Note 8 - Related Party Transactions

12 Months Ended

Mar. 31, 2012

Related Party Transactions Disclosure [Text Block]

8.             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 $1,393,822 and $1,758,512 in loans outstanding to University students at March 31, 2012 and 2011.

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, 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 term of the SLA was for one year from the effective date (July 1, 2008), with automatic one-year renewal periods thereafter.  The SLA may be terminated by either party upon 30 days notice.

Under the SLA, the Company paid GU/MSB $75,000 per month for these services effective January 1, 2010.  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’s expenses for services under the SLA were $900,000 for each of the years ended March 31, 2012 and 2011.

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. 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 a monthly base rent of $32,500 and an initial security deposit of the same amount.  Broadview Institute, Inc. guaranteed the lease. Rent expense for the Layton facility was $390,000 for each of the years ended March 31, 2012 and 2011.

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 $48,100 and an initial security deposit of the same amount.  Broadview Institute, Inc. guaranteed the lease.  Rent expense for the Orem facility was $577,200 for each of the years ended March 31, 2012 and 2011.

Effective January 1, 2011, Broadview University entered into 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 and $117,000 for the years ended March 31, 2012 and 2011.

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, 2012 was approximately $3,985,000.

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.  Total payments made to MSB for these items were $1,033,218 and $1,069,616 for the years ended March 31, 2012 and 2011.

Effective July 2011, the Company began utilizing 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.  Total payments from the Company to MSB for textbook purchases made by University students were $877,743 for the year ended March 31, 2012.  Commission payments are remitted by the third-party provider to GU for all textbook sales to these three entities.  Commissions remitted to the Company from GU totaled $158,958 for the year ended March 31, 2012.

The Company also may reimburse, or be reimbursed by, GU and MSB for other miscellaneous expenditures made by GU and MSB on the Company’s behalf that are outside the scope of the SLA disclosed above.  Such payments to MSB totaled $89,229 and $158,842 for the years ended March 31, 2012 and 2011.  Such payments to GU totaled $12,878 and $26,900 for the years ended March 31, 2012 and 2011.  Total payments received from MSB totaled $156,802 and $376,887 for the years ended March 31, 2012 and 2011.  Total payment received from GU totaled $20,316 and $2,681 for the years ended March 31, 2012 and 2011.

The Company had a due to affiliate balance for MSB of $118,173 and $113,904 at March 31, 2012 and 2011.  The Company had a due to affiliate balance for GU of $2,215 at March 31, 2011.

During the year ended March 31, 2012, the Company purchased $96,000 of equipment from Institute of Production & Recording, Inc., an entity partially owned by Mr. Myhre.  This amount was due to Institute of Production & Recording, Inc. at March 31, 2012.