<PAGE>


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

                                   -----------

                                   FORM 10-QSB

(Mark One)

         /X/      QUARTERLY REPORT PURSUANT SECTION 13 OR 15 OF
                  THE SECURITIES AND EXCHANGE ACT OF 1934

                        FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1999.

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

                        FOR THE TRANSITION PERIOD FROM        TO       .

                         COMMISSION FILE NUMBER: 0-21932

                                   -----------

                        CALIFORNIA CULINARY ACADEMY, INC.

              (Exact name of small business issuer in its charter)

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

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

                    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/.


<PAGE>

PART I--FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                        CALIFORNIA CULINARY ACADEMY, INC.
                            CONDENSED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>

                                                       December 31,     June 30,        December 31,
                                                          1999            1999              1998
                                                      -------------   -------------    -------------
                                                       (unaudited)       (Note 1)       (unaudited)

<S>                                                   <C>             <C>              <C>

ASSETS
Current Assets:
   Cash and Cash Equivalents                          $         457    $        854    $         770
   Accounts Receivable, net                                   4,326           3,487            4,437
   Inventories                                                  254             233              249
   Other current assets                                         243             400              514

                                                      -------------   -------------    -------------
      Total Current Assets                                    5,280           4,974            5,970

Property and Equipment, net                                   8,977           9,186            7,938
Other assets                                                  1,216           1,147              667

                                                      -------------   -------------    -------------
      TOTAL ASSETS                                         $ 15,473        $ 15,307         $ 14,575
                                                      =============   =============    =============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
   Accounts payable & accrued liabilities                   $ 2,164         $ 2,506            $ 923
   Bank & term loans current                                    842           1,000              166
   Deferred revenue                                           4,716           4,017            4,344
   Other Current Liabilities                                    599             585              475

                                                      -------------   -------------    -------------
      Total Current Liabilities                               8,321           8,108            5,908

Long-Term Liabilities:
   Bank & term loans                                          2,124           2,124            2,244

                                                      -------------   -------------    -------------
      TOTAL LIABILITIES                                      10,445          10,232            8,152

Shareholders Equity:
   Common stock                                              11,355          11,355           11,355
   Note receivable from shareholder                            (555)           (533)            (511)
   Accumulated deficit                                       (5,772)         (5,747)          (4,421)

                                                      -------------   -------------    -------------
      Total Shareholders' Equity                              5,028           5,075            6,423

      TOTAL LIABILITIES AND
                                                      =============   =============    =============
          SHAREHOLDERS' EQUITY                             $ 15,473        $ 15,307         $ 14,575
                                                      =============   =============    =============

</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            Six Months Ended
                                                 December 31,              December 31,
                                          --------------------------- --------------------------
                                              1999          1998          1999          1998
                                          ------------  ------------- ------------  ------------
<S>                                       <C>           <C>           <C>           <C>
Revenues:
     Culinary arts education              $      3,716  $       3,464 $      7,507  $      7,438
     Restaurants & catering                      1,040            918        1,612         1,420
     Housing fees                                  275            109          456           262
     Retail & other                                 55             61          139            85
                                          ------------  ------------- ------------  ------------
          Total Revenues                         5,086          4,552        9,714         9,205

Cost of sales                                      991          1,080        1,875         1,862
                                          ------------  ------------- ------------  ------------
Gross Margin                                     4,095          3,472        7,839         7,343

Operating expenses
     Occupancy                                     748            604        1,438        1,155
     Depreciation & amortization                   223            281          548          550
     Compensation & Benefits                     1,934          1,773        3,839        3,602
     Outside services                              131            126          319          237
     Advertising & Promotion                       142            124          306          273
     Legal & other                                 717            466        1,417        1,009
                                          ------------  ------------- ------------  -----------
                                                 3,895          3,374        7,867        6,826
                                          ------------  ------------- ------------  -----------
Operating income (loss)                            200             98          (28)         517

     Interest income (expense)                      12             40            3           82
                                          ------------  ------------- ------------  -----------
 Income  (loss) before taxes                       212            138          (25)         599
     Income tax provision                            -             30            -           60
                                          ============  ============= ============  ===========
Net Income                                $        212  $         108 $        (25) $       539
                                          ============  ============= ============  ===========

Net Income (loss) per share:
Basic                                     $       0.06  $        0.03 $      (0.01) $      0.14
                                          ============  ============= ============  ===========
Diluted                                   $       0.06  $        0.02 $      (0.01) $      0.12
                                          ============  ============= ============  ===========

Weighted average common shares
   Outstanding                               3,815,431      3,815,431    3,815,431    3,815,431
                                          ============  ============= ============  ===========

</TABLE>

See notes to condensed financial statements


                                       2
<PAGE>

                        CALIFORNIA CULINARY ACADEMY, INC.
                       CONDENSED STATEMENTS OF CASH FLOWS
                        (DOLLARS IN THOUSANDS, UNAUDITED)

<TABLE>
<CAPTION>

                                                                                 Six Months Ended
                                                                                  December 31,
                                                                            -------------------------
                                                                                1999         1998
                                                                            ------------ ------------

<S>                                                                         <C>          <C>

Cash flows from operating activities:
     Net income (loss)                                                            $ (25)       $ 539
     Adjustments to reconcile net income (loss) to net cash provided by
       (used in) operating activities:
       Depreciation and Amortization                                                548          550
       Tax provision (Benefit)                                                        -           60
       Provision for losses on accounts receivables                                  52           58
       Deferred rent                                                                (37)          73
     Changes in assets and liabilities
       Accounts receivable                                                         (891)        (818)
       Inventories                                                                  (21)         (23)
       Prepaid expenses and other assets                                            157         (143)
       Note Receivable                                                              (22)         (22)
       Other assets                                                                 (32)           -
       Accounts payable and accrued liabilities                                    (342)        (484)
       Deferred revenue                                                             699          284
       Other Current Liabilities                                                     14            -
                                                                            ------------ ------------
          Net cash provided by (used in) operating activities                       100           74
                                                                            ------------ ------------


Cash flows from investing activities:
     Acquisition of property and equipment                                         (339)      (4,114)
                                                                            ------------ ------------
          Net cash used in investing activities                                    (339)      (4,114)
                                                                            ------------ ------------

Cash flow from financing activities:
     Borrowings under debt agreements                                                 -        2,325
     Principal payments on current liabilities                                     (158)
     Principal payments on capital lease obligations                                  -          (48)

                                                                            ------------ ------------
          Net cash provided by financing activities                                (158)       2,277
                                                                            ------------ ------------

Decrease in cash and equivalents                                                   (397)      (1,763)
Cash and equivalents, beginning of period                                           854        2,533

                                                                            ------------ ------------
Cash and equivalents, end of period                                               $ 457        $ 770
                                                                            ============ ============

</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 December 31, 1999 and 1998, the interim results
of operations for the three and six month periods ended December 31, 1999 and
1998, and cash flows for the six month periods ended December 31, 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 fiscal year ended June 30, 1999.

         The results of operations for the six 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 3,500 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.


                                       4
<PAGE>

                        CALIFORNIA CULINARY ACADEMY, INC.

         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.

         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. If the merger transaction described in Note 5 is not consummated,
the Academy plans to develop the space into a College of Food campus. (See Item
2, "Management's Discussion and Analysis of Financial Condition and Results of
Operations--Sale of the Academy.") 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. Due to the pending merger with Career Education
Corporation (See Note 5, "Subsequent Events") plans for the campus have been
suspended and the Company intends to sell the property. (See Item 2,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Sale of the Academy.") Through December 31, 1999, the Academy has
incurred cost of approximately $1,256,000 in design, construction and carrying
costs for the property and building permits.

         The New Orleans complex is currently subject to a mortgage interest
held by First Bank and Trust 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 $165,000.

         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, Theodore G. Crocker, 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 $90,000
as of December 31, 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 $555,000.

         Pursuant to a letter agreement with CECO dated December 4, 1999, Mr.
Crocker has agreed that as of the closing of the proposed merger, he will pay
the Academy a total of $465,000 plus accrued interest in full payment of a
promissory note held by the Academy and will release the Academy from any claims
he has against it, including those relating to the promissory note, and that he
will bring any future actions relating to a certain worker's compensation claim
only against the insurance carrier, and not against the Acedemy. CECO has agreed


                                       5
<PAGE>

                        CALIFORNIA CULINARY ACADEMY, INC.

with Mr. Crocker that it will, at the closing, cause the Academy to release any
and all claims it has against Mr. Crocker.

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. Subsequent to that time, CECO conducted
a review of the Academy's business and made a revised proposal that would
involve an acquisition of the Academy for $5.25 per share in cash. On December
6, 1999, the Academy entered into a definitive agreement with CECO for the
acquisition of all the outstanding common stock of the Academy for a price of
$5.25 per share ("Transaction"). The completion of the Transaction is subject to
the approval of the shareholders of the Academy. A shareholders meeting has been
scheduled for February 21, 2000 to vote on the Transaction. The closing of the
Transaction is also contingent on Academy's receipt of notice that Academy's
Accreditation has been renewed by the Accrediting Commission for Career
Schools/Colleges of Technology ("ACCSCT"), the approval of the change of
ownership by the California Bureau for Private Postsecondary and Vocational
Education ("BPPVE") and all approvals and consents from governmental and
regulatory authorities where necessary to complete the merger, except for
Department of Education ("DOE") approval and other approvals whose absence could
not reasonably be expected to have a material adverse effect on the Academy or
on the Academy's or CECO's ability to consummate the merger. Under DOE
regulations, DOE approval, which effectively permits the Academy to continue to
access federal student financial aid funding, can only be obtained after the
merger has been consummated. The Academy, with the assistance of CECO, is
presently working toward obtaining all of these approvals and providing these
notices. There can be no assurance that the Academy's shareholders will approve
the transaction, the Academy's accreditation will be renewed by ACCSCT, the
change of ownership will be approved by the required governmental and regulatory
authorities or that the transaction will close as planned. The Proxy Statement
for the Shareholders meeting to be held on February 21, 2000, which includes a
comprehensive analysis of the Transaction and definitive Agreement and Plan of
Merger for the Transaction has been filed with the Securities and Exchange
Commission.

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


                                       6
<PAGE>

                        CALIFORNIA CULINARY ACADEMY, INC.

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, 581 students
were enrolled as of December 31, 1999. By comparison, 606 students were enrolled
as of December 31, 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 December 31, 1999, approximately 236 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 December 31, 1999, the Academy
had 21 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.

RISKS AND UNCERTAINTIES

The following are certain material risk factors related to the Academy's
business. Such factors should be considered by shareholders in deciding whether
or not to vote to approve the principal terms of the merger.


                                       7
<PAGE>

                        CALIFORNIA CULINARY ACADEMY, INC.

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 $500,000 as of January 31, 2000. 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. On December 6, 1999, the Academy entered into
a definitive agreement with CECO for the acquisition of all the outstanding
common stock of the Academy for a price of $5.25 per share ("Transaction"). The
completion of the Transaction is subject to the approval of the shareholders of
the Academy. A shareholders meeting has been scheduled for February 21, 2000 to
vote on the Transaction. The closing of the Transaction is also contingent on
Academy's receipt of notice that the Academy's accreditation has been renewed by
the Accrediting Commission for Career Schools/Colleges of Technology ("ACCSCT")
and the approval of the change of ownership by the California Bureau for Private
Postsecondary and Vocational Education ("BPPVE") and all approvals and consents
from governmental and regulatory authorities where necessary to complete the
merger, except for Department of Education ("DOE") approval and other approvals
whose absence could not reasonably be expected to have a material adverse effect
on the Academy or on the Academy's or CECO's ability to consummate the merger.
Under DOE regulations, DOE approval, which effectively permits the Academy to
continue to access federal student financial aid funding, can only be obtained
after the merger has been consummated. The Academy, with the assistance of CECO,
is presently working toward obtaining all of these approvals and providing these
notices.

         There can be no assurance that the Academy's shareholders will approve
the transaction, the Academy's accreditation will be renewed by ACCSCT, the
change of ownership will be approved by BPPVE or that the transaction will close
as planned. The Proxy Statement for the Shareholders meeting to be held on
February 21, 2000 which includes a comprehensive analysis of the Transaction and
the definitive Agreement and Plan of Merger for the Transaction has been filed
with the Securities and Exchange Commission and is hereby


                                       8
<PAGE>

                        CALIFORNIA CULINARY ACADEMY, INC.

incorporated by reference. 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, a net loss of
($25,000) for the six months ended December 31, 1999, compared to a gain of
$539,000 for the six months ended December 31, 1998, and net income of $212,000
for the three month period ended December 31, 1999, compared to $108,000 for the
three month period ended December 31, 1998. 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 "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 90/10 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%.


                                       9
<PAGE>

                        CALIFORNIA CULINARY ACADEMY, INC.

-    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 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


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                        CALIFORNIA CULINARY ACADEMY, INC.

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.

RESULTS OF OPERATIONS

REVENUES

         Culinary arts education revenue increased 7.3%, to $3,716,000, for the
three months ended December 31, 1999, from $3,464,000 in the same period last
year. The increase in culinary arts education revenue is due in large part to
tuition increases, increased enrollment in the Colleges of Food and an
additional week of instruction in December 1999.

         Restaurants and catering increased 13.3%, to $1,040,000, for the three
months ended December 31, 1999, from $918,000 in the same period last year. The
increase in restaurants and catering is primarily due to increased catering
activity during November and December 1999. Housing fees increased 152.3% to
$275,000 for the quarter from $109,000 in the same period of the prior year due
to increased occupancy generated from availability of the second housing
facility.

COST OF SALES

         Food and beverage costs decreased by 25.1% to $541,000 for the three
months ended December 31, 1999, from $722,000 in the same period last year. The
decrease was primarily due to implementation of improved controls surrounding
the ordering process. The decrease was partially offset by costs associated with
the increase in food and beverage volume.

         Other costs of sales increased 25.7%, to $450,000, for the three months
ended December 31, 1999, from $358,000 in the same period last year. The
increase in other costs of sales is primarily attributable 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 $521,000, or 15.5%, to
$3,895,000 for the three months ended December 31, 1999, from $3,374,000 in the
same period last year. The increase in operating costs was due primarily to the
following factors: (i) increase in occupancy costs of $144,000, or 23.8%, due to
the leasing of the second residential hotel in San Francisco and the College of
Food campuses in La Mesa and Garden Grove, California; (ii) increase in
compensation and outside service expenses of $166,000, or 8.8%, due to a
reorganization of the sales and marketing functions in the fourth quarter of
fiscal year 1999; and (iii) costs associated with the New Orleans Project.


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                        CALIFORNIA CULINARY ACADEMY, INC.

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 $28,000 from net interest income
during the same period a year ago 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 December 31, 1999, the Academy's principal source of liquidity
included cash and cash equivalents of $457,000 and net accounts receivable of
$4,326,000. As of December 31, 1999, the Academy had negative working capital of
($3,041,000). Net cash provided by operating activities was $100,000 and
($74,000) during the fiscal quarter ended December 31, 1999 and 1998,
respectively.

         The primary reasons for the decrease in cash balances were (i) payments
on development related obligations, (ii) principal payments on short-term and
long-term debt and (iii) merger related costs.

         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 $500,000 as of January
31, 2000. 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 when or if 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 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.

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. As of January 31, 2000, there have
been no Year 2000 problems with the Academy's computerized systems or Year 2000
related disruptions of services from the Academy's suppliers


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<PAGE>

                        CALIFORNIA CULINARY ACADEMY, INC.

and utilities providers. However, there can be no assurance that Year 2000
problems will not materialize in the future.

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

          SEQUENTIAL
          EXHIBIT
          NUMBER
          --------

            3.2(1)    Bylaws, as currently in effect

            4.1(1)    Specimen of Common Stock Certificate

            4.2(2)    Form of Representative's Warrant

           10.1(1)   1992 Stock Option Plan, form of Incentive Stock Option
                     Agreement, form of Nonqualified Stock Option Agreement

           10.2(1)   Form of Indemnification Agreement with Directors and
                     Officers of the Registrant and Schedule of Indemnities

           10.5(1)   U.S. Department of Education Program Letter of Agreement
                     dated march 1993

           10.6(1)   Form of Enrollment Agreement

           10.18(5)  Consulting Agreement between Registrant and Theodore G.
                     Crocker dated January 1, 1994.

           10.21(5)  Agreement between Registrant and Trident Trading Company,
                     Inc. (Wusthof/Trident) dated August 5, 1994

           10.25(7)  Lease Agreement between Registrant and Toshiba American
                     Information systems, Inc. dated November 2, 1995

           10.25(8)  Amended Financing Agreement between Registrant and Wells
                     Fargo Bank dated February 1, 1996

           10.26(8)  Agreement between Registrant and Simon & Schuster, Innc.
                     Dated February 22, 1996

           10.29(10) Lease for premises at Natividad Plaza, Salinas, CA

           10.30(10) Agreement between Registrant and Noel-Levitz, Inc. dated
                     July 1, 1996 [Employment Agreements]

           10.33     Executive Employment Agreement between Registrant and Keith
                     H. Keogh dated May 31, 1995 with addendum dated
                     June 1, 1999

           10.34     Executive Employment Agreement between Registrant and
                     Jerald W. Chesser dated July 1, 1999

           10.35     Executive Employment Agreement between Registrant and Laura
                     Rivera dated March 15, 1999


                                       13
<PAGE>


           10.36     Executive Employment Agreement between Registrant and
                     Thomas Spanier dated May 1, 1998 with addendum dated
                     June 1, 1999

           10.37     Executive Employment Agreement between Registrant and
                     Charles E. White dated May 1, 1998 with addendum dated
                     June 1, 1999

           21.0      Academy has no Subsidiaries

           23.1      Independent Auditor's Consent

           27.l0     Financial Data Schedule

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

    (1)   Previously filed as an exhibit to the original filing of the
          Registration Statement on Form SB-2 (file No. 33-62720-LA) filed May
          14, 1993

    (2)   Previously filed as an exhibit to Amendment No. 1 of the Registration
          Statement filed June 7,k 1993

    (3)   Previously filed as an exhibit to Form 10-KSB/A for the fiscal year
          ended August 31, 1994

    (4)   Previously filed as an exhibit to Form 10-QSB for the quarter ended
          May 31, 1994

    (5)   Previously filed as an exhibit to Form 10-QSB for the fiscal year
          ended June 30, 1994

    (6)   Previously filed as an exhibit to Form 10-QSB for the fiscal year
          ended June 30, 1995

    (7)   Previously filed as an exhibit to Form 10-QSB for the quarter ended
          December 31, 1995

    (8)   Previously filed as an exhibit to Form 10-QSB for the quarter ended
          March 31, 1996

    (9)   Previously filed as an exhibit to Form 10-QSB for the quarter ended
          June 30, 1996

    (10)  Previously filed as an exhibit to Form 10-QSB for the quarter ended
          September 30, 1996

(b)      Reports on Form 8-K.

         The Academy filed reports on Form 8-K on April 30, 1999 and June 11,
         1999 in fiscal year ended June 30, 1999, and Form 8-K on August 24,
         1999 and December 9, 1999 in fiscal year ending June 30, 2000, the
         contents of which are incorporated herein by reference.

                                   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.

February 10, 2000           CALIFORNIA CULINARY ACADEMY, INC.

                            By:         /s/ Charles E. White
                                   ------------------------------------

                                            Charles E. White

                                         CHIEF FINANCIAL OFFICER
                                (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)


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