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.

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, valuation of goodwill and the provision for income taxes.

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 and lab fees are recorded as deferred revenue and are recognized over the course of the quarter. Other revenue sources include textbook sales and commissions, 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.

All highly liquid investments purchased with a maturity of three months or less are considered to be cash equivalents. There were no such investments included in cash and cash equivalents at March 31, 2012 or 2011.

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, 2012 or 2011.

Cash accounts are maintained primarily at two financial institutions in the United States. 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. At March 31, 2012 and 2011, most of the Company’s cash was maintained in one bank savings account.

Approximately 79% and 73% of the Company’s revenues (calculated on a cash basis in accordance with USDE regulations) were collected from funds distributed under Title IV programs for the years ended March 31, 2012 and 2011. The financial and assistance programs under Title IV are subject to various political and governmental budgetary considerations. There is no assurance that such funding will be maintained at current levels. If the Company were to lose its eligibility to participate in Title IV programs, Broadview University students would likely need to seek alternative funding sources to pay for their cost of education.

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 $55,000 at March 31, 2012 and 2011.

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:

Fair value is the exchange price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. The Company classifies assets and liabilities recorded at fair value under the fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. The fair value measurements are classified under the following hierarchy:

Goodwill represents the excess purchase price over the appraised value of the portion of identifiable assets not under common control that were acquired from Broadview University. Goodwill is not amortized but is reviewed at least annually for impairment, or between annual dates if circumstances change that would more likely than not cause impairment. Management performs its annual impairment test at the close of each fiscal year, and considers several factors in evaluating goodwill for impairment, including the Company’s current financial position and results, general economic and industry conditions and legal and regulatory conditions. During the year ended March 31, 2012, the Company recorded a $622,016 impairment charge related to goodwill. See Note 4 for further discussion.

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 March 31, 2012 or 2011.

The Company records rent expense on a straight-line basis over the lease term. The difference between actual rent payments and the straight-line rent expense is recorded as a long-term liability; this liability will decrease when actual rent payments exceed the straight-line expense.

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.

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, 2012 and 2011 for which a liability would be recorded, and there were no adjustments for unrecognized tax benefits during the years then ended.

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.

There were no dilutive instruments as of March 31, 2012 and 2011 due to the recognition of a net loss for both years. The basic and diluted weighted average shares outstanding were 8,306,773 and 8,224,416 for the years ended March 31, 2012 and 2011.

Certain amounts in the 2011 consolidated financial statements have been reclassified to conform to the presentation in the 2012 statements. Such reclassifications did not impact the Company’s consolidated net loss or stockholders’ equity as previously reported.

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