<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC 20549

                                   FORM 10-Q

           QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended May 31, 2000
                       Commission file number 000-29820

                         ARGOSY EDUCATION GROUP, INC.
            (Exact name of registrant as specified in its charter)


                      Illinois                             36-2855674
          (State or other jurisdiction of               (I.R.S. Employer
           incorporation or organization)             Identification No.)


                           Two First National Plaza
                       20 South Clark Street, 3rd Floor
                            Chicago, Illinois 60603
                           Telephone: (312) 899-9900
  (Address, including zip code, and telephone number, including area code, of
                         principal executive offices)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                                 YES X     NO

     At July 10, 2000 the registrant had 6,477,417 shares of common stock
outstanding.
<PAGE>

                         ARGOSY EDUCATION GROUP, INC.

                                     INDEX

<TABLE>
<CAPTION>
Pescription                                                                                               Page No.
Part I.   Financial Information

Item 1.   Financial Statements

<S>                                                                                                       <C>
         Condensed Consolidated Balance Sheets...........................................................    3
         Condensed Consolidated Statements of Operations.................................................    4
         Condensed Consolidated Statements of Cash Flows.................................................    5
         Notes to Condensed Consolidated Financial Statements............................................    6

Item 2.   Management's Discussion and Analysis of Results of Operations and Financial Condition..........    9

Item 3.   Quantitative and Qualitative Disclosure About Market Risk......................................   14

Part II.  Other Information

Item 1.   Legal Proceedings..............................................................................   14

Item 2.   Changes in Securities and Use of Proceeds......................................................   14

Item 3.   Defaults Upon Senior Securities................................................................   14

Item 4.   Submission of Matters to a Vote of Security-Holders............................................   14

Item 5.   Other Information..............................................................................   14

Item 6.   Exhibits and Reports on Form 8-K...............................................................   14
</TABLE>

                                      -2-
<PAGE>

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements


                 ARGOSY EDUCATION GROUP, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                            (Amounts in thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                              May 31, 2000           August 31, 1999
                                                                              ------------           ---------------
<S>                                                                           <C>                    <C>
    ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                                                   $     10,530           $         8,980
  Short-term investments                                                             7,406                     6,027
  Receivables, net                                                                   3,230                     1,593
  Prepaid expenses and other current assets                                            865                     1,324
                                                                              ------------           ---------------
         Total current assets                                                       22,031                    17,924
PROPERTY AND EQUIPMENT, net                                                          6,391                     5,617
NON-CURRENT INVESTMENTS                                                              1,085                     2,745
OTHER ASSETS                                                                         3,245                     1,234
INTANGIBLES, net                                                                     6,762                     6,799
                                                                              ------------           ---------------
         TOTAL ASSETS                                                         $     39,514           $        34,319
                                                                              ============           ===============

         LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
  Current maturities of long-term debt                                        $        957           $           486
  Accounts payable                                                                   1,024                     1,109
  Accrued payroll and other related liabilities                                      1,043                       547
  Accrued expenses                                                                   1,073                       417
  Deferred revenue and student deposits                                              4,400                     2,548
                                                                              ------------           ---------------
         Total current liabilities                                                   8,497                     5,107
                                                                              ------------           ---------------

LONG-TERM DEBT, less current maturities                                              2,656                     2,998

DEFERRED RENT                                                                          717                       610

COMMITMENTS & CONTINGENCIES

STOCKHOLDERS' EQUITY:
  Class A common stock - 30,000,000 shares authorized, $.01 par value,
   2,058,430 and 2,000,000 shares issued and outstanding
   at May 31, 2000 and August 31, 1999 respectively                                     21                        20
  Class B common stock - 10,000,000 shares authorized,
   $.01 par value, 4,900,000 shares issued and outstanding                              49                        49
  Additional paid-in capital                                                        25,128                    24,871
  Treasury Stock-at cost: 482,000 shares at May 31, 2000,
   none at August 31, 1999                                                          (2,131)                       --
  Accumulated other comprehensive income                                               697                       447
  Purchase price in excess of predecessor carryover                                   (720)                     (720)
  Retained earnings                                                                  4,600                       937
                                                                              ------------           ---------------
         Total stockholders' equity                                                 27,644                    25,604
                                                                              ------------           ---------------
         TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                           $     39,514           $        34,319
                                                                              ============           ===============
</TABLE>

                                      -3-
<PAGE>

                 ARGOSY EDUCATION GROUP, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                   (In thousands, except per share amounts)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                          Three Months Ended                  Nine Months Ended
                                                                       May 31,          May 31,           May 31,          May 31,
                                                                       -------          -------           -------          -------
                                                                         2000             1999              2000             1999
                                                                         ----             ----              ----             ----
<S>                                                                    <C>              <C>               <C>              <C>
Revenues:
   Tuition and fees, net                                               $ 12,007         $  9,887          $ 32,631         $ 26,586
   Other                                                                    689              808             2,255            2,529
                                                                       --------         --------          --------         --------
      Total revenues, net                                                12,696           10,695            34,886           29,115
                                                                       --------         --------          --------         --------

Operating expenses:
   Cost of education                                                      5,285            4,838            15,276           13,593
   Selling expenses                                                         900              307             2,733            1,086
   General and administrative expenses                                    3,702            2,607            11,025            8,103
   Related party general and administrative expense                          --               13                --              668
                                                                       --------         --------          --------         --------
      Total operating expenses                                            9,887            7,765            29,034           23,450
                                                                       --------         --------          --------         --------

   Income from operations                                                 2,809            2,930             5,852            5,665

Other income (expense):
   Interest income                                                          206              244               649              557
   Interest expense                                                         (79)            (181)             (221)            (504)
   Other income (expense)                                                   (15)              --               (64)              --
                                                                       --------         --------          --------         --------
      Total other income (expense), net                                     112               63               364               53
                                                                       --------         --------          --------         --------

Income before provision for income taxes                                  2,921            2,993             6,216            5,718

Income taxes:
   Income tax provision on C corporation income                           1,197            1,182             2,553            1,182

   Income tax provision on S corporation income                                                                                  62

   Deferred income taxes recorded in conjunction
    with termination of S corporation election                               --             (764)               --             (764)
                                                                       --------         --------          --------         --------
    Total income taxes                                                    1,197              418             2,553              480
                                                                       --------         --------          --------         --------
Net income                                                             $  1,724         $  2,575          $  3,663         $  5,238
                                                                       ========         ========          ========         ========
Net income per share:
   Basic and diluted                                                   $   0.27         $   0.38          $   0.56         $   0.95
                                                                       ========         ========          ========         ========

Weighted average shares outstanding:
   Basic                                                                  6,476            6,748             6,547            5,523
                                                                       ========         ========          ========         ========
   Diluted                                                                6,478            6,748             6,547            5,523
                                                                       ========         ========          ========         ========
</TABLE>

                                      -4-
<PAGE>

                  ARGOSY EDUCATION GROUP, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Amounts in thousands)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                             Nine Months Ended
                                                                                                  May 31,
                                                                                         2000                1999
                                                                                         ----                ----
<S>                                                                                   <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
       Net Income                                                                     $   3,663          $   5,238
       Adjustments to reconcile net income to net cash
         provided by operating activities -
            Depreciation and amortization                                                 1,103                961
            Deferred taxes                                                                 (246)                --
            Issuance of stock performance grants                                            228                 --
            Changes in operating assets and liabilities                                   1,882              1,002
                                                                                      ---------          ---------
                Net cash provided by operating activities                                 6,630              7,201
                                                                                      ---------          ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
       Purchase of property and equipment, net                                           (1,600)              (992)
       Business acquisition, net of cash                                                   (247)              (185)
       Sale (purchase) of investments, net                                                  560             (5,120)
                                                                                      ---------          ---------
                Net cash used in investing activities                                    (1,287)            (6,297)
                                                                                      ---------          ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
       Issuance of common stock                                                              --             26,040
       Offering costs                                                                        --             (1,184)
       Purchase of treasury stock                                                        (2,131)                --
       Borrowing of long-term debt                                                          480                150
       Payments of long-term debt                                                          (351)            (5,281)
       Advances (to)/from related party                                                  (1,769)                33
       Shareholder distribution                                                              --            (15,469)
       Repayment of shareholder note                                                         --              3,278
       Payments to former owners of acquired businesses                                      --               (272)
                                                                                      ---------          ---------
                Net cash (used in) provided by financing activities                      (3,771)             7,295
                                                                                      ---------          ---------
EFFECTIVE EXCHANGE RATE CHANGES ON CASH                                                     (22)               (23)
                                                                                      ---------          ---------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                                 1,550              8,176

CASH AND CASH EQUIVALENTS, beginning of period                                            8,980              2,712
                                                                                      ---------          ---------

CASH AND CASH EQUIVALENTS, end of period                                              $  10,530          $  10,888
                                                                                      =========          =========
</TABLE>

                                      -5-
<PAGE>

                 ARGOSY EDUCATION GROUP, INC. AND SUBSIDIARIES
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

Note 1 - The Company and Basis of Presentation

     Argosy Education Group, Inc. (the "Company") is the nation's largest for-
profit provider of doctoral level programs. The Company's mission is to provide
academically oriented practitioner-focused education in fields with numerous
employment opportunities and strong student demand. The Company operates degree
and non-degree granting private, for-profit post-secondary schools devoted to
awarding doctoral and master's degrees in psychology, education and business as
well as bachelor's degrees in business, associate degrees in allied health
professions and diplomas in information technology.

     The accompanying condensed unaudited consolidated financial statements have
been prepared on the same basis as the annual consolidated financial statements
and, in the opinion of management, reflect all adjustments, which include only
normal recurring adjustments necessary to present fairly the financial
condition and results of operations of the Company. These consolidated financial
statements and notes thereto are unaudited and should be read in conjunction
with the Company's audited financial statements included in the Company's report
on Form 10K, as filed with the Securities and Exchange Commission. The results
of operations for the nine months ended May 31, 2000 are not necessarily
indicative of results that can be expected for the entire fiscal year.

     The condensed consolidated financial statements as of May 31, 2000 and the
nine months ended May 31, 2000 and May 31, 1999 include the accounts of the
Company and its wholly owned subsidiaries. All intercompany balances and
transactions have been eliminated in consolidation.

     On March 8, 1999 the Company completed an initial public offering of
2,000,000 shares of Class A Common Stock (the "Offering"). Prior to the
Offering, the Company had one class of common stock outstanding. In connection
with the Offering, the Company's existing common stock underwent an approximate
2,941-for-one stock split which was then converted into 4,900,000 shares of
Class B Common Stock. The Company also authorized 30,000,000 shares of Class A
Common Stock and 5,000,000 shares of Preferred Stock. The effect of the stock
split has been retroactively reflected for all periods presented in the
accompanying consolidated financial statements. There was no Preferred Stock
issued or outstanding as of May 31, 2000.

     On December 3, 1999, the Securities and Exchange Commission released Staff
Accounting Bulletin (SAB) No. 101, Revenue Recognition, to provide guidance on
the recognition, presentation, and disclosure of revenue in financial
statements. The SAB outlines basic criteria that must be met before registrants
may recognize revenue, including persuasive evidence of the existence of an
arrangement, the delivery of products or services, a fixed and determinable
sales price, and reasonable assurance of collection. SAB 101 is effective
beginning the first fiscal quarter of the first fiscal year beginning after
December 15, 1999. Prior to the release of SAB 101, our revenue recognition
policy was in compliance with generally accepted accounting principles.
Effective September 1, 2000, we will adopt a change in accounting principle to
comply with the specific provisions and guidance of SAB 101. SAB 101 will
require us to recognize revenue related to application, technology, and
registration fees over the contract period. Through May 31, 2000, we have
recognized application, technology and registration fees as revenue upon
receipt. We have estimated the cumulative effect of this accounting change to be
approximately $0.2 million as of May 31, 2000. The effect will be recorded in
the first quarter of fiscal year 2001.

                                      -6-
<PAGE>

Note 2 - Income Taxes

     Prior to the Offering completed on March 8, 1999, the Company included its
income and expenses with those of its shareholders for Federal and certain state
income tax purposes (an S Corporation election). In connection with the
Offering, the Company terminated its S Corporation status and recorded a
deferred income tax asset and corresponding reduction of income tax expense of
$764,222, arising from a change in the Company's tax status. Beginning March 8,
1999, the Company has provided for deferred income taxes under the asset and
liability method of accounting. This method requires the recognition of deferred
income taxes based upon the tax consequences of "temporary differences" by
applying enacted statutory tax rates applicable to future years to differences
between financial statements carrying amounts and the tax basis of existing
assets and liabilities.

Note 3: Acquisitions

     On November 30, 1998, the Company acquired 100% of the outstanding stock of
PrimeTech, which owns two Canadian schools that award non-degree certificates in
network engineering and software programming. Prior to that acquisition the
majority shareholder of the Company owned a one-third interest in PrimeTech.
Under the acquisition agreement, the Company was required to pay the former
owners, consisting of Dr. Markovitz and two operating managers, a total of
$500,000 (Canadian Dollars) upon closing and is obligated to issue shares of the
Company's common stock, the fair value of which is equal to 102% of PrimeTech's
net income, as defined in such agreement, in each of PrimeTech's next three
fiscal years. The Company has negotiated agreements with the two operating
managers in lieu of future stock issuance as provided for in the acquisition
agreement. The agreements specify an aggregate payout of approximately $150,000
(US Dollars) which was paid prior to May 31, 2000.

     In April 2000, the Washington School of Professional Psychology (WSPP)
gained its regional accreditation from the North Central Association of Colleges
and Schools (NCA) and officially became a regionally accredited campus. This was
the final step in a purchase agreement for WSPP and resulted in a payment of
approximately $100,000 to the former owner.

Note 4: Shareholders' Equity

     The Company adopted a repurchase program for the Company's Class A Common
Stock of up to 500,000 shares. Shares of Class A Common Stock will be purchased
by the Company from time to time through open market purchases and private
purchase, as available. Under this program, the Company has repurchased 482,000
shares as of May 31, 2000 at a total cost of approximately $2,131,000.

Note 5: Related-Party Transactions

     As of September 1, 1999 the Company entered into an agreement to manage the
John Marshall Law School of Atlanta, Georgia ("John Marshall"). The agreement is
for 10 years and includes an option to purchase John Marshall. The right can be
exercised at the Company's discretion. In addition, a line of credit of $600,000
was established between the Company and John Marshall. As of May 31, 2000, the
Company advanced approximately $500,000 under the line of credit and
approximately $1,769,000 to fund operations under the management agreement. The
amounts are included in other assets.

Note 6: Comprehensive Income

     On September 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" ("SFAS No. 130"), which
requires companies to report all changes in equity during a period, except those
resulting from investment by owners and distributions to owners, in a

                                      -7-
<PAGE>

financial statement for the period in which they are recognized. The disclosure
of comprehensive income and accumulated other comprehensive income is as
follows:

<TABLE>
<CAPTION>
                                                           Three Months Ended                        Nine Months Ended
                                                           ------------------                        -----------------
                                                     May 31, 2000       May 31, 1999          May 31, 2000      May 31, 1999
                                                     ------------       ------------          ------------      ------------
<S>                                                  <C>                <C>                   <C>               <C>
Net income                                            $   1,724          $   2,575             $   3,663         $   5,238

Other comprehensive income:
   Unrealized gain/(loss) on investments                   (170)                17                   280               (14)
   Foreign currency translation adjustment                   (9)                (4)                  (30)               (2)
                                                     -------------------------------          ------------------------------

Total other comprehensive income                           (179)                13                   250               (16)
                                                     -------------------------------          ------------------------------

Comprehensive income                                  $   1,545          $   2,588             $   3,913         $   5,222
                                                     ===============================           =============================
</TABLE>

     For the period ended May 31, 2000 and May 31, 1999 Accumulated Other
Comprehensive Income, net of tax, was approximately $418,000 and $7,000,
respectively, and would have resulted in a reduction of Comprehensive Income.

Note 7: Segment Reporting

     The Company has two business segments: 1) Schools ("Schools") and 2) Test
Preparation Materials and Workshops ("Test Preparation"). These segments are
managed as separate strategic business units due to the distinct nature of their
operations. The Schools Segment, which represents the operations of ASPP, U of
S, MIA and PrimeTech, provides programs in psychology, education, business,
allied health professions, network engineering and software programming. All
operations of the Schools Segment are located in the United States with the
exception of PrimeTech which is located in Canada. The Test Preparation Segment
offers courses and materials for post-graduate psychology and counseling license
examinations and is located in the United States.

                                      -8-
<PAGE>

     The following table presents financial data for the three and nine months
ended May 31, 2000 and May 31, 1999 for these segments (dollars in thousands):

                                     Schools    Test Preparation    Consolidated
                                     -------    ----------------    ------------
       Three Months Ended
          May 31, 2000
          ------------
Revenue                              $11,776       $    920          $  12,696
Income from operations                 2,499            310              2,809
Net Income                             1,570            154              1,724
Total Assets                          35,712          3,802             39,514

       Three Months Ended
          May 31, 1999
          ------------
Revenue                              $ 9,644      $   1,051          $  10,695
Income from operations                 2,510            420              2,930
Net Income                             2,184            391              2,575
Total Assets                          32,836          4,045             36,881

        Nine Months Ended
          May 31, 2000
          ------------
Revenue                              $32,234      $   2,652          $  34,886
Income from operations                 5,073            779              5,852
Net Income                             3,244            419              3,663
Total Assets                          35,712          3,802             39,514

        Nine Months Ended
          May 31, 1999
          ------------
Revenue                              $26,279      $   2,836          $  29,115
Income from operations                 4,728            937              5,665
Net Income                             4,452            786              5,238
Total Assets                          32,836          4,045             36,881

Item 2. Management's Discussion and Analysis of Results of Operations and
        Financial Condition

     This Quarterly Report on Form 10-Q contains statements that may constitute
"forward-looking statements" as defined by the U.S. Private Securities
Litigation Reform Act of 1995. Such forward-looking statements can be identified
by the use of forward-looking terminology such as "believes," "estimates,"
"anticipates," "continues," "contemplates," "expects," "may," "will," "could,"
"should" or "would," or the negatives thereof. Those statements are based on the
intent, belief or expectation of the Company as of the date of this Quarterly
Report. Any such forward-looking statements are not guarantees of future
performance and may involve risks and uncertainties that are outside the control
of the Company. Results may differ materially from the forward-looking
statements contained herein as a result of changes in governmental regulations,
including those governing student financial aid, and other factors. The Company
expressly disclaims any obligation to release publicly any updates or revisions
to any forward-looking statement contained herein to reflect any change in the
Company's expectations with regard thereto or any change in events, conditions
or circumstances on which any such statement is based. The following discussion
of the Company's results of operations and financial condition should be read in
conjunction with the interim unaudited condensed financial statements of the
Company and the notes thereto included herein and in conjunction with the
information contained in the Form 10K as filed with the Securities and Exchange
Commission.

                                      -9-
<PAGE>

Results of Operations

The following table summarizes the Company's operating results as a percentage
of net revenue for the period indicated:

<TABLE>
<CAPTION>
                                                                      Three Months Ended                   Nine Months Ended
                                                                   May 31,           May 31,           May 31,          May 31,
                                                                   -------           -------           -------          -------
                                                                     2000              1999              2000             1999
                                                                     ----              ----              ----             ----
<S>                                                                <C>               <C>               <C>              <C>
Total revenues, net                                                        100%             100%              100%             100%

Operating expenses:
Cost of education                                                         41.6             45.2              43.8             46.7
Selling expenses                                                           7.1              2.9               7.8              3.7
General and administrative expenses                                       29.2             24.4              31.6             27.8
Related party general and administrative expense                            --              0.1                --              2.3
                                                                          ----             ----              ----             ----

Total operating expenses                                                  77.9             72.6              83.2             80.5
                                                                          ----             ----              ----             ----

Income from operations                                                    22.1             27.4              16.8             19.5

Total other income (expense), net                                          0.9              0.6               1.0              0.2
                                                                          ----             ----              ----             ----

Income before provision for income taxes                                  23.0             28.0              17.8             19.7

Provision for income taxes                                                 9.4              3.9               7.3              1.6
                                                                          ----             ----              ----             ----

Net income                                                                13.6%            24.1%             10.5%            18.1%
                                                                          ====             ====              ====             ====
</TABLE>

                                      -10-
<PAGE>

Three Months Ended May 31, 2000 Compared to Three Months Ended May 31, 1999

     Net revenues increased 18.7% from $10.7 million in the third quarter of
fiscal 1999 to $12.7 million in the third quarter of fiscal 2000, due to
increased revenue at all schools, primarily ASPP. For all schools owned by the
Company during fiscal 1999, the revenue increase is primarily due to internal
growth, tuition increases and the addition of new campuses and new programs.

     Cost of education increased 9.2% from $4.8 million in the third quarter of
fiscal 1999 to $5.3 million in the third quarter of fiscal 2000, due to
additional teaching costs to meet the growth in the number of students attending
the schools, and the development of new campuses and programs. As a percentage
of net revenue, cost of education decreased from 45.2% in fiscal 1999 to 41.6%
in fiscal 2000 due to efficiencies in the student services area.

     Selling expenses increased 193.2% from $0.3 million in the third quarter of
fiscal 1999 to $0.9 million in the third quarter of fiscal 2000. As a percentage
of revenue selling expenses increased from 2.9% to 7.1%, primarily due to the
addition of recruiters in all of the Argosy schools. This is an integral part of
our marketing strategy.

     General and administrative expenses increased 42.0% from $2.6 million in
the third quarter of fiscal 1999 to $3.7 million in the third quarter of fiscal
2000 and, as a percentage of net revenue increased from 24.4% to 29.2% from
quarter to quarter. The dollar increase is primarily due to additional expenses
incurred as a public company, additional management payroll costs, additional
costs of start up operations, and additional depreciation expense due to the
continued investment in the Company's equipment and computer systems. In
addition, charges totaling $0.2 million were recorded in relation to the final
settlement of matters arising in connection with the purchase of MIM and a
settlement of a minor dispute.

     Related party general and administrative expenses, which represents amounts
paid to a company owned by the majority shareholder that provided management
services for the Company and its schools, was $0.01 million in the third quarter
of fiscal 1999. Upon consummation of the Offering, the relationship with the
related company was terminated.

     The provision for income taxes increased from $0.4 million in the third
quarter of fiscal 1999 to $1.2 million in the third quarter of fiscal 2000, due
to the Company's change to a C Corporation on March 8, 1999. Upon the
termination of its S Corporation status in the third quarter of 1999, the
Company recorded a deferred income tax asset and corresponding reduction of
income tax expense of $0.8 million.

     Net income decreased 33.0%, from $2.6 million in the third quarter of
fiscal 1999 to $1.7 million in the third quarter of fiscal 2000 due to the
reasons discussed above.

Nine Months Ended May 31, 2000 Compared to Nine Months Ended May 31, 1999

     Net revenues increased 19.8% from $29.1 million in the first nine months of
fiscal 1999 to $34.9 million in the first nine months of fiscal 2000, primarily
due to increased revenue at all schools owned in the first nine months of both
fiscal 1999 and 2000. For schools owned by the Company during fiscal 1999,
revenue increased by 21.1% primarily due to internal growth. Additional revenue
was recognized from tuition increases and the addition of new campuses and new
programs. Also, the fiscal 1999 totals include revenue from PrimeTech only for
the six months following its acquisition as compared to nine months of revenues
in fiscal 2000.

                                      -11-
<PAGE>

     Cost of education increased 12.4% from $13.6 million in the first nine
months of fiscal 1999 to $15.3 million in the first nine months of fiscal 2000,
due to additional teaching costs to meet the growth in the number of students
attending the schools, the development of new campuses and programs and the
acquisition of PrimeTech. As a percentage of net revenue, cost of education
decreased from 46.7% in fiscal 1999 to 43.8% in fiscal 2000 due to efficiencies
in the student services area.

     Selling expenses increased 151.7% from $1.1 million in the first nine
months of fiscal 1999 to $2.7 million in the first nine months of fiscal 2000.
As a percentage of revenue, selling expenses increased from 3.7% to 7.8% due to
the addition of recruiters in all of the Argosy schools. This is an integral
part of our marketing strategy. In addition, the acquisition of PrimeTech
requires more costly advertising media than the other Argosy companies.

     General and administrative expenses increased 36.1% from $8.1 million in
the first nine months of fiscal 1999 to $11.0 million in the first nine months
of fiscal 2000 and, as a percentage of net revenue increased from 27.8% to
31.6%. The increase is primarily due to additional management payroll costs,
additional expenses incurred as a public company, additional costs of start up
operations, and additional depreciation expense due to the continued investment
in the Company's equipment and computer systems. In addition, charges totaling
$0.2 million were recorded in relation to the final settlement of matters
arising in connection with the purchase of MIM and a settlement of a minor
dispute.

     Related party general and administrative expenses, which represents amounts
paid to a company owned by the majority shareholder that provided management
services for the Company and its schools, was $0.7 million in the first nine
months of fiscal 1999. Upon consummation of the Offering, the relationship with
the related company was terminated.

     The provision for income taxes increased from $0.5 million in the first
nine months of fiscal 1999 to $2.6 million in the first nine months of fiscal
2000, due to the Company's change to a C Corporation on March 8, 1999. Upon the
termination of its S Corporation status in the third quarter of 1999, the
Company recorded a deferred income tax asset and corresponding reduction of
income tax expense of $0.8 million. In addition, there was a negligible tax
charge for the first half of fiscal 1999 while the Company was an S Corporation.

     Net income decreased 30.1%, from $5.2 million in the first nine months of
fiscal 1999 to $3.7 million in the first nine months of fiscal 2000 due to the
reasons discussed above.

Seasonality and Other Factors Affecting Quarterly Results

     The Company has experienced seasonality in its results of operations
primarily due to the pattern of student enrollments at most of the Company's
schools. Historically, the Company's lowest quarterly net revenue and income
have been in the fourth fiscal quarter (June through August) due to lower
student enrollment during the summer months at most of the Company's schools,
while the Company's expenses remain relatively constant over the course of a
year. The Company expects that this seasonal trend will continue and that
operating results for any quarter are not necessarily indicative of the results
for any future period.

Liquidity and Capital Resources

     Since its formation, the Company has financed its operating activities
primarily through cash generated from operations. Acquisitions have been
financed primarily through debt instruments. Net cash provided by operating
activities decreased from $7.2 million in the nine months ended May 31, 1999 to
$6.6 million in the nine months ended May 31, 2000. The Company had $13.5
million of working capital as of

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<PAGE>

May 31, 2000 compared to $12.8 million of working capital as of August 31, 1999.
Advances made to John Marshall during the nine months ended May 31, 2000 were
approximately $1.8 million.

     Capital expenditures increased from $1.0 million in the nine months ended
May 31, 1999 to $1.6 million in the same period in 2000. The increase was due to
the investment in continued upgrading of school equipment and facilities, the
enhanced capabilities of the Company's computer system, and the investment in
the start up of an internet campus. Capital expenditures are expected to
continue to increase as the student population increases and the Company
continues to upgrade and expand current facilities and equipment. The Company
has no other commitments for material capital expenditures.

Year 2000 Compliance

     The "Year 2000 Problem" is the potential for computer processing errors
resulting from the use of computer programs that have been written using two
digits, rather than four, to denote a year (e.g., using the digits "98" to
denote 1998). Computer programs using this nomenclature can misidentify
references to dates after 1999 as meaning dates early in the twentieth century
(e.g., "1902" rather than "2002"). The Year 2000 Problem is commonly considered
to be prevalent in computer programs written as recently as the mid-1990s, and
can cause such programs to generate erroneous information, to otherwise
malfunction or to cease operations altogether.

     The Company has installed a new management information system in its
corporate headquarters. In addition, the Company's schools each have stand-alone
computer systems and networks for internal use and for communication with its
students and with corporate headquarters. Since January 1, 2000, there have been
no material adverse affects related to the Year 2000 Problem. However, there can
be no assurance that this new computer system will not still be affected by the
Year 2000 Problem and that the Company's existing systems will not still be
affected by the Year 2000 Problem, or that a failure of any other parties, such
as the DOE or other government agencies on which the Company depends for student
financial assistance or the financial institutions involved in the processing of
student loans, to address the Year 2000 Problem will not have a material adverse
effect on the Company's business, results of operations or financial condition.
In particular, there can be no assurance that malfunctions relating to the Year
2000 Problem will not result in the misreporting of financial information by the
Company. The Company has made inquiries of substantially all of its material
vendors regarding the Year 2000 Problem and has not detected any significant
issues relating to the Year 2000 Problem. However, the Company has not made a
formal assessment of the computer programs used by government agencies or other
first parties with which the company interacts, or an assessment of its own
vulnerability to the failure of such programs to be free of the Year 2000
Problem. The Company does not have any formal contingency plans relating to the
Year 2000 Problem.

     The Company believes that the most reasonably likely worst case scenario
for the Company regarding the Year 2000 Problem is a failure of the DOE to
adequately ensure payment of financial aid amounts. The 1998 Amendments require
the DOE to take steps to ensure that the processing, delivery and administration
of grant, loan and work assistance provided under the Title IV Programs are not
interrupted because of the Year 2000 Problem. This legislation also authorizes
the DOE to postpone certain HEA requirements to avoid overburdening institutions
and disrupting the delivery of student financial assistance as a consequence of
this problem. To date, we do not believe that the DOE has experienced any
disruptions associated with the Year 2000 Problem, and our students have not
experienced any delays in tuition payments as a result of the Year 2000 Problem.
There can be no assurance, however, that assistance will not be interrupted or
that any DOE requirements would be postponed so that there would be no material
adverse effect on the Company's schools.

                                      -13-
<PAGE>

Item 3. Quantitative and Qualitative Disclosure About Market Risk

     The Company is exposed to the impact of interest rate changes, foreign
currency fluctuations and changes in the market value of its investments. The
Company does not utilize interest rate swaps, forward or option contracts on
foreign currencies or commodities, or other types of derivative financial
instruments. The Company has debt with fixed annual rates of interest ranging
from 6.25% to 9.0% totaling $3.2 million at May 31, 2000. In addition, at May
31, 2000, the Company has debt in the amount of $0.4 million with interest at
the higher of the Federal Funds Rate plus 0.5% or the lender's rate of interest.
The Company estimates that the fair value of each of its debt instruments
approximated its market value on May 31, 2000.

     The Company is subject to fluctuations in the value of the Canadian dollar
vis-a-vis the U.S. dollar. The fair value of the assets and liabilities of these
operations approximated current market rates at May 31, 2000.

     From time to time, the Company invests excess cash in marketable
securities. These investments principally consist of U.S. Treasury notes,
corporate bonds, short-term commercial paper and money market accounts, the fair
value of which approximated current market rates at May 31, 2000.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

        None.

Item 2. Changes in Securities and Use of Proceeds

        None.

Item 3. Defaults Upon Senior Securities

        None.

Item 4. Submission of Matters to a Vote of Security-Holders

        None.

Item 5. Other Information

        None.

Item 6. Exhibits and Reports on Form 8-K

  (a)   Exhibits

  27.1  Financial Data Schedule

  (b)   Reports on Form 8-K:

        None

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<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

ARGOSY EDUCATION GROUP, INC.

July 14, 2000                               /s/  Charles T. Gradowski
                                            ------------------------------------
                                            Charles T. Gradowski
                                            Chief Financial Officer

                                      -15-