Note 4 - Commitments and Contingencies

6 Months Ended

Jun. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

(4) COMMITMENTS AND CONTINGENCIES:

(a)     Legal Proceedings

From time to time, in the ordinary course of business, we are a party to various claims and legal proceedings. There have been no material changes with respect to legal proceedings previously reported in our 2013 Annual Report.

(b)      Government Regulation - Schools

We have obtained accreditation and state approvals for the Arlington, Texas campus of our schools and applied for approval of U.S. Department of Education (the “DOE”) for the campus to participate in the student financial programs authorized by Title IV of the Higher Education Act of 1965 (the “Title IV Programs”), which are administered by the DOE. Accordingly, while that campus is open and operational, the campus is not eligible to participate in the Title IV Programs. In order to be so eligible, that campus must, among other things, meet DOE requirements for being considered “legally authorized” in the State of Texas, as discussed in our Annual Report on Form 10-K for the year ended December 31, 2013 at “Regulation – Schools – State Authorization Agencies.” If the DOE determines that a state agency’s approval does not comply with DOE requirements, the DOE has established a process under which the effective date of the requirements will be extended through July 1, 2015 if the state provides an explanation of how an additional one-year extension will permit the state to finalize its procedures so that the approvals provided to institutions comply with state authorization requirements and requests such extension. The DOE notified us on August 4, 2014 that it had denied the application for DOE approval of the Arlington campus to participate in the Title IV programs based on the conclusion that documentation of the authorization from the Texas Department of State Health Services (“DSHS”) was insufficient to demonstrate compliance with DOE requirements and based on the documentation from DSHS not containing the required explanation or extension request as referenced above. We intend to request the DOE to reconsider its determination and also are communicating with DSHS about requesting an extension and providing additional information addressing DOE’s stated concerns with the DSHS authorization. If DOE rejects our request for reconsideration of its determination and if DSHS refuses to request, or DOE refuses to grant an extension, we will continue to be unable to disburse Title IV funds to students enrolled at the campus and this would have a material adverse effect on our business, results of operations and financial condition.

We also have two other campuses in Texas (Dallas and Houston) that the DOE previously approved for Title IV participation in 2011 and in 2012, respectively, and that are scheduled to apply to the DOE in the fourth quarter of 2014 for recertification to continue to participate in the Title IV Programs. Those two campuses, together with the Arlington campus, represent 11% of the total student population of our schools. If the DOE refuses to recognize the DSHS approval of those programs and does not grant an extension of the state authorization regulation, the DOE could refuse to recertify our Dallas and Houston campuses for continued Title IV participation, and could attempt to seek repayment of federal aid funds disbursed to students at these campuses notwithstanding its prior approval of these campuses, which would have a material adverse effect on our business, results of operations and financial condition.