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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                            ------------------------

                                  FORM 10-QSB

(Mark One)

<TABLE>
<S>   <C>
/X/   QUARTERLY REPORT PURSUANT SECTION 13 OR 15 OF THE SECURITIES
      AND EXCHANGE ACT OF 1934

        FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999.

/ /   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 OF THE
      SECURITIES AND EXCHANGE ACT OF 1934

   FOR THE TRANSITION PERIOD FROM             TO             .
</TABLE>

                        COMMISSION FILE NUMBER: 0-21932

                            ------------------------

<TABLE>
<S>                                            <C>
                             CALIFORNIA CULINARY ACADEMY, INC.
                    (Exact name of small business issuer in its charter)

                 CALIFORNIA                                     94-3042862
       (State or other jurisdiction of            (I.R.S. Employer Identification Number)
       incorporation or organization)

      625 POLK STREET SAN FRANCISCO, CA                            94102
  (Address of principal executive offices)                      (Zip Code)
</TABLE>

                   Issuer's Telephone Number: (415) 771-3536

                            ------------------------

    Indicate by check mark whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act 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 / /

    The number of shares outstanding of the registrant's Common Stock as of
September 30, 1999, was 3,815,431.

    Transitional Small Business Disclosure Format.  Yes / /   No /X/.

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<PAGE>
PART I--FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                       CALIFORNIA CULINARY ACADEMY, INC.

                            CONDENSED BALANCE SHEETS

                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                            SEPTEMBER 30,   JUNE 30,   SEPTEMBER 30,
                                                                1999          1999         1998
                                                            -------------   --------   -------------
<S>                                                         <C>             <C>        <C>
ASSETS
Current Assets:
  Cash and Cash Equivalents...............................     $   690      $   854       $ 1,893
  Accounts Receivable, net................................       4,668        3,487         4,601
  Inventories.............................................         243          233           297
  Other current assets....................................         317          400           810
                                                               -------      -------       -------
      Total Current Assets................................     $ 5,918      $ 4,974       $ 7,601
Property and Equipment, net...............................     $ 9,136      $ 9,186       $ 4,818
Other assets..............................................       1,242        1,147           656
                                                               -------      -------       -------
      TOTAL ASSETS........................................     $16,296      $15,307       $13,075
                                                               =======      =======       =======

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
  Accounts payable........................................     $ 1,995      $ 1,822       $   431
  Accrued liabilities.....................................         620          684           840
  Bank & term loans current...............................         924        1,000            --
  Deferred revenue........................................       5,221        4,017         4,702
  Student prepayments.....................................         585          585           477
  Other Current Liabilities...............................          --           --           121
                                                               -------      -------       -------
      Total Current Liabilities...........................     $ 9,345      $ 8,108       $ 6,571
Long-Term Liabilities:
  Bank & term loans.......................................     $ 2,124      $ 2,124            --
  Capital lease obligations...............................          --           --            92
                                                               -------      -------       -------
      TOTAL LIABILITIES...................................     $11,469      $10,232       $ 6,663

Shareholders Equity:
  Common stock............................................     $11,355      $11,355       $11,351
  Note receivable from shareholder........................        (544)        (533)         (500)
  Accumulated deficit.....................................      (5,984)      (5,747)       (4,439)
                                                               -------      -------       -------
      Total Shareholders' Equity..........................     $ 4,827      $ 5,075       $ 6,412
                                                               -------      -------       -------
      TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY..........     $16,296       15,307       $13,075
                                                               =======      =======       =======
</TABLE>

                  See notes to condensed financial statements

                                       1
<PAGE>
                       CALIFORNIA CULINARY ACADEMY, INC.

                       CONDENSED STATEMENTS OF OPERATIONS

                 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

                                  (unaudited)

<TABLE>
<CAPTION>
                                                               THREE MONTHS ENDED
                                                                  SEPTEMBER 30,
                                                              ---------------------
                                                                1999        1998
                                                              ---------   ---------
<S>                                                           <C>         <C>
Revenues:
  Culinary arts education...................................  $   3,791   $   3,974
  Restaurants & catering....................................        572         502
  Housing fees..............................................        181         153
  Retail & other............................................         83          24
                                                              ---------   ---------
      Total Revenues........................................      4,627       4,653

Cost of sales...............................................        884         785
                                                              ---------   ---------
Gross Margin................................................      3,743       3,868

Operating expenses
  Occupancy.................................................        690         552
  Depreciation & amortization...............................        326         269
  Compensation & Benefits...................................      1,906       1,818
  Outside services..........................................        188         110
  Advertising & Promotion...................................        164         149
  Legal & other.............................................        697         543
                                                              ---------   ---------
                                                                  3,971       3,441
                                                              ---------   ---------
Operating income (loss).....................................       (228)        427
  Interest income (expense).................................         (9)         42
                                                              ---------   ---------
Income (loss) before taxes..................................       (237)        469
  Income tax provision......................................                     30
                                                              ---------   ---------
Net Income..................................................  $    (237)  $     439
                                                              =========   =========
Net Income (loss) per share:
  Basic.....................................................  $   (0.06)  $    0.12
                                                              =========   =========
  Diluted...................................................  $   (0.06)  $    0.11
                                                              =========   =========
Weighted average common shares Outstanding..................  3,815,431   3,814,431
                                                              =========   =========
</TABLE>

                  See notes to condensed financial statements

                                       2
<PAGE>
                       CALIFORNIA CULINARY ACADEMY, INC.

                       CONDENSED STATEMENTS OF CASH FLOWS

                       (DOLLARS IN THOUSANDS, UNAUDITED)

<TABLE>
<CAPTION>
                                                                 THREE MONTHS
                                                                     ENDED
                                                                 SEPTEMBER 30,
                                                              -------------------
                                                                1999       1998
                                                              --------   --------
<S>                                                           <C>        <C>
Cash flows from operating activities:
  Net income (loss).........................................  $  (237)    $  439
  Adjustments to reconcile net income (loss) to net cash
    provided by (used in) operating activities:
    Depreciation and Amortization...........................      326        269
    Tax provision (Benefit).................................       --         30
    Provision for losses on accounts receivables............       30        (30)
    Deferred rent...........................................      (36)        41
  Changes in assets and liabilities
    Accounts receivable.....................................   (1,167)      (941)
    Inventories.............................................      (10)       (70)
    Prepaid expenses and other assets.......................       83       (771)
    Notes Payable...........................................      (11)       (11)
    Other assets............................................      (95)        --
    Accounts payable and accrued liabilities................       95       (645)
    Deferred revenue........................................    1,204        919
                                                              -------     ------
      Net cash provided by (used in) operating activities...      182       (770)
                                                              -------     ------
Cash flows from investing activities:
  Acquisition of property and equipment.....................     (270)       135
                                                              -------     ------
      Net cash used in investing activities.................     (270)       135
Cash flow from financing activities:
  Principal payments on current liabilities.................      (76)        --
  Principal payments on capital lease obligations...........       --         (5)
                                                              -------     ------
      Net cash provided by financing activities.............      (76)        (5)
                                                              -------     ------
Decrease in cash and equivalents............................     (164)      (640)
Cash and equivalents, beginning of period...................      854      2,533
                                                              -------     ------
Cash and equivalents, end of period.........................  $   690     $1,893
                                                              =======     ======
</TABLE>

                  See notes to condensed financial statements

                                       3
<PAGE>
                       CALIFORNIA CULINARY ACADEMY, INC.

                    NOTES TO CONDENSED FINANCIAL STATEMENTS

NOTE 1 BASIS OF PRESENTATION

    The accompanying unaudited condensed financial statements have been prepared
from the records of the California Culinary Academy, Inc. (the "Academy")
without audit and, in the opinion of management, include all adjustments
(consisting of only normal recurring accruals) necessary to present fairly the
financial position at September 30, 1999 and 1998, the interim results of
operations for the three month periods ended September 30, 1999 and 1998, and
cash flows for the three month periods ended September 30, 1999 and 1998. The
balance sheet at June 30, 1999, presented herein, has been derived from the
audited financial statements of the Academy for the fiscal year then ended.

    Accounting policies followed by the Academy are described in Note 1 to the
audited financial statements for the fiscal year ended June 30, 1999. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted for the purposes of the interim condensed financial
statements. The interim condensed financial statements should be read in
conjunction with the audited financial statements, including notes thereto for
the year ended June 30, 1999.

    The results of operations for the three month period presented herein are
not necessarily indicative of the results to be expected for the full year.

    Certain prior year amounts have been reclassified to conform to current year
presentation.

NOTE 2 LEASE AGREEMENTS

    In May 1997, the Academy renegotiated its lease for its core campus in San
Francisco. The lease term extends through March 2013 and the lease provides for
three extension options of five years each. In September 1999, the Academy
executed its options for an additional approximately 8,000 square feet of space.
Under the lease agreement, the Academy is obligated to occupy an additional
approximately 4,000 square feet of space when it becomes available. The Academy
currently occupies approximately 73,000 square feet (92% of the building). The
monthly rental obligation is approximately $101,000. The Academy is also
responsible for its pro-rata share of insurance, real property taxes and common
area maintenance, which is approximately $16,000 monthly.

    In August 1997, the Academy entered into a master lease of a 68-room hotel
in San Francisco, approximately one block from the main campus, to provide
student housing. The lease term extends until August 31, 2012 and the lease
provides for three extension options of five years each. The monthly rental
obligation is approximately $29,000. The Academy is also responsible for payment
of its pro-rata share of insurance and real property taxes, which is
approximately $1,500 monthly.

    In October 1997, the Academy purchased for approximately $1,900,000, an
80-room hotel in San Francisco, across the street from its main campus, which it
uses for student housing. In June 1998, the Academy sold the hotel for
$2,220,000 and entered into a lease for the property. Under the terms of the
lease, the landlord agreed to renovate and deliver at least sixty rooms to the
Academy over an eighteen-month period, which began September 1, 1998. As of
April 30, 1999, the landlord had delivered all 80 rooms to the Academy. The base
monthly rental obligation is approximately $36,000. In addition, the Academy is
also responsible for payment of its pro-rata share of insurance, real property
taxes and common area maintenance, which is approximately $5,000 monthly.

    In July 1998, the Academy entered into a lease for a 5,000 square foot
building in La Mesa, California. The lease term extends until June 30, 2003, and
the lease provides for three extension options of five years each. The Academy
developed the building into a College of Food campus, which was opened in
December 1998. The monthly rental obligation is approximately $4,000. The
Academy is also responsible for payment of its pro-rata share of insurance, real
property taxes and common area maintenance, which is approximately $1,000
monthly.

                                       4
<PAGE>
                       CALIFORNIA CULINARY ACADEMY, INC.

              NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)

NOTE 2 LEASE AGREEMENTS (CONTINUED)

    In January 1999, the Academy entered into a lease for a 5,050 square foot
space in a building complex in Garden Grove, California. The lease term extends
until May 2010, and the lease provides for two extension options of five years
each. The Academy plans to develop the space into a College of Food campus,
expected to be opened in the summer of 2000. The monthly rental obligation is
approximately $5,050. The Academy is also responsible for payment of its
pro-rata share of insurance, real property taxes and common area maintenance,
which is approximately $2,500 monthly.

    In December 1998, the Academy purchased a six building, 153,000 square foot
complex in New Orleans, Louisiana., which was to have been developed into a
second regional campus. Plans for the campus have been suspended and the Company
eventually intends to sell the property. (See Item 2 "Management's Discussion
and Analysis of Financial Condition and Results of Operations--Proposed Sale of
the Academy.")

    The New Orleans complex is currently subject to a mortgage interest held by
First Bank and Trust Company in the principal amount of $2,158,600, due
December 30, 2003, and liens on the property held by Eskew Architects and Centex
Landis Construction in the aggregate amount of $195,000.

    To provide funding for a portion of the approximately $18 million
development budget for the campus, the Academy plans to sell the land and
buildings and lease them back under a long-term lease agreement. Management
estimates the annual lease payments for the New Orleans campus would be
approximately $1,350,000. Through September, the Academy has incurred cost of
approximately $1,250,000 in design, construction and carrying costs for the
property and building permits.

    The Academy's management estimates that the capacity of the existing core
campus in San Francisco is approximately 1,200 students. The capacity of the
Salinas and La Mesa College of Food campuses is 150 students each and the
capacity of the San Francisco College of Food facility is 50 students.

NOTE 3 RELATED PARTY TRANSACTIONS

    In December 1997, the then Chairman of the Board of Directors exercised
stock options under the Academy's 1992 stock option plan. In exchange, he
delivered a promissory note for the value of the stock options of $465,000
bearing an interest rate of 9.5% and a due date no later than December 31, 1998.
Accrued interest on this note was approximately $79,000 as of September 30,
1999. Payment on this promissory note is currently delinquent and the Academy
has filed a lawsuit for the collection of the outstanding balance of
approximately $544,000.

NOTE 4 OTHER

    On April 28, 1999, the Academy entered into an agreement to sell $7 million
aggregate principal amount of its 10% Convertible Notes due 2005 and warrants to
acquire 250,000 shares of its common stock through a private offering to
institutional buyers. On August 11, 1999, a majority of the shareholders voted
against the transaction. The Academy terminated the agreement on August 12,
1999.

NOTE 5 SUBSEQUENT EVENT

    On August 2, 1999, the Academy announced that it had entered into a
non-binding letter of intent to be acquired by Career Education Corporation
("CECO") for a price of $6.50 per share. Since that time, CECO has conducted a
review of the Academy's business and had made a revised proposal that would
involve an acquisition of the Academy for $5.25 per share in cash. Such proposal
is under review by the Board of Directors of the Academy. The Academy has not at
this time entered into a definitive agreement with CECO. There can be no
assurance that the two companies will reach an agreement with respect to an
acquisition, or, if such an agreement is reached, that the negotiated price will
not differ materially from the price that has been proposed by CECO.

                                       5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS

OVERVIEW

    The following discussion should be read in conjunction with the financial
statements and notes thereto.

EDUCATION PROGRAMS

    The Academy's revenues are derived primarily from culinary arts education,
as well as restaurant, retail and media operations. Culinary arts education
primarily consists of the Associate of Occupational Studies Culinary Arts Degree
Program ("AOS Degree"), the Baking and Pastry Arts Certificate Program ("B&P
Certificate"), the College of Food Basic Professional Culinary Skills Program,
Weekend Professional Skills programs and Consumer Education programs.

    The sixteen-month AOS Degree program enrolls students on a two-week cycle.
This program can accommodate up to 25 students per class, with 558 students
enrolled as of September 30, 1999. By comparison, 556 students were enrolled as
of September 30, 1998.

    The Academy leases two properties in San Francisco, which provide housing
for students enrolled in the AOS Degree and B&P Certificate programs. Management
believes available student housing will continue to have a favorable impact on
the new student enrollments and student retention rates. Revenues from the
Academy's AOS Degree and B&P Certificate programs are derived exclusively from
enrollment in those programs. Tuition is initially recorded as deferred revenue
at the commencement of each enrollment period and recognized over the length of
a program as students complete course work required for graduation.

    The College of Food's Basic Professional Culinary Skills Program commenced
in October 1996 at the Academy's prototype facility in Salinas, California. The
Academy opened its second College of Food facility on the campus of San Diego
State University in February 1998. In December 1998, the College of Food
facility on the San Diego State University campus was closed and a larger campus
was opened in La Mesa, California, approximately 5 miles from the previous
location. The Academy's third College of Food was opened in San Francisco in
June 1999. The College of Food programs enroll students every three to four
weeks. As of September 30, 1999, approximately 297 students were enrolled in the
Academy's three College of Food programs.

    Weekend Professional programs are currently offered every eight to fourteen
weeks, depending on the program. As of September 30, 1999, the Academy had 35
students enrolled in various Weekend Professional programs.

    Consumer Education consists of programs oriented to a part-time audience.
The course length and content address the interest of food industry
professionals, home cooks and individuals anticipating career changes. These
courses include single topic classes and various three or four class series
covering current topics and basic skills.

RESTAURANT, RETAIL AND MEDIA

    Restaurant and retail operations include two restaurants and a private
dining room open to the public seven days per week, banquet services generally
offered seven days per week and a small on-site retail shop offering
student-prepared foods, beverages, cookbooks, video tapes, kitchen wares and
selected clothing. All restaurant and retail operations are located at the
Academy's core campus in San Francisco.

    Media operations primarily consist of the marketing of the "Cooking at the
Academy" television series and cookbook.

                                       6
<PAGE>
RISKS AND UNCERTAINTIES

    The following factors, and the other information contained herein, should be
considered carefully in evaluating the Academy and its business.

DEFAULTS ON OBLIGATIONS; LACK OF ADEQUATE CAPITAL RESOURCES

    The Academy is in default on its San Francisco City tax payments and on its
obligations to various third parties, including those in connection with its
planned development of a regional campus in New Orleans, Louisiana (the "New
Orleans Project") (which plans have been suspended) and certain other business
development initiatives. The amount necessary to cure the defaults is
approximately $650,000 as of November 1, 1999. The Academy does not possess the
funds necessary to cover such defaults. To raise funds, the Academy intends to
sell its New Orleans real estate. The sale of the property is expected to result
in cash proceeds of approximately $1.2 million, although there is no assurance
that the property will be sold or what the proceeds will be. However, without
the sale of the New Orleans property, the Academy does not possess the
additional funds necessary to cure all of its defaults. In addition, the Academy
does not believe that its cash shortfall will be solved in the short-term by
cash flows from operations and it currently does not have access to sufficient
credit or other financing. In the event that the proposed merger with CECO is
not completed in the near term, the Academy may require significant debt or
equity financing to meet its obligations. There can be no assurance that such
financing will be available and, if available, that the terms thereof will not
be highly disadvantageous to current shareholders. If sufficient financing is
not available, it is possible that the Academy would be required to seek
protection from creditors under bankruptcy laws. In the event of bankruptcy, the
Academy's assets will first be available to pay its debts and other contractual
obligations. Holders of Common Stock would only receive the assets remaining, if
any, after payment of all such obligations.

RISK OF FAILURE TO COMPLETE PROPOSED MERGER

    In August 1999, the Academy announced that it was in discussions with Career
Education Corporation ("CECO") regarding a proposed merger in which CECO would
pay $6.50 for each outstanding share of the Academy's Common Stock. On
October 15, 1999, the Academy announced that negotiations with CECO were
continuing and that CECO had revised its proposal to reflect an acquisition
price of $5.25 per share in cash.

    The merger discussions were prompted by certain large shareholders of the
Academy, who opposed the Academy's planned private placement of convertibles
debentures, the proceeds of which were to be used to develop a new campus in New
Orleans, Louisiana. The Academy's financial condition has deteriorated since May
1999. In addition to the termination of the convertible debenture sale, the
pending merger discussions resulted in the Academy's inability to complete a
planned sale and leaseback of the property it purchased to develop the New
Orleans campus. The Academy's current financial condition is further discussed
elsewhere in this section.

    There can be no assurance that the Academy will be able to reach a
definitive agreement with CECO concerning a merger or as to the terms of such a
merger. Further, if a definitive agreement is reached there can be no assurance
that the conditions to such merger will be satisfied. If the proposed merger is
not completed, the Academy's current financial condition presents significant
risks for investors in the Academy's Common Stock.

RECENT OPERATING RESULTS

    The Academy has reported a net loss of ($771,000) and ($869,000) for the
fiscal years ended June 30, 1998 and 1999, respectively, and a net loss of
($237,000) for the quarter ended September 30, 1999. There can be no assurance
that the Academy will operate profitably in future periods. Future operating
results will depend on numerous factors, including, among others, the Academy's
ability to continue to meet the requirements for participation in government
student loan programs (see

                                       7
<PAGE>
"Regulations" below) and, if applicable, its ability to successfully develop and
operate any new schools or programs.

    Based on the financial condition of the school as of June 30, 1999, the
Academy may not meet the financial responsibility requirements of the DOE. The
DOE regulations require an institution such as the Academy to achieve a minimum
score based on ratios measuring its primary reserves, equity and net income.
These regulations also require institutions to have sufficient cash reserves to
make required refunds, meet repayment obligations to the DOE, and not be in
violation of any loan agreement at the end of its fiscal year. Failure to meet
these requirements may subject the Academy to additional monitoring by and
reporting to the DOE, procedures affecting the disbursement of federal student
financial assistance to its students, and possibly the posting of a letter of
credit in favor of the DOE. If the Academy's financial condition were to fail to
improve sufficiently in subsequent fiscal years, the Academy's participation in
the Title IV student financial assistance programs could be jeopardized, which
would have a material adverse effect on the Academy.

REGULATIONS

    The Academy is subject to extensive regulations by state and federal
governmental agencies and accrediting agencies. At the federal level, HEA and
the regulations promulgated thereunder by the DOE set forth numerous standards
that schools must satisfy in order to participate in the federal student
financial aid programs under Title IV of the HEA ("Title IV Programs"). For the
year ended June 30, 1999, the Academy derived approximately 42% of its revenue
from Title IV Programs.

    Significant factors relating to Title IV Programs that could adversely
affect the Academy include the following:

    - THE 90/15 RULE OF THE HIGHER EDUCATION ACT ("HEA"): this rule states that
      any institution that derives more than 90% of its revenue from Title IV
      Programs in one year will be ineligible to participate in Title IV the
      following year. In fiscal year 1999, 42% of Academy revenues were derived
      from Title IV Programs.

    - DEFAULT RATES: in order to remain eligible for Title IV participation, an
      institution must not exceed a set limit on student loan default rates. If
      an institution exceeds a default rate of 25% for three consecutive years
      or 40% in one year, it will lose its eligibility to participate the
      following year. The Academy's current student loan default rate is 8.6%.

    - FINANCIAL STANDARD: The HEA prescribes specific standards of financial
      responsibility that a proprietary institution must satisfy in order to
      participate in Title IV Programs. The standards apply three different
      ratios: an equity ratio, a primary reserve ratio and a new income ratio,
      which are weighted and added together to produce a composite score. The
      ratio methodology of these standards takes into account an institution's
      total financial resources and determines a combined score of the measures
      of those resources along a common scale (from negative 1.0 to positive
      3.0). It allows a relative strength in one measure to mitigate a relative
      weakness in another measure. If an institution achieves a composite score
      of at least 1.5, it is financially responsible without further oversight.
      If an institution achieves a composite score from 1.0 to 1.4 it is in the
      "zone" and is subject to additional monitoring, but may continue to
      participate as a financially responsible institution for up to three
      years. These regulations also require institutions to have sufficient cash
      reserves to make required refunds, to meet repayment obligations to the
      Department and not to be in violation of any loan agreement at the end of
      its fiscal year.

    - CHANGE IN CONTROL: The DOE, most accrediting commissions and most state
      education authorities that regulate the Academy have laws, regulations,
      and/or standards pertaining to a change in ownership/change in control of
      educational institutions, but these regulations do not uniformly define
      what constitutes a change in control. The DOE regulations do describe
      certain transactions that constitute a change in control, including the
      transfer of a controlling interest in

                                       8
<PAGE>
      voting stock or the filing of an 8-K reporting a change in control. Once
      an institution is deemed to have experienced a change in control, it
      immediately becomes ineligible to participate in Title IV Programs and
      must apply for readmission into the Title IV Programs; however, if an
      institution timely files a materially complete application, it may avoid a
      cut-off in the funds it derives from the Title IV Programs.

    The financial position of the Academy as of June 30, 1999, may result in the
institution not achieving a composite score of more than 1.0 and meeting the
DOE's financial responsibility standards. If the Academy fails to meet these
standards it may be (i) required to post a letter or credit with the DOE,
(ii) subjected to additional monitoring and reporting, (iii) subjected to
procedures affecting the disbursement of federal financial assistance to its
students, and (iv) placed on provisional certification. Failure to improve its
fiscal position in subsequent fiscal years could jeopardize the Academy's
continued participation in the Title IV student financial assistance programs.

COMPETITION

    The Academy is one of the largest professional chef training schools in the
United States, based on enrollment statistics in the 1999 SHAW GUIDE. However,
the market for professional training of chefs is fragmented and regionally
oriented. According to the American Culinary Federation Educational Institute,
there are approximately 500 postsecondary culinary programs offered worldwide.
These programs range from simple food programs offered by vocational training
schools to fully accredited four-year programs.

    As of June 30, 1999, admissions statistics show that approximately 66% of
the Academy's students reside in California. However, the Academy believes that
it competes in the professional chef training market with, among others, two
not-for-profit institutions: the Culinary Institute of America, whose main
campus is in Hyde Park, New York, and Johnson & Wales University in Providence,
Rhode Island, which has campuses in Maryland, Colorado and Florida. The Academy
believes that both of these institutions have secured significant financial and
equipment contributions to build new facilities and expand their classrooms. The
Academy's business will be affected by its ability to compete effectively with
the Culinary Institute of America and Johnson & Wales, as well as other
competitors currently operating in, or which may subsequently enter, the
professional chef training market.

    The Academy believes that competition in the professional chef training
market is based primarily on the quality of an educational institution's faculty
and educational services, the job placement of graduates and the quality of the
academic facilities. The Academy believes that there is no assurance that the
Academy will be able to continue to compete favorably on these criteria.

RISKS ASSOCIATED WITH EXPANSION PLANS

    The Academy planned to develop a core campus, similar in scope to its San
Francisco facility, in an approximately 153,000 square foot building complex in
New Orleans, Louisiana, which was acquired in December 1998. Through
September 30, 1999, the Academy spent approximately $1,250,000 for architectural
and engineering services, permits, construction and other costs associated with
the development of the campus. In June 1999, the project was placed on hold
pending the outcome of discussions, initiated by three of the Academy's
shareholders who hold slightly more than 50% of the Academy's stock, certain
companies which had previously expressed an interest in buying the Academy. As
of November 1, 1999, discussions continue with one of those companies, Career
Education Corporation ("CECO"), regarding the possible purchase of all
outstanding shares of Academy stock. If no sale takes place, the Academy
intends, subject to the availability of sufficient financing, to proceed with
the development of the New Orleans Project and several other College of Food
facilities in other major cities in the United States. The successful
development of the planned facilities would require careful management of
various risks associated with such projects, including construction delays, cost
estimation errors or overruns, equipment or materials delays or shortages and
other factors, many of

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<PAGE>
which are beyond the Academy's control. There can be no assurance that the
Academy would not encounter unforeseen difficulties if it attempts to establish
these new facilities.

    The Academy would need to accomplish a number of objectives in order to
successfully complete the development of these new facilities, including raising
capital to cover the costs of architects, engineers, contractors and equipment,
hiring competent staff and recruiting students.

    In addition, the establishment of these new facilities would result in
substantial new fixed and operating expenses, including expenses associated with
additional real estate, additional personnel, and depreciation. If the Academy
were unable to attract a sufficient number of students to the facilities to
offset these new expenses, operating results could be materially adversely
affected in future periods.

    Furthermore, the development of these new facilities could place a
significant strain on the Academy's management resources and could result in the
diversion of management attention from the day-to-day operation of the Academy's
business. If the Academy is successful in increasing its volume of business, it
will need to continue to implement and improve its operational, financial and
management information systems, procedures, and controls on a timely basis.

    This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. The forward-looking statements contained herein are based
upon current expectations, and actual results may differ materially.
Forward-looking statements contained in this report involve numerous risks and
uncertainties, including those discussed in this report and the Academy's Annual
Report on form 10-KSB for the fiscal year ended June 30, 1999, that could cause
actual results to differ materially from those projected. Investors are
cautioned not to place undue reliance on these forward-looking statements, which
reflect management's expectations only as of the date hereof. The Academy
undertakes no obligation to publicly release the results from any revision to
these forward-looking statements that may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.

RESULTS OF OPERATIONS

REVENUES

    Culinary arts education revenue decreased 4.6%, to $3,791,000, for the three
months ended September 30, 1999, from $3,974,000 in the same period last year.
The decrease in culinary arts education revenue is due primarily to the
temporary decrease in AOS Degree student census, due to a decrease in length of
the program from 18 to 16 months. The Academy thus had more students
matriculating and entering its externship program in the second and third fiscal
quarters of the fiscal year ended June 30, 1999 than in previous fiscal
quarters, resulting in a reduction in both the number of revenue-producing
students and total enrollment. This decrease was partially offset by tuition
increases and increased attendance at the Academy's College of Food locations.

    Restaurants, catering and other revenue increased 23.1%, to $836,000, for
the three months ended September 30, 1999, from $679,000 in the same period last
year. The increase in restaurants, catering and other revenue is primarily due
to revenues generated by the Academy's student housing and increased restaurant
and catering sales.

COST OF SALES

    Food and beverage costs increased 16.6%, to 450,000, for the three months
ended September 30, 1999, from $386,000 in the same period last year. The
increase in food and beverage cost resulted from higher food costs and increased
College of Food enrollment during the quarter.

    Other costs of sales increased 8.8%, to $434,000, for the three months ended
September 30, 1999, from $399,000 in the same period last year. The increase in
other costs of sales is primarily attributable

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<PAGE>
to costs associated with student supply packages due to increased enrollment at
the College of Food campuses and improved retail sales at the San Francisco
campus.

OPERATING EXPENSES

    Operating expenses increased approximately $530,000, or 15.4% ,to $3,971,000
for the three months ended September 30, 1999, from $3,441,000 in the same
period last year. The increase in operating costs was due primarily to the
following factors: (i) increase in occupancy costs of $138,000, or 25.0%, due to
lease of the second residential hotel in San Francisco and the leasing of the
College of Food campuses in La Mesa and Garden Grove, California; (ii) increase
in depreciation expense of $57,000, or 21.2%, which was primarily due to the
opening of the La Mesa College of Food; (iii) increase in compensation and
outside service expenses of $166,000, or 8.6%, due to a reorganization of the
sales and marketing functions in the fourth quarter of fiscal year 1999; and
(iv) costs associated with the planned New Orleans Project.

INTEREST EXPENSE, NET

    Interest expense, net consists primarily of interest payments related to
short-term loans which were partially offset by interest on cash equivalents and
short-term investments. The decrease of $51,000 from net interest income during
the same period a year ago to net interest expense in the current fiscal quarter
resulted from a decrease in cash equivalents and short-term investments due to
development activities and an increase in short-term borrowings.

LIQUIDITY AND CAPITAL RESOURCES

    Historically, the Academy has financed its long-term growth through the
issuance of debt and equity securities in both private and public transactions,
borrowings from related parties, lease and debt financing obligations and cash
flow provided by operations.

    As of September 30, 1999, the Academy's principal source of liquidity
included cash and cash equivalents of $690,000 and net accounts receivable of
$4,668,000. As of September 30, 1999, the Academy had negative working capital
of $3,427,000. Net cash provided by operating activities during the first fiscal
quarter ended September 30 was $182,000 and ($770,000) in 1999 and 1998,
respectively.

    The primary reasons for the decrease in cash balances was the acquisition of
property and equipment and principal payments on short-term obligations.

    The Academy is in default on its San Francisco City tax payments and on its
obligations to various third parties, including those in connection with the New
Orleans Project and certain other business development initiatives. The amount
necessary to cure the defaults is approximately $650,000 as of November 1, 1999.
The Academy does not possess the funds necessary to cover such defaults. To
raise funds, the Academy intends to sell its New Orleans real estate. The sale
of the property is expected to result in cash proceeds of approximately $1.2
million, although there is no assurance that the property will be sold or what
the proceeds will be. However, without the sale of the New Orleans property, the
Academy does not possess the additional funds necessary to cure all of its
defaults. In addition, the Academy does not believe that its cash shortfall will
be solved in the short-term by cash flows from operations and it currently does
not have access to sufficient credit or other financing. In the event that the
proposed merger with CECO is not completed in the near term, the Academy may
require sufficient debt or equity financing to meet its obligations. There can
be no assurance that such financing will be available and, if available, that
the terms thereof will not be highly disadvantageous to current shareholders. If
sufficient financing is not available, it is possible that the Academy would be
required to seek protection from creditors under bankruptcy laws. In the event
of bankruptcy, the Academy's assets will first be available to pay its debts and
other contractual obligations. Holders of Common Stock would only receive the
assets remaining, if any, after payment of all such obligations.

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<PAGE>
YEAR 2000 CONSIDERATIONS

    The Academy has a number of computer and software systems that are critical
to the efficient and timely processing of information and business transactions.
Most of the Academy's suppliers are also dependent on computerized systems to
process information. The Academy has determined that most of its computerized
systems are year 2000 compliant and that the few systems that are not compliant
can be brought into compliance by the year 2000. The systems that are currently
non-compliant would not pose a significant problem to the Academy in either cost
or disruption of services if they cannot be made compatible.

    With the exception of utility companies who supply electricity, gas, water
and telephone service to the Academy's facilities, the Academy estimates that
the year 2000 compliance issue will have minimal effect on its ability to obtain
the products and services required by the Academy. The Academy is unable to
assess the year 2000 issue as it relates to its suppliers of utility services.
Disruption of utilities of any kind could have a major but undeterminable effect
on the Academy's business and profits. Management believes that a disruption in
utilities, and the impact such a disruption would have on its operations, would
be similar in degree and magnitude for the Academy as it would be for its
competitors. There is no assurance, however, that unforeseen year 2000 problems
will not occur that will have a significant negative effect on the Academy's
revenues and profits.

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

    There are various legal claims and lawsuits pending by and against the
Academy that, in the opinion of management, after consultation with legal
counsel, are not expected to have any material adverse effect on the results of
operations or financial position of the Academy.

ITEM 2. EXHIBITS AND REPORTS ON FORM 8-K

(a) EXHIBITS

    (1) The Exhibits filed with the Academy's Annual Report on Form 10-KSB for
       the fiscal year ended June 30, 1999, are incorporated herein by
       reference.

(b) REPORTS ON FORM 8-K

    (1) The Academy filed a Current Report on Form 8-K on August 24, 1999,
       reporting a change in the Academy's certifying accountant.

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<PAGE>
                                   SIGNATURES

    In accordance with the requirements of the Securities Exchange Act of 1934,
as amended, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

November 12, 1999

<TABLE>
<S>                                                    <C>  <C>
                                                       CALIFORNIA CULINARY ACADEMY, INC.

                                                       By:             /s/ CHARLES E. WHITE
                                                            -----------------------------------------
                                                                         Charles E. White
                                                                     CHIEF FINANCIAL OFFICER
                                                               (PRINCIPAL FINANCIAL AND ACCOUNTING
                                                                             OFFICER)
</TABLE>

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