SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT

                     Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934


                                 March 16, 2001
                Date of Report (Date of earliest event reported)


                            THE TESSERACT GROUP, INC.
             (Exact name of registrant as specified in its charter)


          Minnesota                     1-11111                  41-1581297
(State or other jurisdiction          (Commission              (IRS Employer
      of incorporation)               File Number)           Identification No.)


         4515 E. Muirwood Drive
           Phoenix, Arizona                                          85048
(Address of principal executive offices)                          (Zip Code)


                                 (480) 940-6300
               Registrant's telephone number, including area code


         (Former name or former address, if changed since last report.)

ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.

     SALE OF EDUCATION PROPERTY INVESTORS, INC. SCHOOL

     On March 16, 2001, The TesseracT Group, Inc. ("we" or "us") sold certain of
our assets to Education Property Investors,  Inc., a Nevada corporation ("EPI").
We made this sale  pursuant to the terms of a Purchase  and Sale  Agreement  for
personal property, dated January 31, 2001, by and between us and EPI, as amended
by that certain First Amendment to Purchase and Sale Agreement,  dated March 15,
2001, and a separate Purchase and Sale Agreement for real property dated January
31, 2001.

     In this  transaction,  we sold certain of our assets  including  equipment,
real property and goodwill  related to our property  commonly known as the North
Scottsdale  TesseracT  School.  In consideration for the sale of these assets we
received $100,000 for the personal property and goodwill, and $1,462,000 for the
real property less a mortgage  payoff amount of  $1,362,000.  EPI waived various
claims for rent.

ITEM 7. FINANCIAL INFORMATION; EXHIBITS

     (c)  Exhibits

       Exhibit No.
       -----------

          10.1      Purchase  and Sale  Agreement  by and between The  TesseracT
                    Group, Inc. and Education  Property  Investors,  Inc., dated
                    January 31, 2001 (as amended).

          10.2      Purchase  and Sale  Agreement  by and between The  TesseracT
                    Group, Inc. and Education  Property  Investors,  Inc., dated
                    January 31, 2001.


                                   SIGNATURES

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

                                           THE TESSERACT GROUP, INC.



Dated:  March 27, 2001                     By /s/ Douglas Snell
                                              ---------------------------
                                              Douglas Snell
                                              Controller