CONCLUSIONES DE VIABILIDAD

The Company leases certain office facilities and office equipment under non-cancelable operating lease arrangements that expire at various dates through July 2018. The office leases contain certain renewal options. Rent expense under non-cancelable operating lease arrangements is accounted for on

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Bridgepoint Education, Inc.

Notes to Consolidated Financial Statements (Continued) 8. Lease Obligations (Continued)

a straight-line basis and totaled $0.9 million, $3.0 million and $6.1 million for the years ended December 31, 2006, 2007 and 2008, respectively.

The following table summarizes the appropriate future minimum rental payments under non-cancelable operating lease arrangements in effect at December 31, 2008 (in thousands):

Year Ending December 31,

2009 $ 13,450 2010 20,142 2011 21,667 2012 23,395 2013 25,146 Thereafter 142,376

Total minimum payments $246,176

The Company has also financed office equipment under capital leases expiring in various years through September 2018. The assets are included in property and equipment and totaled $0.9 million and $0.6 million as of December 31, 2007 and 2008, respectively. Accumulated depreciation on these assets totaled $0.4 million and $0.2 million at December 31, 2007 and 2008, respectively.

Future minimum lease payments under capital leases at December 31, 2008 are as follows (in thousands):

Year Ending December 31,

2009 $179 2010 137 2011 99 2012 69 2013 2 Thereafter —

Total minimum payments $486

Less: Amount representing interest (36)

Present value of minimum lease payments $450

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Bridgepoint Education, Inc.

Notes to Consolidated Financial Statements (Continued) 9. Earnings Per Share

The following table sets forth the computation of the basic and diluted earnings per share for the periods indicated (in thousands, except share and per share data):

Year Ended December 31, 2006 2007 2008

Net income (loss) $(5,150) $ 3,287 $26,431

Effect of accretion of preferred dividends (1,718) (1,856) (2,006)

Net income available (loss attributable) to common stockholders $(6,868) $ 1,431 $24,425

Denominator:

Weighted average common shares outstanding 3,197 3,311 3,335

Effect of dilutive options — 1,135 5,510

Effect of dilutive warrants — — 1,160

Diluted weighted average common shares outstanding 3,197 4,446 10,005

Earnings (loss) per share:

Basic $ (2.15) $ 0.01 $ 0.38

Diluted $ (2.15) $ 0.01 $ 0.13

The computation of dilutive shares outstanding excludes the following securities:

(a)

Redeemable convertible preferred stock:

The computation of dilutive shares outstanding excludes the equivalent common shares that would be related to both the accreted value and the optional conversion feature of the redeemable convertible preferred stock for the periods indicated as the Company was in a period of loss or the effect of applying the two-class method was anti-dilutive.

Year Ended December 31, 2006 2007 2008

Redeemable convertible preferred stock 113,002 98,272 60,446

(b)

Options and warrants:

The computation of dilutive shares outstanding excludes stock options and warrants to purchase shares of common stock for the periods indicated as the Company was either in a period of loss or as the exercise prices were greater than the average market price of our common stock and therefore the effect would be anti-dilutive.

Year Ended December 31, 2006 2007 2008

Options 3,530 — —

Warrants 1,578 1,578 39

The Company calculated earnings per share using the two-class method under the guidelines of FAS 128 to reflect the participation rights of each class and series of stock. Under FAS 128, basic net

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Bridgepoint Education, Inc.

Notes to Consolidated Financial Statements (Continued) 9. Earnings Per Share (Continued)

income is computed for common stock outstanding during the period by dividing net income allocated to the participation rights of each class by the weighted average number of common shares outstanding during the period.

The following presents the net income allocated to each class of common stock in the calculation of basic earnings per share for the years ended December 31, 2007 and 2008:

December 31, 2007 2008

Net income attributable to common stock $1,431 $24,425

Income allocated to redeemable convertible preferred stock $1,856 $ 2,006

Net income $3,287 $26,431 December 31, 2007: Weighted Avg Shares Income Allocation Common stock 3,311 $ 47

Redeemable convertible preferred stock 98,272 $ 1,384

Total $ 1,431 December 31, 2008: Weighted Avg Shares Income Allocation Common stock 3,335 $ 1,276

Redeemable convertible preferred stock 60,446 $23,149

Total $24,425

The numerator of diluted earnings per share is computed by starting with the numerator of basic earnings per share and adding back income attributable to the participation rights of redeemable convertible preferred stock to the extent such shares are dilutive.

The denominator of diluted earnings per share includes the incremental potential common shares issuable upon the following events to the extent their effect is dilutive:

(i)

Exercise of stock options and warrants;

(ii)

Optional conversion of all outstanding shares of Series A Convertible Preferred Stock with each share of Series A Convertible Preferred Stock being converted into 2.265380093 shares of common stock; and

(iii)

Issuance of shares of common stock at fair value in payment of the accreted value of $27.1 million of the redeemable convertible preferred stock to the holders of Series A Convertible Preferred Stock.

There was no difference between income allocated to the participation rights of the various classes in computing basic and diluted earnings per share as all potential common shares of redeemable convertible preferred stock were anti-dilutive.

Bridgepoint Education, Inc.

Notes to Consolidated Financial Statements (Continued) 9. Earnings Per Share (Continued)

Unaudited pro forma earnings per share

Pro forma basic earnings per share has been calculated assuming the optional conversion of all outstanding shares of the redeemable convertible preferred stock into shares of common stock as of the beginning of the period, with each share of the redeemable convertible preferred stock converting into 2.265380093 shares of common stock. See Note 10, "Redeemable Convertible Preferred Stock (Series A Convertible Preferred Stock)." Pro forma diluted earnings per share also includes the incremental shares of common stock issuable upon the exercise of stock options and warrants, consistent with the amount included in the historical diluted per share calculation.

The following table sets forth the computation of unaudited pro forma basic and diluted earnings per share for the periods indicated (in thousands, except share and per share data):

Year Ended December 31, 2008 Numerator: Net income $ 26,431 Denominator:

Weighted average number of common shares outstanding 3,335

Add: Pro forma adjustments to reflect assumed weighted average effect of conversion of redeemable convertible

preferred stock 44,805

Denominator for pro forma basic earnings per share 48,140

Add: Pro forma adjustments to reflect assumed weighted average effect of exercise of common stock options 5,510

Add: Pro forma adjustments to reflect assumed exercise of outstanding warrants 1,160

Denominator for pro forma diluted earnings per share 54,810

Pro forma earnings per share, basic $ 0.55

Pro forma earnings per share, diluted $ 0.48

Unaudited supplemental pro forma earnings per share

Supplemental basic pro forma earnings per share has been calculated assuming (i) the optional conversion of all outstanding shares of the redeemable convertible preferred stock into shares of common stock as of the beginning of the period, with each share of the redeemable convertible preferred stock converting into 2.265380093 shares of common stock, and (ii) the issuance of shares of common stock at the initial public offering price of $10.50 per share in payment of the accreted value of $27.1 million of the redeemable convertible preferred stock in excess of net income of $26.4 million for the year ended

December 31, 2008 to the holders thereof. See Note 10, "Redeemable Convertible Preferred Stock (Series A Convertible Preferred Stock)." Supplemental pro forma diluted earnings per share also includes the incremental shares of common stock issuable upon the exercise of stock options and warrants, consistent with the amount included in the historical diluted per share calculation.

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Bridgepoint Education, Inc.