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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                  FORM 10-KSB

<TABLE>
<S>        <C>
(Mark One)

/X/        Annual report under section 13 or 15(d) of the Securities and Exchange Act of 1934
           For the fiscal year ended June 30, 1999
/ /        Transition report pursuant to section 13 or 15(d) of the Securities and Exchange Act
           of 1934 For the transition period from             to
</TABLE>

                        COMMISSION FILE NUMBER: 0-21932

                       CALIFORNIA CULINARY ACADEMY, INC.
                 (Name of small business issuer in its charter)

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

<TABLE>
<S>                                         <C>
               CALIFORNIA                                  94-3042862
    (State or other jurisdiction of           (I.R.S. Employer Identification No.)
     incorporation or organization)

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

                   Issuer's Telephone Number: (415) 292-8280

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

           Securities registered under Section 12(b) of the Act: None

             Securities registered under Section 12(g) of the Act:
                  Common Stock, no par value (Title of class)

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

    Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. Yes /X/ No / /.

    Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B contained in this form, and no disclosure will be contained,
to the best of the registrant's knowledge, in definitive proxy information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. /X/

    Revenues for the most recent fiscal year were: $17,974,000.

    The aggregate market value of the voting stock held by non-affiliates
computed by reference to the closing sale price on September 10, 1999 was
$13,261,331.

    The number of shares outstanding of the issuer's Common Stock as of
September 10, 1999, was 3,815,431.

    Documents incorporated by reference: None

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

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    This Annual Report on Form 10-KSB 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 Academy's actual results may differ
materially from the results projected in the forward-looking statements. Factors
that might cause such a difference include, but are not limited to, those
discussed in "ITEM 1--Description of Business", including the section therein
entitled "Risk Factors," and in "ITEM 6--Management's Discussion and Analysis of
Financial Condition and Results of Operations".

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS.

    The California Culinary Academy, Inc., ("Academy") is one of the largest
publicly held, for-profit professional culinary arts training schools in the
United States (based on the number of students enrolled in its programs),
offering a variety of programs to culinary arts professionals, serious amateurs
and other members of the public who may be interested in specific culinary
subjects. The Academy operates at three locations: the main campus located in
San Francisco, California and at extension campuses in Salinas and San Diego,
California. In conjunction with its education activities, the Academy operates
two public restaurants and a small retail shop at its San Francisco campus,
serving a clientele that consists of students, staff and the general public.

    The Academy has been in operation since 1977, offering its core programs,
consisting of the Associate of Occupational Studies Culinary Arts Degree Program
("AOS Degree"), the Baking & Pastry Arts Certificate Program ("B&P
Certificate"), weekend continuing education programs for professionals, and
other courses or workshops for interested non-professional students.

    In October 1996, the Academy introduced a new concept in culinary education
when it opened its College of Food at its extension campus in Salinas. A second
College of Food was opened in San Diego, California in February 1998. The
strategy of the College of Food is to increase the students' basic knowledge of
kitchen skills, sanitation and supervisory skills, as well as offering
specialized courses in baking and pastry. The College of Food concept is
designed to attract students who wish to enter the culinary field, food service
workers who need specialized training or individuals who simply want to expand
their culinary knowledge.

    As of September 1, 1999, the Academy has graduated approximately 5,600
students from its professional programs. In addition, thousands of individuals
have attended one or more of its continuing education classes. For the year
ended June 30, 1999, the Academy averaged approximately 617 full-time students
in its AOS Degree and B&P Certificate programs. These programs are designed to
accommodate up to 25 students in each of approximately 25 enrollment periods per
year for the AOS Degree program and 25 in each of the seven enrollment periods
for the B&P Certificate program. The Colleges of Food, each of which can
accommodate up to approximately 150 students with new enrollments occurring
approximately every three to four weeks, averaged 174 students during the year
ended June 30, 1999. Because the curriculum at the Academy focuses on practical
skills and techniques that the Academy believes are critical to success in the
food industry, the Academy has historically enjoyed a high job placement rate
among its graduates.

    The predecessor to the Academy was incorporated in June 1977, as a
Pennsylvania corporation. In October 1986, the Academy was incorporated in the
State of California under the name CCA Acquisition Corporation and was the
surviving corporation in a merger with the Pennsylvania corporation. Upon
completion of the merger, CCA Acquisition Corporation changed its name to
California Culinary Academy, Inc.

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<PAGE>
EDUCATION PROGRAMS

    The Academy's professional programs are designed to prepare students for
entry-level professional positions or for individual advancement to supervisory
positions in food service operation. The primary educational offerings of the
Academy are the AOS Degree and B&P Certificate programs. The Academy has also
applied for certification of its Basic Professional Culinary Skills Program at
the College of Food. Completed coursework from the College of Food's Basic
Professional Culinary Skills Program is transferable into the Academy's AOS
Degree program. In addition to its degree and certificate programs, the Academy
also offers a large variety of non-degree programs for professionals and other
students. All professional programs emphasize "hands on" practical experience.

    Full-time classes at the main campus in San Francisco are offered in two
seven-hour shifts, from 7 AM to 10 PM, Monday through Friday. At the Colleges of
Food, classes are offered in a choice of four hour shifts, from 9 AM to 1 PM or
from 6 PM to 10 PM for part-time students. Part-time students typically have
full or part-time jobs and the choice of classes accommodates their employment
schedules. Continuing education courses are offered on weekends at the Academy's
main campus.

AOS PROGRAM

    The Culinary Arts Program provides an intensive 16-month course of study
leading to an Associate of Occupational Studies ("AOS") Degree in Culinary Arts.
The program is divided into two academic terms. Enrollment periods begin every
two weeks, which provide students with flexible scheduling options and most
efficiently utilize the services of the Academy's chef instructors and the
Academy's facilities.

    The curriculum of the AOS Degree program, which integrates classical and
modern culinary techniques with strong kitchen management skills, is designed to
prepare students for professional entry into the food service industry. Courses
include Food Science and Technology, Food History and Anthropology, Baking and
Pastry, Skill Development, Garde Manger, Hospitality Management, Production
Kitchens, Wine Appreciation and other related subjects. In these courses
students learn how to prepare breads, pastries, desserts, appetizers, soups,
sauces, vegetables, salads, sandwiches, hors d'oeuvres, cold buffets, and
entrees. They also learn to identify, fabricate and portion meats, poultry and
fish. The professional kitchen management courses include such topics as
sanitation, hygiene, safety procedures, cost control, human resource management
and styles of table service.

    Integral to the coursework is experience operating the Academy's two
restaurants and participating in an externship (see "Restaurants, Retail and
Media"). In connection with the Academy's restaurant operations, students rotate
through kitchen stations in order to gain proficiency in various skills needed
to perform at professional standards in a commercial kitchen, and serve the
general public clientele in both sit-down and buffet-style settings. The AOS
Degree program provides a sequential course of study culminating in a
three-month off-site externship where students gain actual experience working
under a highly qualified professional chef.

    As of September 10, 1999, tuition and fees for the AOS Degree program
totaled approximately $31,755 for the full 16-month course of study. This fee
includes textbooks, uniforms, knife kits, the cost of food used in the
classrooms and one meal per day, in addition to the cost of course instruction.
Tuition is payable in installments during the two academic terms. Financial
assistance is available to eligible students (see "Government Financial Aid
Programs and Regulation").

BAKING & PASTRY CERTIFICATE PROGRAM

    The B&P Certificate program is designed for those students interested in
professional baking. The program provides 30 weeks of comprehensive study, with
an emphasis on the hands-on application of fundamental techniques and
ingredients. The program is divided into four modules: (i) breads and

                                       3
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doughs; (ii) cakes; (iii) service pastry and desserts; and (iv) chocolate,
confectionery and showpieces. In addition, the curriculum includes professional
development courses on safety and sanitation, nutrition and human resource
management. Although not included as a required part of the curriculum,
externships are available. Enrollment periods begin approximately every seven
weeks and each session can accommodate up to 25 students.

    As of September 10, 1999, tuition and fees for the B&P Certificate program
total approximately $14,228 for the full 30-week course of study. This fee
includes textbooks, uniforms, knife kits, cost of food, one meal per day and
supplies. Deferred payment plans and financial assistance are available to
eligible students (see "Government Financial Aid Programs and Regulations")

BASIC PROFESSIONAL CULINARY SKILLS PROGRAM

    The California Bureau for Private Postsecondary and Vocational Education
("BPPVE") has certified the Academy's 12-credit course of study offered at the
College of Food.

    The College of Food Basic Skills Program requires completion of 352 hours of
study for 12 credits as follows: 32 hours of Safety and Sanitation; 128 hours of
Kitchen Skills; 64 hours of Basic Baking skills; 64 hours of Garde Manger; 32
hours in Breakfast Cookery; and 32 hours of Current topics in Mid-Scale Dining.
Credits from the College of Food Basic Skills Program can be applied toward
earning an AOS Degree or a B&P Certificate through the Academy's core programs
at the main campus.

    As of September 10, 1999, tuition and fees for the Certificate of Basic
Professional Culinary Skills Program totaled approximately $5,156.

NON-DEGREE OR CERTIFICATE PROGRAMS

    In addition to its educational programs leading to the AOS Degree in
Culinary Arts, the B&P Certificate, and the College of Food Certificate of Basic
Professional Culinary Skills, the Academy offers non-degree continuing education
courses for professionals and serious amateurs, as well as other courses of
interest to anyone who likes to cook. The professional non-degree continuing
education programs address traditional kitchen skills with emphasis on palate
development, cooking techniques, and sauces.

    The courses generally are offered on consecutive weekends, and cover a
variety of subjects. Currently the Academy offers a series of eight-week
culinary courses and a fourteen-week baking and pastry series. Fees for the
non-degree professional programs range from $500 to $1,900. Completed course
work can be applied toward earning an AOS Degree or B&P Certificate.

EDUCATIONAL SERVICES

    JOB PLACEMENT FOR PROFESSIONAL PROGRAM STUDENTS AND GRADUATES.  The
Academy's Career Services staff assists currently enrolled students and
graduates in obtaining positions in the food industry in a number of ways. The
Career Services Office houses reference material containing current job openings
that include entry level through advanced positions throughout the United States
and foreign countries. For students and graduates who are unable to access the
current job openings on campus, these job openings are also recorded on the Job
Hotline, a telephone announcement that is updated weekly. Twice per year during
the Academy's Spring and Fall Recruitment Weekend, the Career Services staff
coordinates a Career Fair featuring representatives from all areas of the food
industry seeking to hire students and graduates of the Academy. The Career
Services staff also coordinates interview schedules for companies recruiting
students and graduates directly from the Academy during the Recruitment Weekend.
In addition, individual counseling sessions, resume assistance and other career
development materials are available through the Career Services Office. While
the Academy does not guarantee

                                       4
<PAGE>
employment specific positions upon graduation, it believes its name, reputation,
and high job placement rate are factors that attract students to its
professional programs.

    Students interested in part-time or full-time jobs while they are enrolled
at the Academy can contact the Career Services Office. The Academy provides
students with names of prospective employers seeking catering staff or other
part-time and full-time assistance. Additionally, the Academy itself offers
part-time employment. For example, the Academy's Food and Beverage Department
hires students to assist with special functions and events, such as private
parties and corporate events held in the Academy's restaurants. The Academy also
offers federal work-study opportunities.

    ALUMNI RELATIONS.  California Culinary Academy alumni relations and career
services personnel are available to refer graduates to other alumni, answer
questions, and provide programs, activities and professional opportunities.

    RECRUITMENT AND ADMISSIONS.  Students are recruited both domestically and
internationally. Statistics compiled show that as of June 30, 1999,
approximately 66% of the full-time students enrolled in the Academy's AOS Degree
or B&P Certificate programs are from California. The Academy's admissions staff
reviews applications for admission to the professional programs. In considering
an applicant for admission to the AOS Degree or B&P Certificate programs, the
admissions staff first determines whether an applicant meets certain minimum
prerequisites, including: (i) demonstrated motivation towards a career in the
culinary arts; (ii) graduation from high school with at least a 2.0 grade point
average or passage of an approved high school equivalency examination; (iii) a
passing score on a general math admissions test; and (iv) for those whose native
language is other than English, passage of the TOEFL test of English as a
Foreign Language with a score of at least 550 out of a total of 665. Experience
in the food industry is viewed favorably by the admissions staff but is not
considered a prerequisite for admission to any of the Academy's programs.
Applicants to the Academy's College of Food programs are not required either to
have a high school diploma or to have passed an approved high school equivalency
examination, or pass an entrance examination.

    The Academy has evaluation agreements with 18 regional junior colleges
allowing certain courses to be transferred to the Academy for credit. The
Academy believes this arrangement enables it to recruit more effectively from
junior colleges.

    The Academy believes that an important recruiting tool is its media
exposure. A 13-part series, COOKING AT THE ACADEMY, was developed and written by
the Academy and produced by the San Francisco public television station KQED.
This series has been shown in its entirety since 1991 through the Public
Broadcasting System to over 250 major media markets in the United States. In the
spring of 1995, a new 26-episode series of COOKING AT THE ACADEMY began airing
on public television stations throughout the country. Additionally, the Academy
has been featured in a syndicated radio talk show, FOOD FOR THOUGHT, airing in
the Monterey Bay area on KCSO radio, as well as DINING AROUND WITH GENE BURNS on
KGO radio in San Francisco. The Academy believes that such widespread exposure
has enhanced the Academy's name recognition, reputation and new student
recruitment efforts (see "Restaurants Retail and Media"). During the fiscal
year, the Academy entered into an agreement with WYES TV in New Orleans,
Louisiana for the production and distribution of a new 26 part series "The
Academy's Global Cuisine" which WYES TV plans to distribute in early 2000. Under
the Agreement with WYES TV, the Academy will publish a cookbook based on the
series.

    On-site admissions representatives, who are full-time salaried employees,
are responsible for recruiting students at the Academy. These admissions
representatives consult with prospective students who are referred by alumni,
respond to the Academy's advertising or are otherwise motivated to contact the
school.

    EDUCATIONAL PROGRAM DEVELOPMENT.  The Academy's ability to attract new
students and place graduating students depends to a significant extent on its
ability to offer educational and training

                                       5
<PAGE>
programs that provide students with skills sought after in the food industry.
Given the continual changes in professional cooking and professional baking, the
Academy believes it is critical that the most current methods are taught. The
Academy's Educational Program Committee (consisting of members of the Academy's
faculty, administration, and focus groups from the food industry), attempts to
respond quickly to both the culinary and business needs of the food industry.
Recent enhancements to the AOS Degree curriculum address profiling the culinary
arts program toward the global cuisine of today's industry. Course work in areas
such as Foods of the Americas, Asian Cuisine and a computer software course in
food industry applications respond directly to existing and current demands
facing the Academy's students upon their graduation.

    EDUCATION-OPERATIONS DEPARTMENT.  The Education-Operations Department is
responsible for the quality and delivery of the educational process, including
direct responsibility for curriculum content and sequencing, chef instructor
training and development, and teaching and evaluation methods. The Vice
President of Academic Affairs is assisted by chef managers who oversee each
educational area, Basic Skills, Culinary Production, Baking and Pastry and
Related Subjects in the AOS Degree or B&P Certificate programs and develop,
monitor and update the educational programs offered at the Academy.

    STUDENT RETENTION.  The Academy continually focuses significant efforts on
maintaining high retention rates for its students. For the fiscal year ended
June 30, 1999, approximately 87% of the students successfully completed the AOS
Degree program on schedule. Based on past experience, it is estimated that an
additional 5% will graduate at a later date. However, as is the case at most
institutions of higher education, some of the Academy's students end their
studies early for personal, financial or academic reasons. The Academy faculty
maintains weekly office hours to provide academic assistance and to advise
students. The Academy faculty and administration are also available to provide
support and referrals to students experiencing personal difficulties.

RESTAURANTS, RETAIL AND MEDIA

    RESTAURANTS.  The Academy operates two public restaurants at its San
Francisco campus: the Careme Room, a fine dining restaurant with seating for
approximately 325 diners, and the mid-scale Grill, with seating for
approximately 125 diners. The restaurants are open to the public seven days per
week for lunch and dinner, excluding school holidays. The restaurants are
staffed by students under faculty supervision and serve as an important teaching
environment since they provide "hands-on" experience in restaurant food
preparation, service and management. In addition, the restaurants provide an
additional source of revenue (see "Management's Discussion and Analysis of
Financial Condition and Results of Operations"). As part of the AOS Degree
program, the Academy's students are instructed in dining room service styles, as
well as professional cooking and food and beverage management.

    RETAIL.  The Academy operates a small retail shop at its San Francisco
campus. The retail shop, which services students, staff and the public, is open
five days per week, offering beverages, cookbooks, videotapes, kitchenware and
selected clothing.

    MEDIA.  The Academy developed and wrote the 13-part television series,
COOKING AT THE ACADEMY, produced in 1991 by San Francisco public television
station KQED, which features cooking instruction on specific topics by the
Academy's chef instructors or former chef instructors. Over 135,000 copies of
the accompanying cookbook, COOKING AT THE ACADEMY, have been distributed under
various distribution agreements. In addition, a series entitled CALIFORNIA
CULINARY ACADEMY COOKBOOKS, which includes 30 titles, has sold over two million
copies since 1985.

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    In 1995, 26 new episodes of COOKING AT THE ACADEMY began airing on public
television stations throughout the country. Over 85,000 copies of the
accompanying cookbook, FESTIVE FAVORITES, have been distributed under various
distribution agreements.

    In 1997, the Academy hosted a radio talk show, FOOD FOR THOUGHT, airing in
the Monterey Bay area on KSCO radio, as well as DINING AROUND WITH GENE BURNS on
KGO radio in San Francisco.

    In 1998, the Academy entered into a contract with WYES TV in New Orleans,
Louisiana for the production and distribution of a new 26-part series, "The
Academy's Global Cuisine," which WYES TV plans to distribute in early 2000. As
part of the agreement, the Academy will publish a cookbook based on the series.

    The Academy maintains a home page on the Internet at "www.baychef.com" as a
promotion and marketing tool to attract new students. The Academy's website
provides information on the Academy's educational programs and personnel,
program costs and admissions procedures and forms, and allows interested parties
to communicate with the Academy via e-mail and to order selected merchandise
from the Academy's retail store.

ACCREDITATION OF THE ACADEMY AND ITS PROFESSIONAL PROGRAMS

    Accreditation is a process for evaluating educational institutions and their
professional programs. Such evaluation process recognizes the quality of
educational program offerings and entitles the schools to the confidence of the
educational community, federal and state government agencies and the public at
large.

    In the United States, this accreditation is given primarily through
non-government, voluntary, institutional or professional associations. Those
groups establish criteria for accreditation, arrange site visits and evaluate
institutions and professional programs that desire accredited status, publicly
designating those that meet their criteria. Accredited schools are subject to
periodic review by accrediting bodies to ensure that the schools maintain the
level of program performance, content, teaching and administrative quality
required by the accrediting body.

    The Academy's postsecondary educational programs are recognized by the U.S.
Department of Education ("DOE") and by the California Bureau for Private,
Post-Secondary and Vocational Education ("BPPVE"). The Academy is accredited by
the American Culinary Federation Educational Institute Accrediting Commission
("ACFEI") and by the Accrediting Commission for Career Schools and Colleges of
Technology ("ACCSCT"). The Colleges of Food are not accredited, nor are the
programs offered by the Colleges of Food.

    The Academy is approved by BPPVE to grant to students who successfully
complete the full-time Culinary Arts Degree program, an AOS Degree in Culinary
Arts, and a Certificate in Baking and Pastry Arts for those students completing
the full-time B&P Certificate program. Approval from BPPVE is renewed
periodically in accordance with the provisions of the California Education Code.

    The Academy has been granted certification for the Basic Professional
Culinary Skills program in the Colleges of Food from BPPVE. The Academy's
courses of instruction for the AOS Degree and B&P Certificate programs are
approved for veterans training by the Federal Department of Veterans Affairs
under the GI Bill of Rights and the Veterans Education Assistance Programs
("VEAP") and for foreign students under the rules and regulations of the
Immigration and Naturalization Service ("INS").

GOVERNMENT FINANCIAL AID PROGRAMS AND REGULATION

    The Academy's students finance their education, in whole or in part, through
individual resources, with approximately 75% of students receiving some form of
financial aid assistance. Approximately

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42% of the Academy's fiscal 1999 educational program revenues were derived from
federal and/or state government-sponsored financial aid. On the basis of
financial information provided by the student and/or the student's family, the
Academy develops an assistance package for students who are eligible for
financial aid. To maintain financial assistance eligibility, students must
demonstrate satisfactory academic progress.

    Extensive and complex regulations govern all of the government grant and
loan programs in which the Academy and its students participate. These programs
are required to be administered in accordance with the standard of care and
diligence of a fiduciary and are subject to annual audits. The Academy's
Director of Financial Aid and one Financial Aid Counselor are certified by the
State of California. Two other Financial Aid Counselors are currently taking the
necessary steps to become certified. Any regulatory violations could be the
basis for suspension, limitation, or termination proceedings. No suspension,
limitation, or termination proceedings have ever been instituted against the
Academy.

    In July 1999, the Academy was re-certified by the DOE, and as such, is
eligible to continue to participate in the federal financial aid programs under
Title IV of the Higher Education Act ("HEA") through June 30, 2003. The Colleges
of Food, however, are not certified to participate in Title IV Programs and
students who attend the Colleges of Food do not receive federal financial aid
funds.

    An institution is required to meet certain specified financial standards in
order to participate in Title IV financial aid programs administered by the DOE.
Failure of an institution to adhere to those standards may result in the DOE
requiring that institution to post a letter or credit or other surety to ensure
that the institution is able to fulfill its educational commitments to its
students and pay required refunds upon withdrawal. The DOE could also place an
institution on provisional certification and subject it to additional monitoring
and reporting requirements.

    The Academy devotes significant time and effort in order to properly and
satisfactorily administer the financial aid programs in accordance with
applicable government regulations and responsibilities. The Academy has
established an internal review committee charged with ongoing compliance reviews
to identify problems, to take expeditious corrective action, and to implement
any and all mandated changes in regulations affecting these programs on a timely
basis. In addition, the Academy has developed job descriptions that the Academy
believes comply with Federal Work Study ("FWS") employment at for-profit
postsecondary institutions, has adopted internal written procedures to ensure
compliance with the Title IV restrictions, and has established and maintained
general ledger control accounts and related subsidiary accounts to assist in the
accurate and timely reporting of information to the DOE and other interested
parties.

    The following is a list of government financial aid programs in which the
Academy's students participate:

       Federal PELL Grant
       Federal Supplemental Educational Opportunity Grant ("SEOG")
       Federal Stafford Loan Program (subsidized)
       Federal Stafford Loan Program (unsubsidized)
       Federal Perkins Direct Student Loan Programs ("Perkins")
       Federal Parent Loans for Undergraduate Students ("PLUS")
       Federal Work Study ("FWS")
       California State Grants A, B, and C

    The Academy is also approved to train veterans and, therefore, students may
be eligible to receive benefits from the Veterans Administration.

    The Academy's continued eligibility to participate in the Title IV student
financial aid loan programs is dependent, in part, on maintaining an acceptable
"cohort" default rate. The cohort default

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rate is defined as the default rate of all federal financial aid loan programs,
other than the Perkins program. The Perkins program default rate is calculated
separately and is the smallest of the Academy's federally funded financial aid
loan programs.

    Any institution that has a cohort default rate of 25% or greater for three
consecutive years will not be eligible to participate in certain Title IV
student financial aid programs for approximately three years. The Academy's
cohort default rates for the three most recent fiscal years for which such data
is available are as follows:

<TABLE>
<CAPTION>
FISCAL YEAR:                                            COHORT DEFAULT RATE:
-----------------------------------------------------  -----------------------
<S>                                                    <C>
1995.................................................                13%
1996.................................................               9.3%
1997.................................................               8.6%
</TABLE>

    Approximately 42% of educational program revenues during fiscal year 1999
were provided by federal and/or state government-sponsored financial aid
programs, a substantial portion of which were derived from various student loan
programs. Participating students make loan application to one of several
federally-approved financial institutions. The ability of private financial
institutions to originate loans to the Academy's students is critical to the
Academy's business.

    Grants represent funds made available to eligible students by the
government, which do not have to be repaid. The Academy is eligible to
participate in federal PELL Grant and SEOG programs. Both are federal programs
for undergraduates at post-secondary schools in the United States who have
demonstrated sufficient financial need.

    All government-subsidized financial assistance programs for students are
subject to political and budgetary considerations outside the control of the
Academy. No assurance can be given that governmental programs currently
providing financial assistance and subsidies to students attending the Academy's
education programs will remain available at present levels. A reduction or
curtailment of funding levels, or other unanticipated changes in federal
assistance program participation requirements, would result in lower enrollments
and adversely impact the Academy's business. (See "Risks Factors").

    The Academy has spent no money in the last two fiscal years on research and
development activities. Additionally, costs and effects of the Academy's
compliance with federal, state and local environmental laws have been
negligible.

RISK FACTORS

    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 the New
Orleans project and certain other business development initiatives. The amount
necessary to cure the defaults is approximately $750,000 as of September 24,
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

                                       9
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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.

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. The Academy
further announced that it had entered into an agreement with CECO not to solicit
or negotiate a business combination transaction with third parties during a
period that has since been extended to October 1, 1999.

    The merger discussions were prompted by certain large shareholders of the
Academy whose opposition to 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/ leaseback of the property it purchased to
develop the New Orleans campus. The Academy's current financial condition is
further discussed above under "Defaults on Obligations; Lack of Adequate Capital
Resources" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources."

    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. 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
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 like 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, to meet repayment obligations to the DOE, and to 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.

                                       10
<PAGE>
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 of 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 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 S-K. Once an
      institution is deemed to have experienced a change of 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 less 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.

                                       11
<PAGE>
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 June 30,
1999, the Academy spent approximately $1,036,000 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 Academy's shareholders who
hold slightly more than 50% of the Academy's stock, with two publicly held
companies which had previously expressed an interest in buying the Academy. If
no sale takes place, the Academy intends, subject to the availablity of
sufficient financing, to proceed with the development of the New Orleans campus
and several other College of Food facilities in other major cities in the United
States. The successful development of the planned facilities will also require
careful management of various risks associated with such projects, including
construction delay, cost estimation errors or overruns, equipment or materials
delays or shortages and other factors, many of which are beyond the Academy's
control. There can be no assurance that the Academy will not encounter
unforeseen difficulties as it attempts to establish these new facilities.

    The Academy will need to accomplish a number of objectives in order to
complete successfully 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 will result in
substantial new fixed and operating expenses, including expenses associated with
additional real estate, additional personnel, and depreciation. If the Academy
is 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

                                       12
<PAGE>
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.

PROPRIETARY RIGHTS

    The long-standing use by the Academy of the "California Culinary Academy"
trade name gives rise to common law protections. In addition, various state and
federal registrations protect some uses of the name and the logos in which the
name has been used.

FACULTY AND EMPLOYEES

    The Academy employed 172 persons at September 10, 1999, of whom 27 were
part-time. Those employees included the President/CEO, Chief Financial Officer,
Chief Operating Officer, Vice President of Marketing, Vice President of Academic
Affairs, 131 members of the administrative and operational staff and 36 chef
instructors and adjunct faculty.

ITEM 2.  DESCRIPTION OF PROPERTY.

    The Academy leases approximately 74,000 square feet of space at 625 Polk
Street in San Francisco, California, a historic building. Effective September
15, 1999, the monthly rental obligation is approximately $102,000, with a
declining payment schedule over time. The Academy is also responsible for its
pro rata share of all leasehold expenses, including insurance, taxes, utilities
and maintenance, which were approximately $11,000 per month during fiscal year
1999. The lease term extends until March 31, 2013, with three five-year renewal
options thereafter.

    Academic facilities at the main campus at 625 Polk Street consist of lecture
classrooms and 14 kitchens for practical training, including four baking and
pastry kitchens, a confiserie, two garde manger kitchens, a seafood butchery, a
meat butchery, three professional production kitchens, a demonstration kitchen
and a skill development lab. Table service classroom facilities include two full
service, student-run public restaurants which seat more than 700 customers for
lunch and dinner seven days a week. Other facilities include a retail shop for
the sale of culinary art supplies and student-prepared food products from the
garde manger, pastry shop, bakery and confiserie. The Academy also has a library
and offices for administration, admissions, financial aid, educational services,
faculty and consumer education.

    In February 1994, the Academy entered into a two-year lease that provided
for four one year option periods for approximately 1,500 square feet at 700 Polk
Street in San Francisco, which it uses for certain of its educational programs.
Rental payments on this location are approximately $2,700 per month. The lease
expired in February 1998 and the Academy is currently renting the space on a
month- to- month basis.

    In July 1996, the Academy entered into a five-year lease for approximately
4,000 square feet in the city of Salinas, California for use as a culinary arts
training center, the prototype College of Food. The monthly rent for the
facility is the greater of approximately $3,900 or 8% of gross sales, plus a
share of common area and exterior maintenance charges that approximate $1,000
per month.

    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 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 were approximately $2,600 per month during fiscal
year 1999. The lease term extends until August 31, 2012, with three five-year
renewal options thereafter.

    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
intends to use for student housing. In June 1998, the Academy sold the hotel for
$2,220,000 and entered into a lease for the property. The

                                       13
<PAGE>
base monthly rent under the lease is $450 per room. In addition, the Academy is
responsible for payment of its pro rata share of insurance, real property taxes
and maintenance, which is estimated to be $2,000 per month.

    On July 1, 1998, the Academy entered into a lease for a 5,000 square foot
building in La Mesa, California for its second College of Food campus. 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. The Academy estimates such payments will be
approximately $1,000 per month. The lease term extends until June 30, 2003 and
the lease provides for three renewal options of five years each. The Academy has
developed the building into a College of Food campus which has recently opened.

    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 June 1999. 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 $2,000 monthly.

    In December 1998, the Academy purchased a six- building, 153,000 square foot
complex in New Orleans, Louisiana. Over the next two years, depending on the
outcome of the potential merger with CECO, the Academy plans to develop the
buildings into a core campus similar in size and scope to its San Francisco
campus. (See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Proposed Sale of the Academy.") Any new core campus would
be subject to the same risks and competitive pressures described herein. (See
"Risk Factors--Risks Associated with Expansion Plans").

    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 $415,860.

    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 that the annual lease payments for the New Orleans campus would be
approximately $1,350,000. Through September, the Academy has incurred cost of
approximately $1,036,00 in design, construction, carrying costs for the property
and building permits.

    The Academy's management estimates that the combined capacity of the
existing core campus in San Francisco is and the planned campus in New Orleans
will be approximately 2,400 students. The capacity of the three existing and one
planned College of Food campuses is 500 students.

INVESTMENT POLICIES.

    The Academy holds all of its cash in money market funds, and does not
currently intend to invest in real estate or real estate interests, real estate
mortgages, or securities of or interests in persons primarily engaged in real
estate activities. Any such investments would require the approval of the
Academy's Board of Directors.

ITEM 3.  LEGAL PROCEEDINGS.

    The Academy is subject to routine claims and litigation arising out of the
normal conduct of its business. While the outcomes cannot be predicted with
certainty, the Academy believes that the resolution of such matters will not
have a material effect on the Academy's financial condition or results of
operations.

                                       14
<PAGE>
    The Academy has filed a lawsuit in the Federal District Court in San
Francisco against Theodore G. Crocker, its former Chief Executive Officer and
Chairman of the Board and current holder of greater than five percent of the
common stock of the Academy, to rescind the sale of 112,000 shares of the
Academy's Common Stock in connection with the exercise of certain options by Mr.
Crocker and to collect damages on an unpaid promissory note in the principal
amount of $465,192.20 plus interest owed by Mr. Crocker to the Academy in
connection with the purchase of such shares. The Academy believes that the
resolution of this litigation will not have a material effect on the Academy's
financial condition or results of operations. On or about September 23, 1999,
Mr. Crocker filed an answer to the Company's complaint, in which he denied
liability and asserted various defenses to payment of the promissory note.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

    The Annual Meeting of Shareholders was held in two sessions. The originally
scheduled meeting was held on June 28, 1999. At this meeting, the shareholders
voted on the ratification of Deloitte & Touche LLP as the Academy's auditors and
the proposed change in the Academy's By-laws to authorize a minimum of six and a
maximum of nine directors. The June 28, 1999 meeting was adjourned and later
reconvened on August 11, 1999 at which time the proposal for a private placement
of convertible notes was voted on. No vote was taken on the proposed slate of
directors. The number of votes for, withheld and against, as well as the number
of abstentions and broker non-votes as to each matter approved at the two
sessions of the Annual Meeting of Stockholders were as follows:

<TABLE>
<CAPTION>
                                                                                             BROKER
MATTER                                    FOR        WITHHELD      AGAINST     ABSTAIN      NON-VOTES
-------------------------------------  ----------  -------------  ----------  ---------  ---------------
<S>                                    <C>         <C>            <C>         <C>        <C>
Election of Directors:...............      (Vote Not Taken)                          --            --
Private Placement of Convertible
  Notes:.............................     258,937           --     1,450,258      2,120            --
Amendment to By-Laws:................   1,385,258           --            --         --            --
Ratification of independent
  auditors:..........................     960,836           --        74,200    350,222            --
</TABLE>

                                    PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

    The Academy's Common Stock is traded in the NASDAQ National Market under the
symbol "COOK." The following table set forth the high and low closing sale
prices for the Common Stock as reported on the NASDAQ National Market for the
periods indicated.

<TABLE>
<CAPTION>
                                                                             HIGH        LOW
                                                                           ---------  ---------
<S>                                                                        <C>        <C>
FISCAL YEAR ENDED JUNE 30, 1998:
Quarter Ended September 30, 1997.........................................  $   8.125  $   7.750
Quarter Ended December 31, 1997..........................................  $   8.000  $   7.500
Quarter Ended March 31, 1998.............................................  $  10.000  $   7.750
Quarter Ended June 30, 1998..............................................  $   8.250  $   7.000

FISCAL YEAR ENDED JUNE 30, 1999:
Quarter Ended September 30, 1998.........................................  $   8.000  $   6.750
Quarter Ended December 31, 1998..........................................  $   8.500  $   7.500
Quarter Ended March 31, 1999.............................................  $   8.500  $   6.875
Quarter Ended June 30, 1999..............................................  $   7.625  $   5.625
</TABLE>

                                       15
<PAGE>
    As of August 31, 1999, there were approximately 72 recorded holders of the
Academy's Common Stock.

    The Academy has never paid cash dividends on its Common Stock. At present,
the Academy intends to retain any earnings for use in its business and does not
anticipate paying cash dividends on its common stock in the foreseeable future.
Beginning September 30, 1996, the Academy was required to pay, and did pay,
quarterly dividends on its outstanding Series A Preferred Stock at the annual
rate of $.4125 per share. An aggregate of $21,688 in cash dividends was paid
during the fiscal year ended June 30, 1998. Pursuant to the terms of the Series
A Preferred Stock Agreement, the Academy converted the outstanding preferred
stock to Common Stock in February 1998.

    During the past three years, the Academy has not sold any securities without
registering such securities under the Securities Act of 1933.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS.

    The following discussion should be read in conjunction with the financial
statements and notes thereto located on pages 20 through 32.

    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 AOS Degree and B&P Certificate programs, the College
of Food Basic Professional Culinary Skills Program, and weekend professional
skills program offerings. The AOS Degree program enrolls students on a two-week
cycle. The program can accommodate up to 25 students per class. The 30-week B&P
Certificate program enrolls classes on a four week cycle, typically ranging in
size from 15 to 25 students, with five classes enrolled as of June 30, 1999. The
College of Food programs commenced October 14, 1996 at the Academy's prototype
facility in Salinas, California. A second College of Food campus was opened on
the campus of San Diego State University in San Diego, California in February
1998. The San Diego State University facility was closed and a new larger campus
was opened in La Mesa in San Diego County in December 1998. In July 1999 a
College of Food facility was opened in San Francisco within a block of the core
campus. As of September 10, 1999, approximately 232 students were enrolled in
the Basic Professional Culinary Skills program at the College of Food's three
locations. The Colleges of Food enroll students every three to four weeks. As of
September 10, 1999, the Academy has 102 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 interests of food industry
professionals, home cooks and individuals who are contemplating a change in
their professional careers. These courses include single topic classes and
various three or four class series covering current topics and basic skills.

    Restaurant and retail operations include two restaurants and a private
dining room, banquet services and a small on-site retail shop offering
beverages, cookbooks, video tapes, kitchen wares and selected clothing. Media
operations primarily consist of the marketing of the COOKING AT THE ACADEMY
television series and cookbook royalties. Certain expenses such as food costs
and costs of goods sold are related to both educational services and retail
restaurant operations.

    Revenues from the Academy's AOS Degree and B&P Certificate programs rely
exclusively on enrollments in those programs. Tuition is initially recorded as
deferred revenue at the commencement of each enrollment period and recognized as
revenue over the length of program as students complete course work required for
graduation.

    The Academy believes that manageable growth is achievable through the
addition of strategically located core campuses, such as its main campus in San
Francisco, as well as extension campuses, such as the College of Food locations
in Salinas and San Diego, California. While management believes that this
strategy will enable it to significantly increase revenues by providing
additional educational and

                                       16
<PAGE>
training resources for the food industry, there can be no assurance that
management will be able to successfully implement such a strategy.

    Except for historical information contained herein, 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
herein involve numerous risks and uncertainties that could cause actual results
to differ materially from those projected. Investors are cautioned not to place
undue reliance on those forward-looking statements, which reflect management's
analysis only as of the date hereof. The Academy undertakes no obligation to
publicly release the results of 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 (see "Business--Risk Factors").

RESULTS OF OPERATIONS

    The Academy incurred a net loss of $869,000, or ($0.23) per share for the
fiscal year ended June 30, 1999 ("Fiscal 1999"), compared to a loss of $771,000,
or $0.22 per share, for the fiscal year ended June 30, 1998 ("Fiscal 1998").

    Total revenues increased $931,000, or 5.6%, from $16,732,000 in Fiscal 1998
to $17,974,000 in Fiscal 1999. Total revenues increased $1,393,000, or 9.1%,
from $15,339,000 for the fiscal year ended June 30, 1997 ("Fiscal 1997") to
$16,732,000 in 1998. Revenues from culinary arts education increased $1,041,000,
or 7.8%, from $13,449,000 in 1998 to $14,490,000 in 1999. Revenues from culinary
arts education increased $767,000, or 6.1%, from $12,682,000 in 1997 to
$13,449,000 in 1998.

    Total student count in the AOS Degree, B&P Certificate and College of Food
programs increased by 31 students, or 4.0%, to 807 students as of June 30, 1999
from 776 students as of June 30, 1998. The increase is primarily attributable to
the introduction of the College of Food programs.

    Student Housing revenue increased by $227,000 or 72.8% from $312,000 in the
fiscal year ended June 30, 1998 to $539,000 in the fiscal year ended June 30,
1999. The increase was due to increased occupancy. Fiscal 1998 was the first
year that the Academy provided housing services.

    Restaurant, retail, media and other sales decreased to $2,945,000, or 16.4%
of total revenues, in Fiscal 1999, compared to $2,971,000, or 17.8% of total
revenues, in Fiscal 1998. Restaurant, retail, media and other sales increased by
$314,000 or by 11.8% from 1997 to $2,971,000 or 17.8% of total revenues in
Fiscal 1998.

    Operating expenses were $15,539,000, or 86.5% of total revenues in Fiscal
1999 compared to $14,063,000 or 84.0% of total revenues in Fiscal 1998. The
increase was primarily attributable to the write off of the expenses of the
private placement that was voted down by the shareholders, pre-opening costs
related to the New Orleans project, opening of the College of Food campus in La
Mesa, California, the opening of a second student housing building in San
Francisco, year end charges to the allowance for doubtful accounts due to the
large increase in College of Food receivables and the increase in Sales and
Marketing related expenses in the fourth quarter resulting from a reorganization
of these two areas of the Academy. Operating expenses were $14,063,000 or 84.0%
of revenues for the fiscal year ended June 30, 1998, compared to $11,875,000 or
77.4% of revenues in 1997.

    Food and beverage expenses were $1,989,000, or 11.1% of total revenues, in
Fiscal 1999, compared to $1,810,000, or 10.8% of total revenues, in Fiscal 1998.
The increase was primarily attributable to an increase in food and beverage
costs. Food and beverage costs were $1,810,000 or 10.8% of revenues for the
fiscal year ended June 30, 1998 compared to $1,744,000 or 11.4% of revenues in
1997.

                                       17
<PAGE>
    In Fiscal 1999, interest income, net of interest expense, was $134,000, or
0.8% of total revenues, compared to interest income, net of interest expense, of
$13,000, or 0.1% of total revenues, in 1998. The increase in net interest income
was primarily attributable to an increase in cash balances during the first half
of the fiscal year. In Fiscal 1998, interest income, net of interest expense,
was $13,000 or 0.1% of revenues, compared to interest income, net of expense, of
$52,000 or 0.3% of revenues in Fiscal 1997.

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 June 30, 1999, the Academy's principal source of liquidity included
cash and cash equivalents of $854,000 and net accounts receivable of $3,487,000.
As of June 30, 1999, the Academy had negative working capital of $3,134,000. Net
cash provided by operating activities was $800,000 and $695,000 in 1999 and
1998, respectively.

    The primary reasons for the decrease in cash balances was the purchase of
and development costs for the New Orleans property, tenant improvement costs for
the La Mesa College of Food campus, increases in accounts receivable due to the
increased enrollment at the two College of Food locations, increased sales and
marketing expenses due to a reorganization of the these areas of the Academy and
a reduction in the AOS degree program census of approximately 125 students in
the fourth quarter due to a change in the length of the program from 18 to 16
months in the first half of the fiscal year 1998. During two months of the
fourth quarter of fiscal year 1999, two AOS class groups were graduating while
one class was starting.

    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 $750,000 as of September 24,
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.

PRIVATE PLACEMENT

    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. The gross proceeds to the Academy, prior to the exercise
of the warrants, would have been $7 million.

    The offering was expected to close in June 1999, subject to satisfaction of
customary conditions, including shareholder approval. The Academy intended to
use the net proceeds from the offering

                                       18
<PAGE>
together with approximately $10 million in proceeds from a sale and leaseback of
the New Orleans property, which was contingent on the funding of the private
placement, to pay for the leasehold improvements and equipment for the New
Orleans and various College of Food campuses.

    The private placement was disapproved by the shareholders of the Academy on
August 11, 1999. If the proposed purchase of the Academy by Career Education
Corporation does not take place, the Academy plans to proceed with another
private placement transaction to fund its strategic plan.

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.

ITEM 7.  FINANCIAL STATEMENTS.

    The balance sheets of the Academy as of June 30, 1999 and 1998, the related
statements of operations, stockholders' equity and cash flows for the years then
ended, and notes to the financial statements are located on pages 20 through 32.

<TABLE>
<CAPTION>
                                                                                                 FORM 10-KSB PAGE
                                                                                                 -----------------
<S>                                                                                              <C>
Independent Auditors' Report...................................................................         20
Balance Sheets as of June 30, 1999 and 1998....................................................         21
Statements of Operations for the years ended June 30, 1999 and 1998............................         22
Statements of Shareholders' Equity for the years Ended June 30, 1999 and 1998..................         23
Statements of Cash Flows for the years ended June 30, 1999 and 1998............................         24
Notes to Financial Statements..................................................................      25 to 32
</TABLE>

                                       19
<PAGE>
                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
California Culinary Academy, Inc.

We have audited the accompanying balance sheet of California Culinary Academy,
Inc. (a California corporation) as of June 30, 1999 and the related statements
of income, stockholders' equity and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit. The financial statements of California Culinary Academy, Inc. as of
June 30, 1998, were audited by other auditors whose report dated September 24,
1998, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above, present fairly, in
all material respects, the financial position of California Culinary Academy,
Inc. as of June 30, 1999, and the results of its operations and cash flows for
the year then ended, in conformity with generally accepted accounting
principles.

ROONEY, IDA, NOLT and AHERN
Certified Public Accountants

Walnut Creek, California
September 21, 1999

                                       20
<PAGE>
                       CALIFORNIA CULINARY ACADEMY, INC.

                                 BALANCE SHEET

                             JUNE 30, 1999 AND 1998
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                                 1999       1998
                                                                                               ---------  ---------
<S>                                                                                            <C>        <C>
                                                      ASSETS
Current Assets
  Cash and cash equivalents..................................................................        854      2,533
  Accounts receivable, net of allowance of $325 and $419.....................................      3,487      3,660
  Inventories................................................................................        233        227
  Prepaid expense and other assets...........................................................        400        191
  Deferred tax asset.........................................................................          0        188
                                                                                               ---------  ---------
  Total Current Assets.......................................................................      4,974      6,799
                                                                                               ---------  ---------
Property and equipment, net..................................................................      9,186      4,830
Intangible assets, net.......................................................................        165        290
Other assets.................................................................................        982        357
                                                                                               ---------  ---------
Total Assets.................................................................................     15,307     12,276
                                                                                               ---------  ---------
                                                                                               ---------  ---------

                                       LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Current portion of notes and lease contracts...............................................      1,000         75
  Accounts payable...........................................................................      1,822        593
  Accrued liabilities........................................................................        684        790
  Deferred revenue...........................................................................      4,017      4,260
  Student prepayments........................................................................        585        477
                                                                                               ---------  ---------
  Total Current Liabilities..................................................................      8,108      6,195
                                                                                               ---------  ---------
Notes payable................................................................................      2,124          0
Capital lease obligations....................................................................          0         97
                                                                                               ---------  ---------
  Total Liabilities..........................................................................     10,232      6,292
                                                                                               ---------  ---------
Commitments and Contingencies
Stockholders' Equity:
Common stock, no par value 20,000,000 shares authorized; 1999: 3,815,431 and 1998: 3,795,350
  issued and outstanding.....................................................................     11,355     11,351
Note receivable from stockholder.............................................................       (533)      (489)
Deficit......................................................................................     (5,747)    (4,878)
                                                                                               ---------  ---------
  Total Stockholders' Equity.................................................................      5,075      5,984
                                                                                               ---------  ---------
Total Liabilities and Stockholders' Equity...................................................     15,307     12,276
                                                                                               ---------  ---------
                                                                                               ---------  ---------
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                       21
<PAGE>
                       CALIFORNIA CULINARY ACADEMY, INC.

                                INCOME STATEMENT

                       YEARS ENDED JUNE 30, 1999 AND 1998
              (DOLLARS IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                                                 1999       1998
                                                                                               ---------  ---------
<S>                                                                                            <C>        <C>
Revenues:
  Culinary arts education....................................................................     14,490     13,449
  Restaurants and catering...................................................................      2,671      2,726
  Student housing............................................................................        539        312
  Retail, media and other....................................................................        274        245
                                                                                               ---------  ---------
    Total Revenues...........................................................................     17,974     16,732
Cost of Sales
  Food and beverage..........................................................................      1,989      1,810
  Program supplies...........................................................................        997        926
  Scholarships and grants....................................................................        133        226
  Merchandise and other......................................................................        314        491
                                                                                               ---------  ---------
                                                                                                   3,433      3,453
                                                                                               ---------  ---------
  Gross Margin...............................................................................     14,541     13,279

Operating expenses
  Occupancy..................................................................................      2,455      2,027
  Repairs and maintenance....................................................................        505        477
  Telephone, security and other..............................................................        483        433
  Depreciation and amortization..............................................................      1,216      1,130
  Compensation and benefits..................................................................      7,277      6,742
  Outside services...........................................................................        653        827
  Advertising and promotion..................................................................        790        777
  Legal and other............................................................................      1,375      1,519
  Provision for doubtful accounts............................................................        319        131
                                                                                               ---------  ---------
                                                                                                  15,073     14,063
Other income and (expenses)
  Preopening costs--New Orleans..............................................................       (218)         0
  Abandoned costs of financing...............................................................       (248)         0
  Interest income............................................................................        134         13
                                                                                               ---------  ---------
Income (loss) before provision for income taxes..............................................       (864)      (771)
Income tax provision.........................................................................          5          0
                                                                                               ---------  ---------
Net income (loss)............................................................................       (869)      (771)
                                                                                               ---------  ---------
                                                                                               ---------  ---------
Net income (loss) per share:
  Basic......................................................................................      (0.23)     (0.22)
  Diluted....................................................................................      (0.23)     (0.22)
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                       22
<PAGE>
                       CALIFORNIA CULINARY ACADEMY, INC.

                       STATEMENT OF STOCKHOLDERS' EQUITY

                       YEARS ENDED JUNE 30, 1999 AND 1998
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                                        NOTE
                                                             PREFERRED STOCK       COMMON STOCK      RECEIVABLE
                                                            -----------------   ------------------      FROM
                                                             SHARES   AMOUNTS    SHARES    AMOUNTS   STOCKHOLDER   DEFICIT   TOTAL
                                                            --------  -------   ---------  -------   -----------   -------   -----
<S>                                                         <C>       <C>       <C>        <C>       <C>           <C>       <C>
Balances as of June 30, 1997..............................   254,500    953     3,393,900   9,649                   (4,085)  6,517

Exercise of stock options.................................                        140,650     749       (489)                  260
Preferred stock dividend declared.........................                                                             (22)    (22)
Issuance of preferred stock,
  Series A................................................     6,300
Conversion of preferred stock to
  common stock............................................  (260,800)  (953)      260,800     953
Net income (loss).........................................                                                            (771)   (771)
                                                            --------  -------   ---------  -------       ---       -------   -----
  Balances as of June 30, 1998............................                      3,795,350  11,351       (489)       (4,878)  5,984

Common stock issued to consummate conversion of preferred
  stock...................................................                         19,081
Interest on note..........................................                                               (44)                  (44)
Exercise of stock options.................................                          1,000       4                                4
Net income (loss).........................................                                                            (869)   (869)
                                                            --------  -------   ---------  -------       ---       -------   -----
  Balances as of June 30, 1999............................                      3,815,431  11,355       (533)       (5,747)  5,075
                                                            --------  -------   ---------  -------       ---       -------   -----
                                                            --------  -------   ---------  -------       ---       -------   -----
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                       23
<PAGE>
                       CALIFORNIA CULINARY ACADEMY, INC.

                            STATEMENT OF CASH FLOWS

                       YEARS ENDED JUNE 30, 1999 AND 1998
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                                   1999       1998
                                                                                                 ---------  ---------
<S>                                                                                              <C>        <C>
Cash Flows From Operating Activities
  Net income (loss)............................................................................       (869)      (771)
  Adjustments to reconcile net income (loss) to net
    cash provided by operating activities
    Depreciation and amortization..............................................................      1,207      1,127
    Tax provision..............................................................................          5          0
    (Gain) on disposal of property.............................................................          0       (197)
    Deferred rent..............................................................................       (135)       157
  Changes in assets and liabilities:
    Accounts receivable........................................................................        173       (813)
    Prepaid expenses and other assets..........................................................       (455)      (148)
    Inventories................................................................................         (6)       114
    Accounts payable...........................................................................      1,229        (87)
    Accrued and other liabilities..............................................................       (106)       265
    Deferred revenues..........................................................................       (243)     1,048
                                                                                                 ---------  ---------
  Net cash provided by operating activities....................................................        800        695

Cash Flows From Investing Activities
  Proceeds from sale of property and equipment.................................................        336      2,148
  Additions to trademarks......................................................................        (12)         0
  Acquisition of property and equipment........................................................     (5,758)    (2,813)
                                                                                                 ---------  ---------
  Net cash used by investing activities........................................................     (5,434)      (665)

Cash Flows From Financing Activities
  Proceeds from exercise of stock options and warrant..........................................          4          0
  Proceeds from loan agreements................................................................      3,125          0
  Principal payments on term loan agreements...................................................        (31)       (43)
  Principal payments on capital lease obligations..............................................       (143)       260
  Payment of preferred stock dividends.........................................................          0        (22)
                                                                                                 ---------  ---------
  Net cash provided by financing activities....................................................      2,955        195
                                                                                                 ---------  ---------

    Net increase (decrease) in cash and cash equivalents.......................................     (1,679)       225
    Cash and cash equivalents, beginning of period.............................................      2,533      2,308
                                                                                                 ---------  ---------
    Cash and cash equivalents, end of period...................................................        854      2,533
                                                                                                 ---------  ---------
                                                                                                 ---------  ---------
</TABLE>

   The accompanying notes are an integral part of these financial statements.

                                       24
<PAGE>
                         NOTES TO FINANCIAL STATEMENTS

                       YEARS ENDED JUNE 30, 1999 AND 1998

NOTE 1  THE COMPANY

    The California Culinary Academy, Inc. (The "Academy") was founded in 1977 to
operate a professional school for chef training, emphasizing the fundamental
techniques of modern classical cooking and baking. The operations of the Academy
include an Associate of Occupational Studies ("AOS") Degree Program in Culinary
Arts, a Certificate Program in Baking and Pastry Arts, weekend and short-course
professional and vocational cooking classes, and two public restaurants and a
retail shop located in San Francisco. The Academy is accredited by the
Accrediting Commission of Career Schools and Colleges of Technology of the
Career College Association and the American Culinary Federation Educational
Institute's Accrediting Commission.

    The Academy conducts its major programs in San Francisco and offers certain
of its subsidiary programs in schools located in Salinas and San Diego. During
the year ended June 30, 1999, the Academy also acquired and improved a property
in New Orleans with a view to presenting a full schedule of culinary programs
and courses in that city.

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH AND CASH EQUIVALENTS

    The Academy considers all highly liquid investments with original maturities
of three months or less to be cash equivalents.

INVENTORIES

    Inventories are stated at the lower of cost or market and for the most part
comprise food and beverages. Cost is determined using the first-in, first-out
(FIFO) method.

PROPERTY AND EQUIPMENT

    Property and equipment are stated at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the assets, which
range from three to ten years. Leasehold improvements are depreciated using the
straight-line method over the remaining term of the lease or the useful life of
the improvements, whichever is shorter.

    Property and equipment comprise the following (dollars in thousands):

<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,                                          1999       1998
----------------------------------------------------------  ---------  ---------
<S>                                                         <C>        <C>
Land......................................................  $   1,359  $     -0-
Kitchen equipment.........................................      1,926      1,859
Furniture, fixtures and equipment.........................      4,507      4,158
Construction-in-progress..................................      3,057         17
Leasehold improvements....................................      5,269      4,658
                                                            ---------  ---------
                                                            $  16,118  $  10,692
Less accumulated depreciation.............................     (6,932)    (5,862)
                                                            ---------  ---------
                                                            $   9,186  $   4,830
                                                            ---------  ---------
                                                            ---------  ---------
</TABLE>

                                       25
<PAGE>
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                       YEARS ENDED JUNE 30, 1999 AND 1998

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INTANGIBLE ASSETS

    Intangible assets are stated at cost and consist primarily of the excess of
the purchase price over net tangible assets acquired in the original purchase of
the Academy. Intangible assets comprise the following (dollars in thousands):

<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,                                          1999       1998
----------------------------------------------------------  ---------  ---------
<S>                                                         <C>        <C>
Favorable lease rights....................................  $   1,476  $   1,476
Goodwill..................................................        249        249
Other.....................................................         17          5
                                                            ---------  ---------
                                                            $   1,742  $   1,730
Less accumulated amortization.............................     (1,577)    (1,440)
                                                            ---------  ---------
                                                            $     165  $     290
                                                            ---------  ---------
                                                            ---------  ---------
</TABLE>

    Amortization is computed using the straight-line method over the estimated
useful lives of the respective assets. The estimated useful lives used in
computing amortization are: favorable lease rights--15 years, goodwill--20 years
and other--one year.

REVENUE RECOGNITION

    Education revenues primarily comprise fees for the A.O.S. Degree Program in
Culinary Arts, a 16-month program, and the 30-week Certificate Program in Baking
and Pastry Arts. Tuition is initially recorded at the commencement of each
semester or term as deferred revenue and is recognized as earned income over the
course of the programs progressively as students complete the credit hours
required for graduation. Revenue on restaurant, retail and media sales is
recognized at the time services are performed or goods are sold.

ACCOUNTING ESTIMATES

    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates and
assumptions. These estimates and assumptions affect the reported amounts of
assets and liabilities and disclosures of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reported period. Actual results could differ from those
estimates.

NET INCOME (LOSS) PER SHARE

    In 1998, the Academy adopted the provisions of Statement of Financial
Accounting Standards No. 128 ("SFAS 128"), Earnings per Share. SFAS 128 requires
a dual presentation of basic and diluted earnings per share ("EPS"). Basic EPS
is computed by dividing net income by the weighted average number of common
shares outstanding for the period. Diluted EPS reflects the potential dilution
that could occur if common stock options were exercised. EPS for all periods
presented have been stated to reflect the adoption of SFAS 128. For the years
ended June 30, 1998 and 1999, stock options were not included in the diluted EPS
share calculation because their effect would have been antidilutive.

    Set forth below are the losses, dividends and outstanding shares used in
computing the basic and diluted EPS for the years ended June 30, 1999 and 1998.
Since the conversion of all preferred stock to

                                       26
<PAGE>
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                       YEARS ENDED JUNE 30, 1999 AND 1998

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
common was consummated by the beginning of the 1999 fiscal year, the convertible
preferred stock no longer affects this computation.

<TABLE>
<S>                                                               <C>
1999 net income (loss)..........................................  $(869,000)
  Dividends on preferred stock..................................        -0-
                                                                  ---------
  Net income (loss) available to common stockholders............  $(869,000)
                                                                  ---------
                                                                  ---------
  Number of shares..............................................  3,815,431
                                                                  ---------
                                                                  ---------
  Earnings (loss) per share, both basic and diluted.............  $   (0.23)

1998 net income (loss)..........................................  $(771,000)
  Dividends on preferred stock..................................    (22,000)
                                                                  ---------
  Net income (loss) available to common stockholders............  $(793,000)
                                                                  ---------
                                                                  ---------
  Number of shares (weighted average)...........................  3,660,207
                                                                  ---------
                                                                  ---------
  Earnings (loss) per share, both basic and diluted.............  $   (0.22)
</TABLE>

CONCENTRATIONS OF CREDIT RISK

    Financial instruments that potentially subject the Academy to concentrations
of credit risk consist of cash, short-term cash investments such as money market
investments, and accounts receivable. The Academy invests substantially all of
its excess cash funds in money market accounts through high-quality financial
institutions and grants credit to its students. The Academy believes that the
credit risks associated with money market investments are minimal due to the
high quality of the financial institutions through which investments are made.
To reduce credit risk relating to student accounts receivable, the Academy
performs regular evaluations of its students' financial condition and assists
qualified students in obtaining student financial aid.

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

    The Academy paid interest during the years ended June 30, 1999 and 1998 of
$4 and $96 (dollars in thousands), respectively. Income taxes paid during these
two years amounted to $32 in 1999 and $1 in 1998.

    Non-cash investing and financing activities included the following: The
Academy received a promissory note of approximately $489,000 from one of its
stockholders, in exchange for the exercise of stock options, for the year ended
June 30, 1998. On February 4, 1998, the closing price of the common stock
equaled or exceeded $8.00 for 20 consecutive trading days. Pursuant to the
automatic conversion provisions of the Series A preferred stock, 23,580 shares
of Series A preferred stock, representing all the remaining Series A preferred
stock outstanding, were automatically converted to 23,580 shares of common
stock.

IMPACT OF NEW ACCOUNTING STANDARDS

    In 1998, the Academy adopted Statement of Accounting Standards No. 130
("SFAS 130"), Reporting Comprehensive Income. This Statement requires that all
items recognized under the accounting standards as components of comprehensive
income be reported in an annual financial statement that is displayed with the
same prominence as other annual financial statements. This

                                       27
<PAGE>
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                       YEARS ENDED JUNE 30, 1999 AND 1998

NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Statement also requires that an entity classify items of other comprehensive
income by their nature in an annual financial statement. For example, other
comprehensive income may include foreign currency translation adjustments,
minimum pension liability adjustments, and unrealized gains and losses on
marketable securities classified as available-for-sale. Comprehensive income has
not differed from net income for the Academy for its fiscal years ended June 30,
1999 and 1998.

STOCK-BASED COMPENSATION

    The Academy accounted for stock-based awards to employees using the
intrinsic value method prescribed by Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees. During the year ended June 30, 1999,
the practice of making stock-based awards was discontinued by the Academy.

NOTE 3  FAIR VALUE OF FINANCIAL INSTRUMENTS

    The carrying amounts of cash and cash equivalents, accounts receivable and
payable and loans are stated at reasonable estimates of their fair values.

    Rates currently available to the Academy for debt carrying similar terms are
used to estimate the fair value of its debt.

NOTE 4  RELATED-PARTY TRANSACTIONS

    Under a month-to-month consulting agreement with a principal stockholder and
chairman of the Board of Directors, fees were paid for investor relations and
other services in the amount of $72,000 for the year ended June 30, 1998 and
$54,000 during the year ended June 30, 1999. This agreement was terminated
during fiscal 1999.

    In December 1997, the Chairman of the Board of Directors exercised stock
options under the Company'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. Interest
has been accrued on this note, which is now delinquent, in the amount of $68,000
through June 30, 1999.

NOTE 5  CAPITAL LEASE OBLIGATIONS

    The Academy leases computers, photocopiers and other equipment under various
capital and operating lease agreements. Certain lease agreements include
purchase options and renewal provisions exercisable at the discretion of the
Academy.

    During the year ended June 30, 1999, capital lease obligations were
substantially reduced leaving balances at the fiscal year end totaling $29,000,
all of which were current.

NOTE 6  BANK AND OTHER CURRENT DEBT

    The Academy entered into a business loan agreement with a bank in May 1999,
subsequently amended August 31, 1999, for a loan of $500,000 carrying interest
at the Bank's reference rate plus 1%.

    This loan is secured by the Academy's accounts receivable, chattel paper,
contract rights and general intangibles. The loan is repayable in installments
beginning in September 1999, with the full principal balance due on January 1,
2000.

                                       28
<PAGE>
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                       YEARS ENDED JUNE 30, 1999 AND 1998

NOTE 6  BANK AND OTHER CURRENT DEBT (CONTINUED)
    The security agreement contains certain covenants with which the Academy
must comply.

    In June, 1999 the Academy contracted with TFC Credit Corporation to obtain
an advance of $250,000 against notes serviced by TFC covering tuition receivable
from students attending the Salinas and San Diego culinary colleges. The Academy
has agreed to repay this advance in full no later than January 31, 2000.

NOTE 7  LONG-TERM DEBT

    In conjunction with acquiring real property for a new culinary academy in
New Orleans, the Academy entered into business loan agreements with a bank and
executed promissory notes, secured by the New Orleans property and an assignment
of leases and rents, due December 28, 1999 and December 30, 2003, as follows:

<TABLE>
<CAPTION>
                                                    MONTHLY PAYMENTS
                                                OF PRINCIPAL AND INTEREST
                                               ---------------------------
                     PRINCIPAL     INITIAL                   COMMENCEMENT     DUE DATE
DATE OF NOTE          AMOUNT    INTEREST RATE  AMOUNT            DATE        OF BALANCE
-------------------  ---------  -------------  -------      --------------   ----------
<S>                  <C>        <C>            <C>          <C>              <C>
12/28/1998.........  $ 166,400         8.75%   (Interest only until due)       12/28/99
12/28/1998.........    943,100         8.75%   $ 9,496          1/30/2000    12/30/2003
12/28/1998.........  1,215,500         8.75%    12,238          1/30/2000    12/30/2003
</TABLE>

    The balances outstanding on these loans at June 30, 1999 included the full
principal amounts, aggregating $2,325,000.

    The five-year maturities of principal payable on the long-term notes after
June 30, 1999 are as follows:

<TABLE>
<CAPTION>
YEAR ENDING JUNE 30,                                                AMOUNT
----------------------------------------------------------------  ----------
<S>                                                               <C>
2000............................................................  $   35,364
2001............................................................      75,384
2002............................................................      82,353
2003............................................................      89,969
2004............................................................   1,875,530
Thereafter......................................................           0
                                                                  ----------
Total...........................................................  $2,158,600
                                                                  ----------
                                                                  ----------
</TABLE>

NOTE 8  STOCK OPTION PLANS

    Plans still in effect at June 30, 1999 include the 1992 Stock Option Plan,
the 1997 Directors' Non-Qualified Stock Option Plan and the 1998 Stock Option
Plan.

    The 1992 plan allocated approximately 384,000 shares for grants and the 1998
plan provides for a maximum of 300,000 shares which may be optioned and sold
under this plan. The 1992 plan requires that the exercise price not be less than
fair market value at the grant date in the case of incentive stock options and
not less than 85% of fair market value for nonstatutory options.

                                       29
<PAGE>
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                       YEARS ENDED JUNE 30, 1999 AND 1998

NOTE 8  STOCK OPTION PLANS (CONTINUED)
    Under the 1998 plan, the option price may not be less than 100% of fair
market value at the date of grant. These options generally expire within 10
years and will vest on a schedule determined by the Academy's Board of
Directors.

    Under the 1997 Directors' plan, all options to a maximum of $240,000 had
been granted as of September 1, 1998 at fair market value. These options vested
immediately and expire after 10 years.

    Transactions affecting the continuity of the options outstanding under all
these plans may be summarized as follows:

<TABLE>
<CAPTION>
                                                                 OUTSTANDING
                                                                   OPTIONS        PRICE RANGE
                                                              -----------------  --------------
                                                               (IN THOUSANDS)
<S>                                                           <C>                <C>
Balance, June 30, 1997......................................            802      $4.18 to $8.00
Options granted.............................................              5               $7.50
Options exercised...........................................           (141)     $4.18 to $7.75
Options canceled............................................           (120)     $4.18 to $7.75
                                                                        ---

Balance, June 30, 1998......................................            546      $4.18 to $8.00
Options granted.............................................            141      $7.25 to $9.19
Options exercised...........................................             (1)              $4.18
Options canceled............................................            (78)     $4.18 to $7.75
                                                                        ---

Balance, June 30, 1999......................................            608      $4.18 to $9.19
                                                                        ---
                                                                        ---
Exercisable options as of June 30, 1999.....................            510      $4.18 to $9.19
                                                                        ---
                                                                        ---
</TABLE>

    Outstanding and exercisable options at June 30, 1999 included the following:

<TABLE>
<CAPTION>
                                   AVERAGE                                   AVERAGE
                    OUTSTANDING   REMAINING      AVERAGE     EXERCISABLE    EXERCISE
 EXERCISE PRICES      OPTIONS       LIFE      OPTION PRICE     OPTIONS        PRICE
------------------  -----------  -----------  -------------  -----------  -------------
<C>                 <C>          <S>          <C>            <C>          <C>
 $4.18 and $5.56        49,630    3.76 years    $    4.46        49,630     $    4.46
  $6.25 to $6.70       289,700         8.13          6.51       289,700          6.51
  $7.00 to $7.75       207,250         5.32          7.29       109,582          7.32
  $8.00 to $9.19        61,500         1.05          8.02        61,500          8.02
                    -----------                              -----------
  $4.18 to $9.19       608,080                                  510,412
                    -----------                              -----------
                    -----------                              -----------
</TABLE>

    As discussed in Note 2, the Academy accounted for its stock-based awards
using the intrinsic value method in accordance with APB No. 25, Accounting for
Stock Issued to Employees, and its related interpretations. Accordingly, no
compensation expense has been recognized in the financial statements for
employee stock arrangements.

NOTE 9  PREFERRED STOCK

    Convertible preferred stock issued by the Academy in August, 1996 was
converted subsequently into common stock, with a final conversion taking place
at the close of the 1998 fiscal year. 19,081 of the common shares issued as a
result of this conversion were not booked by the Academy until July, 1998.

                                       30
<PAGE>
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                       YEARS ENDED JUNE 30, 1999 AND 1998

NOTE 10  INCOME TAXES:

    The Academy's provision for income taxes comprised the following amounts for
the years ended June 30, 1999 and 1998:

<TABLE>
<CAPTION>
                                                                     JUNE 30,
                                                               --------------------
                                                                 1999       1998
                                                               ---------  ---------
<S>                                                            <C>        <C>
Current......................................................  $     -0-  $     -0-
Deferred.....................................................      5,000        -0-
                                                               ---------  ---------
Totals.......................................................  $   5,000  $     -0-
                                                               ---------  ---------
                                                               ---------  ---------
</TABLE>

    Deferred tax assets and liabilities result from differences in the timing
controlling recognition of certain income and expense items for income tax and
financial accounting purposes. Components of the net deferred tax asset include
the following deferred tax assets and liabilities:

<TABLE>
<CAPTION>
                                                                 (IN THOUSANDS OF
                                                                     DOLLARS)
                                                                       JUNE
                                                               --------------------
                                                                 1999       1998
                                                               ---------  ---------
<S>                                                            <C>        <C>
Tax effect of deferred tax assets (liabilities):
  Accrued vacation...........................................  $      88  $      54
  Allowance for doubtful accounts............................        162        180
  Depreciation and amortization..............................       (116)      (142)
  Net operating loss carryforward............................      1,331        940
  Other......................................................       (260)      (204)
  Valuation allowance........................................       (887)      (505)
                                                               ---------  ---------
    Net deferred tax asset...................................  $     318  $     323
                                                               ---------  ---------
                                                               ---------  ---------
</TABLE>

    At June 30, 1999, the Academy had federal and California net operating loss
carryforwards of approximately $3,564,000 and $1,227,000, respectively. The
federal loss carryforwards will expire from years 2005 to 2018. California loss
carryforwards will expire from 2001 to 2004.

    The valuation allowance reduces the tax benefit of net future deductions to
an amount of income tax benefit estimated to be realizable within the
foreseeable future.

NOTE 11  401(k) RETIREMENT PLAN

    Employees become eligible to participate in a defined 401(k) plan as soon as
they are hired. The plan permits employee contributions and discretionary
employer matching contributions. The plan was amended January 1, 1997 to allow
the Academy to make matching contributions in the form of its common stock.

    The Academy's contributions to this plan for the years ended June 30, 1999
and 1998 were approximately $108,000 and $166,000, respectively.

NOTE 12  COMMITMENTS

    In September 1994, the Academy had agreed with a supplier of cutlery to
purchase $1,650,000 in hardware including, knives, tools and other items, over
an unlimited term. In return, the supplier

                                       31
<PAGE>
                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

                       YEARS ENDED JUNE 30, 1999 AND 1998

NOTE 12  COMMITMENTS (Continued)
underwrote a portion of the production costs of the television cooking
presentations: "Cooking at the Academy".

    By June 30, 1999, this purchase commitment had been satisfied in an amount
of approximately $820,000.

    The Academy has rental commitments under leases of real properties in San
Francisco, Salinas, Garden Grove and San Diego. Future minimum payments under
long-term operating leases were as follows for the five years ending after June
30, 1999:

<TABLE>
<CAPTION>
YEAR ENDING JUNE 30,                                             AMOUNT
------------------------------------------------------------  ------------
<S>                                                           <C>
2000........................................................  $  2,223,876
2001........................................................     1,850,736
2002........................................................     1,846,866
2003........................................................     1,804,296
2004........................................................     1,747,296
</TABLE>

    Rent expense for the years ended June 30, 1999 and 1998 was $1,993,000 and
$1,590,000, respectively.

NOTE 13  CONTINGENCIES

STUDENT FINANCIAL ASSISTANCE

    The Academy derives approximately 42% of its education program revenues from
students participating in students' financial assistance programs administered
by the Department of Education (DOE) and the State of California.

    To continue taking part in Title IV funding administered by the DOE, The
Academy is subject to periodic audit by the DOE to determine the Academy's
compliance with funding requirements. While management believes the institution
is in compliance, adverse findings by the DOE are possible. The financial
consequences of such adverse findings cannot be determined at this time.

LITIGATION

    The Academy is involved in several matters which may require litigation or
legal settlement. Its counsel's opinion is that open matters at June 30, 1999
are unlikely to result in any material loss to the Academy.

PROPOSED SALE OF REAL PROPERTY

    It is the intent of the Academy's management to sell its real property in
New Orleans within the next fiscal period. It is possible, depending upon the
real estate market in New Orleans at the time, that such a sale will result in
substantial loss to the Academy.

POSSIBLE UNCERTAINTIES

    The year 2000 Computer Problem creates risk for the Academy from unforeseen
problems in its own computer systems and from third parties with whom the
Academy deals on financial transactions. Such failures of the Academy's or third
parties' computer systems could have a material impact on the Academy's ability
to conduct its business.

                                       32
<PAGE>
ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
  FINANCIAL DISCLOSURE.

    The information required by this Item is incorporated herein by reference to
the Academy's Current Report of Form 8-K, filed on August 8, 1999.

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
  COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.

    The executive officers and directors of the Academy as of September 10, 1999
are as follows:

<TABLE>
<CAPTION>
NAME                                         AGE                               POSITIONS
------------------------------------------  ------  ---------------------------------------------------------------
<S>                                         <C>     <C>
David J. Berger...........................     40   Director
Ralph Brennan(1)..........................     47   Director
James D. Cockman(1)(2)....................     66   Director
Bert P. Cutino(2).........................     59   Director
William G. De Mar.........................     52   Director
Keith H. Keogh(2).........................     47   Director and Chief Executive Officer--Acting Chairman
Paul H. Prudhomme.........................     57   Director
Leenie Ruben..............................     57   Director
David Warnock.............................     41   Director
Jerald Chesser............................     49   Vice President--Academic Affairs
Laura Rivera..............................     37   Vice President--Marketing
Thomas A. Spanier.........................     53   Vice President--Development and Chief Operating Officer
Charles E. White..........................     57   Vice President and Chief Financial Officer
</TABLE>

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

(1) Member of the Compensation Committee

(2) Member of the Audit Committee

    The bylaws of the Academy provide for a board of between six and nine
members. The board is currently fixed at nine members. All directors hold office
until the next annual meeting of shareholders or until their successors have
been duly elected and qualified. Officers serve at the discretion of the Board
of Directors. There are no family relationships between any of the Academy's
directors and executive officers.

    Mr. Berger was appointed to the Board of Directors in June 1999. Since 1995,
he was a member of the law firm of Wilson Sonsini Goodrich & Rosati, a
Professional Corporation, where he specializes in mergers and acquisitions. He
is 40 years old.

    Mr. Brennan was nominated to the Board of Directors in May 1998. A member of
the Brennan restaurant family in New Orleans, he is the co-owner of Mr. B's
Bistro and owner of Bacco and Ralph Brennan's Red Fish Grill in New Orleans'
French Quarter. He is 47 years old.

    Mr. Cockman has served as a member of the Board of Directors since January
1997. He currently serves as the Chairman and Chief Executive Officer of
American Culinary Equipment, Inc., Greenville, South Carolina, a manufacturer
and marketer of professional stainless steel kitchen equipment to the
foodservice industry. Mr. Cockman serves on the boards of Ryans Family Steak
House, Greenville, South Carolina and Clayton Homes, Inc., Knoxville, Tennessee.
He is 66 years old.

    Mr. Cutino was nominated to the Board of Directors in May 1998. From October
1968 to the present, Cutino has been Executive Chef/Owner of the Sardine Factory
Restaurant in Monterey,

                                       33
<PAGE>
California. Mr. Cutino has served as a member of the Board of Advisors to the
California Culinary Academy from 1994-1998. He is 59 years old.

    Mr. De Mar was appointed to the Board of Directors in July 1999. Mr. De Mar
is a former Chief Operating Officer, and Corporate Secretary, and was a member
of the Board of Directors of the Academy from 1987 to 1997. Over the past five
years, he has been involved with Antelope Development, LLC and Avis Car Rental.
Mr. De Mar is 51 years old.

    Mr. Keogh joined the Academy as Executive Vice President and Chief Operating
Officer in June 1995. In April 1996, he was appointed as President and Chief
Operating Officer of the Academy, and in May, 1998, he was appointed as Chief
Executive Officer of the Academy and joined the Board of Directors.
Concurrently, he resigned his position as Chief Operating Officer. From 1971
until joining the Academy, Mr. Keogh had been employed at Walt Disney World,
Orlando, Florida, and held various positions, including Executive Chef, Research
and Development--Theme Parks. Mr. Keogh was the Manager of the Culinary Team USA
(the US Culinary Olympic Team) from 1988 to 1996 and past president of the World
Association of Cooks Societies and the American Culinary Federation. He is 46
years old.

    Chef Prudhomme has served as a member of the Board of Directors since June
1997. For more than five years, Chef Paul Prudhomme has been the proprietor of
the K-Paul's Louisiana Kitchen, located in the French Quarter of New Orleans,
Louisiana. Chef Prudhomme also has developed and, for more than five years, has
been distributing a line of natural herbs and spices, "Chef Prudhomme's Magic
Seasoning Blends." Chef Prudhomme is also the author of several cookbooks. He is
57 years old.

    Ms. Rubin was nominated to the Board of Directors in May 1998. In 1982, she
founded Marketing Spectrum, a marketing and research firm. As President of
Marketing Spectrum, she has conducted business with an extensive range of
clients in the food service industry, including such major brand name companies
as Kraft, General Mills and Olive Garden. He is 57 years old.

    Mr. Warnock was appointed to the Board of Directors in June 1999. Mr.
Warnock is a founding partner of Cahill, Warnock & Company LLC, which is the
general partner of Strategic Associates, L.P., and is a general partner of
Cahill, Warnock Strategic Partners Fund, L.P, the purchasers in the proposed
transaction described beginning on page 9 of this Proxy Statement. Prior to
founding Cahill, Warnock & Company, Mr. Warnock was employed from 1983 to 1995
at T. Rowe Price Associates, Inc. He was founder and President of T. Rowe Price
Strategic Partners and T. Rowe Price Strategic Partners II, private equity
partnerships with committed capital of over $72 million. He also served as an
Executive Vice President of the T. Rowe Price New Horizons Fund. He is on the
board of directors of several portfolio companies including Environmental
Safeguards, Inc., Concord Career Colleges, Touchstone Applied Science, and
Childrens Comprehensive Services, and of several charitable organizations. David
received a BA from the University of Delaware, an MS (in finance) from the
University of Wisconsin and is a CFA. Mr. Warnock was elected to the Board of
Directors in May 1999. Mr. Warnock is 41 years old.

    Mr. Chesser joined the Academy in July 1999 as Vice President of Academic
Affairs. Prior to joining the Academy, Dr. Chesser was Dean/Professor at the
Chef John Folse Culinary Institute at Nicholls State University in Louisiana.
Dr. Chesser has a Bachelors and Masters in History from Oklahoma State
University and his Ed.D In Educational Leadership from the University of Central
Florida and is a certified Executive Chef and Culinary Educator. He is 49 years
old.

    Ms. Rivera joined the Academy in March 1999 as Vice President of Marketing.
From July 1994 to July 1998, Ms. Rivera was Director of Marketing and Publicity
of the Feature Animation Division of The Disney Academy. Ms. Rivera holds a B.A.
and a Masters degree from University of Wisconsin and an M.B.A in Marketing from
Harvard Business School. She is 37 years old.

                                       34
<PAGE>
    Mr. Spanier joined the Academy in May 1998 as Vice President-Development and
Chief Operating Officer. From February 1998 to May 1998, he consulted with the
Academy as interim CFO. From August 1994 until May 1998, he was an independent
business consultant, providing interim management services as well as consulting
services to a range of high technology and marketing companies. From April 1993
to August 1994, Mr. Spanier was Executive Vice President and Chief Operations
Officer of the Academy. Mr. Spanier holds a B.S. degree in Business (Managerial
Economics) from the University of California, Berkeley and an M.B.A. from
Harvard Business School. He is 53 years old.

    Mr. White joined the Academy in May 1998 as Vice President and Chief
Financial Officer. Mr. White has provided consulting and turn-around management
services to a range of companies in the restaurant, real estate development and
hospitality industries. From 1996 until 1998, he was Chief Operating Officer of
Stars Restaurants. From June 1993 to June 1995, he was General Manager and Chief
Executive Officer of Lummi Casino, and since 1986, he has been President and
Chief Executive Officer of Pea Soup Andersen's. Mr. White is a CPA and Certified
Hotel Administrator. He holds a BS degree in Accounting from San Diego State
University, an MBA from Southland University and a LLB degree from La Salle
Extension University. He is 57 years old.

    During the fiscal year ended June 30, 1999, the Board of Directors held
sixteen meetings. No member of the Board attended fewer than 75% of the meetings
in the last fiscal year.

COMMITTEES OF THE BOARD

    The Academy's Board of Directors has established a Compensation Committee
and an Audit Committee. Each Committee has at least two outside directors. The
Compensation Committee establishes salaries, incentives and other forms of
compensation for directors, officers and other employees of the Academy. The
Audit Committee oversees actions taken by the Academy's independent auditors and
reviews the Academy's internal financial controls. The Compensation and Audit
Committees each held one meeting during the fiscal year ended June 30, 1999. A
Venture Committee was formed in July of 1999 to explore potential merger
opportunities. The Board has delegated certain advisory authority to each
committee, but the decision making and management responsibilities of the
Academy remain with the full Board. No committee member attended fewer than 75%
of the meetings of the committees of which he was a member in the last fiscal
year.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

    The Academy's executive officers and directors are required under the
Securities Exchange Act of 1934 to file with the Securities and Exchange
Commission reports of ownership and changes in ownership in their holdings of
the Academy's Common Stock. Based on an examination of these reports and on
written representations provided to the Academy, all such reports required to be
filed for the fiscal year ended June 30, 1999 have been timely filed.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

    As permitted by the General Corporation Law of California (the "Corporations
Code"), the Academy's Articles of Incorporation eliminate, to the fullest extent
permitted under California law, the personal liability of a director to the
Academy for monetary damages in an action brought by or in the right of the
Academy for breach of a director's duties to the Academy and its shareholders.
Under current California law, liability is not eliminated for (i) acts or
omissions that involve intentional misconduct or a knowing and culpable
violation of law; (ii) acts or omissions that a director believed to be contrary
to the best interests of the corporation or its shareholders or that involve the
absence of good faith on the part of the director; (iii) any transaction from
which a director derived an improper personal benefit; (iv) acts or omissions
that show a reckless disregard for the director's duty to the

                                       35
<PAGE>
corporation or its shareholders in circumstances in which the director was
aware, or should have been aware, in the ordinary course of performing a
director's duties, of a risk of serious injury to the corporation or its
shareholders; (v) acts or omissions that constitute an unexcused pattern of
inattention that amounts to an abdication of the director's duty to the
corporation or its shareholders; (vi) contracts or other transactions between
corporations and directors putting interrelated directors in violation of
Section 310 of the Corporations Code, and (vii) distributions, loans or
guarantees made in violation of Section 316 of the Corporations Code. In
addition, the Academy's Articles of Incorporation and bylaws provide for
indemnification, to the fullest extent permitted under the Corporations Code, of
directors, officers and agents of the Academy and persons who serve at the
request of the Academy as a director, officer, employee, trustee or agent of
another corporation, partnership, joint venture, trust or other enterprise.

    The Academy has also entered into indemnification agreements with its
directors and executive officers, as permitted under the bylaws. The
indemnification agreements provide that the directors and executive officers
will be indemnified to the fullest extent permitted by applicable law against
all expenses (including attorneys' fees), judgements, fines and amounts
reasonably paid or incurred by them for settlement in any threatened, pending or
completed action, suit or proceeding, including any derivative actions, on
account of their services as a director or executive officer of the Academy or
of any subsidiary of the Academy or of any other company or enterprise in which
they are serving at the request of the Academy. No indemnification will be
provided under the indemnification agreements, however, to any director or
executive officer in certain limited circumstances, including on account of
knowingly fraudulent, deliberately dishonest or willful misconduct. To the
extent the provisions of the indemnification agreements exceed the
indemnification permitted by applicable law, such provisions may be
unenforceable or may be limited to the extent they are found by a court of
competent jurisdiction to be contrary to public policy. In addition, in the
opinion of the Securities and Exchange Commission, indemnification for
liabilities arising under the Securities Act of 1933, as amended, is against
public policy and, therefore, unenforceable. Accordingly, these indemnification
provisions may not limit the liability of directors and executive officers under
such act.

ITEM 10.  EXECUTIVE COMPENSATION.

    The following table sets forth certain information regarding compensation
paid by the Academy for services rendered during each of the Academy's last two
completed fiscal years for the Academy's Chief Executive Officer and all other
executive officers whose total annual salary and bonus exceeded $100,000 for the
fiscal year ended June 30, 1999 (the "Named Executive Officers").

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                          LONG TERM
                                                                                        COMPENSATION       ALL OTHER
                                                                            SALARY         AWARDS        COMPENSATION
NAME AND PRINCIPAL POSITION                                       YEAR       ($$)      OPTIONS/SAR'S #       ($$)
--------------------------------------------------------------  ---------  ---------  -----------------  -------------
<S>                                                             <C>        <C>        <C>                <C>
Keith H. Keogh................................................       1999    195,000                          6,585(1)
President and Chief Executive Officer                                1998    195,000                         10,522(2)

Thomas A. Spanier.............................................       1999    150,000                            865(3)
Vice President Development & COO                                     1998     17,308                            865(3)

Charles E. White..............................................       1999    150,000
Vice President & CFO                                                 1998     17,885
</TABLE>

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

(1) Includes $772 in payments on life insurance policies and $5,863 in employer
    contributions to the 401(k) Plan.

                                       36
<PAGE>
(2) Includes $772 in payment on life insurance policies and $9,238 in employer
    contributions to the 401(k) Plan.

(3) Employers contribution to 401(k) Plan.

    Directors who are employees of the Academy are not separately compensated
for their services as directors or as members of committees of the Board of
Directors. For the period July 1, 1998 to May 6, 1999 of fiscal year 1999,
directors who were not employees of the Academy and who resided in Northern
California received $750 per month as a monthly retainer for serving on the
Board. For the same period, directors who were not employees of the Academy and
who resided outside of Northern California received $1,000 per month as an
annual retainer for serving on the Board. On May 7, 1999, the Board of Directors
changed the non-employee Board member and committee member compensation from May
7, 1999, all non-employee Board members received $1,000 per month as a monthly
retainer, plus $500 for each Board meeting attended in person and $250 for each
telephonic Board and committee meeting attended and reimbursement of reasonable
travel expenses that are directly related to the Board service.

    Other than the 401(k) Plan described below, the Academy has no retirement,
pension or profit sharing program for the benefit of its directors, officers or
other employees, but the Board of Directors may recommend one or more such
programs for adoption in the future.

STOCK OPTIONS

    The Academy's 1992 Stock Option Plan ("1992 Plan"), 1998 Stock Option Plan
("1998 Plan"), 1997 Directors Non-Qualified Stock Option Plan ("Directors Plan")
(collectively, the "Option Plans") permit the granting of incentive stock
options ("ISO's"), or non-qualified stock options ("NSO's") at the discretion of
the Board or a committee designated by the Board to administer the Plan (the
"Administrator"). Subject to the terms of the Option Plans, the Administrator
determines the terms and conditions of options granted under the Option Plans,
including the exercise price and option term. The Option Plans provide that the
Administrator must establish an exercise price for ISO's that is not less than
the fair market value per share at the date of grant. The exercise price of
NSO's may not be less than 85% of the fair market value per share on the date of
grant. Each ISO must expire within ten years of the date of grant. However, if
ISO's are granted to persons owning more than 10% of the voting stock of the
Academy, the Option Plans provide that the exercise price must be not less than
110% of the fair market value per share at the date of grant and that the term
of the option may not exceed five years. No ISO may be granted to an employee
who when aggregated with all other ISO's granted to such employee by the Academy
or any parent, subsidiary or affiliate (as defined by the Option Plans) would
result in the vesting of shares having an aggregate fair market value
(determined for each share as of the date of grant of the ISO covering such
share) in excess of $100,000 in any calendar year. No such limit applies to the
grant of NSO's.

    As of April 1994, the number of shares authorized for issuance under the
1992 Plan was 450,000 shares. In March 1996, the Board of Directors voted to
increase the number of shares reserved for issuance under the 1992 Plan by
100,000 shares. Such increase was approved by an affirmative vote of the
shareholders at the annual shareholders meeting in March 1996. Unless sooner
terminated by the Board of Directors, the 1992 Plan terminates in December 2002.

    The 1998 Plan was approved by a vote of the shareholders at the annual
shareholders meeting in July 1998. Under the 1998 Plan, 300,000 Options are
authorized for issuance. Unless sooner terminated by the Board of Directors, the
1998 Plan terminates in July 2008. The 1998 Plan replaced the 1997 Stock Option
Plan, which was adopted by the Board in June 1997, but was never implemented or
submitted to a shareholder vote.

                                       37
<PAGE>
    The Directors Plan was ratified by a vote of the shareholders at the annual
shareholders meeting in July 1998. Under the Directors Plan, 240,000 options are
authorized. As of September 1, 1998, all the authorized options had been
granted.

    In the event of a merger in which the Academy is not the surviving
corporation or upon the sale of substantially all of the assets of the Academy,
all outstanding options under each of the Academy's Plans shall, notwithstanding
any contrary terms of the grant, accelerate and become exercisable in full prior
to the consummation of such merger at such times and on such conditions as the
Administrator shall determine, unless the successor corporation assumes the
outstanding options or substitutes substantially equivalent options. Shares
subject to options granted under each of the Plans that have lapsed or
terminated are returned to the Plan.

    The following table sets forth information regarding the grant of stock
options during the fiscal year ended June 30, 1999 by the executive officers
named in the Summary Compensation Table:

                     OPTION/SAR GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                            NUMBER OF
                                           SECURITIES
                                           UNDERLYING      % OF TOTAL OPTIONS/SARS
                                          OPTIONS/SARS     GRANTED TO EMPLOYEES IN    EXERCISE OR BASE
NAME                                       GRANTED(#)            FISCAL YEAR             PRICE($/SH)     EXPIRATION DATE
----------------------------------------  -------------  ---------------------------  -----------------  ---------------
<S>                                       <C>            <C>                          <C>                <C>
Thomas A. Spanier.......................       50,000                    37%              $    7.25          June, 2004
Charles E. White........................       50,000                    37%              $    7.25          June, 2004
</TABLE>

    The following table sets forth information regarding exercises of stock
options during the fiscal year ended June 30, 1999 by the executive officers
named in the Summary Compensation Table:

              AGGREGATED OPTION/SAR EXERCISED IN LAST FISCAL YEAR
                      AND FISCAL YEAR-END OPTION/SAR VALUE

<TABLE>
<CAPTION>
                               SHARES                           NUMBER OF UNEXERCISED             VALUE OF IN-THE-MONEY
                              ACQUIRED                              OPTIONS/SAR'S                     OPTIONS/SAR'S
                                 ON             VALUE             AT FISCAL YEAR END                AT FISCAL YEAR END
NAME                          EXERCISE        REALIZED        EXERCISABLE/UNEXERCISABLE         EXERCISABLE/UNEXERCISABLE
-------------------------  ---------------  -------------  --------------------------------  --------------------------------
<S>                        <C>              <C>            <C>          <C>                  <C>          <C>
Keith H. Keogh...........             0       $       0        60,000                0               $0(1)              0
                                                              120,000                0           $6,000(2)              0
</TABLE>

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

(1) Calculated as the difference between the fair market value of the Common
    Stock at June 30, 1999 of $6.750 and the option exercise price of $8.00 per
    share.

(2) Calculated as the difference between the fair market value of the Common
    Stock at June 30, 1999 of $6.750 and the option exercise price of $6.70 per
    share.

401(k) RETIREMENT PLAN

    The Academy maintains an employee benefit plan qualified under Section
401(k) of the Internal Revenue Code (the "401(k) Plan"). Employees become
eligible to participate in the 401(k) Plan after six months of continuous full
time employment, assuming other eligibility requirements are also satisfied.
Under the 401(k) Plan, there is no fixed dollar amount of retirement benefits,
and actual benefits received by employees will depend on the amount of each
employee's account balance at the time of retirement. The account balance will
reflect annual allocations, the period of time an employee participates in the
401(k) Plan and the success of the 401(k) Plan in investing and reinvesting the
assets of the trust fund. A participant's vested benefit is distributed upon
death, disability or termination of

                                       38
<PAGE>
employment, however, terminated employees may elect to keep vested benefits in
the plan if such vested benefits are greater than an amount stipulated in the
Plan. The Plan is not insured by the Pension Benefit Guaranty Corporation.

    The 401(k) Plan includes an arrangement under which employees may elect to
have the Academy contribute a portion of their compensation to the 401(k) Plan.
The Plan does not allow an employee to make direct contributions to the trust
fund. Such contributions are elective deferrals, and the amount may not exceed
certain dollar limitations established by the Internal Revenue Service.

    The Academy has the option of matching employee contributions to the 401(k)
Plan with cash or Academy Common Stock.

ITEM 11.  SECURITY OWNERSHIP OR CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

    The following table sets forth information as of September 10, 1999, with
respect to the beneficial ownership of Common Stock by each shareholder owning
5% or more of the Academy's Common Stock, by each director, the Named Executive
Officers, and by all executive officers and directors as a group.

    ITEM 11 Security Ownership of Certain Benefical Ownership Management.

                          SHARES BENEFICIALLY OWNED(1)

<TABLE>
<CAPTION>
DIRECTORS AND 5% SHAREHOLDERS               NUMBER          PERCENT
----------------------------------------  ----------        -------
<S>                                       <C>               <C>
Theodore G. Crocker ....................   1,457,861(2)(3)    38.2%
  625 Polk Street
  San Francisco, CA 94102

James D. Cockman .......................      40,500(4)        1.1
  625 Polk Street
  San Francisco, CA 94102

Paul H. Prudhomme ......................      40,000(5)        1.0
  625 Polk Street
  San Francisco, CA 94102

Keith Keogh ............................     187,590(6)        4.9%
  625 Polk Street
  San Francisco, CA 94102

Bert Cutino ............................         500             *
  625 Polk Street
  San Francisco, CA 94102

William De Mar .........................   1,457,861(7)(8)    38.2
  625 Polk Street
  San Francisco, CA 94102

Charles E. White .......................        1500             *
  625 Polk Street
  San Francisco, CA 94102

Thomas Spanier .........................         200             *
  625 Polk Street
  San Francisco, CA 94102
</TABLE>

                                       39
<PAGE>
<TABLE>
<CAPTION>
DIRECTORS AND 5% SHAREHOLDERS               NUMBER          PERCENT
----------------------------------------  ----------        -------
<S>                                       <C>               <C>
Ralph Brennan ..........................       1,000             *
  625 Polk Street
  San Francisco, CA 94102

All Executive Officers and Directors as    1,729,151          45.3%
  a Group (12 persons)..................
</TABLE>

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

*   Indicates less than 1%.

(1) Beneficial ownership of shares by directors, officers and 5% or more
    shareholders includes both outstanding Common Stock and shares issuable upon
    exercise of warrants or options that are currently exercisable or will be
    exercisable within 60 days after the date of the table. Except as indicated
    in the footnotes to this table and pursuant to applicable community property
    laws the persons named in the table have sole voting and investment power
    with respect to all shares of Common Stock beneficially owned by them.

(2) Includes 190,935 shares of common stock owned by William De Mar, with whom
    Mr. Crocker has formed a group for the purpose of acquiring, holding, or
    disposing of securities of the Academy.

(3) Includes 40,000 shares of Common Stock issuable upon exercise of currently
    exercisable options.

(4) Includes 40,000 shares of Common Stock issuable upon exercise of currently
    exercisable options.

(5) Includes 40,000 shares of Common Stock issuable upon exercise of currently
    exercisable options.

(6) Includes 180,000 shares of Common Stock issuable upon exercise of currently
    exercisable options.

(7) Includes 1,266,926 shares of common stock owned by Theodore Crocker, with
    whom Mr. De Mar has formed a group for the purpose of acquiring, holding, or
    disposing of securities of the Academy.

(8) Includes 40,000 shares of common stock issuable upon exercise of currently
    exercisable options.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

    In July 1992, and from time to time prior to August 1, 1991, Mr. Crocker,
along with Robert J. Marani and William G. DeMar, then members of the Board of
Directors, and all principal shareholders, made unsecured loans to the Academy.
These loans were evidenced by promissory notes and subsequently repaid. The
loans carried interest at then prevailing interest rates and called for warrants
to be issued that entitled the holders thereof to purchase an aggregate of 82
shares of the Academy's then Series A Preferred Stock. Warrants issued in
conjunction with these loans were converted, concurrently with the completion of
the Initial Public Offering in July 1993, into warrants to purchase 97,990
shares of Common Stock at an exercise price of $4.18 per share. During 1994, the
original expiration date of the warrants was extended for an additional two
years to August 31, 1996. On August 31, 1996, such warrants were exercised.

    In January 1995, the Academy entered into a month-to-month consulting
agreement whereby Mr. Crocker provided investor relations and other strategic
services in return for a fixed monthly payment for office rent and costs. The
agreement provided for fees not to exceed $6,000 per month. The Academy paid
$72,000 in fees in both the years ended June 30, 1998 and 1997 to Mr. Crocker.
The agreement was terminated in February 1999. Mr. Crocker was paid fees of
$54,000 in the fiscal year ended June 30, 1999.

    In January 1996, the Academy entered into an agreement with Bailey & Company
Inc. to serve as the selling agents for the placement of up to $5,000,000 in
Convertible Subordinated Notes ("Notes"). Bruce Bailey, the Chairman and
President of Bailey & Company, Inc. was a member of the Academy's

                                       40
<PAGE>
Board of Directors. The agent was entitled to receive a commission of 7% of the
gross proceeds of the sale, a non-accountable expense allowance of 3% and
warrants to purchase 10% of the number of shares sold in the offering. In April
1996, the Academy issued $1,4000,000 of Notes and the selling agent received the
warrants and $189,000 in commissions and fees.

    During the year ended June 30, 1998, the Academy paid Grover T. Wickersham,
P.C. approximately $28,000 for legal services and approximately $39,000 in
additional billing for services rendered by Grover T. Wickersham, P.C. during
the fiscal year ended June 30, 1998 will be paid in fiscal year 1999. Grover T.
Wickersham, the principal member of such firm, was a member of the Academy's
Board of Directors.

    In July 1996, the Academy entered into a five-year lease for approximately a
3,800 square foot facility in Salinas, California. The lessor is a partnership
controlled by Mr. Crocker and Robert J. Marani, a shareholder and then member of
the Academy's Board of Directors. Independent members of the Board of Directors
have approved the lease. Management believes that these lease terms are no less
favorable than those which it may have negotiated with an independent landlord.
The new facility is an extension campus, which opened in October 1996. The
monthly rent for the facility is the greater of approximately $3,900 or 8% of
gross sales, plus a share of common area and exterior maintenance charges that
approximate $1,000 per month. The Academy paid a lease acquisition fee of
$150,000 upon execution of the lease agreement.

                                       41
<PAGE>
ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K.

(a) Exhibits:

<TABLE>
<CAPTION>
 SEQUENTIAL
   EXHIBIT
   NUMBER
-------------
<C>            <S>
      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 America 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, Inc. 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

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

     10.35     Executive Employment Agreement between Registrant and Laura Rivera dated March 15, 1999 with
               addendum dated June 1, 1999

     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

     27.0      Financial Data Schedule
</TABLE>

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

 (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

                                       42
<PAGE>
 (2) Previously filed as an exhibit to Amendment No. 1 of the Registration
     Statement filed June 7, 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, June 11, 1999 and
August 8, 1999 in fiscal year ended June 30, 1999, the contents of which are
incorporated herein by reference.

                                       43
<PAGE>
                                   SIGNATURES

    In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized;

<TABLE>
<S>                             <C>  <C>
Dated: September 28, 1999       CALIFORNIA CULINARY ACADEMY, INC.

                                By:               /s/ KEITH KEOGH
                                     -----------------------------------------
                                                    Keith Keogh
                                              CHIEF EXECUTIVE OFFICER
</TABLE>

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrants in the capacities and on the dates indicated below.

<TABLE>
<CAPTION>
          SIGNATURE                       TITLE                    DATE
------------------------------  --------------------------  -------------------

<C>                             <S>                         <C>
       /s/ KEITH KEOGH
------------------------------  Chief Executive Officer     September 28, 1999
         Keith Keogh              and Director

     /s/ CHARLES E. WHITE
------------------------------  Chief Financial Officer     September 28, 1999
       Charles E. White

     /s/ DAVID J. BERGER
------------------------------  Director                    September 28, 1999
       David J. Berger

      /s/ RALPH BRENNAN
------------------------------  Director                    September 28, 1999
        Ralph Brennan

     /s/ JAMES D. COCKMAN
------------------------------  Director                    September 28, 1999
       James D. Cockman

       /s/ BERT CUTINO
------------------------------  Director                    September 28, 1999
         Bert Cutino

    /s/ WILLIAM G. DE MAR
------------------------------  Director                    September 28, 1999
      William G. De Mar
</TABLE>

                                       44
<PAGE>
<TABLE>
<CAPTION>
          SIGNATURE                       TITLE                    DATE
------------------------------  --------------------------  -------------------

<C>                             <S>                         <C>
    /s/ PAUL H. PRUDHOMME
------------------------------  Director                    September 28, 1999
      Paul H. Prudhomme

       /s/ LEENIE RUBEN
------------------------------  Director                    September 28, 1999
         Leenie Ruben

      /s/ DAVID WARNOCK
------------------------------  Director                    September 28, 1999
        David Warnock
</TABLE>

                                       45