Note 8 - Related Party Transactions

6 Months Ended

Sep. 30, 2013

Related Party Transactions [Abstract]

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 $1,346,303 and $1,233,571 in loans outstanding to University students at September 30, 2013 and March 31, 2013.

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 five-year renewal options. The agreement is a “triple net” lease with an initial security deposit of $32,500. Broadview Institute, Inc. guaranteed the lease. Rent expense for the Layton facility was $109,200 and $218,400 for the three and six months ended September 30, 2013, as well as the three and six months ended September 30, 2012.

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 ten year period with two five-year renewal options. The agreement is a “triple net” lease with an initial security deposit of $48,100. Broadview Institute, Inc. guaranteed the lease. Rent expense for the Orem facility was $150,900 and $295,200 for the three and six months ended September 30, 2013, and $144,300 and $288,600 for the three and six months ended September 30, 2012.

Broadview University is a party to 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 ten year period with two five-year renewal options. The agreement is a “triple net” lease. Rent expense for the Boise facility was $117,000 and $234,000 for the three and six months ended September 30, 2013, as well as the three and six months ended September 30, 2012.

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 September 30, 2013 was approximately $3,239,000.

During the six months ended September 30, 2012, the Company paid $96,000 to The Institute of Production & Recording, Inc., an entity partially owned by Mr. Myhre, for the purchase of equipment. 

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 SLA automatically renews for one-year periods every July, but may be terminated by either party upon 30 days’ notice.

The Company incurs a monthly management fee payable to GU/MSB under the terms of the SLA. This fee is negotiated based on analysis of the cost and scope of services provided. Such analysis is performed as deemed necessary by either party, or annually at a minimum. The Company’s Board of Directors approves any changes to the monthly fee. Effective October 1, 2012, the monthly management fee was reduced from $75,000 to $50,000. 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 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.

The Company utilizes 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 students who use school-issued financial aid vouchers. Commission payments are remitted by the third-party provider to MSB or GU for all textbook sales to students from these three entities.

Effective during the three months ended September 30, 2013, the Company began purchasing electronic learning device inventory through the same distributor as GU and MSB. MSB will be paying for all purchases, and the Company will reimburse MSB for such purchases made on the Company’s behalf.

The Company, GU and MSB also may reimburse each other for miscellaneous expenditures made by one entity on another entity’s behalf that are outside the scope of the SLA disclosed above.  

The following table summarizes the related party transactions with MSB for the three and six month periods ended September 30, 2013 and 2012:

	Three Months Ended						Six Months Ended
	September 30, 2013			September 30, 2012			September 30, 2013			September 30, 2012
Balance due to MSB - beginning of period	$	1,011,476		$	344,149		$	674,465		$	118,173
Management fees charged by MSB		150,000			225,000			300,000			450,000
Benefit claims paid by MSB		137,826			306,882			335,259			489,926
Textbook purchases by MSB		98,726			255,214			161,978			338,766
Inventory purchases by MSB		520,875			-			520,875			-
Textbook commissions received by MSB		(19,078	)		-			(55,079	)		-
Other miscellaneous transactions, net		(28,508	)		2,970			(66,181	)		(37,650	)
Broadview payments to MSB		(1,360,954	)		(315,000	)		(1,360,954	)		(540,000	)
Balance due to MSB - end of period	$	510,363		$	819,215		$	510,363		$	819,215

The following table summarizes the related party transactions with GU for the three and six month periods ended September 30, 2013 and 2012:

	Three Months Ended						Six Months Ended
	September 30, 2013			September 30, 2012			September 30, 2013			September 30, 2012
Balance due from GU - beginning of period	$	803		$	49,965		$	-		$	-
Textbook commissions received by GU		-			37,926			-			87,891
Other miscellaneous transactions, net		1,685			21,967			2,488			21,967
Broadview payments from GU		(2,488	)		(87,891	)		(2,488	)		(87,891	)
Balance due from GU - end of period	$	-		$	21,967		$	-		$	21,967