and liabilities
assumed exceeded the fair value of the assets acquired by $2,941 which was recorded as goodwill.
The transaction closed on February&nbsp;2, 2004 at which time the University commenced its operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On June&nbsp;25, 2004, the University entered into an ancillary agreement (the &#147;Ancillary
Agreement&#148;) with the Institute, pursuant to which the University agreed to purchase the ground
campus and related buildings (the &#147;Campus&#148;) excluding one building and the underlying real estate,
from the Institute for the following consideration:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>$26,750 in cash;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the assumption of a $1,500 note payable to a third party (the &#147;Kirksville Note&#148;);</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the issuance by the University to the Institute of a warrant (the &#147;Institute
Warrant&#148;) to purchase a 10.0% non-dilutable equity interest in the University for an
exercise price of $1 during a one month period beginning in July&nbsp;1, 2011 subject to a
right for the University to repurchase the warrant at any time prior to its exercise for
$6,000.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The value of the warrant was estimated at $420 which approximates 10% of the estimated fair
value of the University at the date of grant and was included as a component of the cost of the
campus and related buildings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In connection with the Ancillary Agreement, (i)&nbsp;the University assigned its right to purchase
the Campus to Spirit Finance Acquisitions, LLC (&#147;Spirit&#148;), (ii)&nbsp;following such assignment, Spirit
acquired the Campus from the Institute for cash, (iii)&nbsp;Spirit leased the Campus to the University
under a long-term lease (the &#147;Spirit Lease&#148;) in connection with which the University issued to
Spirit a warrant, and (iv)&nbsp;the Institute loaned the University $1,250 payable over seven years (the
&#147;Institute Loan&#148;).
</DIV>



<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->106<!-- /Folio -->
</DIV>



<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Notes to Financial Statements<BR>
(In thousands of dollars, except share and per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Shortly after the completion of the acquisition, the University and the Institute became
involved in certain disputes, with the University alleging breaches of representations and
warranties concerning the campus operations, its compliance with Department of Education
regulations, and the Institute&#146;s failure to adequately disclose liabilities in the Purchase
Agreement and the Ancillary Agreement. In addition, the University withheld payment of amounts due
under the Royalty Agreement and the Institute Loan. At December&nbsp;31, 2007, the University had
withheld payment of approximately $7,428 in payments due under the Royalty Agreement and
approximately $840 of principal and interest payments under the Institute Loan. As a result of
these disputes, the University commenced legal proceedings in March&nbsp;2006 and the Institute brought
counterclaims.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In September&nbsp;2007, the University and the Institute entered into a standstill agreement
pursuant to which they agreed to stay all legal proceedings through April&nbsp;15, 2008. In accordance
with the terms of the standstill agreement, the University made an initial non-refundable,
non-creditable $3,000 payment to the Institute and received an option to pay an additional $19,500
to the Institute by April&nbsp;15, 2008, which would serve, in its entirety, as consideration for:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the satisfaction in full of all past royalties due to the Institute under the
Royalty Agreement and the elimination of the existing obligation to pay royalties for
online student revenues in perpetuity;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the repurchase of the Institute Warrant;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the acquisition by the University of the real property and related building
located on the Campus that was owned by the Institute and not transferred in connection
with the Ancillary Agreement;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the termination of a sublease agreement pursuant to which the Institute leased
office space on the Campus;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the assumption by the Company of all future payment obligations in respect to
certain gift annuities made to the school by donors prior to the acquisition; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the satisfaction in full of the $1,250 Institute Loan (including all accrued and
unpaid interest thereon).</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On April&nbsp;15, 2008, the University exercised its option and paid the additional $19,500 to the
Institute and the Institute relinquished any and all rights it had to be involved in Grand Canyon
University, and all parties released any and all claims they may have had against the other
parties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Accounting for the April&nbsp;15, 2008 Settlement of the Standstill Agreement</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table provides a tabular depiction of the University&#146;s allocation of the $22,500
total payment to the Institute to each of the assets acquired, obligations settled, and liabilities
assumed, based on the University&#146;s fair value estimates.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="86%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Initial Payment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Optional Payment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,500</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><B>Total Payment to be allocated</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>22,500</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><I>1) Obligations settled</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151;Accrued royalties due under Royalty Agreement (as of April&nbsp;15, 2008)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,730</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151;Repurchase of Institute Warrant</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151;Repayment of Institute Loan, including accrued interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,257</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151;Other amounts due to the Institute</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">327</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><I>2) Liabilities assumed</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151;Assumption of gift annuities obligation, at fair value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(887</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><I>3) Cost to be allocated to assets acquired</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151;Real property and prepaid royalty asset</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,073</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><B>Total fair value estimates</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left"><B>$</B></TD>
    <TD align="right"><B>22,500</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->107<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Notes to Financial Statements<BR>
(In thousands of dollars, except share and per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As indicated in the table above, the total payment was applied to the following items, in the
order indicated: (1)&nbsp;to satisfy all past royalties due to the Institute; (2)&nbsp;to redeem the
Institute Warrant, based on the original terms of such warrant; (3)&nbsp;to satisfy a loan provided by
the Institute, including all accrued and unpaid interest thereon; and (4)&nbsp;to satisfy other amounts
due to the Institute.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The standstill agreement also required the University to assume future payment obligations in
respect of certain gift annuities made to the school by donors prior to the acquisition, which
represents a liability assumed under the standstill agreement and was recognized based on the fair
value of such annuities at the option exercise date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The remaining $6,073 of the total payment was allocated to the remaining acquired assets based
on their individual fair value relative to the total fair value of those assets. The University
recognized the real property (<I>i.e</I>., land) and related building acquired from the Institute in the
transaction as an asset at the option exercise date and these assets totaling $129 and $24,
respectively, have been classified within &#147;Property and Equipment&#148; in the University&#146;s balance
sheets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The $5,920 value of the settlement of future royalty payment obligations to the Institute was
determined based on its relative fair value at the option exercise date and is included in the
accompanying balance sheet at December&nbsp;31, 2008 as a &#147;Prepaid Royalty,&#148; and is being amortized on a
straight line basis over a period of 20&nbsp;years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Spirit Transaction</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In April&nbsp;2009, the University acquired the land and buildings that comprise its ground campus
and 909,348 shares of its common stock from Spirit Master Funding, LLC and Spirit Management
Company, respectively (collectively, &#147;Spirit&#148;) for an aggregate purchase price of $50,000. Prior to
the acquisition, the University had leased the land and buildings from Spirit, accounting for the
land as an operating lease and the buildings and improvements as capital lease obligations. To
finance a portion of the purchase, the University entered into a loan agreement with a financial
institution pursuant which it borrowed $25,675. See Note 8, Notes Payable and Other Noncurrent
Liabilities and Note 13, Preferred Stock and Equity Transactions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The University allocated $14,495 of the purchase price to the repurchase of its common stock
and the remaining $35,505 to the land and buildings. Additionally, the University removed the
building and improvement assets and related capital lease obligations of $30,020 and applied the
deferred gain of $1,429 as a reduction to the new building value. See
Note 7, Property and
Equipment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Use of Estimates</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The preparation of financial statements in conformity with U.S. generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported amounts
in the financial statements and accompanying notes. Actual results could differ from those
estimates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Reclassifications</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Certain reclassifications have been made to prior year balances to conform to the current
period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Cash and Cash Equivalents</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The University invests cash in excess of current operating requirements in short term
certificates of deposit and money market instruments. The Company considers all highly liquid
investments with maturities of three months or less at the time of purchase to be cash equivalents.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->108<!-- /Folio -->
</DIV>

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<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Notes to Financial Statements<BR>
(In thousands of dollars, except share and per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Restricted Cash and Cash Equivalents</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">A significant portion of the University&#146;s revenue is received from students who participate in
government financial aid and assistance programs. Restricted cash and cash equivalents primarily
represents amounts received from the federal and state governments under various student aid grant
and loan programs, such as Title IV. These funds are received subsequent to the completion of the
authorization and disbursement process for the benefit of the student. The U.S. Department of
Education requires Title IV funds collected in advance of student billings to be segregated in a
separate cash or cash equivalent account until the students are billed for their portion. The
University also classifies the $5,200 that is agreed to pay to settle the <I>qui tam </I>matter as
restricted cash, subject to the distribution of the settlement amount from escrow in accordance
with the terms of the settlement agreement. The University records all of these amounts as a
current asset in restricted cash and cash equivalents. Restricted cash and cash equivalents is
excluded from cash and cash equivalents until the cash is no longer restricted. The majority of
these funds remain as restricted cash and cash equivalents for an average of 60 to 90&nbsp;days from the
date of receipt.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In the fourth quarter of 2010, the counterparty to the University&#146;s interest rate swap made a
collateral call and the University posted $760 of pledged collateral as noncurrent restricted cash.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Investments</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The University considers its investments in marketable securities as available-for-sale
securities. Available-for-sale securities are carried at fair value as determined by quoted market
prices, with unrealized gains and losses, net of tax, reported as a separate component of
comprehensive income and stockholders&#146; equity. Unrealized losses considered to be
other-than-temporary are recognized currently in earnings. The cost of securities sold is based on
the specific identification method. Amortization of premiums, accretion of discounts, interest and
dividend income and realized gains and losses are included in investment income.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Fair Value of Financial Instruments</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The carrying value of cash and cash equivalents, accounts receivable, accounts payable,
accrued compensation and benefits and accrued expenses approximate their fair value based on the
liquidity or the short-term maturities of these instruments. The carrying value of notes payable
approximate fair value based on its variable rate index. The carrying value of other notes payable
and capital lease obligations approximate fair value based upon market interest rates available to
the University for debt of similar risk and maturities. Derivative financial instruments are
carried at fair value, determined using Level 2 of the hierarchy of valuation inputs as defined in
the Financial Accounting Standards Board (&#147;FASB&#148;) Accounting Standards Codification
(&#147;Codification&#148;), with the use of inputs other than quoted prices that are observable for the asset
or liability. See Note 11, Derivative Instruments.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The fair value of investments, primarily municipal securities, were determined using Level 1
of the hierarchy of valuation inputs, with the use of observable market prices in the active
market. The unit of account used for valuation is the individual underlying security. The municipal
securities are comprised of city and county bonds related to schools, water and sewer, and housing
bonds.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The fair value of the prepaid royalty asset relating to the settlement of future royalty
payment obligations to the Institute was determined using an income approach, based on management&#146;s
forecasts of revenue to be generated through its online education program using Level 3 of the
hierarchy of valuation inputs. The rate utilized to discount net cash flows to their present values
is 35%. This discount rate was determined after consideration of the University&#146;s weighted average
cost of capital giving effect to estimates of the University&#146;s risk-free rate, beta coefficient,
equity risk premium, small size risk premium, and company-specific risk premium.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->109<!-- /Folio -->
</DIV>

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<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Notes to Financial Statements<BR>
(In thousands of dollars, except share and per share data)</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Allowance for Doubtful Accounts</I></B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">All students are required to select both a primary and secondary payment option with respect to
amounts due to the University for tuition, fees and other expenses. The most common payment option
for the University&#146;s students is financial aid. In instances where a student selects financial aid
as the primary payment option, he or she often selects personal cash as the secondary option. If a
student that has selected financial aid as his or her primary payment option withdraws prior to the
end of a course but after the date that the University&#146;s institutional refund period has expired,
the student will have incurred the obligation to pay the full cost of the course. If the withdrawal
occurs before the date at which the student has earned 100% of his or her financial aid, the
University will have a return to Title IV requirement and the student will owe the University all
amounts incurred that are in excess of the amount of financial aid that the student earned and that
the University is entitled to retain. In this case, the University must collect the receivable
using the student&#146;s second payment option. In instances in which the student chose to receive
living expense funds as part of his or her financial aid disbursement, the University is required
to return the unearned portion of these funds as well and then collect these amounts from the
student.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">
The University records an allowance for doubtful accounts for
estimated losses resulting from the inability, failure or refusal of
its students to make required payments, which includes the recovery
of financial aid funds advanced to a student for amounts in excess
of the student&#146;s cost of tuition and related  fees. The University determines
 the adequacy of its allowance for doubtful accounts based on an analysis of
its historical bad debt experience, current economic trends, and the aging
 of the accounts receivable and student status. The University applies reserves to its
 receivables based upon an estimate of the risk presented by the age of the
receivables and student status.
The University writes off accounts receivable balances at the earlier
of the time the balance is deemed uncollectible, or one year after
the revenue is generated.
The University continues to reflect accounts receivable with an offsetting allowance
as long as management believes there is a reasonable possibility of collection. Bad debt expense is recorded as
an instructional costs and services  expense in the income statement.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Property and Equipment</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Property and equipment are recorded at cost less accumulated depreciation. Depreciation is
computed using the straight-line method. Normal repairs and maintenance are expensed as incurred.
Expenditures that materially extend the useful life of an asset are capitalized. Construction in
progress represents items not yet placed in service and are not depreciated. Internally developed
software represents qualifying salary and consulting costs for time spent on developing internal
use software and is included in construction in progress until its completion. The University
capitalizes interest using its interest rates on the specific borrowings used to finance the
improvements, which approximated 3.1% in 2010, 5.4% in 2009 and 8.7% in 2008, given the amount of
the specific debt exceeded the in process value of the project at all times. Interest cost
capitalized and incurred in the years ended December&nbsp;31, 2010, 2009, and 2008 are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year Ended December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest incurred</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,283</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,808</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,022</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest capitalized</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">394</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">195</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">125</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">889</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,613</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,897</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Depreciation is provided using the straight-line method over the estimated useful lives of the
assets. Furniture and fixtures, computer equipment, and vehicles generally have estimated useful
lives of ten, four, and five years, respectively. Leasehold improvements are depreciated over the
shorter of their lease term or their useful life. Land improvements and buildings are depreciated
over lives ranging from 10 to 40&nbsp;years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Leases</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The University enters into various lease agreements in conducting its business. At the
inception of each lease, the University evaluates the lease agreement to determine whether the
lease is an operating or capital lease. In addition, many of the lease agreements contain renewal
options and tenant improvement allowances. When such items are included in a lease agreement, the
University records a deferred liability on the balance sheet and records the rent expense evenly
over the term of the lease. Leasehold improvements are included as investing activities and are
included as additions to property, plant and equipment. For leases with renewal options, the
University records rent expense and amortizes the leasehold improvement on a straight-line basis
over the initial non-cancelable lease term unless it intends to exercise the renewal option. Once
it extends the renewal option, the University amortizes any tenant improvement allowances over the
extended lease period as well as the leasehold improvement asset (unless the extended lease term is
longer than the economic life of the asset). The University expenses any additional payments under
its operating leases for taxes, insurance or other operating expenses as incurred.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Deferred Loan Costs</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The University capitalized expenses paid to third parties from a note agreement with a
financial institution and these costs, which totaled $317 are amortized over the five year life of
the note using the straight-line method, which approximates the effective interest method.
Accumulated amortization was $105 and $42 as of December&nbsp;31, 2010 and 2009, respectively.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->110<!-- /Folio -->
</DIV>

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<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Notes to Financial Statements<BR>
(In thousands of dollars, except share and per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Other Assets</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">During 2010, the University entered into an agreement with an affiliated entity to develop a
new learning management system for use by the University. Through this agreement, the University
prepaid perpetual license fees, acquired source code rights for the software developed, and prepaid
maintenance and service fees for the first seven years of use for an aggregate amount of $4,900.
As of December&nbsp;31, 2010, the University has paid $4,500. The University anticipates full
conversion to this new learning management platform for online delivered coursework by the third
quarter of 2011.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Long-Lived Assets</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The University evaluates the recoverability of its long-lived assets for impairment, other
than goodwill, for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset to undiscounted future net cash flows
expected to be generated by the assets. If such assets are considered to be impaired, the
impairment to be recognized is measured by the amount by which the carrying amount of the assets
exceeds the fair value of the assets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Goodwill</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Goodwill represents the excess of the cost over the fair market value of net assets acquired,
including identified intangible assets. Goodwill is tested annually or more frequently if
circumstances indicate potential impairment, by comparing its fair value to its carrying amount.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Share-Based Compensation</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The University measures and recognizes compensation expense for share-based payment awards
made to employees, consultants and directors, including employee stock options. Prior to the
University&#146;s initial public offering in November&nbsp;2008, the University had no share-based awards.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The University calculates the fair value of share-based awards on the date of grant. The
University uses the Black-Scholes-Merton option pricing model to estimate fair value. The option
pricing model requires the University to estimate certain key assumptions such as expected life,
volatility, risk free interest rates, and dividend yield to determine the fair value of share-based
awards, based on historical information and management judgment. The University amortizes the
share-based compensation expense over the period that the awards are expected to vest, net of
estimated forfeiture rates. If the actual forfeitures differ from management estimates, adjustments
to compensation expense are recorded. The University reports cash flows resulting from tax
deductions in excess of the compensation cost realized for those options (excess tax benefits) as
financing cash flows.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The University has analyzed the circumstances in which the simplified method is allowed and is
utilizing the simplified method for all stock options granted since November&nbsp;2008. The simplified
method for estimating the expected life uses the mid-point between the vesting term and the
contractual term of the stock option.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Derivatives and Hedging</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Derivative financial instruments are recorded on the balance sheet as assets or liabilities
and re-measured at fair value at each reporting date. For derivatives designated as cash flow
hedges, the effective portion of the gain or loss on the derivative is reported as a component of
other comprehensive income and reclassified into earnings in the same period or period during which
the hedged transaction affects earnings. Gains and losses on the derivative representing either
hedge ineffectiveness or hedge components excluded from the assessment of effectiveness are
recognized in current earnings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Derivative financial instruments enable the University to manage its exposure to interest rate
risk. The University does not engage in any derivative instrument trading activity. Credit risk
associated with the University&#146;s derivatives is limited to the risk that a derivative counterparty
will not perform in accordance with the terms of the
contract. Exposure to counterparty credit risk is considered low because these agreements have
been entered into with institutions with Aa or higher credit ratings, and they are expected to
perform fully under the terms of the agreements.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->111<!-- /Folio -->
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Notes to Financial Statements<BR>
(In thousands of dollars, except share and per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As of December&nbsp;31, 2010 no derivative ineffectiveness was identified. Any ineffectiveness in
the University&#146;s derivative instruments designated as hedges would be reported in interest expense
in the income statement. As of December&nbsp;31, 2010 $4 of credit default risk interest income was
recorded in interest expense in the income statement. At December&nbsp;31, 2010, the University does not
expect to reclassify any gains or losses on derivative instruments from accumulated other
comprehensive income (loss)&nbsp;into earnings during the next 12&nbsp;months.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Income Taxes</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The University accounts for income taxes payable or refundable for the current year and
deferred tax assets and liabilities for future tax consequences of events that have been recognized
in the University&#146;s financial statements or tax returns. Deferred tax assets and liabilities are
measured using enacted tax rates in effect for the year in which the temporary differences are
expected to be realized.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In January&nbsp;2008, the University adopted a more-likely-than-not threshold for financial
statement recognition and measurement of an uncertain tax position taken or expected to be taken in
a tax return. The University recognizes interest and penalties related to uncertain tax positions
in income tax expense. The University has reserved approximately $388 and $568 for uncertain tax
positions including interest and penalties, which is classified within accrued liabilities on the
accompanying balance sheet as of December&nbsp;31, 2010 and 2009, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The University has deferred tax assets, which are subject to periodic recoverability
assessments. Valuation allowances are established, when necessary, to reduce deferred tax assets to
the amount that more likely than not will be realized. Realization of the deferred tax assets is
principally dependent upon achievement of projected future taxable income offset by deferred tax
liabilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Loss Contingencies</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The University accrues for contingent obligation when it is probable that a liability has been
incurred and the amount is reasonably estimable. When the University becomes aware of a claim or
potential claim, the likelihood of any loss exposure is assessed. If it is probable that a loss
will result and the amount of the loss is estimable, the University records a liability for the
estimated loss. If the loss is not probable or the amount of the potential loss is not estimable,
the University will disclose the claim if the likelihood of a potential loss is reasonably possible
and that the amount of the potential loss could be material. Estimates that are particularly
sensitive to future changes include tax, legal, and other regulatory matters, which are subject to
change as events evolve, and as additional information becomes available during the administrative
and litigation process. The University expenses legal fees as incurred.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Revenue Recognition</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Net revenues consist primarily of tuition and fees derived from courses taught by the
University online, at its 100 acre traditional campus in Phoenix, Arizona, and onsite at the
facilities of employers, as well as from related educational resources such as access to online
materials. Tuition revenue and most fees and related educational resources are recognized pro-rata
over the applicable period of instruction, net of scholarships provided by the University. For the
years ended December&nbsp;31, 2010, 2009 and 2008, the University&#146;s revenue was reduced by approximately
$55,833, $34,155 and $18,381, respectively, as a result of scholarships that the University offered
to students. The University maintains an institutional tuition refund policy, which provides for
all or a portion of tuition to be refunded if a student withdraws during stated refund periods.
Certain states in which students reside impose separate, mandatory refund policies, which override
the University&#146;s policy to the extent in conflict. If a student withdraws at a time when only a
portion, or none of the tuition is refundable, then in accordance with its revenue recognition
policy, the University continues to recognize the tuition that was not refunded as pro-rata over
the applicable period of instruction. Since the University recognizes revenue pro-rata over the
term of the course and because, under its institutional refund policy, the amount subject to refund
is never greater than the amount of the revenue that has been deferred, under the University&#146;s
accounting policies revenue is not recognized with respect to amounts that could potentially be
refunded. The University&#146;s change in April&nbsp;2010 to a non-term borrower-based
institution from a term based institution for federal student financial aid funding purposes
does not have any impact on the timing and recognition of revenues. Deferred revenue and student
deposits in any period represent the excess of tuition, fees, and other student payments received
as compared to amounts recognized as revenue on the income statement and are reflected as current
liabilities in the accompanying balance sheet. The University&#146;s educational programs have starting
and ending dates that differ from its fiscal quarters. Therefore, at the end of each fiscal
quarter, a portion of revenue from these programs is not yet earned. Other revenues may be
recognized as sales occur or services are performed.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->112<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Notes to Financial Statements<BR>
(In thousands of dollars, except share and per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Instructional Costs and Services</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Instructional costs and services consist primarily of costs related to the administration and
delivery of the University&#146;s educational programs. This expense category includes salaries,
benefits and share-based compensation for full-time and adjunct faculty and administrative
personnel, information technology costs, bad debt expense, curriculum and new program development costs (which are
expensed as incurred) and costs associated with other support groups that provide services directly
to the students. This category also includes an allocation of depreciation, amortization, rent, and
occupancy costs attributable to the provision of educational services, primarily at the
University&#146;s Phoenix, Arizona campus. In the second quarter of 2010, the University completed the
conversion of its student records system from DataTel to CampusVue. In connection with this
conversion, the University incurred approximately $4,013 of costs due to unanticipated delays in
information processing which are included in instructional costs and services for the year ended
December&nbsp;31, 2010. In 2010, the University reclassified its bad debt expense from general and administrative to instructional
costs and services.
The University believes that these changes provide greater comparability
to other institutions in its industry sector. There were no changes to total costs and expenses as a result of these reclassifications.

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Selling and Promotional</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Selling and promotional expenses include salaries, benefits and share-based compensation of
personnel engaged in the marketing, recruitment, and retention of students, as well as advertising
costs associated with purchasing leads, hosting events and seminars, and producing marketing
materials. This category also includes an allocation of depreciation, amortization, rent, and
occupancy costs attributable to selling and promotional activities at the Company&#146;s facilities in
Arizona. Selling and promotional costs are expensed as incurred. Advertising costs, which include
marketing leads, events, and promotional materials for the years ended December&nbsp;31, 2010, 2009, and
2008 were $35,550, $24,820, and $18,541, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Through December&nbsp;2010, the University was a party to a revenue sharing arrangement (the
Collaboration Agreement) with Mind Streams, L.L.C. (Mind Streams), a related party pursuant to
which it pays a percentage of the net revenue that it actually receives from applicants recruited
by those entities that matriculate at Grand Canyon University. Mind Streams bears all costs
associated with the recruitment of these applicants. Additionally in 2010, Gail Richardson, the
father of Brent D. Richardson, the University&#146;s Executive Chairman, and Christopher C. Richardson,
the University&#146;s General Counsel and a director, formed a new entity, Lifetime Learning, which
plans to generate and sell leads to the University and other entities in the education sector. For
the years ended December&nbsp;31, 2010, 2009, and 2008, the University expensed approximately $8,777,
$6,736, and $5,895, respectively, pursuant to these arrangements, exclusive of the settlement
arrangement discussed in the following paragraph. As of December&nbsp;31, 2010 and 2009, $9,367, and
$305, respectively, were due to these related parties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As a result of new rules adopted by the U.S. Department of Education and effective July&nbsp;1,
2011, the University determined that revenue sharing arrangements like the Collaboration Agreement,
and the manner in which it pays amounts under the Collaboration Agreement, will most likely no
longer be permitted. Accordingly, the University and Mind Streams entered into an agreement, dated
December&nbsp;30, 2010, pursuant to which the University agreed to pay Mind Streams an amount equal to
(a) $8,500, plus (b)&nbsp;Mind Streams&#146; applicable share of any net revenue actually received by the
University on or before February&nbsp;28, 2011 with respect to any such Mind Streams identified students
commencing University courses prior to November&nbsp;1, 2010. In return, Mind Streams has agreed to (i)
accept such amounts in full and complete satisfaction of all amounts owed by the University to Mind
Streams under the Collaboration Agreement, and (ii)&nbsp;transfer to the University a proprietary
database of potential student leads. In the aggregate, the University has expensed $9,233 in 2010
relating to this agreement.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->113<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Notes to Financial Statements<BR>
(In thousands of dollars, except share and per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>General and Administrative</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">General and administrative expenses include salaries, benefits and share-based compensation of
employees engaged in corporate management, finance, human resources, compliance, and other
corporate functions. General and administrative expenses also include
an allocation of depreciation, amortization, rent, and occupancy costs attributable to the
departments providing general and administrative functions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Exit Costs</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In November&nbsp;2009, the University finalized a plan to centralize its student services
operations in Arizona and, as a result, closed its student services facility in Utah. The exit
costs expected to be incurred in connection with this decision have been expensed and are presented
separately on the income statement. The costs incurred include severance payments; relocation
expense; lease payments; and the write off of leasehold improvements associated with this leased
space.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following is a summary of the University&#146;s exit activities:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Accrued Exit</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Accrued Exit</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Costs at</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Costs at</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000"><B>Payments to</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Exit Costs</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Date</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Severance payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">503</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(503</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Future lease payments, lease
terminated in October&nbsp;2010</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">288</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(395</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Leasehold improvements and other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">151</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(128</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">832</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">258</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1,026</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">64</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Accrued Exit</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Accrued Exit</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Costs at</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Costs at</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Payments to</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Exit Costs</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B> Date</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Severance payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">615</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(112</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">503</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Future lease payments, net of
estimated sublease rentals</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">288</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">288</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Leasehold improvements and other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">315</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(274</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,218</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(386</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">832</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Insurance/Self-Insurance</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The University uses a combination of insurance and self-insurance for a number of risks,
including claims related to employee health care, workers&#146; compensation, general liability, and
business interruption. Liabilities associated with these risks are estimated based on, among other
things, historical claims experience, severity factors, and other actuarial assumptions. The
University&#146;s loss exposure related to self-insurance is limited by stop loss coverage on a per
occurrence and aggregate basis. Expected loss accruals are based on estimates, and while the
University believes the amounts accrued are adequate, the ultimate loss may differ from the amounts
provided.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Concentration of Credit Risk</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The University may extend credit for tuition to some students. A substantial portion is repaid
through the student&#146;s participation in federally funded financial aid programs. Transfers of funds
from the financial aid programs to the Company are made in accordance with the U.S. Department of
Education (&#147;Department of Education&#148;) requirements. A majority of the University&#146;s revenues are
derived from tuition financed under the Title IV programs of the Higher Education Act of 1965, as
amended (the &#147;Higher Education Act&#148;). The financial aid and assistance programs are subject to
political and budgetary considerations and are subject to extensive and complex regulations. The
University&#146;s administration of these programs is periodically reviewed by various regulatory
agencies. Any regulatory violation could be the basis for the initiation of potentially adverse actions
including a suspension, limitation, or termination proceeding, which could have a material adverse
effect on the University.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->114<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Notes to Financial Statements<BR>
(In thousands of dollars, except share and per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Students obtain access to federal student financial aid through a Department of Education
prescribed application and eligibility certification process. Student financial aid funds are
generally made available to students at prescribed intervals throughout their predetermined
expected length of study. Students typically apply the funds received from the federal financial
aid programs first to pay their tuition and fees. Any remaining funds are distributed directly to
the student.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Segment Information</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The University operates as a single educational delivery operation using a core infrastructure
that serves the curriculum and educational delivery needs of both its ground and online students
regardless of geography. The University&#146;s chief operating decision maker manages the University&#146;s
operations as a whole and no expense or operating income information is generated or evaluated on
any component level.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Recent Accounting Pronouncements</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In June&nbsp;2009, the Financial Accounting Standards Board (&#147;FASB&#148;) issued guidance that modifies
how a company determines when an entity that is insufficiently capitalized or is not controlled
through voting (or similar rights) should be consolidated. This guidance clarifies that the
determination of whether a company is required to consolidate an entity is based on, among other
things, an entity&#146;s purpose and design and a company&#146;s ability to direct the activities of the
entity that most significantly impact the entity&#146;s economic performance. This guidance requires an
ongoing reassessment of whether a company is the primary beneficiary of a variable interest entity
and additional disclosures about a company&#146;s involvement in variable interest entities and any
significant changes in risk exposure due to that involvement. This guidance is effective for fiscal
years beginning after November&nbsp;15, 2009. The adoption had no impact on the University&#146;s financial
position or results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In June&nbsp;2009, the FASB set forth certain financial reporting requirements by enterprises
involved with variable interest entities and to provide more relevant information to users of
financial statements. This guidance became effective for the University&#146;s interim and annual
reporting periods beginning January&nbsp;1, 2010. The adoption had no impact on the University&#146;s
financial position or results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In January&nbsp;2010, previously released guidance on fair value measurements and disclosures was
amended. The amendment requires disclosure of transfers into and out of Level 1 and Level 2 fair
value measurements, and also requires more detailed disclosure about the activity within Level 3
fair value measurements. The guidance became effective for the University&#146;s interim and annual
reporting periods beginning January&nbsp;1, 2010. The adoption had no impact on the University&#146;s
financial position or results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In February&nbsp;2010, the FASB issued new guidance relating to subsequent events. This update
removes the requirement for an SEC filer to disclose the date through which subsequent events have
been evaluated and became effective for the University&#146;s interim and annual reporting periods
beginning January&nbsp;1, 2010. The adoption had no impact on the University&#146;s financial position or
results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The University has determined that all other recently issued accounting standards will not
have a material impact on its financial statements, or do not apply to its operations.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->115<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Notes to Financial Statements<BR>
(In thousands of dollars, except share and per share data)</B>
</DIV>


<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>4. Initial Public Offering, Special Distribution and Secondary Offering</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In November&nbsp;2008, the University completed an initial public offering of common stock. In the
initial public offering, the University sold 11,575,000 shares of common stock at a price to the
public of $12.00 per share, before underwriting discounts and commissions. Net proceeds to the
University were approximately $128,756, after deducting underwriting discounts and commissions and
offering expenses. Upon the closing of the offering, all of the University&#146;s then outstanding
Series&nbsp;A Preferred Stock converted into 10,870,178 shares of common stock and all of the
University&#146;s then outstanding Series&nbsp;C Preferred Stock converted into 2,233,333 shares of common
stock.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On September&nbsp;26, 2008 the University&#146;s Board of Directors approved the payment of a special
distribution to its stockholders of record as of September&nbsp;26, 2008 to be paid from the proceeds of
the initial public offering (including any proceeds resulting from sales of shares pursuant to the
underwriters&#146; exercise of their over-allotment option) in the amount of 75% of the gross offering
proceeds. On November&nbsp;3, 2008, the University&#146;s Board of Directors approved the revision of the
record date for determining those stockholders entitled to receive the possible special
distribution described above to November&nbsp;18, 2008. The University&#146;s registration statement for the
initial public offering became effective on November&nbsp;19, 2008. In the fourth quarter of 2008, the
University distributed $108,675, which is equal to 75% of the total gross proceeds from the sale of
common stock, including the underwriters&#146; exercise of the over-allotment option. The special
distribution was paid on an as if converted basis to all common and preferred shareholders of
record as of November&nbsp;18, 2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In September&nbsp;2009, the University completed a public offering of shares of its common stock.
In the offering 6,900,000 shares were sold, consisting of 1,000,000 shares sold by the University
and 5,900,000 shares sold by certain stockholders of the University. Total net proceeds to the
University were $14,880, net of underwriting discounts and commissions and offering expenses. The
University did not receive any of the proceeds from the sale of common stock sold by the selling
stockholders.
</DIV>

<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>5. Valuation and Qualifying Accounts</B>
</DIV>

<!-- xbrl,body -->
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Balance at</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Balance at</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Beginning of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Charged to</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>End of</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Year</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Expense</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Deductions</B><SUP style="FONT-size: 85%; vertical-align: text-top"><B>(1)</B></SUP></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Year</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Allowance for doubtful accounts receivable:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Year ended
December&nbsp;31, 2010 (Restated)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,553</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,511</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(15,952</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">30,112</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Year ended December&nbsp;31, 2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,356</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,016</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12,819</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,553</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Year ended December&nbsp;31, 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12,158</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,465</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14,267</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,356</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 10pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96%">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Deductions represent accounts written off, net of recoveries.</TD>
</TR>

</TABLE>


<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>6. Investments</B>
</DIV>
<!-- xbrl,body -->

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The University had no investments as of December&nbsp;31, 2010. The following is a summary of
amounts included in investments as of December&nbsp;31, 2009. The University considered all investments
as available for sale.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14" style="border-bottom: 1px solid #000000"><B>As of December 31, 2009</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Gross</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Gross</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Estimated</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Adjusted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unrealized</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unrealized</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Fair</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Cost</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Gains</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(Losses)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Value</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Money Market Funds</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">43</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">43</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Municipal Securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">448</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">487</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">491</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">39</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">$</TD>
    <TD align="right">(1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">530</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Gross realized gains and losses resulting from the sale of available-for-sale securities were
$31, $0, and $110 for the years ended December&nbsp;31, 2010, 2009 and 2008, respectively. For the years
ended December&nbsp;31, 2010, 2009, and 2008, the net unrealized gain (loss)&nbsp;on available-for-sale
securities were $(4), $7, and $(63), net of tax effect, respectively.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->116<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Notes to Financial Statements<BR>
(In thousands of dollars, except share and per share data)</B>
</DIV>


<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>7. Property and Equipment</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Property and equipment consist of the following:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>As of December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Land</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">8,282</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,230</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Land improvements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,597</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,597</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Buildings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,323</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,176</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equipment under capital leases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,502</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,545</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Leasehold improvements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,407</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,692</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Computer equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,742</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,327</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Furniture, fixtures and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,401</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,750</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Internally developed software</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,825</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,011</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">998</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">420</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Construction in progress</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,349</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,712</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">148,426</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,460</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less accumulated depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(24,427</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13,090</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property and equipment, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">123,999</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">67,370</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Depreciation and amortization expense associated with property and equipment, including assets
under capital lease, totaled $11,376, $7,228, and $4,592 for the years ended December&nbsp;31, 2010,
2009, and 2008, respectively.
</DIV>

<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>8. Notes Payable and Other Noncurrent Liabilities</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">To finance a portion of the campus land and building purchase from Spirit, the University
entered into a loan agreement in April&nbsp;2009 with a financial institution pursuant to which it
borrowed $25,675. The note agreement contains standard covenants, including covenants that, among
other things, restrict the University&#146;s ability to incur additional indebtedness or liens; sell,
assign, lease, transfer or otherwise dispose of any part of the University&#146;s assets other than in
the ordinary course of business; make investments or capital contributions to any individual or
entity; enter into any consolidation, merger, or other combination, or become a partner in a
partnership, a member of a joint venture, or a member of a limited liability company; acquire or
purchase a business or all or substantially all of the assets of a business in an aggregate amount
exceeding an amount equal to 25% of the University&#146;s tangible net worth; and engage in any business
activities substantially different from the University&#146;s present business. In addition the loan
agreement requires the University to maintain compliance with certain applicable regulatory
standards, and requires the University to maintain a certain financial condition. Indebtedness
under the note agreement is collateralized by the land and buildings that comprise the University&#146;s
ground campus. As of December&nbsp;31, 2010, the University is in compliance with its debt covenants.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>As of December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Notes Payable</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Note payable, monthly payment of $143; interest at 30&nbsp;day LIBOR plus 2.25%
(2.51% at December&nbsp;31, 2010) through April&nbsp;30, 2014</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">22,829</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">24,565</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Note payable; monthly payments of $20; interest at 3.9% through
September&nbsp;2011</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">178</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">407</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Various Gift Annuities; quarterly payments of $34 extending through 2019;
interest at 10%</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">744</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">802</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equipment note; monthly payments of $6 extending through December&nbsp;2011;
interest at 6.6%</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">136</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Notes payable for vehicles requiring monthly payments with interest rates
ranging from 8.8% to 11.0% extending into March&nbsp;2013</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">178</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,907</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,088</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: Current portion</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,026</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,105</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">21,881</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">23,983</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->117<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Notes to Financial Statements<BR>
(In thousands of dollars, except share and per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Payments due under the notes payable obligations are as follows as of December&nbsp;31, 2010:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="86%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2011</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,026</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2012</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,783</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2013</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,750</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2014</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,903</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2015</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">93</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">352</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">23,907</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Long-term deferred rent included in other noncurrent liabilities as of December&nbsp;31, 2010 and
2009 was $2,029 and $1,239, respectively. The derivative liability for the forward interest rate
swap included in other noncurrent liabilities as of December&nbsp;31, 2010 and 2009 was $686 and $228,
respectively.
</DIV>

<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>9. Capital Lease Obligations</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Capital lease obligations consist of the following:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>As of December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Capital Lease Obligations</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital leases for equipment (various leases extending into 2012, with implicit
interest rates ranging from 4.0% to 6.9%, monthly payments totaling $62 and
quarterly payments totaling $239)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,824</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,619</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,824</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,619</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: Current portion of capital lease obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,673</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">751</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">151</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">868</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Payments due under future minimum lease payments under the capital lease obligations are as
follows as of December&nbsp;31, 2010:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="86%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2011</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,703</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2012 and thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">152</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,855</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: Portion representing interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Present value of minimum lease payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,824</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>10. Commitments and Contingencies</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Leases</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The University leases certain land, buildings and equipment under non-cancelable operating
leases expiring at various dates through 2023. Future minimum lease payments under operating leases
due each year are as follows at December&nbsp;31, 2010:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="86%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2011</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">4,754</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2012</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,874</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2013</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,802</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2014</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,506</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2015</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,628</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Thereafter</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,072</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total minimum payments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">53,636</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Total rent expense and related taxes and operating expenses under operating leases for the
years ended December&nbsp;31, 2010, 2009 and 2008 was $5,287, $4,541, and $2,375, respectively.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->118<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Notes to Financial Statements<BR>
(In thousands of dollars, except share and per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Legal Matters</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">From time to time, the University is a party to various lawsuits, claims, and other legal
proceedings that arise in the ordinary course of business, some of which are covered by insurance.
When the University is aware of a claim or potential claim, it assesses the likelihood of any loss
or exposure. If it is probable that a loss will result and the amount of the loss can be reasonably
estimated, the University records a liability for the loss. If the loss is not probable or the
amount of the loss cannot be reasonably estimated, the University discloses the nature of the
specific claim if the likelihood of a potential loss is reasonably possible and the amount involved
is material. With respect to the majority of pending litigation matters, the University&#146;s ultimate
legal and financial responsibility, if any, cannot be estimated with certainty and, in most cases,
any potential losses related to those matters are not considered probable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On August&nbsp;14, 2008, the U. S. Department of Education (&#147;Department of Education&#148;), Office of
Inspector General (&#147;OIG&#148;) served an administrative subpoena on the University requiring it to
provide certain records and information related to performance reviews and salary adjustments for
all of its enrollment counselors and managers from January&nbsp;1, 2004 to August&nbsp;2008. The University
has cooperated with the OIG to facilitate its investigation and completed its rolling responsive
document production, which commenced in September&nbsp;2008, in June&nbsp;2009. In light of the settlement
of the <I>qui tam </I>litigation described below, the University believes that this investigation has
effectively ended.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On September&nbsp;11, 2008, the University was served with a <I>qui tam </I>lawsuit that had been filed
against the University in August&nbsp;2007 in the United States District Court for the District of
Arizona (the &#147;Court&#148;) by a then-current employee on behalf of the federal government. All
proceedings in the lawsuit had been under seal until September&nbsp;5, 2008, when the court unsealed the
first amended complaint, which had been filed on August&nbsp;11, 2008. A <I>qui tam </I>case is a civil
lawsuit brought under the federal False Claims Act by one or more individuals (a &#147;relator&#148;) on
behalf of the federal government for an alleged submission to the government of a false claim for
payment. The relator, often a current or former employee, is entitled to a share of the
government&#146;s recovery in the case. A <I>qui tam </I>action is always filed under seal and remains under
seal until the government decides whether to intervene in the case. If the government intervenes,
it takes over primary control of the litigation. If the government declines to intervene in the
case, the relator may nonetheless elect to continue to pursue the litigation at his or her own
expense on behalf of the government. In the University&#146;s case, the <I>qui tam </I>lawsuit was initially
filed under seal in August&nbsp;2007 and was unsealed and served on the University following the
government&#146;s decision not to intervene at that time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The <I>qui tam </I>lawsuit alleged, among other things, that the University violated the False Claims
Act by knowingly making false statements, and submitting false records or statements, from at least
2001 to the present, to get false or fraudulent claims paid or approved, and asserted that the
University improperly compensated certain of its enrollment counselors in violation of the Title IV
law governing compensation of such employees, and as a result, improperly received Title IV program
funds. The complaint specifically alleged that some of the University&#146;s compensation practices with
respect to its enrollment personnel, including providing non-cash awards, violated the Title IV law
governing compensation. While the University believes that the compensation policies and practices
at issue in the complaint were not based on success in enrolling students in violation of
applicable law, the Department of Education&#146;s regulations and interpretations of the incentive
compensation law do not establish clear criteria for compliance in all circumstances, and some of
these practices, including the provision of non-cash awards, were not within the scope of any
explicit &#147;safe harbor&#148; provided in the compensation regulations. The complaint sought treble the
amount of unspecified damages sustained by the federal government in connection with the
University&#146;s receipt of Title IV funding, a civil penalty for each violation of the False Claims
Act, attorneys&#146; fees, costs, and interest. The University filed a motion to dismiss this case in
November&nbsp;2008, which was denied by the court in February&nbsp;2009.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->119<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Notes to Financial Statements<BR>
(In thousands of dollars, except share and per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Pursuant to the court&#146;s mandatory scheduling order, the University entered into settlement
discussions with respect to the <I>qui tam </I>matter with the relator and, in October&nbsp;2009, reached a
settlement in principle with the relator pursuant to which the University agreed to pay $5,200 to
finally resolve the <I>qui tam </I>case and thereby avoid the cost and distraction of a potentially
protracted trial. Thus, in the third quarter of 2009, the University accrued $5,200 for the
estimated litigation loss. This settlement in principle was conditioned upon obtaining the
approval of the U.S.
Department of Justice (which has authority to approve settlement of False Claims Act matters)
and the Department of Education with respect to the issuance to the University of a full three-year
Title IV program participation agreement (the University&#146;s application for which has been pending
since March&nbsp;2008), resolving the OIG investigation, and finalizing the settlement terms that would
release the University from other False Claims Act cases based upon the conduct covered by the
settlement. Following unsuccessful attempts to finalize a settlement agreement among the
University, the relator and the United States, on April&nbsp;28, 2010, the University and the relator
submitted a proposed settlement agreement to the Court for approval. In accordance with a
scheduling order set by the Court, the United States filed certain objections to the proposed
settlement agreement to which the University and the relator responded. The Court then held a
hearing regarding the proposed settlement agreement, and the United States&#146; objections thereto, on
June&nbsp;10, 2010.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Following the June&nbsp;10, 2010 hearing, the Court ruled that, notwithstanding the United States&#146;
objections, the Court would not object to the provisions of the settlement agreement proposed by
the University and the relator that provide, among other things, (a)&nbsp;that the $5,200 settlement
amount would be payable by the University on the earlier of September&nbsp;1, 2011 or the issuance by
the Department of Education to the University of a full three-year Title IV program participation
agreement, and (b)&nbsp;that the University would receive a release from future False Claims Act claims
(i.e. <I>qui tam </I>actions) with respect to all conduct which is of the same subject matter as the
conduct that is at issue in the current <I>qui tam </I>litigation (the &#147;covered conduct&#148;) through April
28, 2010 (the date that the settlement agreement was submitted to the Court). The Court asked for
further briefing and a final hearing on August&nbsp;13, 2010 on the issue of whether the Court had
jurisdiction to approve the settlement agreement, over the United States&#146; objections, if it
included (i)&nbsp;within the scope of the release provision, a release, given by the relator acting on
behalf of the Department of Education to the fullest extent permitted by applicable law, from
future Department of Education administrative actions with respect to the covered conduct, and (ii)
a provision confirming that the University had fully complied with the OIG subpoena.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Following the August&nbsp;13, 2010 hearing, on August&nbsp;17, 2010 the Court filed an order approving a
settlement agreement between the University and the relator. In its August&nbsp;17, 2010 order, the
Court approved the inclusion of the administrative release provision in the settlement agreement,
but stated that it lacked a basis for making a finding regarding the University&#146;s compliance with
the OIG subpoena. As a result, the settlement agreement provided a release to the University,
given by the relator acting on behalf of the Department of Education to the fullest extent
permitted by law, from future Department of Education administrative actions with respect to the
covered conduct for the period from January&nbsp;1, 2001 to April&nbsp;28, 2010, although the Department of
Education does retain the power it currently possesses to initiate other administrative actions
against the University. On August&nbsp;20, 2010, the Court filed an order dismissing the matter with
prejudice pursuant to the settlement. As required by the settlement agreement, the University
promptly deposited $5,200 into an interest-bearing segregated account controlled by the University,
for payment to the United States and the relator in accordance with the terms of the settlement
agreement, as described above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On September&nbsp;16, 2010, the United States filed a notice with the Court that it intended to
appeal, before the U.S. Court of Appeals for the Ninth Circuit, the Court&#146;s June&nbsp;10, 2010 and
August&nbsp;17, 2010 orders overruling the United States&#146; objections to the settlement and the Courts&#146;
August&nbsp;20, 2010 order dismissing that matter with prejudice pursuant to the settlement. On
December&nbsp;27, 2010 the United States filed a motion with the Court of Appeals seeking to voluntarily
dismiss its appeal of the District Court&#146;s orders. The Court of Appeals granted this motion on
December&nbsp;28, 2010. As a result, the settlement agreement previously approved by the District Court
took effect on the terms previously disclosed. Subject to the distribution of the settlement
amount from escrow in accordance with the terms of the settlement agreement, the University
management believes the <I>qui tam </I>matter, which was originally filed in 2007 and unsealed in 2008, is
now resolved.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Upon resolution of any pending legal matters, the University may incur charges in excess of
presently established reserves. Management does not believe that any such charges would,
individually or in the aggregate, have a material adverse effect on the University&#146;s financial
condition, results of operations or cash flows.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->120<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Notes to Financial Statements<BR>
(In thousands of dollars, except share and per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Tax Reserves, Non-Income Tax Related</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">From time to time the University has exposure to various non-income tax related matters that
arise in the ordinary course of business. At December&nbsp;31, 2010 and 2009, the University has
reserved approximately $92 and $229 for tax matters where its ultimate exposure is considered
probable and the potential loss can be reasonably estimated. During 2009, a non-income tax related
matter related to the University&#146;s classification of its online faculty as independent contractors
was resolved with the Internal Revenue Service (&#147;IRS&#148;) and, effective July&nbsp;1, 2009, all faculty for
the University have been treated as employees. The University had reserved $235 in 2008 related to
this matter, which approximated the amount paid in 2009.
</DIV>

<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>11. Derivative Instruments</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On June&nbsp;30, 2009, the University entered into two derivative agreements to manage its 30-day
LIBOR interest exposure related to its variable rate note payable. Neither of these instruments
contained financing elements. The contractual terms of the University&#146;s derivative instruments have
not been structured to ensure that net payments will be made by one party in the earlier periods
and subsequently returned by the counterparty in later periods of the derivative&#146;s term. Neither of
the University&#146;s derivative instruments have been amended or modified since their inception. The
interest rate corridor required an upfront payment of $164 by the University to the counterparty
solely for the time value of an out-of-the-money option contract based on the forward LIBOR rate
curve at the instrument&#146;s inception. Accordingly, the fair value of the corridor derivative asset
at inception was $164. The fair value for the interest rate corridor was determined using a
hypothetical derivative transaction and Level 2 of the hierarchy of valuation inputs. The fair
value as of December&nbsp;31, 2010 and 2009 with adjustment for credit risk was $27 and $113,
respectively, and this derivative asset is included in other assets in the accompanying balance
sheet. The interest rate swap instrument was an out-of-the-money option contract based on the
forward LIBOR rate curve at the instrument&#146;s inception. The fair value of the interest rate swap,
with adjustment for credit risk, is a liability of $686 and $228 as of December&nbsp;31, 2010 and 2009,
respectively, and is included in other noncurrent liabilities in the accompanying balance sheet.
These derivative instruments were designated as cash flow hedges of variable rate note payable
obligations. Accordingly, the adjustment of $551 and $278 for the year ended December&nbsp;31, 2010 and
2009, respectively, for the effective portion of the loss on the derivatives is included as a
component of other comprehensive income, net of taxes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The interest rate corridor instrument hedges variable interest rate risk starting July&nbsp;1, 2009
through April&nbsp;30, 2014 with a notional amount of $11,482 as of December&nbsp;31, 2010. The corridor
instrument permits the University to hedge its interest rate risk at several thresholds; the
University will pay variable interest rates based on the 30-day LIBOR rates monthly until that
index reaches 4%. If 30-day LIBOR is equal to 4% through 6%, the University will pay 4%. If 30-day
LIBOR exceeds 6%, the University will pay actual 30-day LIBOR less 2%. This reduces the
University&#146;s exposure to potential increases in interest rates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The interest rate swap commenced on May&nbsp;1, 2010 and continues each month thereafter until
April&nbsp;30, 2014 and has a notional amount of $11,482 as of December&nbsp;31, 2010. The University will
receive 30-day LIBOR and pay 3.245% fixed interest on the amortizing notional amount. Therefore,
the University has hedged its exposure to future variable rate cash flows through April&nbsp;30, 2014.
The interest rate swap is not subject to a master netting arrangement and collateral has been
called by the counterparty and reflected in a restricted cash account as of December&nbsp;31, 2010 in
the amount of $760.
</DIV>

<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>12. Earnings Per Share</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Basic earnings per common share is calculated by dividing net income available to common
stockholders by the weighted average number of common shares outstanding for the period. Diluted
earnings per common share reflects the assumed conversion of all potentially dilutive securities,
consisting of stock options, preferred stock and common stock warrants for which the estimated fair
value exceeds the exercise price, less shares which could have been purchased with the related
proceeds, unless anti-dilutive. Contingently issuable stock, such as issuances to Blanchard
Education, LLC (as discussed in Note 13), is also included in the diluted shares computation if
enrollment levels have been attained, unless anti-dilutive.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->121<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Notes to Financial Statements<BR>
(In thousands of dollars, except share and per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The table below reflects the calculation of the weighted average number of common shares
outstanding, on an as if converted basis, used in computing basic and diluted earnings per common
share.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year Ended December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Denominator:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic common shares outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,721,999</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,184,186</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,184,766</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Effect of dilutive preferred stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,559,801</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Effect of dilutive warrants</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,666,312</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Effect of contingently issuable common stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,010</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Effect of dilutive stock options and restricted stock</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">673,917</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">318,639</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted common shares outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,395,916</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,502,825</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,429,889</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Diluted weighted average shares outstanding exclude the incremental effect of shares that
would be issued upon the assumed exercise of stock options. For the year ended December&nbsp;31, 2010
and 2009, approximately 1,020,863 and 196,804, respectively, of the University&#146;s stock options
outstanding were excluded from the calculation of diluted earnings per share as their inclusion
would have been anti-dilutive. These options could be dilutive in the future.
</DIV>

<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>13. Preferred Stock and Equity Transactions</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Preferred Stock</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As of December&nbsp;31, 2010 and 2009, the University had 10,000,000 shares of authorized but
unissued and undesignated preferred stock. As of December&nbsp;31, 2007, the following series of
preferred stock had been authorized, all of which were previously repurchased or converted into
shares of the University&#146;s common stock in connection with the University&#146;s initial public offering
of common stock in November&nbsp;2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Series&nbsp;A Convertible Preferred Stock</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The University entered into a Series&nbsp;A convertible preferred stock (the &#147;Series&nbsp;A&#148;) purchase
agreement on August&nbsp;24, 2005. The holders of Series&nbsp;A were entitled to vote and to receive
dividends, when and as declared by the board of directors from time to time, in each case on an
as-converted to common stock basis. The Series&nbsp;A was originally convertible into common stock on a
one for one basis, but, as a result of the stock split that occurred in connection with the
University&#146;s initial public offering of common stock, the Series&nbsp;A ultimately converted at a ratio
of 1,826 shares of common stock for each share of Series&nbsp;A, or a total of 10,870,178 shares of
common stock, upon the completion of the University&#146;s initial public offering of common stock in
November&nbsp;2008.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Series&nbsp;C Preferred Stock</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On December&nbsp;18, 2007, the University entered into a Series&nbsp;C preferred stock purchase
agreement and subscription agreement. The holders of Series&nbsp;C were entitled to receive, in
preference to the holders of the all other classes of stock, when and as declared by the board of
directors or upon a liquidation event, cumulative dividends at a rate of 8.0% per year, less the
amount of any dividends actually paid. Such dividends accrued whether or not declared by the board
of directors, whether or not there were funds legally available to pay dividends, and compounded on
an annual basis. In the event of liquidation, or a change in control, as defined, the holders of
the Series&nbsp;C were entitled to receive, in preference to all other shareholders, any distributions
of the assets of the University equal to two times the original purchase price of the shares, or
$7,000 per share, subject to certain adjustments, plus all accumulated but unpaid dividends. The
Series&nbsp;C was non-voting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On December&nbsp;18, 2007 the University issued 1,359 shares of Series&nbsp;C stock and received net
proceeds of $4,720 in cash and a subscription receivable of $5,725 for the remaining 1,636 shares,
which were paid for and issued in January&nbsp;2008.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->122<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Notes to Financial Statements<BR>
(In thousands of dollars, except share and per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In May&nbsp;2008, the board of directors and stockholders of the University authorized an amendment
to be made to the University&#146;s certificate of incorporation that provided for the Series&nbsp;C
preferred stock to convert automatically
into common stock upon the closing of a qualified public offering. In November&nbsp;2008, the board
of directors and stockholders of the University revised such amendment to clarify that, upon
conversion to common stock, accrued and unpaid dividends would be disregarded and not paid. The
amendment was filed on November&nbsp;19, 2008, and became effective prior to the effectiveness of the
registration statement relating to the University&#146;s initial public offering. The number of shares
of common stock issued upon conversion of the Series&nbsp;C in connection with the initial public
offering was equal to the aggregate liquidation preference of the Series&nbsp;C preferred stock divided
by the public offering price of the common stock, which equaled $26,800 divided by $12.00, or
2,233,333 shares of common stock. The accrued but unpaid dividends related to the Series&nbsp;C were
accretive through November&nbsp;19, 2008 resulting in cumulative undeclared dividends on the Series&nbsp;C of
$938 upon conversion.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Common Stock</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On September&nbsp;26, 2008 the University&#146;s Board of Directors approved an amendment to the
Company&#146;s charter to increase the Company&#146;s authorized common stock to 100,000,000 common shares.
This charter amendment was approved by the University&#146;s stockholders on September&nbsp;27, 2008 and
became effective on September&nbsp;29, 2008. On September&nbsp;26, 2008, the University&#146;s Board of Directors
declared a 1,826 for one stock split of its outstanding common stock, which became effective on
September&nbsp;29, 2008. This stock split resulted in the issuance of approximately 19.2&nbsp;million
additional shares of common stock and caused the conversion ratio of the Series&nbsp;A to adjust from a
one for one ratio to an 1,826 for one ratio. All information presented in the accompanying
financial statements have been adjusted to reflect the 1,826 for one stock split.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In June&nbsp;2004, the University entered into a license agreement with Blanchard relating to the
University&#146;s use of the Ken Blanchard name for its College of Business. Under the terms of that
agreement the University agreed to pay Blanchard a royalty generated on net tuition from certain
programs in the University&#146;s College of Business and to issue to Blanchard up to 909,348 shares of
common stock with the actual number issued to be contingent upon the University&#146;s achievement of
stated enrollment levels in its College of Business during the term of the agreement. As of
December&nbsp;31, 2006, the University deemed it probable that 182,600 shares would be earned and, as of
August&nbsp;15, 2007, those 182,600 shares were earned and due to Blanchard under this agreement, On May
9, 2008, the University and Blanchard amended the terms of the agreement pursuant to which
Blanchard was issued 365,200 shares of the University&#146;s common stock in full settlement of all
shares owed and contingently owed under this agreement. The fair value of the shares issued to
Blanchard as part of the license agreement of $3,394 was determined at the date it became probable
that shares would then be earned and then adjusted until the date the shares were earned. This
amount is included in the balance sheet as a component of &#147;Prepaid Royalty&#148; and will be amortized
through operations as an expense over the remaining term of the license agreement. Included in due
to related parties is $875 and $869 at December&nbsp;31, 2010 and 2009, respectively, related to the
royalty arrangement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Treasury Stock</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On August&nbsp;16, 2010, the University announced that its Board of Directors had authorized the
University to repurchase up to $25,000 of common stock, from time to time, depending on market
conditions and other considerations. The expiration date on the repurchase authorizations is
September&nbsp;30, 2011 and repurchases occur at the University&#146;s discretion. Repurchases may be made
in the open market or in privately negotiated transactions, pursuant to the applicable Securities
and Exchange Commission rules. The amount and timing of future share repurchases, if any, will be
made as market and business conditions warrant. Since its approval of the share repurchase plan,
the University has purchased 50,000 common stock shares at an aggregate cost of $782, which are
recorded at cost in the accompanying December&nbsp;31, 2010 balance sheet and statement of stockholders&#146;
equity (deficit).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Preferred Stock</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Company&#146;s charter, which became effective upon the completion of the University&#146;s initial
public offering, provides that the board of directors has authority to issue preferred stock, with
voting powers, designations, preferences, and special rights, qualifications, limitation, or
restrictions as permitted by law as determined by the board of directors, without stockholder
approval. The board of directors may authorize the issuance of preferred stock with voting or
conversion rights that could adversely affect the voting power or other rights of the holders of
the common stock.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->123<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Notes to Financial Statements<BR>
(In thousands of dollars, except share and per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Warrants to Purchase Common Stock</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In 2004, the Company issued the Institute Warrant to purchase a 10.0% non-dilutive membership
interest (later amended to be common stock), at an exercise price of $1. The Institute Warrant was
to have been exercisable for a one month period beginning on July&nbsp;1, 2011. The University had the
right to repurchase the Institute Warrant prior to the exercise period for $6,000. On April&nbsp;15,
2008 the Institute Warrant was repurchased with the execution of the settlement discussed in Note
3. The repurchase was accounted for as a reduction of equity, net of related tax benefit of $2,316.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In 2004, the University issued the Spirit Warrant, which was exercisable for 909,348 shares
for an aggregate exercise price of $526. On November&nbsp;18, 2008, the Spirit Warrant was exercised.
The shares issued upon exercise of the Spirit Warrant were subject to repurchase at a fixed price
of $16,000 at any time prior to three years after the date the Spirit Warrant was exercised, or
November&nbsp;18, 2011. The University exercised this right in April&nbsp;2009 and repurchased the 909,348
shares for an allocated purchase price of $14,495. The shares were retired. See Note 3, Spirit
Transaction.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Investor Rights Agreement</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The University is a party to an investor rights agreement with certain of its investors,
pursuant to which the University has granted those persons or entities the right to register shares
of common stock held by them under the Securities Act of 1933, as amended (the &#147;Securities Act&#148;).
Certain of the holders of these rights are entitled to demand that the University register their
shares of common stock under the Securities Act, while others are entitled to &#147;piggyback&#148;
registration rights in which they may require the University to include their shares of common
stock in future registration statements that may be filed, either for its own account or for the
account of other security holders exercising registration rights. In addition, after an initial
public offering, certain of these holders have the right to request that their shares of common
stock be registered on a Form S-3 registration statement so long as the anticipated aggregate sales
price of such registered shares as of the date of filing of the Form S-3 registration statement is
at least $1,000. The foregoing registration rights are subject to various conditions and
limitations, including the right of underwriters of an offering to limit the number of registrable
securities that may be included in an offering. The registration rights terminate as to any
particular shares on the date on which the holder sells such shares to the public in a registered
offering or pursuant to Rule&nbsp;144 under the Securities Act. The University is generally required to
bear all of the expenses of these registrations, except underwriting commissions, selling
discounts, and transfer taxes.
</DIV>

<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>14. Income Taxes</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The University has deferred tax assets and liabilities that reflect the net tax effects of
temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Deferred tax assets are subject to
periodic recoverability assessments. Realization of the deferred tax assets, net of deferred tax
liabilities is principally dependent upon achievement of projected future taxable income. The
University has no valuation allowance at December&nbsp;31, 2010 and 2009.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The components of income tax expense (benefit)&nbsp;are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year Ended December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="padding-top: 1px; font-size: 10pt"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000"><B>Restated</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Federal</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">22,522</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">16,587</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,564</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">State</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,163</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">432</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,685</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,102</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,996</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Federal</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">(2,956</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,498</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">190</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">State</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,480</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(625</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(331</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">(5,436</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,123</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(141</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">22,249</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">17,979</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,855</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->124<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Notes to Financial Statements<BR>
(In thousands of dollars, except share and per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">A reconciliation of income tax computed at the U.S. statutory rate to the effective income tax
rate is as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Year Ended December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px; font-size: 10pt"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000"><B>Restated</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Statutory U.S. federal income tax rate (benefit)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">35.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">35.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">35.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">State income taxes, net of federal tax benefit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">State tax credits, net of federal effect</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(5.2</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non deductible expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(0.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effective income tax rate (benefit)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">38.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">39.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">36.6</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Significant components of the Company&#146;s deferred income tax assets and liabilities as of
December&nbsp;31, 2010 and 2009 are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>As of December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom" style="padding-top: 1px; font-size: 10pt"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 0px solid #000000"><B>Restated</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current deferred tax asset (liability):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts receivable allowance for doubtful accounts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">14,713</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,315</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">State taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,512</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(135</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Estimated litigation loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,275</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,247</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">602</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,258</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Current deferred tax asset</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,078</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,685</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-current deferred tax asset (liability):</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Depreciation and leases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(7,719</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(605</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Share-based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,561</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,749</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unrealized gains on available for sale securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(16</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred rent</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">543</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">376</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Intangibles</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,977</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,812</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">438</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(360</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Non-current deferred tax asset</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,956</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px">Net deferred tax asset</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">18,878</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12,641</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In January&nbsp;2008, the University began its accounting for uncertainty in tax positions. The
University will recognize the impact of a tax position in its financial statements if that position
is more-likely-than-not of being sustained on audit, based on the technical merits of the position.
The University discloses all unrecognized tax benefits, which includes the reserves recorded for
uncertain tax positions on filed tax returns and the unrecognized portion of affirmative claims. No
adjustment was made to opening retained earnings. The University recognizes interest and penalties
related to uncertain tax positions in income tax expense.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The reconciliation of the beginning and ending balance of unrecognized tax benefits at
December&nbsp;31 is as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unrecognized tax benefits, beginning of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,066</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">748</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tax positions taken during the current year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Increases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">390</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Decreases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tax positions taken during a prior year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Increases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">235</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Decreases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(505</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Decreases for settlements during the period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(226</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(75</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Reductions for lapses of applicable statute of limitations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Unrecognized tax benefits, end of year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">604</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,066</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>




<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->125<!-- /Folio -->
</DIV>



<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Notes to Financial Statements<BR>
(In thousands of dollars, except share and per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As of December&nbsp;31, 2010 and 2009, the unrecognized tax benefit recorded of $388 and $619, respectively, if reversed, would
impact the effective tax rate. During the years ended December&nbsp;31, 2010, 2009, and 2008, the University recognized approximately
$80, $52 and $116, respectively, in interest and penalties. At December&nbsp;31, 2010 and 2009, the University had accrued $160 and $148, respectively, in interest and $30 and $30, respectively, in penalties. It is reasonably possible that the
amount of the
unrecognized tax benefit will change during the next 12&nbsp;months, however management does not expect the potential change
to have a material effect on the results of operations or financial position.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The University&#146;s uncertain tax positions are related to tax years that remain subject to examination by tax authorities.
As of December&nbsp;31, 2010, the earliest tax year still subject to examination for federal and state purposes is 2007 and 2005, respectively.
During 2008, the IRS commenced an examination of the University&#146;s 2005 income tax return and subsequently opened 2006 for examination.
The University has finalized the federal income tax audits of 2005 and 2006 and as a result of the audit findings, paid $67 and $20 in tax and
interest, respectively, for 2005 and $159 and $31 in tax and interest, respectively, for 2006 during 2010.
</DIV>

<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>15. Regulatory</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The University is subject to extensive regulation by federal and state governmental agencies
and accrediting bodies. In particular, the Higher Education Act of 1965, as amended (the &#147;Higher
Education Act&#148;), and the regulations promulgated thereunder by the Department of Education, subject
the University to significant regulatory scrutiny on the basis of numerous standards that schools
must satisfy in order to participate in the various federal student financial assistance programs
under Title IV of the Higher Education Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">To participate in the Title IV programs, an institution must be authorized to offer its
programs of instruction by the relevant agency of the state in which it is located, accredited by
an accrediting agency recognized by the Department of Education and certified as eligible by the
Department of Education. The Department of Education will certify an institution to participate in
the Title IV programs only after the institution has demonstrated compliance with the Higher
Education Act and the Department of Education&#146;s extensive regulations regarding institutional
eligibility. An institution must also demonstrate its compliance to the Department of Education on
an ongoing basis. The University submitted its application for recertification in March&nbsp;2008 in
anticipation of the expiration of its provisional certification on June&nbsp;30, 2008. The Department of
Education did not make a decision on the University&#146;s recertification application by June&nbsp;30, 2008,
and therefore the University&#146;s participation in the Title IV programs has been automatically
extended on a month-to-month basis until the Department of Education makes its decision. As of
December&nbsp;31, 2010, management believes the University is in compliance with the applicable
regulations in all material respects.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Because the University operates in a highly regulated industry, it, like other industry
participants, may be subject from time to time to investigations, claims of non-compliance, or
lawsuits by governmental agencies or third parties, which allege statutory violations, regulatory
infractions, or common law causes of action. While there can be no assurance that regulatory
agencies or third parties will not undertake investigations or make claims against the University,
or that such claims, if made, will not have a material adverse effect on the University&#146;s business,
results of operations or financial condition, management believes the University is in compliance
with applicable regulations in all material respects.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In connection with its administration of the Title IV federal student financial aid programs,
the Department of Education periodically conducts program reviews at selected schools that receive
Title IV funds. In July&nbsp;2010, the Department of Education initiated a program review of Grand
Canyon University covering the 2008-2009 and 2009-2010 award years. As part of this program
review, a Department of Education program review team conducted a site visit on the University&#146;s
campus and reviewed, and in some cases requested further information regarding, the University&#146;s
records, practices and policies relating to, among other things, financial aid, enrollment,
enrollment counselor compensation, program eligibility and other Title IV compliance matters. Upon
the conclusion of the site visit, the University was informed by the program review team that it
would (i)&nbsp;conduct further review of the University&#146;s documents and records offsite, (ii)&nbsp;upon
completion of such review, schedule a formal exit interview to be followed by a preliminary program
review report in which any preliminary findings of non-compliance would be presented, and (iii)
conclude the review by issuance of a final determination letter. The program review team has not
yet scheduled a formal exit interview with the University. Accordingly, at this point, the program
review remains open and the University intends to continue to cooperate with the review team until
the program review is completed.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->126<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Notes to Financial Statements<BR>
(In thousands of dollars, except share and per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">While the University has not yet received notification of the timing of its exit interview or
the Department of Education&#146;s preliminary program review report or final determination letter, as a
result of concerns first raised by a member of the program review team at the conclusion of the
site visit and subsequently stated in an affidavit by such member filed in connection with an
August&nbsp;13, 2010 hearing related to the recently-settled <I>qui tam </I>case, the University became aware
that the program review team had two preliminary findings of concern. The first issue is whether a
compensation policy in use during part of the period under review improperly rewarded some
enrollment counselors based on success in enrolling students in violation of applicable law. As
the University has previously disclosed in the context of its now-settled <I>qui tam </I>action, while it
believes that the University&#146;s compensation policies and practices at issue in the program review
were not based on success in enrolling students in violation of applicable law, the Department of
Education&#146;s regulations and interpretations of the incentive compensation law do not establish
clear criteria for compliance in all circumstances and some of the University&#146;s practices in prior
years were not within the scope of any of the specific &#147;safe harbors&#148; provided in the compensation
regulations and applicable during that period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The second issue is whether, during the award years under review, certain programs offered
within the University&#146;s College of Liberal Arts provided students with training to prepare them for
gainful employment in a recognized occupation. This &#147;gainful employment&#148; standard has been a
requirement for Title IV eligibility for programs offered at proprietary institutions of higher
education such as Grand Canyon University although, pursuant to legislation passed in 2008 and
effective as of July&nbsp;1, 2010, this requirement no longer applies to designated liberal arts
programs offered by the University and certain other institutions that have held accreditation by a
regional accrediting agency since a date on or before October&nbsp;1, 2007 (the University has held a
regional accreditation since 1968). Subsequent to the filing of the affidavit by the program
review team member expressing this preliminary finding, the program review team submitted a written
request to the University in which the program review team stated the view that, prior to July&nbsp;1,
2010, traditional liberal arts programs were not considered as being eligible under Title IV but
then requested additional information from the University that would help the Department of
Education determine whether the programs offered within the University&#146;s College of Liberal Arts
were eligible under Title IV because they did provide training to prepare students for gainful
employment in a recognized occupation. While the University was not informed as to which specific
programs offered within the University&#146;s College of Liberal Arts the program review team believes
may be ineligible, in August&nbsp;2010 the University provided the Department of Education with the
requested information which the University believes will demonstrate that the programs offered
within the University&#146;s College of Liberal Arts met this requirement. The University has received
no further communications from the Department of Education regarding the program review.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The University&#146;s policies and procedures are planned and implemented to comply with the
applicable standards and regulations under Title IV. If and to the extent the Department of
Education&#146;s final determination letter identifies any compliance issues, the University is
committed to resolving such issues and ensuring that Grand Canyon University operates in compliance
with all Department of Education requirements. Program reviews may remain unresolved for months or
years with little or no communication from the Department of Education, and may involve multiple
exchanges of information following the site visit. The University cannot presently predict whether
or if further information requests will be made, when the exit interview will take place, when the
preliminary program review report or final determination letter will be issued, or when the program
review will be closed. If the Department of Education were to make significant findings of
non-compliance in the final program review determination letter, including any finding related to
the two issues discussed above, then, after exhausting any administrative appeals available to the
University, the University could be required to pay a fine, return Title IV monies previously
received, or be subjected to other administrative sanctions. While the University cannot currently
predict the outcome of the Department of Education review, any adverse finding could damage the
University&#146;s reputation in the industry and have a material adverse effect on the University&#146;s
business, results of operations, cash flows and financial position.
</DIV>

<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>16. Share-Based Compensation Plans</B>
</DIV>

<!-- xbrl,body -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Adoption of Equity Plans</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On September&nbsp;27, 2008 the University&#146;s stockholders approved the adoption of the 2008 Equity
Incentive Plan (&#147;Incentive Plan&#148;) and the 2008 Employee Stock Purchase (&#147;ESPP&#148;). A total of
4,199,937 shares of the University&#146;s
common stock were originally authorized for issuance under the Incentive Plan. On January&nbsp;1,
2010 and 2009 and in accordance with the terms of the Incentive Plan, the number of shares
authorized for issuance under the Incentive Plan automatically increased by 2.5% of the number of
shares of common stock issued and outstanding on December&nbsp;31, 2009 and 2008, or 2,278,078 shares,
raising the total number of shares of common stock authorized for issuance under the Incentive Plan
to 6,478,015 shares. Although the ESPP has not yet been implemented, a total of 1,049,984 shares of
the University&#146;s common stock have been authorized for sale under the ESPP.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->127<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Notes to Financial Statements<BR>
(In thousands of dollars, except share and per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Incentive Plan</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In connection with the initial public offering, on November&nbsp;19, 2008, the University granted
710,494 fully vested options and 2,594,583 time vested options to purchase shares of common stock
with an exercise price equal to the initial public offering price of $12.00 per share. During 2010,
the University granted time vested options to purchase shares of common stock with an exercise
price equal to the fair market value on the date of grant. The time vested options will vest
ratably over a period of five years for employees and three years for the director grant. Both the
fully vested and time vested options will expire ten years from the date of grant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">A summary of the activity related to stock options granted under the University&#146;s Incentive
Plan is as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14" style="border-bottom: 1px solid #000000"><B>Summary of Stock Options Outstanding</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Average</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Average</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Remaining</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Aggregate</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Price per</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Contractual</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Intrinsic</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Share</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Term (Years)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Value ($)(1)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Outstanding as of December&nbsp;31, 2007</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,305,108</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(49,322</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Forfeited, canceled or expired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,375</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Outstanding as of December&nbsp;31, 2008</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,247,411</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">217,526</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(102,134</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Forfeited, canceled or expired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(12,807</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Outstanding as of December&nbsp;31, 2009</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,349,996</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12.30</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">921,550</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.29</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(144,095</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Forfeited, canceled or expired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(101,279</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.45</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Outstanding as of December&nbsp;31, 2010</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,026,172</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">14.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.20</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">21,540</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Exercisable as of December&nbsp;31, 2010</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,513,916</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12.11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11,324</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Available for issuance as of
December&nbsp;31, 2010</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,034,053</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96%">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Aggregate intrinsic value represents the value of the University&#146;s closing stock price on
December&nbsp;31, 2010 ($19.59) in excess of the exercise price multiplied by the number of options
outstanding or exercisable.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As of December&nbsp;31, 2010, there was approximately $17,003 of total unrecognized share-based
compensation cost, net of estimated forfeitures, related to unvested stock options. These costs are
expected to be recognized over a weighted average period of 2.2&nbsp;years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table summarizes information related to stock options exercised for year ended
December&nbsp;31, 2010, 2009 and 2008:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Amounts related to options exercised:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Intrinsic value realized by optionee</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,407</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">656</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">249</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Actual tax benefit realized by the University for tax deductions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">563</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">262</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">98</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Cash received from stock option exercises during fiscal year 2010, 2009 and 2008 totaled
approximately $1,747, $1,226 and $592, respectively.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->128<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Notes to Financial Statements<BR>
(In thousands of dollars, except share and per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Share-based Compensation Expense</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The table below outlines share-based compensation expense for the fiscal years ended December
31, 2010, 2009 and 2008 related to restricted stock and stock options granted:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Instructional costs and services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,034</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">771</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,737</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Selling and promotional</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">233</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">116</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,322</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,782</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,532</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">619</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Share-based compensation expense included in operating expenses</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,049</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,419</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,678</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tax effect of share-based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(2,020</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,368</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,454</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><B>Share-based compensation expense, net of tax</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,029</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,051</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">2,224</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Share-based Compensation Expense Assumptions</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Fair Value. </I>The University uses the Black-Scholes-Merton option pricing model to estimate the
fair value of the University&#146;s options as of the grant dates using the following weighted average
assumptions:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Year Ended December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2008</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average fair value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10.74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7.99</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5.68</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected volatility</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">47.50</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">47.46</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">46.13</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected life (years)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.47</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Risk-free interest rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2.87</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2.81</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2.44</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dividend yield</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">0</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Expected Volatility. </I>As the University&#146;s stock had not been publicly traded prior to November
2008, the expected volatility assumption for the years ended December&nbsp;31, 2010, 2009 and 2008
reflects an average of volatilities of the University&#146;s peer group of public education companies
with a period equal to the expected life of the options.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Expected Life (years). </I>The University continues to use the simplified method to estimate the
expected term of stock options under certain circumstances. The simplified method for estimating
expected term is to use the mid-point between the vesting term and the contractual term of the
share option. The University has analyzed the circumstances in which the use of the simplified
method is allowed. The University has elected to use the simplified method for options granted in
fiscal year 2010, 2009 and 2008 because the University does not have historical exercise data to
estimate expected term due to the limited time period its shares have been publicly traded.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Risk-Free Interest Rate. </I>The risk-free interest rate assumption is based upon the U.S.
constant maturity treasury rates as the risk-free rate interpolated between the years commensurate
with the expected life of the options.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Dividend Yield. </I>The dividend yield assumption is zero since the University does not expect to
declare or pay dividends in the foreseeable future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Forfeitures. </I>Forfeitures are estimated at the time of grant based on historical retention of
employees. If necessary, management estimates are adjusted at the end of each reporting period if
actual forfeitures differ from those estimates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Expected Vesting Period. </I>The University amortizes the share-based compensation expense, net of
forfeitures, over the expected vesting period using the straight-line method.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->129<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Notes to Financial Statements<BR>
(In thousands of dollars, except share and per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Stock Grant</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On November&nbsp;19, 2008, the University granted 109,329 shares of common stock with a fair value
of $12.00 per share, to its Chief Executive Officer, which is reflected as share-based compensation
expense in 2008 in the amount of $1,300 in general and administrative expense.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Restricted Stock Grants</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">On March&nbsp;3, 2009, the University granted 1,307 shares of common stock with a fair value of
$15.30 per share, to certain members of the University&#146;s board of directors. The restricted shares
have voting rights and vested on March&nbsp;3, 2010. On May&nbsp;19, 2009, the University granted 2,491
shares of common stock with a fair value of $14.05 per share, to certain members of the
University&#146;s board of directors. The restricted shares have voting rights and vested immediately
prior to the 2010 annual stockholders&#146; meeting. On November&nbsp;10, 2009, the University granted 1,141
shares of common stock with a fair value of $17.54 per share, to a member of the University&#146;s board
of directors. The restricted shares have voting rights and vested on November&nbsp;10, 2010. On May&nbsp;18,
2010, the University granted 1,391 shares of common stock with a fair value of $25.16 per share, to
certain members of the University&#146;s board of directors. The restricted shares have voting rights
and vest on the earlier of May&nbsp;18, 2011 or immediately prior to the 2011 annual stockholders
meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">A summary of the activity related to restricted and unrestricted stock granted under the
University&#146;s Incentive Plan is as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Average</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Grant Date</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Total</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Fair Value</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>per Share</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Outstanding as of December&nbsp;31, 2007</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">109,329</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Vested</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">109,329</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Forfeited, canceled or expired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Outstanding as of December&nbsp;31, 2008</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">109,329</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.00</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,737</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.88</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Vested</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Forfeited, canceled or expired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Outstanding as of December&nbsp;31, 2009</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">118,066</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12.21</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,173</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25.16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Vested</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,737</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.88</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Forfeited, canceled or expired</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Outstanding as of December&nbsp;31, 2010</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">122,239</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12.66</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Vested as of December&nbsp;31, 2010</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">118,066</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12.21</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>401(k) Plan</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The University has established a 401(k) Defined Contribution Benefit Plan (the &#147;Plan&#148;). The
Plan provides eligible employees, upon date of hire, with an opportunity to make tax-deferred
contributions into a long-term investment and savings program. All employees over the age of 21 are
eligible to participate in the plan. The Plan allows eligible employees to contribute to the Plan
subject to Internal Revenue Code restrictions and the Plan allows the University to make
discretionary matching contributions. The University made discretionary matching contributions to
the plan of $800, $522 and $388 for the years ended December&nbsp;31, 2010, 2009 and 2008, respectively.
</DIV>

<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>17. Related Party Transactions</B>
</DIV>
<!-- xbrl,body -->

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Related party transactions include transactions between the University and certain of its
shareholders and affiliates. The following transactions were in the normal course of operations and
were measured at the exchange amount, which is the amount of consideration established and agreed
to by the parties.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->130<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Notes to Financial Statements<BR>
(In thousands of dollars, except share and per share data)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">As of and for the years ended December&nbsp;31, 2010, 2009, and 2008, related party transactions
consisted of the following:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Shareholders</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Significant Education Holding, LLC (&#147;Sig Ed&#148;) &#151; </I>Prior to completion of the University&#146;s
initial public offering of common stock, Sig Ed was a stockholder of the University. In connection
with the initial public offering, Sig Ed was dissolved and shares of the University&#146;s common stock
that were held by Sig Ed were distributed to its members. At December&nbsp;31, 2007 until the
distribution of such shares in connection with the initial public offering, Sig Ed held 18,260,000
shares of the University&#146;s common stock. The University has not engaged in any transactions with
Sig Ed, but has engaged in certain transactions with former members of Sig Ed, as discussed below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Rich Crow Enterprises, LLC (&#147;Rich Crow&#148;) &#151; </I>Members of Rich Crow include the Executive
Chairman and General Counsel of the University, who are also both members of the University&#146;s Board
of Directors. Rich Crow was also a member of Sig Ed. A member of Rich Crow is also related to the
owner of a company that provided marketing services totaling $249 and $257 in the years ended
December&nbsp;31, 2010, and 2009, respectively, of which $44 and $0 amounts were owed at December&nbsp;31,
2010, and 2009, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Endeavour Capital Fund IV, LP, Endeavour Associated Fund IV, LP, and Endeavour Capital
Parallel Fund IV, LP (&#147;Endeavour&#148;) </I>&#151; Two members of the University&#146;s Board of Directors are also
employees of Endeavour. The Company paid Endeavour management and reimbursed fees of $356 for the
year ended December&nbsp;31, 2008. As of December&nbsp;31, 2010 and 2009, $0 and $0 were payable to
Endeavour.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Affiliates</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Mind Streams, LLC (&#147;Mind Streams&#148;), 21st Century, LLC (&#147;21st Century&#148;) and Lifetime Learning
&#151; </I>Mind Streams, 21st Century and Lifetime Learning are owned and operated, in part, by the father
of the University&#146;s Executive Chairman and General Counsel. See further discussion in Note 3,
Summary of Significant Accounting Policies <I>&#151; </I>Selling and Promotional.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Other</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Young Life Southwest Region (&#147;YLSW&#148;) &#151;</I>One of the University&#146;s Board of Directors serves as
the Executive Chairman of the Board of Trustees of Young Life Southwest Region, a non-profit
organization. In May&nbsp;2010, the University entered into an agreement with YLSW to support
leadership development, community outreach ministry growth, and student outreach growth with YLSW.
During 2010, the University expensed $497 for all of these components and as of December&nbsp;31, 2010
$52 was payable to YLSW. In addition, the agreement provides for ambassador program scholarships
each year, $139 of scholarships were awarded to YLSW ambassadors for the year ended December&nbsp;31,
2010.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->131<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>

<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Notes to Financial Statements<BR>
(In thousands of dollars, except share and per share data)</B>
</DIV>


<!-- xbrl,n -->
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>18. Quarterly Results of Operations
<!-- xbrl,body -->
(Unaudited and Restated)</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table
summarizes the unaudited quarterly results of operations for 2010
(Restated as described in Note 2) and 2009
and should be read in conjunction with other information included in the accompanying financial
statements.
</DIV>


<DIV align="center">
<TABLE style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="26" style="border-bottom: 1px solid #000000"><B>2010</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Second Quarter</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Second Quarter</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Third Quarter</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Third Quarter</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Fourth Quarter</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Fourth Quarter</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>First Quarter</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>As Reported (2)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>As Restated</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>As Reported (2)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>As Restated</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>As Reported (2)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>As Restated</B></TD>
    <TD>&nbsp;</TD>
</TR>



<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net revenue</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">89,326</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">97,522</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">97,322</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">98,946</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">98,946</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">100,031</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">100,031</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Costs and expenses:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Instructional costs and services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,586</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,668</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,958</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,996</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,643</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,146</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,361</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Selling and promotional</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,876</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,976</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,976</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,538</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,538</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,104</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,176</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,176</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,608</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,608</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,733</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,733</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Contract termination fees with
a related party</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,233</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,233</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Estimated exit costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">89</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Royalty to former owner</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">116</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">116</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total costs and expenses</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69,729</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77,010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">86,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76,808</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,455</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">88,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90,965</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Operating income</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,597</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,512</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,022</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,138</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,491</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,281</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,066</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(283</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(125</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(125</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(143</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(143</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(170</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(170</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Income before income taxes</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,314</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,387</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,897</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,995</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,348</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,111</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,896</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,834</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,991</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,163</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,077</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,606</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,540</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,646</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net income available to common
stockholders</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11,480</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12,396</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,734</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12,918</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">10,742</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,571</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">6,250</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Earnings per share:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Basic income per share(1)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.28</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Diluted income per share(1)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.27</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.28</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Basic weighted average
shares outstanding</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,674</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,724</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,724</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,746</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,743</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,743</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Diluted weighted average shares
outstanding</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,325</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,557</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,557</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,351</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,351</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,346</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,346</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">The sum of quarterly income per share may not equal annual income per
share due to rounding.</DIV></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px; font-size: 3pt"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: justify">
The As Reported amounts reflect the reclassification of bad debt expense from General and administrative
to Instructional costs and services as disclosed in Note 3.</DIV></TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->132<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>
<!-- xbrl -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">






<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Grand Canyon Education, Inc.</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Notes to Financial Statements<BR>
(In thousands of dollars, except share and per share data)</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="44%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="14" style="border-bottom: 1px solid #000000"><B>2009</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>First Quarter</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Second Quarter</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Third Quarter</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Fourth Quarter</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net revenue</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">55,459</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">62,905</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">66,084</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">77,454</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Costs and expenses:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Instructional costs and
services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,263</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,703</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,809</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,832</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Selling and promotional</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,575</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,726</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,095</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,009</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,538</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,396</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,213</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,457</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Litigation loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Estimated exit costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,218</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Royalty to former owner</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total costs and expenses</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,450</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">49,899</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59,391</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59,590</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Operating income</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,009</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,006</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,693</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,864</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(558</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(300</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(233</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(198</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Income before income taxes</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,451</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,706</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,460</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,666</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,376</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,063</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,969</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,571</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net income available to
common stockholders</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">5,075</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">7,643</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">3,491</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">11,095</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Earnings per share:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Basic income per share(1)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.24</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Diluted income per share(1)</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.17</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">0.24</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Basic weighted average
shares outstanding</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,474</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,846</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,783</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,636</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Diluted weighted average
shares outstanding</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,821</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,051</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,099</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,041</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->

</TABLE>
</DIV>




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96%">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>The sum of quarterly income per share may not equal annual income per share due to rounding.</TD>
</TR>

</TABLE>


<!-- /xbrl,ns -->


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->133<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>



<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">





<DIV align="left">
<A name="C24244115"></A>
</DIV>

<DIV align="left" style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>Item&nbsp;9.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B><I>Changes in and Disagreements With Accountants on Accounting and Financial Disclosure</I></B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">None.
</DIV>
<DIV align="left">
<A name="C24244116"></A>
</DIV>

<DIV align="left" style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>Item&nbsp;9A.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B><I>Controls and Procedures</I></B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Disclosure Controls and Procedures</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">
We maintain disclosure controls and procedures designed to provide reasonable assurance that
information required to be disclosed in reports filed under the Exchange Act is recorded,
processed, summarized and reported within the specified time periods and accumulated and
communicated to our management, including our Chief Executive Officer
(&#147;Principal Executive Officer&#148;) and Chief Financial Officer
(&#147;Principal Financial Officer&#148;), as appropriate, to allow timely decisions regarding
required disclosure. We have established a Disclosure Committee, consisting of certain members
of management, to assist in this evaluation. Our Disclosure Committee meets on a quarterly basis
and more often if necessary.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">
Under the supervision and with the participation of our management, including our Principal
Executive Officer and Principal Financial Officer, an evaluation was performed on the
effectiveness of the design and operation of our disclosure controls and procedures
(as defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Exchange Act), as of the end
of the period covered by this annual report in connection with the filing of our original Annual
Report on Form 10-K for the fiscal year ended December 31, 2010. Based on that evaluation,
our management, including the Principal Executive. Officer and Principal Financial Officer,
concluded at that time that our disclosure controls and procedures were effective as of
December&nbsp;31, 2010.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">
In connection with the restatement of our financial statements for the year ended
December&nbsp;31, 2010, our management re-evaluated the effectiveness of our disclosure controls
and procedures and identified a material weakness in our internal control over financial reporting
with respect to our calculation of the allowance for doubtful accounts, as described below
under &#147;Management&#146;s Report on Internal Control over Financial Reporting.
&#148; Solely as a result of this material weakness, our Principal Executive Officer and Principal
Financial Officer have revised their conclusions regarding the effectiveness of our internal
control over financial reporting as of December&nbsp; 31, 2010. Accordingly, management now
concludes that our disclosure controls and procedures were not effective at a reasonable
assurance level as of December&nbsp;31, 2010.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">
As of the date of this filing, we have adopted a new methodology to calculate the allowance for
doubtful accounts that incorporates additional information about the composition of our accounts
receivable. Management has taken actions, as described below under &#147;Remediation Steps to
Address Material Weakness,&#148; to remediate the material weakness in our internal control over
financial reporting, and believes such controls have been remediated as of the date of this filing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Management&#146;s Report on Internal Control Over Financial Reporting</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">
Management is responsible for establishing and maintaining effective internal control over
financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Internal control
over financial reporting is a process designed 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
(&#147;GAAP&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our internal control over financial reporting includes those policies and procedures that:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of our assets; </TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(ii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with GAAP, and that receipts and expenditures
are being made only in accordance with authorizations of our management and directors; and  </TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(iii)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of our assets that could have a material effect on the financial
statements.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">
Because of its inherent limitation, our internal control systems and procedures may not prevent
or detect misstatements. An internal control system, no matter how well conceived and operated,
can provide only reasonable, not absolute, assurance that the objectives of the control system are
met. Because of the inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if any, have been
detected. Also, projections of any evaluation of effectiveness to future periods are subject to
the risks that controls may become inadequate because of changes in condition, or that the degree
of compliance with the policies and procedures may deteriorate.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">
Prior to the filing of our original Annual Report on Form 10-K for the fiscal year ended
December&nbsp;31, 2010, management, under the direction of our Principal Executive Officer and
Principal Financial Officer, assessed the effectiveness of the Corporation&#146;s internal control
over financial reporting. In making this assessment, it used the criteria set forth by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO).  Based on this
assessment, our management had concluded that as of December 31, 2010, our internal control
over financial reporting was effective based on those criteria.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">
In connection with the restatement discussed in the Explanatory Note to this Form 10-K/A and in
Note 2 to our financial statements, management reevaluated  the effectiveness of our
internal control over financial reporting as of December&nbsp;31, 2010. Based on its re-evaluation,
management determined that a material weakness in our internal control over the calculation of our
allowance for doubtful accounts existed as of December&nbsp;31, 2010. A material weakness is a control
deficiency, or combination of control deficiencies, in internal control over financial reporting
that results in more than a remote likelihood that a material misstatement of the annual or
interim financial statements will not be prevented or detected on a timely basis. Specifically,
the design of controls over the preparation and review of the allowance for doubtful accounts did
not detect that our estimation method did not consider all available information to make an
appropriate estimate of the required reserve. As a result, we were required to restate our
previously issued financial statements for the fiscal year ended December 31, 2010
and the fiscal quarters ended June 30, 2010, September&nbsp;30, 2010, March&nbsp;31, 2011 and
June&nbsp;30, 2011.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->134<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 0pt; text-indent: 4%">
Based on its reevaluation, our management has now concluded that as
of December&nbsp;31, 2010 our
internal control over financial reporting is not effective based on COSO criteria.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">
The effectiveness of our internal control over financial reporting has been audited by
Ernst &amp;  Young LLP, an independent registered public accounting firm, as stated in their
attestation report which is included herein.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>
Remediation Steps to Address Material Weakness</B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">
Management has dedicated significant resources to correct the methodology relating to the
calculation of our allowance for doubtful accounts and to ensure that we take proper steps to
improve our internal controls and remedy our material weakness in our internal control over
financial reporting and disclosure controls. Management has
implemented effective control policies and procedures and remediated the underlying control
deficiencies by taking the following actions:
</DIV>
<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>conducted a full review of our methodology for estimating the allowance for doubtful
accounts  </TD>
</TR>

</TABLE>
</DIV>
<DIV>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>established controls and procedures adequate to timely identify changes to the
composition of our accounts receivable   </TD>
</TR>

</TABLE>
</DIV>
<DIV>
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&#149;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>established controls and procedures to enhance our ability to monitor collection trends.</TD>
</TR>
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">
Management believes that the actions described above have remediated the identified material
weakness and strengthened our internal control over financial
reporting as of the date of this filing.

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">
Further, we believe that, as a result of management&#146;s in-depth review of its accounting processes
and the additional procedures management has implemented, there are no material inaccuracies or
omissions of material fact in this Form 10-K/A and, to the best of our knowledge, we believe that
the financial statements in this Form 10-K/A fairly present in all material aspects
the financial condition, results of operations and cash flows of the Company in conformity with
generally accepted accounting principles.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>
Changes in Internal Control Over Financial Reporting</B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">
Except as noted above, there were no changes in our internal control over financial reporting
during the quarter ended December&nbsp;31, 2010, that materially affected, or are reasonably likely
to materially affect, our internal control over financial reporting.
</DIV>
<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>
Report of Independent Registered Public Accounting Firm</B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>
The Board of Directors and Stockholders<BR>
Grand Canyon Education, Inc.</B>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">
We have audited Grand Canyon Education Inc.&#146;s  (the &#147;Company&#148;) internal control over financial
reporting as of December&nbsp;31, 2010, based on criteria established in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(the COSO criteria). Grand Canyon Education Inc.&#146;s management is responsible for maintaining
effective internal control over financial reporting, and for its assessment of the effectiveness
of internal control over financial reporting included above under the
heading &#147;Management&#146;s Report
on Internal Control over Financial Reporting.&#148; Our responsibility is to express an opinion on the
Company&#146;s internal control over financial reporting based on our audit.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">
We conducted our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether effective internal control over financial reporting
was maintained in all material respects. Our audit included obtaining an understanding of
internal control over financial reporting, assessing the risk that a material weakness exists,
testing and evaluating the design and operating effectiveness of internal control based on the
assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">
A company&#146;s internal control over financial reporting is a process designed 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.
A company's internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management
and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's assets that could
have a material effect on the financial statements.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">
Because of its inherent limitations, internal control over financial reporting may not prevent
or detect misstatements. Also, projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">
In our report dated February&nbsp;22, 2011, we expressed an unqualified opinion on the effectiveness
of internal control over financial reporting as of December&nbsp;31, 2010. As described in the
following paragraph, the Company subsequently determined that a deficiency in controls as
described in the following paragraph existed as of the previous assessment date, and has
further concluded that such deficiency represented a material
weakness as of December&nbsp;31, 2010.
As a result, management has revised its assessment included above under the
heading &#147;Management's Report on Internal Control over Financial
Reporting&#148; to conclude that the
Company&#146;s internal control over financial reporting was not
effective as of December&nbsp;31, 2010.
Accordingly, our opinion on the effectiveness of the Company&#146;s internal control over financial
reporting as of December&nbsp;31, 2010, expressed herein is different from that expressed in our
previous report.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">
A material weakness is a deficiency, or combination of deficiencies, in internal control over
financial reporting, such that there is a reasonable possibility that a material misstatement
of the company&#146;s annual or interim financial statements will not be prevented or detected on a
timely basis. The following material weakness has been identified and included in management's
assessment. Management has identified a material weakness in its internal control over the
Company&#146;s calculation of its allowance for doubtful accounts. This material weakness was
considered in determining the nature, timing and extent of audit tests applied in our audit of
the 2010 financial statements and this report does not affect our
report dated February&nbsp;22, 2011,
except for Note 2, as to
which the date is November 14, 2011, on those financial statements (as restated).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">
In our opinion, because of the effect of the material weakness described above on the achievement
of the objectives of the control criteria, Grand Canyon Education, Inc. has not maintained
effective internal control over financial reporting as of
December&nbsp;31, 2010, based on the COSO
criteria.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
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    <TD width="45%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Ernst &amp; Young LLP
</TD>

<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt;">
Phoenix, Arizona<BR>
February&nbsp;22, 2011, except for the effects of the material
weakness described in the sixth paragraph above, as to which the date
is November   14, 2011
</DIV>

<DIV align="left" style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>Item&nbsp;9B.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B><I>Other Information</I></B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">None.
</DIV>
<DIV align="left">
<A name="C24244118"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>PART III</B>
</DIV>

<DIV align="left">
<A name="C24244119"></A>
</DIV>

<DIV align="left" style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>Item&nbsp;10.</B></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: left"><B><I>Directors, Executive Officers and Corporate Governance</I></B></DIV></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Information relating to our Board of Directors, Executive Officers, and Corporate Governance
required by this item appears in the sections entitled &#147;Corporate Governance and Board Matters&#148; and
&#147;Proposal No.&nbsp;1: Election of Directors&#148; in our 2011 proxy statement, and such information is
incorporated herein by reference.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our employees must act ethically at all times and in accordance with the policies in our Code
of Business Conduct and Ethics. We require full compliance with this policy from all designated
employees including our Chief Executive Officer, Chief Financial Officer, and Chief Accounting
Officer. We publish the policy, and any amendments or waivers to the policy, in the Corporate
Governance section of our website located at www.gcu.edu/ Investor Relations/Corporate Governance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The charters of our
 Audit Committee, Compensation Committee, and Nominating and Governance
Committee are also available in the Corporate Governance section our website located at
www.gcu.edu/Investor Relations/Corporate Governance.
</DIV>
<DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->135<!-- /Folio -->
</DIV>
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left">
<A name="C24244120"></A>
</DIV>

<DIV align="left" style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>Item&nbsp;11.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B><I>Executive Compensation</I></B></TD>
</TR>
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>EXECUTIVE COMPENSATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Compensation Discussion and Analysis</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>The following discussion and analysis should be read in conjunction with &#147;Compensation of
Named Executive Officers&#148; and the related tables that follow. In addition, the following discussion
and analysis gives effect to the restatement of our balance sheet and statements of income,
stockholders&#146; equity and cash flows for the year ended December&nbsp;31, 2010 as described above in Item
7, </I>Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations<I>.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Executive Summary</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We are a regionally accredited provider of postsecondary education services focused on
offering graduate and undergraduate degree programs in our core disciplines of education, business,
healthcare, and liberal arts. We offer programs online as well as ground programs at our
approximately 100-acre traditional campus in Phoenix, Arizona and onsite at the facilities of
employers. At December&nbsp;31, 2010, we had approximately 41,500 students. At December&nbsp;31, 2010, 91.0%
of our students were enrolled in our online programs and, of those students 45.5% were pursuing
master&#146;s or doctoral degrees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Fiscal 2010 was a transitional year for the Company. We made a strategic decision to scale
down enrollment growth and focus on enhancing the academic reputation of our private,
Christian-focused, market-supported institution. In addition, we made numerous operational and
academic changes, including adjustments to our student refund policy, the strengthening of our
academic progress policy, the raising of our admissions requirements and the transition from a
&#147;term-based&#148; financial aid system (where all students, including online students, begin programs
and are eligible to receive financial aid at periodic start dates pursuant to a calendar-based term
system) to a &#147;borrower-based, non-term&#148; or &#147;BBAY&#148; financial aid system (where each student may
begin a program and be eligible to receive financial aid at any time throughout the year). While
these changes had a significant negative impact on our short-term financial results, we believe
they are in the long-term best interest of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In addition, throughout 2010, our industry faced a changing regulatory environment with new
proposed and final rules being issued by the Department of Education and legislative hearings and
initiatives in both the U.S. Senate and House of Representatives. For a complete description of
these matters, please see &#147;Business &#151; Regulation&#148; and &#147;Management&#146;s Discussion and Analysis of
Financial Condition and Results of Operations&#148; in our Annual Report on Form 10-K/A.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our senior management guided our company through these changes while still producing very
positive financial results (2010 operating income, Adjusted EBITDA and net income results are as
restated):
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Net revenue increased 47.3% to $385.8&nbsp;million for fiscal 2010, compared to
$261.9&nbsp;million for fiscal 2009;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Operating income increased 35.3% to $63.0&nbsp;million for fiscal 2010, compared to
$46.6&nbsp;million for fiscal 2009. The operating margin for fiscal 2010 was 16.3%,
compared to 17.8% for fiscal 2009;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Adjusted EBITDA increased 39.2% to $90.7&nbsp;million for fiscal 2010, compared to
$65.1&nbsp;million for fiscal 2009;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Net income increased 39.5% to $38.1&nbsp;million for fiscal 2010, compared to $27.3
million for fiscal 2009; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Diluted net income per share was $0.82 for fiscal 2010, compared to $0.60 for
fiscal 2009</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

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<DIV style="margin-top: 10pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We also had positive non-financial developments in 2010, including:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The focus on the quality of our online student body resulted in an increase in
the number of graduate students as a percentage of the total online student body to
45.5% in 2010 from 44.5% in 2009 and an increase in the number of our nursing and
education students, who as a group have the highest graduation rates and lowest
default rates, as a percentage of the total online student body to 19.3% and 49.6%
in 2010 from 13.4% and 49.1% in 2009, respectively;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The focus on the quality of our campus-based students and our ground campus
resulted in an increase in the number of campus-based students from 3,113 in 2009
to 3,748 in 2010 and an increase in the average incoming G.P.A. of these students.
While we currently expect to have between 4,200 and 4,500 campus-based students in
fall 2011, we expect the quality of these students to continue to improve;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We continued to focus on academic excellence initiatives, including a new
learning system that we will begin to implement in the first half of 2011 and which
we expect will increase student learning and faculty effectiveness and result in
higher retention rates, as well as the build out of our instructional design team,
who work to improve the curriculum, instruction and course sequencing in many of
our programs.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Finally, during fiscal year 2010, we continued practices that are considered standard for good
corporate governance and executive compensation, including:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Strong alignment between company-wide and personal performance and payouts under
our annual cash incentive plan;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The absence of any multi-year guaranteed bonuses;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Severance arrangements with our named executive officers that are limited to one
year of base salary and benefits and limited acceleration of vesting; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Double-trigger change-in-control arrangements with our named executive officers.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Given these factors and practices, we believe our executive compensation in fiscal year 2010
appropriately reflected the economic and regulatory environments, the performance of the Company
and the relationship with market compensation necessary to retain and motivate our executives.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We anticipate 2011 may be equally as challenging. It appears that our industry is beginning
to face an increased amount of competition for working adult students as more universities have
begun offering working adults options to return to school, and the easing of the economic downturn
of the last three years, which had created a counter-cyclical environment. The legislative
hearings and initiatives in the U.S. Senate, House of Representatives and at the Department of
Education appear as if they will also continue.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Overview of 2010 Executive Compensation</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The purpose of this compensation discussion and analysis is to provide information about each
material element of compensation that we pay or award to, or that is earned by, our named executive
officers, who consist of our principal executive officer, our principal financial officer, and our
five other most highly compensated executive officers whose total compensation for the fiscal year
ended December&nbsp;31, 2010, was in excess of $100,000 and who were serving as executive officers at
the end of that fiscal year, all as set forth in the Summary Compensation Table set forth below.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">This compensation discussion and analysis addresses and explains the compensation practices we
followed in 2010, the numerical and related information contained in the summary compensation and
related tables presented below, and actions we have taken regarding executive compensation since
the end of our 2010 fiscal year. Specifically, this compensation discussion and analysis addresses:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the objectives of our compensation program (found in the section entitled
&#147;Objectives of Compensation Programs&#148;);</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>what our compensation program is designed to reward (also described in the section
entitled &#147;Objectives of Compensation Programs&#148;);</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>each element of compensation (set forth in the section entitled &#147;Compensation
Programs Design and Elements of Compensation&#148;);</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>why each element was chosen (described with each element of compensation, including
base pay, short-term incentives and long-term incentives);</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>how amounts and formulas for pay are determined (also described with each element of
compensation, including base pay, short-term incentives and long-term incentives); and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>how each compensation element and our decisions regarding that element fit into the
Company&#146;s overall compensation objectives and affect decisions regarding other elements
(described with each element of compensation).</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Compensation Determinations</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">All of our named executive officers who appear in the Summary Compensation Table are parties
to employment agreements, and the level of base salary to be paid to those officers over the term
of their respective employment agreements was determined as part of the negotiation process
relating to such agreements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our Compensation Committee&#146;s charter empowers it to set all compensation, including, but not
limited to, salary, bonus, incentive compensation, equity awards, benefits and perquisites, for our
executive officers. Our Compensation Committee makes such determinations with respect to our
Executive Chairman and Chief Executive Officer and, for all other executives, makes such
determinations in consultation with our Executive Chairman and Chief Executive Officer. For
additional information regarding the Compensation Committee, please see &#147;Corporate Governance and
Board Matters &#151; Committees of Our Board of Directors &#151; Compensation Committee.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Objectives of Compensation Programs</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We pay our executive officers based on business performance and individual performance, and,
in setting compensation levels, we take into consideration our past practices, our current and
anticipated future needs, and the relative skills and experience of each individual executive.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Compensation philosophy. </I>Under our compensation philosophy, a named executive officer&#146;s total
compensation will vary based on our overall performance and the particular named executive
officer&#146;s personal performance and contribution to our overall results. This philosophy generally
applies to all of our employees, although the degree of variability and compensation at risk
increases as an employee&#146;s function and level of responsibility increases. Our overall goals in
implementing this philosophy are to attract, motivate, and retain highly qualified individuals
responsible for guiding us and creating value for our investors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Compensation objectives. </I>We believe that the compensation program we follow helps us achieve
the following objectives:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Compensation should be related to performance. </I>We believe that the
performance-based portion of an individual&#146;s total compensation should increase as the
individual&#146;s business responsibilities increase. Thus, a material portion of executive
compensation is linked to our and the individual&#146;s performance, which also serves to
align the named executive officers&#146; interests with those of our investors.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Compensation should be competitive and cost effective. </I>We believe that our
compensation programs should foster an innovative, high integrity, and
performance-oriented culture that serves to attract, motivate, and retain executives
and other key employees with the appropriate skill sets to lead us
through expected future growth in a dynamic, competitive, and highly regulated
environment. Accordingly, we seek to provide compensation, in amounts and based on
performance targets, necessary to achieve these goals and which is of fair value
relative to other positions at the Company.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

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</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Company compensation policies. </I>During 2010, our named executive officers&#146; total in-service
compensation consisted of base salaries, cash bonuses, limited perquisites, and other benefits
generally available to all employees. With regard to these components, we adhere to the following
compensation policies:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Founders with significant equity stakes require limited cash or equity incentives.</I>
As founders of our Company, Brent D. Richardson and Christopher C. Richardson have
significant equity ownership in the Company. We believe that the Richardsons&#146; ownership
stake provides a level of motivation that would not be appreciably enhanced through
material cash bonus opportunities or the grant of further equity incentives.
Accordingly, in 2010, the Richardsons were compensated solely through base salary, a
limited bonus and limited perquisites.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Cash should be the principal component of compensation. </I>The Company&#146;s compensation
policy focuses most heavily on providing the opportunity for its named executive
officers to earn total cash compensation at levels that enable the Company to achieve
the motivation and retention goals described above, and to provide equity incentives as
a reward for superior performance rather than as a substitute for cash compensation.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Base salaries should generally be the largest component of cash compensation</I>. Our
compensation programs generally reflect our view that base salaries reflect
compensation for the named executive officers to perform the essential elements of
their respective jobs, and that cash bonuses are a reward for superior company and
individual performance. In this regard, base salary should generally be the largest
component of cash compensation.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Cash incentives should be linked to performance. </I>Under our Cash Incentive Plan,
bonuses paid to our named executive officers are based on overall company and
individual performance.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We believe our policies have helped us achieve our compensation objectives of attracting,
motivating, retaining, and rewarding our key officers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Compensation Programs Design and Elements of Compensation</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We choose to pay each element of compensation to further the objectives of our compensation
program, which, as noted, include the need to attract, motivate, retain, and reward key leaders
critical to our success by providing competitive total compensation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Elements of In-Service Compensation. </I>For our 2010 fiscal year, our executive compensation mix
included base salary, cash bonuses, share-based compensation, limited perquisites, and other
benefits generally available to all employees. We generally determine the nature and amount of
each element of compensation as follows:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Base salary. </I>We typically agree upon a base salary with a named executive officer
at the time of initial employment. The amount of base salary agreed upon, which is not
at risk, reflects our views as to the individual executive&#146;s past experience, future
potential, knowledge, scope of anticipated responsibilities, skills, expertise, and
potential to add value through performance, as well as competitive industry salary
practices. Although minimum base salaries for each of our current named executive
officers are set by their respective employment agreements, as described below, we
review executive officer salaries annually and may increase them based on an evaluation
of the Company&#146;s performance for the year and the performance of the functional areas
under an executive officer&#146;s scope of responsibility. We also consider qualitative
criteria, such as education and experience requirements, complexity, and scope or
impact of the position compared to other executive positions internally.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

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<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Bonuses. </I>We provide cash bonuses, which typically are at-risk, to recognize and
reward our named executive officers based on our success and their individual
performance in a given year. For 2010, we awarded performance-related bonuses based on
the Cash Incentive Plan. The operation of this plan as it relates to our named
executive officers is described in more detail below.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Share-based compensation</I>. Our Equity Incentive Plan had authorized 6,478,015 shares
of common stock for grants as of December&nbsp;31, 2010. Under the terms of this plan, the
number of shares authorized for grants thereunder automatically increased on January&nbsp;1,
2011 by 2.5% of the number of shares of our common stock issued and outstanding on
December&nbsp;31, 2010, to 7,621,065 shares. In 2010, our named executive officers received
grants under this plan as part of an overall, annual grant made to company employees.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Perquisites. </I>We seek to compensate our named executive officers at levels that
eliminate the need for material perquisites and enable each individual officer to
provide for his or her own needs. Accordingly, in 2010, we provided limited perquisites
to our named executive officers. See &#147;Compensation of Executive Officers &#151; Summary
Compensation Table&#148; for additional detail.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Other. </I>We offer other employee benefits to named executive officers for the purpose
of meeting current and future health and security needs for the executives and their
families. These benefits, which we generally offer to all eligible employees, include
medical, dental, and life insurance benefits; short-term disability pay; long-term
disability insurance; flexible spending accounts for medical expense reimbursements; a
401(k) retirement savings plan; and free tuition for a spouse or up to two children
with no more than two participants receiving the tuition benefit at any one time. The
401(k) retirement savings plan is a defined contribution plan under Section 401(a) of
the Code. Employees may make pre-tax contributions into the plan, expressed as a
percentage of compensation, up to prescribed IRS annual limits, with such contributions
subject to a matching Company contribution up to prescribed limits.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Elements of Post-Termination Compensation and Benefits. </I>The employment agreements of our
current named executive officers provide for post-termination salary and benefit continuation in
the event of a termination by us without Cause (as defined below) or by the executive for Good
Reason (as defined below) or in the event of any such termination within 12&nbsp;months following a
Change in Control (as defined below), and for so long as the named executive officer abides by
customary confidentiality, non-competition, and non-solicitation covenants and executes a full
release of all claims, known or unknown, that the executive may have against the Company. We
believe that the amounts of these payments and benefits and the periods of time during which they
would be provided are fair and reasonable, and we have not historically taken into account any
amounts that may be received by a named executive officer following termination when establishing
current compensation levels. The elements of post-termination compensation that were in effect
during 2010 pursuant to the written employment agreements consisted of the following:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Salary continuation. </I>Each named executive officer would continue to receive salary
payments for a period of 12&nbsp;months following any qualifying termination of employment.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Benefits continuation. </I>Each named executive officer would continue to receive
Company -paid premiums for continued group health benefits under COBRA during the
12-month salary continuation period.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Partially accelerated vesting of stock options</I>. Mr.&nbsp;Mueller, Dr.&nbsp;Meyer, and Mr.
Bachus would receive partial acceleration of the vesting of certain of their stock
options to the next vesting date immediately following the date of termination, in the
event of a termination by us without Cause or by the executive for Good Reason.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Fully accelerated vesting of stock options</I>. In the event of a termination by us
without Cause or by the executive for Good Reason within 12&nbsp;months following a Change
in Control, each named executive officer would receive full acceleration of the vesting
of their stock options.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

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</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">See &#147;Potential Payments Upon Termination or Change in Control&#148; for additional detail.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Impact of Performance on Compensation</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Under the Cash Incentive Plan, a participant&#146;s bonus is based on the Company&#146;s achievement of
revenue and Adjusted EBITDA targets, as well as the participant&#146;s achievement of individual
performance goals. For purposes of the plan, Adjusted EBITDA is defined as net income plus
interest expense net of interest income, plus income tax expense, and plus depreciation and
amortization (EBITDA), as adjusted for (i)&nbsp;royalty payments incurred pursuant to an agreement with
our former owner that was terminated as of April&nbsp;15, 2008; (ii)&nbsp;share-based compensation and any
other expense related to equity compensation awards for the applicable fiscal year; (iii)&nbsp;any
extraordinary, nonrecurring items, as determined by the Compensation Committee; and (iv)&nbsp;all
amounts (including settlement payments, legal fees, costs and other litigation and/or settlement
expenses) expensed during the applicable fiscal year in connection with the settlement of
litigation matters. We focus on Adjusted EBITDA in connection with our Cash Incentive Plan because
we believe that it provides useful information regarding our operating performance and executive
performance as it does not give effect to items that management does not consider to be reflective
of our core operating performance. See &#147;Management&#146;s Discussion and Analysis of Financial Condition
and Results of Operations &#151; Non-GAAP Discussion&#148; in our Annual Report on Form 10-K for further
information. As such, we believe it is fair and reasonable to our executives to assess their
individual performance on the same basis as our performance is assessed by our Board of Directors
and investors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Company performance</I>. Depending on a participant&#146;s management level, the financial metrics
account for between 60% and 80% of the target bonus and the specific individual performance goals
account for between 20% and 40% of the target bonus.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Individual performance</I>. In reviewing individual performance, we look at an executive&#146;s
achievement of non-financial objectives that, with respect to a given participant, may include
achieving objectives related to, among other things, program development and expansion, regulatory
compliance, and enrollment growth.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Calculation of bonuses</I>. For each named executive officer, the Compensation Committee
establishes a target bonus, which is stated as a percentage of the officer&#146;s base salary. For
2010, the target bonus percentage for the named executive officers was as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="86%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Target Bonus as a</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Percentage of Base Salary</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Brent D. Richardson</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">8.4</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Brian E. Mueller</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dr.&nbsp;W. Stan Meyer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">75.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Daniel E. Bachus</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">75.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Joseph N. Mildenhall</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">50.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Christopher C. Richardson</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">50.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dr.&nbsp;Kathy Player</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">50.0</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">For each named executive officer, the financial metrics account for 80% of the target bonus,
with the revenue target and the Adjusted EBITDA target accounting for 50.0% each of such 80%,
respectively, and the specific individual performance goals accounting for 20% of the target bonus.
The actual percentage is determined on the basis of the Company&#146;s achievement of the revenue and
Adjusted EBITDA targets that the Compensation Committee establishes for the applicable fiscal year.
With respect to these targets, the threshold goal is set using the Company&#146;s budget for the
applicable fiscal year. For participants to earn any payout under the plan, the Company must
achieve at least of 95% of both budgeted revenue and Adjusted EBITDA. Assuming both of these
thresholds are achieved, payouts are made based on the Company&#146;s achievement of a minimum of 95% of
budgeted revenue and Adjusted EBITDA (resulting in a bonus of 50% of the target bonus allocable to
the financial metrics) and a maximum of 105% of budgeted revenue and 107% of Adjusted EBITDA
(resulting in a bonus of 150% of the target bonus allocable to the financial metrics). Performance
between minimum and maximum levels results in prorated payments to plan participants using
straight-line interpolation.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->141<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Shown below is a summary of the matrix described above:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="41%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="14%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Goal</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Threshold</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Target</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Maximum</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Revenue goal<BR>
(50.0% of financial metric)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">95% of budget</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">100% of budget</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">105% of budget</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjusted EBITDA<BR>
(50.0% of financial metric)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">95% of budget</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">100% of budget</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">107% of budget</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Bonus payout as a % of
target bonus allocable to
financial metrics</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">50%</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">100%</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">150%</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Under the Cash Incentive Plan, the actual bonus that a named executive officer could earn
under the plan for a given fiscal year ranges from 0% to a maximum of 140% of his or her annual
target bonus (with such maximum achieved by obtaining the maximum payout for achieving the
financial metrics (80% * 150%, or 120%) and achieving the individual goals (an additional 20%). To
illustrate how the plan functions, assume that a participant&#146;s base salary for 2010 is $300,000 and
that the target bonus is 50% of base salary. Of this target bonus of $150,000, $60,000 (or 50.0%
of the 80% subject to achievement of the financial metrics) would be based upon the Company&#146;s
achievement of the revenue target, $60,000 (or 50.0% of the 80% subject to the achievement of the
financial metrics) would be based on the Company&#146;s achievement of the Adjusted EBITDA target, and
$30,000 (20%) would be based on the participant&#146;s achievement of his or her individual performance
goals. If the revenue target is achieved at the threshold level (so only 50% of the revenue
component is payable at that level), the Adjusted EBITDA target is achieved at the target level (so
that 100% of the Adjusted EBITDA component is payable at that level), and the specific individual
performance goals are met, the participant would be entitled to a potential bonus of $120,000
(calculated as $30,000 plus $60,000 plus $30,000).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The plan for eligible senior management other than the named executive officers is similar to
the above, except that, for participants below the named executive officer level, the bonus is
calculated based on two six-month cycles, such that the determination of the bonus payable for each
half of the applicable year is determined on the basis of the achievement of the revenue, Adjusted
EBITDA and individual performance targets established for each such period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Changes to performance goals and target awards</I>. At any time prior to the final determination
of bonuses earned, the Compensation Committee may adjust the performance goals and target awards to
reflect a change in corporate capitalization (such as a stock split or stock dividend), or a
corporate transaction (such as a merger, consolidation, separation, reorganization or partial or
complete liquidation), or to reflect equitably the occurrence of any extraordinary event, any
change in applicable accounting rules or principles, any change in the Company&#146;s method of
accounting, any change in applicable law, any change due to any merger, consolidation, acquisition,
reorganization, stock split, stock dividend, combination of shares or other changes in the
Company&#146;s corporate structure or shares, or any other change of a similar nature.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>2010 financial goals. </I>The following table shows the Company financial goals established for
the named executive officers for 2010. These financial goals were selected based upon the Company&#146;s
budget for 2010, which the Board of Directors believes is the appropriate level at which to set
goals in order to maximize the incentive for superior performance.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Maximum</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>(105% of Budget for</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Threshold</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Target</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Revenue/107% of Budget</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(95% of Budget)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(100% of Budget)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>for Adjusted EBITDA</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B><I>Revenue</I></B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">379,549,607</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">399,525,902</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">419,502,197</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B><I>Adjusted EBITDA</I></B><SUP style="font-size: 85%; vertical-align: text-top"><B><I>(1)</I></B></SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,407,672</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">84,639,655</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90,564,431</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>The Threshold, Target, and Maximum amounts for the Adjusted EBITDA goal have been adjusted
to reflect a change in the methodology used to calculate our
allowance for doubtful accounts that caused the Company&#146;s 2010 financial results to be
restated. See <I>Item&nbsp;7, </I>Management&#146;s Discussion and Analysis of Financial Condition and Results of
Operations.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->142<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>2010 individual goals</I>. The individual performance goals applicable to the named executive
officers in 2010 focused on each executive&#146;s achievement of one or more objectives that related to
their specific duties and
responsibilities on behalf of the Company. For Mr.&nbsp;Mueller, Dr.&nbsp;Meyer, Mr.&nbsp;Bachus, Mr.&nbsp;Chris
Richardson, Mr.&nbsp;Mildenhall, and Dr.&nbsp;Player, one individual performance goal was to manage their
individual departments within budget. Mr.&nbsp;Brent Richardson&#146;s individual performance goals included
providing insight and direction to the senior management team regarding key corporate objectives.
The individual performance goals for Mr.&nbsp;Mueller and Dr.&nbsp;Meyer included developing solutions for
operational challenges such as improving student time to completion, transitioning to a
borrower-based financial aid environment, improving staff to student ratios, and developing campus
infrastructure. The individual performance goals for Mr.&nbsp;Mueller and Mr.&nbsp;Bachus included
participation in a specified number of investor conferences and/or investor meetings. Dr.&nbsp;Meyer&#146;s
individual performance goals included developing a media and marketing strategy that improved the
marketing awareness of Grand Canyon University. Mr.&nbsp;Bachus individual performance goals included
managing the financial and reporting functions to ensure that no material weaknesses occurred
within the Company&#146;s financial reporting structure and overseeing the transition to the federal
direct lending program. The individual performance goals for Mr.&nbsp;Chris Richardson included
working with outside legal counsel to resolve outstanding legal matters and demonstrating
leadership in other management areas such as human resources and state licensure. Dr.&nbsp;Player&#146;s
individual performance goals included producing a comprehensive Presidential Report regarding Grand
Canyon University and its colleges and working on solutions to improve certain academic related
items.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><I>Performance vs. compensation paid for 2010</I>. For 2010, each named executive officer achieved
performance payout percentages of between 85.0% and 100.0% of the 20.0% portion of their respective
bonus awards that are allocable to individual performance goals. In addition, the Company achieved
revenue equal to 96.6% of target and Adjusted EBITDA equal to 101.4% of target, resulting in
performance payout percentages of 66.0% for the revenue component of the target bonus and 110.0%
for the adjusted EBITDA component of the target bonus. Accordingly, the named executive officers
achieved incentive bonuses equal to the following percentages of their base salaries:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Adjusted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Individual</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2010 Bonus as</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2010 Bonus</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Revenue</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>EBITDA</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Goals</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Percentage of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>as Percentage</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Performance</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Performance</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Performance</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Target Bonus</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>of Base</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>2010</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Payout (%)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Payout (%)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Payout (%)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>(%)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Salary($)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Bonus ($)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Brent D. Richardson</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">66.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">110.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">90.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">7.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">22,600</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Brian E. Mueller</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">66.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">110.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">90.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">90.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">542,400</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dr.&nbsp;W. Stan Meyer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">66.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">110.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">93.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">89.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">66.9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">234,019</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Daniel E. Bachus</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">66.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">110.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">90.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">67.8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">237,300</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Christopher C.
Richardson</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">66.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">110.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">90.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">45.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">134,470</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Joseph N. Mildenhall</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">66.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">110.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">90.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">45.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">135,600</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dr.&nbsp;Kathy Player</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">66.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">110.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">85.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">87.4</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">43.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">120,175</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%"><i>Impact of Restatement on Determination of 2010 Bonuses.</i>  In considering the impact of the restatement of our 2010 financial statements on the bonuses that were paid to our named executive officers for 2010, the Compensation Committee considered the fact that the increase in the allowance for doubtful accounts for 2010
(and corresponding decrease in Adjusted EBITDA) as a result of the
restatement solely reflected a correction in the methodology used to
calculate our allowance for doubtful accounts - from our previous
methodology that had been followed since the Company&#146;s initial public offering to a new methodology largely resulting from the Company&#146;s move from a term-based financial aid system to BBAY in 2010 and the ongoing ongoing economic downturn, the latter of which has had a cumulative, and difficult to detect,
effect on the motivation of former students to timely repay their receivables balances.   In addition, this change in methodology resulted from management, on its own initiative, undertaking an in-depth analysis of the makeup of the students (active and former) from whom we held accounts receivable and did not involve any misconduct,
 malfeasance or other action or inaction on the part of our named executive officers for which the committee believed any named executive officers should be held accountable or should otherwise be penalized in the determination of the achievement of the 2010 financial performance goals.  The Compensation Committee further believes that,
regardless of the change in methodology and its impact on our financial results for 2010, our senior management guided us through a difficult year for our industry with very positive results, all while making numerous operational, academic and other non-financial changes (described above) that we believe are in the long-term best interest of the Company.
With the foregoing factors in mind, the Compensation Committee determined that the Adjusted EBITDA targets for 2010 should be adjusted to reflect equitably the change in accounting policy, with the result that the bonuses paid in 2010 remain unchanged.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Equity Incentives</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In 2008, our Board of Directors and stockholders adopted the Equity Incentive Plan and
authorized and reserved a total of 4,199,937 shares of our common stock for issuance thereunder.
The number of shares authorized and reserved under the Equity Incentive Plan will increases on each
subsequent January 1 through 2018 by an amount equal to the smaller of (a)&nbsp;2.5% of the number of
shares of common stock issued and outstanding on the immediately preceding December&nbsp;31, or (b)&nbsp;a
lesser amount determined by our Board of Directors. As of January&nbsp;1, 2011, there is authorized and
reserved a total of 6,478,015 shares under the Equity Incentive plan. Shares subject to awards that
expire or are cancelled or forfeited will again become available for issuance under the Equity
Incentive Plan. The shares available are not reduced by awards settled in cash or by shares
withheld to satisfy tax withholding obligations. Only the net number of shares issued upon the
exercise of stock appreciation rights or options exercised by means of a net exercise or by tender
of previously owned shares are deducted from the shares available under the Equity Incentive Plan.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->143<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table provides information as of December&nbsp;31, 2010, with respect to shares of
our common stock that may be issued under our existing equity compensation plans:
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>Equity Compensation Plan Information</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="58%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Number of securities to be</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Weighted-average</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Number of securities</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>issued upon exercise of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>exercise price of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>remaining available for</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>outstanding options,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>outstanding options,</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>future issuance under</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Plan Category</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>warrants and rights</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>warrants and rights</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>equity compensation plans</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity Compensation
Plans Approved by
Securityholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4,443,962</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">14.19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2,034,053</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity Compensation
Plans Not Approved
by Securityholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" nowrap align="right">None</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" nowrap align="right">None</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">4,443,962</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">14.19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2,034,053</TD>
    <TD nowrap><SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes outstanding options to purchase shares of our common stock under our Equity
Incentive Plan.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes shares available for future issuance under our Equity Incentive Plan.</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We may grant awards under the Equity Incentive Plan to our employees, officers, directors, or
consultants, or those of any future parent or subsidiary corporation or other affiliated entity.
While we may grant incentive stock options only to employees, we may grant nonstatutory stock
options, stock appreciation rights, restricted stock purchase rights or bonuses, restricted stock
units, performance shares, performance units, and cash-based awards or other stock-based awards to
any eligible participant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Only members of the Board of Directors who are not employees at the time of grant are eligible
to participate in the non-employee director awards component of the Equity Incentive Plan. The
Board of Directors, based on the recommendation of the Nominating and Corporate Governance
Committee, sets the amount and type of non-employee director awards to be awarded on a periodic,
non-discriminatory basis. Non-employee director awards may be granted in the form of nonstatutory
stock options, stock appreciation rights, restricted stock awards and restricted stock unit awards.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In the event of a change in control, as described in the Equity Incentive Plan, the acquiring
or successor entity may assume or continue all or any awards outstanding under the Equity Incentive
Plan or substitute substantially equivalent awards. Any awards that are not assumed or continued in
connection with a change in control or are not exercised or settled prior to the change in control
will terminate effective as of the time of the change in control. In connection with a change in
control, the Compensation Committee may provide for the acceleration of vesting of any or all
outstanding awards upon such terms and to such extent as it determines, except that the vesting of
all non-employee director awards will automatically be accelerated in full, and the vesting of
awards held by each of our named executive officers who are parties to employment agreements will
automatically be accelerated in full upon termination other than for cause upon or within 12&nbsp;months
following such change in control. The Equity Incentive Plan also authorizes the Compensation
Committee, in its discretion and without the consent of any participant, to cancel each or any
outstanding award denominated in shares upon a change in control in exchange for a payment to the
participant with respect to each share subject to the cancelled award of an amount equal to the
excess of the consideration to be paid per share of common stock in the change in control
transaction over the exercise price per share, if any, under the award.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our Board of Directors has approved a policy relating to the granting of stock options and
other equity-based awards. Under this policy:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>all stock option grants, restricted stock awards, and other equity based awards,
which we collectively refer to as stock-based grants, must be approved by the
Compensation Committee;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the date for determining the strike price and similar measurements for stock-based
awards will be the date of the meeting (or a date shortly after the meeting) or, in the
case of an employee, director, or consultant not yet hired, appointed, or retained,
respectively, the subsequent date of hire, appointment, or retention, as the case may
be;</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->144<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>we will not intentionally grant stock-based awards before the anticipated
announcement of materially favorable news or intentionally delay the grant of
stock-based awards until after the announcement of materially unfavorable news; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the Compensation Committee will approve stock-based grants only for persons
specifically identified at the meeting by management.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Role of the Compensation Consultant</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Compensation Committee has the sole authority from the Board of Directors for the
appointment, compensation and oversight of our outside compensation consultant. The Compensation
Committee has retained Mercer, a wholly-owned subsidiary of Marsh &#038; McLennan Companies, Inc.
(&#147;MMC&#148;), as its consultant to assist the Compensation Committee with its responsibilities related
to our executive compensation programs. Mercer&#146;s fees for executive compensation consulting to the
Compensation Committee in fiscal year 2010 were $28,473. The executive compensation services
provided include assisting in defining the Company&#146;s executive compensation strategy, providing
market benchmark information, supporting and reviewing the design of incentive compensation plans,
advising on the competitiveness of executive officer compensation, and providing regulatory and
governance guidance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">During the fiscal year, Mercer and its MMC affiliates were retained by Company management to
provide services unrelated to executive compensation, including insurance brokerage services and
services related to the Company&#146;s employee health plans. The aggregate fees paid for those other
services in fiscal 2010 were $149,000. The Compensation Committee did not review or approve the
other services provided by Mercer and its affiliates to the Company, as those services were
approved by management in the normal course of business. Based on policies and procedures
implemented by the Compensation Committee and by Mercer to ensure the objectivity of Mercer&#146;s
individual executive compensation consultant, the Compensation Committee believes that the
consulting advice it receives from Mercer is objective and not influenced by Mercer&#146;s or its
affiliates&#146; other relationships with the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Effect of Accounting and Tax Treatment on Compensation Decisions</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Internal Revenue Code Section&nbsp;162(m) Policy</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Section&nbsp;162(m) of the Code, as amended, imposes a $1&nbsp;million limit on the amount that a public
company may deduct for compensation paid to the company&#146;s chief executive officer or any of the
company&#146;s four other most highly compensated executive officers who are employed as of the end of
the year. This limitation does not apply to compensation that meets the requirements under Section
162(m) for &#147;qualifying performance-based&#148; compensation (i.e., compensation paid only if the
individual&#146;s performance meets pre-established objective goals based on performance criteria
approved by stockholders). With regard to our Equity Incentive Plan, we previously relied on an
exemption from Section 162(m) for a plan adopted prior to the time a company becomes a public
company. In connection with this proxy statement, we are soliciting the approval of our
stockholders with respect to the grant limitation within our 2008 Equity Incentive Plan. If
stockholder approval of the grant limitation within our 2008 Equity Incentive Plan is not obtained,
we will not make any further grants under the Equity Incentive Plan to our chief executive officer
and our other named executive officers who are &#147;covered employees&#148; as defined in Section&nbsp;162(m), or
their successors, until such time, if any, as stockholder approval of a subsequent similar proposal
is obtained. With regard to the cash compensation we pay, in the form of both base salary and
pursuant to our Cash Incentive Plan described above, we are also soliciting the approval of our
stockholders of the Cash Incentive Plan in accordance with Section&nbsp;162(m). If the Cash Incentive
Plan is approved by stockholders, it will be effective for fiscal 2011, beginning January&nbsp;1, 2011
and ending December&nbsp;31, 2011, and will remain in effect for each fiscal year thereafter until
terminated by our Board of Directors or Compensation Committee. No compensation will be paid under
the Cash Incentive Plan to the named executive officers covered by the Cash Incentive Plan unless
the Cash Incentive Plan is approved by stockholders.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->145<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Internal Revenue Code Section&nbsp;409A</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Section&nbsp;409A of the Code (&#147;Section&nbsp;409A&#148;) requires that &#147;nonqualified deferred compensation&#148;
be deferred and paid under plans or arrangements that satisfy the requirements of the statute with
respect to the timing of deferral elections, timing of payments and certain other matters. Failure
to satisfy these requirements can expose employees and other service providers to accelerated
income tax liabilities and penalty taxes and interest on their vested compensation under such
plans. Accordingly, as a general matter, it is our intention to design and administer our
compensation and benefits plans and arrangements for all of our employees and other service
providers, including our named executive officers, so that they are either exempt from, or satisfy
the requirements of, Section&nbsp;409A. With respect to our compensation and benefit plans that are
subject to Section&nbsp;409A, in accordance with Section&nbsp;409A and regulatory guidance issued by the
Internal Revenue Service, we are currently operating such plans in compliance with Section&nbsp;409A.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><I>Accounting Standards</I>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Grants of stock options under the Equity Incentive Plan are recognized as compensation expense
for the fair value of equity-based compensation awards. The Compensation Committee considers the
accounting implications of significant compensation decisions, including in connection with
decisions that relate to the Equity Incentive Plan and equity award programs thereunder. As
accounting standards change, we may revise certain programs to appropriately align accounting
expenses of our equity awards with our overall executive compensation philosophy and objectives.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Conclusion</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We believe that the compensation amounts paid to our named executive officers for their
service in 2010 were reasonable and appropriate and in our best interests.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Significant Events After December&nbsp;31, 2010</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Compensation Committee granted stock options to the Company&#146;s named executive officers,
other than Brent D. Richardson and Christopher C. Richardson, effective March&nbsp;11, 2011. Each
option vests 20% on each of the first five anniversaries of the date of grant, and has an exercise
price of $15.34, which is equal to the closing price of our common stock on the date of grant. The
number of shares granted to each such officer is as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="86%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Number of Shares Subject to Option</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Brian E. Mueller</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dr.&nbsp;W. Stan Meyer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Daniel E. Bachus</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Joseph N. Mildenhall</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dr.&nbsp;Kathy Player</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,000</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Compensation Policies and Practices as Related to Risk Management</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In connection with the preparation of this proxy statement, our Compensation Committee
reviewed and discussed our compensation policies and practices for senior management, including our
named executive officers. In this regard, the Compensation Committee took note of the fact that:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>We pay base salaries we believe are competitive and that are generally intended to
constitute the largest component of cash compensation. We believe that this emphasis on
paying competitive base salaries that are not at risk for performance discourages
inappropriate risk taking;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Our Cash Incentive Plan focuses on the achievement of company-wide revenue and
adjusted EBITDA targets and individual non-financial performance metrics (which can
include metrics based on compliance with regulatory or other risk management policies).
We believe that the design of the Cash Incentive Plan prevents participants from being
able to materially enhance their bonus prospects through excessive or inappropriate
risk-taking;</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->146<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The cash payments that may be made to our named executive officers under the Cash
Incentive Plan are subject to stated maximum limits, which we believe mitigates any
risks that our named executive officers may take; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The stock option grants made to our named executive officers, and all other
employees, under the Equity Incentive Plan all vest in annual increments over a period
of five years, which we believe discourages excessive or inappropriate short-term risk
taking.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Based on that review, and with input from management, the Compensation Committee has determined
that that there are no known potential risks arising from our compensation polices or practices
that are reasonably likely to have a material adverse effect on us.
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->147<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Compensation Committee Report</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The Compensation Committee has discussed and reviewed the Compensation Discussion and Analysis
with management. Based upon this review and discussion, the Compensation Committee recommended to
the Board of Directors that the Compensation Discussion and Analysis be included in this proxy
statement.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Compensation Committee:<BR>
<BR>

<I>David J. Johnson (Chair)<BR>
Chad N. Heath<BR>
D. Mark Dorman</I>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR></TABLE>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Compensation Committee Interlocks and Insider Participation</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">During 2010, Messrs.&nbsp;Johnson, Heath and Dorman served as the members of our Compensation
Committee. No executive officer serves, or in the past has served, as a member of the Board of
Directors or compensation committee of any entity that has any of its executive officers serving as
a member of our Board of Directors or Compensation Committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Compensation of Named Executive Officers</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Summary Compensation Table</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table sets forth the total compensation earned for services rendered by our
principal executive officer, our principal financial officer, and our five other most highly
compensated executive officers whose total compensation for the fiscal year ended December&nbsp;31, 2010
was in excess of $100,000 and who were serving as executive officers at the end of that fiscal
year. The listed individuals are referred to herein as the &#147;named executive officers.&#148;
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->148<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">
<DIV align="center">
<TABLE style="font-size: 8pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="38%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Stock</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Options</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Non-Equity<BR>
Incentive Plan</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>All Other</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Bonus</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Awards</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Awards</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name and Position</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Year</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Salary ($)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B> ($)(1)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($) (2)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)(3)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B> ($)(4)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($) (5)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Brent D. Richardson</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2010</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$</TD>
    <TD align="right" valign="top">297,500</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$</TD>
    <TD align="right" valign="top">22,600</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$</TD>
    <TD align="right" valign="top">17,408</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">$</TD>
    <TD align="right" valign="top">337,508</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><I>Executive Chairman</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2009</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">297,500</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">25,425</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">17,408</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">340,333</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2008</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">297,500</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">18,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">15,628</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">331,128</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Brian E. Mueller</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2010</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">555,384</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1,067,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">542,400</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2,580</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2,167,364</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><I>Chief Executive Officer and Director</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2009</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">500,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">508,500</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">20,205</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1,028,705</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">(Principal Executive Officer) (6)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2008</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">246,154</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">250,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1,311,948</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">6,533,489</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">7,740</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">8,349,331</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dr.&nbsp;W. Stan Meyer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2010</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">327,692</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">426,800</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">234,019</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2,745</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">991,256</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><I>Executive Vice President </I>(6)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2009</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">300,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">152,550</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">5,391</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">457,941</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2008</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">147,692</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">75,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2,613,394</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2,836,086</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Daniel E. Bachus</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2010</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">316,538</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">426,800</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">237,300</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">420</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">981,058</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><I>Chief Financial Officer</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2009</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">275,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">139,838</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">323</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">415,161</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">(Principal Financial Officer) (6)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2008</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">132,212</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">68,750</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2,352,058</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2,553,020</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Christopher C. Richardson</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2010</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">297,500</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">134,470</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2,527</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">434,497</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:45px; text-indent:-15px"><I>General Counsel and Director</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2009</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">297,500</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">76,275</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">5,244</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">379,019</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2008</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">297,500</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">18,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">7,750</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">323,250</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Mr.&nbsp;Joseph N. Mildenhall</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2010</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">300,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">266,750</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">135,600</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2,963</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">705,313</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><I>Chief Information Officer</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2009</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">78,075</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">580,650</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">44,356</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">17,887</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">720,968</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 0em; background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dr.&nbsp;Kathy Player</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2010</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">275,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">266,750</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">120,175</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2,610</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">664,535</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><I>Grand Canyon University President</I></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2009</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">275,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">139,838</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">5,346</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">420,184</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2008</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">230,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">75,000</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">398,139</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&#151;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">7,750</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">710,889</TD>
    <TD valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>





<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>For Mr.&nbsp;Mueller, Dr.&nbsp;Meyer, Mr.&nbsp;Bachus and Dr.&nbsp;Player, the amounts in this column for 2008
reflect non-performance-related bonuses that were negotiated in connection with the employment
agreements we entered into with them prior to our initial public offering, as well as, for Dr.
Player only, an additional discretionary bonus of $6,250. All other amounts in this column
reflect discretionary bonuses paid prior to the time we became a public company.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>The amounts shown in this column reflect the compensation costs attributable to an
unrestricted stock grant made to Mr.&nbsp;Mueller in 2008 in connection with out initial public
offering. The compensation costs are based on the grant date fair value for the shares of
common stock granted. Such grant date fair value has been calculated on the basis of the fair
market value of our common stock on the grant date. No shares of stock were granted in any
year prior to 2008.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>The amounts shown in this column reflect the compensation costs attributable to the stock
options granted to the named executive officers in 2010, 2009 and 2008. The compensation costs
are based on the grant date fair value of each stock option and do not take into account any
estimated forfeitures related to service-based vesting conditions, if any. Assumptions used in
the calculation of the grant date fair value of each option granted during the 2010, 2009 and
2008 fiscal year are set forth in Notes 3 and 16 to our financial statements for the fiscal
year ended December&nbsp;31, 2010 included in our 2010 Annual Report on Form&nbsp;10-K. No options were
granted in any year prior to 2008.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>The amounts in this column reflect non-equity incentive payments earned pursuant to our Cash
Incentive Plan.</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->149<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>For Mr.&nbsp;Brent D. Richardson, the amounts in this column include the value of payments made by
us on a Company-owned vehicle used by Mr.&nbsp;Richardson. In 2009 for Mr.&nbsp;Mueller, the amount in
this column reflects the value of tuition-free enrollment for an additional child at Grand
Canyon University (beyond the single spouse or child tuition benefit available to all
full-time Company employees at that time). For Mr.&nbsp;Mueller, Dr.&nbsp;Meyer, Mr.&nbsp;Christopher D.
Richardson, Mr.&nbsp;Joseph N. Mildenhall and Dr.&nbsp;Player, the amounts in this column
reflect matching payments made by the Company under our 401(k) plan. In 2010 and 2009, the
amounts in this column include company paid life insurance premiums for all named executive
officers.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(6)</TD>
    <TD>&nbsp;</TD>
    <TD>Mr.&nbsp;Mueller, Dr.&nbsp;Meyer, and Mr.&nbsp;Bachus commenced employment with us on July&nbsp;1, 2008. Mr.
Mildenhall commenced employment with us on September&nbsp;16, 2009.</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>2010 Grants of Plan-Based Awards</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table sets forth certain information with respect to incentive plan awards under
our Cash Incentive Plan and our Equity Incentive Plan for the fiscal year ended December&nbsp;31, 2010
to each of our named executive officers:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="23%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>All Other</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Option</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Awards:</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>or Base</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Grant Date</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Price of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Fair Value</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10"><B>Estimated Future Payouts Under Non-</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Securities</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Option</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>of Stock</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Equity Incentive Plan Awards(1)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Underlying</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Awards</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>and Option</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Grant Date</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Threshold($)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Target($)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Maximum($)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Options (#)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($/Sh)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Awards(2)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Brent D. Richardson</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">12,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">35,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Brian E. Mueller</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap>Feb. 25, 2010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">300,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">600,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">840,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">21.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">1,067,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dr.&nbsp;W. Stan Meyer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center" nowrap>Feb. 25, 2010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">131,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">262,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">367,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">426,800</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Daniel E. Bachus</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center">Feb. 25, 2010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">131,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">262,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">367,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">426,800</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Christopher C. Richardson</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">150,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">210,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Joseph N. Mildenhall</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center">Feb. 25, 2010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,375</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">148,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">208,250</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">266,750</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dr.&nbsp;Kathy Player</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="center">Feb. 25, 2010</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">137,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">192,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">266,750</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>These amounts reflect the Threshold, Target and Maximum bonuses payable to our named executive
officers under our Cash Incentive Plan. All such awards have been paid, and the actual amounts paid
are set forth in the Summary Compensation Table above.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>The dollar value reported in this column with respect to option awards represents the grant
date fair value of each option award determined in accordance with the provisions of SFAS 123(R). A
discussion of the valuation assumptions used in the SFAS 123(R) calculation of grant date fair
value is set forth in Notes 3 and 16 to our financial statements for the fiscal year ended December
31, 2010, included in our 2010 Annual Report on Form 10-K.</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>2010 Outstanding Equity Awards at Fiscal Year-End</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table provides certain summary information concerning outstanding equity awards
held by the named executive officers as of December&nbsp;31, 2010.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->150<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="25%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="26%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="13" style="border-bottom: 1px solid #000000"><B>Option Awards(1)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Stock Awards</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Securities</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Securities</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Number of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Market Value</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Underlying</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Underlying</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Shares of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>of Shares of</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unexercised</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Unexercised</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Option</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Stock That</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Stock That</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Options (#)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Options (#)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Exercise Price</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Option Expiration</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Have Not</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Have Not</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Exercisable</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Unexercisable</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Date</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Vested</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Vested</B></TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="padding-top: 1px; font-size: 10pt"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Brian E. Mueller</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">21.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">February 25, 2020</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">437,315</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">655,973</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>November 19, 2018</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dr.&nbsp;W. Stan Meyer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">February 25, 2020</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">174,926</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">262,389</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">November 19, 2018</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Daniel E. Bachus</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">February 25, 2020</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">157,433</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">236,151</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">November 19, 2018</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Joseph N. Mildenhall</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">February 25, 2020</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom" nowrap>September 16, 2019</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dr.&nbsp;Kathy Player</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">February 25, 2020</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,955</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,240</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">November 19, 2018</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>For Dr.&nbsp;Player, 29,463 shares covered by her exercisable options were fully vested upon
grant. The shares covered by the options granted to Mr.&nbsp;Mueller, Dr.&nbsp;Meyer, Mr.&nbsp;Bachus, Mr.
Mildenhall and the remainder of Dr.&nbsp;Player&#146;s options vest in five successive equal annual
installments upon the completion of each year of service with us over the five year period
measured from their grant date, subject to fully accelerated vesting in the event of a
termination of employment by us without cause or by the executive for good reason within 12
months following a change in control of the Company. Mr.&nbsp;Mueller, Dr.&nbsp;Meyer, Mr.&nbsp;Bachus and
Mr.&nbsp;Mildenhall also receive partially accelerated vesting through the next vesting date
immediately following the date of termination, upon the termination of employment by us
without cause or by the executive for good reason.</TD>
</TR>

</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Option Exercises and Stock Vested</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Dr.&nbsp;Player was the only one of our named executive officers that exercised stock options
during the fiscal year ended December&nbsp;31, 2010.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="72%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="6" style="border-bottom: 1px solid #000000"><B>Option Awards</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Number of Shares Acquired</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Value Realized</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>on Exercise (#)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>on Exercise ($)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dr.&nbsp;Kathy Player</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">210,000</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Executive Employment Agreements</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">We are parties to employment agreements with each of our named executive officers. The
agreements with Mr.&nbsp;Mueller, Dr.&nbsp;Meyer, and Mr.&nbsp;Bachus (entered into in July&nbsp;2008), and the
agreements with Messrs.&nbsp;Richardson and Richardson and Dr.&nbsp;Player (entered into in September&nbsp;2008)
each have a four-year term that automatically renew for one year periods after the initial
four-year term unless either party provides written notice that it does not wish to renew the
respective agreement. The agreement with Mr.&nbsp;Mildenhall (entered into in September&nbsp;2009) has a
three-year term and is also subject to automatic renewal. Except with respect to certain items of
compensation, as described below, the terms of each agreement are similar in all material respects.
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The agreements with each of Brent D. Richardson and Christopher C. Richardson
provide for a base salary of $297,500, subject to annual review by the Compensation
Committee, and entitle each to receive performance bonuses as determined by the
Compensation Committee based upon the Company&#146;s achievement of performance, budgetary,
and other objectives, as set in advance by the Compensation Committee. The agreements
do not set a target performance bonus as percentage of base salary, but leave such
target to be determined by the Compensation Committee. In addition, and also as
discussed elsewhere in this proxy statement, although Messrs.&nbsp;Richardson and Richardson
are eligible to participate in the Equity Incentive Plan, we do not anticipate granting
any material awards under the Equity Incentive Plan to them and their agreements do not
provide for any such awards.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->151<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The agreements with each of Mr.&nbsp;Mueller, Dr.&nbsp;Meyer, Mr.&nbsp;Bachus, Mr.&nbsp;Mildenhall and
Dr.&nbsp;Player provide for a base salary and a target bonus under our Cash Incentive Plan.
Effective June&nbsp;1, 2010, the Compensation Committee increased the base salaries of Mr.
Mueller, Dr.&nbsp;Meyer and Mr.&nbsp;Bachus to $600,000, $350,000 and $350,000 from $500,000,
$300,000 and $275,000, respectively, and also increased the target bonus for Dr.&nbsp;Meyer
and Mr.&nbsp;Bachus to 75% of base salary from 50% of base salary. Mr.&nbsp;Mueller, Dr.&nbsp;Meyer,
Mr.&nbsp;Bachus, Mr.&nbsp;Mildenhall, and Dr.&nbsp;Player are also eligible to receive equity
incentive awards under our Equity Incentive Plan.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each agreement entitles the executive to receive customary and usual fringe benefits
generally available to our senior management, and to be reimbursed for reasonable
out-of-pocket business expenses.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each agreement entitles the executive to certain benefits upon his or her
termination of employment under specified circumstances.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In addition, each of the above employment agreements provides for payments upon certain
terminations of the executive&#146;s employment. For a description of these termination provisions,
whether or not following a change-in-control, and a quantification of benefits that would be
received by these executives, see the heading &#147;Potential Payments upon Termination or Change in
Control&#148; below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>Potential Payments upon Termination or Change in Control</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Our employment agreements with our named executive officers entitle them to certain severance
payments and other benefits in the event of certain types of terminations, which are summarized
below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Termination for Cause</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Each of the employment agreements provides that if the named executive officer is terminated
by us for &#147;Cause,&#148; the named executive officer will be entitled to receive only his or her base
salary then in effect, pro rated to the date of termination, and all fringe benefits through the
date of termination, and all of such officer&#146;s vested and unvested options will terminate. For
purposes of each of the employment agreements, &#147;Cause&#148; is defined as (a)&nbsp;acts or omissions
constituting gross negligence, recklessness or willful misconduct on the part of the executive with
respect to the executive&#146;s obligations or otherwise relating to the business of the Company; (b)
the executive&#146;s material breach of the employment agreement; (c)&nbsp;the executive&#146;s breach of the
Company&#146;s employee nondisclosure and assignment agreement; (d)&nbsp;the executive&#146;s conviction or entry
of a plea of nolo contendere for fraud, misappropriation or embezzlement, or any felony or crime of
moral turpitude; (e)&nbsp;the executive&#146;s inability to perform the essential functions of the
executive&#146;s position, with or without reasonable accommodation, due to a mental or physical
disability; (f)&nbsp;the executive&#146;s willful neglect of duties as determined in the sole and exclusive
discretion of the Board of Directors, provided that the executive has received written notice of
the action or omission giving rise to such determination and has failed to remedy such situation to
the satisfaction of the Board of Directors within 30&nbsp;days following receipt of such written notice,
unless the executive&#146;s action or omission is not subject to cure, in which case no such notice
shall be required, or (g)&nbsp;the executive&#146;s death.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Termination Without Cause or Termination for Good Reason</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Each of the employment agreements provides that if the named executive officer&#146;s employment is
terminated by us without Cause, or by the executive for &#147;Good Reason,&#148; the named executive officer
will be entitled to receive his or her base salary then in effect, pro rated to the date of
termination, as well as a severance package consisting of the following:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a severance payment equivalent to 12&nbsp;months of the executive&#146;s base salary then in
effect on the date of termination, payable in accordance with the Company&#146;s regular
payroll cycle commencing with the first payroll date occurring on or after the 60th day
following the date of the executive&#146;s termination of employment;</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->152<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV style="margin-top: 10pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>payment by us of the premiums required to continue the executive&#146;s group health care
coverage for a period of 12&nbsp;months following the executive&#146;s termination, under the
applicable provisions of the Consolidated Omnibus Budget Reconciliation Act (&#147;COBRA&#148;),
provided that the executive timely elects to continue and remains eligible for these
benefits under COBRA, and does not become eligible for health coverage through another
employer during this period; and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="4%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>with respect to Mr.&nbsp;Mueller, Dr.&nbsp;Meyer, and Mr.&nbsp;Bachus, acceleration of the vesting
of the next annual installment of the options granted to them in November&nbsp;2008 that
would otherwise have vested on the next vesting date following the termination of the
executive&#146;s employment.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">To receive the severance package, the executive must: (i)&nbsp;comply with all surviving
provisions of his or her agreement, including the non-competition, non-solicitation, and
confidentiality provisions described below, and (ii)&nbsp;execute a full general release, releasing all
claims, known or unknown, that executive may have against us arising out of or in any way related
to executive&#146;s employment or termination of employment with us. In addition, for options that
previously vested, the executive has until the earlier of three months from the date of separation
and the expiration of the applicable option to exercise such option.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">For purposes of each of the employment agreements, &#147;Good Reason&#148; is defined as the occurrence
of any of the following conditions without the executive&#146;s written consent, which condition remains
in effect 30&nbsp;days after the executive provides written notice to us of such condition: (a)&nbsp;a
material reduction in the executive&#146;s base salary as then in effect prior to such reduction, other
than as part of a salary reduction program among similar management employees, (b)&nbsp;a material
diminution in the executive&#146;s authority, duties or responsibilities as an employee of the Company
as they existed prior to such change, or (c)&nbsp;a relocation of the executive&#146;s principal place of
work that increases the executive&#146;s one-way commute distance by more than 50 miles; provided that
the executive will be deemed to have given consent to any such condition if the executive does not
provide written notice to us of his or her intent to exercise such rights within 30&nbsp;days following
the first occurrence of such condition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Termination Upon a Change in Control</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Each of the employment agreements provides that if the named executive officer&#146;s employment is
terminated by us without Cause or by the executive for Good Reason, in each case upon or within 12
months following a &#147;Change in Control,&#148; then, in addition to receiving his or her base salary then
in effect, pro rated to the date of termination, and the severance package described above, the
named executive officer will also be entitled to acceleration of the vesting of all stock options
held by such executive that have not yet vested as of the date of such termination. For purposes
of each of the employment agreements, &#147;Change in Control&#148; is defined as any one of the following
occurrences: (a)&nbsp;any &#147;person&#148; (as such term is used in Sections 13(d) and 14(d) of the Exchange
Act), becomes the &#147;beneficial owner&#148; (as such term is defined in Rule&nbsp;13d-3 promulgated under the
Exchange Act), directly or indirectly, of securities of the Company representing more than 50% of
the total fair market value or total combined voting power of our then-outstanding securities
entitled to vote generally in the election of directors; provided, however, that a Change in
Control shall not be deemed to have occurred if such degree of beneficial ownership results from
any of the following: (i)&nbsp;an acquisition of securities by any person who on the effective date of
the employment agreement was the beneficial owner of more than 50% of such voting power, (ii)&nbsp;any
acquisition of securities directly from us including, without limitation, pursuant to or in
connection with a public offering of securities, (iii)&nbsp;any acquisition of securities by us, (iv)
any acquisition of securities by a trustee or other fiduciary under a Company employee benefit
plan, or (v)&nbsp;any acquisition of securities by an entity owned directly or indirectly by
stockholders of the Company in substantially the same proportions as their ownership of the voting
securities of the Company; (b)&nbsp;the sale or disposition of all or substantially all of the Company&#146;s
assets (other than a sale or disposition to one or more subsidiaries of the Company), or any
transaction having similar effect is consummated; (c)&nbsp;the Company is party to a merger or
consolidation that results in the holders of voting securities of the Company outstanding
immediately prior thereto failing to continue to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than 50% of the combined
voting power of the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; or (d)&nbsp;the dissolution or liquidation of the
Company.
</DIV>
<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->153<!-- /Folio -->
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B><I>Non-Competition and Non-Solicitation Obligations</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Each of the agreements prohibits the executives from engaging in any work that creates an
actual conflict of interest with us, and includes customary non-competition and non-solicitation
covenants that prohibit the executives, during their employment with us and for 12&nbsp;months
thereafter, from (i)&nbsp;owning (except ownership of less than 1% of any class of securities which are
listed for trading on any securities exchange or which are traded in the over the counter market),
managing, controlling, participating in, consulting with, rendering services for, or in any manner
engaging in the operation of a for-profit, postsecondary education institution or any other
business that is in the same line of business as us; (ii)&nbsp;soliciting funds on behalf of, or for the
benefit of, any for-profit, postsecondary education institution (other than us) or any other entity
that competes with us; (iii)&nbsp;soliciting our current or prospective students to be students for any
other for-profit, postsecondary education institution; (iv)&nbsp;inducing or attempting to induce any of
our employees to leave our employ, or in any way interfering with the relationship between us and
any of our employees; or (v)&nbsp;inducing or attempting to induce any of our students, customers,
suppliers, licensees, or other business partners to cease doing business with, or modify its
business relationship with, us, or in any way interfere with or hinder the relationship between any
such student, customer, supplier, licensee, or business partner and us. Each of the executives has
separately entered into a confidentiality agreement with us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">The following table provides information regarding the potential payments upon termination
without Cause or for Good Reason, as well upon termination without Cause or for Good Reason after a
Change in Control of the
Company, which would have been paid to each executive in the event he or she had been
terminated as of December&nbsp;31, 2010. All payments in connection with any such termination will
comply with Section&nbsp;409A of the Code, to the extent Section&nbsp;409A applies. The actual amounts to be
paid out can only be determined at the time of such executive&#146;s separation from the Company.
</DIV>
<DIV align="center">
<TABLE style="font-size: 9pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head --><TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="7%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 9pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10"><B>Termination without Cause or for Good Reason</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 9pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>Termination without Cause or for Good Reason</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="10" style="border-bottom: 1px solid #000000"><B>following a Change in Control</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 9pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Acceleration of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 9pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Cash</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Vesting of</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Acceleration of</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 9pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Payment</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Benefits</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Options</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Cash Payment</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Benefits</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>Vesting of Options</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 9pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)(1)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)(2)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)(3)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)(1)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)(2)</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>($)(3)</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD nowrap><DIV style="margin-left:15px; text-indent:-15px">Brent D. Richardson</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">297,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">14,681</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">297,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">14,681</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Brian E. Mueller</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">600,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,681</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,659,611</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">600,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,681</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,978,834</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dr.&nbsp;W. Stan Meyer</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">350,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,681</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">663,844</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">350,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,681</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,991,533</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Daniel E. Bachus</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">350,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,681</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">597,461</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">350,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,681</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,792,382</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Joseph N. Mildenhall</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">300,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,283</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">300,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,283</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115,200</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Christopher C.
Richardson</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">297,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,462</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">297,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,462</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff; padding-top: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dr.&nbsp;Kathy Player</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">275,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,075</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">275,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,075</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">296,503</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body --></TABLE>
</DIV>




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 6pt">
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Assumes a termination date of December&nbsp;31, 2010, and is based on the executive&#146;s salary in
effect at such date.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Reflects the cost related to the continuation of the executive&#146;s health benefits for the
period specified.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Calculated based on an assumed termination date of December&nbsp;31, 2010 and the closing market
price of our common stock on the Nasdaq Global Market on such date, less the applicable
exercise price for each option for which vesting is accelerated.</TD>
</TR>

</TABLE>



<DIV align="left">
<A name="C24244121"></A>
</DIV>

<DIV align="left" style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>Item&nbsp;12.</B></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: left"><B><I>Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters</I></B></DIV></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Information relating to this item appears in the sections entitled &#147;Executive Compensation&#148;
and &#147;Beneficial Ownership of Common Stock&#148; in our 2011 proxy statement, and such information is
incorporated herein by reference.
</DIV>




<DIV align="left">
<A name="C24244122"></A>
</DIV>

<DIV align="left" style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>Item&nbsp;13.</B></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: left"><B><I>Certain Relationships and Related Transactions, and Director Independence</I></B>.</DIV></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Information relating to this item appears in the sections entitled &#147;Corporate Governance and
Board Matters &#151; Director Independence&#148; and &#147;Certain Relationships and Related Party Transactions&#148;
in our 2011 proxy statement, and such information is incorporated by reference herein.
</DIV>



<DIV align="left">
<A name="C24244123"></A>
</DIV>

<DIV align="left" style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>Item&nbsp;14.</B></TD>
    <TD>&nbsp;</TD>
    <TD><DIV style="text-align: left"><B><I>Principal Accounting Fees and Services</I></B></DIV></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Information relating to this item appears in the section entitled &#147;Proposal No.&nbsp;6:
Ratification of Independent Registered Public Accounting Firm &#151; Fees&#148; in our 2011 proxy statement,
and such information is incorporated herein by reference.
</DIV>



<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->154<!-- /Folio -->
</DIV>



<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">
<DIV align="left">
<A name="C24244124"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>PART IV</B>
</DIV>

<DIV align="left">
<A name="C24244125"></A>
</DIV>

<DIV align="left" style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt; background: transparent; color: #000000">
<TR>
    <TD width="7%"></TD>
    <TD width="1%"></TD>
    <TD></TD>
</TR>
<TR valign="top">
    <TD nowrap align="left"><B>Item&nbsp;15.</B></TD>
    <TD>&nbsp;</TD>
    <TD><B><I>Exhibits, Financial Statement Schedules</I></B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt"><B>(a)&nbsp;The following documents are filed as part of this Annual Report on Form 10-K:</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">1.&nbsp;<I>Financial Statements filed as part of this report</I>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="86%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="9%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Index to Financial Statements</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>Page</B></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Report of Independent Registered Public Accounting Firm</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">96</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance
Sheets as of December&nbsp;31, 2010 (restated) and 2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">98</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom"  style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income
Statements for the years ended December&nbsp;31, 2010 (restated), 2009 and 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">99</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Statements
of Comprehensive Income for the years ended December&nbsp;31, 2010 (restated), 2009 and 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom"  style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Statements of Preferred Stock and Stockholders Equity (Deficit) for the
years ended December&nbsp;31,
2010(restated), 2009 and 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">101</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Statements of Cash Flows for the years ended
December&nbsp;31, 2010 (restated), 2009 and 2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom"  style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Notes to Financial Statements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">2.&nbsp;<I>Financial Statement Schedules</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">All financial statement schedules have been omitted since the required information is not
applicable or is not present in amounts sufficient to require submission of the schedule, or
because the information required is included in the Financial Statements and Notes thereto.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">3.&nbsp;<I>Exhibits</I>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="43%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Method of Filing</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Amended and Restated Certificate
of Incorporation
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;3.1 to Amendment No.&nbsp;6 to
the University&#146;s Registration
Statement on Form&nbsp;S-1 filed with
the SEC on November&nbsp;12, 2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Second Amended and Restated Bylaws
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;3.1 to the University&#146;s
Current Report on Form&nbsp;8-K filed
with the SEC on August&nbsp;2, 2010.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Specimen of Stock Certificate
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;4.1 to Amendment No.&nbsp;2 to
the University&#146;s Registration
Statement on Form&nbsp;S-1 filed with
the SEC on September&nbsp;29, 2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Amended and Restated Investor
Rights Agreement, dated September
17, 2008, by and among Grand
Canyon Education, Inc. and the
other parties named therein
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;4.2 to Amendment No.&nbsp;2 to
the University&#146;s Registration
Statement on Form&nbsp;S-1 filed with
the SEC on September&nbsp;29, 2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->155<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>



<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="43%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Number</B></TD>

    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Method of Filing</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Amended and Restated Executive
Employment Agreement, dated
September&nbsp;10, 2008, by and
between Grand Canyon Education,
Inc. and Brent Richardson&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.1 to Amendment No.&nbsp;2 to
the University&#146;s Registration
Statement on Form&nbsp;S-1 filed with
the SEC on September&nbsp;29, 2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Amended and Restated Executive
Employment Agreement, dated
September&nbsp;10, 2008, by and
between Grand Canyon Education,
Inc. and Christopher Richardson&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.2 to Amendment No.&nbsp;2 to
the University&#146;s Registration
Statement on Form&nbsp;S-1 filed with
the SEC on September&nbsp;29, 2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.3</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Executive Employment Agreement,
dated September&nbsp;1, 2008, by and
between Grand Canyon Education,
Inc. and Kathy Player&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.1 to the University&#146;s
Current Report on Form&nbsp;8-K filed
with the SEC on March&nbsp;25, 2009.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.4</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2008 Equity Incentive Plan&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.4 to Amendment No.&nbsp;2 to
the University&#146;s Registration
Statement on Form&nbsp;S-1 filed with
the SEC on September&nbsp;29, 2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.5</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2008 Employee Stock Purchase Plan&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.5 to Amendment No.&nbsp;2 to
the University&#146;s Registration
Statement on Form&nbsp;S-1 filed with
the SEC on September&nbsp;29, 2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.6</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">License Agreement, dated June&nbsp;30,
2004, by and between Blanchard
Education, LLC and Significant
Education, LLC
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.15 to the University&#146;s
Registration Statement on Form&nbsp;S-1
filed with the SEC on May&nbsp;13,
2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.7</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Letter Agreement, dated February
6, 2006, by and between The Ken
Blanchard Companies and Grand
Canyon University
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.16 to the University&#146;s
Registration Statement on Form&nbsp;S-1
filed with the SEC on May&nbsp;13,
2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.8</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Amendment to License Agreement,
dated May&nbsp;8, 2008, by and between
Blanchard Education, LLC and
Grand Canyon Education, Inc.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.17 to the University&#146;s
Registration Statement on Form&nbsp;S-1
filed with the SEC on May&nbsp;13,
2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.9</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Collaboration Agreement, dated
July&nbsp;11, 2005, by and between
Mind Streams, LLC and Significant
Education, LLC (as supplemented
by Project One and Project Two)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.18 to Amendment No.&nbsp;1
to the University&#146;s Registration
Statement on Form&nbsp;S-1 filed with
the SEC on August&nbsp;13, 2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.10</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Executive Employment Agreement,
dated June&nbsp;25, 2008, by and
between Grand Canyon Education,
Inc. and Daniel E. Bachus&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.19 to Amendment No.&nbsp;1
to the University&#146;s Registration
Statement on Form&nbsp;S-1 filed with
the SEC on August&nbsp;13, 2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.11</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Executive Employment Agreement,
dated June&nbsp;25, 2008, by and
between Grand Canyon Education,
Inc. and Brian E. Mueller&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.20 to Amendment No.&nbsp;1
to the University&#146;s Registration
Statement on Form&nbsp;S-1 filed with
the SEC on August&nbsp;13, 2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.12</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Executive Employment Agreement,
dated June&nbsp;25, 2008, by and
between Grand Canyon Education,
Inc. and W. Stan Meyer&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.21 to Amendment No.&nbsp;1
to the University&#146;s Registration
Statement on Form&nbsp;S-1 filed with
the SEC on August&nbsp;13, 2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->156<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>



<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="43%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Number</B></TD>

    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Method of Filing</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.13</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Form of Director and Officer
Indemnity Agreement
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.21 to Amendment No.&nbsp;2
to the University&#146;s Registration
Statement on Form&nbsp;S-1 filed with
the SEC on September&nbsp;29, 2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.14</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Purchase and Sale Agreement,
dated April&nbsp;27, 2009, by and
among Grand Canyon Education,
Inc., Spirit Master Funding, LLC,
and Spirit Management Company
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.1 to the University&#146;s
Quarterly Report on Form&nbsp;10-Q
filed with the SEC on August&nbsp;3,
2009.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.15</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Loan Agreement, dated April&nbsp;27,
2009, by and between Grand Canyon
Education, Inc. and Bank of
America, N.A.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.2 to the University&#146;s
Quarterly Report on Form&nbsp;10-Q
filed with the SEC on August&nbsp;3,
2009.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.16</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Employment Agreement, dated
September&nbsp;16, 2009, by and
between Grand Canyon Education,
Inc. and Joseph N. Mildenhall&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.1 to the University&#146;s
Quarterly Report on Form&nbsp;10-Q
filed with the SEC on November&nbsp;4,
2009.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.17</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Amendment No.&nbsp;1 to Loan
Agreement, dated June&nbsp;9, 2010,
between Grand Canyon Education,
Inc. and Bank of America, N.A.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.1 to the University&#146;s
Quarterly Report on Form&nbsp;10-Q
filed with the SEC on August&nbsp;9,
2010.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.18</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Asset Purchase Agreement, dated
December&nbsp;30, 2010, between Grand
Canyon Education, Inc. and Mind
Streams, L.L.C.
</DIV></TD>
    <TD>&nbsp;</TD>
<TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.18 to the University&#146;s
Annual Report on Form&nbsp;10-K
filed with the SEC on February 22, 2011.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">23.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Consent of Independent Registered
Public Accounting Firm
</DIV></TD>

    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Filed herewith.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">24.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Power of Attorney
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Previously
filed with the University&#146;s
Annual Report on Form&nbsp;10-K
filed with the SEC on February 22, 2011.</TD>

</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">31.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Certification of the Chief
Executive Officer Pursuant to
Rule&nbsp;13a-14(a) and 15d-14(a) as
Adopted Pursuant to Section&nbsp;302
of the Sarbanes-Oxley Act of 2002
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Filed herewith.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">31.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Certification of the Chief
Financial Officer Pursuant to
Rule&nbsp;13a-14(a) and 15d-14(a) as
Adopted Pursuant to Section&nbsp;302
of the Sarbanes-Oxley Act of 2002
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Filed herewith.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">32.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Certification of Chief Executive
Officer Pursuant to 18 U.S.C.
Section&nbsp;1350, as Adopted Pursuant
to Section&nbsp;906 of the
Sarbanes-Oxley Act of 2002&#134;&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Filed herewith.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">32.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Certification of Chief Financial
Officer Pursuant to 18 U.S.C.
Section&nbsp;1350, as Adopted Pursuant
to Section&nbsp;906 of the
Sarbanes-Oxley Act of 2002&#134;&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Filed herewith.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 10pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt">Significant Education, LLC is the predecessor to Significant Education, Inc., which is the former
name of Grand Canyon Education, Inc.
</DIV>


<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 3pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96%">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>Indicates a management contract or any compensatory plan, contract or arrangement.</TD>
</TR>

</TABLE>



<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&#134;&#134;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>This certification is being furnished solely to accompany this report pursuant to 18 U.S.C.
Section&nbsp;1350, and is not being filed for purposes of Section&nbsp;18 of the Exchange Act, and is
not to be incorporated by reference into any filings of the University, whether made before or
after the date hereof, regardless of any general
incorporation language in such filing.</TD>
</TR>

</TABLE>
</DIV><P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->157<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">


<DIV style="margin-top: 10pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>
<DIV align="left">
<A name="C24244126"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>SIGNATURES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Pursuant to the requirements of Section&nbsp;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.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="45%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left"><B>GRAND CANYON EDUCATION, INC.</B></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Brian E. Mueller
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Name: Brian E. Mueller
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title: Chief Executive Officer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the capacities and on the
dates indicated.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Signature</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Title</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000">Date</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Brian E. Mueller
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Brian E. Mueller
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Chief Executive Officer and Director
(Principal Executive Officer)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">November&nbsp;14, 2011</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Daniel E. Bachus
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Daniel E. Bachus
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Chief Financial Officer<br>
(Principal Financial Officer and
Principal Accounting Officer)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">November&nbsp;14, 2011</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ *
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Brent D. Richardson
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Executive Chairman&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">November&nbsp;14, 2011</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ *
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Christopher C. Richardson
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Director&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">November&nbsp;14, 2011</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ *
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
David J. Johnson
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Director&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">November&nbsp;14, 2011</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ *
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Jack A. Henry
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Director&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">November&nbsp;14, 2011</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Bradley A. Casper
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Director&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">November&nbsp;14, 2011</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ *
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Director
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">November&nbsp;14, 2011</TD>
</TR>
<TR style="font-size: 10pt">
    <TD valign="top" style="border-top: 1px solid #000000"><DIV style="margin-left:0px; text-indent:-0px">D. Mark Dorman</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ *
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Chad N. Heath
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">Director&nbsp;
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">November&nbsp;14, 2011</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="49%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">* By:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Daniel E. Bachus
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Daniel E. Bachus
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Attorney-in-Fact</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>




<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->158<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="left">
<A name="C24244127"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>EXHIBIT INDEX</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="43%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Number</B></TD>

    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Method of Filing</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Amended and Restated Certificate of
Incorporation
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;3.1 to Amendment No.&nbsp;6 to
the University&#146;s Registration
Statement on Form&nbsp;S-1 filed with
the SEC on November&nbsp;12, 2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Second Amended and Restated Bylaws
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;3.1 to the University&#146;s
Current Report on Form&nbsp;8-K filed
with the SEC on August&nbsp;2,2010.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Specimen of Stock Certificate
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;4.1 to Amendment No.&nbsp;2 to
the University&#146;s Registration
Statement on Form&nbsp;S-1 filed with
the SEC on September&nbsp;29, 2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Amended and Restated Investor Rights
Agreement, dated September&nbsp;17, 2008, by
and among Grand Canyon Education, Inc.
and the other parties named therein
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;4.2 to Amendment No.&nbsp;2 to
the University&#146;s Registration
Statement on Form&nbsp;S-1 filed with
the SEC on September&nbsp;29, 2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Amended and Restated Executive Employment
Agreement, dated September&nbsp;10, 2008, by
and between Grand Canyon Education, Inc.
and Brent Richardson&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.1 to Amendment No.&nbsp;2 to
the University&#146;s Registration
Statement on Form&nbsp;S-1 filed with
the SEC on September&nbsp;29, 2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Amended and Restated Executive Employment
Agreement, dated September&nbsp;10, 2008, by
and between Grand Canyon Education, Inc.
and Christopher Richardson&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.2 to Amendment No.&nbsp;2 to
the University&#146;s Registration
Statement on Form&nbsp;S-1 filed with
the SEC on September&nbsp;29, 2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.3</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Executive Employment Agreement, dated
September&nbsp;1, 2008, by and between Grand
Canyon Education, Inc. and Kathy Player&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.1 to the University&#146;s
Current Report on Form&nbsp;8-K filed
with the SEC on March&nbsp;25, 2009.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.4</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2008 Equity Incentive Plan&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.4 to Amendment No.&nbsp;2 to
the University&#146;s Registration
Statement on Form&nbsp;S-1 filed with
the SEC on September&nbsp;29, 2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.5</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2008 Employee Stock Purchase Plan&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.5 to Amendment No.&nbsp;2 to
the University&#146;s Registration
Statement on Form&nbsp;S-1 filed with
the SEC on September&nbsp;29, 2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.6</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">License Agreement, dated June&nbsp;30, 2004,
by and between Blanchard Education, LLC
and Significant Education, LLC
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.15 to the University&#146;s
Registration Statement on Form&nbsp;S-1
filed with the SEC on May&nbsp;13, 2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.7</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Letter Agreement, dated February&nbsp;6, 2006,
by and between The Ken Blanchard
Companies and Grand Canyon University
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.16 to the University&#146;s
Registration Statement on Form&nbsp;S-1
filed with the SEC on May&nbsp;13, 2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.8</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Amendment to License Agreement, dated May
8, 2008, by and between Blanchard
Education, LLC and Grand Canyon
Education, Inc.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.17 to the University&#146;s
Registration Statement on Form&nbsp;S-1
filed with the SEC on May&nbsp;13, 2008.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->159<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="43%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Number</B></TD>

    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Method of Filing</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.9</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Collaboration Agreement, dated July&nbsp;11,
2005, by and between Mind Streams, LLC
and Significant Education, LLC (as
supplemented by Project One and Project
Two)
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.18 to Amendment No.&nbsp;1 to
the University&#146;s Registration
Statement on Form&nbsp;S-1 filed with
the SEC on August&nbsp;13, 2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.10</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Executive Employment Agreement, dated
June&nbsp;25, 2008, by and between Grand
Canyon Education, Inc. and Daniel E.
Bachus&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.19 to Amendment No.&nbsp;1 to
the University&#146;s Registration
Statement on Form&nbsp;S-1 filed with
the SEC on August&nbsp;13, 2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.11</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Executive Employment Agreement, dated
June&nbsp;25, 2008, by and between Grand
Canyon Education, Inc. and Brian E.
Mueller&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.20 to Amendment No.&nbsp;1 to
the University&#146;s Registration
Statement on Form&nbsp;S-1 filed with
the SEC on August&nbsp;13, 2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.12</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Executive Employment Agreement, dated
June&nbsp;25, 2008, by and between Grand
Canyon Education, Inc. and W. Stan Meyer&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.21 to Amendment No.&nbsp;1 to
the University&#146;s Registration
Statement on Form&nbsp;S-1 filed with
the SEC on August&nbsp;13, 2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.13</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Form of Director and Officer Indemnity
Agreement
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.21 to Amendment No.&nbsp;2 to
the University&#146;s Registration
Statement on Form&nbsp;S-1 filed with
the SEC on September&nbsp;29, 2008.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.14</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Purchase and Sale Agreement, dated April
27, 2009, by and among Grand Canyon
Education, Inc., Spirit Master Funding,
LLC, and Spirit Management Company
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.1 to the University&#146;s
Quarterly Report on Form&nbsp;10-Q filed
with the SEC on August&nbsp;3, 2009.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.15</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Loan Agreement, dated April&nbsp;27, 2009, by
and between Grand Canyon Education, Inc.
and Bank of America, N.A.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.2 to the University&#146;s
Quarterly Report on Form&nbsp;10-Q filed
with the SEC on August&nbsp;3, 2009.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.16</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Employment Agreement, dated September&nbsp;16,
2009, by and between Grand Canyon
Education, Inc. and Joseph N. Mildenhall&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.1 to the University&#146;s
Quarterly Report on Form&nbsp;10-Q filed
with the SEC on November&nbsp;4, 2009.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.17</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Amendment No.&nbsp;1 to Loan
Agreement, dated June&nbsp;9, 2010,
between Grand Canyon Education,
Inc. and Bank of America, N.A.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Incorporated by
reference to
Exhibit&nbsp;10.1 to the
University&#146;s
Quarterly Report on
Form&nbsp;10-Q filed
with the SEC on
August&nbsp;9, 2010.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">10.18</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Asset Purchase Agreement, dated
December&nbsp;30, 2010, between Grand
Canyon Education, Inc. and Mind
Streams, L.L.C.
</DIV></TD>
    <TD>&nbsp;</TD>
<TD align="left" valign="top">Incorporated by reference to
Exhibit&nbsp;10.18 to the University&#146;s
Annual Report on Form&nbsp;10-K
filed with the SEC on February 22, 2011.</TD>

</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">23.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Consent of Independent Registered Public
Accounting Firm
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Filed herewith.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">24.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Power of Attorney
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Previously
filed with the University&#146;s
Annual Report on Form&nbsp;10-K
filed with the SEC on February 22, 2011.
</TD>

</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">31.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Certification of the Chief Executive
Officer Pursuant to Rule&nbsp;13a-14(a) and
15d-14(a) as Adopted Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Filed herewith.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->160<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#C24244tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="43%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Number</B></TD>

    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Method of Filing</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">31.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Certification of the Chief Financial
Officer Pursuant to Rule&nbsp;13a-14(a) and
15d-14(a) as Adopted Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Filed herewith.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">32.1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Certification of Chief Executive Officer
Pursuant to 18 U.S.C. Section&nbsp;1350, as
Adopted Pursuant to Section&nbsp;906 of the
Sarbanes-Oxley Act of 2002&#134;&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Filed herewith.</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="left" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">32.2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Certification of Chief Financial Officer
Pursuant to 18 U.S.C. Section&nbsp;1350, as
Adopted Pursuant to Section&nbsp;906 of the
Sarbanes-Oxley Act of 2002&#134;&#134;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Filed herewith.</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 10pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 3pt">Significant Education, LLC is the predecessor to Significant Education, Inc., which is the former
name of Grand Canyon Education, Inc.
</DIV>




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 3pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="96%">&nbsp;</TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>Indicates a management contract or any compensatory plan, contract or arrangement.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">&#134;&#134;</TD>
    <TD>&nbsp;</TD>
    <TD>This certification is being furnished solely to accompany this report pursuant to 18 U.S.C.
Section&nbsp;1350, and is not being filed for purposes of Section&nbsp;18 of the Exchange Act, and is
not to be incorporated by reference into any filings of the University, whether made before or
after the date hereof, regardless of any general incorporation language in such filing.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt; text-indent: 4%">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->161<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>2
<FILENAME>c24244exv23w1.htm
<DESCRIPTION>EXHIBIT 23.1
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 23.1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<DIV style="font-family: Helvetica,Arial,sans-serif; margin-left: .25in; width: 7.50in">

<DIV align="right" style="font-size: 10pt; margin-top: 10pt"><B>Exhibit&nbsp;23.1</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><b>Consent
of Independent Registered Public Accounting Firm</b></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">

We consent to the incorporation by reference in the Registration Statements on Form S-8
 (No. 333-155973 and No. 333-165019) pertaining to the 2008 Equity Incentive Plan of Grand
Canyon Education, Inc. of our report dated February 22, 2011, except for  Note 2, as to which the date is November 14, 2011,
with respect to the financial statements (as restated) of Grand Canyon Education, Inc., and our report dated February 22, 2011,
except for the effects of the material weakness described in the sixth paragraph, as to which the date is November 14,
2011, with respect to the effectiveness of internal control over financial reporting of Grand Canyon Education, Inc.,
included in this Annual Report (Form 10-K/A) for the year ended December 31, 2010.

</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">     /s/ Ernst &#038; Young LLP
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Phoenix, Arizona<BR>
November 14, 2011
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio --><!-- /Folio -->
</DIV>




</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>3
<FILENAME>c24244exv31w1.htm
<DESCRIPTION>EXHIBIT 31.1
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 31.1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">

<DIV align="right" style="font-size: 10pt; margin-top: 10pt"><B>Exhibit&nbsp;31.1</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a)<BR>
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">I, Brian E. Mueller, certify that:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">1.&nbsp;I
have reviewed this Annual Report on Form 10-K/A for the year ending December&nbsp;31, 2010 of
Grand Canyon Education, Inc.;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">2.&nbsp;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;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">3.&nbsp;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;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">4.&nbsp;The registrant&#146;s other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules&nbsp;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:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">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;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">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;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">c) Evaluated the effectiveness of the registrant&#146;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
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">d) Disclosed in this report any change in the registrant&#146;s internal control over financial
reporting that occurred during the registrant&#146;s most recent fiscal quarter (the registrant&#146;s fourth
fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant&#146;s internal control over financial reporting; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">5.&nbsp;The registrant&#146;s other certifying officer(s) and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrant&#146;s auditors and the audit
committee of the registrant&#146;s board of directors (or persons performing the equivalent functions):
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">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&#146;s
ability to record, process, summarize and report financial information; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant&#146;s internal control over financial reporting.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="45%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date:
November&nbsp;14, 2011
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Brian E. Mueller
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Brian E. Mueller
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Executive Officer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">(Principal Executive Officer)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>4
<FILENAME>c24244exv31w2.htm
<DESCRIPTION>EXHIBIT 31.2
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 31.2</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">


<DIV align="right" style="font-size: 10pt; margin-top: 10pt"><B>Exhibit&nbsp;31.2</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CERTIFICATION PURSUANT TO RULES 13a-14(a) AND 15d-14(a)<BR>
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt">I, Daniel E. Bachus, certify that:
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">1.&nbsp;I
have reviewed this Annual Report on Form 10-K/A for the year ending December&nbsp;31, 2010 of
Grand Canyon Education, Inc.;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">2.&nbsp;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;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">3.&nbsp;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;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">4.&nbsp;The registrant&#146;s other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules&nbsp;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:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">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;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">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;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">c) Evaluated the effectiveness of the registrant&#146;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
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">d) Disclosed in this report any change in the registrant&#146;s internal control over financial
reporting that occurred during the registrant&#146;s most recent fiscal quarter (the registrant&#146;s fourth
fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant&#146;s internal control over financial reporting; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">5.&nbsp;The registrant&#146;s other certifying officer(s) and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrant&#146;s auditors and the audit
committee of the registrant&#146;s board of directors (or persons performing the equivalent functions):
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">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&#146;s
ability to record, process, summarize and report financial information; and
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 8%">b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant&#146;s internal control over financial reporting.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="45%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date:
November&nbsp;14, 2011
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Daniel E. Bachus
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Daniel E. Bachus
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Financial Officer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" nowrap>(Principal Financial Officer and Principal Accounting Officer)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>5
<FILENAME>c24244exv32w1.htm
<DESCRIPTION>EXHIBIT 32.1
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 32.1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">


<DIV align="right" style="font-size: 10pt; margin-top: 10pt"><B>Exhibit&nbsp;32.1</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,<BR>
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In
connection with the Annual Report on Form 10-K/A of Grand Canyon Education, Inc. (the
&#147;Company&#148;) for the year ending December&nbsp;31, 2010 as filed with the Securities and Exchange
Commission on the date hereof (the &#147;Report&#148;), I, Brian E. Mueller, Chief Executive Officer, of the
Company, certify, pursuant to &#167; 906 of the Sarbanes-Oxley Act of 2002,18 U.S.C. &#167; 1350, as adopted
pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (15 U.S.C. 78m); and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Date:
November&nbsp;14, 2011
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="45%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Brian E. Mueller
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Brian E. Mueller
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Chief Executive Officer (Principal Executive Officer)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.2
<SEQUENCE>6
<FILENAME>c24244exv32w2.htm
<DESCRIPTION>EXHIBIT 32.2
<TEXT>
<HTML>
<HEAD>
<TITLE>Exhibit 32.2</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.50in">


<DIV align="right" style="font-size: 10pt; margin-top: 10pt"><B>Exhibit&nbsp;32.2</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350<BR>
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 10pt; text-indent: 4%">In
connection with the Annual Report on Form 10-K/A of Grand Canyon Education, Inc. (the
&#147;Company&#148;) for the year ending December&nbsp;31, 2010 as filed with the Securities and Exchange
Commission on the date hereof (the &#147;Report&#148;), I, Daniel E. Bachus, Chief Financial Officer, of the
Company, certify, pursuant to &#167; 906 of the Sarbanes-Oxley Act of 2002,18 U.S.C. &#167; 1350, as adopted
pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (15 U.S.C. 78m); and</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 10pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 10pt">Date:
November&nbsp;14, 2011
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="45%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="45%">&nbsp;</TD>
</TR>
<TR></TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">/s/ Daniel E. Bachus
<DIV style="font-size: 1pt; border-top: 1px solid #000000">&nbsp;</DIV>
Daniel E. Bachus
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top" nowrap><DIV style="margin-left:0px; text-indent:-0px">Chief Financial Officer (Principal Financial and Principal Accounting Officer)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
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end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
