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EX-32.1 - EXHIBIT 32.1 - BROADVIEW INSTITUTE INCex32-1.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 30, 2011

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

For the transition period from ______to ______

Commission File Number: 000-08505
 
BROADVIEW INSTITUTE, INC.
(Exact name of registrant as specified in its charter)

 
Minnesota   41-0641789
(State or Other Jurisdiction of Incorporation or Organization)   (I.R.S. Employer Identification Number)
 
8147 Globe Drive, Woodbury, Minnesota 55125
(Address of Principal Executive Offices) (Zip Code)
 
Registrant’s telephone number, including area code: (651) 332-8000

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X]  No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232. 405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No

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 “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer [  ]       Accelerated filer [  ]       Non-accelerated filer [  ]       Smaller reporting company [X]
     (Do not check if a smaller
              reporting company)

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

The number of shares outstanding of the Registrant’s Common Stock, $0.01 par value, as of November 1, 2011 was 8,358,252.
 
 
 

 
 
BROADVIEW INSTITUTE, INC.
AND SUBSIDIARY

INDEX
FORM 10-Q

SEPTEMBER 30, 2011
 
PART I –  FINANCIAL INFORMATION
Page No.
     
Item 1.
Financial Statements
1
 
       
Item 2.
Management’s Discussion and Analysis of Financial Condition
   
  and Results of Operations
10
 
       
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
20
 
       
Item 4.
Controls and Procedures
21
 
       
PART II – OTHER INFORMATION
   
       
Item 1.
Legal Proceedings
21
 
       
Item 1A.
Risk Factors
21
 
       
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
22
 
       
Item 3.
Defaults Upon Senior Securities
22
 
       
Item 4.
Reserved
22
 
       
Item 5.
Other Information
22
 
       
Item 6.
Exhibits
22
 
       
SIGNATURES
 
23
 
 
 
i

 
 
PART I – FINANCIAL INFORMATION

Item 1.  Financial Statements
 
BROADVIEW INSTITUTE, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
 
   
September 30,
   
March 31,
 
   
2011
   
2011
 
   
(Unaudited)
       
ASSETS            
             
CURRENT ASSETS
           
Cash and cash equivalents   $ 3,068,597     $ 4,527,415  
Student receivables     268,741       262,954  
Due from affiliates     42,469       -  
Prepaid expenses     89,267       97,101  
Income taxes receivable     49,122       -  
Other     -       137,124  
TOTAL CURRENT ASSETS     3,518,196       5,024,594  
                 
PROPERTY AND EQUIPMENT, NET
    3,023,016       3,000,238  
                 
OTHER ASSETS
               
Deposits     189,676       189,676  
Deferred income taxes     981,000       401,000  
Goodwill     622,016       622,016  
    $ 8,333,904     $ 9,237,524  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
                 
CURRENT LIABILITIES
               
Accounts payable   $ 349,477     $ 514,217  
Accrued expenses     268,725       371,293  
Student credit balances     91,404       50,114  
Due to affiliates     275,451       116,119  
Income taxes payable     -       878  
Deferred income taxes     11,000       5,000  
TOTAL CURRENT LIABILITIES     996,057       1,057,621  
                 
DEFERRED RENT
    711,967       571,586  
                 
STOCKHOLDERS' EQUITY
               
Preferred stock Series B, par value $.01 per share, authorized 5,000,000 shares, 500,000 shares issued and outstanding
    5,000       5,000  
Common stock, par value $.01 per share, authorized 100,000,000 shares, 8,358,252 and 8,248,252 shares issued and outstanding at September 30, 2011 and March 31, 2011
    83,582       82,482  
Additional paid-in capital     4,527,304       4,464,404  
Retained earnings     2,009,994       3,056,431  
TOTAL STOCKHOLDERS' EQUITY     6,625,880       7,608,317  
    $ 8,333,904     $ 9,237,524  
 
See notes to consolidated financial statements.
 
 
-1-

 
 
BROADVIEW INSTITUTE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
    Three Months Ended September 30,     Six Months Ended September 30,  
   
2011
   
2010
   
2011
   
2010
 
                         
REVENUES
  $ 4,311,675     $ 4,876,295     $ 9,095,050     $ 10,316,555  
                                 
OPERATING EXPENSES
                               
Educational services and facilities
    3,955,770       3,425,387       8,016,164       6,916,654  
Selling, general and administrative
    1,387,864       1,627,013       2,725,681       2,865,825  
                                 
TOTAL OPERATING EXPENSES
    5,343,634       5,052,400       10,741,845       9,782,479  
                                 
OPERATING INCOME (LOSS)
    (1,031,959 )     (176,105 )     (1,646,795 )     534,076  
                                 
OTHER INCOME
    2,439       7,134       6,358       15,836  
                                 
INCOME (LOSS) BEFORE INCOME TAXES
    (1,029,520 )     (168,971 )     (1,640,437 )     549,912  
                                 
INCOME TAX EXPENSE (BENEFIT)
    (396,617 )     (60,158 )     (624,000 )     211,994  
                                 
NET INCOME (LOSS)
  $ (632,903 )   $ (108,813 )   $ (1,016,437 )   $ 337,918  
                                 
EARNINGS (LOSS) PER SHARE:
                               
                                 
Basic
  $ (0.08 )   $ (0.01 )   $ (0.12 )   $ 0.04  
                                 
Diluted
  $ (0.08 )   $ (0.01 )   $ (0.12 )   $ 0.04  
 
See notes to consolidated financial statements.
 
 
-2-

 
 
BROADVIEW INSTITUTE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
   
Six Months Ended September 30,
 
   
2011
   
2010
 
             
CASH FLOWS FROM OPERATING ACTIVITIES:
           
Net income (loss)
  $ (1,016,437 )   $ 337,918  
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
               
Depreciation
    350,000       190,749  
Deferred income taxes
    (574,000 )     174,000  
Deferred rent
    140,381       273,020  
Stock-based compensation
    64,000       135,500  
Changes in operating assets and liabilities:
               
Student receivables
    (5,787 )     51,895  
Inventory
    -       215,293  
Prepaid expenses
    7,834       66,568  
Other assets
    137,124       (53,404 )
Accounts payable and accrued expenses
    (267,308 )     (98,141 )
Student credit balances
    41,290       49,808  
Income taxes
    (50,000 )     (62,006 )
Net cash provided by (used in) operating activities
    (1,172,903 )     1,281,200  
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Purchases of property and equipment
    (372,778 )     (1,054,120 )
Net change in due from affiliates
    (42,469 )     -  
Net cash used in investing activities
    (415,247 )     (1,054,120 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Net change in due to affiliates
    159,332       (35,099 )
Preferred dividends paid
    (30,000 )     (30,000 )
Net cash provided by (used in) financing activities
    129,332       (65,099 )
                 
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    (1,458,818 )     161,981  
                 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    4,527,415       5,591,079  
                 
CASH AND CASH EQUIVALENTS AT END OF PERIOD
  $ 3,068,597     $ 5,753,060  
                 
SUPPLEMENTAL DISCLOSURES:
               
Cash paid for income taxes
  $ -     $ 100,000  
Non-cash activities:
               
Other current assets for inventory returns
  $ -     $ 209,509  
 
See notes to consolidated financial statements.
 
 
-3-

 
 
Broadview Institute, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(Unaudited)

1.       Nature of Business

Broadview Institute, Inc. (the “Company”), a Minnesota corporation, offers career-focused post-secondary education services through its wholly-owned subsidiary, C Square Educational Enterprises, Inc., a Utah corporation (d/b/a Broadview University and hereafter referred to as  “Broadview University” or the “University”).  Broadview University is accredited by the Accrediting Council for Independent Colleges and Schools (“ACICS”) to award diplomas, undergraduate degrees, and master’s degrees in various fields of study.  Broadview University delivers these services through traditional classroom settings as well as through online instruction.  The University has campuses located in the Utah cities of Layton, Orem, Salt Lake City and West Jordan, as well as Boise, Idaho.

Effective May 2010, C Square Educational Enterprises, Inc. changed its registered d/b/a with the state of Utah from Utah Career College to Broadview University.
 
2.             Presentation of Financial Information

The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements.  Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations, although the Company’s management believes that the disclosures made herein are adequate to make the information presented not be misleading.

The Company manages its business on the basis of one reporting segment.  The unaudited consolidated financial statements include the accounts of the Company and its subsidiary, Broadview University.  All inter-company accounts and transactions have been eliminated in the unaudited consolidated financial statements.  In the opinion of management, the unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the consolidated financial position of the Company as of September 30, 2011, the consolidated results of operations and the consolidated cash flows for the three and six months ended September 30, 2011 and 2010.  Results of operations and cash flows for the periods presented are not necessarily indicative of results to be expected for any other interim period or for the full fiscal year.

These unaudited consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto in its Form 10-K for the year ended March 31, 2011 and Annual Report to Security Holders filed with the SEC.

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.
 
 
-4-

 
 
Broadview Institute, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(Unaudited)
 
2.            Presentation of Financial Information – (continued)

Recent Accounting Pronouncements

In September 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2011-08, Intangibles – Goodwill and Other, which is included in Accounting Standards Codification (“ASC”) 350, Testing Goodwill for Impairment.  The guidance gives the Company the option to perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, and in some cases skip the two-step impairment test.  The guidance will be effective for the Company’s interim and annual reporting periods beginning January 1, 2012.  The Company’s management is evaluating any potential impact on the Company’s financial condition, results of operations, or disclosures.

Reclassifications

The Company’s management made changes in the current fiscal year to the Company’s financial statement presentation of operating expenses, and reclassified prior periods to conform to the current presentation.  Such reclassifications did not impact total operating expenses, net income (loss) or stockholders’ equity as previously reported.
 
3.            Earnings (Loss) Per Share

Earnings (loss) per common share (“EPS”) is calculated for basic EPS by dividing net income (loss) available to common stockholders by the weighted average number of vested common shares outstanding during the period.  Diluted EPS reflects the potential dilution that could occur assuming conversion or exercise of all dilutive unconverted or unexercised financial instruments.  Potentially dilutive instruments include warrants, restricted stock awards and preferred stock.

The basic income (loss) available to common stockholders was computed as follows:

   
Three Months Ended
   
Six Months Ended
 
    September 30,     September 30,  
     
2011
     
2010
     
2011
     
2010
 
Net income (loss)
  $ (632,903 )   $ (108,813 )   $ (1,016,437 )   $ 337,918  
Cumulative dividends
    (7,500 )     (7,500 )     (15,000 )     (15,000 )
Net income (loss) available to
     common stockholders
  $ (640,403 )   $ (116,313 )   $ (1,031,437 )   $ 322,918  
 
 
-5-

 
 
Broadview Institute, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(Unaudited)
 
3.            Earnings (Loss) Per Share – (continued)

The outstanding shares used for the diluted EPS were computed as follows:

   
Three Months Ended
 
Six Months Ended
 
   
September 30,
 
September 30,
 
   
2011
   
2010
   
2011
   
2010
 
Weighted-average shares outstanding –
     basic
    8,298,252       8,228,252       8,293,279       8,230,655  
Incremental shares from assumed
     exercise or conversion of dilutive
     instruments:
                               
          Warrants
    -       -       -       335,700  
          Restricted stock not vested
    -       -       -       20,000  
          Preferred stock
    -       -       -       500,000  
Weighted average shares – diluted
    8,298,252       8,228,252       8,293,279       9,086,355  
 
4.           Stockholders’ Equity

Series A Preferred Stock

The Company designated 100,000 shares of its preferred stock as Series A, cumulative, voting preferred stock with a per share par value of $.01 and a per share liquidation value equal to the greater of $100 or 100 times the per share liquidation value of common stock.  Each share of Series A preferred stock has voting rights equal to 100 shares of common stock.  Upon issuance, the Series A preferred stock bears a cumulative quarterly dividend equal to the greater of $1.00 or 100 times the amount of any quarterly declared dividend on common stock.  No shares of Series A preferred stock are issued.

Series B Preferred Stock

The Company has 5,000,000 authorized shares of Series B preferred stock, with a per share par value of $.01.  The Company previously issued 500,000 shares to Mr. Terry Myhre (“Mr. Myhre”), the Company’s Chairman and single largest shareholder, for $625,000.  Each share of Series B preferred stock is entitled to the same voting rights as common stock and bears a cumulative annual dividend of $.06 per share and has liquidation rights over common stock at $1.25 per share plus any cumulative dividends.  At September 30, 2011, cumulative preferred stock dividends in arrears were $15,000.  Each Series B preferred share is convertible into one share of common stock at any time.

Warrants

Detachable warrants for 1,000,000 shares of common stock were included with the Series B preferred stock issuance noted above.  The warrants were issued with an exercise price of $1.25 per share and appraised value of approximately $.20 per warrant.  At September 30, 2011 and 2010, 650,000 warrants were outstanding and 650,000 shares of common stock were reserved for conversion of the warrants.  The warrants expire in March 2015.
 
 
-6-

 
 
Broadview Institute, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(Unaudited)
 
4.           Stockholders’ Equity – (continued)

Stock Options

There were no stock options granted, exercised or expired during the three and six months ended September 30, 2011 and 2010, and no options were outstanding as of September 30, 2011 or 2010.

Equity Incentive Plan

The Company has an Equity Incentive Plan that permits the granting of stock options, restricted stock awards, restricted stock units, performance share awards, performance unit awards and stock appreciation rights to certain employees, consultants, affiliates and advisors of the Company. Of the 1,000,000 shares of the Company’s common stock that were initially available for issuance pursuant to the Equity Incentive Plan, 740,000 shares were available for issuance at September 30, 2011.

Restricted Stock Awards

On June 15, 2011, the Company’s Board of Directors (the “Board”) approved a compensation arrangement for the Board’s directors for the 2012 and 2013 fiscal years.  Under the arrangement applicable for those two fiscal years, the Board granted each of the Company’s five directors a two-year restricted stock award for 16,000 shares of common stock under the Equity Incentive Plan.  These shares were valued at $1.28 per share, which was the closing price of the Company’s common stock on the grant date.  Each award will vest at a rate of 2,000 shares per quarter beginning with the Company’s quarter ending June 30, 2011.

If any director ceases to serve on the Company’s Board for any reason during the award’s vesting period, such director’s restricted stock award will cease vesting, and all unvested shares pursuant to such award will be forfeited to the Company without payment of any consideration therefore to the director.  Future expense related to these awards is expected to be $76,800.  Stock compensation expense for directors recorded for the three and six months ended September 30, 2011 was $12,800 and $25,600.

Stock compensation expense for directors under a previous compensation arrangement was $32,500 and $65,000 for the three and six months ended September 30, 2010.

Other Stock-Based Compensation

On June 15, 2011, the Board awarded stock bonuses to the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) in the amount of 20,000 and 10,000 shares of common stock.  The shares were valued at $1.28 per share, which was the closing price of the Company’s common stock on the grant date.  The stock bonuses are not subject to forfeiture or any vesting requirements and were not made pursuant to the Equity Incentive Plan.  The Company recognized expense of $38,400 related to these awards for the three months ended June 30, 2011; no stock compensation expense for officers was recognized for the three months ended September 30, 2011.

Stock compensation expense for officers was $70,500 for the three months ended June 30, 2010; no stock compensation expense for officers was recognized for the three months ended September 30, 2010.
 
 
-7-

 
 
Broadview Institute, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(Unaudited)
 
5.           Income Taxes

At September 30, 2011, the Company had approximately $1,670,000 in federal net operating loss carryforwards to reduce future taxable income, which expire beginning after the Company’s fiscal year ending March 31, 2026.  The Company also has a federal alternative minimum tax credit carryforward of $235,000 which does not expire.

The Company is subject to U.S. federal income tax as well as income tax of multiple state jurisdictions.  No jurisdictions are currently under examination.  The Company’s policy is to recognize interest and penalties related to uncertain tax positions as income tax expense when assessed.  No liability was recorded for interest or penalties related to uncertain tax positions at September 30, 2011 or March 31, 2011.
 
6.           Related Party Transactions

Certain University students received funding toward the cost of their education from Myhre Investments, LLC, an entity owned by Mr. Myhre.  Myhre Investments, LLC had $1,729,522 and $1,758,512 in loans outstanding to University students at September 30, 2011 and March 31, 2011.

The Company utilizes executive, administrative, accounting and consulting services provided by Globe University (“GU”) and the Minnesota School of Business (“MSB”) (collectively “GU/MSB”), companies owned by Mr. Myhre, pursuant to a Service Level Agreement (the “SLA”) between the Company and GU/MSB.  Some of the services provided by GU/MSB under this arrangement include chief financial and chief executive officer services, information technology support, finance and accounting services, human resources support, student financial aid consulting and curriculum consulting.  The SLA automatically renews for one-year periods every July, but may be terminated by either party upon 30 days notice.

The Company’s expenses for services under the SLA were $225,000 and $450,000 for each of the three and six month periods ended September 30, 2011 and 2010.  Management believes the monthly charges under the SLA are competitive with, or less than, what the Company would have to pay to provide these services or to obtain them from another third party.

Broadview University is a party to a lease agreement with Myhre Holdings-Utah, LLC, an entity wholly-owned by Myhre Holdings, Inc., which is owned by the heirs of Mr. Myhre. Under the agreement, the University leases a 31,200 square foot building located in Layton, Utah. The lease is for an initial period of ten years with two additional five-year renewal options. The agreement is a “triple net” lease with monthly base rent of $32,500 and an initial security deposit of the same amount.  Broadview Institute, Inc. guaranteed the lease. Rent expense for the Layton facility was $97,500 and $195,000 for each of the three and six month periods ended September 30, 2011 and 2010.
 
 
-8-

 
 
Broadview Institute, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(Unaudited)
 
6.Related Party Transactions – (continued)

Broadview University is a party to a lease agreement with Myhre Holdings-Orem, LLC, an entity wholly-owned by Myhre Holdings, Inc.  Under the agreement, the University leases a 31,200 square foot building located in Orem, Utah.  The lease is for an initial period of ten years with two additional five-year renewal options.  The agreement is a “triple net” lease with monthly base rent of $48,100 and an initial security deposit of the same amount.  Broadview Institute, Inc. guaranteed the lease.  Rent expense for the Orem facility was $144,300 and $288,600 for each of the three and six month periods ended September 30, 2011 and 2010.

Effective January 1, 2011, Broadview University entered into a lease agreement with Myhre Holdings-Meridian, LLC, an entity wholly-owned by Myhre Holdings, Inc.  Under the agreement, the University leases a 31,200 square foot building located in Boise, Idaho.  The lease is for an initial period of ten years with two additional five-year renewal options.  The agreement is a “triple net” lease with monthly base rent of $39,000.  Rent expense for the Boise facility was $117,000 and $234,000 for the three and six month periods ended September 30, 2011.

The Company participates in employee benefit plans, including a self-insured health plan, that are administered by the same service providers as GU and MSB.  Claim and benefit payments for the Company’s employees under these plans are made by MSB to the service providers and the Company reimburses MSB for payments made on the Company’s behalf.  Total payments made to MSB for these items were $151,660 and $457,973 during the three and six month periods ended September 30, 2011.  Payments for these items were $496,144 during the three and six month periods ended September 30, 2010.

Effective July 2011, the Company began utilizing the same third-party provider as GU and MSB for the outsourcing of textbook sales to University students.  Under the arrangement, this third-party bills MSB for all textbooks purchased by MSB, GU and Broadview University students who use school-issued financial aid vouchers.  Total payments to MSB for such activity were $232,650 and $251,172 during the three and six month periods ended September 30, 2011.  Commission payments are remitted to GU for all textbook sales to these three entities.  Commissions earned by the Company that were remitted to GU totaled $50,512 and $56,756 for the three and six month periods ended September 30, 2011.

The Company also may reimburse GU and MSB for other miscellaneous expenditures made by GU and MSB on the Company’s behalf that are outside the scope of the SLA disclosed above.  Total payments to MSB for these items were $28,636 and $103,850 during the three and six month periods ended September 30, 2011.  Total payments to MSB for these items were $46,316 for the three and six month periods ended September 30, 2010.  No payments were made to GU during the three and six month periods ended September 30, 2011 and 2010.

The Company had a due to affiliate balance for MSB of $275,451 and $113,903 at September 30, 2011 and March 31, 2011.  The Company had a due from affiliate for GU of $42,469 at September 30, 2011 and a due to affiliate balance for GU of $2,215 at March 31, 2011.
 
 
-9-

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

Cautionary Notice Regarding Forward Looking Statements

Certain statements included in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as elsewhere in this report on Form 10-Q, any documents incorporated by reference herein, and other written or oral statements made from time to time by the Company that are not statements of historical or current facts should be considered forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”).  .  Forward-looking statements provide current expectations or forecasts of future events.  Such statements can be identified by the use of terminology such as “anticipate,”  “believe,” “estimate,” “expect,” “intend,” “may,” “could,” “possible,” “plan,” “project,” “should,” “will,” “forecast,” and similar words or expressions.  These forward-looking statements are based on the Company’s current plans or expectations and are subject to a number of uncertainties and risks that could significantly affect current plans and anticipated actions and the Company’s future consolidated financial conditions and results.  In accordance with the Safe Harbor provisions of the Reform Act, the Company has identified important factors that could cause the actual results to differ materially from those expressed in, or implied by, such statements.  The assumptions, risks and uncertainties include the growth pace of student enrollments, our continued compliance with regulatory requirements, maintaining our accreditation status, availability of funding programs for Broadview University students, our ability to successfully open new campuses, our ability to update and expand academic program offerings, our ability to hire and retain key personnel, rulemaking by the U.S. Department of Education and increased focus by the U.S. Congress on for-profit educational institutions, and general economic and market conditions.  Further information about these and other relevant risks and uncertainties may be found in our annual report on Form 10-K and other Company filings with the Securities and Exchange Commission.  The Company undertakes no obligation to update or revise forward looking statements, except as may be required by law.

Description of Business

Overview:

We are a career-focused post-secondary education services company.  Our mission is to demonstrate a “we care” philosophy by preparing career-focused, community-minded graduates for the global workforce.  We care about our students, our employees, and the employers who hire our students.  We strive to help our students build knowledge and skills for a specific career field, make professional connections through service learning experiences, and provide them with placement assistance.

We work to fulfill this mission by offering a variety of academic programs through Broadview University.  Broadview University is accredited to award diplomas, undergraduate degrees, and master’s degrees in various fields of study.  Broadview University delivers these programs through traditional classroom settings as well as through online instruction.  The University has campuses located in the Utah cities of Layton, Orem, Salt Lake City and West Jordan, as well as Boise, Idaho; our Salt Lake City and Boise campuses opened in October 2010 and January 2011, respectively.

We have rebranded the University for the purpose of future expansion both in campus locations as well as degree offerings.  Effective May 2010, C Square Educational Enterprises, Inc. changed its registered d/b/a with the state of Utah from Utah Career College to Broadview University.
 
 
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Our mission places the achievement of our students first, demonstrating our focus on delivering a high quality product.  We believe that this focus has led to our successful expansion and is in line with our commitment to our shareholders to generate long-term sustainable growth and margin expansion.

Key Trends, Developments and Challenges

Revenue Trends

Approximately 96% of our revenues are tuition collected from Broadview University’s students.  As of September 30, 2011, we charged $410 per credit hour for most of our programs with the exception of our nursing program, for which $565 was charged per credit.  Our last tuition rate increase occurred in July 2010, when a 4.6% and 6.5% increase for nursing and all other program credits, respectively, was implemented.  We believe that our enrollments are influenced by a number of factors, including, but not limited to:

 
the attractiveness of our program offerings;
 
our ability to offer flexible class scheduling;
 
the relative cost of our educational services compared to competitors;
 
our mix of residential and online course offerings;
 
the effectiveness of our marketing and recruiting efforts;
 
the quality of our faculty;
 
the availability of federal and other financial aid;
 
general economic conditions in the regions we operate; and
 
the regulatory environment of our industry.

Since October 2010, we have opened two new branch campuses, including our first campus outside the state of Utah.  Despite these openings, Broadview University had 1,159 students enrolled for the quarter ended September 30, 2011, compared to 1,300 for the corresponding quarter of the prior year, a decrease of 10.8%.  Combined enrollments for the two newest campuses was 145 students for the quarter ended September 30, 2011.

We continue to experience declining new enrollments and average student population, a trend that has been evident throughout the for-profit post-secondary industry for several months.  Prospective student interest has been dampened by the prolonged economic downturn, and competition for high-quality leads has increased.  We expect this trend to continue in the near term.  Additionally, we believe the University’s lead flow was negatively impacted in the short term due to our rebranding efforts implemented in May 2010.  Declining enrollments are expected to adversely impact our revenues, financial condition, results of operations and cash flows.

We are committed to a long-term program of sustainable revenue growth, and believe our rebranding efforts, while contributing to the current decline in enrollments, will ultimately position us for improved future growth.  Additionally, in the past year Broadview University has also received accrediting body approval for expansion of our program and degree offerings, delivered both via our residential campuses and our online educational offerings.  This includes offering our first masters-level degree in management.
 
 
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Regulatory Environment

Broadview University is subject to extensive regulation by federal and state governmental agencies and accrediting bodies.  Particularly, the Higher Education Act of 1965 (the “Higher Education Act”) and the regulations promulgated thereunder by the U.S. Department of Education (“USDE”) subject the University to numerous standards that must be satisfied to participate in the various types of federal aid programs under Title IV of the Higher Education Act (“Title IV”).

The USDE published new regulations in October 2010 and June 2011 regarding program integrity, including final “gainful employment” rules.  Under Title IV regulations, a program of study must prepare learners for gainful employment in a recognized occupation.  The USDE finalized rules regarding academic program compliance with gainful employment regulations, implemented new disclosure and reporting requirements, and changed the requirements for new program approval.

Certain rules for disclosures and new program approval were effective July 1, 2011, and the new reporting requirements are effective October 1, 2011.  We believe we have taken the necessary steps to ensure compliance with these new rules.

Regarding the measurement of academic program compliance with gainful employment, if a particular program does not meet the USDE standards of gainful employment, the program could be subject to increased disclosure requirements, limits on enrollment, termination of Title IV eligibility, and/or other consequences.

Under the final rules, an academic program would be considered to lead to gainful employment if it meets at least one of the following three metrics:

 
at least 35% of former students are repaying their loans (defined as reducing the loan principal balance by at least $1 over a 12-month period);
 
the estimated annual loan payment of a typical graduate does not exceed 30% of his or her discretionary income; or
 
the estimated annual loan payment of a typical graduate does not exceed 12% of his or her total earnings.

The first time an academic program fails all three metrics, the institution must disclose to students why the measurement was not achieved and how the failure will be addressed.  After a second failure in a three-year span, institutions must inform students that their debts may be unaffordable after graduation, that the program is at risk of losing eligibility to participate in Title IV programs, and disclose the students’ existing transfer options.  Academic programs that fail all of the metrics for three years in a four-year period would lose their eligibility to participate in Title IV programs.  As these final regulations will be effective July 1, 2012, the first year a program could become ineligible would be June 30, 2015, based on its performance in the three preceding years.

Management is evaluating the Company’s plan for compliance with the above metrics.  Although the final rules provide opportunities to address program deficiencies before the loss of Title IV eligibility, there are several factors beyond our control that could affect our eligibility, such as changes in the actual or deemed income level of our graduates, changes in student borrowing levels, increases in interest rates, changes in the federal poverty income level relevant for calculating discretionary income, and other factors.  Our exposure to such external factors may inhibit our ability to offer or continue certain programs.
 
 
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Critical Accounting Policies

The discussion and analysis of the Company’s financial condition and results of operations is based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.  The preparation of these consolidated financial statements requires management to make estimates and assumptions in certain circumstances that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities at the date of the Company’s financial statements.

Management bases its estimates and judgments on historical experience, observance of trends in the industry, information provided by outside sources and on various other factors that are believed to be reasonable under the circumstances.  Actual results may differ from these estimates under different assumptions or conditions.  The Company’s critical accounting policies are outlined in the Company’s Form 10-K for the year ended March 31, 2011 and Annual Report to Security Holders filed with the SEC.

Results of Continuing Operations

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

The following table presents statements of operations data as percentages of revenues for each of the periods indicated:

   
Three Months Ended
   
Six Months Ended
 
   
September 30,
   
September 30,
 
   
2011
   
2010
   
2011
   
2010
 
Revenues
    100.0 %     100.0 %     100.0 %     100.0 %
                                 
Operating Expenses:
                               
   Educational services and facilities
    91.8       70.2       88.1       67.0  
   Selling, general and administrative
    32.2       33.4       30.0       27.9  
         Total Operating Expenses
    124.0       103.6       118.1       94.9  
                                 
Operating Income (Loss)
    (24.0 )     (3.6 )     (18.1 )     5.1  
                                 
Other Income
    0.1       0.2       0.1       0.2  
Income (Loss) Before Income Taxes
    (23.9 )     (3.4 )     (18.0 )     5.3  
                                 
Income Tax Expense (Benefit)
    (9.2 )     (1.2 )     (6.8 )     2.0  
Net Income (Loss)
    (14.7 )%     (2.2 )%     (11.2 )%     3.3 %
 
 
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Three Months Ended September 30, 2011 Compared with Three Months Ended September 30, 2010

Revenues

The following table presents period-over-period changes in our primary revenue components:

   
Quarter Ended September 30,
   
Change
 
   
2011
   
2010
   
Amount
   
Percent
 
Tuition
  $ 4,314,569     $ 4,839,062     $ (524,493 )     (10.8 ) %
Textbook sales
    -       -       -       N/A  
Textbook commissions
    51,421       80,809       (29,388 )     (36.4 )
Fees and other charges
    107,305       104,388       2,917       2.8  
Refunds
    (161,620 )     (147,964 )     (13,656 )     (9.2 )
Total revenue
  $ 4,311,675     $ 4,876,295     $ (564,620 )     (11.6 ) %

Tuition

Our tuition revenue decrease was primarily attributable to decreased enrollments.  Total enrollments decreased by 141 students, or 10.8%, to 1,159 for the quarter ended September 30, 2011 compared to 1,300 for the corresponding quarter of the previous year.  Enrollments for the quarter ended September 30, 2011 include 145 students enrolled at our Salt Lake City, Utah and Boise, Idaho campuses, which opened October 2010 and January 2011, respectively.  Enrollments at these campuses increased 62.9% during the first six months of the current year.  Comparing only campuses in operation for both quarters ended September 30, 2011 and 2010, our enrollments decreased 22.0% for the quarter ended September 30, 2011 compared to the corresponding quarter of the previous year.

Textbook Sales and Commissions

Effective July 2010, we outsourced textbook sales to a third-party service provider.  In previous periods, we purchased textbooks directly from book publishers and resold the textbooks to our students, recognizing both textbook sales revenue and textbook purchasing expense, net of returns.  Under the current arrangement, our students purchase textbooks directly from the service provider, and we receive commission revenue from the service provider based on the overall net sales; we no longer recognize textbook sales revenue or textbook purchasing expense.

The decrease in textbook commissions was primarily due to timing of the conversion to outsourcing in the prior year, compared to timing of textbook ordering in the current year.

Fees and Other Charges

Fees and other charges increased primarily due to greater access fees and miscellaneous student charges, offset by fewer application fees received from prospective students.

Educational services and facilities operating expenses

Expenses related to educational services and facilities increased 15.5% to $3,955,770 for the quarter ended September 30, 2011 from $3,425,387 for the same quarter of the previous year.  The $530,383 increase was primarily due to direct costs to support two additional branch campuses.  Total educational services and facilities expenses for our Salt Lake City and Boise campuses were $1,063,738 for the quarter ended September 30, 2011.  Such expenses at our three campuses and online operations that were operating in both the current year and prior year quarters decreased $399,427, or 12.1%.
 
 
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Overall payroll-related expenses increased 4.6% to $2,041,415 in the quarter ended September 30, 2011 compared to $1,950,775 in the same quarter of the prior year.  Payroll-related expenses at our Salt Lake City and Boise campuses were $489,591 during the quarter ended September 30, 2011.  Excluding the payroll costs related these campuses, such expenses decreased $398,952, or 20.5%, compared to the same quarter of the previous year.

Facility costs, including rent expense, increased 35.9% to $943,699 in the quarter ended September 30, 2011 from $694,543 in the same quarter of the prior year.  The increase of $249,157 is primarily related to rent expense for our Boise campus, which was $117,000 for the three months ended September 30, 2011.  Other facility costs for our Salt Lake City and Boise campuses were $63,767 during the quarter ended September 30, 2011.

Our lease for the Salt Lake City campus commenced April 1, 2010, and although we received a six-month rent payment holiday from the commencement date, the lease has escalating rental payments over the term of the agreement and we recognized $133,929 of straight-line rent expense during the three months ended September 30, 2010.

Other factors contributing to the change in educational services and facilities expense include depreciation expense, student materials, and health insurance.  Depreciation expense increased $91,000, or 95.8%, due primarily to increased capital expenditures for the two newest campuses.  Student materials expense increased $61,847, or 52.5%, due to the two new campuses operating in the current year quarter, as well as increased purchasing related to our nursing program. Expense for health insurance and related claims increased $57,486, or 68.4%, comparing the three months ended September 30, 2011 to the same quarter of the prior year.

The following table summarizes certain educational services and facilities expenses as a percentage of revenue:

   
Percentage of Revenue
 
   
Quarter Ended September 30,
 
Expense
 
2011
   
2010
 
Payroll and related
    47.3 %     40.0 %
Rent and other facility
    21.9 %     14.2 %
Scholarships
    5.5 %     5.4 %
Depreciation
    4.3 %     1.9 %
Student materials
    4.2 %     2.4 %
Health insurance
    3.3 %     1.7 %

In total, educational services and facilities expenses increased to 91.8% of revenues for the quarter ended September 30, 2011, compared to 70.2% for the same quarter of the prior year.  As discussed above, our Salt Lake City and Boise campus openings in the past nine months had a significant impact on these expenses and their percentages of revenues.  Historically we have anticipated that operating costs for any new campus openings will likely exceed new campus revenues for a period of four to six quarters, which is generally the length of time a new campus takes to achieve profitable enrollment levels.  Based on projected enrollment data, we do not expect these newer campuses will achieve profitable enrollment levels during our fiscal year ending March 31, 2012.
 
 
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Selling, general and administrative expenses

Expenses related to selling and general administrative activities decreased 14.7% to $1,387,864 for the three months ended September 30, 2011 from $1,627,013 in the same quarter of the prior year.  The $239,149 decrease was primarily due to these expansion costs.  We classify various expenditures for expansion campuses as administrative expenses until such campuses commence operations.  We had no such expense during the three months ended September 30, 2011. Our corporate expense was $243,410 during the same quarter of the prior year, primarily due to expenses incurred prior to our Salt Lake City campus opening.

These costs were offset by increased marketing costs, in part related to our rebranding under the Broadview University name, as well as additional marketing for our Salt Lake City and Boise campuses.  Marketing costs increased $69,956, or 8.2%, to $928,222 for the three months ended September 30, 2011 from $858,266 for the same quarter of the prior year.

Marketing expenses as a percentage of revenues were 21.5% and 17.6% for the quarters ended September 30, 2011 and 2010.  We anticipate that marketing efforts will continue at similar levels in the near future as we continue to emphasize our rebranding and the newer campuses.

Our management fee paid under the SLA was $225,000 for each of the quarters ended September 30, 2011 and 2010. The management fee is reviewed as needed, but at a minimum, on an annual basis.  
 
Operating income (loss)

Operating income (loss) is the primary measure used by management in assessing our performance. Our operating loss increased 486.0% to $1,031,959 for the three months ended September 30, 2011 compared to $176,105 for the same quarter of the prior year.  The increase of $855,854 was primarily the result of the aforementioned factors.  Our Salt Lake City and Boise campuses recognized a combined operating loss of $666,731 for the three months ended September 30, 2011.

Other income

Other income consists of interest earned on excess cash maintained in a bank savings account.  Interest income decreased 65.8%, or $4,695, comparing the quarter ended September 30, 2011 to the same quarter of the prior year.

Income taxes

We recognized an income tax benefit of $396,617 for the three months ended September 30, 2011 compared to a benefit of $60,158 for the same quarter of the prior year.  The increase in benefit of $336,459, or 559.3%, was primarily due to the increase in loss before taxes, attributable to the aforementioned factors.
 
 
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Six Months Ended September 30, 2011 Compared with Six Months Ended September 30, 2010
 
Revenues

The following table presents period-over-period changes in our primary revenue components:

   
Six Months Ended September 30,
   
Change
 
   
2011
   
2010
   
Amount
   
Percent
 
Tuition
  $ 9,189,116     $ 9,984,834     $ (795,718 )     (8.0 ) %
Textbook sales
    -       364,442       (364,442 )     N/A  
Textbook commissions
    69,935       80,809       (10,874 )     (13.5 )
Fees and other charges
    216,718       207,333       9,385       4.5  
Refunds
    (380,719 )     (320,863 )     (59,856 )     (18.7 )
Total revenue
  $ 9,095,050     $ 10,316,555     $ (1,221,505 )     (11.8 ) %

Tuition

Our tuition revenue decrease was primarily attributable to decreased enrollments.  Average enrollments for the six months ended September 30, 2011 decreased by 160 students, or 11.6%, to 1,214 for the six months ended September 30, 2011 compared to 1,374 for the corresponding period of the previous year.  Average enrollments at our Salt Lake City, Utah and Boise, Idaho campuses, which opened October 2010 and January 2011, respectively, were 131 students for the six months ended September 30, 2011.  Enrollments at these campuses increased 62.9% during the six months ended September 30, 2011.  Comparing only campuses in operation for both six-month periods ended September 30, 2011 and 2010, average enrollments decreased 21.1% for the six months ended September 30, 2011 compared to the corresponding period of the previous year.

Textbook Sales and Commissions

Effective July 2010, we outsourced textbook sales to a third-party service provider.  In previous periods, we purchased textbooks directly from book publishers and resold the textbooks to our students, recognizing both textbook sales revenue and textbook purchasing expense, net of returns.  Under the current arrangement, our students purchase textbooks directly from the service provider, and we receive commission revenue from the service provider based on the overall net sales; we no longer recognize textbook sales revenue or textbook purchasing expense.

The decrease in textbook commissions was primarily due to timing of the conversion to outsourcing in the prior year, compared to timing of textbook ordering in the current year.

Fees and Other Charges

Fees and other charges increased primarily due to greater access fees and miscellaneous student charges, offset by fewer application fees received from prospective students.

Educational services and facilities operating expenses

Expenses related to educational services and facilities increased 15.9% to $8,016,164 for the six months ended September 30, 2011 from $6,916,654 for the same period of the previous year.  The $1,099,510 increase was primarily due to direct costs to support two additional branch campuses.  Total educational services and facilities expenses for our Salt Lake City and Boise campuses were $2,097,471 for the six months ended September 30, 2011.
 
 
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Such expenses at our three campuses and online operations that were operating in both the current year and prior year periods decreased $730,302, or 11.0%.

Overall payroll-related expenses increased 9.0% to $4,185,302 in the six months ended September 30, 2011 compared to $3,839,780 in the same period of the prior year.  Payroll-related expenses at our Salt Lake City and Boise campuses were $998,031 during the six months ended September 30, 2011.  Excluding the payroll costs related to these campuses, such expenses decreased $652,509, or 17.0%, compared to the same period of the previous year.

Facility costs, including rent expense, increased 30.4% to $1,884,333 in the six months ended September 30, 2011 from $1,444,812 in the same period of the prior year.  The increase of $439,521 is primarily related to rent expense for our Boise campus, which was $234,000 for the six months ended September 30, 2011.  Other facility costs for our Salt Lake City and Boise campuses were $134,721 during the six months ended September 30, 2011.

Our lease for the Salt Lake City campus commenced April 1, 2010, and although we received a six-month rent payment holiday from the commencement date, the lease has escalating rental payments over the term of the agreement and we recognized $267,658 of straight-line rent expense during the six months ended September 30, 2010.

Other factors contributing to the change in educational services and facilities expense include student materials, health insurance, and depreciation expense.  Student materials expense increased $183,907, or 110.5%, due to the two new campuses operating in the current year period, as well as increased purchasing related to our nursing program. Expense for health insurance and related claims increased $172,675, or 159.0%, comparing the six months ended September 30, 2011 to the same period of the prior year.  Depreciation expense increased $161,250, or 85.4%, due primarily to increased capital expenditures for the two newest campuses.

The following table summarizes certain educational services and facilities expenses as a percentage of revenue:

   
Percentage of Revenue
 
   
Six Months Ended
September 30,
 
Expense
 
2011
   
2010
 
Payroll and related
    46.0 %     37.2 %
Rent and other facility
    20.7 %     14.0 %
Scholarships
    5.7 %     4.5 %
Depreciation
    3.8 %     1.8 %
Student materials
    3.9 %     1.6 %
Health insurance
    3.1 %     1.1 %

In total, educational services and facilities expenses increased to 88.1% of revenues for the six months ended September 30, 2011, compared to 67.0% for the same period of the prior year.  As discussed above, our Salt Lake City and Boise campus openings in the past nine months had a significant impact on these expenses and their percentages of revenues.  Historically we have anticipated that operating costs for any new campus openings will likely exceed new campus revenues for a period of four to six quarters, which is generally the length of time a new campus takes to achieve profitable enrollment levels.  Based on projected enrollment data, we do not expect these newer campuses will achieve profitable enrollment levels during our fiscal year ending March 31, 2012.
 
 
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Selling, general and administrative expenses

Expenses related to selling and general administrative activities decreased 4.9% to $2,725,681 for the six months ended September 30, 2011 from $2,865,825 in the same period of the prior year.  The $140,144 decrease was primarily due to these expansion costs in the prior year period.  We classify various expenditures for expansion campuses as administrative expenses until such campuses commence operations.  We had no such expense during the six months ended September 30, 2011. Our corporate expense was $310,669 during the same period of the prior year, primarily due to expenses incurred prior to our Salt Lake City campus opening.

During the six months ended September 30, 2011, our marketing costs increased $337,311, or 23.1% to $1,794,706 compared to $1,457,395 for the same period of the prior year.  The increase was related to our rebranding under the Broadview University name, as well as additional marketing for our Salt Lake City and Boise campuses.

Marketing expenses as a percentage of revenues were 19.7% and 14.1% for the six months ended September 30, 2011 and 2010, respectively.  We anticipate that marketing efforts will continue at similar levels in the near future as we continue to emphasize our rebranding and the newer campuses.

Our management fee paid under the SLA was $450,000 for each of the six month periods ended September 30, 2011 and 2010. The management fee is reviewed as needed, but at a minimum, on an annual basis.  
 
Operating income (loss)

Operating income (loss) is the primary measure used by management in assessing our performance. Operating income (loss) decreased 408.3% to an operating loss of $1,646,795 for the six months ended September 30, 2011 compared to operating income of $534,076 for the same period of the prior year.  The decrease of $2,180,871 was primarily the result of the aforementioned factors.  Our Salt Lake City and Boise campuses recognized a combined operating loss of $1,397,686 for the six months ended September 30, 2011.

Other income

Other income consists of interest earned on excess cash maintained in a bank savings account.  Interest income decreased 59.9%, or $9,478, comparing the six months ended September 30, 2011 to the same period of the prior year.

Income taxes

We recognized an income tax benefit of $624,000 for the six months ended September 30, 2011 compared to expense of $211,994 for the same period of the prior year.  The decrease of $835,994, or 394.3%, was primarily due to the decrease in profitability before taxes, attributable to the aforementioned factors.
 
 
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Liquidity and Capital Resources

Our primary source of liquidity has historically been cash flows from operations.  Cash and cash equivalents were $3,068,597 at September 30, 2011 compared to $4,527,415 at March 31, 2011.  Most of our excess cash is held in an interest-bearing bank savings account.  We did not have any outstanding debt or any unused borrowing facilities at September 30, 2011 and March 31, 2011.

A significant portion of our revenues are derived from Title IV programs administered by the USDE.  Federal regulations dictate the timing of disbursements under Title IV programs.  Students must apply for new loans and grants each award year, which starts July 1.  Loan funds are generally provided by lenders in multiple disbursements for each academic year.  The disbursements are usually received beginning in the second week of each academic quarter.  These factors, together with the timing of our students beginning their programs, affect our operating cash flow.

A portion of our revenues is received from students who receive financial loans from Myhre Investments, LLC, an entity owned by our Chairman.  As of September 30, 2011, Myhre Investments, LLC had $1,729,522 in loans outstanding to Broadview University students.

Management believes that we have sufficient cash reserves to fulfill our obligations and support operations in the normal course of business through the year ended March 31, 2012.  Management further believes that inflation will not have a significant impact on our business.  We used $1,172,903 of cash in our operating activities for the six months ended September 30, 2011, primarily due to our net loss of $1,016,437 recognized during the period.  Other factors in the net usage of cash for operations included a $574,000 increase in deferred income taxes and a $267,308 decrease in accounts payable and accrued expenses.  These factors were partially offset by depreciation expense of $350,000 and a $140,381 increase in our deferred rent liability.  The net change in balances due to or receivable from affiliates was an increase of $116,863.  Capital expenditures for property and equipment were $372,778 during the six months ended September 30, 2011.
 
Item 3.  Quantitative and Qualitative Disclosures About Market Risk

We invest our excess cash in a savings account maintained at a domestic bank.  The market risk on such investments is minimal.  We have no history of investing in derivative financial instruments, derivative commodity instruments or other such financial instruments, and management does not anticipate making such investments in the future.  We do not have receivables from foreign customers, and are not exposed to foreign currency exchange rate risk arising from transactions in the normal course of business with foreign individuals or entities.
 
 
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Item 4.  Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company maintains “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”).  These controls and procedures are designed to ensure that information required to be disclosed by the Company in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, and our Board of Directors, as appropriate, to allow timely decisions regarding required disclosure.  Management, under supervision and with participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2011 and concluded that our disclosure controls and procedures were effective as of this date.

Changes in Internal Controls Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 
PART II – OTHER INFORMATION

Item 1.  Legal Proceedings

From time to time, the Company may be involved in litigation and other legal proceedings arising out of the ordinary course of its business. We are not at this time a party to any legal proceedings which, individually or in the aggregate, would be expected to have a material adverse effect on our business, financial condition or results of operations.


Item 1A. Risk Factors

The discussion of the Company’s business and operations set forth in this report and our other SEC filings should be read together with the risk factors contained in Item 1 of the Company’s Annual Report on Form 10-K filed with the SEC, which describe various risks and uncertainties to which the Company is or may become subject.  These risks and uncertainties have the potential to affect the Company’s business, financial condition, results of operation, cash flows, strategies or prospects in a material and adverse manner.  Additional risks and uncertainties not presently known to management or that we currently believe to be immaterial may also adversely affect our business, financial condition or results of operations.

There have been no material changes to the risk factors previously described in Part I, Item 1A included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2011.

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

None.


Item 3.    Defaults Upon Senior Securities

None.


Item 4.    Reserved



Item 5.    Other Information

None.


Item 6.    Exhibits
 
Exhibit                            Description
 
 
31.1
Certification of Chief Executive Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002
 
 
31.2
Certification of Chief Financial Officer Pursuant to Section 302 of Sarbanes-Oxley Act of 2002
 
 
32.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 
32.2
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 101.INS*  XBRL Instance
 101.SCH*  XBRL Taxonomy Extension Schema
 101.CAL*  XBRL Taxonomy Extension Calculation
 101.DEF*  XBRL Taxonomy Extension Definition
 101.LAB*   XBRL Taxonomy Extension Labels
 101.PRE*  XBRL Taxonomy Extension Presentation
                                                                                      
* XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended; is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended; and otherwise is not subject to liability under these sections.
 
 
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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
Date:    
November 10, 2011 Broadview Institute, Inc.  
  (Registrant)  
       
 
By:
/s/ Jeffrey D. Myhre  
    Jeffrey D. Myhre, Chief Executive Officer  
       
  And: /s/ Kenneth J. McCarthy   
    Kenneth J. McCarthy, Chief Financial Officer  

 
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