SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549
                  ---------------------------------------------------

                         AMENDMENT NO. 1 ON FORM 10-K/A
                                  TO FORM 10-K

(mark one)


    X          Annual Report  Pursuant to Section 13 or 15(d) of the  Securities
---------      Exchange Act of 1934

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

                         Commission file number 1-12636

                             THERMORETEC CORPORATION
            (Exact name of Registrant as specified in its character)

Delaware                                                    59-3203761
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                              Identification No.)

Damonhill Square
9 Pond Lane, Suite 5A
Concord, Massachusetts                                       01743-2851
(Address of principal executive offices)                     (zip code)

        Registrant's telephone number, including area code: (781) 622-1000

            Securities registered pursuant to Section 12(b) of the Act:

                                                      Name of each exchange
Title of each class                                   on which registered
Common Stock, $.01 par value                          American Stock Exchange

            Securities registered pursuant to section 12(g) of the Act:
                                      None

Indicate by check mark whether the Registrant (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, and (2) has been subject to the filing requirements for
at least the past 90 days. X No _____.

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best  of  the  Registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  into  Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

The  aggregate  market  value of the voting stock held by  nonaffiliates  of the
Registrant as of April 30, 1999, was approximately $8,465,000.

As of April 30,  1999,  the  Registrant  had  13,554,498  shares of Common Stock
outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  Registrant's  Annual Report to Shareholders for the fiscal year
ended April 3, 1999, are incorporated by reference into Parts I and II.

<PAGE>

Items 10, 11, 12 & 13 of Part III of the Registrant's Annual Report on Form 10-K
for the fiscal year ended April 3, 1999 are hereby amended and restated in their
entirety as follows:

                                    Part III

Item 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

      Set forth below are the names of the directors,  their ages, their offices
in  ThermoRetec  Corporation.  ("ThermoRetec"  or the  Company"),  if any, their
principal  occupation or employment for the past five years, the length of their
tenure  as  directors  and the names of other  public  companies  in which  such
persons hold directorships.  Information regarding their beneficial ownership of
the Company's Common Stock and of the common stock of its parent company, Thermo
TerraTech  Inc.  ("Thermo  TerraTech"),  a provider  of  industrial  outsourcing
services and manufacturing  support encompassing a broad range of specialization
including environmental-liability management, engineering and design, laboratory
testing  and metal  treating,  and Thermo  TerraTech's  parent  company,  Thermo
Electron Corporation ("Thermo Electron"), a provider of products and services in
measurement instrumentation,  biomedical devices, energy, resource recovery, and
emerging  technologies,  is reported in Item 12 - Security  Ownership of Certain
Beneficial Owners and Management.

-------------------------------------------------------------------------------
John P. Appleton       Dr.  Appleton,  64, has been the  chairman of the board
                       and a  director  of the  Company  since  1993.  He also
                       served as the Company's  chief  executive  officer from
                       September  1993 until May 1997.  Dr.  Appleton has been
                       the  president  and chief  executive  officer of Thermo
                       TerraTech  since  September  1993.  He has  served as a
                       vice  president  of  Thermo   Electron  since  1975  in
                       various  managerial   capacities.   Dr.  Appleton  also
                       serves as a director of The Randers  Killam  Group Inc.
                       and Thermo TerraTech.

-------------------------------------------------------------------------------
Robert W. Dunlap       Dr.  Dunlap,   62,  has  been  the   president,   chief
                       executive  officer and a director of the Company  since
                       April  1998.  Prior to that  time,  he served as a vice
                       president of the Company  from May 1996  through  April
                       1998 and as president  and chief  executive  officer of
                       Remediation  Technologies,  Inc., which was acquired by
                       the Company in December  1995,  from 1985 through April
                       1998.

-------------------------------------------------------------------------------
Elias P. Gyftopoulos   Dr.  Gyftopoulos,  72,  has  been  a  director  of  the
                       Company  since  1994.  Dr.   Gyftopoulos  is  Professor
                       Emeritus of the Massachusetts  Institute of Technology,
                       where  he  was  the  Ford   Professor   of   Mechanical
                       Engineering  and of Nuclear  Engineering  for more than
                       twenty  years  prior to his  retirement  in  1996.  Dr.
                       Gyftopoulos  is also a  director  of  Thermo  Electron,
                       Thermo BioAnalysis  Corporation,  Thermo  Cardiosystems
                       Inc.,     ThermoLase     Corporation,     ThermoSpectra
                       Corporation,   Thermo  Vision   Corporation   and  Trex
                       Medical Corporation.

-------------------------------------------------------------------------------
Brian D. Holt          Mr. Holt,  50, has been a director of the Company since
                       November  1998.  Mr.  Holt has been the  president  and
                       chief executive  officer of Thermo Ecotek  Corporation,
                       a majority-owned  subsidiary of Thermo Electron that is
                       involved in  clean-power  resources,  clean fuels,  and
                       naturally  derived  products for protecting crops since
                       February   1994.  He  has  been  the  chief   operating
                       officer,  environmental  and energy, of Thermo Electron
                       since  September  1998.  From March  1996 to  September
                       1998, he was a vice president of Thermo  Electron.  For
                       more than five  years  prior to his  appointment  as an
                       officer of Thermo Ecotek Corporation,  he was president
                       and  chief  executive  officer  of  Pacific  Generation
                       Company, a financier,  builder,  owner, and operator of
                       independent  power  facilities.  Mr.  Holt  is  also  a
                       director of KFx,  Inc.,  The Randers Killam Group Inc.,
                       Thermo  Ecotek  Corporation,  Thermo Power  Corporation
                       and Thermo TerraTech.

-------------------------------------------------------------------------------
Fred Holubow           Mr.  Holubow,  60, has been a director  of the  Company
                       since  1992.  Mr.  Holubow has been vice  president  of
                       Pegasus Associates,  an investment management firm, for
                       more than five years.

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

<PAGE>

-------------------------------------------------------------------------------
Theo Melas-Kyriazi     Mr.  Melas-Kyriazi,  40,  has  been a  director  of the
                       Company  since  1992 and its  chief  financial  officer
                       since January 1999. Mr.  Melas-Kyriazi  has also been a
                       vice  president,  of Thermo  Electron  since March 1998
                       and its chief  financial  officer  since  January 1999.
                       Prior to his  appointment as a vice president at Thermo
                       Electron,  Mr.  Melas-Kyriazi  served as president  and
                       chief executive  officer of ThermoSpectra  Corporation,
                       a  majority-owned  subsidiary  of Thermo  Electron that
                       develops,  manufactures, and markets precision imaging,
                       inspection,    measurement,   and   temperature-control
                       instrumentation   for   customers   in  an   array   of
                       industries  from its  inception  until March 1998.  Mr.
                       Melas-Kyriazi  was  treasurer of Thermo  Electron  from
                       1988 to August  1994.  He is a director of  ThermoSpectra
                       Corporation.

-------------------------------------------------------------------------------
Frank E. Morris        Dr.  Morris,  75,  has been a director  of the  Company
                       since  1993.  Dr.  Morris  served as  president  of the
                       Federal  Reserve  Bank of  Boston  from  1968  until he
                       retired in 1988.  Dr.  Morris  also served as the Peter
                       Drucker  Professor of Management at Boston College from
                       1989 to 1994.

-------------------------------------------------------------------------------
William A. Rainville   Mr.  Rainville,  57, has been a director of the Company
                       since  June  1993.  He has  been  president  and  chief
                       executive  officer of Thermo Fibertek Inc., a majority-
                       owned  subsidiary of Thermo  Electron that develops and
                       manufactures    equipment    and   products   for   the
                       papermaking and paper-recycling  industries,  since its
                       inception  in 1991,  and has been the  chief  operating
                       officer,  recycling  and recovery,  of Thermo  Electron
                       since   September   1998.   Prior  to  that  time,  Mr.
                       Rainville  was  a  senior  vice   president  of  Thermo
                       Electron from March 1993 to September  1998; and a vice
                       president  of Thermo  Electron  from 1986 to 1993.  Mr.
                       Rainville   is  also  a  director   of  Thermo   Ecotek
                       Corporation,  Thermo  Fibergen  Inc.,  Thermo  Fibertek
                       Inc. and Thermo TerraTech.
-------------------------------------------------------------------------------

Committees of the Board of Directors and Meetings

      The board of directors  has  established  an audit  committee  and a human
resources  committee,  each consisting solely of directors who are not employees
of the Company,  of Thermo  Electron or of any other  companies  affiliated with
Thermo Electron (also referred to as "outside  directors").  The present members
of the audit  committee are Mr. Holubow  (Chairman)  and Dr.  Morris.  The audit
committee reviews the scope of the audit with the Company's  independent  public
accountants  and meets with them for the purpose of reviewing the results of the
audit  subsequent to its completion.  The present members of the human resources
committee are Dr. Morris (Chairman),  Dr. Gyftopoulos and Mr. Holubow. The human
resources  committee  reviews the  performance  of senior members of management,
recommends executive compensation and administers the Company's stock option and
other  stock-based  compensation  plans.  The Company does not have a nominating
committee of the board of directors.  The board of directors met five times, the
audit committee met twice and the human resources committee met six times during
fiscal 1999. Each director attended at least 75% of all meetings of the board of
directors and committees on which he served held during fiscal 1999,  except Mr.
Rainville,  who  attended  40% of such  meetings.  Mr.  Rainville  is  also  the
president  and  chief  executive  officer  of  Thermo  Fibertek  Inc.,   another
majority-owned  subsidiary  of  Thermo  Electron,  and  is  required  to  travel
extensively in his position.  Mr.  Rainville missed three meetings due to travel
on company business.

      The board of  directors  has also  established  a special  committee  (the
"Special  Committee")  consisting solely of one outside director for the purpose
of evaluating the merits and negotiating  the terms of the proposed  transaction
with  Thermo  Electron  pursuant to which the  Company  would be taken  private,
considering  such  alternatives as the Special  Committee deems  appropriate and
making a  recommendation  to the full  board of  directors  on whether or not to
approve any such proposed  transaction.  See Item 13 - Certain Relationships and
Related Transactions. The sole member of the Special Committee is Mr. Holubow.

Compensation of Directors

      Cash Compensation

      Outside directors receive an annual retainer of $2,000 and a fee of $1,000
per day for  attending  regular  meetings of the board of directors and $500 per
day for  participating  in meetings of the board of  directors  held by

<PAGE>
means of  conference  telephone  and for  participating  in certain  meetings of
committees  of the  board  of  directors.  Payment  of  directors'  fees is made
quarterly. Dr. Appleton, Dr. Dunlap, Mr. Melas-Kyriazi and Mr. Rainville are all
employees  of Thermo  Electron or its  subsidiaries  and do not receive any cash
compensation  from the Company for their  services as  directors.  Directors are
also reimbursed for out-of-pocket expenses incurred in attending such meetings.

      In  addition,  the  member of the  Special  Committee  receives a one-time
retainer of $20,000 and a fee of $1,000 per day for attending  regular  meetings
of the Special  Committee and $500 per day for  participating in meetings of the
Special Committee held by means of conference telephone.

      Deferred Compensation Plan for Directors

      Under  the  Company's  deferred   compensation  plan  for  directors  (the
"Deferred  Compensation Plan"), a director has the right to defer receipt of his
cash fees  until he  ceases to serve as a  director,  dies or  retires  from his
principal occupation.  In the event of a change in control or proposed change in
control of the Company that is not approved by the board of directors,  deferred
amounts  become payable  immediately.  Either of the following is deemed to be a
change of control: (a) the acquisition,  without the prior approval of the board
of  directors,  directly  or  indirectly,  by any  person  of 50% or more of the
outstanding  Common Stock or the outstanding common stock of Thermo TerraTech or
25% or more of the  outstanding  common  stock of  Thermo  Electron;  or (b) the
failure of the persons  serving on the board of directors  immediately  prior to
any  contested  election of directors or any exchange  offer or tender offer for
the Common Stock or the common stock of Thermo  TerraTech or Thermo  Electron to
constitute  a majority  of the board of  directors  at any time within two years
following any such event. Amounts deferred pursuant to the Deferred Compensation
Plan are  valued at the end of each  quarter  as units of the  Company's  Common
Stock.  When  payable,  amounts  deferred may be  disbursed  solely in shares of
Common Stock accumulated under the Deferred Compensation Plan. A total of 37,500
shares of Common  Stock  have been  reserved  for  issuance  under the  Deferred
Compensation  Plan. As of April 3, 1999,  deferred units equal to  approximately
14,468 shares of Common Stock were accumulated  under the Deferred  Compensation
Plan.

      Directors Stock Option Plan

      The  Company's  directors  stock  option  plan,  (the  "Directors  Plan"),
provides  for the grant of stock  options to purchase  shares of Common Stock of
the Company to outside directors as additional compensation for their service as
directors.

      The Directors Plan originally provided for the grant of stock options upon
a  director's  initial  appointment.  Outside  directors  appointed  before  the
amendment  of the plan  received an option to purchase  22,500  shares of Common
Stock upon their  appointment  or election.  The plan,  as amended in 1995,  now
provides  that the size of the award to new directors is reduced by 4,500 shares
each  year  until  1999,  when  the  initial  grant  for new  directors  will be
eliminated entirely.  Accordingly,  directors first appointed or elected in 1997
will receive  options to purchase  9,000 shares,  directors  first  appointed or
elected in 1998 will  receive  options to purchase  4,500  shares and  directors
first  appointed or elected in 1999 and  thereafter  will not receive an initial
option grant.  Options granted upon a director's  election or appointment may be
exercised at any time from and after the six-month anniversary of the grant date
of the option and prior to the expiration of the option on the fifth anniversary
of the grant date. Such options are subject to restrictions on resale and to the
repurchase by the Company of the shares  subject to option at the exercise price
if the director ceases to serve as a director of the Company, Thermo Electron or
any  subsidiary  of Thermo  Electron,  for any  reason  other  than  death.  The
restriction  and repurchase  rights lapse in equal  installments of 4,500 shares
starting with the first anniversary of the grant date, provided the director has
continuously  served as a director of the Company or any other  Thermo  Electron
company prior to that date.

      Commencing with the 1998 Annual Meeting of Stockholders, outside directors
receive an annual  grant of options to  purchase  1,000  shares of Common  Stock
pursuant  to the  Directors  Plan at the close of  business  on the date of each
Annual Meeting of the  Stockholders of the Company.  Options  evidencing  annual
grants may be exercised at any time from and after the six month  anniversary of
the grant date of the option  and prior to the  expiration  of the option on the
third  anniversary  of the grant  date.  Shares  acquired  upon  exercise of the
options

<PAGE>

are subject to repurchase by the Company at the exercise  price if the recipient
ceases  to serve as a  director  of the  Company  or any other  Thermo  Electron
company prior to the first anniversary of the grant date.

      The exercise  price for options  granted under the  Directors  Plan is the
average of the closing  prices of the Common  Stock as reported on the  American
Stock  Exchange  (or other  principal  market on which the Common  Stock is then
traded) for the five trading days  immediately  preceding and including the date
of grant,  or, if the  shares are not then  traded,  at the last price per share
paid by third parties in an arms-length  transaction  prior to the option grant.
As of May 31, 1999,  options to purchase  78,000 shares of Common Stock had been
granted and were outstanding  under the Directors Plan, no options had lapsed or
been  exercised,  and options to  purchase  72,000  shares of Common  Stock were
reserved and available for grant under the Directors Plan.

Stock Ownership Policies for Directors

      The human resources  committee of the board of directors (the "Committee")
has  established a stock holding policy for directors.  The stock holding policy
requires  each  director  to hold a minimum  of 1,000  shares  of Common  Stock.
Directors  are requested to achieve this  ownership  within a three year period.
The chief  executive  officers  of the  Company  is  required  to comply  with a
separate stock holding policy  established by the Committee,  which is described
in Item 11 - Executive Compensation - Stock Ownership Policies.

      In addition,  the  Committee has adopted a policy  requiring  directors to
hold shares of the Company's  Common Stock equal to one-half of their net option
exercises over a period of five years.  The net option exercise is determined by
calculating the number of shares acquired upon exercise of a stock option, after
deducting  the  number of shares  that could have been  traded to  exercise  the
option and the number of shares that could have been  surrendered to satisfy tax
withholding obligations  attributable to the exercise of the option. This policy
is also applicable to executive officers and is described in Item 11 - Executive
Compensation - Stock Ownership Policies.

Executive Officers

      Reference  is made to Item 1(e) of this Report for  information  regarding
the Executive Officers of the Registrant.

Item 11 - EXECUTIVE COMPENSATION

Summary Compensation Table

NOTE:  All share data for the common  stock of The Randers  Killam Group Inc., a
majority-owned  subsidiary of Thermo  TerraTech,  has been adjusted to reflect a
one-for-five reverse stock split effected in February 1999.

      The following table summarizes  compensation  during the last three fiscal
years for  services to the Company in all  capacities  awarded to,  earned by or
paid to the  Company's  chief  executive  officer and its four other most highly
compensated  executive officers.  These executive officers are together referred
to as the "named executive  officers." No other executive officer of the Company
met the definition of "highly  compensated" within the meaning of the Securities
and Exchange Commission's executive compensation disclosure rules.

      The  Company  is  required  to  appoint  certain  executive  officers  and
full-time  employees of Thermo Electron as executive officers of the Company, in
accordance with the Thermo Electron  Corporate  Charter.  The  compensation  for
these executive officers is determined and paid entirely by Thermo Electron. The
time and  effort  devoted  by these  individuals  to the  Company's  affairs  is
provided to the  Company  under the  Corporate  Services  Agreement  between the
Company and Thermo  Electron.  See Item 13 - Certain  Relationships  and Related
Transactions.  Accordingly,  the  compensation  for  these  individuals  is  not
reported in the following table.

<PAGE>

                           Summary Compensation Table
--------------------------------------------------------------------------------


                                   Annual                      Long Term
                                Compensation                 Compensation
<TABLE>
<CAPTION>
<S>                  <C>      <C>       <C>              <C>               <C>            <C>
Name and            Fiscal    Salary    Bonus          Restricted     Securities    All Other
Principal Position  Year                                 Stock         Underlying   Compensation (3)
                                                         Award (1)     Options (2)

Robert W. Dunlap (4)  1999      $190,000 $65,000         $124,875       8,000 (THN)      $9,600
   President & Chief                                                    2,900 (TMO)
   Executive Officer                                                    8,000 (TTT)

                      1998      $165,000     $0 (5)         --         24,000 (RGI)      $9,500
                      1997      $165,000     $35,000        --         10,000 (TMO)      $5,088
                                                                       10,000 (TTT)
----------------------------------------------------------------------------------------------------------
Jeffrey L. Powell (6) 1999      $145,000     $44,000    $49,500         1,000 (TMO)      $8,237(7)
   Senior Vice                                                          5,000 (TTT)
   President
   and former Chief   1998      $145,000     $0 (5)         --            700 (TMO)     $60,304(7)
   Executive                                                            2,000 (MKA)
   Officer
                                                                        2,000 (ONX)
                                                                       24,000 (RGI)
                                                                        2,000 (TDX)
                                                                        1,000 (TISI)
                                                                        2,000 (TRIL)
                                                                        1,500 (VIZ)
                                                                        2,000 (TRCC)
                      1997      $122,000     $40,000       --             600 (TMO)      $7,023
                                                                        2,000 (TFG)
                                                                        6,000 (TOC)
-----------------------------------------------------------------------------------------------------
Nels R. Johnson       1999      $105,000     $29,000        --          3,000 (TMO)      $5,665
  Vice President                                                        5,000 (TTT)
                      1998      $101,000     $26,000        --          7,000 (THN)      $9,344
                                                                          800 (TMO)
                                                                        2,400 (RGI)
                      1997       $97,300     $28,000        --          8,000 (THN)      $5,275
                                                                          900 (TMO)
-------------------------------------------------------------------------------------------------------
Norman A. Pedersen(8) 1999      $102,000     $28,000        --           1,000 (THN)     $6,821(9)
     Former Vice                                                              900 (TMO)
     President,
     Business                                                               2,500 (TTT)
     Development
                      1998       $98,000     $19,000        --             20,000 (THN)   $9,991 (9)
                                                                              800 (TMO)
                                                                            6,000 (RGI)
--------------------------------------------------------------------------------------------------------
James Lousararian(10) 1999       $71,875     $17,500        --                 -- --     $51,561 (11)
     Former Vice      1998      $110,000          $0 (5)    --             20,000 (THN)   $5,576 (11)
     President                                                              9,600 (RGI)
                      1997      $106,000     $25,000        --             10,000 (THN) $  6,567
--------------------------------------------------------------------------------------------------------
</TABLE>

(1)   In fiscal 1999,  Dr. Dunlap and Mr.  Powell were awarded  22,200 and 8,800
      shares, respectively, of restricted stock of Thermo TerraTech with a value
      of $124,875 and $49,500,  respectively,  on the grant date. The restricted
      stock  awards  vest in their  entirety on January 2, 2002.  Dividends  are
      payable on restricted stock. At the end of fiscal 1999, Dr. Dunlap and Mr.
      Powell held 22,200 and 8,800 shares, respectively,  of restricted stock of
      Thermo  TerraTech  with  an  aggregate  value  of  $111,000  and  $44,000,
      respectively.

<PAGE>

(2)   Options to purchase  Common Stock granted by the Company are designated in
      the table as "THN". In addition,  the named  executive  officers have also
      been granted options to purchase the common stock of the following  Thermo
      Electron  companies  during the last three  fiscal years as part of Thermo
      Electron's stock option program:  Thermo Electron (designated in the table
      as TMO),  Thermo  TerraTech  (designated in the table as TTT), The Randers
      Killam  Group  Inc.  (designated  in the  table as RGI),  Metrika  Systems
      Corporation   (designated  in  the  table  as  MKA),   ONIX  Systems  Inc.
      (designated in the table as ONX), Thermedics Detection Inc. (designated in
      the table as TDX), Thermo Fibergen Inc.  (designated in the table as TFG),
      Thermo  Information  Solutions  Inc.  (designated  in the  Table as TISI),
      Thermo Optek Corporation  (designated in the table as TOC), Thermo Trilogy
      Corporation  (designated in the table as TRIL),  Thermo Vision Corporation
      (designated  in the  table  as VIZ) and  Trex  Communications  Corporation
      (designated in the table as TRCC).

(3)   Represents the amount of matching  contributions  made by the individual's
      employer on behalf of named executive officers participating in the Thermo
      Electron 401(k) plan or, in the case of Dr. Dunlap,  the RETEC  Employees'
      Savings and Profit Sharing Plan.

(4)   Dr. Dunlap was  appointed  president  and chief  executive  officer of the
      Company on April 30, 1998. He served as vice president of the Company from
      May 8, 1996 through April 30, 1998.

(5)   Dr. Dunlap,  Mr. Powell and Mr.  Lousararian  each elected to forego their
      bonuses  for fiscal  1998 in light of the  Company's  operating  and stock
      price performance in fiscal 1998.

(6)   Mr. Powell served as president and chief executive  officer of the Company
      from May 14, 1997 through  April 30,  1998,  when he was named senior vice
      president  of the  Company.  He served as  president  and chief  operating
      officer of the Company prior to his promotion to chief executive officer.

(7)   In addition to the matching contribution referred to in footnote (3), such
      amount  includes the  reimbursement  by the Company of $50,000 in expenses
      associated  with Mr.  Powell's  relocation  to Concord,  Massachusetts  in
      fiscal  1998  and  $3,218  and  $932,   which  represents  the  amount  of
      compensation  in  fiscal  1999 and  1998,  respectively,  attributable  to
      interest-free  loans provided to Mr. Powell  pursuant to the stock holding
      assistance plan of the Company.  See Item 13 - Certain  Relationships  and
      Related Transactions Stock Holding Assistance Plans.

(8)   Mr. Pedersen was appointed an executive  officer of the Company on May 14,
      1997, and resigned on May 17, 1999.

(9)   In addition to the matching contribution referred to in footnote (3), such
      amount  includes  $2,460  and  $645,   which   represents  the  amount  of
      compensation  in  fiscal  1999 and  1998,  respectively,  attributable  to
      interest-free loans provided to Mr. Pedersen pursuant to the stock holding
      assistance plan of the Company.  See Item 13 - Certain  Relationships  and
      Related Transactions - Stock Holding Assistance Plans.

(10)  Mr.  Lousararian  resigned as a vice  president  of the Company  effective
      November 18, 1998.

(11)  In addition to the matching contribution referred to in footnote (3), such
      amount  includes  $2,554  and  $671,   which   represents  the  amount  of
      compensation  in  fiscal  1999 and  1998,  respectively,  attributable  to
      interest  free loans  provided  to Mr.  Lousararian  pursuant to the stock
      holding   assistance   plan  of  the  Company.   See  Item  13  -  Certain
      Relationships and Related  Transactions - Stock Holding  Assistance Plans.
      Such amount also includes approximately $43,125 paid to Mr. Lousararian in
      connection with his resignation as a Vice President of the Company,  which
      represents the remainder of Mr.  Lousararian's salary from his resignation
      through  the end of  fiscal  1999  ("Severance  Payment").  The  Severance
      Payment  was  added  to Mr.  Lousararian's  salary  and  annual  bonus  in
      determining whether his annual compensation exceeded $100,000.

<PAGE>


Stock Options Granted During Fiscal 1999

       The following table sets forth information  concerning  individual grants
of stock  options  made during  fiscal  1999 to the  Company's  named  executive
officers.  It has not  been the  Company's  policy  in the  past to grant  stock
appreciation rights, and no such rights were granted during fiscal 1999.

                          Option Grants in Fiscal 1999
--------------------------------------------------------------------------------
                                                                   Potential
                                                                    Realizable
                    Number of     Percent of                    Value at Assumed
                   Securities       Total                        Annual Rates of
                   Underlying      Options    Exercise             Stock Price
                     Options      Granted to  Price             Appreciation for
                  Granted and   Employees in    Per  Expiration  Option Term (2)
<TABLE>
<CAPTION>
<S>                   <C>           <C>         <C>    <C>       <C>       <C>
      Name         Company (1)   Fiscal Year   Share   Date        5%       10%
--------------     -----------   ------------  ------ --------- ----------------
Robert W. Dunlap   8,000 (THN)    1.08%        $2.45   2/23/04     $5,440 $12,000
                   2,900 (TMO)    0.07%   (3) $16.20   9/23/03    $12,992 $28,681
                   8,000 (TTT)    0.67%   (3)  $5.03   2/24/04    $11,120 $24,560
----------------------------------------------------------------------------------
Jeffrey L.         1,000 (TMO)    0.02%   (3) $34.50   6/2/03      $9,530 $21,060
Powell
                   5,000 (TTT)    0.42%   (3)  $5.03   2/24/04     $6,950 $15,350
----------------------------------------------------------------------------------
Nels R. Johnson      800 (TMO)    0.02%   (3) $34.50   6/2/03      $7,624 $16,848
                   2,200 (TMO)    0.05%   (3) $16.20   9/23/03     $9,856 $21,758
                   5,000 (TTT)    0.42%   (3)  $5.03   2/24/04     $6,950 $15,350
----------------------------------------------------------------------------------
Norman A.          1,000 (THN)    0.13%        $2.45   2/23/04       $680  $1,500
Pedersen
                     900 (TMO)    0.02%   (3) $34.50   6/2/03      $8,577 $18,954
                   2,500 (TTT)    0.21%   (3)  $5.03   2/24/04     $3,475  $7,675
----------------------------------------------------------------------------------
James                 --             --           --       --          --      --
Lousararian
----------------------------------------------------------------------------------
</TABLE>

(1)   All  of the  options  granted  during  the  fiscal  year  are  immediately
      exercisable at the date of grant.  In all cases,  the shares acquired upon
      exercise are subject to repurchase by the granting company at the exercise
      price if the  optionee  ceases to be employed by such company or any other
      Thermo Electron company.  The granting company may exercise its repurchase
      rights  within  six  months  after  the   termination  of  the  optionee's
      employment.  The repurchase  rights generally lapse ratably over a one- to
      five-year  period,  depending on the option term, which may vary from five
      to ten years,  provided  the  optionee  continues  to be  employed  by the
      granting  company  or any other  Thermo  Electron  company.  The  granting
      corporation  may permit the holders of options to exercise  options and to
      satisfy tax withholding  obligations by surrendering  shares equal in fair
      market value to the exercise price or withholding  obligation.  Please see
      footnote  (2) under  Summary  Compensation  Table  above  for the  company
      abbreviations used in this table.

(2)   The amounts shown on this table represent hypothetical gains that could be
      achieved for the respective  options if exercised at the end of the option
      term.  These gains are based on assumed rates of stock  appreciation of 5%
      and 10%  compounded  annually  from the date the  respective  options were
      granted to their  expiration  date.  The gains shown are net of the option
      exercise price, but do not include  deductions for taxes or other expenses
      associated  with the  exercise.  Actual  gains,  if any,  on stock  option
      exercises will depend on the future performance of the common stock of the
      applicable  corporation,  the optionee's  continued employment through the
      option period and the date on which the options are exercised.

(3)   These options were granted  under stock option plans  maintained by Thermo
      Electron  or its  subsidiaries  other  than the  Company as part of Thermo
      Electron's   compensation  program  and  accordingly  are  reported  as  a
      percentage  of total options  granted to employees of Thermo  Electron and
      its subsidiaries.

<PAGE>


Stock Options Exercised During Fiscal 1999 and Fiscal Year-End Option Values

       The following  table reports certain  information  regarding stock option
exercises  during fiscal 1999 and  outstanding  stock options held at the end of
fiscal 1999 by the Company's named  executive  officers.  No stock  appreciation
rights were exercised or were outstanding during fiscal 1999.

Aggregated  Option  Exercises  In Fiscal  1999 And Fiscal 1999  Year-End  Option
Values
-------------------------------------------------------------------------------


<TABLE>
<CAPTION>
<S>                   <C>           <C>       <C>           <C>             <C>
                                                         Number of      Value of
                                                        Unexercised   Unexercised
                                 Shares                  Options at   In-the-Money
                                Acquired      Value        Fiscal      Options at
                                   on       Realized      Year-End       Fiscal
       Name        Company (1)  Exercise       (2)     (Exercisable/   Year-End
       ----        -----------  --------       ---   Unexercisable)(1) (Exercisable/
                                                       --------------- Unexercisable)
                                                                       -------------
Robert W. Dunlap       THN         --          --        8,000  /0      $400  /--
                       TMO         --          --       12,900  /0        $0  /--
                       RGI         --          --       24,000  /0        $0  /--
                       TTT         --          --       18,000  /0        $0  /--
-----------------------------------------------------------------------------------
Jeffrey L. Powell      THN         --          --      111,000  /0        $0  /--
                       TMO         300       $3,101     35,112  /0    $4,680  /--
                                                                             (3)
                       MKA         --          --        2,000  /0        $0  /--
                       ONX         --          --        2,000  /0        $0  /--
                       RGI         --          --       24,000  /0        $0  /--
                       TDX         --          --        2,000  /0        $0  /--
                       TBA         --          --        2,000  /0    $17,500 /--
                       TFG         --          --        2,000  /0        $0  /--
                       TFT        4,500      $34,875         0  /0        $0  /--
                      TISI         --          --            0 /1,000     -- /$0
                                                                             (4)
                       TLZ         --          --        5,000  /0        $0  /--
                       TLT         --          --            0 /2,000     -- /$0
                                                                             (4)
                       TOC         --          --        6,000  /0        $0  /--
                       TMQ         --          --        6,000  /0        $0  /--
                       TSR         --          --        2,000  /0        $0  /--
                       TTT         --          --       28,000  /0        $0  /--
                      TRIL         --          --            0 /2,000     -- /$0
                                                                             (4)
                       VIZ         --          --        1,500  /0        $0  /--
                      TRCC         --          --            0 /2,000     -- /$0
                                                                             (4)
                       TXM         --          --        4,000  /0        $0  /--
-----------------------------------------------------------------------------------
Nels R. Johnson        THN         --          --       37,250  /0        $0  /--
                       TMO         --          --       17,295  /0    $7,489  /--
                       RGI         --          --        2,400  /0        $0  /--
                       THI         --          --       11,718  /0    $11,402 /--
                       THS         --          --          600  /0-       $0  /--
                       TTT         --          --       17,000  /0        $0  /--
-----------------------------------------------------------------------------------
Norman A.              THN         --          --       54,000  /0       $50  /--
Pedersen (5)
                       TMO         --          --        6,700  /0        $0  /--
                       RGI         --          --        6,000  /0        $0  /--
                       THP       10,000      $11,075         0  /0        $0  /--
                       TTT         --          --       18,500  /0        $0  /--
-----------------------------------------------------------------------------------
James Lousararian      TMO         --          --        2,025  /0    $1,945  /--
                       TFT       4,500       $20,250         0  /0        $0  /--
-----------------------------------------------------------------------------------
</TABLE>
<PAGE>

(1)   All of the options reported  outstanding at the end of the fiscal year are
      immediately exercisable as of fiscal year-end,  except options to purchase
      the  common  stock  of  Thermo  Information   Solutions  Inc.,  ThermoLyte
      Corporation,   Thermo   Trilogy   Corporation   and  Trex   Communications
      Corporation  which are not  exercisable  until the  earlier of (i) 90 days
      after the effective  date of the  registration  of that  company's  common
      stock  under  Section 12 of the  Exchange  Act or (ii) nine years from the
      grant date. In all cases, the shares acquired upon exercise of the options
      reported in the table are subject to repurchase by the granting company at
      the exercise  price if the optionee  ceases to be employed by such company
      or any other Thermo Electron  company.  The granting  company may exercise
      its  repurchase  rights  within six months  after the  termination  of the
      optionee's  employment.  For  publicly-traded  companies,  the  repurchase
      rights generally lapse ratably over a one- to ten-year  period,  depending
      on the option  term,  which may vary from five to twelve  years,  provided
      that the optionee  continues to be employed by the granting company or any
      other Thermo Electron company. For companies whose shares are not publicly
      traded,  the  repurchase  rights  lapse in  their  entirety  on the  ninth
      anniversary of the grant date. The granting  company may permit the holder
      of options to exercise options and to satisfy tax withholding  obligations
      by surrendering shares equal in fair market value to the exercise price or
      withholding  obligation.  Certain  options have  three-year  terms and the
      repurchase rights lapse in their entirety on the second anniversary of the
      grant date. Please see footnote (2) under Summary Compensation Table above
      for the company  abbreviations  used in this table.  In addition,  company
      abbreviations  used in this  table and not  defined  in  footnote  (2) are
      defined as follows:  Thermo  BioAnalysis  Corporation  (designated  in the
      table as TBA),  Thermo  Fibertek  Inc.  (designated  in the table as TFT),
      ThermoLase  Corporation  (designated  in the  table  as  TLZ),  ThermoLyte
      Corporation  (designated  in the  table as TLT),  ThermoQuest  Corporation
      (designated in the table as TMQ),  Thermo Sentron Inc.  (designated in the
      table as TSR) and Trex  Medical  Corporation  (designated  in the table as
      TXM)

(2)   Amounts  shown in this column do not  necessarily  represent  actual value
      realized from the sale of the shares  acquired upon exercise of the option
      because in many cases the shares are not sold on exercise  but continue to
      be held by the executive officer  exercising the option. The amounts shown
      represent the difference  between the option exercise price and the market
      price on the date of  exercise,  which is the amount  that would have been
      realized if the shares had been sold immediately upon exercise.

(3)   Options to purchase  22,500 shares of the common stock of Thermo  Electron
      granted to Mr.  Powell  are  subject  to the same  terms as  described  in
      footnote  (1),   except  that  the  repurchase   rights  of  the  granting
      corporation  generally  do not lapse  until the tenth  anniversary  of the
      grant  date.  In  the  event  of  the  employee's   death  or  involuntary
      termination  prior  to the  tenth  anniversary  of  the  grant  date,  the
      repurchase  rights of the  granting  corporation  shall be deemed to lapse
      ratably over a five-year period  commencing with the fifth  anniversary of
      the grant date.

(4)   No public  market  existed for the shares  underlying  these options as of
      April 3, 1999. Accordingly,  no value in excess of exercise price has been
      attributed to these options.

(5)   Mr.  Pedersen was employed by Thermo Electron prior to joining the Company
      and has been  granted  options to purchase  shares of the common  stock of
      Thermo  Electron  and certain of its  subsidiaries  other than the Company
      from time to time by Thermo  Electron  or such other  subsidiaries.  These
      options are not  reported  here as they were granted as  compensation  for
      service  to Thermo  Electron  companies  in  capacities  other than in his
      capacity as a vice president of the Company.

Executive Retention Agreements

      Thermo  Electron  has  entered  into  agreements  with  certain  executive
officers and key employees of Thermo Electron and its subsidiaries  that provide
severance  benefits if there is a change in control of Thermo Electron and their
employment is terminated by Thermo Electron "without cause" or by the individual
for  "good  reason",  as those  terms  are  defined  therein,  within  18 months
thereafter.  For purposes of these  agreements,  a change in control exists upon
(i) the acquisition by any person of 40% or more of the outstanding common stock
or voting securities of Thermo Electron; (ii) the failure of the Thermo Electron
board of  directors  to  include a majority  of  directors  who are  "continuing
directors",  which  term is defined to  include  directors  who were  members of
Thermo  Electron's  board on the date of the agreement or who  subsequent to the
date of the

<PAGE>

agreement  were  nominated  or  elected  by a  majority  of  directors  who were
"continuing  directors" at the time of such  nomination  or election;  (iii) the
consummation of a merger,  consolidation,  reorganization,  recapitalization  or
statutory  share  exchange  involving  Thermo  Electron  or the  sale  or  other
disposition of all or substantially  all of the assets of Thermo Electron unless
immediately  after such  transaction  (a) all holders of Thermo  Electron common
stock immediately prior to such transaction own more than 60% of the outstanding
voting securities of the resulting or acquiring corporation in substantially the
same  proportions as their ownership  immediately  prior to such transaction and
(b) no person after the transaction  owns 40% or more of the outstanding  voting
securities  of the  resulting  or  acquiring  corporation;  or (iv)  approval by
stockholders of a complete liquidation or dissolution of Thermo Electron.

      In 1998, Thermo Electron  authorized an executive retention agreement with
Dr. Dunlap. This agreement provides that in the event Dr. Dunlap's employment is
terminated  under the  circumstances  described above, he would be entitled to a
lump sum  payment  equal to the sum of (a) one times  his  highest  annual  base
salary in any 12 month period during the prior  five-year  period,  plus (b) one
times his highest annual bonus in any 12 month period during the prior five-year
period.  In  addition,  he would be provided  benefits  for a period of one year
after such termination substantially equivalent to the benefits package he would
have been otherwise entitled to receive if he was not terminated.  Further,  all
repurchase  rights of Thermo Electron and its subsidiaries  shall lapse in their
entirety  with respect to all options  that he holds in Thermo  Electron and its
subsidiaries,  including  the Company,  as of the date of the change in control.
Finally,  Dr. Dunlap would be entitled to a cash payment equal to $15,000, to be
used toward outplacement services.

      Assuming that the severance  benefits  would have been payable as of April
5, 1999,  the lump sum  salary and bonus  payment  under such  agreement  to Dr.
Dunlap would have been approximately  $289,000. In the event that payments under
these  agreements are deemed to be so called "excess  parachute  payments" under
the applicable  provisions of the Internal Revenue Code of 1986, as amended (the
"Internal  Revenue  Code"),  Dr.  Dunlap would be entitled to receive a gross-up
payment  equal to the amount of any excise  tax  payable by him with  respect to
such  payment,  plus the  amount of all other  additional  taxes  imposed on him
attributable to the receipt of such gross-up payment.

Stock Ownership Policies

      The human resources  committee of the board of directors (the "Committee")
established  a stock holding  policy for executive  officers of the Company that
required executive officers to own a multiple of their compensation in shares of
Common Stock.  For the chief  executive  officer,  the multiple is one times his
base salary and reference  incentive  compensation  for the fiscal year. For all
other  officers,  the multiple  was one times the  officer's  base  salary.  The
Committee  deemed it appropriate to permit  officers to achieve these  ownership
levels over a  three-year  period.  The policy has been amended to apply only to
the chief executive officer.

      In order to assist  executive  officers in complying with the policy,  the
Committee also adopted a stock holding  assistance  plan under which the Company
is authorized to make  interest-free  loans to executive officers to enable them
to  purchase  shares  of  Common  Stock in the open  market.  This plan was also
amended to apply only to the chief executive officer.  The loans are required to
be repaid upon the earlier of demand or the tenth anniversary of the date of the
loan, unless otherwise determined by the Committee.

      The Committee also has a policy  requiring its executive  officers to hold
shares of Common  Stock equal to one-half of their net option  exercises  over a
period of five years.  The net option  exercise is determined by calculating the
number of shares  acquired upon exercise of a stock option,  after deducting the
number of shares  that could  have been  traded to  exercise  the option and the
number of shares that could have been  surrendered  to satisfy  tax  withholding
obligations attributable to the exercise of the option.

Item 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The following  table sets forth the beneficial  ownership of Common Stock,
as well as the common stock of Thermo  TerraTech,  the Company's parent company,
and of Thermo Electron,  Thermo TerraTech's parent company,  as of May 31, 1999,
with respect to (i) each  director,  (ii) each  executive  officer  named in the
summary  compensation  table set forth in Item 11 - Executive  Compensation (the
"named  executive  officers")  and (iii) all

<PAGE>

directors and current executive officers as a group. In addition,  the following
table sets forth the beneficial  ownership of Common Stock,  as of May 31, 1999,
with  respect to each  person who was known by the  Company to own  beneficially
more than 5% of the outstanding shares of Common Stock.

      While  certain  directors  or  executive  officers of the Company are also
directors or executive officers of Thermo Electron or Thermo TerraTech, all such
persons  disclaim  beneficial  ownership  of the shares of Common Stock owned by
Thermo TerraTech or Thermo Electron.

<TABLE>
<CAPTION>
<S>                            <C>             <C>                  <C>
                            ThermoRetec    Thermo TerraTech Thermo Electron
        Name (1)          Corporation (2)      Inc. (3)     Corporation (4)
        --------          ---------------      --------     ---------------
Thermo Electron            10,258,990              N/A              N/A
Corporation (5)
William Harris              1,081,882              N/A              N/A
Investors, Inc. (6)
John P. Appleton               73,000          305,939          154,363
Robert W. Dunlap              103,842           40,200           13,755
Elias P. Gyftopoulos           31,133            3,040           70,698
Brian D. Holt                       0          250,000          286,943
Fred Holubow                   59,892           16,500            6,000
Nels R. Johnson                37,688           17,958           20,352
James Lousararian              10,041              226            3,362
Theo Melas-Kyriazi             22,500           53,618          312,043
Frank E. Morris                33,325            1,500           25,214
Norman A. Pedersen             63,144           18,500           13,907
Jeffrey L. Powell             121,000           56,635           36,831
William A. Rainville           24,000           60,000          352,959
All directors and
current executive
     officers as a            602,564          835,313        1,497,332
     group (11 persons)
</TABLE>

(1)   Except as reflected in the  footnotes to this table,  shares  beneficially
      owned  consist of shares owned by the  indicated  person or by that person
      for the benefit of minor  children and all share  ownership  includes sole
      voting and investment power.

(2)   Shares of Common Stock beneficially owned by Dr. Appleton, Dr. Dunlap, Dr.
      Gyftopoulos, Mr. Holubow, Mr. Johnson, Mr. Melas-Kyriazi,  Dr. Morris, Mr.
      Pedersen,  Mr.  Powell,  Mr.  Rainville  and  all  directors  and  current
      executive  officers as a group  include  63,000,  8,000,  29,600,  26,450,
      37,250,  22,500,  26,450,  54,000,  111,000,  22,500 and  415,750  shares,
      respectively, that such person or group has the right to acquire within 60
      days of May 31,  1999,  through  the  exercise  of stock  options.  Shares
      beneficially  owned by Dr.  Gyftopoulos,  Mr. Holubow,  Dr. Morris and all
      directors and current  executive  officers as a group include 533,  7,060,
      6,875 and 14,468 shares,  respectively,  that had been  allocated  through
      April 3, 1999, to their respective  accounts maintained under the Deferred
      Compensation Plan. Shares of Common Stock beneficially owned by Dr. Dunlap
      and all  directors  and  current  executive  officers  as a group  include
      warrants  to  purchase   23,962  shares  issued  in  connection  with  the
      acquisition of Remediation  Technologies Inc. by the Company.  No director
      or named executive officer  beneficially  owned more than 1% of the Common
      Stock  outstanding as of May 31, 1999; all directors and current executive
      officers  as  a  group  beneficially  owned  4.43%  of  the  Common  Stock
      outstanding as of such date.

(3)   Shares of the common stock of Thermo TerraTech  beneficially  owned by Dr.
      Appleton,  Dr.  Dunlap,  Dr.  Gyftopoulos,  Mr.  Holt,  Mr.  Johnson,  Mr.
      Melas-Kyriazi, Dr. Morris, Mr. Pedersen, Mr. Powell, Mr. Rainville and all
      directors  and  current  executive  officers as a group  include  275,000,
      18,000, 1,500, 250,000,  17,000, 53,000, 1,500, 18,500, 28,000, 60,000 and
      727,500 shares,  respectively,  that such person or group has the right to
      acquire  within 60 days of May 31,  1999,  through  the  exercise of stock
      options.  Shares  beneficially  owned by Mr. Holubow and all directors and
      current executive  officers as a group each include 16,500 shares that Mr.
      Holubow has the right to acquire  within 60 days of May 31, 1999,  through
      the  exercise  of stock  purchase  warrants  acquired in  connection  with
      private  placements  of

<PAGE>

      the securities of Thermo  TerraTech on terms identical to terms granted to
      unaffiliated  investors.  Shares  beneficially owned by Dr. Appleton,  Mr.
      Melas-Kyriazi, and all directors and current executive officers as a group
      include 305, 299 and 907 shares,  respectively,  allocated through May 31,
      1999,  to  accounts  maintained  pursuant  to the  ESOP.  Except  for  Dr.
      Appleton, who beneficially owned 1.58% and Mr. Holt who beneficially owned
      1.3% of the common stock  outstanding  as of May 31, 1999,  no director or
      named  executive  officer  beneficially  owned  more than 1% of the common
      stock of Thermo  TerraTech  outstanding as of such date; all directors and
      current  executive  officers  as a group  beneficially  owned 4.34% of the
      common stock of Thermo TerraTech outstanding as of May 31, 1999.

(4)   Shares of the common stock of Thermo  Electron  beneficially  owned by Dr.
      Appleton,  Dr.  Dunlap,  Dr.  Gyftopoulos,  Mr.  Holt,  Mr.  Johnson,  Mr.
      Melas-Kyriazi, Dr. Morris, Mr. Pedersen, Mr. Powell, Mr. Rainville and all
      directors  and  current  executive  officers  as a group  include  116,902
      12,900, 7,625, 283,950,  14,765,  275,811,  7,625, 6,700, 30,050, 286,837,
      and  1,211,152  shares,  respectively,  that such  person or group has the
      right to acquire  within 60 days of May 31, 1999,  through the exercise of
      stock  options.   Shares   beneficially   owned  by  Dr.   Appleton,   Mr.
      Melas-Kyriazi and all directors and current executive  officers as a group
      include 1,615,  1,071, and 4,112 shares,  respectively,  allocated through
      May 31, 1999, to their respective  accounts  maintained pursuant to Thermo
      Electron's employee stock ownership plan ("ESOP"),  of which the trustees,
      who have investment power over its assets are officers of Thermo Electron.
      Shares beneficially owned by Dr. Gyftopoulos, Dr. Morris and all directors
      and current  executive  officers as a group include 494, 11,924 and 12,418
      shares,  respectively,  that had been allocated  through April 3, 1999, to
      their  respective   accounts  maintained  pursuant  to  Thermo  Electron's
      deferred compensation plan for directors. Shares beneficially owned by Dr.
      Morris  include  3,415  shares  owned by his spouse.  No director or named
      executive officer  beneficially  owned more than 1% of the common stock of
      Thermo Electron  outstanding as of May 31, 1999; all directors and current
      executive officers as a group did not beneficially own more than 1% of the
      common stock of Thermo Electron outstanding as of such date.

(5)   Shares  beneficially  owned by Thermo Electron  includes 239,955 shares of
      Common  Stock  issuable  upon  the  conversion  of  the  Company's  4 7/8%
      convertible  debentures  due  2000  owned  by  Thermo  Electron  and  also
      includes.  Also  includes  269,492  shares of Common Stock  issuable  upon
      conversion of the Company's 3 7/8%  convertible  debentures due 2000 owned
      by  Thermo  TerraTech.  As of May 31,  1999,  Thermo  Electron,  primarily
      through its  majority-owned  subsidiary,  Thermo  TerraTech,  beneficially
      owned  approximately  74.22%  of  the  outstanding  Common  Stock.  Thermo
      Electron's address is 81 Wyman Street, Waltham,  Massachusetts 02454-9046.
      As of May 31,  1999,  Thermo  Electron  had the  power to elect all of the
      members of the Company's board of directors.

(6)   Information  regarding  the number of shares of Common Stock  beneficially
      owned by William Harris Investors,  Inc. ("Harris") is based upon the most
      recent  Schedule 13G of Harris received by the Company which reported such
      ownership as of December 31, 1998.  These shares of Common Stock have been
      acquired by Harris on behalf of  discretionary  clients of Harris.  Harris
      has shared voting power and sole  dispositive  power with respect to these
      shares of Common Stock.  Harris is an investment  adviser registered under
      Section 203 of the Investment Adviser Act of 1940, as amended. Its address
      is 2 North LaSalle  Street,  Suite 400,  Chicago,  Illinois  60602.  As of
      December 31, 1998, Harris  beneficially  owned  approximately  8.2% of the
      outstanding Common Stock.

Section 16(a) Beneficial Ownership Reporting Compliance

      Section 16(a) of the  Securities  Exchange Act of 1934,  as amended,  (the
"Exchange  Act") requires the Company's  directors and executive  officers,  and
beneficial  owners of more than 10% of the Common Stock, such as Thermo Electron
and  Thermo  TerraTech,  to file with the  Securities  and  Exchange  Commission
initial reports of ownership and periodic reports of changes in ownership of the
Company's  securities.  Based upon a review of such  filings,  all Section 16(a)
filing requirements  applicable to such persons were complied with during fiscal
1999,  except in the following  instances.  Mr. Holt, a director of the Company,
filed his Form 3 late.  Thermo  Electron  filed two Form 4s late,  reporting the
acquisition  of shares of Common Stock  associated  with the Company's  dividend
reinvestment plan and three transactions  associated with the grant and lapse of
options to purchase  Common Stock  granted to  employees  under its stock option
program.

<PAGE>


Item 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      Thermo  Electron has, from time to time,  caused its  subsidiaries to sell
minority interests to investors,  resulting in several  majority-owned,  private
and  publicly-held  subsidiaries.  Thermo TerraTech has created the Company as a
majority-owned,   publicly-held   subsidiary.   The   Company   and  such  other
majority-owned  Thermo Electron  subsidiaries are hereinafter referred to as the
"Thermo Subsidiaries."

      Thermo  Electron and each of the Thermo  Subsidiaries  recognize  that the
benefits and support that derive from their  affiliation are essential  elements
of their individual  performance.  Accordingly,  Thermo Electron and each of the
Thermo  Subsidiaries,  including the Company,  have adopted the Thermo  Electron
Corporate  Charter (the "Charter") to define the relationships and delineate the
nature of such cooperation  among  themselves.  The purpose of the Charter is to
ensure  that  (1)  all of the  companies  and  their  stockholders  are  treated
consistently and fairly,  (2) the scope and nature of the cooperation  among the
companies, and each company's responsibilities, are adequately defined, (3) each
company has access to the  combined  resources  and  financial,  managerial  and
technological  strengths of the others,  and (4) Thermo  Electron and the Thermo
Subsidiaries, in the aggregate, are able to obtain the most favorable terms from
outside parties.

      To achieve these ends, the Charter identifies the general principles to be
followed  by the  companies,  addresses  the  role and  responsibilities  of the
management of each company,  provides for the sharing of group  resources by the
companies  and  provides  for  centralized  administrative,  banking  and credit
services to be performed  by Thermo  Electron.  The services  provided by Thermo
Electron include collecting and managing cash generated by members, coordinating
the access of Thermo Electron and the Thermo  Subsidiaries  (the "Thermo Group")
to external  financing  sources,  ensuring  compliance  with external  financial
covenants  and internal  financial  policies,  assisting in the  formulation  of
long-range planning and providing other banking and credit services. Pursuant to
the  Charter,  Thermo  Electron  may also  provide  guarantees  of debt or other
obligations of the Thermo  Subsidiaries or may obtain external  financing at the
parent level for the benefit of the Thermo  Subsidiaries.  In certain instances,
the Thermo  Subsidiaries  may  provide  credit  support to, or on behalf of, the
consolidated  entity or may obtain  financing  directly from external  financing
sources. Under the Charter,  Thermo Electron is responsible for determining that
the Thermo Group  remains in compliance  with all covenants  imposed by external
financing sources,  including covenants related to borrowings of Thermo Electron
or other  members of the Thermo Group,  and for  apportioning  such  constraints
within the Thermo  Group.  In  addition,  Thermo  Electron  establishes  certain
internal policies and procedures  applicable to members of the Thermo Group. The
cost of the services  provided by Thermo Electron to the Thermo  Subsidiaries is
covered under existing corporate services agreements between Thermo Electron and
the Thermo Subsidiaries.

      The Charter currently provides that it shall continue in effect so long as
Thermo Electron and at least one Thermo Subsidiary participate.  The Charter may
be amended at any time by agreement of the participants.  Any Thermo Subsidiary,
including the Company,  can withdraw from  participation  in the Charter upon 30
days' prior notice.  In addition,  Thermo  Electron may terminate a subsidiary's
participation in the Charter in the event the subsidiary ceases to be controlled
by Thermo  Electron  or ceases to comply with the  Charter or the  policies  and
procedures  applicable  to the  Thermo  Group.  A  withdrawal  from the  Charter
automatically  terminates  the corporate  services  agreement and tax allocation
agreement  (if  any) in  effect  between  the  withdrawing  company  and  Thermo
Electron.  The  withdrawal  from  participation  does not terminate  outstanding
commitments  to third  parties  made by the  withdrawing  company,  or by Thermo
Electron  or other  members of the Thermo  Group,  prior to the  withdrawal.  In
addition,  a  withdrawing  company is  required  to  continue to comply with all
policies and  procedures  applicable to the Thermo Group and to provide  certain
administrative  functions mandated by Thermo Electron so long as the withdrawing
company is controlled by or affiliated with Thermo Electron.

      As provided in the Charter,  the Company and Thermo  Electron have entered
into a Corporate  Services  Agreement  (the  "Services  Agreement")  under which
Thermo  Electron's  corporate staff provides  certain  administrative  services,
including certain legal advice and services,  risk management,  employee benefit
administration,  tax advice and  preparation  of tax returns,  centralized  cash
management  and  financial  and other  services to the Company.  The Company was
assessed  an  annual  fee  equal to 0.8% of the  Company's  revenues  for  these
services in fiscal  1999.  The annual fee will  remain at 0.8% of the  Company's
revenues  for fiscal  2000.  The fee is reviewed  annually and may be changed by
mutual agreement of the Company and Thermo Electron.  During fiscal 1999, Thermo
Electron assessed the Company  $1,136,000 in fees under the Services  Agreement.

<PAGE>

Management believes that the charges under the Services Agreement are reasonable
and that the terms of the Services Agreement are fair to the Company.  In fiscal
1999,  the  Company  was billed an  additional  $57,000 by Thermo  Electron  for
certain administrative services required by the Company that were not covered by
the  Services  Agreement.   The  Services  Agreement  automatically  renews  for
successive  one-year  terms,  unless canceled by the Company upon 30 days' prior
notice.  In addition,  the Services  Agreement  terminates  automatically in the
event the  Company  ceases to be a member of the Thermo  Group or ceases to be a
participant  in the  Charter.  In the  event of a  termination  of the  Services
Agreement,  the Company will be required to pay a  termination  fee equal to the
fee that was paid by the Company for services  under the Services  Agreement for
the  nine-month  period  prior to  termination.  Following  termination,  Thermo
Electron may provide certain administrative services on an as-requested basis by
the  Company or as  required in order to meet the  Company's  obligations  under
Thermo  Electron's  policies and  procedures.  Thermo  Electron  will charge the
Company a fee equal to the market rate for comparable  services if such services
are provided to the Company following termination.

      Thermo Electron has announced a proposed reorganization  involving certain
of Thermo Electron's  subsidiaries,  including the Company. Under this plan, the
Company,  and its sister  subsidiary,  The Randers Killam Group Inc., as well as
their  parent  company,  Thermo  TerraTech  Inc.,  would be merged  into  Thermo
Electron.   As  a  result,   all  three  companies  would  become  wholly  owned
subsidiaries of Thermo Electron.  The public shareholders of all three companies
would receive common stock in Thermo Electron in exchange for their shares.  The
completion of these  transactions is subject to numerous  conditions,  including
the establishment of prices and exchange ratios; confirmation of anticipated tax
consequences;  the approval of the Board of Directors  of Thermo  TerraTech  and
Randers Killam;  the negotiation and execution of definitive merger  agreements;
the  receipt  of  fairness  opinions  from  investment  banking  firms  that the
transactions  are fair to the Company's and  subsidiaries'  shareholders  (other
than Thermo  TerraTech and Thermo  Electron) from a financial point of view; the
approval  of  the  Company's  Board  of  Directors,  including  its  independent
directors; and completion of review by the Securities and Exchange Commission of
any necessary documents regarding the proposed transactions.

      From time to time the Company may transact  business with other  companies
in the Thermo Group.

      The  Company  purchases  and  sells  services  in the  ordinary  course of
business to other companies  affiliated with Thermo  TerraTech.  In fiscal 1999,
the Company sold a total of $730,000 of products to other  companies  affiliated
with Thermo  TerraTech  and  purchased a total of $432,000 of services from such
companies.  The Company derived revenues of $347,000 in fiscal 1999 from a joint
venture  with  Thermo  EuroTech  N.V.,  a  majority-owned  subsidiary  of Thermo
TerraTech,  which was  established  in fiscal  1998 to provide  soil-remediation
services in Europe.

      In March 1999, as settlement of a note  receivable,  the Company  received
118,707 shares of Thermo TerraTech  common stock.  The Company  immediately sold
the shares to Thermo  TerraTech at fair market  value and  received  proceeds of
$668,000.

      At  April  3,  1999,  the  Company  owed  Thermo  Electron  and its  other
subsidiaries  an  aggregate  of  $2,109,000  for amounts due under the  Services
Agreement and related  administrative  charges, for other products and services,
and for  miscellaneous  items,  net of  amounts  owed to the  Company  by Thermo
Electron  and  its  other   subsidiaries   for  products,   services  and  other
miscellaneous  items.  The largest amount of such net  indebtedness  owed by the
Company to Thermo  Electron and its other  subsidiaries  since April 4, 1998 was
$2,109,000.  These  amounts do not bear  interest and are expected to be paid in
the normal course of business.

      As of April 3,  1999,  approximately  $20,607,000  of the  Company's  cash
equivalents was invested in a repurchase  agreement with Thermo Electron.  Under
this  agreement,  the Company in effect  lends  excess cash to Thermo  Electron,
which Thermo Electron  collateralizes with investments principally consisting of
corporate  notes,  U.S.  government  agency  securities,   money  market  funds,
commercial paper and other marketable securities, in the amount of at least 103%
of such obligation.  The Company's funds subject to the repurchase agreement are
readily convertible into cash by the Company.  The repurchase  agreement earns a
rate based on the 90-day  Commercial  Paper Composite Rate plus 25 basis points,
set at the beginning of each quarter.  This

<PAGE>

agreement was terminated  effective June 1, 1999 in connection with the adoption
of a new domestic cash management agreement.

      Effective June 1, 1999, the Company and Thermo Electron commenced use of a
new domestic cash management  arrangement.  Under the new  arrangement,  amounts
advanced to Thermo Electron by the Company for domestic cash management purposes
bear interest at the 30-day Dealer  Commercial  Paper Rate plus 50 basis points,
set at the beginning of each month. Thermo Electron is contractually required to
maintain cash,  cash  equivalents,  and/or  immediately  available bank lines of
credit equal to at least 50% of all funds  invested  under this cash  management
arrangement  by  all  Thermo  Electron  subsidiaries  other  than  wholly  owned
subsidiaries.  The  Company  has the  contractual  right to  withdraw  its funds
invested in the cash management arrangement upon 30 days' prior notice.

Stock Holding Assistance Plan

      The human resources committee of the board of directors (the "Committee"),
established a stock holding policy that requires the chief executive  officer to
acquire and hold a minimum number of shares of Common Stock.  In order to assist
the chief  executive  officer in complying  with the policy,  the Committee also
adopted  a stock  holding  assistance  plan  under  which the  Company  may make
interest-free  loans to the chief executive  officer,  to enable him to purchase
the Common  Stock in the open  market.  The stock  holding  policy and the stock
holding  assistance  plan were both  subsequently  amended  to apply only to the
chief executive officer. During fiscal 1998, Mr. Powell, a vice president of the
Company, received loans in the principal amount of $59,940.50 under this plan to
purchase 10,000 shares, the entire amount of which was outstanding as of May 31,
1999.  In fiscal  1998,  Mr.  Pedersen,  then a vice  president  of the Company,
received loans in the principal amount of $45,828.50 under this plan to purchase
7,401 shares,  the entire amount of which was outstanding as of May 31, 1999. In
fiscal 1998, Mr.  Lousararian,  then a vice  president of the Company,  received
loans in the  principal  amount of $47,572.50  under the plan to purchase  7,700
shares,  the entire amount of which was  outstanding  as of May 31, 1999.  These
loans are repayable  upon the earlier of demand or the tenth  anniversary of the
date of the loan, unless otherwise determined by the Committee.

                                   SIGNATURES

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the Registrant has duly caused this Amendment No. 1 on form 10-K/A
to be signed by the undersigned, duly authorized.

                                             THERMORETEC CORPORATION


                                             By:  / s /  Sandra L. Lambert
                                                ----------------------------
                                                Sandra L. Lambert
                                                Secretary