Note 4 - Commitments and Contingencies

9 Months Ended

Sep. 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 our Arlington, Texas campus and have obtained approval from the 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. In order to be eligible to participate in the Title IV Programs, the campus must, among other things, meet DOE requirements for being considered “legally authorized” in the State of Texas, as discussed in our 2013 Annual Report 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 June 30, 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 has approved the Arlington campus to participate in the Title IV programs. The DOE had previously 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 DOE’s 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 subsequently requested the DOE to reconsider its determination based in part on additional documentation that we provided. The DOE responded by granting an extension of the effective date of the state authorization rule requirements until June 30, 2015 and approving the Arlington campus to participate in the Title IV programs. If Texas does not change its law to clarify the authority of DSHS in a manner that complies with the state authorization rule by June 30, 2015, we could lose our authority to disburse Title IV funds to students enrolled at the Arlington 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, that have approvals from DSHS, and that have applied, as required, to the DOE for recertification to continue to participate in the Title IV Programs. Those two campuses, together with the Arlington campus, represent 13% of the total student population of our schools. The DOE has not yet reviewed the recertification applications for these two campuses. If the DOE does not apply the extension to the two campuses, 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. If the DOE approves our Dallas and Houston campuses, but Texas does not change its law to clarify the authority of DSHS in a manner that complies with the state authorization rule of the DOE by June 30, 2015, we could lose our authority to disburse Title IV funds to students enrolled at these campuses, which would have a material adverse effect on our business, results of operations and financial condition.