bvii20140331

10-K 1 bvii20140331_10k.htm FORM 10-K bvii20140331_10k.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended March 31, 2014

[ ] 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: 0-8505

BROADVIEW INSTITUTE, INC.

(Exact name of registrant as specified in its charter)

Minnesota	41-0641789
(State of incorporation)	(I.R.S. Employer
	Identification No.)

8147 Globe Drive

Woodbury, MN 55125

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

Telephone Number: (651) 332-8000

Securities registered under Section 12(b) of the Exchange Act:

(Title of each class)

None

Securities registered under Section 12(g) of the Exchange Act:

(Title of each class)

Common Stock, par value $.01

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes [ ] No [X]

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 Website, 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

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 [ ] (Do not check if a smaller reporting company)	Smaller reporting company [ X]

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

The aggregate market value of the common stock held by non-affiliates based upon the closing sale price at which the common equity was last sold as of September 30, 2013, the last business day of the registrant’s most recently completed second fiscal quarter, was approximately $309,000.

Total number of shares of $.01 par value common stock outstanding at June 24, 2014: 83,508,252

DOCUMENTS INCORPORATED BY REFERENCE

Certain portions of the registrant’s Definitive Proxy Statement for its 2014 Annual Meeting of Shareholders (which is expected to be filed with the Commission within 120 days after the end of the registrant’s 2014 fiscal year) are incorporated by reference into Part III of this Annual Report on Form 10-K.

TABLE OF CONTENTS

		Page

PART I

ITEM 1.	Business	1
ITEM 1A.	Risk Factors	21
ITEM 1B.	Unresolved Staff Comments	30
ITEM 2.	Properties	30
ITEM 3.	Legal Proceedings	30
ITEM 4.	Mine Safety Disclosures	30

PART II

ITEM 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	31
ITEM 6.	Selected Financial Data	32
ITEM 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33
ITEM 7A.	Quantitative and Qualitative Disclosures About Market Risk	40
ITEM 8.	Financial Statements and Supplementary Data	41
ITEM 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	60
ITEM 9A.	Controls and Procedures	60
ITEM 9B.	Other Information	61

PART III

ITEM 10.	Directors, Executive Officers and Corporate Governance	61
ITEM 11.	Executive Compensation	61
ITEM 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	61
ITEM 13.	Certain Relationships and Related Transactions, and Director Independence	62
ITEM 14.	Principal Accounting Fees and Services	62

PART IV

ITEM 15.	Exhibits, Financial Statement Schedules	63

SIGNATURES		64

Introduction

References to “we,” “our,” and the “Company” refer to Broadview Institute, Inc. together in each case with our wholly-owned consolidated subsidiary, C Square Educational Enterprises, Inc., unless the context indicates otherwise. C Square Educational Enterprises, Inc. has registered d/b/a as “Broadview University” and “Broadview Entertainment Arts University”, and is hereafter referred to as “Broadview University” or the “University.”

PART I

CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS:

Certain statements contained in this Annual Report on Form 10-K (the “Report”), the documents incorporated by reference herein, and other written and 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. 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. Forward looking statements contained in this Report include the following: our expectations regarding future revenues and expenses, accreditation renewal, dividend expectations, enrollments, growth and expansion opportunities, the effects of our rebranding efforts, the adequacy of our properties, changes in governmental rules and regulations and our compliance with such regulations, general economic conditions, the effect of credit availability and interest rate changes, the impact of inflation, and the sufficiency of existing cash reserves to support operations and fulfill existing obligations. These forward-looking statements are based upon 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 condition and results.

Factors that could cause actual results to materially differ from those discussed in the forward-looking statements include, but are not limited to, those described in “Item 1A – Risk Factors”. The performance of our business and our securities may be adversely affected by these factors and by other factors common to other businesses and investments, or to the general economy. Forward-looking statements are qualified by some or all of these risk factors. Therefore, shareholders and other readers should consider these risk factors with caution and form their own critical and independent conclusions about the likely effect of these risk factors on our future performance. Such forward-looking statements speak only as of the date on which the statements are made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made to reflect the occurrence of unanticipated events or circumstances. Shareholders and other readers are cautioned not to place undue reliance on forward-looking statements, and should carefully review the disclosures and the risk factors described in this and other documents we file from time to time with the Securities Exchange Commission (“SEC”), including our reports on Forms 10-Q and 8-K to be filed in fiscal 2015.

ITEM 1.

BUSINESS

Overview

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 by the Accrediting Council for Independent Colleges and Schools (“ACICS”) to award diplomas, undergraduate degrees, and master’s degrees in various fields of study. The 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 mission places the achievement of our students first, demonstrating the Company’s focus on delivering a high quality product.

Principal Products and Services

Recruitment and Admissions

A typical Broadview University student is either unemployed or under-employed, and has enrolled in one of our programs to acquire new skills to increase his or her career opportunities. We have an admissions department at each campus that is responsible for interviewing potential applicants, providing information regarding our academic programs, and to assist with the overall application process. We maintain a standardized presentation for all programs. The admissions criteria vary according to the program of study. Generally, each applicant for enrollment must have a high school diploma or the equivalent.

Student Completion

We strive to help students complete their program of study through admissions screening, financial planning and student services. Our classes are offered during the day and evening to meet students’ scheduling needs and many courses are available through online delivery.

If a student terminates enrollment in a course prior to completion, federal and state regulations permit Broadview University to retain only a certain percentage of the total tuition and lab fees, which varies with, but generally equals or exceeds, the percentage of the courses completed. Amounts received by Broadview University in excess of such set percentage of tuition and lab fees are refunded to the student or the appropriate funding source.

Student Placement

Although, like other post-secondary educational institutions, Broadview University does not guarantee job placement, the University does provide job placement assistance for graduates. We assist students with resumé preparation and identifying employment leads. Our placement office maintains job website links and provides job hotline information.

Our History

Broadview Institute, Inc. was incorporated in 1945 in the state of Minnesota. Prior to the Company’s purchase of C Square Educational Enterprises, Inc. in 2005, Broadview Institute, Inc. was involved in the media production industry and operated under the names Northwest Teleproductions, Inc. (until February 2000) and Broadview Media, Inc. (until August 2006).

In 1996, Minnesota businessman Terry Myhre (“Mr. Myhre”) purchased a controlling interest in C Square Educational Enterprises, Inc., a Utah corporation. At that time, C Square Educational Enterprises, Inc. operated a single campus in Salt Lake City, Utah under the Utah Career College name.

Mr. Myhre invested in Broadview Institute, Inc. in March 2003, becoming its single largest shareholder, and subsequently became the Company’s Chairman and CEO. In July 2005, Broadview Institute, Inc. purchased C Square Educational Enterprises, Inc. The acquisition was accounted for as a merger of an entity under common control since Mr. Myhre had a controlling interest in both companies. The financial statements for all periods prior to July 1, 2005 were combined and restated in a manner similar to a pooling of interests to reflect the acquisition as if it had occurred on April 1, 2004. Through exercise of stock warrants and purchases of the Company’s common and preferred stock, Mr. Myhre has recently increased his ownership percentage in Broadview, as more fully discussed in Items 7 and 8 of this Report. Mr. Myhre beneficially owns approximately 97% of the Company’s shares as of the date of this Report.

Subsequent to the acquisition of C Square Educational Enterprises, Inc., we operated two distinct business segments, Education and Media Production. Our expansion of the Education segment began with the addition of our first branch campus in Layton, Utah in January 2007. We have since added three additional branch campuses, including our first outside the state of Utah, as well as introduced online program offerings. With the Company’s focus shifted to the Education segment, we discontinued our Media Production segment entirely, effective March 31, 2008. 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.

Service Level Agreement with Related Party

Mr. Myhre also owns, or has the controlling interest in, Globe University (“GU”) and Minnesota School of Business (“MSB”) (collectively “GU/MSB”), which are privately-owned, post-secondary career colleges headquartered in Minnesota. Chief Executive Officer Jeffrey Myhre, son of Mr. Myhre, also holds an ownership interest in GU/MSB. Together, GU/MSB has 20 campuses located in Minnesota, Wisconsin and South Dakota. GU/MSB has been educating students for more than 125 years and currently has a combined enrollment of approximately 4,900 students.

We utilize executive, administrative, accounting and consulting services provided by GU/MSB 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 incurs a monthly management fee payable to GU/MSB under the terms of the SLA. This fee is negotiated based on management’s analysis of the cost and scope of services provided. Such analysis is performed as deemed necessary by either party, or annually at a minimum. The Company’s Board of Directors approves any changes to the monthly fee. 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. A summary of the monthly fee since the SLA’s effective date is as follows:

●

July 2008 – December 2009: $50,000 per month

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January 2010 – September 2012: $75,000 per month

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October 2012 – Date of this Report: $50,000 per month

Industry Background and Outlook

The post-secondary education industry is highly fragmented and competitive. We compete with traditional public and private two-year and four-year colleges and universities, other proprietary institutions, and alternatives to post-secondary education, such as immediate employment and military service. Career-focused post-secondary institutions have seen large increases in students over the past two decades due to their ability to provide flexible schedules, online classes, and career-specific curriculum.

Our industry is highly regulated and compliance with these regulations allows many benefits to companies in our industry, such as access to federal student financial aid. Projected growth in the post-secondary education market has recently been negatively affected by the prolonged economic downturn, as well as uncertainty associated with legislative and regulatory proposals. The industry is heavily dependent on continued availability of federal funding programs for students, and concerns over potential reductions in or availability of such programs have contributed to lower projected enrollment growth in recent years.

According to the National Center for Education Statistics (“NCES”), there were approximately 7,400 Title IV eligible postsecondary education institutions in the United States for the academic year 2012-13, of which approximately 3,500 were for-profit institutions. Additionally, according to NCES, the number of undergraduate enrollments in all post-secondary degree-granting institutions is projected to increase 14% by 2022 from actual enrollments in 2011.

We believe that Broadview University competes with other educational institutions principally based upon the quality of educational programs, reputation in the business community, program costs, and graduates’ ability to find employment.

Company Strategy

We have identified the following factors as key to executing our mission statement:

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Actively participate in our communities at multiple levels;

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Offer programs that meet the needs of employers; and

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Provide service and applied learning opportunities for our students and employers in our surrounding communities.

Our Competitive Strengths

Strengths that help us provide quality education and services to our students include:

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Service learning in our communities. Service learning combines meaningful community service opportunities with course learning objectives to enrich our students’ academic experience.

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Applied learning curriculum. Our programs are designed to teach students how to be successful on the job through hands-on activities and small class sizes.

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Flexible scheduling. Students may enroll in residential classes, both during the day and at night, and may also enroll in online classes. Classes are offered on a quarterly schedule which allows us to enroll new students four times per year.

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Credentialed and experienced faculty. Our faculty members hold advanced degrees in the program areas they instruct. In addition, we require industry experience to ensure our instructors have hands-on knowledge. Campus deans provide instruction and resources for the professional development of our instructors.

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Community focus. Our campus leaders develop relationships with municipalities and employers in the surrounding communities to help our students upon their graduation. Because of these relationships, our students will have opportunities for membership in industry association groups, internships with employers, and ultimately career placement.

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Emphasis on job placement. We work with our students throughout their program of study to provide opportunities for them to network with future employers and prepare themselves to enter the job market upon program completion.

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Experienced management team. We partner with GU/MSB for their expertise in curriculum management, technology, finance, compliance, marketing and strategic management. These schools have been focused on career education for more than 125 years. The senior management team for the consortium of schools has many experienced managers of career colleges, which provides Broadview University with leaders experienced in growth and quality higher education. We share a similar model for growth and campus management that has been successful with GU/MSB schools.

Curricula

We offer a wide range of degree programs related to high-growth employment sectors, including:

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Business and Accounting;

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Health Sciences;

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Information Technology;

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Legal Sciences; and

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Entertainment Design and Media Production

In November 2011, we rebranded our Salt Lake City campus to focus solely on academic programs in the fields of studio arts, production arts, and the entertainment business. The Salt Lake City campus was rebranded as Broadview Entertainment Arts University, or BEAU (herein referred to as “BEAU” or the “Salt Lake City campus”). Programs offered include Music Production and Engineering, Comic and Sequential Art, and various other visual design programs. We believe this strategic move will better position us to capitalize on the demand for such skills in the workforce, and provide a clear focus for the BEAU campus while our other campuses will continue to offer our variety of traditional academic programs.

Programs of study range from 12 to 45 months. We structure our curricula to allow students to advance sequentially from one learning level to another by applying credits earned in one program toward attainment of a more advanced degree.

The programs and their percentage of the student population for our academic quarters ended March 31, 2014 and 2013 were as follows:

Program	2014			2013
A.A.S. Veterinary Technology		28.6	%		31.0	%
B.S. Criminal Justice		5.3			3.6
A.A.S. Medical Assistant		5.0			4.6
A.A.S. Music Production and Engineering		5.0			4.5
A.A.S. Criminal Justice		4.2			4.2
A.A.S. Massage Therapy		3.8			3.0
A.A.S. Information Technology		3.7			3.5
B.F.A. Game Art		3.5			1.8
B.F.A. Comic and Sequential Art		3.4			1.5
A.A.S. Paralegal		3.1			4.5
A.A.S. Business Administration		3.1			4.0
B.S. Business Administration		3.1			2.5
B.S. Paralegal		2.6			2.3
B.S. Information Technology		2.0			2.0
A.A.S. Medical Administrative Assistant		1.8			3.2
Other programs		21.8			23.8
		100.0	%		100.0	%

Markets and Distribution

The primary market for Broadview University currently includes applicants from the states of Utah and Idaho to be served both via residential and online educational offerings. We use our own admissions teams and market our programs through print, television, radio, Internet and telemarketing outlets. We maintain booths and information tables at appropriate conferences, expos and other events in the communities where we operate.

Student Profile

Selected student population statistics are as follows:

●	Average age:	28 years
●	Female / Male:	66% / 34%
●	Students of color:	19%
●	Military veterans and dependents:	20%

Research and Development

Development of new course offerings is expensed as incurred and is not separately tracked and recorded in the Company’s consolidated financial statements.

Effect of Environmental Regulation

To management’s knowledge, there are no federal, state or local provisions regulating the discharge of materials into the environment or otherwise relating to the protection of the environment, compliance with which the Company has had or is expected to have a material effect on our capital expenditures, earnings or competitive position.

Employees

As of March 31, 2014, we had 210 employees. Of this figure, 69 were staff (15 part-time) and 141 were faculty (99 part-time).

Patents and Trademarks

The Company claims common law trademark rights in the names Broadview Institute, Broadview University, and BEAU. The Company has no other patents, trademarks, copyrights, licenses, franchises or concessions that it considers material.

Financing Student Education

Students who attend Broadview University finance their education in a variety of ways. In addition to financial aid programs offered through the federal government, many of our students finance their own education or receive tuition reimbursement from their employers. Congress has enacted various tax credits for students pursuing higher education and has recently expanded education benefits available to military veterans who have served on active duty.

Title IV Programs

A majority of students who attend our school are eligible to participate in some form of government-sponsored financial aid program. The Higher Education Opportunity Act (“HEOA”) was enacted on August 14, 2008 and reauthorizes the Higher Education Act of 1965, as amended (the “Higher Education Act”). Under Title IV of the Higher Education Act (“Title IV”), various financial aid programs are offered.

The Title IV programs provide grants and loans to students who can use those funds to finance certain expenses at any institution that has been certified as eligible by the U.S. Department of Education (“USDE”). Recipients of Title IV program funds must maintain a satisfactory grade point average and progress in a timely manner toward completion of their program of study.

For the year ended March 31, 2014, approximately 79% of our revenues (calculated on a cash basis, as defined by the USDE) were derived from Title IV programs. Types of Title IV loan programs available to our students include the following:

Federal Direct Student Loans

Under the William D. Ford Federal Direct Loan Program (the “Direct Loan” program), the USDE makes loans directly to students. The most common loans made to our students include the Federal Stafford Loan (the “Stafford” loan), which may be subsidized or unsubsidized, and the Federal Parent Loan for Undergraduate Students (the “PLUS” loan).

Stafford loans are made directly to our students by the USDE. Students who have demonstrated financial need are eligible to receive a subsidized Stafford loan, while students without a demonstrated financial need are eligible to receive an unsubsidized Stafford loan. The student is responsible for paying the interest on an unsubsidized Stafford loan while in school and after leaving school, although actual interest payments generally may be deferred by the student until after graduation. Students who are eligible for a subsidized Stafford loan may also receive an unsubsidized Stafford loan.

A student is not required to meet any specific credit scoring criteria to receive a Stafford loan, but any student with a prior Stafford loan default or who has been convicted under federal or state law of selling or possessing drugs may not be eligible for a Stafford loan. The USDE has established maximum annual and aggregate borrowing limits with respect to Stafford loans, and these limits are generally less than the cost of education at Broadview University.

PLUS loans are loans for dependent undergraduate students where the parent is the borrower on behalf of the student. Creditworthy parents are allowed to borrow up to the cost of education and eligibility is not based on financial need. Principal repayment is required through installment payments once the loan is fully disbursed. Students must maintain at least a “half-time” status and meet satisfactory academic progress requirements, as defined by the USDE, to participate in the PLUS loan program.

Federal Grants

Title IV federal grants are generally made to our students under the Federal Pell Grant Program (the “Pell” program) and the Federal Supplemental Educational Opportunity Grant Program (the “FSEOG” program). The USDE makes Pell grants up to a maximum amount per award year to students who demonstrate financial need. FSEOG program awards are designed to supplement Pell grants up to a maximum amount per award year for the neediest students. An institution is required to make a 25% matching contribution for all federal funds received under the FSEOG program.

Other Financial Aid Programs

In addition to Title IV programs, eligible students at Broadview University may also participate in educational assistance programs administered by the U.S. Department of Veterans Affairs, the U.S. Department of Defense, and various private organizations.

Government Approvals and Effect of Governmental Regulations

We operate in a highly-regulated industry with oversight by several agencies. The Higher Education Act and the regulations promulgated thereunder require all higher education institutions that participate in the various financial aid programs under Title IV both to comply with detailed substantive and reporting requirements and to undergo periodic regulatory evaluations. The Higher Education Act allocates regulatory responsibility for these programs among (1) the federal government through the USDE; (2) the institutional accrediting agencies recognized by the U.S. Secretary of Education, and (3) state education regulatory bodies. The regulations, standards and policies of these agencies are subject to frequent change.

Accreditation

Accreditation is a process for recognizing educational institutions and the programs offered by those institutions for achieving a level of quality that entitles them to the confidence of the educational community and the public they serve. In the United States, this recognition is extended primarily through nongovernmental, voluntary, regional, national, professional or specialized accrediting associations.

Accredited institutions are subject to periodic review by accrediting bodies to ensure these institutions maintain required levels of performance, evidence institutional and program stability, demonstrate integrity and fulfill other requirements established by the accrediting body.

Accrediting agencies also are responsible for overseeing educational institutions. Continued approval by an accrediting agency recognized by the USDE is necessary for an institution to maintain eligibility to participate in Title IV programs.

Accrediting agencies primarily examine the academic quality of the institution’s instructional programs, and a grant of accreditation is generally viewed as confirmation that an institution’s programs meet generally accepted academic standards. Accrediting agencies also review the administrative and financial operations of the institutions they accredit to ensure that each institution has sufficient resources to perform its educational mission. Broadview University has received a grant of accreditation from the ACICS effective through December 31, 2018.

Accrediting commission oversight may occur at several levels. ACICS may require a school to submit a response to one or more citations when there is evidence that there are deficiencies in the school’s compliance with accreditation standards or requirements. ACICS may also require a school to submit periodic reports to monitor one or more specified areas of performance. In a letter dated May 3, 2013, ACICS notified Broadview University that ACICS completed its review of the Company’s financial statements for the fiscal year ended March 31, 2012. Due to the financial position and results of operations for our year then ended, ACICS directed the Company to submit a Financial Improvement Plan and Quarterly Financial Reports to ACICS’s Financial Review Committee. Broadview has remained compliant with these financial monitoring requirements through the date of this Report. In cases where ACICS has reason to believe that a school is not in compliance with accreditation standards and other requirements, ACICS may place a school on probation (a “Probation Order”), or order the school to show cause as to why accreditation should not be withdrawn (a “Show Cause Order”).

A school under a Show Cause Order or Probation Order is required to demonstrate corrective action and compliance with accrediting standards within a specified time period. Based on the school’s actions and response, ACICS may remove the order, continue the order, or withdraw the school’s accreditation.

If Broadview University were to lose its accreditation, students attending the University would not be eligible to receive Title IV funding. Our inability to participate in Title IV programs would have a significant impact on our operations. Broadview University is currently not under any Show Cause Orders or Probation Orders from the ACICS.

State Authorization

State licensing agencies are responsible for the oversight of educational institutions. Continued approval by such agencies is necessary for an institution to operate and grant degrees or diplomas to its students. Moreover, under the Higher Education Act, approval by such agencies is necessary to maintain eligibility to participate in Title IV programs. Currently, Broadview University is authorized by its applicable state licensing agency or agencies. In the state of Utah, Broadview University is exempt from state registration requirements because of its ACICS accreditation. In Idaho, Broadview University is registered with the Idaho State Board of Education.

The increasing popularity and use of the Internet and other online services for the delivery of education has led and may lead to the adoption of new laws and regulatory practices in the United States or foreign countries or to interpretation of the application of existing laws and regulations to such services. These new laws and interpretations may relate to issues such as the requirement that online educational institutions be licensed as a school in one or more jurisdictions even where they have no physical location. New laws, regulations or interpretations related to doing business over the Internet could increase our cost of doing business, affect our ability to increase enrollments and revenues, or otherwise have a material adverse effect on our business.

On October 29, 2010, the USDE adopted new regulations regarding state licensure of online programs. The revised rules specify that an institution offering distance post-secondary education must meet any state requirements for it to be legally offering post-secondary distance or correspondence education in that state. The USDE has faced significant legal challenge as to its ability to enforce such regulations. On June 23, 2014, the USDE announced the effective date for these rules has been pushed back to July 1, 2015 in order to provide states with additional time to finalize processes for institutions to comply with the state authorization provisions. At this time, the Company is unable to determine what impact, if any, a final rule will have on its financial condition and results of operations.

Eligibility and Certification Procedures

Under the provisions of the Higher Education Act, an institution must apply to the USDE for continued certification to participate in Title IV programs at least every six years or when it undergoes a change of control, as discussed below. The USDE may place an institution on provisional certification status if it finds that the institution does not fully satisfy all required eligibility and certification standards.

Provisional certification does not generally limit an institution’s access to Title IV program funds. The USDE may withdraw an institution’s provisional certification without advance notice if the USDE determines that the institution is not fulfilling all material requirements. In addition, an institution must obtain USDE approval for certain substantial changes in its operations, including changes in an institution’s accrediting agency or state authorizing agency or changes to an institution’s structure or certain basic educational features.

Program Participation Agreement

Each institution participating in Title IV programs is required to enter into a Program Participation Agreement with the USDE. Under the agreement, the institution agrees to follow the USDE’s rules and regulations governing Title IV programs. Broadview University’s current Program Participation Agreement will expire on December 31, 2019, assuming our compliance with the agreement’s terms. The deadline to apply for recertification is September 30, 2019.

Financial Aid Regulation

To participate in the Title IV programs, an institution must be authorized to offer its programs of instruction by the relevant education agencies of the state in which it is located, must be accredited by an accrediting agency recognized by the USDE, and must be certified as eligible by the USDE. The USDE will certify an institution to participate in Title IV programs only after the institution has demonstrated compliance with the Higher Education Act and the USDE’s extensive regulations regarding institutional eligibility. An institution must also demonstrate its compliance with these requirements to the USDE on an ongoing basis. Higher Education Act regulations also require that an institution’s administration of Title IV program funds be audited annually by an independent accounting firm.

Administrative Capability

USDE regulations specify extensive criteria that an institution must satisfy to establish that it has the requisite administrative capability to participate in Title IV programs. These criteria require of participating institutions, among other things:

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compliance with all applicable federal student financial aid regulations;

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having capable and sufficient personnel to administer the federal student financial aid programs;

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providing financial aid counseling to its students; and

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submitting all reports and financial statements required by the regulations.

Financial Responsibility Standards

To participate in Title IV programs, an institution must satisfy specific measures of financial responsibility as prescribed by the USDE. The USDE evaluates institutions for compliance with these standards each year, based on the institution’s annual audited consolidated financial statements. To be considered financially responsible, an institution must, among other things,

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have sufficient cash reserves to make required refunds;

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be current on its debt payments;

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meet all of its financial obligations, and

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achieve a “composite score” of at least 1.5 based on the institution’s annual consolidated financial statements.

The USDE calculates an institution’s composite score, which may range from –1.0 to 3.0, based on a combination of financial measures designed to establish the adequacy of an institution’s capital resources, its financial viability and its ability to support current operations. An institution that does not meet the USDE’s minimum composite score of 1.0 may demonstrate its financial responsibility in one of several ways, including posting a letter of credit in favor of the USDE in an amount equal to at least 50% of Title IV program funds received by the institution during its prior fiscal year, or posting a letter of credit in an amount equal to at least 10% of Title IV program funds received by the institution during its prior fiscal year and agreeing to certain additional requirements for the receipt of Title IV program funds, including, in certain circumstances, receipt of Title IV program funds under an agreement other than the USDE’s standard advance funding arrangement.

Our composite score as of and for the year ended March 31, 2014 and 2013 was 1.8 and 1.7. However, our composite score as of and for the year ended March 31, 2012 was 1.3. When an institution’s composite score is less than 1.5, but greater than 1.0, the USDE may still consider the institution to be financially responsible if the institution qualifies for an alternative standard. The Company agreed to increased monitoring of its operations on December 13, 2012, including administration of Title IV programs, while maintaining a composite score equal to 1.0 to 1.4 for each year under the alternative standard (the “Zone Alternative”). This election gave the Company an opportunity to improve its financial condition over time without requiring a letter of credit posting or participation in Title IV programs under provisional certification.

Under the Zone Alternative, a participating institution:

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must request and receive funds under the cash monitoring or reimbursement payment methods, as specified by the USDE (see “Heightened Cash Management” section below);

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must provide timely information regarding certain oversight and financial events;

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may be required to submit its financial statement and compliance audit earlier than normally required; and

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may be required to provide information about its current operations and future plans.

Heightened Cash Management

The USDE places an institution on one of three cash management programs if it determines there is a need to strictly monitor the institution’s participation in Title IV programs. In the Company’s December 2012 response to the USDE, management elected the Heightened Cash Monitoring 1 program (“HCM1”). Under this program, the USDE releases funds to the institution after the institution has made the disbursement to the student or parent borrower. After an institution makes disbursements to eligible borrowers, it draws down Title IV funds to cover those disbursements in the same way as an institution on the advance payment method. Under HCM1, the institution’s independent external auditor is required to express an opinion, as part of the institution’s USDE compliance audit, on the institution’s compliance with the requirements of the Zone Alternative, including its administration of the payment method under which the institution received and disbursed Title IV program funds.

The Company implemented changes to its procedures for processing federal aid to comply with this requirement. Such changes did not have a material impact on the Company’s operations, liquidity, results of operations or cash flows. The USDE notified the Company on January 7, 2014 that Broadview was no longer required to comply with the Zone Alternative restrictions, due to the USDE’s completion of its review of the Company’s financial statements for the year ended March 31, 2013.

Student Loan Default Rates

An institution may lose eligibility to participate in some or all Title IV programs if defaults on the repayment of federal program loans by its students exceed certain levels. The USDE uses a specific methodology to determine default rates and imposes varying sanctions based upon the calculation results.

Current Cohort Default Rate Provisions

The USDE calculates a rate of student defaults for each institution with 30 or more borrowers entering repayment in a given federal fiscal year. The USDE includes in the cohort all student borrowers at the institution who entered repayment on any federal program loan during that year. The cohort default rate is the percentage of those borrowers who default by the end of the following federal fiscal year (October through September), resulting in a two-year cohort default rate. Because of the need to collect data on defaults, the USDE publishes cohort default rates two years in arrears; for example, in the fall of 2013, the USDE issued cohort default rates for federal fiscal year 2011.

The USDE may take adverse action against an institution if it has excessive cohort default rates, including the following:

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An institution whose cohort default rates equal or exceed 25% for three consecutive years will no longer be eligible to participate in the Title IV loan programs and the federal Pell Grant programs effective 30 days after notification by the USDE, unless the institution timely appeals that determination in a manner specified by the USDE.

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An institution whose cohort default rate for any federal fiscal year exceeds 40% will no longer be eligible to participate in the Title IV loan programs effective 30 days after notification by the USDE, unless the institution timely appeals that determination in a manner specified by the USDE.

Termination under either of the above provisions is for the remainder of the federal fiscal year in which the USDE determines that such institution has lost its eligibility, and for the two subsequent federal fiscal years.

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An institution whose cohort default rate equals or exceeds 25% for any one of the three most recent federal fiscal years may be placed on provisional certification status by the USDE for up to four years. Provisional certification does not limit an institution’s access to Title IV program funds; however, provisional status means an institution is subject to closer USDE review and it may be subject to various adverse actions if it violates Title IV requirements.

We have implemented a student loan default management program aimed at reducing the likelihood of our students’ failure to repay their loans in a timely manner. Our cohort default rates on Title IV program loans for the 2011, 2010, and 2009 federal fiscal years were 9.5%, 8.5% and 12.2%, respectively. The average cohort default rates for proprietary institutions nationally were 13.6%, 12.9% and 15.0% for federal fiscal years 2011, 2010, and 2009, respectively.

Cohort Default Rate Provisions Effective July 1, 2014

The current cohort default rate calculation and threshold for regulatory sanctions will change effective July 1, 2014 as a result of the reauthorization of the Higher Education Act by Congress through the HEOA in 2008. HEOA modified the Higher Education Act’s cohort default rate provisions related to Title IV loans in two significant ways.

First, under the new provisions, the period for measuring defaults will be expanded by one year, resulting in a three-year cohort default rate. Second, effective as of federal fiscal year 2012, the cohort default rate threshold of 25% was increased to 30%. Consequences of this change include the following:

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If an institution’s cohort default rate is 30% or more in a given fiscal year, the institution will be required to assemble a “default prevention task force” and submit to the USDE a default improvement plan.

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Institutions that exceed 30% for two consecutive fiscal years will be required to review, revise and resubmit their default improvement plan, and the USDE may direct that such plan be amended to include actions, with measurable objectives, that it determines will promote loan repayment.

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An institution whose cohort default rate is 30% or more for any two out of three consecutive federal fiscal years may be subject to USDE provisional certification. Such an institution may file an appeal to demonstrate exceptional mitigating circumstances and, if the U.S. Secretary of Education determines that the institution demonstrated such circumstances, the Secretary of Education may not subject the institution to provisional certification based solely on the institution’s cohort default rate.

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An institution whose cohort default rate is equal to or greater than 30% for each of the three most recent federal fiscal years will be ineligible to participate in the Title IV programs.

The revisions to the cohort default rate described above did not change the existing provision whereby an institution generally loses Title IV eligibility if its most recent default rate exceeds 40%.

The USDE’s final regulations implementing the HEOA provisions on cohort default rates and other student loan matters clarify that the USDE will issue two cohort default rates – both a two-year rate and a three-year rate – for federal fiscal years 2009 through 2011. The final regulations indicate that the USDE will rely on the two-year rate and related thresholds to determine institutional eligibility until 2014, when the USDE issues official three-year cohort default rates. Three-year cohort default rates were generally expected to be higher than two-year rates because of both the longer repayment history and current economic conditions. Broadview’s unofficial three-year cohort default rate for federal fiscal years 2010 and 2009 were 13.2% and 19.3%, compared to the average unofficial three-year rate for proprietary institutions nationally of 21.8% and 22.7%.

Compliance with “90/10 Rule”

A requirement of the Higher Education Act, commonly referred to as the “90/10 Rule,” applies only to proprietary institutions of higher education such as Broadview University. Under the Higher Education Act, a proprietary institution is prohibited from deriving from Title IV funds, on a cash accounting basis (except for certain institutional loans) for any fiscal year, more than 90% of its revenues (as computed for 90/10 Rule purposes). Effective August 14, 2008, HEOA changed the 90/10 Rule from an eligibility requirement to a compliance obligation that is part of an institution’s program participation agreement with the USDE.

Institutions that violate the 90/10 Rule for any fiscal year will be placed on provisional status for two fiscal years. Violation of the 90/10 Rule for two consecutive fiscal years will result in an institution becoming ineligible to participate in Title IV programs for at least two fiscal years. The institution will be required to demonstrate compliance with Title IV eligibility and certification requirements for at least two fiscal years prior to resuming Title IV program participation. In addition, the USDE now discloses on its website any institution that fails to meet the 90/10 Rule requirements, and reports annually to Congress the relevant ratios for each institution.

For the fiscal year ended March 31, 2014, Broadview University received $10,138,851 of Title IV funds and total eligible cash receipts of $12,861,699, resulting in a percentage of 79%. Financial data used to calculate Broadview University 90/10 Rule compliance is Broadview University data on a stand-alone basis. We monitor compliance with this 90/10 Rule to minimize the risk that Broadview University would derive more than the maximum allowable percentage of its cash-basis revenue from Title IV programs for any fiscal year.

Return of Title IV Program Funds

An institution participating in Title IV programs must correctly calculate the amount of unearned Title IV program funds that were disbursed to students who withdrew from educational programs before completing the programs, and must return those funds in a timely manner. If a student withdraws during the first 60% of any period of enrollment or payment period, the amount of Title IV program funds that the student earned is equal to a pro rata portion of the funds for which the student would otherwise be eligible. If the student withdraws after the 60% point, then the student has earned 100% of the Title IV program funds.

Institutions must return the lesser of the unearned Title IV program funds or the institutional charges incurred by the student for the period multiplied by the percentage of unearned Title IV program funds. Institutions are required to return such funds within 45 days of the date the institution determines that the student has withdrawn. Compliance with refund calculation provisions is audited on an annual basis. If such payments are not made in a timely manner, an institution may be subject to adverse action, including being required to submit a letter of credit equal to 25% of the refunds the institution should have made in its most recently completed fiscal year.

Under USDE regulations, if late returns of Title IV program funds constitute 5% or more of students sampled in the institution’s annual compliance audit for either of its two most recently completed fiscal years, an institution generally must submit an irrevocable letter of credit payable to the U.S. Secretary of Education. Currently, we are not required to post a letter of credit or accept other conditions on our participation in Title IV programs related to late returns of Title IV program funds.

Gainful Employment

Under the Higher Education Act, a proprietary institution must prepare students for gainful employment in a recognized occupation. In June 2011, the USDE issued final regulations on the metrics to determine whether an academic program prepares a student for gainful employment. On June 30, 2012, the U.S. District Court for the District of Columbia, considering a challenge to the regulations brought by the Association of Private Sector Colleges and Universities, vacated these debt measures as well as the rules requiring institutions to report to the USDE information about students who complete gainful employment programs. On July 30, 2012, the USDE filed a motion to alter or amend the Court’s judgment; however, the Court denied this motion on March 19, 2013.

After the USDE’s regulations were invalidated by the federal court, the USDE convened a negotiated rulemaking to propose new regulations related to gainful employment. These negotiations did not yield a required consensus, and thus, the USDE issued for public comment a Notice of Proposed Rulemaking on March 25, 2014.

Under the proposed rule, a gainful employment program would pass the USDE’s measures if:

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The estimated annual loan payment of graduates does not exceed 20% of their discretionary earnings or 8% of their total earnings, and;

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The program cohort default rate for former students enrolled in the program does not exceed 30%.

The proposal would also establish a “zone” for gainful employment programs that have a discretionary income rate greater than 20% and less than or equal to 30%, or an annual earnings rate greater than 8% and less than or equal to 12%. A gainful employment program would become ineligible for Title IV funding if it fails the debt-to-earnings rates measure for two out of three consecutive years, or has a combination of debt-to-earnings rates that are in the zone or failing for four consecutive years. Additionally, a gainful employment program that has a program cohort default rate of 30% or greater for three consecutive fiscal years would become ineligible. Institutions would also be required to certify that all gainful employment programs meet applicable accreditation requirements, as well as state licensure standards. Institutions would also be required to disclose to students and prospective students certain information about gainful employment programs and to report to the USDE certain data relating to gainful employment programs.

Given the uncertainty as to what form any final regulations might take in relation to gainful employment, the Company is unable to determine what impact, if any, a final rule will have on its financial condition and results of operations.

Approval of New Programs and Locations

Our ability to establish additional locations and programs is regulated at the accrediting body, state and federal levels. ACICS requires institutions under its accreditation to provide notification in advance of implementing new programs or locations. Additionally, ACICS may conduct site visits to ensure that accredited institutions maintain educational quality. Any new Broadview University campus locations require ACICS approval before enrolling students.

The Higher Education Act generally requires that certain educational institutions be in full operation for two years before applying to participate in Title IV programs. However, the regulations generally permit an institution that is certified to participate in Title IV programs to establish an additional location and apply to participate in Title IV programs at that location without reference to the two-year requirement, if such an additional location satisfies all other applicable requirements.

Effective July 2011, a proprietary institution must notify the USDE of new programs that are subject to gainful employment requirements a minimum of 90 days before courses begin. The institution may proceed with the program offering unless the USDE advises the institution within 60 days of the notification that the additional program(s) must be approved.

Incentive Compensation

An institution participating 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 recruiting or admission activities or in making decisions regarding the awarding of Title IV program funds. Failure to comply with the incentive payment rules could result in loss of certification to participate in Title IV programs, limitations on such participation, or financial penalties.

Effective July 2011, the USDE eliminated 12 “safe harbors” relating to payment and compensation plans that institutions may practice without fear of violating the prohibitions. The USDE’s final rules prohibit payment made “in any part” directly or indirectly upon the success of securing enrollments or financial aid, apply to all employees at an institution who are engaged in or responsible for any student recruitment or admission activity, limit “profit-sharing payments,” and set rules for third-party contracts.

Although we cannot provide any assurances that the USDE will not find deficiencies in our compensation plans, management believes that our current compensation plans are in compliance with the Higher Education Act and USDE regulations.

Lender Relationships

HEOA adds a new requirement, as part of an institution’s Program Participation Agreement with the USDE, that institutions participating in Title IV programs adopt a code of conduct pertinent to student loans. Broadview University has a code of conduct that management believes complies with the provisions of HEOA in all material respects.

Additionally, HEOA contains provisions that apply to federal and private lenders, prohibiting such lenders from engaging in certain activities as they interact with institutions.

Provisional Certification upon Change in Control

A school that undergoes a change of ownership resulting in a change in control (as defined under the Higher Education Act) must be reviewed and recertified for participation in Title IV programs under its new ownership. A school’s change of ownership application can be reviewed prior to the change of ownership. If the USDE finds the application to be materially complete, the USDE may generate a Temporary Program Participation Agreement allowing the school’s students to continue to receive federal funding, subject to the USDE’s continued review of the transaction and certain other conditions. Subsequent to the USDE’s review of the complete application filed as a result of the transaction, the USDE will either deny recertification to the school under the new ownership or recertify the school on a provisional basis.

During the time a school is provisionally certified, it may be subject to summary adverse action for a material violation of Title IV program requirements and may not establish additional locations without prior approval from the USDE. However, provisional certification does not otherwise limit an institution’s access to Title IV program funds. There have been no transactions which constitute a change in control for Broadview during the periods covered by this Report, nor through the date of this Report.

Third-Party Servicers

USDE regulations permit an institution to enter into a written contract with a third-party servicer for the administration of any aspect of the institution’s participation in Title IV programs, subject to the third-party servicer meeting applicable Title IV requirements. An institution must report to the USDE any new contracts or significant modifications to contracts with third-party servicers. We do not have any relationships with third-party servicers for the administration of any aspect of our participation in Title IV programs.

Compliance with Federal Regulatory Standards and Effect of Federal Regulatory Violation

Broadview University is subject to and, from time to time, is likely to have pending audits, compliance reviews, inquiries and investigations by the USDE and other state regulatory agencies, accrediting agencies, and other third parties that may allege violations of regulations, accreditation standards, or other regulatory requirements applicable to us.

The Higher Education Act also requires that an institution’s administration of Title IV program funds be audited annually by an independent accounting firm and that the resulting audit report be submitted to the USDE for review within six months of the institution’s fiscal year end. If we fail to comply with the regulatory standards governing Title IV programs, the USDE could impose one or more sanctions, up to and including suspension or termination of our ability to participate in Title IV programs. Although no such actions are currently in force and we are not aware of any such sanctions presently contemplated, such proceedings would likely have a material adverse effect on the Company.

Recent or Pending Legislative and Regulatory Activity

Congress

Congress must reauthorize the Higher Education Act approximately every six years. In July 2008, Congress completed the reauthorization process by passing the HEOA, which was signed into law in August 2008. HEOA provisions are effective upon enactment, unless otherwise specified in the law. In October 2009, the USDE published final regulations to implement HEOA changes to Title IV of the Higher Education Act. Those regulations were effective July 1, 2010. Congress began Higher Education Act reauthorizations hearings in 2013, and there is currently an automatic one-year extension that continues the current authorization through September 30, 2014.

As of the date of this Report, there are a number of topics being considered in Congress that could lead to enacted legislation in the near future. The Consumer Financial Protection Bureau submitted reports to Congress in 2012 with recommendations for restructuring the student borrowing experience, including requiring institutions to certify that a student is not eligible for any further federal funds before a private loan may be issued to such student. On January 23, 2013, the Know Before You Owe Private Student Loan Act of 2013 was introduced in Congress. This proposed act would require institutions to certify to a private loan lender a student’s cost of attendance and estimated federal financial assistance before a loan may be issued to such student. This Act would also require institutions to counsel students about their loan options, including discussion of differences between federal and private loans.

Also on January 23, 2013, the Fairness for Struggling Students Act of 2013 was introduced in Congress. This Act would allow private student loans to be dischargeable in bankruptcy. As of the date of this report, we do not know what legislative action Congress may take in response to these proposals, and whether such actions – if any – will have any negative impact on our business or results of operations.

On August 9, 2013, the Bipartisan Student Loan Certainty Act became law. Under this law, all Stafford loans to undergraduates are pegged to the 10-year Treasury Bill plus 2.05% with a cap at 8.25%. Stafford loans to post-graduate students will be at the Treasury Bill rate plus 3.6% with a cap at 9.5%. Direct PLUS loans are set at the Treasury Bill rate plus 4.6% with a cap at 10.5%. Direct consolidation loan rates will be a weighted average of the interest rates of the consolidated loans rounded to the nearest 1/8^th of 1%. Interest rates will be reset every July 1 and effective for the loans taken out from July 1^st to June 30^th of the following year. Those interest rates will be effective for the life of the loan.

In addition, Congress reviews and approves appropriations for Title IV programs on an annual basis. An elimination of certain Title IV programs, a reduction in federal funding levels of these programs, or other material changes in program offerings or participation requirements could reduce the ability of certain students to finance their education. Given the significant percentage of Broadview University’s revenues that are derived from the Title IV programs, significant changes in Title IV program funding or participation requirements could have a material adverse effect on the Company.

Participation of proprietary education institutions in Title IV programs, as well as U.S. Department of Defense oversight of tuition assistance for military service members, have been active topics in recent years. The Senate’s Health, Education, Labor and Pensions (“HELP”) committee has held hearings into, among other things, the standards and procedures of accrediting agencies, credit hours and program length, the portion of federal student financial aid going to proprietary institutions, and the receipt of veteran’s and military education benefits by students enrolled at proprietary institutions. On July 30, 2012, the HELP committee released a report titled “For Profit Higher Education: The Failure to Safeguard the Federal Investment and Ensure Student Success.” The report recommended several reforms that could change the participation of proprietary institutions such as Broadview University in Title IV funding. Such changes include:

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Linking access to federal financial aid to minimum student outcome thresholds;

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Prohibiting institutions from using federal financial aid dollars for marketing activities;

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Expanding the required percentage of revenues from non-federal sources;

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Expanding the reporting period for cohort default rates beyond three years; and

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Further limiting incentive compensation arrangements at proprietary institutions.

While the HELP Committee’s report was ultimately not adopted, the activities demonstrate continued Congressional focus on our industry.

U.S. Department of Education

In October 2009, the USDE published final regulations to implement HEOA changes to Title IV of the Higher Education Act. Those regulations were effective July 1, 2010. In October 2010, the USDE published final regulations pertaining to program integrity at higher education institutions, most of which became effective July 2011. The revised rules also establish new annual reporting requirements that are applicable to most programs of study. For each program, an institution must report specific information regarding the program, students enrolled in the program, and students who completed the program, including the amount the student received from private educational loans and institutional financing plans, as well as information on whether the student matriculated to a higher credentialed program at the institution or transferred to such a program at another institution.

In addition, for each program subject to the new rule, the institution must provide prospective students with several new disclosures related to the occupations that the program prepares students to enter, the on-time graduation rate, tuition, fees and costs, placement rates and median loan debt. The institution must include the disclosures listed above in promotional materials it makes available to prospective students, and post this information on its website.

Gainful Employment

On June 13, 2011, the USDE published final regulations defining the term “gainful employment.” Under these regulations, which were scheduled to go into effect July 1, 2012, a particular program offered by an institution would have become ineligible for Title IV funding if it could not pass at least one of three alternative measurements in three out of four consecutive years. These regulations failed a challenge in U.S. District Court on June 30, 2012.

The USDE filed a motion for reconsideration, which was also denied by the Court on March 19, 2013, holding that the data collection required by the regulations was prohibited by statute. After the USDE’s regulations were invalidated by the federal court, the USDE convened a negotiated rulemaking to propose new regulations related to gainful employment. These negotiations did not yield a required consensus, and thus, the USDE issued for public comment a Notice of Proposed Rulemaking on March 25, 2014. Under the proposed rule, a gainful employment program would pass the USDE’s measures if:

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The estimated annual loan payment of graduates does not exceed 20% of their discretionary earnings or 8% of their total earnings, and;

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The program cohort default rate for former students enrolled in the program does not exceed 30%.

Institutions would also be required to certify that all gainful employment programs meet applicable accreditation requirements, as well as state licensure standards. Institutions would also be required to disclose to students and prospective students certain information about gainful employment programs and to report to the USDE certain data relating to gainful employment programs.

Additionally, the USDE is considering rule making that could affect regulations concerning program integrity, Title IV cash management, and state authorization of distance education, among other topics. Given the uncertainty as to what form any final regulations might take in relation to gainful employment or the other topics under consideration, the Company is unable to determine what impact, if any, any final rules will have on its financial condition and results of operations.

Misrepresentation

Under the Higher Education Act, the USDE may fine, suspend or terminate the participation in Title IV programs by an institution that engages in substantial misrepresentation of the nature of its educational programs, its financial charges, or the employability of its graduates. Such misrepresentation could come from activities such as marketing, advertising, and recruiting, among others. On June 5, 2012, the U.S. Court of Appeals for the District of Columbia Circuit held that the USDE’s definition of misrepresentation that included “any statement that has the likelihood or tendency to deceive or confuse” was unsupported by law, and thus the court vacated that portion of the regulation.

Credit Hours

In June 2010, the House Education and Labor Committee held a hearing concerning accrediting agencies’ standards for assessing institutions’ credit hour policies. The USDE’s Program Integrity Regulations define the term “credit hour” and require accrediting agencies to review the reliability and accuracy of an institution’s credit hour assignments. If an accreditor does not comply with this requirement, its recognition by the USDE could be jeopardized. If an accreditor identifies and reports systematic or significant noncompliance by an institution to the USDE, and the institution is found to be out of compliance with the credit hour definition, the USDE could impose sanctions on the institution.

Executive Order on Military and Veterans Benefits Programs

In April 2012, the President issued an Executive Order directing the Departments of Defense and Veterans Affairs to implement actions to establish “Principles of Excellence” to apply to educational institutions receiving funding from Federal military and veterans’ educational benefits programs. The Order was in response to reports of certain educational institutions aggressively targeting service members due to their accessibility to federal funds under the Post-9/11 GI Bill. The Order is intended to strengthen oversight, enforcement and accountability within such benefits. We will continue to monitor federal activity related to this Order in the coming months.

ITEM 1A.

RISK FACTORS

Risks Related to Our Industry:

Failure to comply with the extensive regulatory requirements for school operations could result in financial penalties, restrictions on our operations, loss of federal financial aid funding for our students, or loss of our authorization to operate our school.

As a provider of higher education services, we are subject to extensive state and federal regulation. In particular, the Higher Education Act, as reauthorized by the HEOA in August 2008, and related regulations impose significant regulatory scrutiny, including detailed substantive and reporting requirements, on Broadview University and all other higher education institutions that participate in the various federal student financial aid programs under Title IV. The Higher Education Act allocates regulatory responsibility for these programs among (1) the federal government through the USDE, (2) accrediting agencies recognized by the USDE, and (3) state education regulatory bodies.

The regulations, standards and policies of these agencies are subject to frequent change and interpretation, which could have a material adverse effect on our accreditation, authorization to operate in various states, permissible activities, receipt of funds under Title IV programs, or costs of doing business. We cannot predict with certainty how all of the requirements applied by these agencies will be interpreted or whether we will be able to comply with these requirements in the future. If we are found to be in noncompliance with any of these regulations, standards or policies, any one of the relevant regulatory agencies may do one or more of the following:

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impose monetary fines or penalties;

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limit or terminate our operations or ability to grant degrees or diplomas;

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restrict or revoke our accreditation, licensure or other approval to operate;

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limit, suspend or terminate our eligibility to participate in Title IV or state financial aid programs;

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require repayment of funds received under Title IV programs or other financial aid programs;

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require us to post a letter of credit with the USDE;

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subject us to other civil or criminal penalties; and/or

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subject us to other forms of censure.

Rulemaking by the USDE could result in regulatory changes that may have a material adverse effect on our business.

The USDE issued on October 28, 2010 final rules that address program integrity issues for post-secondary education institutions participating in Title IV programs, most of which took effect on July 1, 2011. See “Government Approvals and Effect of Governmental Regulations” in Item I, Part I of this Report for greater detail and analysis of these rules. The uncertainty surrounding the rules, interpretive regulations and guidance by the USDE may continue for some time and could adversely affect our business.

Any action by Congress that significantly reduces Title IV program funding or the ability of Broadview University or its students to participate in Title IV programs could have a material adverse effect on our business.

Congress reauthorizes the Higher Education Act every six years. Additionally, Congress determines the funding level for each Title IV program on an annual basis. Any action by Congress that significantly reduces funding for Title IV programs or limits the ability of Broadview University or our students to participate in these programs could have a material adverse impact on our business. A reduction in government funding could lead to lower enrollments and require our students to find alternative sources of financial aid. See “Government Approvals and Effect of Governmental Regulations” in Item I, Part I of this Report for greater detail and analysis of recent Congressional activities.

If we fail to maintain our institutional accreditation through ACICS, or if ACICS loses recognition by the USDE, we would lose our ability to participate in Title IV programs.

ACICS is a national accrediting agency recognized by the U.S. Secretary of Education as a reliable authority on educational quality for institutions such as Broadview University. Institutional accreditation by a national or regional accrediting agency is required by the USDE for us to remain eligible to participate in Title IV programs.

The loss of accreditation would, among other consequences, render Broadview University ineligible to participate in Title IV programs, which would have a material adverse effect on our business. ACICS is also able to impose other penalties or issue warnings or other forms of censure that could have a material adverse effect on our operations.

Loss of Broadview University’s state authorizations could prevent us from offering certain programs, operating our campuses, or affect our ability to participate in Title IV programs in the states we currently operate or may operate in the future.

A school that grants degrees, diplomas or certificates must be authorized by the relevant education agency of the state in which it is located. In the state of Utah, Broadview University is exempt from state registration requirements because of its ACICS accreditation. In Idaho, Broadview is registered with the Idaho State Board of Education. State registration is also required by the USDE to participate in Title IV programs. The loss of state authorization would, among other things, render Broadview University ineligible to participate in Title IV programs in a state where such authorization was lost, and would limit or prevent us from operating in that state, which could have a material adverse effect on our business.

Effective July 1, 2011, USDE regulations provide that a proprietary institution is considered legally authorized by a state if the state has a process to review and act on complaints concerning the institution, including enforcing applicable state laws, and the institution complies with any applicable state approval or licensure requirements consistent with the new rules. However, if a state in which Broadview has a physical campus fails to comply with these rules, or if such state fails to provide us with legal authorization, it could limit our ability to operate in that state.

If Broadview University fails to obtain recertification by the USDE when required, we would lose our ability to participate in Title IV programs.

An institution generally must seek recertification from the USDE at least once every six years, and possibly more frequently if circumstances dictate. The USDE may withdraw our certification if it determines that we are not fulfilling material requirements for continued participation in Title IV programs. Each institution participating in Title IV programs must enter into a Program Participation Agreement with the USDE. Under such an agreement, the institution agrees to follow the USDE’s rules and regulations governing Title IV programs. Broadview University’s current Program Participation Agreement will expire on December 31, 2019, assuming compliance with the agreement’s terms.

Broadview University may lose its eligibility to participate in Title IV programs if its student loan default rates are greater than the standards set by the USDE.

In general, under the Higher Education Act, an educational institution may lose its eligibility to participate in Title IV programs if, for three consecutive federal fiscal years, 25% or more of its students who were required to begin repaying their student loans in the relevant federal fiscal year default on their payments by the end of the next fiscal year. An institution whose default rate is greater than 40% in any one federal fiscal year may also lose its Title IV eligibility.

Broadview University has implemented a student loan default management program aimed at reducing the likelihood of our students’ failure to repay their loans in a timely manner. Broadview University’s cohort default rates on Title IV program loans for the 2011, 2010, and 2009 federal fiscal years were 9.5%, 8.5% and 12.2%, respectively.

The average cohort default rates for proprietary institutions nationally were 13.6%, 12.9% and 15.0% for federal fiscal years 2011, 2010, and 2009, respectively.

The current cohort default rate calculation and threshold for regulatory sanctions will change effective July 1, 2014, whereby the period for measuring defaults will be expanded by one year and the threshold of 25% noted above will be increased to 30%, among other changes as disclosed in “Government Approvals and Effect of Governmental Regulations” in Item I, Part I of this Report. If Broadview University were ineligible to participate in Title IV programs due to non-compliance with current or future measurements of cohort default rates, this would have a material adverse effect on our business.

Failure to demonstrate “administrative capability” or “financial responsibility” as defined by the USDE may result in the loss of eligibility to participate in Title IV programs.

We may, among other consequences, be required to post a letter of credit or accept other limitations to continue our participation in Title IV programs if we do not meet the USDE’s financial responsibility standards or if we do not correctly calculate and timely return Title IV program funds for students who withdraw before completing their program of study. Losing our Title IV eligibility or having it adversely conditioned would have a material adverse effect on our business.

As disclosed under the “Financial Responsibility Standards” sub-section of the Government Approvals and Effect of Governmental Regulations section in Item 1 of Part I in this Report, our composite score as of and for the years ended March 31, 2014 and 2013 was 1.8 and 1.7. However, our composite score as of and for the year ended March 31, 2012 was 1.3. With our 2012 composite score falling below the minimum score of 1.5 required by the USDE for an institution to be considered fiscally responsible, we were subject to increased monitoring of our operations, as well as heightened cash management policies and procedures for our administration of Title IV funds.

Our management implemented changes to our procedures for processing federal aid to comply with the USDE’s requirements. Such changes did not have a material impact on our operations or our liquidity, results of operations or cash flows. The USDE notified the Company on January 7, 2014 that Broadview was no longer required to comply with the conditions and restrictions outlined above, due to the USDE’s completion of its review of the Company’s financial statements for the year ended March 31, 2013.

If the Company fails to satisfy the USDE’s financial responsibility standards, our financial condition, results of operations, and cash flows could be materially adversely affected, should the Company not have adequate resources to meet the USDE’s letter of credit requirements.

We cannot offer new programs if such offerings are not timely approved by the USDE and state and accrediting regulators, as applicable.

We may have to repay Title IV program funds disbursed to students enrolled in a new program if the Company does not obtain prior approval from the USDE and state and accrediting regulators, as applicable.

We could lose our eligibility to participate in Title IV programs or be provisionally certified with respect to our participation in such programs if the percentage of our revenues derived from those programs were too high.

Under the 90/10 Rule, a proprietary institution may lose its Title IV eligibility if, on a cash accounting basis, it derived more than 90% of its revenues from Title IV programs for any fiscal year, as defined in accordance with applicable USDE regulations for Title IV programs. For the fiscal year ended March 31, 2014, Broadview University derived 79% of its revenues from Title IV programs based on the USDE’s required calculations. We closely monitor our compliance with this requirement on an ongoing basis.

If we lose our eligibility to participate in Title IV programs because more than 90% of our revenues are derived from Title IV program funds in any year, our students would no longer be eligible to receive Title IV program funds under various government-sponsored financial aid programs, which would significantly reduce our enrollments and revenues and have a material adverse effect on our business, financial condition, results of operations and cash flows.

We are subject to sanctions if we fail to calculate accurately and make timely payment of refunds of Title IV program funds for students who withdraw before completing their educational program.

The Higher Education Act and USDE regulations require us to calculate refunds of unearned Title IV program funds disbursed to students who withdraw from school before completion of their educational program. If refunds are not properly calculated or paid in a timely manner, we may be required to post a letter of credit with the USDE or be subject to sanctions or other adverse actions, which could have a material adverse effect on our business.

Failure to comply with USDE incentive compensation rules could result in sanctions against Broadview University.

We are subject to sanctions if payments of impermissible commissions, bonuses or other incentive payments are made to the individuals involved in certain recruiting, admissions, or financial aid activities. If we were found to violate standards related to payment of commissions, bonuses and other incentive payments, the USDE could impose monetary fines, penalties or other sanctions on the Company that may have a material adverse effect on our business.

Investigations, claims, and actions against the Company and other companies in our industry could adversely affect our business and stock price.

In recent years, the operations of a number of companies in the education and training services industry have been subject to intense regulatory scrutiny. In some cases, allegations of wrongdoing on the part of such companies have resulted in formal or informal investigations by the U.S. Department of Justice, the SEC, state governmental agencies and USDE. 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.

Even if the Company satisfactorily resolves any such investigations, claims and actions, we may have to expend substantial resources to address and defend those claims or actions, which could have a material adverse effect on our business.

General credit market conditions related to the student loan industry may result in fewer lenders and loan products and increased regulatory costs.

The HEOA contains requirements pertinent to relationships between lenders and institutions such as Broadview University. On October 28, 2009, the USDE issued final regulations implementing certain HEOA provisions related to preferred lender lists and preferred lender arrangements.

The regulations regarding preferred lender lists, which were effective July 1, 2010, are largely comparable to those in the USDE’s current regulations, with the exceptions being that the new regulations also address private as well as federal loan lenders. These and other legislative and regulatory developments as well as general credit market conditions may cause some lenders to decide not to participate in certain federal loan programs and may impose increased costs on the Company.

Failure to comply with the USDE’s gainful employment regulations could result in heighted disclosure requirements and loss of Title IV eligibility.

To be eligible for Title IV funding, academic programs offered by proprietary institutions of higher education must prepare students for gainful employment in a recognized occupation. The USDE has previously adopted gainful employment regulations that were subsequently invalidated by a U.S. federal court in March 2013. The USDE subsequently convened a negotiated rulemaking to propose new regulations related to gainful employment. These negotiations did not yield a required consensus, and thus the USDE issued for public comment a Notice of Proposed Rulemaking on March 25, 2014. The details of the proposed rules are disclosed under the “Gainful Employment” sub-section of the Government Approvals and Effect of Governmental Regulations section in Item 1 of Part I in this Report.

Given the uncertainty as to what form any final regulations might take in relation to gainful employment, the Company is unable to determine what impact, if any, any final rules will have on its financial condition and results of operations.

Our industry may be adversely affected by general economic conditions in the U.S. or abroad.

The U.S. economy and the economies of other key industrialized countries have been in a recession as characterized by reduced economic activity, increased unemployment and substantial uncertainty about their financial services markets. In addition, homeowners in the U.S. have experienced an unprecedented reduction in wealth due to the decline in residential real estate values across much of the country.

These events may reduce the demand for our programs among students, the willingness of employers to sponsor educational opportunities for their employees, and the ability of our students to find employment in their chosen area of study, any of which could materially and adversely affect our business, financial condition, results of operations and cash flows. In addition, these events could adversely affect the ability or willingness of our former students to repay student loans, which could increase our student loan cohort default rate and require increased time, attention and resources to manage these defaults.

Risks Related to Our Business:

We have largely relied on our Chairman and largest shareholder to provide liquidity to the Company during the past two fiscal years, and without such financial support, the Company would have had difficulty meeting its current obligations.

Mr. Terry Myhre, chairman of our board of directors (“Mr. Myhre”), beneficially owned approximately 97% of our outstanding common stock as of the date of this Report. Since March 2012, Mr. Myhre has executed transactions with the Company that have resulted in cash inflows from financing activities totaling $13,937,500. This total includes $11,337,500 from equity transactions, as well as $2,600,000 of borrowings under a line of credit agreement with Mr. Myhre. These cash-infusions have come against a three-year total of $10,580,736 of cash used in operating activities for the fiscal years ended March 31, 2012 to 2014.

Without the financial support from Mr. Myhre, the Company would likely have been unable to meet its current obligations, absent material changes to the Company’s operations. Additionally, these transactions have greatly aided the Company’s ability to comply with various regulatory requirements that concern an institution’s financial health. Due to projected losses continuing in the near future, we anticipate that the Company may continue to rely on Mr. Myhre for financial support, the degree of such support depending on management’s ability to adequately contain costs against projected future revenues. See further details on these transactions with Mr. Myhre in Items 7 and 8 of this Report.

Our financial performance depends, in part, on our ability to update and expand our academic programs and keep pace with changing market needs and technology.

Prospective employers of our graduates increasingly demand that their entry-level employees possess appropriate technological skills. Our educational programs must keep pace with these evolving requirements. If we cannot respond to changes in industry requirements, it could have a material adverse effect on our business, results of operations or financial condition.

High interest rates could adversely affect our ability to attract and retain students because the cost of education may be unaffordable for students. Changes in credit requirements may impact current or prospective students’ ability to obtain financing for the cost of education.

Our growth rate is uncertain, and we may not be able to assess our future growth prospects effectively.

Due to significant operating losses incurred over the past three fiscal years, management’s focus has been pushed toward maintaining sustainable student populations at our existing campuses. As such, we have no current plans for opening additional branch campuses in the foreseeable future. If, at some point, management determines it is appropriate to consider expansion, our ability to act on any growth model is dependent on a number of factors, including our ability to obtain timely regulatory approvals, identify geographical locations that have appropriate population demographics, and recruit and retain high-quality academic and administrative personnel. We opened four branch campuses from January 2007 through January 2011, including two in the last six months of fiscal year 2011.

We operate in a highly competitive industry.

The postsecondary education market is highly competitive. We compete with traditional public and private two-year and four-year colleges and universities and other proprietary schools, including those that offer fully online programs. Some public and private colleges and universities, as well as other private career-oriented schools, may offer programs similar to ours.

Although tuition at private nonprofit institutions is, on average, higher than tuition at Broadview University, some public institutions are able to charge lower tuition than Broadview University, due in part to government subsidies, government and foundation grants, tax-deductible contributions and other financial sources not available to proprietary schools. Some of our competitors in both the public and private sectors have substantially greater financial and other resources than Broadview University.

Our success depends in part on our ability to market Broadview University to prospective students.

Our financial performance depends, in part, on our ability to continue to develop awareness and acceptance of our school and programs among high school graduates and working adults. Broadview University uses its own admissions teams and markets its courses through print, television, radio, Internet and telemarketing outlets. Broadview University maintains booths and information tables at appropriate conferences, expos and other events in the communities where it operates.

The satisfaction of our students with our delivery of academic services is also a key element in cultivating our brand to prospective students. Customer dissatisfaction with our services or programs could lead to declining enrollments.

The loss of our key personnel could harm our business.

Our success depends upon our ability to attract and retain highly qualified faculty, campus administrators and management. We may have difficulty locating, hiring and retaining qualified personnel. The loss of services of key personnel, or failure to attract and retain other qualified and experienced personnel, could cause our business to suffer.

We operate pursuant to a Service Level Agreement with GU/MSB and are substantially dependent upon GU/MSB for support services, the loss of which could have a significant negative impact on our operations.

Broadview University utilizes executive, administrative, accounting and consulting services provided by GU/MSB pursuant to a SLA between the Company and GU/MSB. Some of the services provided by GU/MSB under this arrangement include chief executive and chief financial officer services, information technology support, finance and accounting services, human resources support, student financial aid consulting and curriculum consulting. The Company currently pays GU/MSB $50,000 per month for such services. If GU/MSB were to terminate the SLA or discontinue providing services to us, we may be unable to find another party to provide such services at a reasonable cost or may be unable to cost-effectively perform such services ourselves, which may have a significant adverse effect on our business.

Our student population and revenues could decrease if the government tuition assistance offered to U.S. Armed Forces personnel is reduced or eliminated, or if our informal relationship with any military facilities is diminished.

Active duty members of the U.S. Armed Forces are eligible to receive tuition assistance from the government, which may be used to pursue post-secondary degrees. We offer scholarships to all members of the U.S. Armed Forces and certain immediate family members or dependents of active-duty personnel. Some of our campuses are located in close proximity to military facilities, and service members and their families represented approximately 20% of the total enrolled students at Broadview University during our quarter ended March 31, 2014. In the event that the available governmental tuition assistance programs are reduced or eliminated, this could have a material adverse effect on our business.

The Company’s computer networks may be vulnerable to system disruptions, unauthorized access, computer viruses, and other security threats.

The performance and reliability of our computer networks is critical to our ability to attract and retain students. Any system error or failure could result in disruption of our educational services. Additionally, a user who circumvents security measures could misappropriate proprietary information or cause interruptions or malfunctions in our operations. Due to the sensitive nature of the information contained on our networks, our networks may be targeted by hackers. 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.

Regulatory requirements may make it more difficult to acquire us.

A change in control resulting from a change in ownership of the Company would trigger a requirement for recertification of Broadview University by the USDE for purposes of participation in federal student financial aid programs, a review of Broadview University’s accreditation by ACICS and reauthorization of Broadview University by certain state licensing and other regulatory agencies. If any of these reviews or approvals were significantly delayed, limited or denied, there could be a material adverse effect on our ability to offer certain educational programs, award certain degrees, diplomas or certificates, operate one or more of our branch campuses, admit certain students or participate in Title IV programs.

Risk Related to Our Common Stock:

Our largest shareholder holds a significant portion of our outstanding equity and may have substantial influence over the Company and his interests may not be aligned with the interests of our other shareholders.

Mr. Myhre, chairman of our board of directors, beneficially owned approximately 97% of our outstanding common stock as of the date of this Report. Additionally, Mr. Myhre has extended a $3,000,000 line of credit to the Company, of which $600,000 was outstanding at March 31, 2014. As such, Mr. Myhre has substantial influence over our business and shareholder voting control, including decisions regarding mergers, consolidations and the sale of all or substantially all of our assets, election of directors and other significant corporate actions.

This concentration of ownership may discourage, delay or prevent a change in control of the Company, which could deprive our shareholders of an opportunity to receive a premium for their shares as part of a sale of the Company and might negatively impact the price of our common stock. These actions may be taken even if they are opposed by our other shareholders, and may have an adverse effect on our operations and the value of our common stock.

Our stock price has, and we expect it to continue to, fluctuate significantly, and the value of your investment may decline.

From April 1, 2012 to March 31, 2014, the market price of our common stock has ranged from a high of $0.41 per share to a low of $0.03 per share. The volatile price of our stock makes it difficult for investors to predict the value of their investment. An investor might not be able to sell shares of our common stock at or above the existing trading price due to fluctuations in the market price of the common stock arising from changes in our operating performance or prospects. In addition, the stock markets in general have experienced extreme volatility that has often been unrelated to the operating performance of particular companies.

Because our common stock is primarily traded on the Over-the-Counter Bulletin Board, the volume of shares traded and the prices at which such shares trade may result in lower prices than might otherwise exist if our common stock was traded on a national securities exchange.

Stocks traded on the Over-the-Counter Bulletin Board are often less liquid than stocks traded on national securities exchanges, not only in terms of the number of shares that can be bought and sold at a given price, but also in terms of delays in the timing of transactions and reduced coverage of such stocks by security analysts and the media. This may result in lower prices for our common stock than might otherwise be obtained if our common stock were traded on a national securities exchange, and could also result in a larger spread between the bid and ask prices for our common stock.

Because we do not expect to pay dividends on our common stock, you will not realize any income from an investment in our common stock unless and until you sell your shares at profit.

We have not paid dividends on our common stock since 1991 and do not anticipate paying any dividends in the near future. You should not rely on an investment in our stock if you require dividend income. Further, you will only realize income on an investment in our shares in the event you sell or otherwise dispose of your shares at a price higher than the price you paid for your shares. Such a gain would result only from an increase in the market price of our common stock, which is uncertain and unpredictable.

The trading price of the Company’s common stock may fluctuate substantially as a result of a number of factors, many of which are not in our control.

Historically, public companies in our industry have experienced relatively high volatility in stock price. Any number of factors may adversely affect the trading price of our common stock, regardless of our actual operating performance, and could prevent an investor from selling shares of our common stock at or above the price at which such shares were purchased. Some of these factors include:

●

our ability to meet or exceed our own forecasts or expectations of analysts or investors;

●

quarterly variations in our operating results;

●

changes in the legal or regulatory environment in which we operate;

●

general conditions in the for-profit, post-secondary education industry, including changes in federal and state laws and regulations and accreditation standards;

●

the initiation, pendency, or outcome of litigation, regulatory reviews, and investigations, including any adverse publicity related thereto;

●

price and volume fluctuations in the overall stock market;

●

loss of key personnel; and

●

general economic conditions.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

There are no SEC staff comments on the Company’s periodic SEC reports which are unresolved.

ITEM 2.

PROPERTIES

We lease all of our campus facilities. Our leases generally range from 10 to 20-year terms and may have renewal options for extended terms up to 10 years. Our initial lease terms expire on various dates from December 2016 to December 2021. Certain leases have escalating base monthly rent amounts over the respective lease term. We generally lease between 31,000 and 45,000 square feet per campus.

We believe such properties to be in good condition and adequate for our present and foreseeable operations. We believe our property is adequately covered by insurance. See Notes 7 and 8 to the Consolidated Financial Statements in this Report for additional information regarding the Company’s leased property.

ITEM 3.

LEGAL PROCEEDINGS

From time to time, we may be involved in litigation and other legal proceedings arising out of the normal course of business. We are currently not a party to any material pending legal proceedings.

ITEM 4.

MINE SAFETY DISCLOSURES

None.

Executive Officers of the Registrant

The names, ages and present positions of the executive officers of the Registrant are as follows:

Name of

Executive Officer

Age

Present Position(s) with

Registrant

Business Experience

Jeffrey D. Myhre

Chief Executive Officer (CEO)

CEO of the Registrant since February 2008; CEO of Globe University and Minnesota School of Business (GU/MSB) from November 2013 to present and Vice President of GU/MSB from November 2006 to November 2013; Director of Online Education for the Minnesota School of Business, March 2005 to November 2006.

Kenneth J. McCarthy

Chief Financial Officer (CFO)

CFO of the Registrant since February 2008; CFO of GU/MSB from March 2003 to present; CPA in assurance practice of Grant Thornton, LLP Minneapolis, Minnesota office, 1996 to 2002.

Jeffrey D. Myhre is the son of Terry L. Myhre, Chairman of the Board of Directors.

PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCK-HOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The Company’s common stock is currently traded on the over-the-counter market and is quoted on the OTC Bulletin Board under the symbol “BVII”. The table below sets forth published quotations for the Company’s common stock and reflects the inter-dealer prices without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. The Company has not paid common stock dividends since fiscal year 1991, and has no present intentions to do so. The number of record holders of the Company’s common stock as of March 31, 2014 was approximately 400.

	Market Prices
	High		Low
2014
First Quarter	$	0.17	$	0.13
Second Quarter	$	0.20	$	0.17
Third Quarter	$	0.17	$	0.03
Fourth Quarter	$	0.25	$	0.04
2013
First Quarter	$	0.40	$	0.30
Second Quarter	$	0.41	$	0.10
Third Quarter	$	0.35	$	0.11
Fourth Quarter	$	0.16	$	0.13

ITEM 6.

SELECTED FINANCIAL DATA

The following table sets forth, for the periods and at the dates indicated, selected consolidated financial and operating data. The following information has been derived from our consolidated financial statements. The information set forth in the following table should be read in conjunction with our consolidated financial statements and notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other information included elsewhere or incorporated by reference in the Annual Report on Form 10-K.

	Years Ended March 31,
STATEMENT OF OPERATIONS DATA *	2014			2013			2012			2011			2010

Revenues	$	13,445,845		$	14,591,667		$	17,826,832		$	20,456,974		$	19,041,087
Operating expenses
Educational services and facilities		13,980,771			14,754,797			15,593,785			14,748,170			11,591,009
Selling, general and administrative		4,342,982			4,928,852			5,439,321			5,928,264			4,184,969
Goodwill impairment		-			-			622,016			-			-
Total operating expenses		18,323,753			19,683,649			21,655,122			20,676,434			15,775,978

Operating income (loss)		(4,877,908	)		(5,091,982	)		(3,828,290	)		(219,460	)		3,265,109

Other income (expense)		(5,722	)		(1,950	)		9,719			27,159			24,816
Income (loss) before taxes		(4,883,630	)		(5,093,932	)		(3,818,571	)		(192,301	)		3,289,925

Income tax expense (benefit)		-			-			346,000			(63,261	)		1,254,770
Net income (loss)	$	(4,883,630	)	$	(5,093,932	)	$	(4,164,571	)	$	(129,040	)	$	2,035,155

EARNINGS (LOSS) PER COMMON SHARE

Basic	$	(0.36	)	$	(0.57	)	$	(0.50	)	$	(0.02	)	$	0.25
Diluted	$	(0.36	)	$	(0.57	)	$	(0.50	)	$	(0.02	)	$	0.23

BALANCE SHEET DATA

Total assets	$	7,211,021		$	9,210,747		$	6,002,606		$	9,237,524		$	8,876,540
Property and equipment, net	$	2,014,650		$	2,380,552		$	2,951,478		$	3,000,238		$	1,424,481
Stockholders' equity	$	4,914,484		$	4,898,114		$	4,315,846		$	7,608,317		$	7,566,857
Common shares outstanding		83,508,252			13,508,252			9,008,252			8,248,252			8,218,252

Certain amounts in the consolidated financial information above for years prior to 2012 have been reclassified to conform to the presentation for subsequent years. Effective during the first quarter of 2012, we made changes in our presentation of operating expenses. We determined that these changes would provide more meaningful information. Such reclassifications did not impact total operating expenses, net income (loss) or stockholders’ equity as previously reported.

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following information should be read in conjunction with “Selected Financial Data” contained in Item 6 of this Report, our consolidated financial statements and the notes thereto contained in Item 8 of this Report, the “Cautionary Notice Regarding Forward-Looking Statements” contained in Part 1 of this Report, “Risk Factors” contained in Item 1A of this Report, and the other information appearing elsewhere in, or incorporated by reference into, in this Report.

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 about 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. The University delivers these programs through traditional classroom settings as well as through online instruction. Our campuses are located in the Utah cities of Layton, Orem, Salt Lake City and West Jordan, as well as Boise, Idaho. Our mission places the achievement of our students first, demonstrating the Company’s focus on delivering a high quality product.

Key Financial Metrics and Trends

We are committed to a long-term program of sustainable revenue growth. We have endured a significant downturn in profitability over the past three fiscal years. Failure to successfully implement the strategies addressed in the following discussion of key financial metrics and trends could have a negative impact on our revenues, financial condition, results of operations and cash flows.

We believe 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 availability of federal and other financial aid;

●

general economic conditions in the regions we operate; and

●

the regulatory environment of our industry.

Set forth below are average enrollment, total credits billed and average tuition rates for the last two years:

	Years ended March 31,
	2014			2013
Average enrollment		781			979
% Change from prior year		(20.2	)%		(16.9	)%

Credits billed		32,745			35,810
% Change from prior year		(8.6	)%		(15.7	)%

Average tuition cost per credit	$	403		$	430

Since October 2010, we opened two branch campuses, including our first campus outside the state of Utah. Despite these openings, Broadview University’s average enrollment has declined over the past three years. 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 the past few years. This industry-wide downturn has come after several years of industry growth, and thus the competition for high-quality leads has increased. Declining enrollments have adversely impacted our revenues, financial condition, results of operations and cash flows. We expect this trend to continue in the near term.

Additionally, our nursing program operated out of our West Jordan campus voluntarily ceased enrolling new students effective November 2011, in response to a warning letter from the Utah State Board of Nursing stating that our nursing graduates’ average pass rate on the National Council Licensure Examination (“NCLEX”) was not meeting required regulatory levels set by the Utah Administrative Code. After we did not achieve the mandated test score levels during a probationary period, we received formal communication from the Licensing Division that Broadview shall immediately begin transferring the majority of its nursing students to another institution pursuant to a teach-out agreement between Broadview and that institution. Broadview’s nursing program effectively ceased operations on December 31, 2012. This action has adversely impacted our revenues, financial condition, results of operations and cash flows. Broadview had 87 nursing students enrolled for our quarter ended March 31, 2012 (7.8% of total enrollments).

In reaction to these negative trends, we have taken a variety of actions, including:

●

Effective July 1, 2012, we implemented a tiered tuition rate program with a goal of increasing the average number of credits taken per student. Numerous studies have shown that students who carry higher credit loads per quarter have a greater likelihood of completing their academic program. Upon rollout of this program, students attending full-time (taking between 11 and 16 credits) were charged a tuition rate of $400 per credit. Students attending at less than full time were charged a tuition rate of $435 per credit. Effective July 1, 2013, the tiered tuition program was modified, where students taking 12 or more credits are charged a tuition rate of $375 per credit. As in prior years, all credits taken above 16 credits in a quarter are free of tuition charges.

●

In September 2013, we introduced a technology-focused learning model where our students and instructors began utilizing portable electronic devices in the classroom. We believe this learning model will transform how our students learn and help differentiate Broadview University from our competitors. This model connects our students with the latest technology to make the classroom experience more interactive and engaging, and has marked a transformation from textbook learning. We believe the job markets demand professionals who have in-depth knowledge of the latest technology, and our model will help students be prepared.

●

We believe this strategic move will better position us to capitalize on the demand for such skills in the workforce, and provide a clear focus for the BEAU campus while our other campuses will continue to offer our variety of traditional academic programs.

●

We are focused on achieving an appropriate ratio of our instruction costs to our revenue. Our management team has recently undertaken efforts to improve our coordinated scheduling of courses offered both residentially and online to ensure that we achieve adequate class sizes.

●

We continue to review and adjust our program and degree offerings to match the demand in the marketplace.

Critical Accounting Policies and Estimates

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 that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and reported amount of expenses during the period reported. 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. Our significant accounting policies are described in Note 2 to the consolidated financial statements contained in Item 8 of this Report. The most significant estimates include allowance for uncollectible student receivables, accrued expenses and the provision for income taxes.

Revenue and Expense Categories

●

Revenue - Approximately 91% of our revenues are tuition collected from Broadview University’s students. The academic year of Broadview University is divided into four quarters, which approximately coincide with the four quarters of the calendar year. Students make payment arrangements for their tuition and related charges prior to the beginning of each quarter.

The University bills students during the second week of each quarter for that quarter’s tuition and related charges; billings for tuition are recorded as deferred revenue and are recognized over the course of the quarter. Other revenue sources include learning resource fees, application fees, merchandise sales and other miscellaneous income; the University recognizes revenue for these items when earned.

If a student withdraws from a course prior to completion, the University refunds a portion of the tuition. The refunded amount is dependent on the timing of the withdrawal. Tuition revenue is shown net of any refunds. Because the University bills its students quarterly for tuition and other academic services, and 100% of these services are generally completed by each quarter end, the University has no deferred revenue at the end of each quarter.

●

Educational Services and Facilities Expense - Our educational services and facilities expenses generally consist of expense items directly attributable to the educational activities of Broadview University. These items include campus administrative and instructional salaries and related costs, student materials, academic program supplies, and facility rent and maintenance.

Payroll and related expenses represent our single largest expense category, accounting for 47.0% and 51.5% of our revenues for the years ended March 31, 2014 and 2013. While the largest individual expense category, such expenses also should be driven by revenue levels. Maintaining an appropriate payroll as a percentage of revenue ratio is a critical focus for management as we adjust to declining enrollments in the near term. Management is continuing to explore additional measures to bring payroll costs in line with revenue levels, while maintaining a focus on exceptional student service.

●

Selling, General and Administrative Expense - Our selling, general and administrative costs primarily include marketing and promotional expenses incurred through various forms of advertising and distribution of promotional materials. We also utilize executive, administrative, accounting and consulting services provided by related parties pursuant to a Service Level Agreement. Some of the services provided by the related parties 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. See Note 7 to the consolidated financial statements contained in Item 8 of this Report for further detail of related party transactions.

Marketing expenses accounted for 23.2% and 23.8% of revenues for the years ended March 31, 2014 and 2013. Management recognizes that spending wisely on advertising will be critical to our efforts to increase our student population. We intend to aggressively seek out the most effective means of promoting the value of our programs.

Results of Operations

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

	Year ended March 31,
	2014			2013			2012
Revenues		100.0	%		100.0	%		100.0	%
Operating expenses
Educational services and facilities		104.0			101.1			87.5
Selling, general and administrative		32.3			33.8			34.0
Total operating expenses		136.3			134.9			121.5
Operating loss		(36.3	)		(34.9	)		(21.5	)
Other income (expense)		0.0			0.0			0.0
Loss before income taxes		(36.3	)		(34.9	)		(21.5	)
Income tax expense		-			-			1.9
Net loss		(36.3	)%		(34.9	)%		(23.4	)%

Year ended March 31, 2014 compared to year ended March 31, 2013

Revenues

The following table presents year-over-year changes in our primary revenue components.

	Year Ended March 31,						Change
	2014			2013			Amount			Percent
Tuition	$	12,622,605		$	14,567,763		$	(1,945,158	)		(13.4	)%
Fees, commissions and other revenue		1,277,288			576,285			701,003			121.6
Refunds		(444,048	)		(552,381	)		108,333			(19.6	)
Total revenue	$	13,455,845		$	14,591,667		$	(1,135,822	)		(7.8	)%

Tuition

Our tuition revenue decrease was primarily attributable to decreased enrollments. Average enrollments for 2014 were 781, a decrease of 20.2% from the average of 979 for the prior year. This decrease was partially offset by an increase in average credits taken per student. Our credits billed for the year ended March 31, 2014 were 32,745 compared to 35,810 for the prior year, a decrease of 8.6%.

Fees, Commissions and Other Charges

During our year ended March 31, 2014, we introduced a technologically focused learning model. Broadview students and instructors began utilizing portable electronic devices in the classroom during the quarter ended December 31, 2013. These devices mark a transformation from textbook learning. The increase in this revenue category is primarily related to fees charged in relation to electronic content and learning devices, which totaled $951,250 for the year ended March 31, 2014.

This change in fee structure also led to the elimination of various other fees, as our miscellaneous student charges decreased $105,607 year over year. Previously, our students purchased textbooks directly from a third-party service provider and we received commission revenue from the service provider based on the overall net sales. Commission revenue decreased to $57,388 for the year ended March 31, 2014 compared to $182,327 for the prior year.

Educational services and facilities operating expenses

Expenses related to educational services and facilities decreased 5.2% to $13,980,771 for the year ended March 31, 2014, from $14,754,797 for the previous year. The $774,026 decrease was primarily due to decreased payroll-related expenses, which decreased $1,203,678, or 16.0%, year over year. Health insurance expense decreased 54.3% to $249,850 for the year ended March 31, 2014 from $546,532 for the previous year, primarily due to the decreased payroll. These decreases were offset primarily by the new costs related to the electronic content and learning devices that were introduced during the year ended March 31, 2014. Such costs totaled $834,112.

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

	Percentage of Revenue Year Ended March 31,
Expense	2014			2013
Payroll and related		47.0	%		51.5	%
Rent and other facility		27.9	%		26.1	%
Student materials and electronic resources		9.2	%		2.9	%
Scholarships		7.0	%		6.5	%

Selling, general and administrative expenses

Expenses related to selling and general administrative activities decreased 11.9% to $4,342,982 in 2014 from $4,928,852 for the previous year. The $585,870 decrease was primarily due to decreased marketing expenditures and a decrease in our monthly management fee. Marketing costs decreased $360,460, or 10.4%, to $3,113,379 in 2014 from $3,473,838 for the previous year, primarily due to management’s efforts to be more selective with advertising buys. As a percentage of revenues, marketing expense was 23.2% and 23.8% for the years ended March 31, 2014 and 2013.

Effective October 1, 2012, our monthly management fee paid under the SLA decreased to $50,000 from $75,000. As such, annual management fee expense decreased $150,000, or 20.0%, from $750,000 in 2013 to $600,000 in 2014. The management fee is reviewed as needed, but at a minimum, on an annual basis. As a percentage of revenues, the management fee was 4.5% and 5.1% for the years ended March 31, 2014 and 2013. We believe 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.

Operating income (loss)

Operating income (loss) is the primary measure used by management in assessing the Company’s performance. Our operating loss decreased $214,074, or 4.2% from $5,091,982 in 2013 to $4,877,908 in 2014. The variance was primarily the result of the aforementioned factors.

Liquidity and Capital Requirements

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.

Cash was $4,858,394 at March 31, 2014 compared to $6,340,609 at March 31, 2013. Most of our excess cash is typically held in an interest-bearing bank savings account. Our capital position has been significantly influenced by transactions with Mr. Terry Myhre, the Company’s Chairman and majority shareholder (“Mr. Myhre”). Since March 2012, Mr. Myhre has executed transactions with the Company that have resulted in cash inflows from financing activities totaling $13,937,500. These cash infusions have come against a three-year total of $10,580,736 of cash used in operating activities for the fiscal years ended March 31, 2012 to 2014. The transactions with Mr. Myhre are as follows:

On March 28, 2014, the Company issued 70,000,000 shares of Common Stock to Mr. Myhre for $4,900,000, or $0.07 per share.

On March 29, 2013, Mr. Myhre purchased 4,500,000 shares of Series B Preferred Stock at a price of $1.00 per share. Each share of Series B Preferred Stock included a detachable warrant to purchase two shares of the Company’s Common Stock for $0.50 per share. Additionally, on the same date, Mr. Myhre purchased 4,500,000 shares of Common Stock at a price of $0.25 per share. Total cash proceeds from the two transactions were $5,625,000.

On March 30, 2012, Mr. Myhre exercised his right under a warrant to purchase 650,000 shares of Common Stock from the Company at an exercise price of $1.25 per share, for a total cash payment of $812,500.

Also on March 30, 2012, we entered into a Line of Credit Authorization agreement (the “Line of Credit”) with Mr. Myhre. The Line of Credit is unsecured, and allows for the Company to borrow from Mr. Myhre up to $3,000,000 of aggregate principal borrowings upon the request of the Company. The Line of Credit has a fixed annual interest rate of 4.0% and, effective June 13, 2013, the expiration date was extended from March 31, 2014 to April 1, 2015. The Company has borrowed a total of $2,600,000 under the Line of Credit through March 31, 2014, and $600,000 remained outstanding at March 31, 2014. This balance was paid in full on June 23, 2014.

The net cash provided by (used in) each of the operating, investing and financing activities are summarized in the following table and discussed in further detail below:

	Year Ended March 31,
	2014			2013			Change
Net cash used in operating activities	$	(4,154,142	)	$	(4,176,837	)	$	22,695
Net cash used in investing activities		(288,410	)		(110,139	)		(178,271	)
Net cash provided by financing activities		2,960,337			8,085,292			(5,124,955	)
Net decrease in cash	$	(1,482,215	)	$	3,798,316		$	(5,280,531	)

Our cash flows used in operating activities has been primarily driven by net losses of $4,883,630 and $5,093,932 for the years ended March 31, 2014 and 2013. Offsetting the 2014 and 2013 net losses were depreciation and amortization of $654,312 and $697,809.

The variance in cash flows related to investing activities is primarily due to fewer property and equipment additions in 2013.

The variance in cash flows related to financing activities is primarily due to the transactions with Mr. Myhre described more fully above, as well as lower amounts due to affiliates at March 31, 2014.

Management anticipates that the Company will use a substantial portion of its cash reserves available at March 31, 2014 to fund operating losses in its fiscal year ending March 31, 2015. However, the combination of cash provided by the March 28, 2014 transactions with Mr. Myhre and the available borrowings under the Line of Credit leads management to believe the Company will be able to fund operations for the next 12 months.

A portion of our revenues is received from students who receive financial loans from Myhre Investments, LLC, an entity owned by Mr. Myhre. As of March 31, 2014, Myhre Investments, LLC had $1,337,256 in loans outstanding to Broadview University students.

Management believes that inflation will not have a significant impact on our business.

Off-Balance Sheet Arrangements

As of March 31, 2014, the Company does not have any off-balance sheet arrangements as defined by Item 303(a)(4) of Regulation S-K.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have no derivative financial instruments or derivative commodity instruments. The Company is subject to the impact of interest rate changes on excess cash maintained in a bank savings account. Earnings on excess cash balances may be adversely affected in the future should interest rates change, or the Company may be required to use these cash holdings for unexpected situations should any arise. As of March 31, 2014, management believes that any increase or decrease in interest rates earned on excess cash holdings will not have a material impact on the Company’s future earnings, fair values or cash flows related to cash.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

BROADVIEW INSTITUTE, INC. AND SUBSIDIARY

CONSOLIDATED FINANCIAL STATEMENTS

Years Ended March 31, 2014 and 2013

C O N T E N T S

	Page(s)

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	42

FINANCIAL STATEMENTS

Consolidated Balance Sheets	43

Consolidated Statements of Operations	44

Consolidated Statements of Stockholders’ Equity	45

Consolidated Statements of Cash Flows	46

Notes to Consolidated Financial Statements	47

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

ON CONSOLIDATED FINANCIAL STATEMENTS

The Board of Directors and Stockholders

Broadview Institute, Inc. and Subsidiary

Woodbury, Minnesota

We have audited the accompanying consolidated balance sheets of Broadview Institute, Inc. and Subsidiary as of March 31, 2014 and 2013, and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years then ended. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

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 consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, 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.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Broadview Institute, Inc. and Subsidiary as of March 31, 2014 and 2013, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

/s/ Lurie Besikof Lapidus & Company, LLP

Lurie Besikof Lapidus & Company, LLP

Minneapolis, Minnesota

June 27, 2014

BROADVIEW INSTITUTE, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

March 31, 2014 and 2013

	2014			2013
ASSETS

CURRENT ASSETS
Cash	$	4,858,394		$	6,340,609
Student receivables		112,304			189,447
Prepaid expenses		4,159			72,654
Inventory		7,333			-
TOTAL CURRENT ASSETS		4,982,190			6,602,710

PROPERTY AND EQUIPMENT, NET		2,014,650			2,380,552

OTHER ASSETS
Deposits		189,676			189,676
Other		24,505			37,809
	$	7,211,021		$	9,210,747

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Line of credit	$	-		$	2,000,000
Accounts payable		634,845			630,783
Accrued expenses		139,034			204,147
Student credit balances		85,437			79,920
Due to affiliates		134,802			674,465
TOTAL CURRENT LIABILITIES		994,118			3,589,315

LONG-TERM LIABILITIES
Line of credit		600,000			-
Deferred rent		702,419			723,318
TOTAL LIABILITIES		2,296,537			4,312,633

STOCKHOLDERS' EQUITY
Preferred stock Series B, par value $.01 per share, authorized 5,000,000 shares, 5,000,000 shares issued and outstanding at March 31, 2014 and 2013		50,000			50,000
Common stock, par value $.01 per share, authorized 100,000,000 shares, 83,508,252 and 13,508,252 shares issued and outstanding at March 31, 2014 and 2013		835,082			135,082
Additional paid-in capital		15,145,104			10,945,104
Accumulated deficit		(11,115,702	)		(6,232,072	)
TOTAL STOCKHOLDERS' EQUITY		4,914,484			4,898,114
	$	7,211,021		$	9,210,747

See notes to consolidated financial statements.

BROADVIEW INSTITUTE, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended March 31, 2014 and 2013

	2014			2013

REVENUES	$	13,445,845		$	14,591,667

OPERATING EXPENSES
Educational services and facilities		13,980,771			14,754,797
Selling, general and administrative		4,342,982			4,928,852
TOTAL OPERATING EXPENSES		18,323,753			19,683,649

OPERATING LOSS		(4,877,908	)		(5,091,982	)

OTHER INCOME (EXPENSE)
Gain on sale of equipment		-			16,744
Interest expense		(7,666	)		(21,027	)
Interest income		1,944			2,333
TOTAL OTHER INCOME (EXPENSE)		(5,722	)		(1,950	)


NET LOSS	$	(4,883,630	)	$	(5,093,932	)

LOSS PER COMMON SHARE:

Basic	$	(.36	)	$	(.57	)

Diluted	$	(.36	)	$	(.57	)

See notes to consolidated financial statements.

BROADVIEW INSTITUTE, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

	Preferred Stock, Series B				Common Stock				Additional Paid-In		Accumulated
	Shares		Amount		Shares		Amount		Capital		Deficit			Total
MARCH 31, 2012		500,000	$	5,000		9,008,252	$	90,082	$	5,358,904	$	(1,138,140	)	$	4,315,846

Issuance of preferred stock		4,500,000		45,000		-		-		4,455,000		-			4,500,000
Issuance of common stock		-		-		4,500,000		45,000		1,131,200		-			1,176,200
Net loss		-		-		-		-		-		(5,093,932	)		(5,093,932	)
MARCH 31, 2013		5,000,000		50,000		13,508,252		135,082		10,945,104		(6,232,072	)		4,898,114

Issuance of common stock		-		-		70,000,000		700,000		4,200,000		-			4,900,000
Net loss		-		-		-		-		-		(4,883,630	)		(4,883,630	)
MARCH 31, 2014		5,000,000	$	50,000		83,508,252	$	835,082	$	15,145,104	$	(11,115,702	)	$	4,914,484

See notes to consolidated financial statements.

BROADVIEW INSTITUTE, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended March 31, 2014 and 2013

	2014			2013

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss	$	(4,883,630	)	$	(5,093,932	)
Adjustments to reconcile net loss to net cash used in operating activities:
Gain on sale of equipment		-			(16,744	)
Depreciation and amortization		654,312			697,809
Deferred rent		(20,899	)		762
Stock-based compensation		-			51,200
Changes in operating assets and liabilities:
Student receivables		77,143			8,800
Prepaid expenses		68,495			(65,523	)
Inventory		(7,333	)		-
Other assets		13,304			25,972
Accounts payable		4,062			77,643
Accrued expenses		(65,113	)		93,081
Student credit balances		5,517			(5,905	)
Income taxes		-			50,000
Net cash used in operating activities		(4,154,142	)		(4,176,837	)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment		(288,410	)		(180,139	)
Proceeds from sale of equipment		-			70,000
Net cash used in investing activites		(288,410	)		(110,139	)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from line of credit		600,000			2,000,000
Payments on line of credit		(2,000,000	)		-
Issuance of stock		4,900,000			5,625,000
Net change in due to affiliates		(539,663	)		460,292
Net cash provided by financing activities		2,960,337			8,085,292

INCREASE (DECREASE) IN CASH		(1,482,215	)		3,798,316

CASH AT BEGINNING OF YEAR		6,340,609			2,542,293

CASH AT END OF YEAR	$	4,858,394		$	6,340,609

See notes to consolidated financial statements.

BROADVIEW INSTITUTE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 “Broadview Entertainment Arts 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.

2.	Summary of Significant Accounting Policies

Principles of Consolidation

The Company manages its business on the basis of one reporting segment. The consolidated financial statements include the accounts of Broadview Institute, Inc. and its wholly-owned subsidiary. All intercompany transactions were eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) 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 consolidated financial statements, and the reported amount of expenses during the period reported. 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 most significant estimates include allowance for uncollectible student receivables, accrued expenses, and the provision for income taxes.

Revenue Recognition

The academic year of Broadview University is divided into four quarters, which approximately coincide with the four quarters of the calendar year. Students make payment arrangements for their tuition and related charges prior to the beginning of each quarter. The University bills students during the second week of each quarter for that quarter’s tuition and related charges; billings for tuition are recorded as deferred revenue and are recognized over the course of the quarter. Other revenue sources include learning resource fees, application fees, merchandise sales and other miscellaneous income; the University recognizes revenue for these items when earned.

BROADVIEW INSTITUTE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.	Summary of Significant Accounting Policies (continued)

Cash

United States Department of Education (“USDE”) regulations require Title IV program funds received by the University in excess of the tuition and fees owed by the relevant students at that time to be, with these students’ permission, maintained and classified as restricted until the students are billed for the portion of their education program related to those funds. Funds transferred through electronic funds transfer programs are held in a separate bank account and released when certain conditions are satisfied. These restrictions have not significantly affected the Company’s ability to fund daily operations. There were no restricted cash balances at March 31, 2014 or 2013.

Concentration of Credit Risk

Cash accounts are maintained at one domestic financial institution. At times throughout the year, the Company’s cash balances may exceed amounts insured by the Federal Deposit Insurance Corporation. The Company has not experienced any losses on its cash.

The University grants credit to students in the normal course of business, but generally does not require collateral or any other security to support amounts due. Generally, a student is prohibited from registering for a subsequent academic quarter if he or she has not made definitive arrangements to pay for outstanding balances. Based upon past experience and management’s judgment, the Company establishes an allowance for doubtful accounts with respect to student receivables at the end of each quarter. Management evaluates a number of factors, including the students’ status (i.e. active, withdrawn, etc.), the period of time a balance has been outstanding, and financial aid options that are available to students that may be applied against a balance. Generally, uncollected amounts for students who have withdrawn or are otherwise no longer in school are written off after being outstanding for more than 90 days. The Company’s allowance for doubtful accounts was $25,000 and $20,000 at March 31, 2014 and 2013.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation is provided in amounts sufficient to charge the cost of depreciable assets to operations over their estimated service lives, principally on a straight-line method for financial reporting purposes and on straight-line and accelerated methods for income tax reporting purposes. Estimated useful lives used for financial reporting purposes are as follows:

Leasehold improvements	Lesser of useful life or remaining lease term
Furniture and equipment (years)	3 - 10

Fair Value of Financial Instruments

The respective carrying value of certain balance sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These include cash, student receivables, accounts payable, accrued expenses, student credit balances and amounts due to affiliates. The fair value of the Company's long-term line of credit approximates its carrying value based upon current rates available to the Company.

BROADVIEW INSTITUTE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.	Summary of Significant Accounting Policies (continued)

Impairment of Long-Lived Assets

The Company reviews its 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 asset. 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. The Company did not record any impairment charges on long-lived assets during the years ended March 31, 2014 or 2013.

Deferred Rent

Rent expense is recognized on a straight-line basis over the lease term. The Company records a long-term liability when straight-line rent expense exceeds actual rent payments; this liability will decrease when actual rent payments exceed the straight-line expense.

Advertising Costs

Advertising costs are expensed as incurred. The Company’s advertising expense was $3,113,379 and $3,473,838 for the years ended March 31, 2014 and 2013.

Stock-Based Compensation

The Company measures and recognizes compensation expense for stock-based payment awards made to officers and directors based on estimated fair values of the share award on the date of grant. The Company records compensation expense for all share-based awards over the vesting period. The expense recorded is based on awards ultimately expected to vest, and therefore, is adjusted for estimated forfeitures. The Company is required to estimate forfeitures at the time of the grant and revise, if necessary, in subsequent periods if actual forfeitures differ from those estimates. In estimating expected forfeitures, the Company analyzes historical forfeiture and termination information and considers how future termination rates are expected to differ from historical rates.

Income Taxes

The Company uses the asset and liability method to compute the differences between the tax bases of assets and liabilities and the related financial amounts. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that is more likely than not to be realized. The Company records a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return, and recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense. The Company had no unrecognized tax benefits at March 31, 2014 and 2013 for which a liability would be recorded, and there were no adjustments for unrecognized tax benefits during the years then ended.

BROADVIEW INSTITUTE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.	Summary of Significant Accounting Policies (continued)

Earnings (Loss) Per Common 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 loss attributable to common stockholders was computed as follows:

	Years Ended March 31,
	2014			2013
Net loss	$	(4,883,630	)	$	(5,093,932	)
Less cumulative dividends		(300,000	)		(30,000	)
Net loss attributable to common stockholders	$	(5,183,630	)	$	(5,123,932	)

There were no dilutive instruments as of March 31, 2014 and 2013 due to the recognition of a net loss for both years. The basic and diluted weighted average shares outstanding were 14,275,375 and 9,030,111 for the years ended March 31, 2014 and 2013.

Recently Issued Accounting Standards

On May 28, 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers. The core principle of the ASU is for companies to recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the consideration, or payment, to which the company expects to be entitled in exchange for those goods or services. The ASU may also result in enhanced disclosures about revenue. For public entities, the ASU is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Due to the recent date of issuance for this ASU, management is currently evaluating what impact, if any, the pronouncement will have on the Company’s disclosures, its financial position or results from operations.

In July 2013, the FASB issued ASU No. 2013-11, Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists. The ASU provides that a liability related to an unrecognized tax benefit would be offset against a deferred tax asset instead of presented gross for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed. The ASU is effective for fiscal years beginning after December 15, 2013. Management does not believe adoption of this ASU will have a material impact on the Company’s financial position or operating results.

BROADVIEW INSTITUTE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3.	Property and Equipment

Property and equipment consisted of the following:

	March 31,
	2014			2013
Furniture and equipment	$	3,360,542		$	3,525,378
Leasehold improvements		1,478,349			1,342,070
		4,838,891			4,867,448
Less accumulated depreciation		(2,824,241	)		(2,486,896	)
	$	2,014,650		$	2,380,552

4.	Line of Credit

The Company is party to a Line of Credit Authorization agreement (the “Line of Credit”) with Mr. Terry Myhre (“Mr. Myhre”), the Company’s Chairman and majority shareholder. The Line of Credit is unsecured and allows the Company to borrow from Mr. Myhre up to $3,000,000 of aggregate principal upon the request of the Company. The Line of Credit has a fixed annual interest rate of 4.0% and is due April 1, 2015. The Company had $600,000 and $2,000,000 outstanding under the Line of Credit at March 31, 2014 and 2013. Interest expense related to Line of Credit borrowings was $7,666 and $21,027 for the years ended March 31, 2014 and 2013. The Company paid $28,693 for interest during the year ended March 31, 2014; no such payments were made during the year ended March 31, 2013. The $600,000 balance outstanding at March 31, 2014 was paid in full on June 23, 2014.

5.	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 had voting rights equal to 100 shares of common stock. Upon issuance, the Series A preferred stock bore 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 were issued, and effective March 29, 2013, the Company’s Board of Directors (the “Board”) decreased the number of authorized Series A preferred stock to zero and terminated the Series A preferred stock designation.

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. 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. Each share of Series B preferred stock is convertible into one share of common stock at any time. The Company previously issued 500,000 shares to Mr. Myhre for $625,000. On March 29, 2013, the Company issued the remaining 4,500,000 shares of Series B preferred stock to Mr. Myhre, including detachable warrants described more fully below, for $4,500,000. At March 31, 2014 and 2013, cumulative preferred stock dividends in arrears were $360,000 and $60,000.

BROADVIEW INSTITUTE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

5.	Stockholders’ Equity (continued)

Warrants

Detachable warrants for 1,000,000 shares of common stock were included with the original issuance of Series B preferred stock noted above. The warrants were issued with an exercise price of $1.25 per share and appraised value of approximately $.20 per warrant. On March 30, 2012, Mr. Myhre exercised his right to purchase 650,000 shares of common stock at an exercise price of $1.25 per share, for a total cash payment of $812,500. Upon exercise, there were no warrants left outstanding, nor were any shares of common stock reserved for such conversion.

Detachable warrants for 9,000,000 shares of common stock were included with the prior year issuance of Series B preferred stock noted above. The warrants were issued with an exercise price of $.50 per share and appraised value of approximately $.06 per warrant. These warrants expire March 29, 2023. The 9,000,000 warrants represented the balance of warrants outstanding at March 31, 2014 and 2013, and there were 9,000,000 shares of common stock reserved for exercise.

Common Stock

On March 28, 2014, the Company issued 70,000,000 shares of Common Stock to Mr. Myhre for $4,900,000. On March 29, 2013, The Company issued 4,500,000 shares of Common Stock to Mr. Myhre for $1,125,000.

Stock Options

No stock options were granted, exercised or expired during the years ended March 31, 2014 and 2013, and no options were outstanding as of March 31, 2014 or 2013.

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 March 31, 2014 and 2013.

Restricted Stock Awards

On June 15, 2011, the Company’s 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 vested at a rate of 2,000 shares per quarter beginning with the Company’s quarter ending June 30, 2011. These awards were fully vested at March 31, 2013. Stock compensation expense for directors was $51,200 for the year ended March 31, 2013. There was no stock compensation expense for the year ended March 31, 2014.

BROADVIEW INSTITUTE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6.	Income Taxes

There was no provision for income taxes for the years ended March 31, 2014 or 2013. A reconciliation of the provision for income taxes at the statutory rates to the reported income tax provision is as follows:

	Years Ended March 31,
	2014			2013
Statutory income tax rate		34.0	%		34.0	%
State taxes, net of federal benefit		4.6			3.6
Establishment of valuation allowances		(39.4	)		(38.4	)
Other		0.8			0.8
		0.0	%		0.0	%

A summary of deferred tax assets and liabilities is as follows:

	March 31,
	2014			2013
Deferred tax assets:
Accounts receivable	$	9,000		$	7,000
Accrued expenses		13,000			10,000
Deferred rent		262,000			270,000
Net operating loss carryforwards		5,419,000			3,591,000
Alternative minimum tax credit		235,000			235,000
		5,938,000			4,113,000

Deferred tax liabilities:
Prepaid expenses		(2,000	)		(27,000	)
Depreciation and amortization		(86,000	)		(163,000	)
		(88,000	)		(190,000	)
Net deferred tax asset before valuation allowance		5,850,000			3,923,000
Valuation allowance		(5,850,000	)		(3,923,000	)
Net deferred tax asset	$	-		$	-

Management evaluates the Company’s deferred tax assets on a regular basis to determine if a valuation allowance should be established based on the consideration of all available evidence using a “more-likely-than-not” standard. In making such judgments, management must weigh both positive and negative evidence that can be objectively verified. A cumulative loss in recent years is significant negative evidence in considering whether deferred tax assets are realizable, and also limits projections of future taxable income to that which can be estimated over a reasonable amount of time. Management’s ability to accurately forecast should be evaluated against recent results, and the reliability of such forecasting inherently decreases as the duration of such forecasting increases.

BROADVIEW INSTITUTE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6.	Income Taxes (continued)

As of March 31, 2012, the Company had reported pre-tax losses for five consecutive quarters, and six of the past seven quarters. After considering evidence including historical results, industry and general economic trends, and forecasts on future operating results, management increased the valuation allowance to fully reserve for the Company’s net deferred tax assets. Due to the continued losses incurred during the years ended March 31, 2014 and 2013, management, after considering relevant evidence and forecasts, has maintained a full valuation allowance against the Company’s net deferred tax assets. As such, the valuation allowance increased $1,927,000 during the year ended March 31, 2014.

The Company’s valuation allowance at March 31, 2014 and 2013 includes $422,000 for net operating loss carryforwards in certain states where management is not currently anticipating any income being generated. At March 31, 2014, the Company had approximately $12,941,000 in federal net operating loss carryforwards to reduce future taxable income. These carryforwards begin to expire in our fiscal year ending March 31, 2025. 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. Currently, no jurisdictions are under examination. No liability was recorded for interest or penalties related to uncertain tax positions at March 31, 2014 or 2013.

For federal purposes, tax years 2011-2013 remain open to examination. Prior to 2011, the statute of limitations remains open for three years subsequent to the utilization of the net operating losses that were generated in those years. For state purposes, the statute of limitations remains open in a similar manner. Management does not anticipate any significant increases or decreases in unrecognized tax benefits within the next twelve months.

7.	Related Party Transactions

Certain Broadview University students received funding toward the cost of their education from Myhre Investments, LLC, an entity owned by Mr. Myhre. Myhre Investments, LLC had $1,337,256 and $1,233,571 in loans outstanding to University students at March 31, 2014 and 2013.

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, including Company Chief Executive Officer (“CEO”) Jeffrey 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 $36,400 and an initial security deposit of $32,500. Broadview Institute, Inc. guaranteed the lease. Rent expense for the Layton facility was $436,800 and $440,640 for the years ended March 31, 2014 and 2013.

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 $51,400 and an initial security deposit of $48,100. Broadview Institute, Inc. guaranteed the lease. Rent expense for the Orem facility was $603,600 and $577,200 for the years ended March 31, 2014 and 2013.

BROADVIEW INSTITUTE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7.	Related Party Transactions (continued)

Broadview University is party to 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 $468,000 for each of the years ended March 31, 2014 and 2013.

Mr. Myhre has personal guarantees on Broadview University’s facility leases for its West Jordan campus. The total amount of remaining rental payments due under the leases as of March 31, 2014 was approximately $2,989,000.

During the year ended March 31, 2013, the Company paid $96,000 to The Institute of Production & Recording, Inc., an entity partially owned by Mr. Myhre and CEO Jeffrey Myhre, for the purchase of equipment.

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 and CEO Jeffrey 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 incurs a monthly management fee payable to GU/MSB under the terms of the SLA. This fee is negotiated based on analysis of the cost and scope of services provided. Such analysis is performed as deemed necessary by either party, or annually at a minimum. The Company’s Board of Directors approves any changes to the monthly fee. Effective October 1, 2012, the monthly management fee was reduced from $75,000 to $50,000. 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.

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.

The Company utilizes 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. Commission payments are remitted by the third-party provider to GU or MSB for all textbook sales to students from these three entities.

During the year ended March 31, 2014, the Company began purchasing digital learning content, including electronic learning devices, through the same vendors as GU and MSB. Payments to the vendors are made by MSB, and the Company reimburses MSB for such purchases made on the Company’s behalf.

BROADVIEW INSTITUTE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7.	Related Party Transactions (continued)

The Company, GU and MSB also may reimburse each other for miscellaneous expenditures made by one entity on another entity’s behalf that are outside the scope of the SLA disclosed above.

The following table summarizes the related party transactions with MSB for the years ended March 31, 2014 and 2013:

	Year Ended March 31,
	2014			2013
Balance due to MSB - beginning of period	$	674,465		$	118,173
Management fees charged by MSB		600,000			750,000
Benefit claims paid by MSB		575,856			834,336
Textbook purchases by MSB		177,576			822,533
Digital learning resources purchased by MSB		918,819			-
Other miscellaneous transactions, net		(213,906	)		(138,088	)
Broadview payments to MSB		(2,598,008	)		(1,712,489	)
Balance due to MSB - end of period	$	134,802		$	674,465

The following table summarizes the related party transactions with GU for the years ended March 31, 2014 and 2013:

	Year Ended March 31,
	2014			2013
Balance due from GU - beginning of period	$	-		$	-
Textbook commissions received by GU		-			178,679
Other miscellaneous transactions, net		(4,853	)		20,307
Broadview payments (from) to GU		4,853			(198,986	)
Balance due from GU - end of period	$	-		$	-

8.	Operating Leases

The University has long-term operating leases for its campus facilities. All leases provide for additional rent based on shared operating expenses. Total rent expense for facilities was $2,887,900 and $2,904,198 for the years ended March 31, 2014 and 2013.

BROADVIEW INSTITUTE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8.	Operating Leases (continued)

Approximate future minimum rent commitments are as follows:

Year Ending March 31,	Amount
2015	$	2,595,000
2016		2,628,000
2017		2,547,000
2018		2,235,000
2019		1,839,000
Thereafter		2,447,000
	$	14,291,000

9.	Employee Benefit Plans

401(k) Savings Plan

The Company participates in a 401(k) employee benefit plan covering eligible employees. The Company contributes to the plan an amount equal to 50% of an employee’s contribution up to a maximum Company contribution of 3% of an employee’s eligible compensation. The Company contributed $35,459 and $50,428 to the plan for the years ended March 31, 2014 and 2013.

Self-Insured Health Plan

The Company participates in a self-insured health plan covering eligible employees. The plan features insured individual and aggregate annual loss limitations. Expense recognized for claims and administration was $249,850 and $546,532 for the years ended March 31, 2014 and 2013.

10.

Regulatory Matters

The Company is subject to extensive regulatory oversight by federal and state governmental agencies, as well as accrediting body oversight. To continue participation in Title IV programs, an institution must demonstrate compliance with extensive academic, administrative and financial regulations regarding institutional eligibility. For the year ended March 31, 2014, the Company derived 79% of its revenues from Title IV funds, as calculated for the purposes of the USDE's 90/10 Rule. Management performs periodic reviews of the Company’s compliance with the various applicable regulatory requirements. As of the date of this Report, management identified the following regulatory matters for disclosure in the notes to these consolidated financial statements:

Composite Score

To participate in Title IV programs, an institution must satisfy specific measures of financial responsibility as prescribed by the USDE. One such measure is the USDE’s composite score, which may range from -1.0 to 3.0, based on a combination of financial measures designed to establish the adequacy of an institution’s capital resources, its financial viability and its ability to support current operations. The Company’s composite score as of and for the years ended March 31, 2014 and 2013 was 1.8 and 1.7. However, the composite score for the year ended March 31, 2012 was 1.3.

BROADVIEW INSTITUTE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10.

Regulatory Matters (continued)

When an institution’s composite score is less than 1.5, but greater than 1.0, the USDE may still consider the institution to be financially responsible if the institution qualifies for an alternative standard. The Company agreed to increased monitoring of its operations on December 13, 2012, including the administration of the Title IV programs, for up to three consecutive fiscal years while maintaining a composite score equal to 1.0 to 1.4 for each of those years (the “Zone Alternative”). This election gave the Company an opportunity to improve its financial condition over time without requiring a letter of credit posting or participation in Title IV programs under provisional certification.

Under the Zone Alternative, a participating institution:

●

must request and receive funds under the cash monitoring or reimbursement payment methods, as specified by the USDE (see “Heightened Cash Management” section below);

●

must provide timely information regarding certain oversight and financial events;

●

may be required to submit its financial statement and compliance audit earlier than normally required; and

●

may be required to provide information about its current operations and future plans.

Heightened Cash Management

BROADVIEW INSTITUTE, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11.

Quarterly Financial Summary (unaudited)

Summarized unaudited quarterly financial data for 2014 and 2013 are as follows:

QUARTERLY OPERATING RESULTS	Quarters Ended
(UNAUDITED)	June 30			September 30			December 31			March 31

Year ended March 31, 2014:
Revenues	$	3,244,742		$	2,803,028		$	4,011,073		$	3,387,002
Operating loss	$	(1,057,724	)	$	(1,508,731	)	$	(1,051,824	)	$	(1,259,629	)
Net loss	$	(1,058,474	)	$	(1,508,271	)	$	(1,051,494	)	$	(1,265,391	)
Loss per common share:
Basic	$	(0.08	)	$	(0.12	)	$	(0.08	)	$	(0.08	)
Diluted	$	(0.08	)	$	(0.12	)	$	(0.08	)	$	(0.08	)

Year ended March 31, 2013:
Revenues	$	3,917,642		$	3,344,175		$	3,810,978		$	3,518,872
Operating loss	$	(994,962	)	$	(1,769,580	)	$	(935,173	)	$	(1,392,267	)
Net loss	$	(993,637	)	$	(1,769,091	)	$	(918,176	)	$	(1,413,028	)
Loss per common share:
Basic	$	(0.11	)	$	(0.20	)	$	(0.10	)	$	(0.16	)
Diluted	$	(0.11	)	$	(0.20	)	$	(0.10	)	$	(0.16	)

ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.

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”). The Company’s management, under supervision and with participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of March 31, 2014, and our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2014.

In designing and evaluating our disclosure controls and procedures, management recognizes that a 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, within the Company have been detected. The design of any system of controls also is based in part upon assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements, due to error or fraud, may occur and may not be detected.

Management’s Annual Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. The Company’s internal control system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes, in accordance with accounting principles generally accepted in the United States of America. Because of inherent limitations, a system of 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 due to change in conditions, or that the degree of compliance with the internal control policies and procedures may deteriorate.

The Company’s management, under the supervision and with participation of the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of March 31, 2014.

This report on the effectiveness of the Company’s internal controls over financial reporting includes conclusions reached by the Company’s management, and does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting, as management’s report was not subject to attestation by our registered public accounting firm pursuant to current SEC requirements.

Changes in Internal Controls Over Financial Reporting

The Company’s management, under the supervision and with participation of the Chief Executive Officer and Chief Financial Officer, have evaluated any changes in the Company’s internal control over financial reporting that occurred during the quarter ended March 31, 2014, and has concluded that there were no changes during such quarter that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 9B.

OTHER INFORMATION

None.

PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Other than the information included in Part I of this Form 10-K under the heading “Executive Officers of the Registrant,”, the following information required by Item 10 is incorporated herein by reference to the following sections of the Registrant’s definitive Proxy Statement for its 2014 Annual Meeting of Shareholders: information relating to directors to the section labeled “Election of Directors;” information relating to compliance with Section 16(a) of the Exchange Act to the section labeled “Section 16 (a) Beneficial Ownership Reporting Compliance;” information relating to the audit committee’s membership to the section labeled “Committees of the Board;” information relating to audit committee financial expertise to the section labeled “Audit Committee Independence and Financial Expert Status;” and information relating to Code of Ethics to the section “Code of Ethics.”

ITEM 11.

EXECUTIVE COMPENSATION

The information required by Item 11 is incorporated herein by reference to the Section labeled “Executive Compensation” of the Registrant’s definitive Proxy Statement for its 2014 Annual Meeting of Shareholders.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by Item 12 relating to principal shareholders and management shareholdings is incorporated herein by reference to the sections labeled “Principal Shareholders” and “Management Shareholdings” of the Registrant’s definitive Proxy Statement for its 2014 Annual Meeting of Shareholders.

The following table provides information as of March 31, 2014 about the Registrant’s equity compensation plans.

	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (1)
	(a)	(b)	(c)
Equity compensation plans approved by security holders	None	None	740,000
Equity compensation plans not approved by security holders	None	None	None
Total	None	None	740,000

(1) On August 9, 2006, the shareholders of the Company approved the Company’s 2006 Equity Incentive Plan (the “2006 Plan”). The 2006 Plan 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. Pursuant to the 2006 Plan, 740,000 shares of the Company’s common stock were available for issuance as of March 31, 2014.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by Item 13 is incorporated herein by reference to the sections labeled “Independence” and “Certain Relationships and Related Transactions” of the Registrant’s definitive Proxy Statement for its 2014 Annual Meeting of Shareholders.

ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by Item 14 is incorporated by reference to the section labeled “Independent Auditors” of the Registrant’s definitive Proxy Statement for its 2014 Annual Meeting of Shareholders.

PART IV

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following information required under this item is filed as part of this report:

(a)(1)

Financial Statements

All required financial statements of the Registrant are set forth under Item 8 of this report on Form 10-K.

(a)(2)

Financial Statement Schedule

Schedules have not been included either because they are not applicable or because the information is included elsewhere in this Annual Report.

(a)(3)

Exhibits.

See “Exhibit Index” on page following signatures.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		BROADVIEW INSTITUTE, INC.
		(the “Registrant”)

	By:	/s/Jeffrey D. Myhre
		Jeffrey D. Myhre, Chief Executive Officer

	Date:	June 27, 2014

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.

Signature	Title	Date

/s/ Jeffrey D. Myhre	Chief Executive Officer	June 27, 2014
Jeffrey D. Myhre	(principal executive officer)

/s/ Kenneth J. McCarthy	Chief Financial Officer	June 27, 2014
Kenneth J. McCarthy	(principal financial officer and principal accounting officer)

/s/ Terry L. Myhre	Chairman of the Board	June 27, 2014
Terry L. Myhre

/s/ James S. Redpath	Director	June 27, 2014
James S. Redpath

/s/ Robert A. Kramarczuk	Director	June 27, 2014
Robert A. Kramarczuk

/s/ Roger C. Kuhl	Director	June 27, 2014
Roger C. Kuhl

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

BROADVIEW INSTITUTE, INC.

(Commission File Number: 0-8505)

EXHIBIT INDEX

For

Form 10-K for 2014 fiscal year

Exhibit
2.1	Stock Exchange Agreement by and among the Registrant, C Square Educational Enterprises and the Sellers Party thereto dated July 1, 2005 –incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed July 8, 2005*
3.1	Registrant’s Restated Articles of Incorporation as adopted by the Board September 15, 2006 - incorporated by reference to Exhibit 3.1 to the Registrant’s Annual Report on Form 10-KSB for the fiscal year ended March 31, 2007*
3.2	Registrant’s Restated Bylaws, as amended to date–incorporated by reference to Exhibit 6(b) to the Registrant’s Registration Statement on Form S-14, Reg. No. 2-55647*
10.1	Common Stock Purchase Warrant dated March 25, 2003, granted by the Registrant to Terry Myhre–incorporated by reference to Exhibit 99.3 to Schedule 13D filed by Terry L. Myhre on May 9, 2003*
10.2	Common Stock Purchase Warrant dated March 30, 2005, as issued by the Registrant to Terry L. Myhre–incorporated by reference to Exhibit 99.6 to Schedule 13D amendment filed by Terry L. Myhre on June 14, 2005*
10.3	Investment Representation Letter and Subscription Agreement dated March 30, 2005, by and between the Registrant and Terry L. Myhre–incorporated by reference to Exhibit 99.5 to Schedule 13D amendment filed by Terry L. Myhre on June 14, 2005*
10.4	Lease Agreement dated October 1, 2002, as amended effective June 1, 2004, and July 1, 2005 and as assigned to the Registrant June 30, 2005, between the Registrant and IS Properties, LLC covering property at 1746 West 7800 South, West Jordan, Utah – incorporated by reference to Exhibit 99.2 to the Registrant’s Quarterly Report on Form 10-QSB for the quarter ended September 30, 2005*
10.5	Lease Agreement dated January 7, 2000, and amended on October 1, 2000, by and between Terry Myhre d/b/a Utah Career College and West One, LLC, covering property at 1902 West 7800 South, West Jordan, Utah – incorporated by reference to Exhibit 99.3 to Registrant’s Quarterly Report on Form 10-QSB for the quarter ended September 30, 2005*
10.6	Lease Agreement dated January 1, 2007, by and between C Square Educational Enterprises, Inc. and Myhre Holdings-Utah, LLC covering property at 869 West Hill Field Road, Layton, Utah – incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed March 22, 2007*

Exhibit
10.7	Lease Guaranty dated effective January 1, 2007, by the Registrant and in favor of Myhre Holdings-Utah, LLC related to lease covering property at 869 West Hill Field Road, Layton, Utah - incorporated by reference to Exhibit 99.2 to the Registrant’s Current Report on Form 8-K filed March 22, 2007*
10.8	2006 Equity Incentive Plan – incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed August 14, 2006*#
10.9	Service Level Agreement dated June 27, 2008 between Registrant and Globe University, Inc. and Minnesota School of Business, Inc. – incorporated by reference to Exhibit 10.23 to the Registrant’s Annual Report on Form 10-KSB filed for the fiscal year ended March 31, 2008*
10.10	Lease Agreement dated August 1, 2008, by and between C Square Educational Enterprises, Inc. and Myhre Holdings-Orem, LLC covering property at 898 North 1200 West, Orem, Utah; guaranteed by the Registrant – incorporated by reference to Exhibit 99.1 to the Registrant’s Quarterly Report on Form 10-Q filed for the quarter ended June 30, 2008*
10.11	Restricted Stock Agreement under the Broadview Institute, Inc. 2006 Equity Incentive Plan dated October 13, 2009 – incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed October 19, 2009*#
10.12	Lease Agreement dated November 5, 2009, by and between C Square Educational Enterprises, Inc. and Boyer South Salt Lake Associates, Ltd. covering property at 240 East Morris Avenue, Salt Lake City, Utah; guaranteed by the Registrant – incorporated by reference to Exhibit 99.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009*
10.13	First Amendment to Service Level Agreement dated November 12, 2009, by and between the Registrant and Globe University, Inc. and Minnesota School of Business, Inc. – incorporated by reference to Exhibit 99.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2009*
10.14	Lease Agreement executed March 31, 2011 and effective January 1, 2011, by and between C Square Educational Enterprises, Inc. and Myhre Holdings-Meridian, LLC covering property at 2750 East Gala Court, Meridian Idaho – incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed April 4, 2011.
10.15	Restricted Stock Award Agreement under the Broadview Institute, Inc. 2006 Equity Incentive Plan dated June 15, 2011 – incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed June 17, 2011.*#
10.16	Line of Credit Authorization by and between the Registrant and Terry L. Myhre, executed and effective March 30, 2012 – incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed April 5, 2012.*
10.17	Memorandum of Understanding and Order by and between the State of Utah Department of Commerce Division of Occupational and Professional Licensing and Broadview University dated December 9, 2011 – incorporated by reference to exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed June 6, 2012.

Exhibit
10.18	State of Utah Department of Commerce Division of Occupational and Professional Licensing letter to Broadview University dated May 25, 2012 regarding updated status under a Memorandum of Understanding and Order between the Division and Broadview University – incorporated by reference to exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed June 6, 2012.
10.19	Memorandum of Understanding and Order by and between the State of Utah Department of Commerce Division of Occupational and Professional Licensing and Broadview University dated August 6, 2012 – incorporated by reference to exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012
10.20	Second Amendment to Service Level Agreement dated November 14, 2012, by and between the Registrant and Globe University, Inc. and Minnesota School of Business, Inc. – incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012*
10.21	Amended and Restated Certificates of Designation of Preferred Stock of the Registrant – incorporated by reference to Exhibit 4.1 to The Registrant’s Current Report on Form 8-K/A filed April 10, 2013*
10.22	Investment Representation Letter and Subscription Agreement dated March 29, 2013, by and between the Registrant and Terry L. Myhre – incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K/A filed April 10, 2013*
10.23	First Amendment to Line of Credit Authorization by and between the Registrant and Terry L. Myhre, executed and effective June 13, 2013 – incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed June 14, 2013*
10.24	Common Stock Purchase Warrant dated March 29, 2013, granted by the Registrant to Terry Myhre – incorporated by reference to Exhibit 99.9 to the Amendment No. 5 to Schedule 13D filed by Terry Myhre on June 25, 2013.
10.25	Investment Representation Letter and Subscription Agreement dated March 28, 2014 by and between the Registrant and Terry L. Myhre – incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed April 1, 2014.
14	Registrant’s Code of Ethics - incorporated by reference to Exhibit 14 to the Registrant’s Annual Report on Form 10-K filed for the fiscal year ended March 31, 2009*
21	Subsidiary of the Registrant
	Name	State of Incorporation
	C Square Educational Enterprises, Inc.	Utah
23.1	Consent of Lurie Besikof Lapidus & Company, LLP**
31.1	Certification of Chief Executive Officer pursuant to Rule 13(a)-14(a) of the Securities Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**
31.2	Certification of Chief Financial Officer pursuant to Rule 13(a)-14(a) of the Securities Act, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**

Exhibit
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

* Incorporated by reference to a previously filed report or document, SEC File No. 0-8505, unless otherwise indicated.

** Filed herewith.

*** 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.

# Indicates a management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K.