<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, 2001
                       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 June 30, 2001 the registrant had 6,486,449 shares of common stock
outstanding.
<PAGE>

                         ARGOSY EDUCATION GROUP, INC.

                                     INDEX

<TABLE>
<CAPTION>
Description                                                                                 Page No.
<S>                                                                                         <C>
Part I.   Financial Information

Item 1.   Financial Statements

         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......................................................        12

Item 3.   Quantitative and Qualitative Disclosure About Market Risk.......................        17

Part II.  Other Information

Item 1.   Legal Proceedings...............................................................        17

Item 2.   Changes in Securities and Use of Proceeds.......................................        17

Item 3.   Defaults Upon Senior Securities.................................................        17

Item 4.   Submission of Matters to a Vote of Security-Holders.............................        17

Item 5.   Other Information...............................................................        17

Item 6.   Exhibits and Reports on Form 8-K................................................        18
</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, 2001            August 31, 2000
                                                                                 --------------            ---------------
                                                                                                             As Restated
                                                                                                             See Note 2.
<S>                                                                              <C>                       <C>
     ASSETS
CURRENT ASSETS:
    Cash and cash equivalents                                                    $        14,078           $         8,112
    Short-term investments                                                                   538                     7,787
    Receivables, net                                                                       3,744                     2,685
    Prepaid expenses and other current assets                                              1,717                       959
                                                                                 ---------------           ---------------
           Total current assets                                                           20,077                    19,543
PROPERTY AND EQUIPMENT, net                                                               23,895                     6,307
NON-CURRENT INVESTMENTS                                                                        -                       200
OTHER ASSETS                                                                               1,438                       159
ADVANCES TO JOHN MARSHALL                                                                      -                       724
DEFERRED TAX ASSET LONG TERM                                                               2,559                     1,680
INTANGIBLES, net                                                                          11,807                     6,687
                                                                                 ---------------           ---------------
           TOTAL ASSETS                                                          $        59,776           $        35,300
                                                                                 ===============           ===============

           LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
    Current maturities of long-term debt                                         $         6,221           $           796
    Accounts payable                                                                       2,158                     1,162
    Accrued payroll and other related liabilities                                          2,555                       634
    Accrued expenses                                                                       2,393                       584
    Deferred revenue and student deposits                                                  8,097                     2,760
                                                                                 ---------------           ---------------
           Total current liabilities                                                      21,424                     5,936
                                                                                 ---------------           ---------------

LONG-TERM DEBT, less current maturities                                                    6,059                     2,604
DEFERRED TAXES                                                                             3,819                         -
DEFERRED RENT                                                                              1,000                       710

COMMITMENTS & CONTINGENCIES

STOCKHOLDERS' EQUITY:
    Class A common stock - 30,000,000 shares authorized,
         $.01 par value, 2,063,062 shares issued and outstanding,
          including 482,000 treasury shares                                                   21                        21
    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                                                             25,131                    25,131
    Treasury Stock-at cost: 482,000 shares at cost                                        (2,131)                   (2,131)
    Stock Warrants                                                                           860                         -
    Accumulated other comprehensive income                                                   (70)                    1,102
    Purchase price in excess of predecessor carryover                                       (720)                     (720)
    Retained earnings                                                                      4,334                     2,598
                                                                                 ---------------           ---------------
           Total stockholders' equity                                                     27,474                    26,050
                                                                                 ---------------           ---------------
           TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                            $        59,776           $        35,300
                                                                                 ===============           ================
</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,
                                                -------      -------     -------     -------
                                                 2001         2000        2001         2000
                                                 ----         ----        ----         ----
<S>                                            <C>       <C>           <C>        <C>
                                                         As Restated                As Restated
                                                         See Note 2.                See Note 2.
Revenues:
       Tuition and fees, net                   $  16,006    $ 11,928   $ 40,368    $  32,552
       Other                                         763         689      2,232        2,255
                                               ---------    --------   --------    ---------
            Total revenues, net                   16,769      12,617     42,600       34,807
                                               ---------    --------   --------    ---------
Operating expenses:
       Cost of education                           7,626       5,285     18,910       15,276
       Selling expenses                            1,824         900      4,560        2,733
       General and administrative expenses         5,415       3,783     14,960       11,296
                                               ---------    --------   --------    ---------
            Total operating expenses              14,865       9,968     38,430       29,305
                                               ---------    --------   --------    ---------
       Income from operations                      1,904       2,649      4,170        5,502

Other income (expense):
       Losses attributable to John Marshall           --        (442)      (872)      (1,191)
       Interest income                               128         206        520          649
       Interest expense                             (249)        (79)      (400)        (221)
       Other income (expense)                         29         (15)        20          (64)
                                               ---------    --------   --------    ---------
            Total other income (expense), net        (92)       (330)      (732)        (827)
                                               ---------    --------   --------    ---------
Income before provision for income taxes           1,812       2,319      3,438        4,675

Income taxes:
       Total provision for income taxes              715         956      1,689        1,936
                                               ---------    --------   --------    ---------
Net income                                     $   1,097    $  1,363   $  1,749    $   2,739
                                               =========    ========   ========    =========
Net income per share:
       Basic                                   $    0.17    $   0.21   $   0.27    $    0.42
                                               =========    ========   ========    =========
       Diluted                                 $    0.17    $   0.21   $   0.27    $    0.42
                                               =========    ========   ========    =========
Weighted average shares outstanding:
       Basic                                       6,483       6,476      6,481        6,547
                                               =========    ========   ========    =========
       Diluted                                     6,484       6,478      6,490        6,547
                                               =========    ========   ========    =========
</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,        May 31,
                                                                                             2001           2000
                                                                                             ----           ----
<S>                                                                                          <C>        <C>
                                                                                                        As Restated
                                                                                                        See Note 2.
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net Income                                                                             $  1,749    $  2,739
      Adjustments to reconcile net income to net cash
        provided by operating activities -
             Depreciation and amortization                                                      1,509       1,103
             Deferred taxes                                                                      (932)       (246)
             Issuance of stock performance grants and warrants                                    860         228
             Losses attributable to John Marshall                                                 872       1,191
             Changes in operating assets and liabilities                                        5,177       1,344
                                                                                             --------    --------
                  Net cash provided by operating activities                                     9,235       6,359
                                                                                             --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Purchase of property and equipment, net                                                  (1,648)     (1,600)
      Business acquisition, net of cash                                                       (10,974)       (247)
      Sale (purchase) of investments, net                                                       5,832         560
      Advances to John Marshall                                                                  (959)     (1,498)
                                                                                             --------    --------
                  Net cash used in investing activities                                        (7,749)     (2,785)
                                                                                             --------    --------
CASH FLOWS FROM FINANCING ACTIVITIES:
      Purchase of treasury stock                                                                   --      (2,131)
      Borrowing of long-term debt                                                               5,083         480
      Payments of long-term debt                                                                 (532)       (351)
                                                                                             --------    --------
                  Net cash (used in) provided by financing activities                           4,551      (2,002)
                                                                                             --------    --------

EFFECTIVE EXCHANGE RATE CHANGES ON CASH                                                           (71)        (22)
                                                                                             --------    --------

NET INCREASE IN CASH AND CASH EQUIVALENTS
                                                                                               5, 966       1,550

CASH AND CASH EQUIVALENTS, beginning of period                                                  8,112       8,980
                                                                                             --------    --------

CASH AND CASH EQUIVALENTS, end of period                                                     $ 14,078    $ 10,530
                                                                                             ========    ========
</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, business, and
law as well as bachelor's degrees in business, associate degrees in allied
health professions and diplomas in information technology.

     The accompanying unaudited condensed 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/A for the year ended August 31, 2000, as restated, as filed with the
Securities and Exchange Commission. The results of operations for the nine
months ended May 31, 2001 are not necessarily indicative of results that could
be expected for the entire fiscal year.

     The condensed consolidated financial statements as of May 31, 2001 and the
nine months ended May 31, 2001 and 2000 include the accounts of the Company and
its wholly owned subsidiaries, and John Marshall Law School on the equity method
of accounting from September 1, 1999 through March 1, 2001, the date of
acquisition of John Marshall. All intercompany balances and transactions have
been eliminated in consolidation.

Note 2. Restatements

     Subsequent to the issuance of the Company's consolidated financial
statements for the quarterly period ended May 31, 2000, it was determined that
the previously reported operating results for the three and nine month periods
ended May 31, 2000 were overstated. The accompanying financial statements
relating to the three and nine month periods ended May 31, 2000 reflect
adjustments (consistent with the Company's reports on Form 10 Q/A for the
quarterly periods ended February 29, 2000, May 31, 2000, and November 30, 2000
and the annual report on Form 10K/A for the year ended August 31, 2000)
primarily to reduce the carrying value of the Company's advances to John
Marshall Law School. It was determined that the more appropriate accounting for
the advances to John Marshall was to treat this as an equity method investment.
The accounting for the advances to John Marshall had been revised to reduce the
amount of the advances to John Marshall to reflect John Marshall's operating
losses during the three and nine months ended May 31, 2000. The 2000 financial
statements were restated to give effect to the revised accounting for the John
Marshall advances from the point in time that the management agreement (Note 6)
was in place (September 1, 1999). Additionally, the financial statements for the
quarter ended November 30, 2000, were restated to eliminate a tax benefit of
$0.2 million associated with the charge recorded for the Leeds Warrant.

                                      -6-
<PAGE>

Note 3: Business Combinations

Western State
-------------

     On March 1, 2001, the Company completed its acquisition of Western State
University College of Law, in Fullerton, California ("Western State") pursuant
to the terms of the Stock Purchase Agreement dated as of November 14, 2000,
between Argosy and Western State. Consideration for the purchase consisted of
$9.4 million in cash and the assumption of $3.9 million in debt, and certain
other deductions as provided for in the purchase agreement. This transaction was
accounted for as a purchase business combination in accordance with Accounting
Principles Board ("APB") Opinion No. 16, "Business Combinations," and,
accordingly, the results of operations of Western State have been included in
the Company's financial statements from March 1, 2001.

The purchase price was preliminarily allocated to the following (in thousands):

          Fair value of assets acquired and liabilities
          assumed                                            $    6,180
          Goodwill                                                3,230

                                                              ---------

          Total                                               $   9,410
                                                              =========

     The goodwill amount included above is being amortized over the estimated
useful life of 15 years.

John Marshall
-------------

     The acquisition of John Marshall was made through a purchase of the assets
of John Marshall on March 1, 2001. The Company exercised its option to purchase
all of the operating assets and assumed the liabilities of John Marshall Law
School for cash of $0.1 million and net advances of $0.7 million contributed to
John Marshall before the acquisition. This transaction was accounted for as a
purchase business combination in accordance with Accounting Principles Board
("APB") Opinion No. 16, "Business Combinations," and, accordingly, the results
of operations of John Marshall have been included in the Company's financial
statements from March 1, 2001. The preliminary purchase price allocation
resulted in negative goodwill of $0.1 million. This negative goodwill was
subsequently allocated to write down the long-lived assets of John Marshall.

     As of September 1, 1999 the Company entered into an agreement to manage
John Marshall. The agreement was for 10 years and included an option to purchase
John Marshall which was exercisable at the Company's discretion. In addition, a
line of credit of $0.6 million was established between the Company and John
Marshall. Prior to the acquisition on March 1, 2001, the Company advanced $0.5
million under the line of credit and approximately $3.1 million to fund
operations.

 The Connecting Link
 -------------------

     Also on March 1, 2001 the Company acquired all of the outstanding common
stock of The Connecting Link, a privately held provider of continuing
professional education for kindergarten to grade 12 teachers for a purchase
price of approximately $1.8 million in cash. This transaction was accounted for
as a purchase business combination in accordance with Accounting Principles
Board ("APB") Opinion No. 16, "Business Combinations," and, accordingly, the
results of operations of Connecting Link have been included in the Company's
financial statements from March 1, 2000.

                                      -7-
<PAGE>

The purchase price was preliminarily allocated to the following (in thousands):

          Fair value of assets acquired and liabilities
          assumed                                          $      (125)
          Goodwill                                               1,941

                                                            ----------

          Total                                             $    1,816
                                                            ==========

  The goodwill amount included above is being amortized over the estimated
useful life of 15 years.

     The following unaudited pro forma financial information presents the
combined results of operations of the Company and Western State, John Marshall,
and Connecting Link as if the acquisitions had occurred as of the beginning of
fiscal 2001 and 2000, after giving effect to certain adjustments, including
amortization of goodwill, and related income tax effects. The pro forma
financial information does not necessarily reflect the results of operations
that would have occurred had the acquisitions of Western State, John Marshall,
and The Connecting Link occurred at the beginning of fiscal 2001 and 2000.

                                                  Nine months ended
                                                       May 31,
                                              ------------------------
                                                     (unaudited)
                                                   (in thousands)

     Pro Forma                                     2001           2000
     --------------------------------         -----------  -----------

     Revenue                                  $    49,281  $    43,489
     Net income                               $     1,319  $     2,516
     Basic and diluted loss per share         $      0.20  $      0.39


Note 4 - Recent Accounting Pronouncements

     In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin 101 ("SAB 101"). SAB 101 requires deferral of certain
revenue items over the period that the related service is provided. Adoption of
SAB 101 is required by the Company's fourth quarter of fiscal 2001. The SEC has
issued interpretive guidance on the implementation of this bulletin, and the
Company is completing an evaluation of its effects. SAB 101 requires the
deferral of certain fees and other charges over the period of service (student
enrollment); however, based on preliminary analysis, the Company does not expect
SAB 101 to have a significant effect on its consolidated results of operations,
financial position and cash flow.


Note 5: Shareholders' Equity

     In the first fiscal quarter of 2000, 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 have been and maybe 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, 2001 at a
total cost of approximately $2,131,000.

                                      -8-
<PAGE>

Note 6: Related-Party Transactions

     As of September 1, 1999 the Company entered into an agreement to manage
John Marshall. The agreement was for 10 years and includes an option to purchase
John Marshall (the purchase option was exercised on March 1, 2001 - See Footnote
3. Business Combinations). A line of credit of $0.6 million was established
between the Company and John Marshall. As of February 28, 2001, the Company
advanced $0.5 million under the line of credit and approximately $3.1 million to
fund operations. For the six months ended February 28, 2001 and the nine months
ended May 31, 2000, the losses for John Marshall, excluding intercompany
transactions, of $0.9 million and $1.2 million, respectively, have been included
as other expenses in the Company's statements of operations and have been
reflected as a reduction of the advances made to John Marshall.

     On September 1, 2000, the Company entered into a Consulting Agreement with
Leeds Equity Associates, L.P. This partnership includes as a partner Jeffrey
Leeds, a member of the Company's board of directors. This Agreement encompasses
the performance of Company requested services over the six-month term of the
Agreement. Payment is represented by a stock purchase warrant providing for the
purchase of 200,000 shares of the Company's Class A common stock at a purchase
price of $6.48 per share and with a seven year exercise period. The warrants are
immediately exercisable and based upon the Black Scholes pricing model valued at
$860,000. The warrant value was expensed over the service period resulting in
half of the charge being recorded in the first fiscal quarter of 2001 and the
remaining charge being recorded in the second quarter of 2001. No tax benefit
has been recorded as a result of this charge.

Note 7: 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 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, 2001     May 31, 2000     May 31, 2001     May 31, 2000
                                                       ------------     ------------     ------------     ------------
<S>                                                    <C>              <C>              <C>              <C>
Net income                                             $      1,097     $      1,363     $      1,749     $      2,739

Other comprehensive income:
   Unrealized gain/(loss) on investments                       (285)            (170)          (1,115)             280
   Foreign currency translation adjustment                        2               (9)             (54)             (30)
                                                      --------------------------------  -------------------------------

Total other comprehensive income                               (283)            (179)          (1,169)             250
                                                      --------------------------------  -------------------------------

Comprehensive income                                   $        814     $      1,184     $        580     $      2,989
                                                      ================================  ===============================
</TABLE>

     As of May 31, 2001 and 2000 Accumulated Other Comprehensive Income
(Expense), net of tax, was approximately $ (42,000) of expense and $418,000 of
income, respectively.

                                      -9-
<PAGE>

Note 8: Segment Reporting


     The Company has two business segments: 1) 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, PrimeTech, John Marshall, Western State University and The Connecting
Link provides programs in psychology, education, business, allied health
professions, network engineering, software programming and law. 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.

     The following table presents financial data for the three and nine months
ended May 31, 2001 and May 31, 2000 for these segments (dollars in thousands):


                                  Schools    Test Preparation   Consolidated
                                  -------    ----------------   ------------

   Three Months Ended
     May 31, 2001
     ------------
Revenue                           $15,812         $   957         $16,769
Income from operations              1,648             256           1,904
Net Income                            949             148           1,097
Total Assets                       54,367           5,409          59,776

   Three Months Ended
     May 31, 2000
     ------------
Revenue                           $11,697         $   920         $12,617
Income from operations              2,339             310           2,649
Net Income                          1,209             154           1,363
Total Assets                       34,787           3,802          38,589

   Nine Months Ended
     May 31, 2001
Revenue                           $39,903         $ 2,697         $42,600
Income from operations              3,470             700           4,170
Net Income                          1,346             403           1,749
Total Assets                       54,367           5,409          59,776

   Nine Months Ended
     May 31, 2000
Revenue                           $32,155         $ 2,652         $34,807
Income from operations              4,723             779           5,502
Net Income                          2,320             419           2,739
Total Assets                       34,787           3,802          38,589

                                      -10-
<PAGE>

Note 9. Subsequent Event

          On July 9, 2001, Argosy entered into an Agreement and Plan of Merger
with Education Management Corporation ("EDMC") and HAC, Inc., a wholly-owned
subsidiary of EDMC, pursuant to which HAC will merge with and into Argosy, with
Argosy continuing as the surviving corporation. In the merger, holders of Argosy
common stock will receive $12.00 per share, without interest, for each share of
Argosy common stock. EDMC also entered into a Stock Purchase Agreement with Dr.
Markovitz providing for the purchase of his shares of Argosy common stock at the
same price per share.

          Consummation of the merger and the stock purchase is subject to a
number of conditions precedent described in the Agreement and Plan of Merger and
the Stock Purchase Agreement, including approval by Argosy stockholders and
certain regulatory approvals.

                                      -11-
<PAGE>

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/A as filed with the Securities and
Exchange Commission.

     As more fully described in Note 2. to the Consolidated Financial Statements
(and in the Companies annual report on Form 10K/A for the year ended August 31,
2000) certain financial information in the filing has been restated to correct
previously issued financial statements. The discussion in this item reflects
those restatements.

     Results of Operations
     On March 1, 2001, the Company acquired Western State University, John
Marshall Law School, and The Connecting Link. As a result of the acquisitions,
the Company's revenue and operating expenses have increased substantially in
subsequent periods, and the Company believes that such increases are likely to
continue in future periods as compared to pre-acquisition periods. These
business combinations were accounted for by the purchase method, and
accordingly, the results of operations of the above mentioned acquired companies
have been included in the Company's financial statements and reflected in the
Company's results of operations since March 1, 2001.

                                      -12-
<PAGE>

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,
                                                    -------          -------                   -------            -------
                                                     2001               2000                    2001               2000
                                                     ----               ----                    ----               ----
<S>                                                 <C>              <C>                       <C>                 <C>
Total revenues, net                                   100%               100%                     100%              100%

Operating expenses:
Cost of education                                      45.4               41.9                     44.4              43.8
Selling expenses                                       10.9                7.1                     10.7               7.9
General and administrative expenses                    32.3               30.0                     35.1              32.5
                                                       ----               ----                     ----              ----

Total operating expenses                               88.6               79.0                     90.2              84.2
                                                       ----               ----                     ----              ----

Income from operations                                 11.4               21.0                      9.8              15.8

Total other income (expense), net                      (0.6)              (2.6)                    (1.7)             (2.4)
                                                        ---                ---                      ---               ---

Income before provision for income taxes               10.8               18.4                      8.1              13.4

Provision for income taxes                              4.3                7.6                      4.0               5.5
                                                        ---                ---                      ---               ---
Net income                                              6.5%              10.8%                     4.1%              7.9%
                                                        ===               ====                      ===               ===
</TABLE>


     Three Months Ended May 31, 2001 Compared to Three Months Ended May 31, 2000

          Net revenues increased 32.9 % from $12.6 million in the third quarter
     of fiscal 2000 to $16.8 million in the third quarter of fiscal 2001, due to
     increased revenue at all schools. The revenue increase is primarily due to
     internal growth and tuition increases and increased revenue related to the
     acquisitions of Western State and John Marshall in the third fiscal quarter
     of 2001.

          Cost of education increased 44.3% from $5.3 million in the third
     quarter of fiscal 2000 to $7.6 million in the third quarter of fiscal 2001,
     due to additional teaching costs to meet the growth in the number of
     students attending the schools and increased cost related to the
     acquisitions of Western State, John Marshall and The Connecting Link in the
     third fiscal quarter of 2001. As a percentage of net revenue, cost of
     education increased from 41.9% in fiscal 2000 to 45.4% in fiscal 2001 due
     primarily to higher education costs as a percentage of revenue relating to
     acquired companies mentioned above.

          Selling expenses increased 102.7% from $0.9 million in the third
     quarter of fiscal 2000 to $ 1.8 million in the third quarter of fiscal
     2001. As a percentage of revenue, selling expenses increased from 7.1% to
     10.9 % primarily due to the addition of recruiters and more aggressive
     advertising at all of the Argosy schools. This is an integral part of our
     marketing strategy. In addition, a significant increase resulted from the
     acquisitions of Western State and John Marshall in the third fiscal quarter
     of 2001.

          General and administrative expenses increased 43.1% from $3.8 million
     in the third quarter of fiscal 2000 to $5.4 million in the third quarter of
     fiscal 2001 and, as a percentage of net revenue increased from 30.0 % to
     32.3 % from quarter to quarter. General and administrative costs increased
     primarily due to the acquisitions of Western State, John Marshall and
     Connecting Link in the third fiscal quarter of 2001. Also, general and

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<PAGE>

administrative expenses increased in the third quarter of 2001 due to additional
management payroll costs to support current and future growth.

         Other expense net, decreased $0.2 million in the third quarter of
fiscal 2001 to $0.1 million from $0.3 million in fiscal 2000 due to the
acquisition of John Marshall which was fully consolidated in the Company's
operating results beginning March 1, 2001. For the three months ended May 31,
2000 the Company treated John Marshall an equity investment and accordingly
classified the losses attributable to John Marshall as other expense.

         The provision for income taxes was $1.0 million in the third quarter of
fiscal 2000 and $0.7 in the third quarter of fiscal 2001.

         Net income decreased 19.5%, from $1.4 million in the third quarter of
fiscal 2000 to $1.1 million in the third quarter of fiscal 2001 due to the
reasons discussed above.

Nine Months Ended May 31, 2001 Compared to Nine Months Ended May 31, 2000
         Net revenues increased 22.4 % from $34.8 million in the first nine
months of fiscal 2000 to $42.6 million in the first nine months of fiscal 2001.
The revenue increase is primarily due to internal growth and tuition increases
and increased revenue related to the acquisition of Western State, John Marshall
and The Connecting Link in the third quarter of fiscal 2001.

         Cost of education increased 23.8% from $15.3 million in the nine months
of fiscal 2000 to $18.9 million in the first nine months of fiscal 2001, due to
additional teaching costs to meet the growth in the number of students attending
the schools. Also contributing to the increase was cost related to the
acquisitions of Western State, John Marshall and The Connecting Link in the
third fiscal quarter of 2001. As a percentage of net revenue, cost of education
increased slightly from 43.8% in fiscal 2000 to 44.4 % in fiscal 2001.

         Selling expenses increased 66.8 % from $2.7 million in the first nine
months of fiscal 2000 to $4.6 million in the first nine months of fiscal 2001.
As a percentage of revenue, selling expenses increased from 7.9 % to 10.7 %
primarily due to the addition of recruiters and more aggressive advertising at
all of the Argosy schools. This is an integral part of the Company's marketing
strategy. In addition, a significant increase resulted from the acquisitions of
Western State, John Marshall, and The Connecting Link in the third quarter of
2001.


         General and administrative expenses increased 32.4 % from $11.3 million
in the first nine months of fiscal 2000 to $15.0 million in the first nine
months of fiscal 2001 and as a percentage of net revenue increased from 32.5% to
35.1% from in the first nine months of fiscal 2001 as compared to the comparable
period in the prior year. The dollar increase is partially due to the expensing
of warrants issued for general and academic services. On September 1, 2000, the
Company entered into a Consulting Agreement with Leeds Equity Associates, LP.
This partnership includes, as a partner Jeffrey Leeds, a member of the Company's
board of directors. This agreement encompasses the performance of Company
requested services over the six-month term of the agreement. Payment is
represented by a stock purchase warrant providing for the purchase of 200,000
shares of the Company's Class A common stock at a purchase price of $6.48 per
share and with a seven year exercise period. The value of the warrants was
established at $0.9 million and half of the charge was recorded in the first
quarter , and the remaining charge was recorded in the second quarter of fiscal
2001. Also, general and administrative expenses increased in the first nine
months of fiscal 2001 due to additional management payroll costs. Finally,
general and administrative costs increased partially due to the acquisitions of
Western State, John Marshall and Connecting Link in the third fiscal quarter of
2001.

         Other expense net, decreased from $0.8 million in the first nine months
of fiscal 2000 to $ 0.7 million in the first nine months of fiscal 2001. This
decrease in fiscal 2001 was due primarily to equity losses resulting from the
Company's investment in John Marshall Law School, which decreased from $1.2
million in the first nine months of fiscal 2000 to $0.9 million in the first
nine months of fiscal 2001. As a

                                      -14-
<PAGE>

result of the acquisition John Marshall, on March 1, 2001 the Company began
fully consolidating the operations of John Marshall. Other expense, net for the
nine months ended May 31, 2001 included losses attributable to John Marshall for
the six month period prior to the acquisition, as compared nine months of losses
during the nine month period ended May 31, 2000. This decrease was partially
offset by higher interest expense of $0.2 million.

         The provision for income taxes was $1.9 million in the first nine
months of fiscal 2000 and $1.7 million in the first nine months of fiscal 2001
and the effective tax rate was 49% and 41% for 2001 and 2000, respectively. The
higher effective income tax rate in the first nine months of fiscal 2001 is the
result of the non-cash stock warrants not having an income tax benefit.

         Net income decreased 36.1%, from $2.7 million in the first nine months
of fiscal 2000 to $1.7 million in the first quarter of fiscal 2001 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 increased from $6.4 million in the nine months ended May 31, 2000 to
$9.2 million in the nine months ended May 31, 2001. The Company had negative
working capital of $1.3 million as of May 31, 2001 which was $14.9 lower than
working capital as of August 31, 2000. The decrease in working capital was due
principally to $5.0 million of additional short term borrowings on the Company's
$20.0 million line of credit and liabilities assumed in the acquisitions of
Western State, John Marshall, and The Connecting Link.

         On March 1, 2001 the Company borrowed $5.0 million on its $20.0 million
line of credit with Bank of America which was scheduled to expire on July 20,
2001 and bears interest at a base rate plus an applicable margin. The borrowing
is classified as short term. The Company intends to extend the line of credit
for two years and reduce the amount to $12.5 million.

         Capital expenditures remained consistent at $1.6 million in the nine
months ended May 31, 2000 and 2001.

         Acquisitions

         On March 1, 2001, the Company completed its acquisition of Western
State University College of Law, in Fullerton, California ("Western State")
pursuant to the terms of the Stock Purchase Agreement dated as of November 14,
2000, between Argosy and Western State. Consideration for the purchase consisted
of $9.4 million in cash and the assumption of $3.9 million in debt, and certain
other deductions as provided for in the purchase agreement. This transaction was
accounted for as a purchase business combination in accordance with Accounting
Principles Board ("APB") Opinion No. 16, "Business Combinations," and,
accordingly, the results of operations of Western State have been included in
the Company's financial statements from March 1, 2001. Goodwill in amount $3.2
million was recorded for the

                                      -15-
<PAGE>

amount of the purchase price in excess of the fair value of assets assumed and
is being amortized over the estimated useful life of 15 years.

         As of, and prior to the acquisition, the Company maintained a long-term
management arrangement with John Marshall Law School ("John Marshall") of
Atlanta, Georgia, beginning in September 1999. The arrangement included a
management agreement, with a 10-year option to purchase John Marshall
exercisable at the Company's discretion and a line of credit of $0.6 million
between the Company and John Marshall. As of, February 28, 2001 the Company had
advanced $0.5 million under the line of credit and approximately $ 3.1 million
in operating cash under the management agreement. These advances, net of John
Marshall operating losses operations, were included in other long-term assets.
As provided for under the agreement, the Company received a management fee based
upon John Marshall's net revenue. The management fee has been eliminated from
the consolidated financial statements.

         The acquisition of John Marshall was made through a purchase of the
assets of John Marshall on March 1, 2001. The Company exercised its option to
purchase all of the operating assets and assumed the liabilities of John
Marshall for cash of $0.1 million and net advances of $0.7 million contributed
to John Marshall before the acquisition. This transaction was accounted for as a
purchase business combination in accordance with Accounting Principles Board
("APB") Opinion No. 16, "Business Combinations," and, accordingly, the results
of operations of John Marshall have been included in the Company's financial
statements from March 1, 2001. The preliminary purchase price allocation
resulted in negative goodwill of $0.1 million. This negative goodwill was
subsequently allocated to write down the long-lived assets of John Marshall.

         In 1987, the Georgia Supreme Court mandated that John Marshall obtain
American Bar Association ("ABA") accreditation before 2003 in order for John
Marshall graduates to take the Georgia Bar Exam. The ABA has to date refused
such accreditation. On June 8, 2001 the Georgia Supreme Court handed down an
order to extend John Marshall's accreditation through 2008. This extension will
continue to allow students to take the state bar exam as the school works toward
gaining ABA accreditation.


         Also on March 1, 2001 the Company acquired all of the outstanding
common stock of The Connecting Link, a privately held provider of continuing
professional education for kindergarten to grade 12 teachers for a purchase
price of approximately $1.8 million in cash. This transaction was accounted for
as a purchase business combination in accordance with Accounting Principles
Board ("APB") Opinion No. 16, "Business Combinations," and, accordingly, the
results of operations of The Connecting Link have been included in the Company's
financial statements from March 1, 2001. Goodwill in the amount $1.9 million was
recorded for the amount of the purchase price in excess of the fair value of
assets acquired and is being amortized over the estimated useful life of 15
years.

                                      -16-
<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 10.5% totaling $7.0 million at May 31, 2001. In addition, at May
31, 2001, the Company has debt in the amount of $5.3 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, 2001.

         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 Canadian operations approximated current market rates at May 31, 2001.

         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 book value at May 31, 2001.


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


               On July 9, 2001, Argosy entered into an Agreement and Plan of
Merger with Education Management Corporation ("EDMC") and HAC, Inc., a wholly-
owned subsidiary of EDMC, pursuant to which HAC will merge with and into Argosy,
with Argosy continuing as the surviving corporation. In the merger, holders of
Argosy common stock will receive $12.00 per share, without interest, for each
share of Argosy common stock. EDMC also entered into a Stock Purchase Agreement
with Dr. Markovitz providing for the purchase of his shares of Argosy common
stock at the same price per share.

          Consummation of the merger and the stock purchase is subject to a
number of conditions precedent described in the Agreement and Plan of Merger and
the Stock Purchase Agreement, including approval by Argosy stockholders and
certain regulatory approvals.

          Copies of the Agreement and Plan of Merger and the Stock Purchase
Agreement are included in this report as Exhibits 2.1 and 2.2. Argosy
stockholders are encouraged to read those documents in their entirety.

                                      -17-
<PAGE>

Argosy stockholders are also strongly urged to read the proxy statement that
will be filed with the Securities and Exchange Commission ("SEC") by Argosy in
connection with the merger. The proxy statement will contain important
information, such as the identities of the participants in the solicitation of
proxies from Argosy stockholders and a description of the interests of such
participants. Stockholders will be able to obtain a free copy of the proxy
statement and any amendments and other relevant documents filed with the SEC at
its website, www.sec.gov. In addition, Argosy will mail the proxy statement to
each stockholder of record on the record date to be established for the
stockholders meeting.



Item 6.  Exhibits and Reports on Form 8-K

    (a)  Exhibits


        2.1  Merger Agreement between Education Management Corporation and
             Argosy Education Group dated July 9, 2001.
        2.2  Stock Purchase Agreement, dated July 9, 2001, between Education
             Management Corporation and Michael Markovitz a stockholder of
             Argosy Education Group.

        (b)  Reports on Form 8-K:

         The Company filed a report on Form 8-K dated March 15, 2001, announcing
its, March 1, 2001, acquisitions of Western State University College of Law and
John Marshall Law School. In addition, the Company announced the restatement of
its financial statements for the year ended August 31, 2000, as well as each
quarter of fiscal 2000 and the first quarter of fiscal 2001.


         The Company filed a report on Form 8-K/A dated May 14, 2001, which
included historical and pro forma financial statements for acquisitions of
Western State University College of Law and John Marshall Law School.




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 13, 2001                               /s/ Charles T. Gradowski
                                            ------------------------------
                                            Charles T. Gradowski
                                            Chief Financial Officer

                                      -18-