<PAGE>

                       U.S. SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C. 20549

                                     FORM 10-KSB

(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, 1997

[ ] Transition report pursuant to section 13 or 15(d) of the Securities and
    Exchange Act of 1934
    For the transition period from                        to
                                     --------------------

                           COMMISSION FILE NUMBER: 0-21932

                          CALIFORNIA CULINARY ACADEMY, INC.

                    (Name of small business issuer in its charter)
              California                              94-3042862
     (State or other jurisdiction                  (I.R.S. Employer 
    of incorporation or organization)            Identification Number)

             625 Polk Street
            San Francisco, CA                            94102
(Address of principal executive offices)              (Zip Code)

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

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.  [   ]

Revenues for the most recent fiscal year were:  $15,339,000

The aggregate market value of the voting stock held by non-affiliates computed
by reference to the closing sale price on September 30, 1997, was $18,621,000.

The number of shares outstanding of the issuer's Common Stock as of September
30, 1997, was 3,568,454.

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 Company'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 - 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.  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 two locations: the main campus located in San
Francisco, California and at an extension campus in Salinas, California.  In
conjunction with its educational 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 ("AOS") Culinary Arts Degree
Program ("AOS Program"), the Baking & Pastry Arts Certificate Program ("B&P
Program") and 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.  The
strategy of the College of Food is to increase 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.  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.

As of September 1, 1997, the Academy has graduated approximately 4,900 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, 1997, the Academy averaged approximately 610 full-time students in its
AOS Program and B&P Program. These programs are designed to accommodate up to 25
students in each of approximately 25 enrollment periods per year for the AOS
Program and nine enrollment periods for the for the B&P Program.  The College of
Food, which can accommodate up to approximately 140 students with new
enrollments occurring approximately every three to four weeks, averaged 17
students during the year ended June 30, 1997.

The predecessor to the California Culinary Academy, Inc. 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.

EDUCATIONAL PROGRAMS

The Academy's professional programs are designed to prepare students for
entry-level professional positions or for individual advancement to supervisory
positions in foodservice operations.  The primary educational offerings of the
Academy are the AOS Culinary Arts Degree Program (the "AOS Program") and the
Baking &


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Pastry Arts Certificate Program ("B&P Certificate").  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
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 College of
Food, classes are offered in a choice of four hours 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 18-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 provides students with flexible scheduling options and most
efficiently utilizes the services of the Academy's chef instructors and the
Academy's facilities. 

The curriculum of the AOS Program, which integrates classical and modern
culinary techniques with strong kitchen management skills, is designed to
prepare students for professional entry into the foodservice 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 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 1, 1997, tuition and fees for the AOS Program total
approximately $27,000 for the full 18-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 Baking & Pastry Certificate Program (the "B&P Certificate") 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, including (i) breads and 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 five weeks and each session can accommodate up to 25
students.


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As of September 1, 1997, tuition and fees for the B&P Certificate total
approximately $11,000 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 Aide Programs and Regulation."

BASIC PROFESSIONAL CULINARY SKILLS PROGRAM

The Academy has applied to the California Council for Private Postsecondary and
Vocational Education ("CPPVE") for certification of its 12-credit course of
study offered at the College of Food.  A decision on this certification
application is expected in early 1998.  The Academy believes that its College of
Food Basic Skills Program will receive the certification being sought; however,
there can be no assurance that the College of Food Basic Skills Program will be
approved by CPPVE in its current configuration or at all.

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 1, 1997, tuition and fees for the Certificate of Basic
Professional Culinary Skills Program is $3,465.

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 (upon approval by CPPVE), 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, a 14 week baking and pastry series.  Fees for the non-degree
professional programs range from $1,100 to $1,775.

Completed coursework can be applied toward earning an AOS degree or a 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 
employment or specific positions upon graduation, it believes its name, 
reputation, and high job placement rate are factors that attract students to 
its professional programs.

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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 its restaurants.  The Academy also offers
federal work-study opportunities.

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

RECRUITMENT AND ADMISSIONS.   Students are recruited both domestically and
internationally.  Statistics compiled in August 1997 show that as of June 30,
1997 approximately 80% of the full-time students enrolled in the Academy's AOS
or B&P Certificate programs are from Northern California.  Applications for
admission to the professional programs are reviewed by the Academy's admissions
staff.  In considering an applicant for admission to the AOS 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; and (III) 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 required to have a high school diploma or to have passed an
approved high school equivalency examination.  In lieu of this requirement, an
applicant must pass an entrance examination and may be required to be
interviewed by the chef instructor.

The Academy has articulation 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 the 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 is
featured in a syndicated radio talk show, FOOD FOR THOUGHT, airing in the
central California Monterey Bay area on KSCO 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."

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 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
curriculum address profiling the culinary arts program toward the global cuisine
of today's industry.  Coursework in areas such as Foods of the Americas, Asian
Cuisine and a


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computer software course in food industry applications respond directly to
existing and current demands placed upon the Academy's students upon graduation.

EDUCATION-OPERATIONS DEPARTMENT.  The Education-Operations Department is
responsible for the quality and delivery of the education process, including
direct responsibility for curriculum content and sequencing, chef instructor
training and development and teaching and evaluation methods.  The Director of
Education-Operations is assisted by the heads of each educational area - Basic
Skills, Culinary Production, Baking and Pastry and Related Subjects, each of
whom serves as an instructor in the AOS degree or B&P Certificate programs.  In
addition, the Department develops, monitors, and updates the educational
programs offered at the Academy.

STUDENT RETENTION.  The Academy continually focuses significant efforts on
maintaining high retention rates for students.  For the fiscal years ended June
30, 1997 and 1996, approximately 82% of the then enrolled students successfully
completed the AOS Culinary Arts Degree Program on schedule.   An additional 5%
graduated 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 maintain 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 a part of the AOS 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 drinks and a limited deli selection.  In addition, the
shop offers various clothing items bearing the Academy name and logo, cookbooks,
videotapes of the two COOKING AT THE ACADEMY series, knife kits bearing the
Academy logo and trademark and other selected cooking tools.

MEDIA.  The Academy has a multi-year agreement with Simon & Schuster to author
and publish four cookbooks.  Presently manuscripts have been submitted and
accepted for one book.  Publication of the first of the series, WRAPS, is
scheduled for February 1998.  The agreement provides for the Academy to earn
fees for the delivery of acceptable outlines and completed manuscripts to the
publisher, in addition to royalties ranging from 6% to 10% on the sale of
published works.

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.

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.


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The Academy hosts 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.

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,
programs costs, 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 and teaching and administrative quality
required by the accrediting body.

The Academy is recognized in its postsecondary educational programs by the U.S.
Department of Education ("DOE") and by the California Council for Private
Postsecondary and Vocational Education ("CPPVE").  The Academy is accredited by
the American Culinary Federation Educational Institute Accrediting Commission
("ACFEI") and by the Accrediting Commission for Career Schools/Colleges of
Technology ("ACCSCT").

The Academy is approved by CPPVE to grant to its students who successfully
complete the full-time Culinary Arts Degree program an Associate of Occupational
Studies ("AOS") degree in Culinary Arts and a Certificate in Baking and Pastry
Arts for those students completing the full-time Baking & Pastry program. 
Approval from CPPVE is renewed periodically in accordance with the provisions of
the California Education Code.

The Academy has applied for a Certificate of Basic Professional Culinary Skills
for those students completing the Basic Professional Culinary Skills program in
the College of Food from CPPVE.
The Academy's courses of instruction for the AOS and Baking & Pastry 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 part, through
individual resources, with approximately 64% of students receiving some form of
financial aid assistance.  Approximately 37% of the Academy's fiscal 1997
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.  All of the Academy's
financial aid counselors and the Director of Financial Aid are certified by the
State of California.  Any regulatory violation could be the


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basis for suspension, limitation, or termination proceedings.  No suspension,
limitation, or termination proceedings have ever been instituted against the
Academy.

In July 1995, the Academy was recertified by the DOE that it is eligible to
continue to participate in the federal financial aid programs under Title IV of
the Higher Education Act ("HEA") through July 31, 1999.

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 of 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.  Management believes 
that the Academy can demonstrate financial responsibility in accordance with 
the standards set forth by the DOE.

The Academy devotes significant effort to properly and satisfactorily 
administering 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: (i) developed job descriptions that the Academy 
believes comply with Federal Work Study ("FWS") employment at for-profit 
postsecondary institutions; (ii) adopted internal written procedures to 
ensure compliance with Title IV restrictions; and (iii) established and 
maintains 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 Title IV student 
financial aid loan programs is dependent, in part, on maintaining an 
acceptable "cohort" default rate.  The cohort default 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 loan programs for approximately three years.  The 
Academy's cohort default rate for the two-year period ending September 30, 
1996 was 12.9%.

Approximately 37% of educational program revenues during fiscal 1997 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.

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Grants are funds made available to eligible students by the government and 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 postsecondary 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 consideration outside the control of the 
Academy.  No assurance can be given that governmental programs that are 
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.

COMPETITION

The Academy is one of the largest professional chef training schools in the 
United States, according to enrollment statistics in the 1996 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, 1997, admissions statistics show that approximately 80% of the 
Academy's students reside in Northern California.  However, the Academy 
believes that it competes in the professional chef training market with, 
among others, the Culinary Institute of America, with its main campus in Hyde 
Park, New York and Johnson & Wales University in Providence, Rhode Island 
with campuses in Maryland, Colorado and Florida, founded in 1946 and 1914, 
respectively, both of which are not-for-profit institutions.  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 subject to its ability to compete 
effectively with the Culinary Institute of America and Johnson & Wales, as 
well as other competitors now in, or which 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 it competes 
favorably on these criteria and, in addition, that it is recognized for its 
quick reaction time to the industry's needs, and continued improvements in 
the quality of its training programs.  There is no assurance, however, that 
the Academy will continue to be able to do so.

PROPRIETARY RIGHTS

The Academy has registered service marks consisting of the names "California 
Culinary Academy" and "College of Food" along with the CCA stylized logo, 
which are registered with the U.S. Patent and Trademark Office for various 
uses.  In addition, the names "California Culinary Academy" and "College of 
Food" are tradenames of the Academy also registered with the U.S. Patent and 
Trademark Office.  Although the Academy's service marks are incontestable by 
any party, no assurance can be given that such registrations are not 
cancelable on grounds other than prior use.  The Academy plans to defend its 
marks in the event of unauthorized infringement.  Such a defense would be 
time consuming and expensive, regardless of the outcome.  Failure or 
inability to defend its marks could adversely impact the Academy's reputation 
and results of operations. Generally, a trademark is protected from 
infringement for a period of ten years, with renewal granted for an 
additional ten-year period.  In 1989, the Academy renewed the registration 
for its "California Culinary Academy" trademark and tradename.

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FACULTY AND EMPLOYEES

The Academy employed 153 persons at September 22, 1997, of which 20 were 
part-time.  Those employees included the Chief Executive Officer, President, 
and Chief Financial Officer, 92 members of the administrative and operational 
staff and 38 chef instructors and adjunct faculty.

RISK FACTORS

In addition to various risks discussed throughout this report, the following 
risk factors might cause the Academy's financial results to differ materially 
from the results projected.

REGULATORY ISSUES.  The Academy is subject to extensive regulation by state, 
federal and accrediting agencies. A substantial portion of the Academy's 
revenues are derived in connection with federal financial aid programs. Any 
failure to observe the various regulatory standards would have a material 
adverse effect on the business of the Academy.  While the Academy believes 
that it can demonstrate financial responsibility in accordance with the 
standards set forth by the DOE, there can be no assurance that it will 
continue to be in compliance in the future.

COMPETITION.  The market for post-secondary culinary education is highly 
competitive and fragmented.  Other schools may offer similar programs, and 
may do so at lower rates due to government subsidies and tax-deductible 
contributions not available to for-profit institutions.  The Academy believes 
that its programs compete favorably with other institutions providing 
culinary arts education: however, there can be no assurance that it will 
continue to stay in compliance or that the regulation will not materially 
change making it more difficult or impossible for the Academy to comply.

CHANGE OF CONTROL.  The Academy would be ineligible to participate in Title 
IV financial aid programs in the event there were a "significant" change of 
ownership or control.  In the event of such a change, the Academy would be 
required to apply for recertification, a process that could take several 
months. Given that most of the Academy's Common Stock is publicly traded or 
available for public sale, there can be no assurance that such a change of 
control may not occur.

ITEM 2.  PROPERTY

The Academy leases approximately 67,000 square feet of space at 625 Polk 
Street in San Francisco, California, an historic building.  The monthly 
rental obligation is approximately $98,000, with a declining payment schedule 
over time.  The Academy is also responsible for payment of its pro rata share 
of all leasehold expenses including insurance, taxes, utilities and 
maintenance, which were approximately $12,000 per month during fiscal year 
1997.  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 include 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 administrative, 
admissions, financial aid, educational services, faculty and consumer 
education.

In February 1994, the Academy entered into a two-year lease 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 expires in February 1998.

                                          10
<PAGE>

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 lessor is a 
partnership whose partners include the Chairman of the Board of Directors and 
certain shareholders in the Academy.  Independent members of the Board of 
Directors approved the lease.  Management believes that these lease terms are 
no less favorable than those that the Academy may have negotiated with an 
independent landlord.  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 $28,000.  
The Academy is also responsible for payment of its pro rata share of 
insurance and real property taxes, which were approximately $1,500 per month 
during September 1997. 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 a hotel 
building in San Francisco, across the street from its main campus, which it 
intends to use for student housing.  It secured long-term financing of 
$1,200,000 to fund this purchase.  No substantial renovation is required or 
contemplated.

Academy management estimates that its current facilities can accommodate 
approximately 1,230 students which the Academy believes is sufficient for its 
foreseeable needs.  Once full enrollment in these facilities is achieved, the 
Academy believes additional facilities can be located.

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 such the resolution of such matters will 
not have a material effect on the Academy's financial condition or results of 
operations.

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

None.

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

The Academy's Common Stock traded in the over-the-counter market and is 
quoted on the Nasdaq National Market under the symbol "COOK."  The following 
table sets forth the high and low closing sale prices for the Common Stock as 
reported on the Nasdaq National Market for the periods indicated:

                                                   HIGH          LOW
                                                   ----          ---
         Fiscal Year Ended June 30, 1996:
         --------------------------------
         Quarter Ended September 30, 1995          $7.625      $4.375
         Quarter Ended December 31, 1995           $7.625      $6.500
         Quarter Ended March 31, 1996              $7.375      $6.188
         Quarter Ended June 30, 1996               $7.750      $6.500

         Fiscal Year Ended June 30, 1997:
         --------------------------------
         Quarter Ended September 30, 1996          $8.500      $7.500
         Quarter Ended December 31, 1996           $8.875      $8.000
         Quarter Ended March 31, 1997              $8.687      $7.250
         Quarter Ended June 30, 1997               $8.250      $7.000


                                          11
<PAGE>

On September 24, 1997, the last reported sale price for the Common Stock was 
$7.938 per share.

As of August 29, 1997, there were approximately 73 record 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 in the foreseeable future except as may 
be required to be paid on its Series A Preferred Stock.  Beginning September 
30, 1996, it was required to pay and has paid quarterly dividends on its 
outstanding Series A Preferred Stock at the annual rate of $.4125 per share.  
An aggregate of $125,313 in cash dividends was paid during the fiscal year 
ended June 30, 1997, in addition to a distribution in Series A Preferred 
Stock of 6,300 shares on such Preferred Stock.

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 17 through 22.

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 Program, the B&P Certificate program, the 
College of Food Basic Professional Culinary Skills Program, and weekend 
professional skills program offerings.  The AOS Program enrolls students on a 
two-week cycle. The program can accommodate up to 25 students per class.  The 
30-week B&P Program enrolls classes on a five week cycle typically ranging in 
size from 15 to 20 students with five classes enrolled as of June 30, 1997.  
The College of Food programs commenced October 14, 1996 at the Academy's 
prototype facility in Salinas, California.  As of September 30, 1997, 
approximately 45 students are enrolled in the Basic Professional Culinary 
Skills program in Salinas.  The College of Food enrolls students every three 
to four weeks.  Weekend professional programs are currently offered every 
eight or fourteen weeks.  As of September 30, 1997, the Academy has 44 
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 career changers.  These courses include single 
topic classes and various three or four class series current topics and basic 
skills.

Restaurant and retail operations include two restaurants and a private dining 
room which is generally open to the public seven days per week, banquet 
services generally offered seven days per week and a small on-site retail 
shop offering student-prepared foods, beverages, cookbooks, video tapes, 
kitchen wares and selected clothing.  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 
related to both educational services and retail restaurant operations.

Revenues from the Academy's AOS Program and the B&P Program rely exclusively 
on enrollments in those programs.  Tuition is initially recorded as deferred 
revenue at the commencement of each enrollment period and recognized 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 extension campuses offering selected courses from the AOS Program 
at training facilities such as its College of Food at Salinas, California and 
by the addition of contract training programs offered to the food industry.  
While management believes that this strategy will enable it to significantly 
increase revenues by providing additional educational and training resources 
to 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.

                                          12
<PAGE>

The forward-looking statements contained herein are based upon current 
expectations, and actual results may differ materially.  Forward-looking 
statements contained in this Report involve numerous risks and uncertainties, 
including those discussed in this Report, that could cause actual results to 
differ materially from those projected.  Investors are cautioned not to place 
undue reliance on these forward-looking statements, which reflect 
management's 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 earned net income of  $160,000 for the 1997 fiscal year, or $0.04 
per share, compared to a net loss of $999,000, or $(0.32) per share for the 
prior year.

Total revenues increased 3.1% for the fiscal year ended June 30, 1997 
("Fiscal 1997") to $15,339,000 from $14,882,000 for the prior year.  Total 
revenues from culinary arts education for Fiscal 1997 were $12,682,000 
compared to $12,178,000 for the prior year, an increase of 4.1

Total student count as of June 30, 1997 increased 10.1% to 599 students in 
the AOS, B&P and College of Food programs compared to 544 for the prior year. 
The increase is primarily attributable to the introduction of the College of 
Food programs as well as changes in the frequency of class starts for the AOS 
program.

Restaurant, retail, media and other sales were $2,657,000, or 17.3% of total 
revenues, during the fiscal year ended June 30, 1997, compared to $2,704,000, 
or 18.2% of total revenues for the prior year.  Prior year's revenue 
reflected a one-time royalty of $150,000 for the use of the Academy's 
trademark, logo and certain content in computer CD-ROM software products.

Operating expenses were $11,875,000 or 77.4% of revenues for the fiscal year 
ended June 30, 1997, compared to $12,376,000, or 83.2% of revenues, for the 
prior year.  The decrease was primarily attributable to reduced expenditures 
for compensation, advertising, outside services, rent, security, business 
taxes, repairs and maintenance and bad debts offset partially by increased 
legal expenses and depreciation expenses on capital improvements.

Food and beverage costs were $1,744,000, or 11.4% of revenues for the year 
for the fiscal year ended June 30, 1997, compared to $1,692,000, or 11.4% of 
revenues, for the prior year.  The increase was primarily attributable to 
increased food and beverage sales.

For Fiscal 1997, interest income, net of interest expense, was $52,000, or 
0.3% of revenues, compared to interest expense, net of interest income, of 
$81,000, or 0.5% of revenues, for the prior year. The decrease in net expense 
was attributable to lower borrowing levels.

LIQUIDITY AND CAPITAL RESOURCES

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

At June 30, 1997, the Academy's principal sources of liquidity included cash 
and cash equivalents of $2,308,000 and net accounts receivable of $2,847,000. 
At June 30, 1997, the Academy had working capital of $951,000. During Fiscal 
1997, the Academy generated $448,000 in positive cash flow from operations.

                                          13
<PAGE>

Subsequent to year-end, the Academy purchased a building in San Francisco, 
which it intends to use for student housing, for approximately $1,900,000, 
including closing costs.  It secured long-term financing of approximately 
$1,200,000 to fund this purchase.  See "Properties."

ITEM 7.  FINANCIAL STATEMENTS

The Balance Sheet of the Academy at June 30, 1997, and the related Statements 
of Operations, Shareholders' Equity and Cash Flows for the years ended June 
30, 1997 and 1996, and notes to the financial statements are located on pages 
15 through 29.

                                                              Form 10-KSB Page
                                                              ----------------
    Report of Independent Public Accountants
    Deloitte & Touche, LLP                                           15

    Balance Sheets at June 30, 1997 and 1996                         16

    Statements of Operations for the years ended
    June 30, 1997 and 1996                                           17

    Statements of Shareholders' Equity for the years
    ended June 30, 1997 and 1996                                     18

    Statement of Cash Flows for the years ended
    June 30, 1997 and 1996                                           19

    Notes to Financial Statements                                     20






                                          14
<PAGE>

                              DELOITTE & TOUCHE OPINION



[Letterhead]

Board of Directors and Shareholders
California Culinary Academy, Inc.:


We have audited the accompanying balance sheets of the California Culinary
Academy, Inc. (the "Academy") as of June 30, 1997 and 1996 and the related
statements of operations, shareholders' equity and cash flows for the years then
ended.  These financial statements are the responsibility of Academy's
management.  Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits 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 audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Academy at June 30, 1997 and 1996, and
the results of operations and its cash flows for the years then ended in
conformity with generally accepted accounting principles.


/s/ Deloitte & Touche LLP

September 15, 1997 (October 3, 1997 as to Note 12)


                                          15
<PAGE>

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

                                        ASSETS

 
<TABLE>
<CAPTION>

                                                                               June 30,
                                                                        ----------------------
                                                                         1997          1996
                                                                        ---------    ---------
<S>                                                                     <C>          <C>
Current  Assets:
  Cash and cash equivalents                                              $2,308       $3,283
  Accounts receivable, net of allowance of $360 and $280                  2,847        2,786
  Inventories                                                               341          208
  Prepaid expenses and other assets                                         343          160
  Deferred tax asset                                                        188          145
                                                                        ---------    ---------
       Total Current Assets                                               6,027        6,582
                                                                        ---------    ---------
Property and equipment, net of depreciation and amortization              4,965        4,117
Intangible assets, net                                                      419          546
Long-term investments - restricted                                                       646
Other assets                                                                215          967
                                                                        ---------    ---------

       TOTAL ASSETS                                                     $11,626      $12,858
                                                                        ---------    ---------
                                                                        ---------    ---------

                        LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
  Accounts payable                                                         $680         $749
  Accrued liabilities                                                       508          477
  Deferred revenue                                                        3,212        3,795
  Student prepayments                                                       356          258
  Current portion of term loans                                              50          292
  Current portion of capital lease obligations                               67           76
  Other current liabilities                                                  88
                                                                        ---------    ---------
       Total Current Liabilities                                          4,961        5,647
                                                                        ---------    ---------
Note payable to bank                                                                     500
Capital lease obligations                                                   148          215
Other non-current liabilities                                                            441
Subordinated convertible notes payable                                                 1,400
Shareholders' Equity:
  Convertible Preferred stock, no par value, 5,000,000 shares
    authorized, 254,500 issued and outstanding; liquidation
    preference $5.50 per share                                              953
  Common stock, no par value, 20,000,000 shares authorized,
    3,393,900 issued and outstanding                                      9,649        8,741
  Retained deficit                                                      (4,085)      (4,086)
                                                                        ---------    ---------
       Total Shareholders' Equity                                         6,517        4,655
                                                                        ---------    ---------

       TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                       $11,626      $12,858
                                                                        ---------    ---------
                                                                        ---------    ---------
</TABLE>
 

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


                                          16
<PAGE>

                          CALIFORNIA CULINARY ACADEMY, INC.
                               STATEMENTS OF OPERATIONS
                      FOR THE YEARS ENDED JUNE 30, 1997 AND 1996
            (DOLLARS IN THOUSANDS EXCEPT FOR SHARES AND PER SHARE AMOUNTS)

                                                          Year Ended June 30,
                                                       ----------------------
                                                          1997        1996
                                                       ----------  ----------
Revenues:
  Culinary arts education                                $12,682      $12,178
  Restaurants & catering                                   2,299        1,965
  Retail, media and other                                    358          739
                                                       ----------  ----------
       Total revenues                                     15,339       14,882

Cost of sales
  Food & beverage                                          1,744        1,692
  Program supplies                                           791          614
  Scholarships & grants                                      216          215
  Merchandise & other                                        498          544
                                                       ----------  ----------
                                                           3,249        3,065
                                                       ----------  ----------
Gross Margin                                              12,090       11,817
Operating expenses
  Occupancy                                                1,725        1,744
  Repairs & maintenance                                      393          434
  Telephone, security & other                                388          442
  Depreciation & amortization                              1,157          991
  Compensation & benefits                                  5,844        5,986
  Outside services                                           515          784
  Advertising & promotion                                    573          666
  Legal & other                                            1,280        1,329
                                                       ----------  ----------
                                                          11,875       12,376

Severance and other                                                      (359)
Interest income (expense)                                     52          (81)
                                                       ----------  ----------
  Income (loss) before provision for income taxes            267         (999)

Income tax provision (benefit)                               107
                                                       ----------  ----------
  Net income (loss)                                         $160        $(999)
                                                       ----------  ----------
                                                       ----------  ----------
Net income (loss) per share                                $0.04       $(0.32)
                                                       ----------  ----------
                                                       ----------  ----------
Weighted average common shares and equivalents         3,656,601    3,114,732
                                                        ----------  ----------
                                                        ----------  ----------



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




                                          17
<PAGE>

                          CALIFORNIA CULINARY ACADEMY, INC.
                          STATEMENTS OF SHAREHOLDERS' EQUITY
                      FOR THE YEARS ENDED JUNE 30, 1997 AND 1996
                       (DOLLARS IN THOUSANDS EXCEPT SHARE DATA)

 
<TABLE>
<CAPTION>

                                                        Preferred Stock          Common Stock
                                                    --------------------- -------------------------   Retained
                                                     Shares      Amount       Shares     Amount       Deficit       Total
                                                    ---------- ---------- ------------- ----------- ------------ -----------
<S>                                                 <C>        <C>        <C>           <C>         <C>          <C>
Balance at June 30, 1995                                              $0   3,095,600       $8,281     ($3,087)      $5,194

  Exercise of Stock Options                                                   87,500          447                      447

  Stock issued in exchange for services                                        3,000           13                       13

  Net loss for the year                                                                                  (999)        (999)
                                                    ---------- ---------- ------------- ----------- ------------ -----------

Balance at June 30, 1996                                  0            0   3,186,100        8,741      (4,086)       4,655
                                                    ---------- ---------- ------------- ----------- ------------ -----------

  Issuance of Preferred Stock                       254,500          953                                               953

  Exercise of Stock Options & Warrants
   (net of tax benefit)                                                      325,300        1,665                    1,665

  Repurchase of Common Stock                                                (117,500)        (757)                    (757)

  Preferred Stock Dividend Declared                                                                      (159)        (159)

  Net income for the year                                                                                 160          160
                                                                                                                         0
                                                    ---------- ---------- ------------- ----------- ------------ -----------

Balance at June 30, 1997                            254,500         $953   3,393,900       $9,649     ($4,085)      $6,517
                                                    ---------- ---------- ------------- ----------- ------------ -----------
                                                    ---------- ---------- ------------- ----------- ------------ -----------
</TABLE>
 




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




                                          18
<PAGE>

                          CALIFORNIA CULINARY ACADEMY, INC.
                               STATEMENTS OF CASH FLOWS
                      FOR THE YEARS ENDED JUNE 30, 1997 AND 1996
                                (DOLLARS IN THOUSANDS)

 
<TABLE>
<CAPTION>
                                                                         Year Ended June 30,
                                                                       -----------------------
                                                                         1997          1996
                                                                       ----------  -----------
<S>                                                                    <C>         <C>
Cash flows from operating activities:
  Net income (loss)                                                        $160        $(999)
  Adjustments to reconcile net income (loss) to net
    cash provided by (used in) operating activities:
       Depreciation and amortization                                      1,157          991
       Tax provision                                                        107
       Provision for losses on accounts receivable                           80          275
       Accrued liabilities and accounts payable                                           13
       Gain on disposal of property                                           2
       Deferred rent                                                        (27)
  Changes in assets and liabilities:
       Accounts receivable                                                 (122)         522
       Inventories                                                         (133)          50
       Prepaid expenses and other assets                                   (234)        (244)
       Accounts payable                                                     (69)         (52)
       Deferred revenues                                                   (583)        (563)
       Accrued and other liabilities                                        110           44
       Other non-current liabilities                                                     (19)
                                                                       ----------  -----------
          Net cash provided by operating activities                         448           18
                                                                       ----------  -----------
Cash flows from investing activities:
  Acquisition of property and equipment                                  (1,877)        (464)
   (Increase) decrease in long-term investments                             646         (646)
                                                                       ----------  -----------
          Net cash used in investing activities                          (1,231)      (1,110)
                                                                       ----------  -----------
Cash flows from financing activities:
  Borrowings under term loan agreement                                                   500
  Borrowings under Convertible Note                                                    1,400
  Principal payments on term loan agreements                               (742)        (250)
  Principal payments on capital lease obligations                           (76)         (81)
  Proceeds from exercise of stock options and warrants                    1,480          447
  Repurchase of common stock                                               (757)
  Payment of Preferred Stock dividends                                      (63)
  Cost of Offering - Preferred Stock                                        (34)
                                                                       ----------  -----------
          Net cash provided by (used in) financing activities              (192)       2,016
                                                                       ----------  -----------
Net increase (decrease) in cash and cash equivalents                       (975)         924
Cash and cash equivalents, beginning of period                            3,283        2,359
                                                                       ----------  -----------
Cash and cash equivalents, end of period                                 $2,308       $3,283
                                                                       ----------  -----------
                                                                       ----------  -----------
</TABLE>
 

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












                                          19
<PAGE>

                             CALIFORNIA CULINARY ACADEMY
                            NOTES TO FINANCIAL STATEMENTS
                                    JUNE 30, 1997


NOTE 1 -- THE COMPANY

The California Culinary Academy, Inc. (the "Academy") was founded in 1977 and 
operates a professional school for chef training that stresses 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, 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.

Enrollment revenues from the Academy's AOS Degree Program and the Baking and 
Pastry Arts Certificate Program rely exclusively on enrollments in those 
programs. Starting in June 1996, AOS classes started every two weeks, 
allowing for more time slots, scheduling convenience and control over 
enrollment.

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 consist 
primarily of food and beverage.  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 amortized 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 consists of the following (dollars in thousands):

                                                          Year Ended June 30,
                                                        ----------------------
                                                          1997        1996
                                                        ---------- -----------
            Kitchen equipment                             $1,817     $  1,663
            Furniture, fixtures and equipment              3,542        2,543
            Construction-in-progress                          20           30
            Leasehold improvements                         4,485        3,777
                                                        ---------- -----------
                                                           9,864        8,013
            Less accumulated depreciation and
            amortization                                  (4,899)      (3,896)
                                                        ---------- -----------
                                                          $4,965     $  4,117
                                                        ---------- -----------
                                                        ---------- -----------


                                          20
<PAGE>

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

                                                          Year Ended June 30,
                                                        ----------------------
                                                          1997        1996
                                                        ---------- -----------
            Favorable lease rights                        $1,476     $  1,476
            Goodwill                                         249          249
            Other                                              4
                                                        ---------- -----------
                                                           1,729        1,725
            Less accumulated amortization                 (1,310)      (1,179)
                                                        ---------- -----------
                                                            $419          546
                                                        ---------- -----------
                                                        ---------- -----------

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.

LONG-TERM INVESTMENTS 
Long-term investments represent certificates of deposit, which were pledged 
as collateral for long-term bank debt.

REVENUE RECOGNITION 
Tuition is initially recorded as deferred revenue at the commencement of each 
enrollment period and is recognized as revenue over the length of program as 
students complete course work required for graduation.   Revenue on 
restaurant, retail and media sales is recognized at the time services are 
performed or goods are sold.

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

NET INCOME (LOSS) PER SHARE 
Net income (loss) per share is based on the weighted average number of shares 
outstanding during each of the respective periods, including the dilutive 
effect of stock options, warrants and convertible preferred stock using the 
treasury stock method.

CONCENTRATION 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 funds through 
high-quality financial institutions and grants credit to its students. The 
Academy believes that the investment risks associated with money market funds 
are minimal due to the high quality of the financial institutions through 
which the investments are made. The Academy believes the credit risk 
associated with its student accounts receivable is minimal as the majority of 
students receive some type of financial aid paid directly to the Academy.  To 
reduce credit risk, the Academy performs ongoing evaluations of its students' 
financial condition and assists qualified students in obtaining student 
financial aid.

                                          21
<PAGE>

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Supplemental disclosure of cash paid for (dollars in thousands):


                                               Year Ended June 30,
                                             ----------------------
                                                1997        1996
                                             ----------  ----------
     Interest                                   $89        $66
     Income taxes                                17          0


Supplemental disclosure of non-cash investing and financing activities:

The Academy issued 254,500 shares of Series A Preferred Stock upon conversion 
of $1,400,000 of Convertible Subordinated Debt during the year ended June 30, 
1997.

The Academy issued a promissory note of approximately $157,000 for the 
repurchase of Common Stock for the year ended June 30, 1997.

The Academy entered into a $190,000 capital lease obligation for office 
equipment for the year ended June 30, 1996.

NEW PRONOUNCEMENT 
In February 1997, the Financial Accounting Standards Board issued Statement 
of Financial Accounting Standards No. 128, EARNINGS PER SHARE.  The Academy 
is required to adopt SFAS No. 128 in the second quarter of fiscal 1998 and 
will restate earnings per share (EPS) data for prior periods to conform to 
SFAS No. 128 at that time.  Earlier application is not permitted.

SFAS No. 128 replaces current EPS reporting requirements and requires a dual 
presentation of basic and diluted EPS.  Basic EPS excludes dilution and is 
computed by dividing net income available to common shareholders by the 
weighted average number of shares outstanding for the period.  Diluted EPS 
reflects the potential dilution that could occur if securities or other 
contracts to issue common stock were exercised or converted in to common 
stock.

Pro-forma amounts for basic and diluted EPS assuming SFAS No. 128 had been in 
effect for the years ended June 30, 1997 and June 30, 1997, respectively are 
as follows:

                                              Year Ended June 30,
                                             ----------------------
                                                1997        1996
                                             ----------  ----------
     Basic earnings per share                  $0.00      ($0.33)
     Diluted earnings per share                $0.00      ($0.33)


STOCK-BASED COMPENSATION
The Academy accounts for stock-based awards to employees using the intrinsic 
value method in accordance with ASPB No. 25, ACCOUNTING FOR STOCK ISSUED TO 
EMPLOYEES.

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

NOTE 3 -- BANK DEBT

As of June 30, 1997, the Academy had no outstanding loans with banks.


                                          22
<PAGE>

     As of June 30, 1996, the Academy had available a revolving line of 
credit and term loan with a bank. The line of credit provided for borrowings 
up to $500,000 with interest at the prime rate of the bank, and was were used 
to finance working capital requirements. The term loan provided for 
borrowings up to $750,000 with interest at 1% above the prime rate of the 
bank. The line of credit and term loan were collateralized by certain fixed 
assets of the Academy. The term loan was further collateralized by a 
certificate of deposit. As of June 30, 1996, the Academy maintained a 
certificate of deposit of $355,000 with the bank, of which $146,000 was 
collateral for the term loan. As of June 30, 1996 there were no amounts 
outstanding on the line of credit; and in September 1996, the Academy 
canceled the line of credit. The term loan agreement with the bank contained 
certain affirmative covenants that the Academy was required to maintain. As 
of June 30, 1996, the Academy was in violation of certain covenants. The loan 
was classified as current and was repaid on October 9, 1996.

     In June 1996, the Academy obtained a term loan from a bank in the amount 
of $500,000, the proceeds of which were used for working capital requirements 
and provided for interest paid monthly at 1% above the bank's index rate for 
90-day certificates of deposits. The line of credit was collateralized by a 
certificate of deposit at the same bank in the amount of $500,000. The term 
loan was repaid during fiscal 1997.

NOTE 4 -- CAPITAL LEASE OBLIGATIONS

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

Future minimum lease payments at June 30, 1997 are as follows (dollars in
thousands):

        Years Ending June 30,                               Amount
        ---------------------                             ----------
          1998                                                  $84
          1999                                                   77
          2000                                                   56
          2001                                                   29
          2002 and thereafter                                     0
                                                          ----------
        Total minimum lease payments                            246
        Less amount representing interest                       (31)
                                                          ----------
        Present value of minimum lease payments                 215 
        Less current portion of capital lease obligations       (67)
                                                          ----------

          Long term portion of capital lease obligations       $148
                                                          ----------
                                                          ----------

NOTE 5 -- RELATED-PARTY TRANSACTIONS

In January 1995, the Academy entered into a month-to-month consulting 
agreement with a principal shareholder and Chairman of the Board of Directors 
to provide consulting services regarding investor relations and other 
strategic services. The agreement provides for fees not to exceed $6,000 per 
month. The Academy paid fees of $72,000 for the years ended June 30, 1996 and 
1997 under this agreement.

In July 1996, the Academy entered into a five-year lease for an approximately
3,800 square foot facility in Salinas, California.  The lease is with a
partnership whose partners include a member of the Board of Directors and
another shareholder of the Academy.  The facility is an extension campus, which
opened in October 1996.  The monthly rent for the facility is the greater of
$3,900 or 8% of gross sales plus a share of common area and exterior maintenance
charges.  The Academy paid a lease acquisition fee of $150,000 upon execution of
the lease agreement.  The lease acquisition fee will be amortized over the term
of the lease.  The lease agreement includes a termination clause subject to
revenue performance at the extension campus during the first twelve months of
operations and a termination fee should the Academy invoke the termination
clause.  This termination clause was not invoked.

In July 1992 and from time to time prior to August 1, 1991, the Chairman of the
Board and two other individuals who were then members of the Board of Directors,
all 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 94 shares of the
Academy's then-existing 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 102,770
shares of common stock at an exercise price of $4.18 per share.  In August 1996,
all warrants were exercised to purchase 102,770 shares of common stock.

In August 1992, the Academy issued warrants to a shareholder who is related to
the Chairman of the Board of Directors to purchase 20 shares of its
then-existing Series A preferred stock at $8,000 per share.  These warrants were
converted, concurrently with the completion of the Initial Public Offering in
July 1993, into warrants to purchase 23,900 shares of common stock at an
exercise price of $4.18.  In August 1996, all warrants were exercised to
purchase 23,900 shares of common stock.

In June 1996, the Academy issued 25,454 warrants with an exercise price of 
$6.625 per share to the company serving as the selling agent of Convertible 
Subordinated Notes ("Notes"). The Chairman and President of the selling agent 
company is a member of the Academy's Board of Directors.  As selling agent of 
the Notes, the selling agent was paid

                                          23
<PAGE>

$189,000 for commission and fees and was entitled to warrants to purchase Common
Stock equal to 10% of the number of shares issued upon conversion of the Notes
to Series A Preferred Stock.

NOTE 6 -- PREFERRED STOCK

During March 1996 and July 1996, the Board of Directors and shareholders,
respectively, authorized the Academy to issue up to 5,000,000 shares of
Preferred Stock in one or more series to be determined by the Board of Directors
from time to time.  An amendment to the Articles of Incorporation authorizing
the issuance of Preferred Stock was filed with the California Secretary of State
in August 1996.  On August 23, 1996, the Academy became legally authorized to
issue up to 700,000 shares of Series A Preferred Stock.  On the same date, the
entire issue of Convertible Subordinated Notes in the aggregate principal amount
of $1,400,000 automatically converted to 254,500 shares of Series A Preferred
Stock.  The preferred stock was recorded net of $447,000 of issuance costs.

The non-redeemable Series A Preferred Stock into which the Notes converted
provides for quarterly dividends at an annual rate of 7.5% per share from the
date of first issuance, when and if declared by the Board of Directors, with a
liquidation preference of $5.50 per share, plus accrued dividends.  Although the
Series A Preferred Stock is nonvoting, in the event the Academy fails to pay a
quarterly dividend, a meeting of the Board of Directors can be called at which
the holders of the Series A Preferred Stock will be entitled to elect one-third
of the Academy's Board of Directors.  Upon payment of the missed dividend(s),
the right to elect one-third of the Board will be rescinded.  Each share of
Series A Preferred Stock is convertible at the option of the holder into the
Academy's Common Stock at the conversion price of $5.50 per share.  After
February 23, 1997, each share of Series A Preferred Stock will convert
automatically if the closing price of the Common Stock equals or exceeds $8.00
for 20 consecutive trading days.  Certain provisions for price protection are
set forth in the terms of the Series A Preferred Stock, but in no event will the
conversion price be less than $3.50.

The Academy granted certain registration rights to the holders of the 
Convertible Notes (and subsequently, the Preferred shareholders). Certain 
penalties were payable to the holders of the Series A Preferred Stock if the 
Academy did not use its best efforts to file a registration statement to 
register for resale the Common Stock underlying the Series A Preferred Stock 
conversion right with an effective date not later than November 23, 1996. 
Such registration statement was declared effective on April 15, 1997. 
Penalties payable to the Series A Preferred shareholders were accrued as of 
June 30, 1997 and paid in July 1997. A total of 6,300 shares of Series A 
Preferred Stock and $35,000 in cash was distributed in connection with this 
penalty.

In July 1997, certain Series A Preferred Stock shareholders elected to convert
approximately 145,000 into Common Stock.

NOTE 7 -- SHAREHOLDERS' EQUITY

STOCK OPTION PLANS
The Academy established the 1992 Stock Option Plan (the "Plan") during the year
ended August 31, 1993 and allocated a total of 383,595 shares to be granted
under the Plan.  Under the Plan, incentive stock options can be granted at
prices not less than 100 percent of the fair market value of the stock at the
date of grant, and non-


                                          24
<PAGE>

qualified options can be granted at not less than 85 percent of the fair market
value of the stock at the date of grant.  Options are exercisable from one to
five years from the date of grant.

The Academy established the 1997 Stock Option Plan (the "1997 Plan") during 
the year ended June 30, 1997 and reserved a total of 600,000 shares of Common 
Stock to be granted under the Plan.  Under the Plan, incentive stock options 
can be granted at prices not less than 100 percent of the fair market value 
of the stock at the date of grant, and non-qualified options can be granted 
at not less than 85 percent of the fair market value of the stock at the date 
of grant. Options are exercisable from one to ten years from the date of 
grant.

Option activity under the 1992 and 1997 Plans are as follows:

 
<TABLE>
<CAPTION>

                                          Shares         Options            Option
                                         Available     Outstanding          Price
                                       ------------   ------------   ------------------
<S>                                    <C>            <C>            <C>
     Balance as of June 30, 1995         172,000        591,000      $4.18 to $8.00

     Shares authorized                   100,000              0
     Options granted (weighted average
      fair value of $4.68)               (26,000)        26,000      $4.25 to $6.50
     Options exercised                         0        (88,000)     $4.18 to $6.25
     Options canceled                     97,000        (97,000)     $4.18 to $8.00
                                       ------------   ------------
     Balance as of June 30, 1996
      (exercisable at a weighted
      average price of $4.68)            343,000        432,000      $4.18 to $8.00
     Shares authorized                   600,000
     Options granted (weighted average
      fair value of $7.11)              (524,000)       524,000      $6.27 to $7.75
     Options exercised                                 (198,000)     $4.18 to $6.25
     Options canceled                     31,000        (31,000)     $6.25 to $8.00
                                       ------------   ------------
     Balance as of June 30, 1997
      (exercisable at a weighted
      average price of $6.61)            450,000        727,000      $4.18 to $8.00
                                       ------------   ------------
                                       ------------   ------------
     Exercisable options                                 567,000      $4.18 to $8.00
                                                      ------------
                                                      ------------
 
</TABLE>

Additional information regarding options outstanding as of June 30, 1997 is 
as follows:

<TABLE>
<CAPTION>

Range of                       Weighted Average         Weighted                           Weighted
Exercise           Number          Remaining            Average           Number           Average
 Prices         Outstanding    Contractual Life      Exercise Price     Exercisable     Exercise Price
------------    -----------    ----------------      --------------     -----------     --------------
<S>             <C>            <C>                   <C>                <C>             <C>

$5.56 - 8.00       91,750              2.3               $7.24             91,750            $7.24
$4.18             118,620              1.2               $4.18            118,620            $4.18
$4.25 - 6.50       13,100              3.6               $4.68             12,267            $4.68
$7.75              43,000              4.1               $7.75             14,340            $7.75
$6.70             220,000              9.6               $6.70             90,000            $6.70
$7.375            241,000              9.9              $7.375            240,000           $7.375
------------    -----------    ----------------      --------------     -----------     --------------
$6.61             727,470              7.0               $6.61            566,977            $6.61

</TABLE>

Of the options outstanding at June 30, 1997 and 1996, 495,000 and 321,000,
respectively, were non-qualified stock options.

ADDITIONAL STOCK PLAN INFORMATION
As discussed in Note 2, the Academy continues to account 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.

Statement of Financial Accounting Standards No. 123, Accounting for 
Stock-Based Compensation, (SFAS 123) requires disclosure of pro forma net 
income and earnings per share had the Academy adopted the fair value method 
as of the beginning of fiscal 1996.  The Accademy's calculations were made 
using the Black-Scholes option pricing model with the following weighted 
average assumptions: expected life, 12 months following vesting; stock 
volatility, 18%; risk free interest rate of 6%; and no dividends during the 
expected term.  The Academy's calculations are based on a multiple option 
valuation approach and forfeitures are recognized as they occur.  If the 
computed fair values of the 1996 and 1997 awards had been amortized to 
expense over the vesting period of the awards, pro forma net income would not 
have changed significantly in the year ended June 30, 1996 and would have 
been $135,000 ($.04 per share) in the year ended June 30, 1997.  However, the 
impact of outstanding non-vested stock options granted prior to 1996 has been 
excluded from the pro forma calculation; accordingly, the 1996 and 1997 pro 
forma adjustments are not indicative of future period pro forma adjustments, 
when the calculation will apply to all applicable stock options.

                                          25
<PAGE>

NOTE 8 -- INCOME TAXES

The provision (benefit) for income taxes for the year ended June 30, 1997 and
the year ended June 30, 1996 consists of the following (dollars in thousands):

                                             Year Ended June 30,
                                         -------------------------
                                           1997           1996
                                         ----------      ---------
              Current                        $175             $0
              Deferred                        (68)             0
                                         ----------      ---------
                                             $107             $0
                                         ----------      ---------
                                         ----------      ---------


A reconciliation of the effective tax rate for income taxes by applying the 
Federal statutory rate to the pre-tax income (loss) is as follows:

                                             Year Ended June 30,
                                         -------------------------
                                           1997           1996
                                         ----------      ---------
              Federal statutory rate        34.0%          34.0%
              State tax, net of federal
                income tax deferral          7.1%
              Other items                   (1.1%)
              Valuation allowance                         (34.0%)
                                         ----------      ---------
              Income tax provision          40.0%           0.0%
                                         ----------      ---------
                                         ----------      ---------


Deferred tax assets and liabilities result from differences in the timing of the
recognition of certain income and expense items for tax and financial accounting
purposes.  The components of the net deferred tax asset include the following
deferred tax assets and liabilities (dollars in thousands):


                                          26
<PAGE>

                                                   Year ended June 30,
                                                 ----------------------
                                                   1997        1996
                                                 ----------   ---------
          Deferred tax assets (liabilities)
              Accrued vacation                        $38         $33
              Allowance for doubtful accounts         154         112
              Net operating loss carryforward         637         715
              Depreciation                            (40)       (195)
              Amortization                           (179)       (219)
              Other                                   (87)
              Valuation allowance                    (200)       (200)
                                                 ----------   ---------
          Net deferred tax asset                     $323        $246
                                                 ----------   ---------
                                                 ----------   ---------


As of June 30, 1997 the Academy has federal and California net operating loss
carryforwards, for ax return purposes, of approximately $1,779,000 and $356,000,
respectively, which are available to offset future taxable income, if any.  The
federal net operating losses begin expiring in 2005 through 2011.  California
net operating loss carryforwards begin expiring in 2001 through 2002.

A valuation allowance has been provided for that portion of deferred tax assets
where it is more likely than not that the future tax benefits of these items
will not be realized.  The factors affecting the realizability of the deferred
asset balance at June 30, 1996 have not changed significantly from the previous
year.

NOTE 9 -- PROMISSORY NOTES

In July 1996, a former executive officer of the Academy elected to exercise
approximately 112,000 vested stock options.  The Academy subsequently entered
into a transaction with this former officer, wherein the Academy purchased and
retired this stock in exchange for approximately $717,000, which approximated
fair market value and was comprised of approximately $560,000 in cash and
$157,000 in promissory notes bearing an interest rate of 8.75%.  As of June 30,
1997, the outstanding balance of these notes was approximately $38,000. 
Interest is to be paid monthly on the notes until January 1, 1998, when the note
is due.

NOTE 10 -- COMMITMENTS AND CONTINGENCIES

PURCHASE AGREEMENT
In September 1994, the Academy entered into an agreement with a company to
purchase $1,650,000 of knives, tools, gadgets and equipment over an unlimited
period of time. In exchange, the company underwrote one-third of the production
costs of the Academy's new television cooking series "Cooking at the Academy." 
As of June 30, 1997, the Academy had purchased approximately $458,000 of knives,
tools, gadgets and equipment.

FACILITY LEASE
The Academy leases restaurant, school and office facilities under an operating
lease. The lease provides for rent payments of approximately $97,000 per month
adjusting downward to approximately $77,000 per month in the fifth year of the
lease and requires the Academy to pay its pro rata share of common area
maintenance, insurance and tax expenses of approximately $13,000 per month.  The
Academy leases facilities in Salinas, California for its College of Food under
an operating lease.  The lease payment is the greater of approximately $3,900
per month or 8% of gross sales and requires the Academy to pay its pro rata
share of common area and exterior maintenance charges, which are approximately
$1,000 each month.   The Academy leases space in another building close to its
main campus, which is used for its educational programs.  The lease payment is
$2,700 per month.


                                          27
<PAGE>


Future minimum lease payments for all operating leases are approximately as
follows (dollars in thousands):

        Year Ending June 30,
        --------------------
              1998                                   $1,122
              1999                                    1,173
              2000                                    1,118
              2001                                    1,045
              2002                                      928
              2003 and thereafter                     9,974
                                                  -----------
                                                    $15,360
                                                  -----------
                                                  -----------

Rent expense for the years ended June 30, 1997 and 1996, was approximately
$1,295,000 and $1,394,000, respectively.

STUDENT FINANCIAL ASSISTANCE PROGRAMS
Approximately 37% percent of the Academy's education program revenues are
provided by students participating in student financial assistance programs
administered by the Department of Education ("DOE")and the State of California.

The Academy is subject to periodic audit by the DOE of its compliance with 
DOE funding requirements.  While management believes that the Academy can 
demonstrate financial responsibility in accordance with the standards set 
forth by the DOE, the possibility of adverse DOE findings exist.  The 
financial statement effect of potential adverse findings is unknown.

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

NOTE 11 -- 401(K) RETIREMENT PLAN

Employees become eligible to participate in a defined 401(k) plan immediately
upon hire, assuming that other eligibility requirements are also satisfied. The
401(k) plan allows for employee contributions and discretionary employer
matching contributions.  On January 1, 1997, the Academy amended the 401(k) plan
to permit discretionary employer matching contributions in the form of the
Academy's Common Stock, which matching contribution is determined quarterly and
contributed at the end of the plan year.  The Academy contributions to the
401(k) plan for the years ended June 30, 1997 and 1996 were approximately
$35,000 and $89,000, respectively.


                                          28
<PAGE>

NOTE 12 -- SUBSEQUENT EVENTS

In August 1997, the Academy entered into a master lease of a 68-room hotel
approximately one block from the Academy's main campus in San Francisco to
provide student housing.  The lease becomes effective on September 2, 1997.  The
initial monthly rent for the facility is approximately $28,000.  The Academy is
also responsible for payment of its pro rata share of insurance and property
taxes, which are approximately $1,000 per month.  In conjunction with the lease,
the Academy paid $25,000 for existing furniture and fixtures.  The lease terms
extend until August 2012, with three five-year renewal options thereafter.

In October 1997, the Academy purchased for approximately $1,900,000 a 70 room
residential hotel adjacent to the Academy's main campus in San Francisco to
provide student housing  and obtained long term debt financing thereon for
$1,200,000.

NOTE 13 -- FAIR VALUE OF FINANCIAL INSTRUMENTS

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

Rates currently available to the Academy for debt with similar terms and
remaining maturities are used to estimate fair value of debt.



                                          29
<PAGE>

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

There were no disagreements on accounting and financial disclosure.


                                       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 29, 1997 are
as follows:

Name                              Age       Positions


Theodore G. Crocker (1)      51        Chairman of the Board and Chief
                                       Executive Officer
W. Bruce C. Bailey (1,2)     43        Director
James Cockman (1,2)          64        Director
Frederick L. Dame            44        Director
Paul Prudhomme               57        Director
Grover T. Wickersham (2)     47        Director
Keith H. Keogh               44        President and Chief Operating Officer
Robert A. Stoffregen         48        Executive Vice President, Chief
                                       Financial Officer, Director of Corporate
                                       Development
------------------------

(1) Member of the Compensation Committee
(2) Member of the Audit Committee

The bylaws of the Academy provide for a board of between seven and nine 
members. The board is currently fixed at seven members and has one vacancy.  
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. Crocker has served as Chairman of the Board since March 1987.  In May 
1996, he was appointed Chief Executive Officer.  Since 1980, Mr. Crocker has 
also been primarily employed as the President of Crocker & Associates, a real 
estate development company located in Watsonville, California.  Mr. Crocker 
holds an Associate of Arts degree from Cabrillo Junior College.

Mr. Bailey was elected to the Board in March 1996.  Mr. Bailey founded the 
investment banking firm of Bailey & Company Inc., Toronto, Canada, in 
December 1988, and has been employed by such firm since that date as Chairman 
of the Board.  Bailey & Company is currently serving as an investment banker 
to the Academy.   Mr. Bailey hold a BA [Hons.] degree from Queen's 
University, Kingston, Canada, an LL.B. from Dalhousie University, Halifax, 
Canada, an LL.M. from Columbia University, New York, New York, and Call to 
the Bar, Law Society of Upper Canada, Toronto, Canada.

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 stainless steel professional kitchen equipment to the 
foodservice industry.  Mr. Cockman serves on the boards of Ryans Family Steak 
House, Greenville, South Carolina, Clayton Homes, Inc., Knoxville Tennessee, 
Clemson University, College of Commerce and Industry, Clemson, South 
Carolina, Greenville Technical College Foundation, Greenville, South Carolina.

                                          30
<PAGE>

Mr. Dame has served as a member of the Board of Directors since January 1997. 
He has served in various senior level management capacities in the Seagram 
organization since 1988, and is currently the Vice President of National 
Accounts for Seagram Chateau Estate Wine Company, San Mateo, California.  Mr. 
Dame is a columnist for the "Wine Trader" as well as for a number of gourmet 
and hotel-restaurant publications in Japan.  He received his degree in 
Journalism and Communications from Washington & Lee University.

Chef Prudhomme has served as a member of the Board of Directors since June 
1997. Chef Paul Prudhomme is the proprietor of K-Paul's Louisiana Kitchen, 
located in the French Quarter of New Orleans.  Chef Prudhomme also has 
developed and distributes a line of natural herbs and spices, "Chef Paul 
Prudhomme's Magic Seasoning Blends," nationally and in more than thirty other 
countries.  Chef Prudhomme is the author of several cookbooks: CHEF PAUL 
PRUDHOMME'S LOUISIANA KITCHEN; THE PRUDHOMME FAMILY COOKBOOK; SEASONED 
AMERICA, FORK IN THE ROAD, PURE MAGIC; FIERY FOODS THAT I LOVE and KITCHEN 
EXPEDITION.

Mr. Wickersham was elected to the Board in March 1996.  Mr. Wickersham has 
practiced corporate and securities law since 1976.  The law firm of Grover T. 
Wickersham, P.C., Palo Alto, California, which he co-founded in July 1986, 
serves as securities law counsel to the Academy.  Mr. Wickersham manages 
Glenbrook Capital, LP, an investment fund established in December 1996, and 
is the co-manager of Oxcal Venture Fund, LLP, a venture capital fund.  Mr. 
Wickersham also serves on the Board of Directors of Telepartner A/S, a Danish 
telecommunications company.  Mr. Wickersham holds a BA degree in American 
Studies from University of California at Berkeley, a JD degree from Hastings 
College of the Law, and an MBA degree from Harvard Business School.

Mr. Keogh joined the Academy as Executive Vice President and Chief Operating 
Officer in July 1995 and was promoted to President in May 1996.  From 1971 
until joining the Academy, Mr. Keogh was employed at Walt Disney World in 
Florida and held various positions, most recently as Executive Chef, Research 
and Development-Theme Parks.  Mr. Keogh was the Manager of the Culinary Team 
USA (the US Culinary Olympic Team) from 1988-96 and past President of the 
World Association of Cooks Societies and The American Culinary Federation.

Mr. Stoffregen joined the Academy in June 1996.  Prior to his appointment as 
Executive Vice president, Chief Financial Officer and Director of Corporate 
Development, Mr. Stoffregen was a member of the public accounting firm of 
Jones, Henley & Schunck.  From August 1991 to September 1994, Mr. Stoffregen 
was Chief Financial Officer of Sharper Image Corporation.  Prior to 1991, Mr. 
Stoffregen was a partner in the public accounting firm of Deloitte & Touche.  
Mr. Stoffregen holds a BA degree in accounting from the University of 
Minnesota -Duluth and a JD from William Mitchell College of Law, Saint Paul, 
Minnesota.

During the fiscal year ended June 30, 1997, the Board of Directors held five 
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 one outside director.  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, 
1997. 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.

                                          31
<PAGE>

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, 1997 have been timely filed 
except that Theodore G. Crocker, a director and executive officer of the 
Academy, inadvertently did not timely file a statement of changes in 
beneficial ownership with respect to four sales, aggregating 5,482 shares in 
April 1997.  These transactions have been reflected in a subsequent filing by 
Mr. Crocker.

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 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 having 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), judgments, fines and amounts 
reasonably paid or incurred by them for settlement in any threatened, pending 
or completed action, suit or proceeding, including any derivative action, 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 (the "Act"), 
is against public policy and, therefore, unenforceable.  Accordingly, these 
indemnification provisions may not limit the liability of directors and 
executive officers under the 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

                                          32
<PAGE>

Officer and all other executive officers whose total annual salary and bonus 
exceeded $100,000 for the fiscal year ended June 30, 1997 (the "Named 
Executive Officers").

                              SUMMARY COMPENSATION TABLE
 
<TABLE>
<CAPTION>

                                                                  Long Term
                                                                 Compensation        All Other
   Name and Principal Position          Year         Salary         Awards         Compensation
                                                       ($$)   Options/SAR's (#)         ($$)

---------------------------------------------------------------------------------------------------
<S>                                     <C>         <C>       <C>                  <C>
Theodore G. Crocker                     1997                                         72,000(1)
CEO and Chairman of the Board           1996                                         72,000(1)

Keith H. Keogh                          1997        184,769                          10,010(2)
President and Chief Operating
Officer                                 1996        153,846        120,000              564(3)
                                        1995         73,846         60,000

Robert A. Stoffregen                    1997        181,328         75,000            9,066(4)
Executive Vice President,
Chief Financial Officer,
Director of Corporate development       1996          3,365         25,000
 
</TABLE>
------------------------

(1) Represents $72,000 reimbursement for office space and costs. 
(2) Includes $772 in payments on life insurance policies and $9,238 in employer
    contributions to the 401(k) Plan.
(3) Represents payments on life insurance policies.
(4) Represents employer contributions to the 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.  During fiscal 1997, directors who were not employees of the 
Academy and who resided in Northern California received $9,000 per annum as 
an annual retainer for serving on the Board.  During fiscal 1997, directors 
who were not employees of the Academy and who resided in outside Northern 
California received $12,000 per annum as an annual retainer for serving on 
the Board.

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 (the "1992 Plan") permits the granting 
of incentive stock options ("ISO's"), or non-qualified stock options 
("NQSO'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 1992 Plan, the Administrator determines the terms and conditions of 
options granted under the 1992 Plan, including the exercise price and option 
term. The 1992 Plan provides 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 NQSO'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 1992 Plan provides 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 1992 Plan) would 
result in the vesting of shares having an aggregate fair market

                                          33
<PAGE>

value (determined for each share as of the date of grant of the ISO covering 
such share) in excess of $l00,000 in any calendar year.  No such limit 
applies to the grant of NQSO'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 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.

In June 1997, the Directors adopted California Culinary Academy 1997 Stock 
Option Plan (the "1997 Plan").  The adoption of 1997 Plan will be submitted 
to a shareholder vote at the next annual meeting.  Subject to the terms of 
the 1997 Plan, the Administrator determines the terms and conditions of 
options granted under the 1997 Plan, including the exercise price and option 
term. The 1997 Plan provides that the Administrator must establish an 
exercise price not be less than 85% of the fair market value per share on the 
date of grant.  The number of options available for grant under the 1997 Plan 
is 600,000.

In the event of a merger in which at the Academy is not the surviving 
corporation 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 exercises of stock 
options during the fiscal year ended June 30, 1997 by the executive officers 
named in the Summary Compensation Table:

                 AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
                         AND FISCAL YEAR-END OPTION/SAR VALUE
<TABLE>
<CAPTION>
 
                                                                Number of Unexercised            Value of in-the-Money
                                 Shares                  Options/SAR's at Fiscal Year-end   Options/SAR's at Fiscal Year-end
                               Acquired on      Value                  end                            Year-end
      Name                       Exercise      Realized     Exercisable / Unexercisable       Exercisable / Unexercisable
------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>             <C>       <C>                   <C>          <C>                    <C>
Theodore G. Crocker                   0             $0         97,990              0              $362,073 (1)           0
                                                               10,000              0               $23,150 (2)           0
                                                               40,000              0               $64,200 (3)           0

Keith H. Keogh                        0             $0         60,000              0                    $0 (4)           0
                                                               40,000         80,000               $47,000 (5)     $94,000(5)

Robert A. Stoffregen                  0             $0         25,000              0               $29,375 (6)           0
                                                               25,000         50,000               $29,375 (7)     $58,750(7)

</TABLE>


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

(1) Calculated as the difference between the fair market value of the Common
    Stock at June 30, 1997 of $7.875 and the option exercise price of $4.18 per
    share.
(2) Calculated as the difference between the fair market value of the Common
    Stock at June 30, 1997 of $7.875 and the option exercise price of $5.56 per
    share.
(3) Calculated as the difference between the fair market value of the Common
    Stock at June 30, 1997 of $7.875 and the option exercise price of $6.27 per
    share.

                                          34
<PAGE>

(4) Calculated as the difference between the fair market value of the Common
    Stock at June 30, 1997 of $7.875 and the option exercise price of $8.00 per
    share.
(5) Calculated as the difference between the fair market value of the Common
    Stock at June 30, 1997 of $7.875 and the option exercise price of $6.70 per
    share.
(6) Calculated as the difference between the fair market value of the Common
    Stock at June 30, 1997 of $7.875 and the option exercise price of $6.70 per
    share.
(7) Calculated as the difference between the fair market value of the Common
    Stock at June 30, 1997 of $7.875 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 one year of service, 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 employment, however, terminated employees may 
elect to keep vested benefits in the plan if such vested benefits are greater 
than an amount stipulated on 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 1, 1997, 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.

                            SHARES BENEFICIALLY OWNED (1)
                                           
     DIRECTORS AND 5% SHAREHOLDERS              NUMBER             PERCENT
     -------------------------------------------------------------------------
    Theodore G. Crocker                        1,330,117 (2)         30.6%
    625 Polk Street
    San Francisco, CA 94102
    
    Grover T. Wickersham                          56,350 (3)          1.3%
    625 Polk Street
    San Francisco, CA 94102
    
    W. Bruce Bailey                               40,000 (4)          1.5%
    625 Polk Street
    San Francisco, CA 94102
    
    James D. Cockman                              40,000 (5)             *
    625 Polk Street
    San Francisco, CA 94102

                                          35
<PAGE>

    Frederick L. Dame                             40,500 (6)             *
    625 Polk Street
    San Francisco, CA 94102
    
    Paul H. Prudhomme                             40,000 (7)             *
    625 Polk Street
    San Francisco, CA 94102

    All Executive Officers and Directors as a Group (8 persons) 1,723,456 39.7%

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

     *   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
         this 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 147,990 shares of Common Stock issuable upon exercise of
         currently exercisable options.
    (3)  Includes 54,850 shares of Common Stock issuable upon exercise of
         currently exercisable options.
    (4)  Includes 65,454 shares of Common Stock issuable upon exercise of
         currently exercisable options and warrants.
    (5)  Includes 40,000 shares of Common Stock issuable upon exercise of
         currently exercisable options.
    (6)  Includes 40,000 shares of Common Stock issuable upon exercise of
         currently exercisable options.
    (7)  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, the 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 provides investor relations and other strategic 
services in return for a fixed monthly payment for office rent and costs.  
The agreement provides for fees not to exceed $6,000 per month.  The Academy 
paid $72,000 in fees in both the years ended June 30, 1997 and 1996 to Mr. 
Crocker.

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. is a member of on the Academy's Board of 
Directors.  The agent was entitled to receive a commission of 7% of the gross 
proceeds sold, 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 $1,400,000 of Notes and the selling agent received the 
warrants and $189,000 commissions and fees.

During the year ended June 30, 1997, the Academy paid Grover T. Wickersham, 
P.C. approximately $22,000 for legal services.  Grover T. Wickersham, the 
principal member of such firm, is a member of the Academy's Board of 
Directors.

                                          36
<PAGE>

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.  The Academy paid a lease acquisition fee of 
$150,000 upon execution of the lease agreement.

(7) ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  The exhibits in the accompanying Index to Exhibits on page 44 of this 
report are filed or incorporated by reference as part of this report.

(b)  The Academy filed no Current reports on Form 8-K during the quarter 
ended June 30, 1997.

                                          37
<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;

Dated:  October 13, 1997           California Culinary Academy, Inc.

                                  By:       /s/ Theodore G. Crocker
                                       ----------------------------
                                                Theodore G. Crocker
                                                Chief Executive Officer and
                                                Chairman of the Board

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 
registrant in the capacities and on the dates indicated below.

<TABLE>
<CAPTION>
 

SIGNATURE                                         TITLE                             DATE
<S>                                               <C>                               <C>
(Principal executive officer)
/s/  Theodore G. Crocker
----------------------------------------------
Theodore G. Crocker                              Chief Executive Officer and        October 13, 1997
                                                 Chairman of the Board              

(Principal financial and accounting officer)
/s/ Robert A. Stoffregen
----------------------------------------------
Robert A. Stoffregen                             Chief Financial Officer            October 13, 1997

/s/ Grover T. Wickersham
----------------------------------------------
Grover T. Wickersham                             Director                           October 13, 1997

/s/ W. Bruce Bailey
----------------------------------------------
W. Bruce Bailey                                  Director                           October 13, 1997

/s/ James D. Cockman
----------------------------------------------
James D. Cockman                                 Director                           October 13, 1997

/s/ Frederick L. Dame
----------------------------------------------
Frederick L. Dame                                Director                           October 13, 1997

/s/ Paul H. Prudhomme
----------------------------------------------
Paul H. Prudhomme                                Director                           October 13, 1997


</TABLE>

                                          38
<PAGE>

                                  INDEX TO EXHIBITS
                                           
SEQUENTIAL 
EXHIBIT 
NUMBER             EXHIBIT
                                           
   3.1 1              Amended and Restated Articles of Incorporation
   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
  10.3 1              Lease for Premises at 625 Polk Street, San Francisco, as
                      amended
  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 (w)--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
   10.27              Loan Agreement between Registrant and Mid-Peninsula Bank
                      dated June 14, 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
   10.31              Lease Agreement between Registrant and 625 Polk Investment
                      Company, a limited partnership, dated as of May 1, 1997
   10.32              1997 Stock Option Plan
   10.33              Executive Employment Agreement between Registrant and 
                      Keith H. Keogh, Dated May 31, 1995
    11.0              Statement re:  Computation of Earnings per Share
    27.0              Financial Data Schedule

------------
                                           
(1)   Previously filed as an exhibit to the original filing of the Registration 
      Statement on Form SB-2 filed May 14, 1993
(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


                                          39