SECURITIES AND EXCHANGE COMMISSION
                       WASHINGTON, D.C 20549
                            ----------
                             FORM 10-K
[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934

           For the fiscal year ended DECEMBER 31, 1999
                                     -----------------
                                OR
[   ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
           THE SECURITIES EXCHANGE ACT OF 1934

   For the transition period from_____________________ to____________________

                          Commission file number 0-11877
                                                 -------
                              ELXSI CORPORATION
                      ---------------------------------------
             (Exact name of registrant as specified in its charter)

             DELAWARE                                 77-0151523
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  (State or other jurisdiction of incorporation or organization)
         (I.R.S. Employer Identification No.)

    3600 RIO VISTA AVENUE, SUITE A, ORLANDO FL            32805
-------------------------------------------------      -----------
    (Address of principal executive offices)            (Zip Code)


Registrant's telephone number, including area code:     (407) 849-1090
                                                     --------------------
Securities registered pursuant to Section 12(b) of the Act:
      TITLE OF EACH CLASS              NAME OF EACH EXCHANGE ON WHICH REGISTERED
-------------------------------        -----------------------------------------
          None                                       Not Applicable

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

  COMMON STOCK, PAR VALUE $0.001, AND ASSOCIATED COMMON STOCK PURCHASE RIGHTS
--------------------------------------------------------------------------------
                                (Title of class)

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 (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.[ X] Yes [ ] 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 Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K.

The approximate aggregate market value of the voting stock held by
non-affiliates of the Registrant, based upon the closing price of the Common
Stock on March 9, 2000, as reported by NASDAQ, was $37,312,044. On March 9,
2000, the Registrant had outstanding 4,287,938 shares of Common Stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement for the Annual Meeting of Shareholders to be
held in May 2000 are incorporated by reference into Part III.

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<PAGE>

This Annual Report on form 10-K (this "10-K") includes forward-looking
statements, particularly in the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" section (Item 7 herein).
Additional written or oral forward-looking statements may be made by or on
behalf of the Company from time to time, in filings with the Securities and
Exchange Commission, in press releases and other public announcements, or
otherwise. All such forward-looking statements are within the meaning of that
term in Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended. Such statements may include,
but not be limited to, projections of revenue, income, losses and cash flows,
plans for future capital and other expenditures, plans for future operations,
financing needs or plans, plans relating to products or services, estimates
concerning the effects of litigation or other disputes, as well as expectations
and assumptions relating to any or all of the foregoing, relating to the
Company, its subsidiaries and/or divisions.

Although the Company believes that its forward-looking statements are based on
expectations and assumptions that are reasonable, forward-looking statements are
inherently subject to risks and uncertainties, some of which can not be
predicted. Accordingly, no assurance can be given that such expectations or
assumptions will prove to have been correct, and future events and actual
results could differ materially from those described in or underlying the
forward-looking statements. Among the factors that could cause future events and
actual results to differ materially are: the demand for the Company's products
and services and other market acceptance risks; the presence in the Company's
markets of competitors with greater financial resources, and the impact of
competitive products and services and pricing; the loss of any significant
customers or group of customers; general economic and market conditions
nationally and (in the case of Bickford's) in New England; the ability of Cues
to develop new products; capacity and supply constraints or difficulties; the
results of the Company's financing efforts; the emergence of future
opportunities; and the effect of the Company's accounting policies.

More detail regarding these and other important factors that could cause actual
results to differ materially from such expectations, assumptions and
forward-looking statements ("Cautionary Statements") may be disclosed in this
10-K, other Securities and Exchange Commission filings and public announcements
of the Company. All subsequent written and oral forward-looking statements
attributable to the Company, its subsidiaries or divisions or persons acting on
their behalf are expressly qualified in their entirety by the Cautionary
Statements.

The Company assumes no obligation to update its forward-looking statements or
advise of changes in the expectations, assumptions and factors on which they are
based.

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                              PART I


ITEM 1.  BUSINESS

GENERAL

ELXSI Corporation (the "Company") is a Delaware corporation with a wholly-owned
subsidiary ELXSI, a California corporation ("ELXSI"). ELXSI's operations consist
of two business segments: restaurant operations and equipment manufacturing.

On July 1, 1991, ELXSI acquired 30 restaurants operating under the Bickford's or
Bickford's Family Fare names and 12 restaurants operating under the Howard
Johnson's name, located in Massachusetts, Vermont, New Hampshire, Rhode Island
and Connecticut, from Marriott Family Restaurants, Inc. ("Marriott") for a
purchase price of approximately $23,867,000 (including transaction fees and
costs).

Between 1991 and 1998, ELXSI sold six of its Howard Johnson's restaurants and
converted five of the remaining six Howard Johnson's into Bickford's Family
Restaurants. During the same period, ELXSI opened 14 new Bickford's Family
Restaurants ("Bickford's") and acquired 16 Abdow's Family Restaurants
("Abdow's"). ELXSI subsequently converted nine Abdow's into Bickford's, sold two
Abdow's and closed another Abdow's. During 1999, the Howard Johnson's lease
expired and the restaurant was closed, two new Bickford's Restaurants were
opened in Somerville, Massachusetts and Warwick, Rhode Island, and one Abdow's
was converted to a Bickford's. As of December 31, 1999, ELXSI operated 61
Bickford's and 3 Abdow's Restaurants in its Bickford's Family Restaurant
division (the "Restaurants" or "Restaurant Division"). As used herein the term
"Restaurants" refers to the Bickford's, Abdow's and Howard Johnson's Restaurants
owned and operated in the Restaurant Division.

On October 30, 1992, ELXSI acquired Cues, Inc., of Orlando, Florida and its two
wholly-owned subsidiaries, Knopafex, Ltd., of Toronto, Canada, and Cues B.V., of
Maastricht, The Netherlands. The Cues business in the United States is owned and
operated as a division of ELXSI. Cues, Knopafex Ltd. and Cues B.V. are
hereinafter collectively referred to as "Cues" or the "Cues Division". Cues is
principally engaged in the manufacturing and servicing of video inspection and
rehabilitation equipment for wastewater and drainage systems primarily for
governmental municipalities, service contractors and industrial users.

FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS

Reference is made to the information set forth in Note 11 (Segment Reporting) to
the Consolidated Financial Statements included herein, which information is
hereby incorporated by reference herein.

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RESTAURANT DIVISION

Restaurant Division sales were $73,916,000, $71,517,000 and $65,198,000 in 1999,
1998 and 1997, respectively, representing 71.0%, 72.6% and 75.0% of the total
sales of the Company during 1999, 1998 and 1997, respectively.

The Restaurants are family-oriented and offer full-service and relatively
inexpensive meals. Featuring a breakfast menu available throughout the day, the
Restaurants appeal to customers who are interested in a casual,
low-to-moderately-priced meal. The Company has been successful in marketing the
breakfast menu concept to customers regardless of the time of day, and has
expanded lunch and dinner patronage by also offering improved traditional lunch
and dinner items. Most menu items are priced between $3.29 and $8.99, with the
average customer check being approximately $5.93, $5.68, and $5.52 in 1999, 1998
and 1997, respectively. Major categories of menu items are pancakes, waffles,
french toast, eggs and omeletts, "country" dinners, soups and side orders,
salads, hamburgers, sandwiches, and desserts. Breakfast items and coffee have
accounted for approximately 70% of all food sales in each of the past three
fiscal years.

Each Restaurant is open seven days a week. Most Restaurants are generally open
from 7:00 a.m. to 11:00 p.m. during the week and later on weekends, with some
open 24 hours on the weekends and others open 24 hours every day. Approximately
60% of weekly sales volume has been generated Friday through Sunday in each of
the past three fiscal years.

While the Company believes that the Restaurants appeal to a wide variety of
customers, they primarily cater to families, and to a lesser extent senior
citizens, who tend to be attracted to the high-quality, low-to-moderately-priced
meals. Each Restaurant generally draws its customers from within a five-mile
radius and, consequently, repeat business is extremely important to the
Restaurant Division's success. The Company believes that repeat business
accounts for a majority of Restaurant sales.

Each of the Bickford's Restaurants generally consists of a free standing
building that covers approximately 2,700 to 7,400 square feet, and all are
typically located adjacent to major roads and highways and/or shopping malls.
Nearly all of the Restaurants contain two dining areas designated as smoking and
non-smoking. At December 31, 1999, 14 of the Restaurant buildings were owned,
while the remaining 50 Restaurants were either leased or owned buildings on
leased land.

Each Restaurant has a kitchen equipped with grill space and ovens for service of
baked foods. Seating capacity ranges from 90 to 257 people. Eight of the
Bickford's Restaurants provide counter service.

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RESTAURANT EXPANSION AND RENOVATION

Capital expenditures during the years ended December 31, 1999, 1998 and 1997
were as follows:

                                           1999           1998           1997
                                        -----------    -----------   -----------
Expansion                               $1,327,000     $  942,000     $  725,000
Conversions                                148,000             --             --
Purchase leased property                        --        641,000        635,000
Renovation                                      --        279,000        255,000
Replacement due to fire loss                    --             --        517,000
Refurbishment & equipment
  replacements                           2,289,000      1,887,000      1,695,000
                                        ----------     ----------     ----------
                                        $3,764,000     $3,749,000     $3,827,000
                                        ==========     ==========     ==========

Earnings from operations funded the majority of the above capital expenditures.
The purchases of the leased properties were primarily made with the proceeds of
mortgage financings.

The Company currently plans to spend approximately $2,300,000 for renovations,
refurbishments and equipment replacements and approximately $3,700,000 for
Restaurant expansion and additions during 2000. Management believes that
earnings from operations will be sufficient to fund this planned program in
addition to other funding requirements.

The Company believes that increased profitability of the Restaurants will come
mainly from gaining market share by continuing its programs to improve food
products and service, and through its programs of refurbishing existing units,
opening new units, and, to a lesser extent, from price increases. The Company
believes that these factors at least partially resulted in increased sales at
comparable Restaurants.

Sales at same Bickford's Restaurants increased 3.1% in 1999 (51 Restaurants),
increased 6.2% in 1998 (48 Restaurants), and increased 4.2% in 1997 (41
Restaurants) over the prior year's sales. Customer counts at these same
Restaurants decreased 0.9% in 1999, increased 3.2% in 1998 and decreased 1.0% in
1997 over the prior year's counts.

The Company takes an opportunistic approach to Restaurant Division expansion.
Management evaluates both purchase and lease opportunities, and, in most
instances, the Company favors opening new Restaurants utilizing leased
properties. The Company will generally open a new Restaurant only if it can
reasonably be expected to meet the Company's return on investment criteria,
which is generally an annual return on the investment of approximately 25% to
30%.

RESTAURANT MANAGEMENT AND SUPERVISION

Each Restaurant has a manager and one to three assistant managers, at least one
of whom must be on duty at all times during Restaurant hours. The managers are
responsible for hiring all personnel at the Restaurant level, managing the
payroll and employee hours and ordering necessary food and supplies. The
Bickford's Division has ten district managers who, between

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them, cover all the Restaurants. The district managers are responsible for the
complete operation of the Restaurants located in assigned geographical areas,
including responsibility for sales, profits and compliance with all operational
policies and procedures. The district managers, managers and assistant managers
are all salaried personnel, but are also compensated with performance
incentives, which can provide a significant portion of their total compensation.
Bonuses paid under the program are based principally upon monthly sales volume,
attainment of certain cost targets and restaurant profitability.

SOURCES AND AVAILABILITY OF MATERIALS

Food supplies are distributed by various Company-approved wholesalers and
purveyors, which deliver directly to each Restaurant based on the quoted cost of
individual food items. Essential supplies and raw materials are available from
several sources, and the Company is not dependent upon any one supplier for its
food supplies. These purchases from suppliers are generally done on a
verbal-purchase-order basis and without any long-term commitments or contracts.
The Company does not maintain or engage in any warehousing or commissary
operations.

SEASONALITY

The Restaurants experience slightly higher revenues in the summer months.

CUSTOMERS

The Restaurants are not dependent upon a single customer or group of customers,
although a large portion of each Restaurant's customers live within a five mile
radius thereof and, accordingly, repeat customers are important to the
Bickford's Division's success. See the fourth paragraph of this "Restaurant
Division" section above.

COMPETITION

The Restaurants are in direct competition with many local restaurants providing
family-oriented meals, some of which are owned, operated and/or franchised by
national and regional chains, many of whom are larger and have greater financial
resources than the Company. The restaurant business is highly competitive with
respect to price, service, location and food quality. The Company believes that
its attention to quality and service, along with its low-to-moderately-priced
menu items, will continue to attract customers. In recent years there has been
an increase in the number of restaurants offering buffet-style dining in New
England. The Company believes that the freshness of its food and its reasonable
pricing compare favorably to these buffet concepts.

EMPLOYEES

At December 31, 1999, the Restaurant Division employed 2,864 persons, of which
2,272 were part-time hourly employees, 357 were full-time hourly employees and
235 were salaried

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personnel. This is an increase of 4.1% (112 people) over the number of employees
as of December 31, 1998. None of the Restaurant Division's employees are
represented by a union.

ENVIRONMENTAL MATTERS

The Restaurant Division is subject to various federal, state and local laws,
rules and regulations relating to the protection of the environment, which are
considered by management to be typical for companies operating in the Restaurant
industry. Management believes that compliance therewith will have no material
effect on its capital expenditures, earnings or competitive position.

CUES DIVISION

The Cues Division sales were $30,227,000, $27,049,000 and $21,747,000 in 1999,
1998 and 1997, respectively, representing 29.0%, 27.4%, and 25.0% of the total
sales of the Company during 1999, 1998 and 1997, respectively.

Cues manufactures systems which utilize closed circuit television and highly
specialized rehabilitation equipment to inspect and repair underground sewer
lines. The infiltration of groundwater into sewer pipelines through leaking
joints and pipe fractures unnecessarily burdens the capacity of sewage treatment
plants by increasing the volume of fluids being treated. Without a tightly
maintained pipe network the treatment plant may become overwhelmed, resulting in
raw sewage flowing into rivers, harbors, lakes or other bodies of water. The
Environmental Protection Agency through the Clean Water Act imposes severe fines
and penalties for such pollution. Leaking joints and pipe fractures can also
contribute to sewer line damage that can be repaired, in severe cases, only by
costly excavation. Cues mounts its systems in specially designed trucks and
vans, which are sold as mobile units. Cues also designs and sells a range of
portable systems that may be hand carried or mounted on a wheeled dolly for ease
of transport to difficult access locations. In addition, Cues provides product
servicing and replacement parts for its customers. The principal customers of
Cues are municipalities and contractors engaged in sewer inspection and repair.
Cues is not directly engaged in the service business of maintaining and
repairing sewer lines but primarily focuses on designing and manufacturing
equipment.

INSPECTION AND REHABILITATION EQUIPMENT

Cues's inspection and sealing equipment constitutes an integrated system that
provides the capability of inspecting underground sewer lines via remote control
television cameras. The system has the capability of creating a permanent record
on video tape of the pipe conditions such as distance, slope, defect severity
and location using various sensing instrumentation. In addition, the Company
manufactures a line of grout application equipment for (a) detecting leaking
joints through an air pressure testing device and (b) properly applying chemical
sealant to repair small pipe fractures and leaking joints.

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Cues also manufactures and sells a line of remotely-operated robotic cutting
devices. These cutting devices reinstate or open lateral sewer lines, which are
smaller-diameter pipes leading from residences or businesses into the main sewer
pipes. The laterals become blocked during the insite process of relining the
walls of mainline pipes with various resin based cured in place materials.

Cues's inspection, cutting and sealing systems are placed in sewer lines through
manholes. The television camera, positioned using either a motorized transporter
or pulled on a skid assembly, relays a television picture of the interior of
that sewer line via cable to a monitoring station in a mobile unit above ground.
The television inspection system employs a three-inch-diameter color camera that
can be remotely adjusted for close-up viewing of problem areas. By recording the
position of the camera as it moves through the sewer lines, the Cues inspection
and sealing equipment gives the customers a permanent record of the condition of
their sewer lines. If the television camera inspection of the sewer lines
discloses a leaking joint or pipe fracture, sealing equipment can be introduced
and positioned through use of the camera to make the repair. Once the sealing
module is positioned, inflatable packers seal off the line at either end of the
damaged area and a chemical sealant is applied that penetrates the leak or
fracture as well as the earth surrounding the pipe, hardening to seal the line.
The sealing module may also be used to determine the structural integrity of the
joint by applying air or water pressure against the walls of the joint. This
pressure test enables the customers to detect leaking joints that may not be
easily detected visually.

The sealing module manufactured by Cues is used to repair sewer lines where
infiltration or inflow of water occurs through leaking joints and pipe
fractures. Repairs can last 20 years or more, depending upon the structural
soundness of the sewer line or repaired joints. Cues's sealing equipment is not
designed to repair a severely damaged or collapsed pipe, which must be excavated
and replaced in the traditional manner or repaired by the use of other sewer
line repair technologies such as relining. However, Cues's Kangaroo (TM) cutting
system is used integrally in the structural, in-line methods of repairing
collapsed sewer lines. Cues has also developed a line of equipment for use in
the inspection, but not the repair, of underground water wells, dams, industrial
pipe, potable water lines and large-pipe storm drains.

Cues designed and wrote DataCap 3.0(TM) software, a data collection program,
which offers the truck operator the ability to electronically grab still frame
picture images and capture video clips of pipe conditions. The images along with
other inspection data such as site address, manhole information, defect
severity, slope inclination or gradient, footage and chemical sealing
information is stored in a database format and may be transmitted via internet
or sent via facsimile for remote review. The data can also be sorted, searched
and printed on reports that include pictures, graphs and text. The advantage of
a computer program over the traditional videotape is primarily time savings for
the city engineers who are required to review inspection reports and catalog
pipe conditions. The DataCap is designed to operate on Windows95(TM),
Windows98(TM) and WindowsNT(TM). By hiring in house software engineers to design
and write the computer code, management believes Cues has an advantage over
competing products by allowing Cues to be more responsive to customer requests
for customized reports and features. The DataCap software is installed on
computer hardware designed and built by Cues to be shock

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mounted and rugged for the truck environment. During 1999, Cues signed a
mutually exclusive agreement with Hansen Information Technologies, Inc., a
leading provider of asset management software to municipalities. The agreement
provides for the interchange of data between the DataCap and the Hansen
Infrastructure Management Solution Software. This agreement will assure both
present and future users of Hansen and Cues software the ability to easily
import and export files between the two database programs.

PRODUCT SERVICING, REPLACEMENT PARTS AND CHEMICALS

Cues provides product servicing and repairs at its facilities in Orlando,
Florida; Montclair, California; Milpitas, California; Toronto, Canada; and
Maastricht, The Netherlands. In Orlando, Cues also maintains an extensive
inventory of replacement parts for distribution and sale to customers. Cues
generally warrants that all parts, components and equipment that it manufactures
will be free from defects in material and workmanship under normal and intended
use for a period of twelve months from the date of shipment to the customer.
Major items of equipment such as vehicles, generators, etc., furnished to, but
not manufactured by, Cues, are covered under the warranty of the third-party
manufacturer of such equipment. Cues recorded warranty expense of approximately
$547,000, $185,000 and $146,000, during the years 1999, 1998 and 1997,
respectively. The increase was related to a specific product that the company
does not anticipate will carry over into future periods.

PRODUCT DEVELOPMENT

Cues has an ongoing program to improve its existing products and to develop new
products. During the 12 months ended December 31, 1999, 1998 and 1997,
approximately $264,000, $360,000 and $217,000, respectively, was expended by
Cues for product development, (excluding, in each case, the compensation and
benefits expense of engineering department personnel, which comprises a
significant portion of research and development efforts). Although Cues holds
United States patents for components of its products, management believes the
expiration or invalidity of any or all of such patents will not have a material
adverse effect on its business. For 2000, Cues currently plans to spend
approximately $250,000 (exclusive of such personnel expenses) for product
development activities.

SOURCE AND AVAILABILITY OF RAW MATERIALS

Cues manufactures certain components of its system and purchases others.
Purchased components include television camera modules, monitors, video
recorders, and vehicles, all of which are available from a number of sources.
These purchases from suppliers are done on a purchase order basis and without
any long-term commitments or contracts.

Cues has agreements with Orlando, Florida truck dealers to deliver truck bodies
that are used in the manufacture of Cues's mobile units. Under these agreements,
Cues reimburses the dealers' floor plan financing costs for those vehicles held
by the dealer until delivery. Cues does not have any other commitments or
contracts with its truck dealers. Management believes that alternative

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sources for truck chassis are available and that the loss of any current dealer
would not have a material adverse effect on Cues.

MARKETING

Cues markets its products and services in the United States though nine direct
salesmen. In certain geographic areas of the country, Cues markets it products
and services through independent representatives which are non-exclusive (to
Cues), none of whom accounted for more than 5% of the Cues Division's revenues
in any of the last three years. The Company believes that the loss of any of
these salesman or representatives would not have a material adverse effect on
the Cues Division. Cues also employees technical service representatives located
in Orlando, Toronto and Maastricht.

Within North America, Cues's customers include municipalities and contractors
engaged in sewer line inspection and repair as well as privately-owned sewer
systems. No customer accounted for more than 5% of Cues's 1999, 1998 or 1997
sales. Cues participates in trade shows and uses trade magazine advertising in
the marketing of its products and services to North American Customers. The Cues
name is well established within its industry, affording it and its products wide
recognition.

Outside North America, Cues markets its products on five continents, either
directly or through non-exclusive (to Cues) independent distributors, agents or
dealers, none of whom accounted for more than 5% of the Cues Division's revenue
in any of the last three years. During 1999, 1998 and 1997, export sales to
foreign countries represented approximately 14%, 13% and 12% of total Cues
sales, respectively. The vast majority of equipment sales to customers in
foreign countries are arranged under U.S. dollar-denominated letter of credit
arrangements and, therefore, the currency and payment risk are minimized.

The Cues Division historically has not experienced any material problems or
risks in distributing and selling products outside the United States, other than
those normally associated with such efforts (e.g., language barriers, time
differences, customs regulations and complications relative to the conforming of
equipment to local electronic, video, vehicle and other standards).

COMPETITION

Competition for the types of product sold by Cues is based mostly on price,
features, service and reliability. Management believes that it competes
effectively in each of these respects. Management also believes that there are
six companies which produce and sell products which are competitive with those
produced by Cues. A significant portion of sales are generated through a bidding
process initiated by municipalities. This process is extremely price sensitive,
requiring Cues to meet or beat competitors' bids in order to secure sales.

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ACQUISITION

During June 1999, Cues acquired the inventory and other assets associated with a
competitor's product line for $778,000. The other assets include tangible and
intangible assets including the trade names, patents, customer and vendor lists,
product literature and engineering drawings. The intangible assets are being
amortized over ten years

EMPLOYEES

At December 31, 1999 Cues had 180 full and part-time employees. This includes
three employees of Knopafex, Ltd. and four employees of Cues B.V. None of the
Cues Division employees are represented by a union.

ENVIRONMENTAL

The Cues Division is subject to various federal, state and local laws, rules and
regulations relating to the protection of the environment, which are considered
by management to be typical for companies operating in the underground pipe
inspection industry. Management believes that compliance therewith has had no
material effect on its capital expenditures, earnings or competitive position.

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ITEM 2.  PROPERTIES

ELXSI leases land and/or buildings at 50 of its 64 restaurants, under lease
agreements expiring (including extension options) on various dates through 2032.
The majority of these leases are "triple net", requiring ELXSI to pay taxes,
maintenance, insurance and other occupancy expenses related to the leased
premises. The rental payments for a majority of the Restaurant locations are
based upon minimum annual rental payments plus a percentage of their respective
sales.

Below is a summary of the Restaurant properties as of December 31, 1999:

                          BICKFORD'S    ABDOW'S      TOTAL
                          ----------    -------      -----
  Massachusetts:  Owned      10           --           10
                  Leased     28            2           30

  Connecticut:    Owned       2           --            2
                  Leased      7            1            8

  Rhode Island:   Owned      --           --           --
                  Leased      6           --            6

  New Hampshire:  Owned       2           --            2
                  Leased      5           --            5

  Vermont:        Owned      --           --           --
                  Leased      1           --            1

  Total:          Owned      14           --           14
                  Leased     47            3           50

ELXSI also owns a 4,000 square foot building in Boston, Massachusetts, which is
used for its Restaurant Division management and administrative headquarters.
ELXSI also owns a 48,000 square foot office and manufacturing facility in
Orlando, Florida, of which 36,000 square feet are currently being utilized by
its Cues Division for manufacturing, while the remaining 12,000 square feet are
being utilized for Cues and Corporate selling, general, and administrative
functions. The old Cues Division facility consisting of 26,000 square feet is
being partially used for manufacturing and storage, while approximately 2,000
square feet are being rented as office space. In addition, Cues rents a 3,000
square foot facility in Montclair, California for service and sales, Cues B.V.
owns an office and manufacturing facility in Maastricht, The Netherlands and
Knopafex, Ltd. rents office and manufacturing space in Toronto, Canada.

ITEM 3. LEGAL PROCEEDINGS

There are no material pending legal proceedings (other than ordinary routine
litigation incidental to the business) to which the Company or any of its
subsidiaries is a party or of which any of

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their respective properties is the subject, nor are there any proceedings known
by the Company to be contemplated by governmental authorities against the
Company or any of its subsidiaries.

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

There were no matters submitted to vote of stockholders during the fourth
quarter of 1999.

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
        STOCKHOLDER MATTERS

MARKET INFORMATION

The Company's Common Stock is traded in the National Market System of The Nasdaq
Stock Market ("Nasdaq"), under the symbol ELXS. The following table sets forth
high and low closing sales prices for the fiscal quarters indicated, as reported
by Nasdaq.

                                    1999                    1998
                                  --------                --------
                             HIGH        LOW         HIGH         LOW
                           --------    --------    --------    --------
First Quarter             $ 13.000     $ 9.750    $ 17.750    $ 10.063
Second Quarter              11.625       9.750      14.750       9.500
Third Quarter               14.750       8.531      12.500       8.750
Fourth Quarter              14.750       9.563      13.625       8.125

On March 9, 2000, the reported last sale price for the Company's Common Stock
was $14.00 per share. The above quotations reflect inter-dealer prices, without
retail mark-up, mark-down or commission and may not necessarily represent actual
transactions.

HOLDERS

As of March 9, 2000 there were 334 holders of record of the Company's Common
Stock.

DIVIDEND HISTORY

The Company has never paid a cash dividend. Management will consider paying
dividends depending on future earnings and cash flows of the Company and other
relevant considerations. On June 4, 1997, the Board of Directors declared a
common stock purchase right dividend for shareholders of the Company's Common
Stock outstanding as of June 16, 1997.

STOCK TRANSFER AGENT

The Company's stock transfer agent is Continental Stock Transfer & Trust Co., 2
Broadway, New York, New York 10004, (212) 509-4000.

                                       13

<PAGE>

ITEM 6. SELECTED FINANCIAL DATA
(Amounts in Thousands, Except Per Share Data)

<TABLE>
<CAPTION>

                                                                   YEAR ENDED DECEMBER 31,
                                               -------------------------------------------------------------
                                                   1999         1998         1997        1996          1995
                                               -----------  -----------  -----------  -----------  ---------
<S>                                            <C>          <C>          <C>          <C>          <C>
NET SALES                                      $ 104,143    $  98,566    $  86,945    $  82,743    $  74,674
COSTS AND EXPENSES:
  Cost of sales                                  (81,703)     (77,327)     (68,406)     (66,603)     (58,347)
  General and administrative                      (9,014)      (9,269)      (7,924)      (7,362)      (7,484)
  Depreciation and amortization                   (3,870)      (3,529)      (3,176)      (2,775)      (2,206)
  Interest income                                    801          583        1,287          111          125
  Interest expense                                  (832)        (807)      (1,420)      (1,495)      (1,767)
  Other (expense) income                            (293)        (193)        (239)         432           65
  Benefit (provision) for income taxes            11,118       (3,234)       7,312        2,332         (514)
                                               ---------    ---------    ---------    ---------    ---------

Net income                                     $  20,350    $   4,790    $  14,379    $   7,383    $   4,546
                                               =========    =========    =========    =========    =========

Net income per common share
  Basic                                        $    4.75    $    1.09    $    3.19    $    1.60    $    0.98
                                               =========    =========    =========    =========    =========
 Diluted                                       $    4.25    $     .98    $    2.98    $    1.56    $    0.92
                                               =========    =========    =========    =========    =========

Weighted average number of common and
  common equivalent shares
  Basic                                            4,283        4,400        4,504        4,606        4,654
  Assumed conversion of options and warrants         508          486          328          139          282
                                               ---------    ---------    ---------    ---------    ---------
  Diluted                                          4,791        4,886        4,832        4,745        4,936
                                               =========    =========    =========    =========    =========

Dividends                                              0            0            0            0            0
                                               =========    =========    =========    =========    =========
OTHER DATA:

Working capital                                $  20,337    $  11,216    $  12,095    $   8,649    $   2,438
Total assets                                      89,851       66,636       67,661       61,143       48,772
Capitalized leases and long term debt             12,903        8,665       12,354       20,704       14,924
Stockholders' equity                              63,877       45,560       43,172       28,913       22,714
</TABLE>

                                       14

<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

See Note 1 to the Consolidated Financial Statements for background on the
Company.

Both the Company's corporate functions and Cues Division have fiscal years
consisting of four calendar quarters ending on December 31. The Restaurant
Division's fiscal years consist of four 13-week quarters (and, accordingly, one
52-week period) ending on the last Saturday in December; this requires that
every six or seven years the Restaurant Division add an extra week at the end of
the fourth quarter and fiscal year.

The Company's revenues and expenses result from the operation of ELXSI's
Restaurant and Cues Divisions and the Company's corporate expenses
("Corporate").


YEAR ENDED DECEMBER 31, 1999


RESTAURANT DIVISION. The Restaurants had sales of $73,916,000, cost of sales of
$60,648,000, selling, general and administrative expenses of $2,117,000 and
depreciation and amortization expense of $3,146,000, which yielded operating
income of $8,005,000. In addition, the Restaurants had $169,000 of interest
expense related primarily to mortgage loans and capital leases, and other
expense of $97,000 related to the write off and reserve for disposals of fixed
assets, resulting in income before taxes of $7,739,000.

CUES DIVISION. Cues had sales of $30,227,000, cost of sales of $21,055,000,
selling, general and administrative expenses of $5,563,000 and depreciation and
amortization expense of $724,000, which yielded operating income of $2,885,000.
In addition, Cues had $155,000 of interest expense, $24,000 of interest income
and $8,000 of other expense, resulting in income before taxes of $2,746,000.

CORPORATE. Corporate general and administrative expenses were $1,334,000. The
major components of these expenses were the $650,000 in management fees paid to
Cadmus Corporation ("Cadmus") under a management agreement (see Note 6 of the
Consolidated Financial Statements), the $220,000 compensation accrual related to
the Bickford's Phantom Stock Option Plan (see Note 10 of the Consolidated
Financial Statements and the Company's proxy statement for further information),
legal expenses, Corporate and Bickford's audit expenses, and stockholder
services and financial reporting expenses.

Under the terms of the Cadmus management agreement, Cadmus provides ELXSI with
advice and services with respect to its business and financial management and
long-range planning. Specific examples of services historically rendered to the
Company under this management agreement include: (a) furnishing the services of
certain executive officers and other employees

                                       15
<PAGE>

of Cadmus; (b) ongoing evaluation of division management; (c) preparing and
reviewing division operating budgets and plans; (d) evaluating new restaurant
locations and menu changes; (e) identifying, and assisting in the divestiture
of, under-performing assets; (f) evaluating financing options and negotiating
with lenders; (g) assisting in the compliance with securities laws and other
public reporting requirements; (h) communicating with stockholders; (i)
negotiating and arranging insurance programs; (j) monitoring tax compliance; (k)
evaluating and approving capital spending; (l) cash management services; (m)
preparing market research; (n) developing and improving management reporting
systems; and (o) identifying and evaluating acquisition candidates and
investment opportunities. It is through the Cadmus management agreement that the
Company is provided the non-director services of: Mr. Milley (except in his
capacity as President of Cues, for which he is directly compensated by ELXSI),
the Company's Chairman of the Board, President and Chief Executive Officer; and
Kevin P. Lynch, a Vice President and Director of the Company.

Corporate interest income was $777,000, consisting primarily of interest on
loans to related parties. Corporate interest expense was $508,000, consisting
primarily of the interest charges on senior bank debt. The Company's senior bank
debt lender is Bank of America, N.A. ("BofA"); Note 7 to Consolidated Financial
Statements of the Company includes information regarding the terms of the senior
bank debt.

During 1999, the Company recorded a current consolidated tax provision of
$1,036,000 and a deferred tax benefit of $12,154,000, resulting in a net income
tax benefit of $11,118,000. Management evaluates the likelihood of future
earnings during the remaining life of its net operating loss and tax credit
carryforwards and the anticipated realization of these tax loss carryforwards in
determining the amount of the deferred tax asset to record.

The Company's 1999 review of its deferred tax asset valuation allowance
indicated that it is more likely than not that additional carryforward tax
benefits will be realized, due to the Company's historical, continued and
increasing profitability and the significantly reduced possibility of an
ownership change brought about as a result of a negotiated standstill agreement
entered into in 1999 with a significant stockholder (see the Company's most
recent Proxy Statement for further information). Accordingly, and taking into
account reasonable and prudent tax planning strategies and future income
projections, the Company reduced the valuation allowance by $12,154,000 during
1999. The resulting net deferred tax asset of $21,170,000 represents the amount
of net operating loss and tax credit carryforwards that management believes more
likely than not will be realized over their remaining life. The remaining
valuation allowance is necessary due to the magnitude of the net operating loss
carryforwards and the uncertainty of future income estimates. Failure to achieve
forecasted taxable income would affect the ultimate realization of the net
deferred tax assets.

The utilization of the Company's net operating loss and tax credit carryforwards
may be impaired or reduced under certain circumstances. Events which may affect
these carryforwards include, but are not limited to, cumulative stock ownership
changes of 50% or more over a three-year period, as defined, the ability of the
company to realize budgeted future taxable income, and the timing of the
utilization of the tax benefit carryforwards. Such changes in ownership would

                                       16
<PAGE>

significantly restrict the Company's ability to utilize loss and credit
carryforwards in accordance with sections 382 and 383 of the Internal Revenue
Code (IRC). Management recognizes that it is limited in its ability to prevent
such cumulative changes in ownership from occurring. If a change of ownership
were to occur - and no assurance can be given that one will not occur - factors
such as the number of common shares issued and outstanding, the market price of
such shares, and short term treasury rates, would be used under the current tax
laws to determine the amount of the tax loss and credit carryforwards that can
be utilized each year

Recording the deferred tax benefit in 1999 resulted in an increase in net income
and basic earnings per share of $12,154,000 and $2.84 ($2.54 diluted earnings
per share), respectively.

EARNINGS PER SHARE. The 1999 basic and diluted earnings per share were $4.75 and
$4.25, respectively. The 1999 weighted average number of shares outstanding for
the basic and diluted earnings per share were 4,283,000 and 4,791,000,
respectively. The average stock price during 1999 was $11.36 and the market
price at December 31, 1999 was $12.88.


YEAR ENDED DECEMBER 31, 1998

RESTAURANT DIVISION. The Restaurants had sales of $71,517,000, cost of sales of
$58,614,000, selling, general and administrative expenses of $2,134,000 and
depreciation and amortization expense of $2,972,000, which yielded operating
income of $7,797,000. In addition, the Restaurants had $148,000 of interest
expense related primarily to mortgage loans and capital leases, and other
expense of $140,000 related to the write off and reserve for disposals of fixed
assets, resulting in income before taxes of $7,509,000.

CUES DIVISION. Cues had sales of $27,049,000, cost of sales of $18,713,000,
selling, general and administrative expenses of $5,137,000 and depreciation and
amortization expense of $557,000, which yielded operating income of $2,642,000.
In addition, Cues had $63,000 of interest expense, $20,000 of interest income
and $72,000 of other expense, resulting in income before taxes of $2,527,000.

CORPORATE. Corporate general and administrative expenses were $1,998,000. The
major components of these expenses were the $900,000 compensation accrual
related to the Bickford's Phantom Stock Option Plan (see Note 10 to the
Consolidated Financial Statements and the Company's most recent Proxy Statement
for further information), the $623,000 in management fees paid to Cadmus under a
management agreement (see Note 6 to the Consolidated Financial Statements),
legal expenses, Corporate and Bickford's audit expenses, and stockholder
services and financial reporting expenses.

Corporate interest expense was $596,000, consisting primarily of the interest
charges on senior bank debt with BofA. The Company's senior bank debt lender is
BofA; Note 7 to Consolidated Financial Statements of the Company includes
information regarding the terms of the senior bank debt.

                                       17
<PAGE>

During 1998, the Company recorded a current consolidated tax provision of
$1,207,000 and deferred tax expense of $2,027,000, resulting in income tax
expense of $3,234,000. At December 31, 1998, management continued to believe the
possibility of a change of ownership occurring in 1999 was less likely due to
bylaw provisions approved by the stockholders in May 1997 to help limit such
changes as well as the passage of time in the three-year window of ownership
change calculation.

Recording the deferred tax expense in 1998 resulted in a decrease in net income
and basic earnings per share of $2,027,000 and $0.46 ($0.41 diluted earnings per
share), respectively.

EARNINGS PER SHARE. The 1998 basic and diluted earnings per share were $1.09 and
$.98, respectively. The 1998 weighted average number of shares outstanding for
the basic and diluted earnings per share were 4,400,000 and 4,886,000,
respectively. The average stock price during 1998 was $11.44 and the market
price at December 31, 1998 was $12.63.


YEAR ENDED DECEMBER 31, 1997

RESTAURANT DIVISION. The Restaurants had sales of $65,198,000, cost of sales of
$53,378,000, selling, general and administrative expenses of $1,880,000 and
depreciation and amortization expense of $2,694,000, which yielded operating
income of $7,246,000. In addition, the Restaurants had $152,000 of interest
expense related to the amortization of deferred financing fees and capital
leases, and other expense of $152,000 related mainly to the write off and
reserve for disposals of fixed assets, resulting in income before taxes of
$6,942,000.

CUES DIVISION. Cues had sales of $21,747,000, cost of sales of $15,028,000,
selling, general and administrative expenses of $4,245,000 and depreciation and
amortization expense of $482,000, which yielded operating income of $1,992,000.
In addition, Cues had $84,000 of interest expense, $24,000 of interest income
and $87,000 of other expense, resulting in income before taxes of $1,845,000.

CORPORATE. Corporate general and administrative expenses were $1,799,000. The
major components of these expenses were the $750,000 compensation accrual
related to the Bickford's Phantom Stock Option Plan (see Note 10 to the
Consolidated Financial Statements and the Company's most recent Proxy Statement
for further information), the $575,000 of management fees paid to Cadmus under a
management agreement (see Note 6 to the Consolidated Financial Statements),
legal expenses, Corporate and Bickford's audit expenses, and stockholder
services and financial reporting expenses.

Corporate interest expense was $1,184,000, consisting of senior bank debt
interest. Note 7 to Consolidated Financial Statements of the Company includes
information regarding the terms of the senior bank debt.

During 1997, the Company recorded a current consolidated tax provision of
$850,000 and a deferred tax benefit of $8,162,000, resulting in a net income tax
benefit of $7,312,000. At

                                       18
<PAGE>

December 31, 1996, management believed that the Company would have a cumulative
stock ownership change of 50% or more during 1997. At December 31, 1997,
management believed the possibility of a change of ownership occurring in 1998
was less likely due to bylaw provisions approved by the stockholders in May 1997
to help limit such changes as well as the passage of time in the three-year
window of ownership change calculation. As a result, in 1997, the Company
reduced the valuation allowance by a net $8,162,000, which increased the
deferred tax asset from $2,881,000 at December 31, 1996 to $11,043,000 at
December 31, 1997. The net deferred tax asset represents the amount of net
operating loss and tax credit carryforwards which management believes were more
likely than not to be realized in the future.

Recording the deferred tax benefit in 1997 resulted in an increase in net income
and basic earnings per share of $8,162,000 and $1.81 ($1.69 diluted earnings per
share), respectively.

EARNINGS PER SHARE. The 1997 basic and diluted earnings per share were $3.19 and
$2.98, respectively. The 1997 weighted average number of shares outstanding for
the basic and diluted earnings per share were 4,504,000 and 4,832,000,
respectively. The average stock price during 1997 was $8.23 and the market price
at December 31, 1997 was $11.50.


COMPARISON OF 1999 RESULTS TO 1998 RESULTS

Sales during 1999 increased by $5,577,000, or 5.7%, gross profit increased by
$1,201,000, or 5.7%, selling, general and administrative expense decreased by
$255,000, or 2.8%, and depreciation and amortization increased by $341,000, or
9.7%, resulting in an increase in operating income of $1,115,000, or 13.2%, in
each case as compared to 1998. Interest expense increased by $25,000, or 3.1%,
interest income increased by $218,000, or 37.4%, and other expense increased by
$100,000, or 51.8%. In 1999, the Company recorded an income tax benefit of
$11,118,000 compared to an income tax expense of $3,234,000 in 1998. The above
changes resulted in a increase in net income of $15,560,000, or 324.8%, in 1999
compared to 1998.

RESTAURANT DIVISION. Restaurant sales increased by $2,399,000, or 3.4%, in 1999.
The sales increase is primarily attributable to an increase in the same store
sales of $1,766,000, sales at new Restaurants of $2,495,000, partially offset by
lost sales due to closed Restaurants and a decrease in customer count for all
stores combined of approximately 1.1%. Same store Restaurant sales increased by
$1,766,000, or 3.1%, mainly as a result of a menu price increase, partially
offset by a decrease in customer counts of 0.9%. Management is continuing to
focus on improving sales at all Restaurants through attention to customer
service, food quality, new menu items and Restaurant refurbishments.

Restaurant gross profit increased by $365,000, or 2.8%, and gross profit as a
percentage of sales remained relatively flat between years. Labor costs as a
percentage of sales increased by 0.8%, from 35.6% in 1998 to 36.4% in 1999, due
to minimum wage increases, competitive economic pressures causing higher average
rates of pay, and increased staffing during peak business periods in order to
enhance customer service. Variable costs including advertising increased by

                                       19
<PAGE>

0.1%, while fixed costs decreased by 0.1% and food costs decreased by 0.7% as a
percentage of sales in 1999 compared to 1998.

Restaurant selling, general and administrative expense decreased by $17,000, or
0.8%, during 1999 compared to 1998.

Restaurant depreciation and amortization expense increased by $174,000, or 5.9%,
during 1999 as compared to 1998. Restaurant depreciation and amortization
expense is anticipated to increase each year with the addition of new
restaurants.

As a result of the above, Restaurant Division operating income increased by
$208,000, or 2.7%, in 1999 compared to 1998.

CUES DIVISION. Cues's sales increased by $3,178,000, or 11.7%, in 1999 compared
to 1998. As a result of this increase and a 0.5% decrease in Cues's gross profit
percentage in 1999 compared to 1998, gross profit increased by $836,000, or
10.0%. Cues was able to increase sales volume in 1999 in the face of continuing
competitive pressures. Customers appear to recognize the benefits of Cues's
equipment, thereby permitting the Company to be more selective in its pricing
during the competitive bidding process. Selling, general and administrative
expenses increased by $426,000, or 8.3%, and depreciation and amortization
expense increased by $167,000, or 30.0%. Approximately 42% of the increase in
selling, general and administrative expenses was related to selling expenses
with the remaining 58% related to general and administrative expense. The
increase in selling expenses is primarily attributable to increases in wages
resulting from both rate and headcount increases, sales volume-related
commissions and an increase in West Coast sales efforts. The general and
administrative expense increase is primarily attributable to increases in wages
resulting from both rate and headcount increases, new facility costs, repairs
and maintenance of computer hardware, and telephone expense. The net result of
the above produced an increase in operating income of $243,000, or 9.2%, in 1999
compared to 1998.

CORPORATE. Corporate's general and administrative expenses decreased by
$664,000, or 33.2%, during 1999 compared to 1998, mainly due to a decrease in
the Bickford's management compensation accrual related to its Phantom Stock
Option Plan, offset in part by a marginal increase in management fee expense.
Phantom option expense was reduced in the fourth quarter as a result of revised
estimates. The expense decreased from $900,000 in 1998 to $220,000 in 1999.
Interest expense decreased by $88,000, or 14.8%, in 1999 compared to 1998.
Interest income increased by $214,000, or 38.0% in 1999 compared to 1998, mainly
due to interest due from the related party loan to Cadmus.


COMPARISON OF 1998 RESULTS TO 1997 RESULTS

Sales during 1998 increased by $11,621,000, or 13.4%, gross profit increased by
$2,700,000, or 14.6%, selling, general and administrative expense increased by
$1,345,000, or 17.0%, and depreciation and amortization increased by $353,000,
or 11.1%, resulting in an operating income increase of $1,002,000, or 13.5%, in
each case as compared to 1997. Interest expense decreased

                                       20
<PAGE>

by $613,000, or 43.2%, interest income decreased by $704,000, or 54.7%, and
other expense decreased by $46,000, or 19.2%. In 1998, the Company recorded an
income tax expense of $3,234,000 compared to an income tax benefit of $7,312,000
in 1997. The above changes resulted in a decrease in net income of $9,589,000,
or 66.7% in 1998 compared to 1997.

RESTAURANT DIVISION. Restaurant sales increased by $6,319,000, or 9.7%, in 1998.
The sales increase is primarily attributable to an increase in the same store
sales of $3,126,000 and sales at new Restaurants of $4,266,000, partially offset
by sales lost due to closed Restaurants. Same store Restaurant sales increased
by $3,126,000, or 6.2%, mainly as a result of an increase in customers and a
menu price increase.

The comparable 48 Bickford's had customer count increases of 3.2%, while the
four remaining Abdow's and the one Howard Johnson's had decreased customer
counts of 2.4% and 1.1%, respectively.

Restaurant gross profit increased by $1,083,000, or 9.2%, and gross profit as a
percentage of sales remained relatively flat between years. Labor costs as a
percentage of sales increased by 0.5%, from 35.1% in 1997 to 35.6% in 1998, due
to competitive economic pressures causing higher average rates of pay and
increased staffing during peak business periods. Variable costs including
advertising remained flat, while fixed costs decreased by 0.2% as a percentage
of sales in 1998 compared to 1997.

Restaurant selling, general and administrative expense increased by $254,000, or
13.5%, during 1998 compared to 1997 due to additional personnel and labor rate
increases.

Restaurant depreciation and amortization increased by $278,000, or 10.3%, during
1998 as compared to 1997.

As a result of the above, Restaurant Division operating income increased by
$551,000, or 7.6%, in 1998 compared to 1997.

CUES DIVISION. Cues's sales increased by $5,302,000, or 24.4%, in 1998 compared
to 1997. As a result of this increase and a 0.1% decrease in Cues's gross profit
percentage in 1998 compared to 1997, gross profit increased by $1,617,000, or
24.1%. Cues was able to increase sales volume in 1998 without resorting to price
reductions in the face of continuing competitive pressures. Selling, general and
administrative expenses increased by $892,000, or 21.0%, and depreciation and
amortization expense increased by $75,000, or 15.6%. Approximately 47% of the
increase in selling, general and administrative expenses was related to selling
expenses with the remaining 53% related to general and administrative expense.
The increase in selling expenses is primarily attributable to increases in wages
resulting from both rate and headcount increases, sales volume-related
commissions and an increase in West Coast sales efforts, where a satellite
service and sales office had recently been established. The general and
administrative expense increase is primarily attributable to increases in wages
resulting from both rate and headcount increases, new facility costs, repairs
and maintenance of computer hardware. The net result of the above produced an
increase in operating income of $650,000, or 32.6%, in 1998 compared to 1997.

                                       21
<PAGE>

CORPORATE. Corporate's general and administrative expenses increased by
$199,000, or 11.1%, during 1998 compared to 1997, mainly due to an increase in
the Bickford's management compensation accrual related to its Phantom Stock
Option Plan and and, to a lesser extent, an marginal increase in management fee
expense. Interest expense decreased by $588,000, or 49.7%, in 1998 compared to
1997.

YEAR 2000 COMPLIANCE

During 1999, the company successfully resolved all of its year 2000 issues (also
known as the Y2K issue), which are the result of computer programs being written
using two digits rather than four to define the applicable year. As a result,
these programs may not have properly recognized the year 2000 (and subsequent
dates) and errors may have resulted. The company instituted procedures to
identify these computer programs as well as any non-information technology
systems in place and modify or replace such systems so that they would function
properly in the year 2000.

During 1998, the Restaurant division installed new accounting systems that are
fully operational and are year 2000 compliant. Individual restaurant locations
do not currently utilize point of sale registers and therefore computer
programming changes are not required. Peripheral hardware and software and
equipment at each restaurant location and the Restaurant's head office were
evaluated and corrected for year 2000 compliance.

During 1999, Cues completed the modifications to its manufacturing and
accounting software, which is the critical component for the planning,
purchasing, manufacturing and sale of its products. All known functions within
the software were rewritten to be year 2000 compliant. Within various
departments, Cues also utilizes computer hardware and peripheral programs that
are separate and distinct from the accounting and manufacturing software.
Examples include programs related to engineering design, spreadsheets, word
processing, and sales database tracking. While not as critical to the ongoing
nature of the business, Cues assessed the effect of Y2K on each hardware and
software component and made all necessary changes by the end of September 1999.
Cues does not utilize any computer aided machinery in its production process.

The Company initiated formal communications with all of its significant
suppliers to determine the extent to which the Company was vulnerable to
potential third parties' failures to remediate their own year 2000 issues.

The Company expensed the costs to modify or replace computer applications, the
majority of which were handled internally utilizing its normal information
technology budget and personnel. The Company did not experience any significant
increases in costs due to year 2000 conversions nor did it experience a decrease
in the information technology budget upon completion of the conversion efforts.
The Company will continue to incur salary expense, while the efforts of
personnel will be directed towards other ongoing information technology projects
in 2000.

Although the Company believes that it successfully avoided any significant
disruption from the Year 2000 issue relating to the century rollover and leap
year, it will continue to monitor all

                                       22
<PAGE>

critical systems for the appearance of delayed complications or disruptions,
problems encountered through suppliers, customers and other third parties with
whom the Company deals. Although these and other unanticipated Year 2000 issues
could have an adverse effect on the results of operations or financial condition
of the Company, it is not possible to anticipate the extent of impact at this
time.

INFLATION

Inflation and changing prices have not had a material impact on the Company's
results of operations.

LIQUIDITY AND CAPITAL RESOURCES

AVAILABLE RESOURCES. The Company's consolidated unrestricted cash positions at
December 31, 1999 and 1998 were $1,366,000 and $1,587,000, respectively. The
Company has a cash management system whereby cash generated by operations is
immediately used to reduce debt. The immediate reduction of outstanding debt
provides the Company with a reduction in interest expense greater than the
interest income that the cash could safely earn from alternative investments.
Working capital needs, when they arise, are met by daily borrowings.

During 1999, the Company had cash flow from operations of $9,901,000 which,
along with the net borrowings of long-term debt of $4,532,000, proceeds from the
exercise of stock options of $60,000 and sale of intangible asset of $145,000;
funded the purchase of property, plant and equipment totaling $4,254,000; a
related party loan of $7,487,000; acquisition of a competitor of $778,000;
principal payments of other long-term debt totaling $270,000; purchase of Common
Stock for $2,046,000; and principal payments on capital leases of $24,000.
During 1999, current assets increased by $10,310,000, primarily due to a related
party loan to Cadmus and partially due to an increase in Cues's accounts
receivable and inventory. Current liabilities decreased in 1999 by $440,000
(excluding the current portion of the long-term debt and current portion of
long-term capital leases).

During 1998, the Company had cash flow from operations of $11,280,000, which,
along with the net borrowings of long-term debt of $500,000 and proceeds from
the exercise of stock options of $26,000, funded the purchase of property, plant
and equipment totaling $5,750,000; a related party loan of $135,000; net
payments of the line of credit of $3,862,000; principal payments of other
long-term debt totaling $217,000; the purchase of Common Stock for $2,432,000;
and principal payments on capital leases of $110,000. During 1998, current
assets decreased by $909,000, primarily due to the use of the restricted cash
and cash equivalents for funding the Cues building renovation and expansion and
a decrease in Cues's accounts receivable, partially offset by an increase in the
Company's current deferred tax asset. Current liabilities increased in 1998 by
$624,000 (excluding the current portion of the long-term debt and current
portion of long-term capital leases).

During 1997, the Company had cash flow from operations of $10,327,000 which,
along with the net collection of related party notes receivable of $3,850,000
and net borrowings of long-term

                                       23
<PAGE>

debt of $3,020,000, funded the purchase of property, plant and equipment
totaling $5,435,000; net payments of the line of credit of $10,765,000;
principal payments of other long-term debt totaling $74,000; the repurchase of
Common Stock and Warrants to purchase Common Stock for $22,000; payment of
deferred bank fees of $153,000; and principal payments on capital leases of
$137,000. During 1997, current assets increased by $3,420,000, primarily due to
the increase in restricted cash and cash equivalents and an increase in the
Company's deferred tax asset. Current liabilities increased in 1997 by $141,000
(excluding the current portion of the long-term debt and current portion of
long-term capital leases).

FUTURE NEEDS FOR AND SOURCES OF CAPITAL. Management believes that cash generated
by operations is sufficient to fund future operations, including the interest
payments on bank debt. With bank approval, excess funds are available under the
Company's loan agreement to finance additional acquisitions.

ITEM 7A. MARKET RISKS.

The Company is exposed to market risk from changes in interest rates on borrowed
funds, which could affect its results of operations and financial condition. At
December 31, 1999, the Company has approximately $10.9 million in variable,
market-rate based debt outstanding. As such the market risk is considered
minimal (based upon a 10% increase or decrease in interest rates from their
December 31, 1999 levels). The Company has elected to manage this risk by
obtaining debt financing which allow it to select the most advantageous interest
rate between either the prime rate or the Eurodollar rate plus 2%

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Consolidated Financial Statements of the Company for each of the fiscal
years in the three-year period ended December 31, 1999, together with the report
thereon of PricewaterhouseCoopers LLP dated March 3, 2000, are included in this
report commencing on page F-1 and are listed under Part IV, Item 14 in this
Report.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
         ACCOUNTING AND FINANCIAL DISCLOSURE

Since the beginning of 1998: (i) PricewaterhouseCoopers LLP, the Company's
independent accountants engaged as the principal accountant to audit the
Company's financial statements, has neither resigned (or indicated it has
declined to stand for re-election after the completion of a current audit) or
been dismissed, and (ii) no new independent accountant has been engaged by the
Company as either the principal accountant to audit the Company's financial
statements or as an independent accountant to audit a significant subsidiary of
the Company.

                                       24
<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required under this item is incorporated herein by reference to
the Company's Proxy Statement to be filed within 120 days after December 31,
1999 for the annual Meeting of Stockholders to be held in May 2000.

ITEM 11. EXECUTIVE COMPENSATION

The information required under this item is incorporated herein by reference to
the Company's Proxy Statement to be filed within 120 days after December 31,
1999 for the annual Meeting of Stockholders to be held in May 2000.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
         AND MANAGEMENT

The information required under this item is incorporated herein by reference to
the Company's Proxy Statement to be filed within 120 days after December 31,
1999 for the annual Meeting of Stockholders to be held in May 2000.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required under this item is incorporated herein by reference to
the Company's Proxy Statement to be filed within 120 days after December 31,
1999 for the annual Meeting of Stockholders to be held in May 2000.

                                       25
<PAGE>


                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
         REPORTS ON FORM 8-K

(A) DOCUMENTS FILED AS PART OF THIS REPORT:

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                        Page
1.  FINANCIAL STATEMENTS                                              NUMBER(S)
                                                                     -----------
    Report of Independent Accountants                                   F-1
    Consolidated Balance Sheets at December 31, 1999 and 1998        F-2 to F-3
    Consolidated Statements of Income for the
      three years ended December 31, 1999                               F-4
    Consolidated Statements of Stockholders' Equity for the
      three years ended December 31, 1999                               F-5
    Consolidated Statements of Cash Flows for the three years
      ended December 31, 1999                                        F-6 to F-7
    Notes to Consolidated Financial Statements                       F-8 to F-28


2.  FINANCIAL STATEMENT SCHEDULES

       Schedule
        Number       Description                                         Page
        ------       -----------                                         ----
         II          Valuation and Qualifying Accounts and Reserves       S-1

All other schedules are omitted because they are not applicable or not required,
or because the required information is included in the Consolidated Financial
Statements or Notes thereto.

3. EXHIBITS

Exhibit
Number        Description
------        -----------

2.1           Agreement and Plan of Merger by and among ELXSI Corporation,
              ELXSI, Cadmus Corporation and Holdingcues, Inc. dated as of
              October 16, 1992, including form of Series C Warrant.
              (Incorporated herein by reference to Exhibit 2.7 of the Company's
              Current Report on Form 8-K filed November 13, 1992 (File No
              0-11877)).

2.2           Family Restaurant Sale and Purchase Agreement, between Marriott
              Family Restaurants, Inc. ("Marriott") and the Company dated
              February 28, 1991. (Incorporated herein by reference to Exhibit
              2.1 of the Company's Current Report on Form 8-K, dated July 16,
              1991 (File No. 0-11877)).

2.3           Side Letter to the Family Restaurant Sale and Purchase Agreement
              between Marriott and the Company dated February 28, 1991.
              (Incorporated herein by reference to Exhibit 2.2 of the Company's
              Current Report on Form 8-K, dated July 16, 1991 (File No.
              0-11877)).

                                       26
<PAGE>

2.4           Assignment and Guaranty of Family Restaurants Sale and Purchase
              Agreement and Side Letter, between the Company, Marriott and ELXSI
              dated June 29, 1991. (Incorporated herein by reference to Exhibit
              2.3 of the Company's Current Report on Form 8-K, dated July 16,
              1991 (File No. 0-11877)).

2.5           Closing Side Letter Agreement Regarding Family Restaurants Sale
              and Purchase Agreement between ELXSI and Marriott dated July 1,
              1991. (Incorporated herein by reference to Exhibit 2.4 of the
              Company's Current Report on Form 8-K, dated July 16, 1991 (File
              No. 0-11877)).

2.6           Real Estate Closing Side Letter Agreement Regarding Family
              Restaurants Sale and Purchase Agreement between ELXSI and Marriott
              dated July 1, 1991. (Incorporated herein by reference to Exhibit
              2.5 of the Company's Current Report on Form 8-K, dated July 16,
              1991 (File No. 0-11877)).

2.7           Agreement Concerning Massachusetts and Connecticut Liquor Licenses
              between ELXSI and Marriott dated July 1, 1991. (Incorporated
              herein by reference to Exhibit 2.6 of the Company's Current Report
              on Form 8-K, dated July 16, 1991 (File No. 0-11877)).

3.1           Restated Certificate of Incorporation of the Company, as amended.
              (Incorporated herein by reference to Exhibit 3.1 of the Company's
              Annual Report on Form 10-K for the fiscal year ended December 31,
              1989 (File No. 0-11877)).

3.2           Certificate of Amendment of Restated Certificate of Incorporation
              of the Company dated May 27, 1992. (Incorporated herein by
              reference to Exhibit 3.2 of the Company's Annual Report on Form
              10-K for the fiscal year ended December 31, 1994 (File No.
              0-11877)).

3.3           Certificate of Amendment of Restated Certificate of Incorporation
              of the Company dated May 19, 1998. (Incorporated herein by
              reference to Exhibit 3.3 to the Company's Current Report on form
              8-k, dated March 19, 1999 (File no. 0-11877))

3.4           Certificate of Amendment of Restated Certificate of Incorporation
              of the Company dated June 9, 1999. (Incorporated herein by
              reference to the Company's Form S-8 Requested Status filed March
              27, 2000 Registration No. 333-33300).

3.5           Bylaws of the Company. (Incorporated herein by reference to
              Exhibit 3.3 to the Company's Current Report on Form 8-K dated June
              24, 1997 and filed on June 26, 1997 (File No. 0-11877)).

4.1           Series A Warrant No. A-7 to purchase 50,000 shares of Common Stock
              issued to Eliot Kirkland L.L.C. ("EKLLC"). (Incorporated herein by
              reference to Exhibit 4.1 of the Company's Annual Report on Form
              10-K for the fiscal year ended December 31, 1996 (File No.
              0-11877)).

4.2           Form of Second Allonge and Amendment to Series A Warrants of ELXSI
              Corporation, with respect to the foregoing Warrant. (Incorporated
              herein by reference to Exhibit 4.2 of the Company's Annual Report
              on Form 10-K for the fiscal year ended December 31, 1998 (File No.
              0-11877)).

4.3           Series A Warrant No. A-6 to purchase 150,500 shares of Common
              Stock issued to the Alexander M. Milley Irrevocable Trust I U/A
              dated May 9, 1994. (Incorporated herein by reference to Exhibit
              4.2 of the Company's Annual Report on Form 10-K for the fiscal
              year ended December 31, 1994 (File No. 0-11877)).

4.4           Form of Second Allonge and Amendment to Series A Warrants of ELXSI
              Corporation, with respect to the foregoing Warrant. (Incorporated
              herein by reference to Exhibit 4.4 of the Company's Annual Report
              on Form 10-K for the fiscal year ended December 31, 1998 (File No.
              0-11877)).
                                       28
<PAGE>

4.5           Series C Warrant No. C-3 to purchase 68,762 shares of Common Stock
              issued to EKLLC. (Incorporated herein by reference to Exhibit 4.6
              of the Company's Annual Report on Form 10-K for the fiscal year
              ended December 31, 1996 (File No. 0-11877)).

4.6           Form of Second Allonge and Amendment to Series C Warrants of ELXSI
              Corporation, with respect to the foregoing Warrant. (Incorporated
              herein by reference to Exhibit 4.6 of the Company's Annual Report
              on Form 10-K for the fiscal year ended December 31, 1998 (File No.
              0-11877)).

4.7           Amended and Restated Registration Rights Agreement dated as of
              January 23, 1990 among the Company, Milley & Company ("M&C") and
              CIEC. (Incorporated herein by reference to Exhibit 4.7 of the
              Company's Annual Report on Form 10-K for the fiscal year ended
              December 31, 1989 (File No. 0-11877)).

4.8           Exercise of Option and Assignment of Registration Rights executed
              by ELX Limited Partnership ("ELX") and The Airlie Group, L.P.
              ("Airlie") dated November 30, 1994. (Incorporated herein by
              reference to Exhibit 4.6 of the Company's Annual Report on Form
              10-K for the fiscal year ended December 31, 1994 (File No.
              0-11877)).

4.9           Amended and Restated Loan and Security Agreement, dated as of
              December 30, 1996, between ELXSI and Bank of America Illinois
              ("BofA"). (Incorporated herein by reference to Exhibit 4.12 of the
              Company's Annual Report on Form 10-K for the fiscal year ended
              December 31, 1996 (File No. 0-11877)).

4.10          Second Amendment to Amended and Restated Loan and Security
              Agreement, dated as of September 24, 1997, between ELXSI and Bank
              of America National Trust and Savings Association. (Incorporated
              herein by reference to Exhibit 4.18 of the Company's Quarterly
              Report on Form 10-Q for the quarter ended September 30, 1997 (File
              No. 0-11877)).

4.11          Trust Indenture, dated as of September 24, 1997, between the
              Orange County Industrial Development Authority and Sun Trust Bank,
              Central Florida, National Association, as Trustee. (Incorporated
              herein by reference to Exhibit 4.19 of the Company's Quarterly
              Report on Form 10-Q for the quarter ended September 30, 1997 (File
              No. 0-11877)).

4.12          Loan Agreement, dated as of September 24, 1997, between ELXSI and
              the Orange County Industrial Development Authority. (Incorporated
              herein by reference to Exhibit 4.20 of the Company's Quarterly
              Report on Form 10-Q for the quarter ended September 30, 1997 (File
              No. 0-11877)).

4.13          Mortgage and Security Agreement, dated as of September 24, 1997
              between ELXSI and the Orange County Industrial Development
              Authority. (Incorporated herein by reference to Exhibit 4.21 of
              the Company's Quarterly Report on Form 10-Q for quarter ended
              September 30, 1997 (File No. 0-11877)).

4.14          Bond Purchase Agreement, dated as of September 24, 1997, by and
              among the Orange County Industrial Development Authority, ELXSI
              and Bank of America National Trust and Savings Association.
              (Incorporated herein by reference to Exhibit 4.22 of the Company's
              Quarterly Report on Form 10-Q for the quarter ended September 30,
              1997 (File No. 0-11877)).

4.15          Guaranty Agreement, dated as of September 24, 1997, by and between
              ELXSI Corporation and Bank of America National Trust and Savings
              Association. (Incorporated herein by reference to Exhibit 4.23 of
              the Company's Quarterly Report on Form 10-Q for the quarter ended
              September 30, 1997 (File No. 0-11877)).

                                       28
<PAGE>

4.16          Security Agreement, dated as of September 24, 1997, between ELXSI
              and the Orange County Industrial Development Authority.
              (Incorporated herein by reference to Exhibit 4.24 of the Company's
              Quarterly Report on Form 10-Q for the quarter ended September 30,
              1997 (File No. 0-11877)).

4.17          Rights Agreement, dated as of June 4, 1997, between the Company
              and Continental Stock Transfer & Trust Company, as Rights Agent.
              (Incorporated herein by reference to Exhibit 4.17 to the Company's
              Form 8-A Registration Statement, dated June 10, 1997 (File no.
              0-11877)).

4.18          Rights Agreement Amendment, dated as of March 16, 1999, between
              the Company and Continental Stock Transfer & Trust Company, as
              Rights Agent. (Incorporated herein by reference to Exhibit 2 to
              the Registrant's Form 8-A/A Registration Statement (Post-Effective
              Amendment No. 1) dated March 19, 1999 (File No. 0-11877)).

4.19          Standstill Agreement, dated as of March 16, 1999, among the
              Company, Alexander M. Milley and the "Kellogg Person" party
              thereto. (Incorporated herein by reference to Exhibit 3 of the
              Registrant's Form 8-A/A Registration Statement (Post-effective
              Amendment No. 1) dated March 19, 1999 (File No. 0-11877))

10.1          The Company's 1987 Incentive Stock Option Plan as amended.
              (Incorporated by reference to Exhibit 10.1 of the Company's Annual
              Report on Form 10-K for the fiscal year ended December 31, 1987
              (File No. 0-11877)).

10.2          The Company's 1987 Supplemental Stock Option Plan as amended.
              (Incorporated by reference to Exhibit 10.2 of the Company's Annual
              Report on Form 10-K for the fiscal year ended December 31, 1987
              (File No. 0-11877)).

10.3          The Company's 1993 Incentive Stock Option Plan. (Incorporated
              herein by reference to Exhibit 10.3 of the Company's Annual Report
              on Form 10-K for the fiscal year ended December 31, 1994 (File No.
              0-11877)).

10.4          The Company's 1995 Incentive Stock Option Plan. (Incorporated
              herein by reference to Exhibit 4.1 to the Company's Form S-8
              Registration Statement filed November 14, 1995 (Registration No.
              033-64205)).

10.5          The Company's 1996 Incentive Stock Option Plan. (Incorporated
              herein by reference to Exhibit 4.1 to the Company's Form S-8
              Registration Statement filed December 2, 1996 (Registration No.
              333-17131)).

10.6          The Company's 1997 Incentive Stock Option Plan. (Incorporated
              herein by reference to Exhibit 4.1 to the Company's Form S-8
              Registration Statements filed January 30, 1998 (Registration No.
              333-45381)).

10.7          The Company's 1998 Incentive Stock Option Plan. (Incorporated
              herein by reference to the Annex A to the Company's Proxy
              Statement included in its Schedule 14A Filed on April 17, 1998
              (File No. 0-11877)).

10.8          The Company's 1999 Incentive Stock Option Plan. (Incorporated
              herein by reference to the Annex A to the Company's Proxy
              Statement included in its Schedule 14A Filed on April 23, 1999
              (File No. 0-11877)).

10.9          The Company's 1999 Non Qualified Incentive Stock Option Plan.
              (Incorporated herein by reference to the Company's Form S-8
              Requested Status filed March 27, 2000 Registration No. 333-33300).

                                       29
<PAGE>

10.10         The ELXSI 1991 Phantom Stock Option Plan for the management of the
              Bickford's Division. (Incorporated herein by reference to Exhibit
              10.4 of the Company's Annual Report on Form 10-K for the fiscal
              year ended December 31, 1994 (File No. 0-11877)).

10.11         Amendment No. 1 to the ELXSI 1991 Phantom Stock Option Plan for
              the management of the Bickford's Division. (Incorporated herein by
              reference to Exhibit 10.5 of the Company's Annual Report on Form
              10-K for the fiscal year ended December 31, 1994 (File No.
              0-11877)).

10.12         Non-Qualified Stock Option Agreement issued to Robert C. Shaw for
              the purchase of 12,500 shares of Common Stock, dated October 30,
              1992. (Incorporated herein by reference to Exhibit 10.7 of the
              Company's Annual Report on Form 10-K for the fiscal year ended
              December 31, 1994 (File No. 0-11877)).

10.13         Non-Qualified Stock Option Agreement issued to John C. Savage for
              the purchase of 10,000 shares of Common Stock, dated October 30,
              1992. (Incorporated herein by reference to Exhibit 10.8 of the
              Company's Annual Report on Form 10-K for the fiscal year ended
              December 31, 1994 (File No. 0-11877)).

10.14         Non-Qualified Stock Option Agreement issued to Farrokh K. Kavarana
              for the purchase of 10,000 shares of Common Stock, dated October
              30, 1992. (Incorporated herein by reference to Exhibit 10.9 of the
              Company's Annual Report on Form 10-K for the Fiscal year ended
              December 31, 1994 (File No. 0-11877)).

10.15         Non-Qualified Stock Option Agreement issued to Kevin P. Lynch for
              the purchase of 20,000 shares of Common Stock, dated October 30,
              1992. (Incorporated herein by reference to Exhibit 10.10 of the
              Company's Annual Report on Form 10-K for the fiscal year ended
              December 31, 1994 (File No. 0-11877)).

10.16         Non-Qualified Stock Option Agreement issued to Alexander M. Milley
              for the purchase of 30,000 shares of Common Stock, dated October
              30, 1992. (Incorporated herein by reference to Exhibit 10.11 of
              the Company's Annual Report on Form 10-K for the fiscal year ended
              December 31, 1994 (File No. 0-11877)).

10.17         Stock and Note Purchase Agreement dated as of August 31, 1989 by
              and among the Company, Airlie and M&C. (Incorporated herein by
              reference to Exhibit 2.1 of the Company's Current Report on Form
              8-K filed October 3, 1989 (File No 0-11877)).

10.18         Management Agreement between Winchester National, Inc. (d/b/a M&C)
              and the Company dated September 25, 1989. (Incorporated herein by
              reference to Exhibit 10.21 of the Company's Annual Report on Form
              10-K for the fiscal year ended December 31, 1991 (File No.
              0-11877)).

10.19         Assignment of Management Agreement dated June 28, 1991 among the
              Company, Winchester National, Inc., ELXSI and Milley Management
              Incorporated ("MMI"). (Incorporated herein by reference to Exhibit
              10.16 of the Company's Annual Report on Form 10-K for the fiscal
              year ended December 31, 1994 (File No. 0-11877)).

10.20         Management Agreement Extension dated September 25, 1992 between
              ELXSI and MMI. (Incorporated herein by reference to Exhibit 10.17
              of the Company's Annual Report on Form 10-K for the fiscal year
              ended December 31, 1994 (File No. 0-11877)).

10.21         Form of Extension No. 2 to Management Agreement, dated as of June
              30, 1997, between ELXSI and Cadmus. (Incorporated herein by
              reference to Exhibit 10.33 to the Company's Current Report on Form
              8-K dated and filed July 9, 1997 (File No. 0-11877)).

                                       30
<PAGE>

10.22         Assignment to Cadmus Corporation ("Cadmus"), dated January 1,
              1994, of MMI's rights under the extended Management Agreement
              dated September 25, 1992, as amended, between ELXSI and MMI.
              (Incorporated herein by reference to Exhibit 10.18 of the
              Company's Annual Report on Form 10-K for the fiscal year ended
              December 31, 1994 (File No. 0-11877)).

10.23         Promissory Note of ELX payable to the Company dated December 8,
              1994 in the amount of $1,155,625.00 due December 8, 1997.
              (Incorporated herein by reference to Exhibit 10.6 of the Company's
              Annual Report on Form 10-K for the fiscal year ended December 31,
              1994 (File No. 0-11877)).

10.24         Letter Agreement dated December 8, 1997, from the Company to ELX
              extending the term of the foregoing. (Incorporated herein by
              reference to Exhibit 10.24 of the Company's Annual Report on Form
              10-K for the fiscal year ended December 31, 1998 (File No.
              0-11877)).

10.25         Form of Promissory Note of ELX payable to the Company, dated
              December 30, 1996, in the amount of $909,150 due on December 30,
              1999. (Incorporated herein by reference to Exhibit E to the
              Amendment No. 10 to the Schedule 13D of Alexander M. Milley, MMI,
              ELX, Cadmus and EKLLC, dated January 7, 1997, filed in respect of
              the Company's Common Stock).

10.26         Letter Agreement dated December 30, 1999, from the Company to ELX
              extending the term of the foregoing to December 31, 2002 and
              increasing the amount to $1,150,959.

10.27         Form of Recapitalization Agreement, dated as of December 30, 1996,
              among Azimuth Corporation ("Azimuth"), Delaware Electro
              Industries, Inc. ("DEI"), Contempo Design, Inc. ("CDI"), Contempo
              Design West, Inc. ("CDW"), ELXSI and BofA. (Incorporated herein by
              reference to Exhibit F to the Amendment No. 10 to the Schedule 13D
              of Alexander M. Milley, MMI, ELX, Cadmus and EKLLC, dated January
              7, 1997, filed in respect of the Company's Common Stock).

10.28         Second Amended and Restated Loan and Security Agreement, dated as
              of October 9, 1995, between Azimuth and BofA. (Incorporated herein
              by reference to Exhibit 10.24 of the Company's Annual Report on
              Form 10-K for the fiscal year ended December 31, 1996 (File No.
              0-11877)).

10.29         Loan and Security Agreement, dated as of October 9, 1995, between
              DEI and BofA. (Incorporated herein by reference to Exhibit 10.25
              of the Company's Annual Report on Form 10-K for the fiscal year
              ended December 31, 1996 (File No. 0-11877)).

10.31         Loan and Security Agreement, dated as of October 9, 1995, between
              CDI and BofA. (Incorporated herein by reference to Exhibit 10.26
              of the Company's Annual Report on Form 10-K for the fiscal year
              ended December 31, 1996 (File No. 0-11877)).

10.31         Loan and Security Agreement, dated as of October 9, 1995, between
              CDW and BofA. (Incorporated herein by reference to Exhibit 10.27
              of the Company's Annual Report on Form 10-K for the fiscal year
              ended December 31, 1996 (File No. 0-11877)).

10.32         First Omnibus Amendment, dated as of August 9, 1996, among
              Azimuth, DEI, CDI, CDW and BofA. (Incorporated herein by reference
              to Exhibit 10.28 of the Company's Annual Report on Form 10-K for
              the fiscal year ended December 31, 1996 (File No. 0-11877)).

10.33         Second Omnibus Amendment, dated as of September 23, 1996, among
              Azimuth, DEI, CDI, CDW and BofA. (Incorporated herein by reference
              to Exhibit 10.29 of the Company's Annual Report on Form 10-K for
              the fiscal year ended December 31, 1996 (File No. 0-11877)).

                                       31
<PAGE>

10.34         Third Omnibus Amendment, dated as of November 27, 1996, among
              Azimuth, DEI, CDI, CDW and BofA. (Incorporated herein by reference
              to Exhibit 10.30 of the Company's Annual Report on Form 10-K for
              the fiscal year ended December 31, 1996 (File No. 0-11877)).

10.35         Second Amended and Restated Guaranty, dated as of October 9, 1995,
              made by DEI, CDI and CDW in favor of BofA. (Incorporated herein by
              reference to Exhibit 10.31 of the Company's Annual Report on Form
              10-K for the fiscal year ended December 31, 1996 (File No.
              0-11877)).

10.36         Second Amended and Restated Pledge Agreement, dated as of October
              9, 1995, among Azimuth, DEI, CDI, CDW and BofA. (Incorporated
              herein by reference to Exhibit 10.32 of the Company's Annual
              Report on Form 10-K for the fiscal year ended December 31, 1996
              (File No. 0-11877)).

10.37         Form of letter, dated June 1997 from ELXSI to Azimuth, DEI, CDI,
              and CDW. (Incorporated herein by reference to Exhibit C to the
              Amendment No. 10 to the Schedule 13D of Alexander M. Milley, MMI,
              ELX, Cadmus and EKLLC, dated January 7, 1997 filed in respect of
              the Company's Common Stock)

10.38         Form of Employment Agreement, dated as of June 30, 1997, between
              ELXSI and Alexander M. Milley. (Incorporated herein by reference
              to Exhibit 10.34 to the Company's Form 8-K Current Report dated
              July 9, 1997 filed on July 9, 1997 (File No. 0-11877)).

10.39         Form of Employment Agreement, dated as of June 30, 1997, between
              ELXSI and David M. Doolittle.

21.1          Subsidiaries of the Company. (Incorporated by reference to Exhibit
              22.1 to the Company's Annual Report on Form 10-K for the fiscal
              year ended December 31, 1990 (File No. 0-11877)).

23.1          Consent of PricewaterhouseCoopers LLP

27            Financial Data Schedule

(b)  REPORTS ON FORM 8-K

         None
                                       32
<PAGE>

                                   SIGNATURES

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

                                  ELXSI CORPORATION


                                  BY:/s/ ALEXANDER M. MILLEY
                                     -----------------------------------
                                         Alexander M. Milley
                                         Chairman of the Board,President
                                         and Chief Executive Officer

Dated:   March  17, 2000

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 and
in the capacities and on the dates indicated.

       SIGNATURE                    TITLE                             DATE

/s/ ALEXANDER M. MILLEY        Chairman of the Board,            March 17, 2000
--------------------------       President and Chief Executive
    Alexander M. Milley          Officer (Principal Executive
                                 Officer)


/s/ ROBERT C. SHAW             Director and Vice President       March 17, 2000
--------------------------
    Robert C. Shaw

/s/ DAVID M. DOOLITTLE         Vice President, Treasurer         March 17, 2000
--------------------------       and Secretary (Chief
    David M. Doolittle           Accounting Officer and
                                 Principal Financial Officer)

/s/ KEVIN P. LYNCH             Director and Vice President       March 17, 2000
--------------------------
    Kevin P. Lynch

/s/ FARROKH K. KAVARANA        Director                          March 17, 2000
--------------------------
    Farrokh K. Kavarana

/s/ DENIS M. O'DONNELL         Director                          March 17, 2000
--------------------------
    Denis M. O'Donnell

                                       33
<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


To the Board of Directors and Shareholders of
ELXSI Corporation

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, of shareholders' equity and of cash flows
present fairly, in all material respects, the financial position of ELXSI
Corporation and its subsidiaries ("the Company") at December 31, 1999 and
December 31, 1998, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1999 in conformity with
generally accepted accounting principles in the United States. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States, which requiref 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.

PricewaterhouseCoopers LLP




Tampa, Florida
March 3, 2000

                                       F-1
<PAGE>

                                ELXSI CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                             (Dollars in Thousands)

                                   A S S E T S



                                               December 31,  December 31,
                                                  1999         1998
                                               ------------  ------------
Current assets:

   Cash and cash equivalents                     $ 1,366      $ 1,587

   Accounts receivable, less allowance for
    doubtful accounts of $214 and $181 in 1999
    and 1998, respectively                         4,109        3,493

   Accounts receivable - related party             7,487           --

   Inventories                                    12,206       10,114

   Prepaid expenses and other current assets         280          292

   Deferred tax asset                              5,832        5,484
                                                  -------     -------

      Total current assets                        31,280       20,970

Property, buildings and equipment, net            32,444       31,888

Intangible assets, net                             5,507        5,163

Notes receivable - related party                   4,442        4,200

Deferred tax asset - noncurrent                   15,338        3,532

Other                                                840          883
                                                 -------      -------

   Total assets                                  $89,851      $66,636
                                                 =======      =======

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

                                      F-2
<PAGE>

                                ELXSI CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                             (Dollars in Thousands)

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                December 31, December 31,
                                                   1999         1998
                                                 --------      ------
Current liabilities:
   Accounts payable                             $   3,267    $   3,526
   Accrued expenses                                 5,988        5,289
   Capital lease obligations - current                 51           52
   Current portion of long-term debt                1,637          887
                                                ---------    ---------

      Total current liabilities                    10,943        9,754

Capital lease obligations - non current             1,014        1,037
Long-term debt, net of discount                    10,201        6,689
Other non current liabilities                       3,816        3,596
                                                ---------    ---------

   Total liabilities                               25,974       21,076
                                                ---------    ---------

Commitments and contingencies (Note 8)                 --           --

Stockholders' equity:
  Preferred Stock, Series A Non-voting
   Convertible, par value $0.002 per share
    Authorized--5,000,000 shares
    Issued and outstanding--none                       --           --
  Common Stock, par value $0.001 per share
    Authorized--60,000,000 shares
    Issued and outstanding--4,275,477
    at December 31, 1999 and 4,453,460
    at December 31, 1998                                4            5
  Additional paid-in-capital                      224,118      226,103
  Accumulated deficit                            (159,993)    (180,343)
  Accumulated other comprehensive income             (252)        (205)
                                                ---------    ---------
      Total stockholders' equity                   63,877       45,560
                                                ---------    ---------

   Total liabilities and stockholders' equity   $  89,851    $  66,636
                                                =========    =========

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

                                      F-3
<PAGE>


                                ELXSI CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
                  (Amounts in Thousands, Except Per Share Data)

<TABLE>
<CAPTION>

                                                      YEAR ENDED DECEMBER 31,
                                                 ----------------------------------
                                                    1999         1998       1997
                                                 ---------    ---------   ---------
<S>                                              <C>          <C>          <C>
Net sales                                        $ 104,143    $  98,566    $  86,945

Costs and expenses:
   Cost of sales                                    81,703       77,327       68,406
   Selling, general and administrative               9,014        9,269        7,924
   Depreciation and amortization                     3,870        3,529        3,176
                                                 ---------    ---------    ---------

Operating income                                     9,556        8,441        7,439

Other income (expense):
   Interest income                                     801          583        1,287
   Interest expense                                   (832)        (807)      (1,420)
   Other expense                                      (293)        (193)        (239)
                                                 ---------    ---------    ---------

Income before income taxes                           9,232        8,024        7,067

Benefit (provision) for income taxes                11,118       (3,234)       7,312
                                                 ---------    ---------    ---------
Net income                                          20,350        4,790       14,379

Other comprehensive (loss) income, net of tax:
   Foreign currency translation adjustment             (47)           4         (109)
                                                 ---------    ---------    ---------
Comprehensive income                             $  20,303    $   4,794    $  14,270
                                                 =========    =========    =========


Net income per common share:
   Basic                                         $    4.75    $    1.09    $    3.19
                                                 =========    =========    =========
   Diluted                                       $    4.25    $     .98    $    2.98
                                                 =========    =========    =========

Weighted average number of common and
common equivalent shares:                            4,283        4,400        4,504
   Basic                                         =========    =========    =========
   Diluted (Note 10)                                 4,791        4,886        4,832
                                                 =========    =========    =========
</TABLE>


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

                                      F-4
<PAGE>

                                ELXSI CORPORATION
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                             (Dollars in Thousands)


<TABLE>
<CAPTION>
                                                                                             Accumulated
                                                                Additional     Accum-           Other
                                         Common Stock           Paid-In-      ulated       Comprehensive
                                        Shares   Dollars        Capital       Deficit      Income(Loss)
                                    ----------  ----------     ----------    ----------     -------------
                                        <S>         <C>            <C>            <C>        <C>
Balance at December 31, 1996        4,660,869    $        5    $  228,520    $ (199,512)   $     (100)

Foreign currency translation
   adjustment, net of tax                  --            --            --            --          (109)
Purchase and retirement of
   Common Stock                        (2,000)           --           (22)           --            --
Exercise of Common Stock options
   to purchase Common Stock             2,100            --            11            --            --
Issuance of fractional shares              11            --            --            --            --
Net income                                 --            --            --        14,379            --
                                   ----------    ----------    ----------    ----------    ----------

Balance at December 31, 1997        4,660,980             5       228,509      (185,133)         (205)

Foreign currency translation
   adjustment, net of tax                  --            --            --            --             4
Purchase and retirement of
   Common Stock                      (212,000)           --        (2,432)           --            --
Exercise of Common Stock options
   to purchase Common Stock             4,465            --            26            --            --
Issuance of fractional shares              15            --            --            --            --
Net income                                 --            --            --         4,790            --
                                   ----------    ----------    ----------    ----------    ----------

Balance at December 31, 1998        4,453,460             5       226,103      (180,343)         (209)

Foreign currency translation
   adjustment, net of tax                  --            --            --            --           (47)
Purchase and retirement of
   Common Stock                      (189,288)           (1)       (2,045)           --            --
Exercise of Common Stock options
   to purchase Common Stock            11,242            --            60            --            --
Issuance of fractional shares              63            --            --            --            --
Net income                                 --            --            --        20,350            --
                                   ----------    ----------    ----------    ----------    ----------

Balance at December 31, 1999        4,275,477    $        4    $  224,118    $ (159,993)   $     (252)
                                   ==========    ==========    ==========    ==========    ==========
</TABLE>

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

                                      F-5
<PAGE>

                                ELXSI CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (Dollars in Thousands)

<TABLE>
<CAPTION>

                                                       YEAR ENDED DECEMBER 31,
                                                    -----------------------------
                                                      1999        1998        1997
                                                    -------      -------    -------
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
<S>                                                 <C>         <C>         <C>
Net income                                          $ 20,350    $  4,790    $ 14,379
Adjustments to reconcile net
  income to net cash provided
  by operating activities:

   Depreciation and amortization                       3,870       3,529       3,176
   Amortization of deferred debt costs                    25          50          74
   Loss on disposal of equipment                          79         195          42
   Gain on sale of intangible                           (100)         --          --

(Increase) decrease in assets:
   Accounts receivable                                  (616)        494        (562)
   Inventories                                        (1,954)        264         639
 Prepaid expenses and other current assets                12         (89)         31
   Deferred tax asset                                (12,154)      2,027      (8,162)
   Other                                                (271)       (256)        101
(Decrease) increase in liabilities:
   Accounts payable                                     (259)       (908)       (497)
   Accrued expenses                                      699         284         356
   Other non current liabilities                         220         900         750
                                                    --------    --------    --------
   Net cash provided by operating activities           9,901      11,280      10,327
                                                    --------    --------    --------
CASH FLOWS USED IN INVESTING ACTIVITIES:

   Business Acquisition                                 (778)         --          --
   Accounts receivable - related party                (7,487)         --          --
   Purchase of property, buildings and equipment      (4,254)     (5,750)     (5,435)
   Sale of Intangible Asset                              145          --          --
   Collection of notes receivable - related party         --          --       5,850
   Investment in notes receivable - related party         --        (135)     (2,000)
                                                    --------    --------    --------
   Net cash used in investing activities             (12,374)     (5,885)     (1,585)
                                                    --------    --------    --------
</TABLE>

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

                                      F-6
<PAGE>

                                ELXSI CORPORATION
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                             (Dollars in Thousands)


<TABLE>
<CAPTION>
                                                              YEAR ENDED DECEMBER 31,
                                                           -----------------------------
                                                            1999        1998       1997
                                                           ------      ------     ------
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
<S>                                                         <C>        <C>        <C>
   Net borrowings (payments) on line of credit              4,532      (3,862)    (10,765)
   Borrowings of long-term debt                                --         500       3,020
   Payments of long-term debt                                (270)       (217)        (74)
   Purchase of Common Stock                                (2,046)     (2,432)        (22)
   Proceeds from exercise of Common Stock
    options                                                    60          26          11
   Payment of deferred bank fee                                --          --        (153)
   Principal payments on capital lease obligations            (24)       (110)       (137)
                                                         --------    --------    --------
   Net cash provided by (used in) financing activities      2,252      (6,095)     (8,120)
                                                         --------    --------    --------

(Decrease) increase in cash and cash equivalents             (221)       (700)        622

Cash and cash equivalents, beginning of period              1,587       2,287       1,665
                                                         --------    --------    --------
Cash and cash equivalents, end of period                 $  1,366    $  1,587    $  2,287
                                                         ========    ========    ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the year for:
    Interest                                             $    725    $    894    $  1,237
    Taxes                                                   1,106       1,278         856
</TABLE>
NON CASH INVESTING ACTIVITIES:

During 1999, the Company converted approximately $242,000 of interest due from
related parties to a note receivable.

In October 1997, the Company purchased a restaurant facility it was previously
leasing, which was classified as a capital lease, in Marlboro, Massachusetts for
approximately $635,000, $520,000 of which was financed with a mortgage note (see
Note 7).

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

                                      F-7
<PAGE>

                                ELXSI CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999

NOTE 1.   THE COMPANY

GENERAL. ELXSI Corporation (together with its subsidiary, the "Company") has
historically operated principally through its wholly-owned California
subsidiary, ELXSI. ELXSI's operating businesses consist of a Restaurant division
in New England and an equipment manufacturer in Orlando, Florida.

RESTAURANT DIVISION. On July 1, 1991, ELXSI acquired 30 Bickford's Restaurants
and 12 Howard Johnson's Restaurants from Marriott Family Restaurants, Inc. These
Restaurants were located in Massachusetts, Vermont, New Hampshire, Rhode Island
and Connecticut.

Between 1991 and 1998, ELXSI sold six of its Howard Johnson's Restaurants,
converted five others into Bickford's Restaurants, opened 14 new Bickford's
Restaurants, acquired 16 Abdow's Family Restaurants ("Abdow's"), sold one of
these Abdow's, closed two of these Abdow's and converted nine of the remaining
Abdow's into Bickford's Restaurants. During 1999 the remaining Howard Johnson's
lease expired and the restaurant was closed. In addition, two new Bickford's
Restaurants were opened in Somerville, Massachusetts and Warwick, Rhode Island
and one Abdow's was converted into a Bickford's. As of December 31, 1999, ELXSI
owned 61 Bickford's and 3 Abdow's Restaurants (the "Restaurants" or "Restaurant
Division").

EQUIPMENT MANUFACTURER. On October 30, 1992, ELXSI acquired Cues, Inc. of
Orlando, Florida and its two wholly-owned subsidiaries Knopafex, Ltd., a
Canadian company, and Cues B.V., a Dutch company, collectively referred to
herein as "Cues" or "Cues Division".

Cues is engaged in the manufacturing and servicing of video inspection and
repair equipment for wastewater and drainage systems primarily for governmental
municipalities, service contractors and industrial users.


NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the
accounts of ELXSI Corporation and its wholly-owned subsidiary, ELXSI. All
material intercompany accounts and transactions have been eliminated.

Both the Company's corporate functions and Cues Division have fiscal years
consisting of four calendar quarters ending on December 31. The Restaurant
Division's fiscal year consists of four 13-week quarters (one 52-week period)
ending on the last Saturday in December; this requires that every six or seven
years the Restaurant Division add an extra week at the end of the fourth quarter
and fiscal year.

CASH AND CASH EQUIVALENTS. The Company has a cash management system whereby
substantially all cash generated by operations is immediately used to reduce
debt. Cash and cash equivalents include bank deposits with original maturities
of three months or less.

                                      F-8
<PAGE>

FAIR VALUE OF FINANCIAL INSTRUMENTS. The carrying amount of cash and cash
equivalents, accounts and notes receivable, accounts payable, accrued expenses
and long-term debt approximates fair value primarily due to the short-term
maturity of those instruments and the variable, market-rate based nature of the
interest rates associated with the debt.

INVENTORIES. Inventories are stated at the lower of cost or market determined by
the first-in, first-out method.

PROPERTY, BUILDINGS AND EQUIPMENT. Property, buildings and equipment, including
buildings under capital leases, are stated at cost less accumulated
depreciation. Depreciation is provided using the straight-line method over the
estimated useful lives of individual assets or classes of assets. Buildings held
pursuant to capital leases or improvements to leased properties or fixtures are
amortized over the shorter of the term of the applicable lease or the estimated
useful life. Estimated useful lives are:

      Buildings                                  30 years
      Building improvements                      20 years
      Equipment, furniture and fixtures         3-7 years

Depreciation expense for 1999, 1998 and 1997 was $3,659,000, $3,348,000 and
$2,995,000, respectively.

Normal repairs and maintenance are expensed as incurred. Expenditures which
materially increase values, change capacities or extend useful lives, are
capitalized. The property, building and equipment accounts are relieved of the
cost of the items being replaced and accumulated depreciation of disposed assets
are eliminated with any resulting gain or loss on disposal being recorded in
other income or expense.

RESTAURANT OPENING COSTS. Non-capital expenditures incurred in opening a new
restaurant are expensed as incurred.

IMPAIRMENT OF LONG-LIVED ASSETS. In the event that facts and circumstances
indicate that the carrying value of a long-lived asset, including associated
intangibles, may be impaired, an evaluation of recoverability is performed by
comparing the estimated future undiscounted cash flows associated with the
asset's carrying amount to determine if a write-down to market value or
discounted cash flow is required.

INTANGIBLE ASSETS. The excess of cost over fair value of net assets acquired is
amortized over a range of 10-35 years using the straight-line method.
Amortization expense for each of 1999, 1998 and 1997 was $181,000, $150,000, and
$150,000, respectively. Management periodically reviews the potential impairment
of intangible assets in order to determine the proper carrying values as of each
consolidated balance sheet date.

Trademarks are amortized over 35 years using the straight-line method. Trademark
amortization expense for 1999, 1998 and 1997 was $30,000, $31,000 and $31,000,
respectively.

DEFERRED DEBT COSTS. Deferred debt costs are amortized over the term of the loan
to interest expense using the effective interest method. As of December 31, 1999
and 1998, $79,000 and

                                      F-9
<PAGE>

$105,000, respectively, remained to be amortized over future periods.
Amortization expense in 1999, 1998 and 1997 was $26,000, $50,000 and $74,000,
respectively.

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

CONCENTRATION OF CREDIT RISK. Financial instruments which potentially subject
the Company to concentrations of credit risk are primarily accounts receivable
and notes receivable. The Company performs ongoing credit evaluations of its
customers' financial condition and, generally, requires no collateral from its
customers. The allowance for non-collection of accounts receivable is based upon
the expected collectability of all accounts receivable.

The Company does not rely on any one vendor or supplier for its raw materials
within each of its operating divisions, and management believes that other
suppliers could provide for the Company's needs on comparable terms.

FOREIGN CURRENCY TRANSLATION. The assets and liabilities of the Canadian and
Dutch subsidiaries of Cues are translated into U.S. dollars at year-end exchange
rates, and revenue and expense items are translated at average rates of exchange
prevailing during the year. Resulting translation adjustments are accumulated in
a separate component of stockholders' equity.

INCOME TAXES. The Company recognizes deferred tax assets and liabilities for the
expected future tax consequences of temporary differences between the carrying
amounts and the tax basis of "other assets and liabilities". Temporary
differences giving rise to deferred tax assets and liabilities include certain
accrued liabilities and net operating loss carryforwards. The provision for
income taxes includes: the amount of income taxes for the year that would be
paid by the Company (without their carryforwards) as determined by applying the
provisions of the current tax law to the taxable income for the year; and the
net change during the year in the Company's deferred tax assets and liabilities.
In determining the amount of any valuation allowance required to offset deferred
tax assets, an assessment is made that includes anticipating future income in
determining the likelihood of realizing deferred tax assets (see Note 5).

ADVERTISING. Advertising costs, included in selling, general and administrative
expense, are expensed as incurred and totaled $1,047,000, $973,000 and
$1,028,000 in 1999, 1998 and 1997, respectively.

ACCOUNTING FOR STOCK-BASED COMPENSATION. The Company measures compensation
expense for employee and director stock options as the aggregate difference
between the market and exercise prices of the options on the date that both the
number of shares the grantee is entitled to receive and the purchase price are
known. Compensation expense associated with option grants is equal to the market
value of the shares on the date of grant and is recorded pro rata over the
required holding period. Pro forma information relating to the fair value of
stock-based compensation is presented in Note 10.

                                      F-10
<PAGE>

EARNINGS PER SHARE. The Company presents "basic" earnings per share, which is
net income divided by weighted average shares outstanding during the period, and
"diluted" earnings per share, which considers the impact of common stock
equivalents. The Company's common stock equivalents consist of employee and
director stock options and warrants to purchase common stock.

NOTE 3. ACQUISITION

During June 1999, Cues acquired the inventory and other assets associated with a
competitor's product line for $778,000. The other assets include tangible and
intangible assets including the trade names, patents, customer and vendor lists,
product literature and engineering drawings. The intangible assets are being
amortized over ten years.

NOTE 4. COMPOSITION OF CERTAIN FINANCIAL STATEMENT COMPONENTS

                                                    YEAR ENDED DECEMBER 31,
                                                -----------------------------
                                                    1999              1998
                                                ------------    -------------
Inventories:
   Raw materials and finished goods             $  7,960,000    $  6,924,000
   Work in process                                 4,246,000       3,190,000
                                                ------------    ------------
                                                $ 12,206,000    $ 10,114,000
                                                ============    ============
Property, buildings and equipment:
   Land                                         $  8,505,000    $  8,505,000
   Buildings and improvements                     19,591,000      18,495,000
   Buildings held pursuant to capital leases       1,234,000       1,234,000
   Equipment, furniture and fixtures              20,668,000      17,816,000
                                                  49,998,000      46,050,000
   Accumulated depreciation                      (17,554,000)    (14,162,000)
                                                ------------    ------------
                                                $ 32,444,000    $ 31,888,000
                                                ============    ============
Intangible assets:
    Excess of cost over fair value of
      net assets acquired                       $  5,849,000    $  5,249,000
    Trademarks                                     1,030,000       1,030,000
    Liquor licenses                                   40,000          85,000
                                                ------------    ------------
                                                   6,919,000       6,364,000
    Accumulated amortization                      (1,412,000)     (1,201,000)
                                                ------------    ------------
                                                $  5,507,000    $  5,163,000
                                                ============    ============


The excess of cost over fair value of net assets acquired, trademarks, and
liquor licenses represent the value assigned to these intangible assets upon the
acquisition of Restaurants and Cues by ELXSI.

                                      F-11
<PAGE>

                                                       1999           1998
                                                   -----------     ----------
Accrued expenses:
    Salaries, benefits and vacation                $ 2,091,000     $1,982,000
      Other taxes                                      907,000        848,000
      Common Stock reverse split payable               560,000             --
    Insurance                                          431,000        598,000
    Warranty                                           425,000        200,000
    Royalty                                            313,000        259,000
    Utilities                                          286,000        250,000
    Rents                                              254,000        243,000
    Professional fees                                  197,000        275,000
    Interest and bank fees                             110,000          3,000
    Other accruals                                     414,000        631,000
                                                   -----------     ----------
                                                   $ 5,988,000     $5,289,000
                                                   ===========     ==========

NOTE 5.   INCOME TAXES

Pre-tax income for the years ended December 31, 1999, 1998 and 1997 is as
follows:

                                                1999         1998       1997
                                             ----------  ----------  ----------
      Domestic                               $9,064,000  $7,923,000  $6,938,000
      Foreign                                   168,000     101,000     129,000
                                             ----------  ----------  ----------
       Total                                 $9,232,000  $8,024,000  $7,067,000
                                             ==========  ==========  ==========

The components of income tax benefit (expense) related to earnings for the years
ended December 31, 1999, 1998 and 1997 are as follows:

                                               1999        1998          1997
                                          ------------ -----------  ------------
      Current:
       Federal                             $ (185,000)  $ (207,000) $ (149,000)

       State and local                       (818,000)    (965,000)   (701,000)
       Foreign                                (33,000)     (35,000)          --
                                          -----------  -----------  -----------
                                           (1,036,000)  (1,207,000)   (850,000)
                                          -----------  -----------  -----------
      Deferred:
       Federal                             12,154,000   (2,027,000)  8,162,000
       State and local                             --           --           --
                                          -----------  -----------  -----------
                                           12,154,000   (2,027,000)  8,162,000
                                          -----------  -----------  -----------

      Total                               $11,118,000  $(3,234,000)  $7,312,000
                                          ===========  ===========  ===========

Deferred income taxes are provided for temporary differences between income tax
and financial statement recognition of revenues and expenses. Significant
components of the deferred tax (liabilities) assets are comprised of the
following at December 31, 1999 and 1998:

                                      F-12
<PAGE>

                                              1999           1998
                                         ------------    ------------
Fixed asset and other                    $ (1,077,000)   $ (1,103,000)
                                         ------------    ------------
 Gross deferred tax liabilities            (1,077,000)     (1,103,000)
                                         ------------    ------------

Accrued expenses and other                  2,558,000       2,548,000
Loss carryforwards                         47,460,000      65,842,000
Credit carryforwards                        2,680,000       1,775,000
                                         ------------    ------------
 Gross deferred tax assets                 52,698,000      70,165,000
                                         ------------    ------------

Deferred tax asset valuation allowance    (30,451,000)    (60,046,000)
                                         ------------    ------------
 Net deferred taxes                      $ 21,170,000    $  9,016,000
                                         ============    ============

At December 31, 1999 and 1998, the Company had net operating loss carryforwards
for federal income tax purposes of approximately $140 million and $194 million,
respectively. The decrease in the net operating loss carryforwards primarily
resulted from the expiration and the use of net operating loss carryforwards to
offset 1999 estimated federal taxable income. As of December 31, 1999, the
Company has tax credit carryforwards of approximately $1,624,000. These net
operating loss and tax credit carryforwards expire as follows:

                                         Net Operating Loss     Tax Credit
                                           Carryforwards       Carryforwards
                                         ------------------    -------------

           2000                             66,375,000            269,000
           2001                             33,916,000              7,000
           2002                              5,836,000                 --
           2003                             14,118,000                 --
           2004                             18,941,000                 --
           2005 through 2014                   401,000          1,348,000
                                          ------------         ----------
                                          $139,587,000         $1,624,000
                                          ============         ==========


The Company also has alternative minimum tax credit carryforwards of
approximately $1,056,000, which have an unlimited carryforward period.

The Company continually reviews the adequacy of the valuation allowance and is
recognizing deferred tax asset benefits only as reassessment indicates that it
is more likely than not that the benefits will be realized.

During 1996, a portion of the valuation allowance was released based upon the
success of Restaurant conversions and Cues manufacturing consolidations that
began in 1995. Accordingly, the Company recognized a $2,881,000 net deferred tax
asset. At the end of 1996, the Company believed it would have a change of
ownership of 50% or more.

During 1997, facts and circumstances surrounding the Company's belief that they
would have a change in ownership of 50% or more materially changed. Accordingly,
the Company reduced the valuation allowance applied against net operating loss
carryforwards by $8,162,000 based upon reasonable and prudent tax planning
strategies and future income projections.

                                      F-13
<PAGE>

During 1998, the Company amortized the deferred tax asset to income tax expense
in the amount of $2,027,000. This reduced the net deferred tax asset to
$9,016,000. During 1999, the Company reduced its deferred tax asset valuation
allowance when it appeared more likely than not that additional carryforward tax
benefits would be realized, due to the Company's historical, continued and
increasing profitability and the significantly reduced possibility of an
ownership change as a result of a negotiated standstill agreement entered into
in 1999 with a significant stockholder. Accordingly, and taking into account
reasonable and prudent tax planning strategies and future income projections,
the Company recorded an additional deferred tax asset of $14,591,000. The
Company amortized the deferred tax asset to income tax expense in the amount of
$2,437,000. The resulting net deferred tax asset of $21,170,000 represents the
amount of net operating loss and tax credit carryforwards that management
believes more likely than not will be realized over their remaining life. The
remaining valuation allowance is necessary due to the magnitude of the net
operating loss carryforwards and the uncertainty of future income estimates.

The Company's net deferred tax assets include substantial amounts of net
operating loss and credit carryforwards. Failure to achieve forecasted taxable
income would affect the ultimate realization of the net deferred tax assets.

The utilization of the Company's net operating loss and tax credit carryforwards
may be impaired or reduced under certain circumstances. Events which may affect
the Company's ability to utilize these carryforwards include, but are not
limited to, cumulative stock ownership changes of 50% or more over a three-year
period, as defined by Section 382 of the Internal Revenue Code (IRC), and the
timing of the utilization of the tax benefit carryforwards. Such changes in
ownership would significantly restrict the Company's ability to utilize loss and
credit carryforwards in accordance with Sections 382 and 383 of the IRC.

A reconciliation of the statutory federal tax rate and the Company's effective
income tax rate for the years ended December 31, 1999, 1998 and 1997 is as
follows:

                                                   1999       1998      1997
                                                 -------     -------   -------

Federal income tax rate                            34.0%      34.0%      34.0%
State income taxes, net of federal benefit          6.4        5.5        6.5
Changes in valuation allowance for deferred
   tax assets                                    (173.0)        --     (113.9)
Other                                               4.0        0.8        1.9
Recognition of net operating loss carryforward       --         --      (32.0)
                                                 -------    -------    -------
    Effective income tax rate                    (128.6)%   40.3%     (103.5)%
                                                 =======    =======    =======

NOTE 6.   RELATED PARTY TRANSACTIONS

TRANSACTIONS WITH ELX LIMITED PARTNERSHIP. On December 8, 1994, the Company
loaned ELX Limited Partnership (ELX), of which the President of the Company is
the sole general partner and other officers of the Company are limited partners,
approximately $1,156,000 under an unsecured note. ELX used the proceeds to
exercise its option to purchase 369,800 shares of the Company's Common Stock
held by The Airlie Group L.P. (Airlie) under an existing option granted to ELX
at $3.125 per share on September 25, 1989. On December 8, 1997, the due date

                                      F-14
<PAGE>

of the loan was extended for an additional three years. The loan bears interest
at 1/2% above the Company's senior debt borrowing rate (see Note 7). Interest
from December 8, 1994 to December 8, 1997 was paid current in December 1997.
Principal and interest from December 8, 1997 are due on December 8, 2000.

On December 30, 1996, the Company loaned ELX approximately $909,000 under an
unsecured note. The proceeds of this loan were used to exercise its option to
purchase 110,200 shares of the Company's Common Stock held by Bank America
Capital Corporation (BACC) under an existing option and to purchase the
remaining 110,200 shares of the Company's Common Stock held by BACC for $5.125
per share. This note also bears interest at 1/2% above the Company's senior debt
borrowing rate. On December 30, 1999, the due date of the loan, the loan
principle and the accrued interest from December 30, 1996 to December 30, 1999,
in the amount of $242,000, were consolidated and the due date was extended for
an additional three years. The current principal of $1,151,000 and accrued
interest from December 31, 1999 are due on December 30, 2002. The source of the
loan funds was ELXSI's line of credit.

TRANSACTIONS WITH CADMUS CORPORATION. During 1999, the Company advanced Cadmus
Corporation ("Cadmus") a total of approximately $7,487,000. The advances have
been guaranteed by Cadmus and are fully secured by a portfolio of private and
public company equities purchased with the proceeds of the advances. In
addition, Alexander Milley, President and Chief Executive Officer of the
Company, has personally guaranteed the amounts due from Cadmus. During 1999, the
Company charged interest on the receivable at prime plus 2% and earned $243,000
of interest income. The President of the Company is the controlling shareholder
of Cadmus; and certain officers, directors, and/or shareholders of Cadmus are
officers and/or directors of the Company.

On June 30, 1997, ELXSI loaned $2,000,000 to Cadmus under a two year note. On
June 30, 1999, the loan was extended for an additional two years and currently
matures on June 30, 2001. The loan bears interest at 15%, payable quarterly in
arrears and is collateralized by an investment owned by Cadmus. ELXSI earned a
5%, or $100,000, closing fee, which was amortized to interest income utilizing
the effective interest method over the original life of the loan. Cadmus
reimbursed ELXSI for the costs incurred by ELXSI in making the loan.

ELXSI (as assignee of ELXSI Corporation) entered into a management agreement on
September 25, 1989 with Cadmus. Effective June 30, 1997, the management
agreement was extended to at least June 30, 2005, and during 1998 the Board of
Directors extended the agreement for an additional two years ending on June 30,
2007. Effective April 1, 1997, the management fee was increased from $500,000 to
$600,000 annually, with a provision that the fee shall increase 5% on each
anniversary date thereof. The management fee may be discontinued following a
year in which the Company's operating income is less than $4,000,000, but will
be reinstated following the first fiscal quarter in which the Company again
attains quarterly operating income of at least $1,250,000. During 1999, 1998 and
1997, the Company was charged management fees of $650,000, $623,000 and
$575,000, respectively. Cadmus also provides the Company with certain general
and administrative services. At December 31, 1999 and 1998, ELXSI did not owe
any amount to Cadmus under such management agreement.

                                      F-15
<PAGE>

TRANSACTIONS WITH AZIMUTH CORPORATION AND SUBSIDIARIES. On March 24, 1998, ELXSI
borrowed $135,000 on it's supplemental line of credit with Bank of America, N.A.
(BofA) and loaned the proceeds to Azimuth Corporation (Azimuth), who purchased
10,000 shares of ELXSI Corporation's Common Stock from a third party. Certain of
the officers, directors and stockholders of Azimuth are officers and directors
of the Company. The loan matures on March 24, 2000 and bears interest at 15% per
annum.

On December 30, 1996, ELXSI entered into a Recapitalization Agreement (the
"Recapitalization Agreement") with Azimuth and its three wholly-owned
subsidiaries: Contempo Design, Inc., Contempo Design West, Inc., and Delaware
Electro Industries, Inc. (collectively referred to as the "Azimuth
Subsidiaries"). Under the Recapitalization Agreement, ELXSI purchased from BofA
three Azimuth Subsidiary revolving notes (the "Notes") which were scheduled to
mature on December 31, 1996. The Notes had a combined face value of $6,650,000
and were purchased by ELXSI at an $800,000 discount. Under the Recapitalization
Agreement, ELXSI received all contract rights and obligations held by BofA in
relation to the Notes and, as a result, became the provider of a working capital
line of credit for the Azimuth Subsidiaries, which ELXSI increased to $9,650,000
and extended through June 30, 1998. An Azimuth guaranty and substantially all of
the assets of Azimuth and the Azimuth Subsidiaries secured the line of credit.

On June 16, 1997, the Azimuth Subsidiaries prepaid the outstanding face amount
of the Notes due to ELXSI by utilizing the proceeds of a new line of credit
obtained from a third party lender. The working capital line of credit extended
by ELXSI to the Azimuth Subsidiaries was terminated upon such prepayment. During
the period the Notes were outstanding, ELXSI earned approximately $938,000 of
income from this transaction.


NOTE 7.   LONG-TERM DEBT

Long-term debt consists of the following:
                                                   DECEMBER 31,
                                               --------------------
                                                  1999       1998
                                               ----------  --------

    Bank Line of Credit with BofA,
    $9,000,000 available, interest due
    monthly at prime (8.5% at December 31
    ,1999) or 2% above Eurodollar rate
    (8.14% at December 31, 1999), maturing
    on June 30, 2001. The line of credit
    does not require minimum reductions in
    available credit. The line is
    collateralized by assets of ELXSI,
    including real estate, and the
    outstanding stock of ELXSI. The
    agreement provides for commitment fees
    of 0.3% on the unused portion of the
    line of credit. In addition, the
    agreementrestricts the payment of cash
    dividends by ELXSI to an amount not to
    exceed 50% of the excess cash flow (as
    defined).                                  $ 5,201,000  $  --

                                      F-16
<PAGE>

                                                     DECEMBER 31,
                                                  -----------------
                                                  1999         1998
                                                 --------   --------

    Supplemental Bank Line of Credit with
    BofA, $4,970,000 available, interest
    due monthly at prime 8.5% at December
    31, 1999) or 2% above Eurodollar rate
    (8.14% at December 31, 1999) maturing
    on June 30, 2001. The line of credit
    requires minimum reductions in
    available credit. The line may be
    utilized to repurchase securities of
    the Company, including stock, warrants
    and notes and is collateralized by
    assets of ELXSI, including real estate,
    and the outstanding stock of ELXSI. The
    agreement provides for commitment fees
    of 0.3% on the unused portion of the
    line of credit.                            3,525,000    4,194,000

    5 year mortgage payable on land and
    building located in Marlboro,
    Massachusetts with monthly installments
    of approximately $3,000 plus interest
    at 8.01% per annum. The balance of
    $347,000 is due on October 1, 2002.          446,000      480,000

    5 year mortgage payable on land and
    building located in Kingston,
    Massachusetts with monthly installments
    of approximately $2,800 plus interest
    at 8.25% per annum. The balance of
    $330,000 is due on August 25, 2003.          452,000      488,000


    15 year Orange County Industrial
    Development Authority bonds with
    monthly principal payments of
    approximately $14,000 plus interest at
    the tax exempt equivalent of the
    Eurodollar rate plus 1.5% payable
    monthly in arrears (5.93% at December
    31, 1999).                                 2,139,000    2,306,000


    Mortgage payable at 8.25% on the land
    and building owned by Cues B.V.

                                                  75,000      108,000
                                              ----------    ----------
                                              11,838,000    7,576,000
    Less current portion                      (1,637,000)    (887,000)
                                              ----------    ----------
    Long-Term Debt                           $10,201,000   $6,689,000
                                              ==========    ==========

The above bank debt agreements contain, among other provisions, financial
covenants related to the maintenance of ELXSI's minimum net worth, restrictions
on its capital expenditures and compliance with certain ratios, including
interest coverage and funded debt to earnings before interest, taxes,
depreciation and amortization. In connection with the Bank line of credit,
supplemental line of credit, and Orange County Industrial Development Bonds,
ELXSI had covenant violations resulting from investments and advances to related
parties during 1999 and the first quarter of 2000. In addition, ELXSI exceeded
the capital expenditures limit included in

                                      F-16
<PAGE>

the Orange County Industrial Development Authority Bond agreement. ELXSI
subsequently requested and obtained waivers from the bank for the violations.

Aggregate maturities of long-term debt for each of the years in the five year
period ending December 31, 2004, and thereafter are as follows:

                2000                      $1,637,000
                2001                       1,662,000
                2002                       6,493,000
                2003                         527,000
                2004                         174,000
                Thereafter                 1,345,000
                                          ----------
                                         $11,838,000

Industrial Development bond proceeds were used to finance the Orlando building
and land acquisition along with subsequent expansion and renovation of the
facility. During the construction phase, proceeds were held by a commercial
bank, as trustee, who invested the funds in a money market mutual fund. During
1998, the expansion and renovation was completed and the funds were disbursed.
Capitalized interest expense and interest income on borrowed funds held by the
trustee related to the Orange County Industrial Development Bonds were $133,000
and $48,000, respectively, during 1998.


NOTE 8.   COMMITMENTS AND CONTINGENCIES

ELXSI conducts a substantial portion of its operations utilizing leased
facilities. ELXSI leases land and/or buildings at 50 of its 64 Restaurants under
lease agreements with terms expiring on various dates (including extension
options) through 2032. The majority of the leases require that ELXSI pay all
taxes, maintenance, insurance, and other occupancy expenses related to leased
premises. The rental payments for a majority of the Restaurant locations are
based on a minimum annual rental plus a percentage of sales, as defined in the
relevant agreements. Generally, the leases provide for renewal options, and in
most cases management expects that in the normal course of business lease
agreements will be renewed or replaced by other leases.

Additionally, ELXSI has several non-cancelable operating leases, primarily for
certain office and transportation equipment, that expire over the next three
years and generally provide for purchases or renewal options.

                                      F-18
<PAGE>

The following is a schedule of future minimum lease commitments for each of the
years in the five-year period ending December 31, 2004, and thereafter:

                                        Capital Leases  Operating Leases
                                        -------------- -----------------

   2000                                   $  139,000     $ 3,054,000
   2001                                      146,000       2,964,000
   2002                                      129,000       2,915,000
   2003                                      105,000       2,514,000
   2004                                      109,000       2,076,000
   Thereafter                              1,334,000      13,935,000
                                          ----------     -----------
   Total minimum lease payments            1,962,000     $27,458,000
                                                         ===========
   Less - Amount representing interest      (897,000)
                                          ----------
  Present value of net minimum capital
    lease payments                         1,065,000
  Less - current portion                     (51,000)
                                          ----------
  Capital lease obligation - noncurrent   $1,014,000
                                          ==========

Rent expense charged to operations amounted to $3,377,000, $3,424,000 and
$3,294,000 during 1999, 1998, and 1997, respectively.

Cues has arrangements with truck dealers to deliver truck bodies that are used
in the manufacture of certain products. Under these arrangements, Cues
reimburses the dealers' floor-plan financing costs for those vehicles held by
the dealers until delivery to Cues. The amount of this reimbursement for 1999,
1998 and 1997 was $53,000, $51,000 and $63,000, respectively. At December 31,
1999 and 1998, truck bodies held by the dealers under these arrangements were
valued at $1,046,000 and $320,000, respectively.

The Company is involved in various claims and lawsuits incidental to its
business. In the opinion of management, the resolution of these matters will not
have a material adverse effect on the Company's consolidated financial position
or results of operations.


NOTE 9.   THRIFT AND PROFIT SHARING PLAN

In 1986, Cues established a contributory trustee administered thrift and profit
sharing plan covering all of its employees who have completed one year of
eligible service. The plan's enrollment dates are January 1, April 1, July 1,
and October 1 of each year. Participants can make deferred cash contributions,
not to exceed 16% of their annual compensation, which are supplemented by
employer matching contributions in the amount of 50% of the participant's
contribution up to a maximum employer contribution of 3%. Participants partially
vest in the employer's contributions after the second year of service and are
fully vested after the sixth year of service. Thrift and profit sharing expense
for 1999, 1998 and 1997 was $94,000, $70,000 and $44,000, respectively.

During 1995, the Restaurant Division established a non-contributory trustee
administered thrift and profit sharing plan covering all of its employees who
are over the age of 21 and have completed one year of eligible service.

                                      F-19
<PAGE>

NOTE 10.   STOCKHOLDERS' EQUITY

COMMON STOCK. Effective June 28, 1999, the Company completed the 1-for-100
reverse split voted on and approved by the Company's stockholders during its
annual meeting on May 27, 1999. As a result, those stockholders who held less
than one share immediately after the reverse split were effectively cashed-out
at the average trading price of the Company's Common Stock during the
immediately preceding 20 trading days. This resulted in the repurchase of
approximately 157,000 shares at $10.83 per share or a total of approximately
$1,704,000. Immediately after the reverse split the shareholders approved a
100-for-1 forward stock split resulting in the stock ownership of all non-cashed
out stockholders being restored to pre-existing levels. As of December 31, 1999
approximately $560,000, which is reflected in accrued expenses on the
accompanying balance sheet, remained to be paid to stockholders under this
reverse split.

COMMON STOCK OPTIONS. At December 31, 1999 and 1998, the Company had a total of
961,745 and 848,435 common shares reserved for issuance under its stock option
plans, respectively. Options under the Company's plans are granted at exercise
prices determined by the Board of Directors, at not less than the fair market
value of the Common Stock on the date of grant. Options generally vest over four
years and become exercisable six months after the date of the grant absent
vesting and expire ten years after the date of the grant.

During 1999, stockholders approved the ELXSI Corporation 1999 Incentive Stock
Option Plan (the "1999 Plan"), under which up to 75,000 shares may be issued.
Under the 1999 Plan options to purchase 75,000 shares were granted and
outstanding at an exercise price of $10.188 per share. A portion of these
options became exercisable on December 15, 1999. Also during 1999, the Board of
ELXSI Corporation approved the ELXSI Corporation 1999 Non-Qualified Stock Option
Agreement (the "1999 Agreement"), under which up to 50,000 shares may be issued.
Under the 1999 Non-Qualified Stock Option Agreement options to purchase 50,000
shares were granted and outstanding at an exercise price of $10.00 per share.
These options became exercisable on March 5, 1999.

During 1998, stockholders approved the ELXSI Corporation 1998 Incentive Stock
Option Plan (the "1998 Plan"), under which up to 75,000 shares may be issued.
Under the 1998 Plan options to purchase 75,000 shares were granted and
outstanding at an exercise price of $8.125 and $9.75 per share. As of December
31, 1999, unexercised options to purchase 75,000 shares were outstanding. A
portion of the $8.125 options became exercisable on April 8, 1999 and a portion
of the $9.75 options became exercisable on August 12, 1999.

During 1997, stockholders approved the ELXSI Corporation 1997 Incentive Stock
Option Plan (the "1997 Plan"), under which up to 130,000 shares may be issued.
Under the 1997 Plan options to purchase 130,000 shares were granted and
outstanding at an exercise price of $6.00 per share as of December 31, 1997. As
of December 31, 1999, unexercised option to purchase 125,000 shares were
outstanding. A portion of these options became exercisable on November 22, 1997.

                                      F-20
<PAGE>

                                                              Weighted-
                                                Number        Average
                                              of Shares    Exercise Price
                                              ---------    --------------
   Granted during 1997                         217,500        7.21
   Exercised during 1997                        (2,100)       5.38
   Outstanding at December 31, 1997            767,160        6.13
   Exercisable at December 31, 1997            580,394        5.74
   Available for grant at December 31, 1997    130,327

   Granted during 1998                          77,500        8.15
   Exercised during 1998                        (4,465)       5.59
   Canceled during 1998                        (55,725)       6.84
   Outstanding at December 31, 1998            784,470        6.28
   Exercisable at December 31, 1998            655,921        6.10
   Available for grant at December 31, 1998     65,165

   Granted during 1999                         164,700       10.03
   Exercised during 1999                       (11,690)       5.48
   Canceled during 1999                         (8,700)      10.66
   Outstanding at December 31, 1999            928,780        6.94
   Exercisable at December 31, 1999            768,841        6.58

   Available for grant at December 31, 1999     32,965


The following table summarizes the stock options outstanding and exercisable at
December 31, 1999:
                        OUTSTANDING                     EXERCISABLE
                    -------------------             --------------------
                        Weighted-
                         Average
                                           Weighted-                Weighted-
                               Remaining   Average                   Average
    Range of       Number of  Contractual  Exercise   Number of     Excercise
Exercise Prices     Options     Life       Price       Options        Price
---------------   ---------   -----------  --------   ---------     ---------
  5.00 - 6.50      621,580      5.27         5.74       585,841       5.73
 8.125 - 10.188    307,200      8.96         9.36       183,000       9.30

Had compensation costs for the stock option plans been determined based on the
fair value at the date of grant for awards in 1999, 1998 and 1997, the Company's
net income and earnings per share would approximate the following pro forma
amounts:


                                      F-21
<PAGE>

                                      1999      1998        1997
                                  ----------- ---------  ----------
Net income - as reported          20,350,000  4,790,000  14,379,000
Net income - pro forma            20,078,000  4,639,000  14,098,000

Basic EPS - as reported                 4.75       1.09        3.19
Basic EPS - pro forma                   4.69       1.05        3.13

Diluted EPS - as reported               4.25        .98        2.98
Diluted EPS - pro forma                 4.19        .95        2.92

The fair value of each option is estimated on the date of grant using the
Black-Scholes option-pricing model. The fair value of options granted during
1999, 1998 and 1997 were calculated utilizing the following weighted-average
assumptions: no dividend yield; expected volatility of 11.7%, 11.8% and 11.7%,
respectively; risk free interest rate of 5.48%, 5.91% and 5.89%, respectively;
and expected lives of 7 years. The weighted-average fair value of options
granted during fiscal 1999, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>

                                                              Weighted-   Weighted-
                                                              Average     Average
                                                  Number      Exercise      Fair
                                                of Options    Prices       Values
                                                ----------    ---------   ---------
Fiscal 1999:
<S>                                               <C>            <C>       <C>
Exercise price = market price at date of grant    164,700        5.48      3.32
Fiscal 1998:
Exercise price = market price at date of grant     75,000        8.125     2.85

Fiscal 1997:
Exercise price = market price at date of grant    217,500        7.21      2.66
</TABLE>

WARRANTS. At December 31, 1999 and 1998, the Company had a total of 269,262
common shares reserved for issuance pursuant to warrants as follows:

In September 1989, the Company issued warrants to acquire up to an aggregate of
1,204,000 shares of the Company's Common Stock. On December 8, 1994, the Company
repurchased 761,638 of these warrants from Airlie for $1,635,000, or $2.125 per
warrant. On December 30, 1996, the Company repurchased all of these warrants
that were for convertible preferred stock (convertible into 241,862 shares of
Common Stock) from BACC for $478,000, or $1.975 per underlying common share. The
remaining 200,500 warrants, designated as Series A, were outstanding and
unexercised at December 31, 1999, and originally had an exercise price and
expiration date of $3.125 and September 25, 1996. During 1996, these warrants'
expiration date was extended until September 30, 1998 and the exercise price was
increased to $3.75 per share, and during 1999 their expiration date was further
extended until September 31, 2000 and their exercise price was further increased
to $4.50. Series A warrants to purchase 50,000 shares of the Company's Common
Stock are held by Eliot Kirkland L.L.C. ("Eliot"), of which Alexander M. Milley,
the President of the Company is the sole manager and significant equity holder.
Series A warrants to acquire 150,500 shares of the Company's Common Stock are
held by the Alexander M. Milley Irrevocable Trust I U/A, a trust for the benefit
of members of Mr. Milley's immediate

                                      F-22
<PAGE>

family and of which Mr. Milley's wife is a trustee. The estimated fair value of
the modified Series A warrants at September 30, 1998 was $5.39 per share using
the Black-Scholes option pricing model and assumptions similar to those used for
valuing the Company's stock options as described above, as compared to the value
of the old warrants at approximately $5.75 per share at the date of extension.

In connection with the 1992 acquisition of Cues, the Company issued Series C
warrants to purchase 68,762 shares of the Company's Common Stock. These warrants
remained unexercised at December 31, 1999, and originally had an exercise price
and expiration date of $4.36 per share and January 31, 1997, respectively.
During 1997, these warrants' expiration date was extended until January 31, 1999
and the exercise price was increased to $5.23 per share. In December 1998, the
Board of Directors of the Company approved the further extension of the
outstanding Series C warrants, which are held by Eliot. Under this modification
of the terms of the Series C warrants, their exercise price was increased from
$5.23 per share to $6.278 per share and their expiration date was extended from
January 31, 1999 to January 31, 2001. The estimated fair value of the modified
Series C warrants at December 17, 1998 was $4.55 per share using a Black-Scholes
option pricing model and assumptions similar to those used for valuing the
Company's stock options as descried above, as compared to the value of the old
warrants at approximately $5.02 per share at the date of extension.

PHANTOM STOCK OPTION PLAN. The ELXSI phantom stock option plan was implemented
in 1992 as a long-term incentive plan for four key executives of Bickford's
Restaurants (the "Group"). At the inception of the plan, the Group paid an
initial investment totaling approximately $116,000. In October 1997, the Company
returned the Group's initial investment and simultaneously received notes for
the same amount from each Group member. These notes bear interest at 9% annually
and are due June 30, 2001. Each Group member is entitled to receive, upon
exercise, a cash payment equal to his individual vested percentage of the
appraised value of Bickford's Restaurants, as defined, less the balance of his
exercise price payable upon exercise. Full vesting occurred on July 1, 1996, at
which time the Group, as a whole, was entitled to 13.9% of the appraised value
of Bickford's Restaurants, as defined. Each Group member's phantom stock options
may be exercised at the earliest of July 1, 2001, the termination of employment,
death or the sale of the Restaurants.

The assumptions used in calculating the annual expense attributable to this plan
include the use of a multiple of the Bickford's Restaurants operating income,
less certain Bickford's-related liabilities, a non-liquidity discount, estimated
taxes related to a gain on divestiture of the Restaurants, sale transaction
costs and the exercise price. During 1999, 1998 and 1997, the Company recorded
compensation expense related to the phantom stock option plan of $220,000,
$900,000 and $750,000, respectively. As of December 31, 1999 and 1998,
$3,700,000 and $3,480,000, respectively, was recorded in other non-current
liabilities, which represents 13.9% of the estimated appraised value of
Bickford's Restaurants after subtracting the Group's required exercise price, as
defined, on those dates.

STOCK PURCHASE RIGHTS. On June 4, 1997, the Board of Directors declared a
dividend distribution of one Common Stock purchase right (a "Right") for each
share of the Company's Common Stock outstanding on June 16, 1997 issued under a
rights agreement (the "Rights Agreement") with Continental Stock Transfer &
Trust Company. Each Right would entitle stockholders to purchase the Company's
Common Stock at an exercise price of $25.00 per full common share, subject to
adjustment. The Rights are not currently exercisable, but would

                                      F-23
<PAGE>

become exercisable if a person or group, together with his affiliates and
associates, becomes an "Acquiring Person" (as defined in the Rights Agreement)
by becoming a beneficial holder of 15% or more of the outstanding shares of
Common Stock (35% or more for The Milley Group Members (as defined in the Rights
Agreement). Upon such an event (or certain other events described in the Rights
Agreement), each Right will entitle the holder thereof (other than the Acquiring
Person and his affiliates and associates) the right to receive, upon exercise
and payment of the exercise price, shares of Common Stock having a market value
equal to two times that exercise price.

In the event that the Company is acquired in a merger or other business
combination, under various circumstances the holders of the Rights will be
entitled to receive, upon exercise, Common Stock of the Company or the acquiring
company, and/or cash and other property, equal to two times the exercise price
of the Rights.

The Company may redeem the Rights at a price of $0.001 per Right, subject to
certain limitations. The Rights will expire at the close of business on June 15,
2007, unless extended through provisions in the Rights Agreement or early
redemption or exchange by the Company.

In March 1999, in connection with and under the terms of a Standstill Agreement
entered into by the Company that month with Peter R. Kellogg and certain persons
and entities controlled by or related to him who had purchased Common stock
("Kellogg Persons"), the Company and Rights Agent executed and delivered an
amendment to the rights Agreement which, among other things, provided that under
certain circumstances such Kellogg Persons could acquire in excess of 15% of the
outstanding Common Stock without becoming "Acquiring Persons" under the Rights
Agreement, and under the Standstill Agreement, Mr. Milley was granted
irrevocable proxies to vote the Kellogg Persons' shares and obtained certain
rights of first refusal over such shares.

RECONCILIATION OF EARNINGS PER SHARE. The following is a reconciliation of the
numerators and denominators of the basic and diluted earnings per share
computations for the years ended December 31:


                                       1999          1998          1997
                                   -----------   -----------   -----------
Basic earnings per share
   Numerator                       $20,350,000   $ 4,790,000   $14,379,000
                                   -----------   -----------   -----------
   Denominator:
      Common shares outstanding      4,283,000     4,400,000     4,504,000
                                   -----------   -----------   -----------
      Basic earnings per share     $      4.75   $      1.09   $      3.19
                                   ===========   ===========   ===========

Diluted earnings per share
   Numerator                       $20,350,000   $ 4,790,000   $14,379,000
   Denominator:
      Common shares outstanding      4,283,000     4,400,000     4,504,000
      Assumed conversion of
       options and warrants            508,000       486,000       328,000
                                   -----------   -----------   -----------
      Total shares                   4,791,000     4,886,000     4,832,000
                                   -----------   -----------   -----------
      Diluted earnings per share   $      4.25   $       .98   $      2.98
                                   ===========   ===========   ===========

Options to purchase 87,500 shares of Common Stock at $9.00 per share were
outstanding during the last quarter of 1997 but were not included in the
computation of diluted earnings per share

                                      F-24
<PAGE>

because the options' exercise price was greater than the average market price of
the common shares. Options to purchase 75,000 shares were still outstanding at
the end of 1999.

Options to purchase 1,200 shares of Common Stock at $26.50 per share, were
outstanding during 1998 and 1997 but were not included in the computation of
diluted earnings per share because the options' exercise price was greater than
the average market price of the common shares. These options are scheduled to
mature on May 23, 2000.

NOTE 11. SEGMENT REPORTING

The Company has two reportable segments, restaurant operations and equipment
manufacturing. The Company is primarily organized into two strategic business
units, which have separate management teams and infrastructures that offer
different products and services. Each business requires different employee
skills, technology and marketing strategies. The restaurant operations segment
includes 64 Restaurants located in the New England States operating under the
Bickford's and Abdow's brand names. The equipment manufacturing segment produces
sewer inspection equipment for sale to municipalities, contractors, and foreign
governments.

Accounting policies of the segments are the same as those described in the
Summary of Significant Accounting Policies. The Company evaluates the
performance of each segment based upon profit or loss from operations before
income taxes "before" non-recurring gains and losses and foreign exchange gains
and losses.

Summarized financial information by business segment for the years ended
December 31, 1999, 1998 and 1997 is summarized in the following table. The
"Other" lines include corporate related items, results of insignificant
operations; and, as they relate to profit and losses, income and expense not
allocated to reportable segments:
<TABLE>
<CAPTION>

                                      1999             1998              1997
                                 -------------     -------------    -------------
<S>                              <C>               <C>              <C>
Revenues From External
 Customers:
 Restaurants                     $  73,916,000     $  71,517,000    $  65,198,000
   Equipment                        30,227,000        27,049,000       21,747,000
                                 -------------     -------------    -------------
                                 $ 104,143,000     $  98,566,000    $  86,945,000
                                 =============     =============    =============
Depreciation and Amortization:
   Restaurants                   $   3,146,000     $   2,972,000    $   2,694,000
   Equipment                           724,000           557,000          482,000
                                 -------------     -------------    -------------
                                 $   3,870,000     $   3,529,000    $   3,176,000
                                 =============     =============    =============
Segment Profit:
   Restaurants                   $   8,005,000     $   7,797,000    $   7,246,000
   Equipment                         2,885,000         2,642,000        1,992,000
   Other                            (1,334,000)       (1,998,000)       1,799,000
                                 -------------     -------------    -------------
                                 $   9,556,000     $   8,441,000    $   7,439,000
                                 =============     =============    =============
Interest Revenue:
   Restaurants                   $          --     $          --    $          --
   Equipment                            24,000            20,000           24,000
   Other                               777,000           563,000        1,263,000
                                 -------------     -------------    -------------
                                 $     801,000     $     583,000    $   1,287,000
                                 =============     =============    =============
</TABLE>

                                      F-25
<PAGE>


                                 1999          1998        1997
                            ------------ -----------   -----------
Interest Expense:
   Restaurants             $   169,000   $   148,000   $   152,000
   Equipment                   155,000        63,000        84,000
   Other                       508,000       596,000     1,184,000
                           -----------   -----------   -----------
                           $   832,000   $   807,000   $ 1,420,000
                           ===========   ===========   ===========

Segment Assets:
   Restaurants             $31,724,000   $31,415,000   $31,184,000
   Equipment                24,555,000    21,474,000    21,132,000
   Other                    33,572,000    13,747,000    15,345,000
                           -----------   -----------   -----------
                           $89,851,000   $66,636,000   $67,661,000
                           ===========   ===========   ===========

Capital Expenditures for
 Segment Assets:
   Restaurants             $ 3,764,000   $ 3,749,000   $ 3,827,000
   Equipment                   490,000     2,001,000     1,608,000
                           -----------   -----------   -----------
                           $ 4,254,000   $ 5,750,000   $ 5,435,000
                           ===========   ===========   ===========

Capital expenditures exclude amounts expended in connection with acquisitions
and divestitures.

There were no inter-segment sales or transfers during 1999, 1998, and 1997.
Operating income by business segment excludes interest income, interest expense,
and other income and expenses. "Other assets" consists principally of the
accounts and notes receivable from related parties, interest receivable, and the
deferred tax asset.

Foreign assets, revenues, and export sales each represent less than 10% of the
Company's totals. No material amounts of the Company's sales are dependent upon
a single customer.


NOTE 12.  QUARTERLY FINANCIAL DATA - (UNAUDITED)

The following summarizes quarterly financial data for 1999 and 1998 (in
thousands, except per share data):

                                                 1999
                          -----------------------------------------------
                           MAR. 31,    JUNE 30,     SEP. 30,    DEC. 31,
                          ----------  ----------  ----------- -----------

Net sales                    $23,512   $26,517     $28,719     $25,395
Gross profit                   4,603     5,747       6,449       5,641
Income before income taxes     1,259     2,258       2,970       2,745
Net income                   $   747   $ 1,333     $15,698     $ 2,572
Earnings per common share:
   Basic                     $   .17   $   .31     $  3.67     $   .60
   Diluted                   $   .16   $   .28     $  3.28     $   .53

                                      F-26
<PAGE>

<TABLE>
<CAPTION>
                                                           1999
                                        --------------------------------------------
                                        MAR. 31,    JUNE 30,    SEP. 30,    DEC. 31,
                                        --------    --------    --------    --------
                                          <S>         <C>          <C>         <C>
Reconciliation of earnings per share:
 Basic earnings per share:
 Numerator                              $    747    $  1,333    $ 15,698    $  2,572
                                        ========    ========    ========    ========
 Denominator:
  Common shares outstanding                4,453       4,431       4,385       4,275
  Impact of reverse split                   (157)       (157)       (104)         --
                                        --------    --------    --------    --------
    Common shares adjusted                 4,296       4,274       4,281       4,275
                                        ========    ========    ========    ========

Basic earnings per share reported       $    .17    $    .30    $   3.58    $    .60
                                        ========    ========    ========    ========
Basic earnings per share adjusted       $    .17    $    .31        3.67    $    .60
                                        ========    ========    ========    ========
Diluted earnings per share:
 Numerator                              $    747    $  1,333    $ 15,698    $  2,572
                                        ========    ========    ========    ========
 Denominator:
  Common shares outstanding                4,453       4,431       4,385       4,275
  Assumed conversion of options
   and warrants                              453         469         469         548
                                        --------    --------    --------    --------
  Total shares as reported                 4,906       4,900       4,854       4,823
   Impact of reverse split                  (157)       (157)       (104)         --
                                        --------    --------    --------    --------
  Common shares adjusted                   4,749       4,743       4,792       4,823
                                        ========    ========    ========    ========

Diluted earnings per share reported     $    .15    $    .27    $   3.22    $    .53
                                        ========    ========    ========    ========
Diluted earnings per share adjusted     $    .16    $    .28    $   3.28    $    .53
                                        ========    ========    ========    ========


                                                        1998
                                    ----------------------------------------------
                                     MAR. 31,    JUNE 30,    SEP. 30,     DEC. 31,
                                    ---------    --------    --------     --------
Net sales                            $ 23,421    $ 25,108    $ 25,558    $ 24,479
Gross profit                            4,656       5,580       5,762       5,241
Income before income taxes              1,564       2,244       2,393
                                                                            1,823
Net income                           $    938    $  1,347    $  1,269    $  1,236
Earnings per common share:
   Basic                             $    .21    $    .30    $    .29    $    .29
   Diluted                           $    .19    $    .27    $    .26    $    .26

Reconciliation of earnings per
 share:
 Basic earnings per share:
  Numerator                          $    938    $  1,347    $  1,269    $  1,236
                                     ========    ========    ========    ========
  Denominator:
    Common shares outstanding           4,654       4,569       4,556       4,456
    Impact of reverse split              (157)       (157)       (157)       (157)
    Common shares adjusted              4,497       4,412       4,399       4,299
                                     ========    ========    ========    ========

 Basic earnings per share reported   $    .20    $    .30    $    .27    $    .28
 Basic earnings per share adjusted   $    .21    $    .30    $    .29    $    .29

</TABLE>

                                      F-27
<PAGE>


                                                        1998
                                    -------------------------------------------
                                      MAR. 31,   JUNE 30,   SEP. 30,   DEC. 31,
                                      --------   --------   --------   --------

Diluted earnings per share:
 Numerator                            $   938    $ 1,347    $ 1,269    $ 1,236
                                      =======    =======    =======    =======
 Denominator:
  Common shares outstanding             4,654      4,569      4,556      4,456
  Assumed conversion of options
   and warrants                           571        580        486        436
                                      -------    -------    -------    -------
  Common shares reported                5,225      5,149      5,042      4,892
     Impact of reverse split             (157)      (157)      (157)      (157)
                                      -------    -------    -------    -------
     Common shares adjusted             5,068      4,992      4,885      4,735
                                      =======    =======    =======    =======
Diluted earnings per share reported   $   .18    $   .26    $   .25    $   .26
                                      =======    =======    =======    =======
Diluted earnings per share adjusted   $   .19    $   .27    $   .26    $   .26
                                      =======    =======    =======    =======
During 1999, the Company did a reverse split and, as a result, shares
outstanding have been retroactively adjusted for all periods presented.

                                      F-28
<PAGE>

          SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

                       ELXSI CORPORATION AND SUBSIDIARIES
                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                    ADDITIONS/(DEDUCTIONS)
                                                               --------------------------------
                                             Balance at   Charged        Charged to                     Balance
                                             Beginning    Costs and        Other         Deductions-     at End
                                             Of Period    Expenses    Accounts-describe  Describe       of Period
                                             ---------    --------    -----------------  --------       ---------
<S>                                          <C>          <C>          <C>               <C>             <C>
Year ended December 31, 1999
  Account deducted from assets:
    Reserve for doubtful accounts
       receivable                            $    181     $      30    $     32  (C)     $     29  (A)   $    214
                                             ========     =========    =========         ========        ========
Inventory reserve                            $  1,295     $     218    $   (449) (E)     $    483  (B)   $    581
                                             ========     =========    =========         ========        ========

      Deferred tax asset valuation
allowance                                    $ 60,046     $     --     $     --          $ 29,595  (D)   $ 30,451
                                             ========     =========    =========         ========        ========
Year ended December 31, 1998 Account
  deducted from assets:
    Reserve for doubtful accounts
       receivable                            $    117     $     30     $     83  (C)     $     49  (A)   $    181
                                             ========     =========    =========         ========        ========
    Inventory reserve                        $  1,227     $    500     $     --          $    432  (B)   $  1,295
                                             ========     =========    =========         ========        ========
    Deferred tax asset
   valuation allowance                       $ 62,759     $     --     $     --          $  2,713  (D)   $ 60,046
                                             ========     =========    =========         ========        ========
Year ended December 31, 1997 Account
  deducted from assets:
    Reserve for doubtful accounts
       receivable                            $     54     $     55     $      8  (C)     $     --  (A)   $    117
                                             ========     =========    =========         ========        ========
    Inventory reserve                        $    550     $    715     $     --          $     38  (B)   $  1,227
                                             ========     =========    =========         ========        ========
    Deferred tax asset valuation allowance   $ 76,979     $     --     $     --          $ 14,220  (D)   $ 62,759
                                             ========     =========    =========         ========        ========
</TABLE>
(A) Uncollectible accounts written off during 1999, 1998 and 1997.
(B) Obsolete inventory written off during 1999, 1998 and 1997.
(C) Bad debtrecoveries.
(D) Change in estimate related to future net operating loss and tax credit usage
    and various changes in timing differences associated with tax to book
    benefits.
(E) Adjustment for system over-allocation of burden on inventory.

                                S-1
<PAGE>

                                ELXSI CORPORATION
                                 EXHIBITS INDEX
                                1999 - FORM 10-K

EXHIBIT
NUMBER        DESCRIPTION

2.1           Agreement  and Plan of  Merger  by and  among  ELXSI  Corporation,
              ELXSI,  Cadmus  Corporation  and  Holdingcues,  Inc.  dated  as of
              October   16,   1992,   including   form  of  Series  C   Warrant.
              (Incorporated  herein by reference to Exhibit 2.7 of the Company's
              Current  Report  on Form 8-K  filed  November  13,  1992  (File No
              0-11877)).

2.2           Family  Restaurant Sale and Purchase  Agreement,  between Marriott
              Family  Restaurants,  Inc.  ("Marriott")  and  the  Company  dated
              February  28, 1991.  (Incorporated  herein by reference to Exhibit
              2.1 of the Company's  Current  Report on Form 8-K,  dated July 16,
              1991 (File No. 0-11877)).

2.3           Side Letter to the Family  Restaurant Sale and Purchase  Agreement
              between   Marriott  and  the  Company  dated  February  28,  1991.
              (Incorporated  herein by reference to Exhibit 2.2 of the Company's
              Current  Report  on Form  8-K,  dated  July  16,  1991  (File  No.
              0-11877)).

2.4           Assignment  and Guaranty of Family  Restaurants  Sale and Purchase
              Agreement and Side Letter, between the Company, Marriott and ELXSI
              dated June 29, 1991.  (Incorporated herein by reference to Exhibit
              2.3 of the Company's  Current  Report on Form 8-K,  dated July 16,
              1991 (File No. 0-11877)).

<PAGE>

2.5           Closing Side Letter Agreement  Regarding  Family  Restaurants Sale
              and Purchase  Agreement  between ELXSI and Marriott  dated July 1,
              1991.  (Incorporated  herein by  reference  to Exhibit  2.4 of the
              Company's  Current  Report on Form 8-K,  dated July 16, 1991 (File
              No. 0-11877)).

2.6           Real  Estate  Closing  Side  Letter  Agreement   Regarding  Family
              Restaurants Sale and Purchase Agreement between ELXSI and Marriott
              dated July 1, 1991.  (Incorporated  herein by reference to Exhibit
              2.5 of the Company's  Current  Report on Form 8-K,  dated July 16,
              1991 (File No. 0-11877)).

2.7           Agreement Concerning Massachusetts and Connecticut Liquor Licenses
              between  ELXSI and  Marriott  dated  July 1,  1991.  (Incorporated
              herein by reference to Exhibit 2.6 of the Company's Current Report
              on Form 8-K, dated July 16, 1991 (File No. 0-11877)).

3.1           Restated  Certificate of Incorporation of the Company, as amended.
              (Incorporated  herein by reference to Exhibit 3.1 of the Company's
              Annual Report on Form 10-K for the fiscal year ended  December 31,
              1989 (File No. 0-11877)).

3.2           Certificate of Amendment of Restated  Certificate of Incorporation
              of the  Company  dated  May  27,  1992.  (Incorporated  herein  by
              reference to Exhibit 3.2 of the  Company's  Annual  Report on Form
              10-K for the  fiscal  year  ended  December  31,  1994  (File  No.
              0-11877)).

3.5           Certificate of Amendment of Restated  Certificate of Incorporation
              of the  Company  dated  May  19,  1998.  (Incorporated  herein  by
              reference to Exhibit 3.3 to the Company's  Current  Report on form
              8-k, dated March 19, 1999 (File no. 0-11877))

3.6           Certificate of Amendment of Restated  Certificate of Incorporation
              of the  Company  dated  June  9,  1999.  (Incorporated  herein  by
              reference to the Company's  Form S-8 Requested  Status filed March
              27, 2000 Registration No. 333-33300).

3.5           Bylaws  of the  Company.  (Incorporated  herein  by  reference  to
              Exhibit 3.3 to the Company's Current Report on Form 8-K dated June
              24, 1997 and filed on June 26, 1997 (File No. 0-11877)).

4.1           Series A Warrant No. A-7 to purchase 50,000 shares of Common Stock
              issued to Eliot Kirkland L.L.C. ("EKLLC"). (Incorporated herein by
              reference to Exhibit 4.1 of the  Company's  Annual  Report on Form
              10-K for the  fiscal  year  ended  December  31,  1996  (File  No.
              0-11877)).

4.2           Form of Second Allonge and Amendment to Series A Warrants of ELXSI
              Corporation, with respect to the foregoing Warrant.  (Incorporated
              herein by reference to Exhibit 4.2 of the Company's  Annual Report
              on Form 10-K for the fiscal year ended December 31, 1998 (File No.
              0-11877)).

4.3           Series A Warrant  No.  A-6 to  purchase  150,500  shares of Common
              Stock issued to the  Alexander M. Milley  Irrevocable  Trust I U/A
              dated May 9, 1994.  (Incorporated  herein by  reference to Exhibit
              4.2 of the  Company's  Annual  Report on Form 10-K for the  fiscal
              year ended December 31, 1994 (File No. 0-11877)).

4.4           Form of Second Allonge and Amendment to Series A Warrants of ELXSI
              Corporation, with respect to the foregoing Warrant.  (Incorporated
              herein by reference to Exhibit 4.4 of the Company's  Annual Report
              on Form 10-K for the fiscal year ended December 31, 1998 (File No.
              0-11877)).  4.5 Series C Warrant No. C-3 to purchase 68,762 shares
              of Common Stock issued to EKLLC. (Incorporated herein by reference
              to Exhibit 4.6 of the Company's Annual Report on Form 10-K for the
              fiscal year ended December 31, 1996 (File No. 0-11877)).

4.6           Form of Second Allonge and Amendment to Series C Warrants of ELXSI
              Corporation, with respect to the foregoing Warrant.  (Incorporated
              herein by reference to Exhibit 4.6 of the Company's  Annual Report
              on Form 10-K for the fiscal year ended December 31, 1998 (File No.
              0-11877)).

4.7           Amended and Restated  Registration  Rights  Agreement  dated as of
              January 23, 1990 among the Company,  Milley & Company  ("M&C") and
              CIEC.  (Incorporated  herein by  reference  to Exhibit  4.7 of the
              Company's  Annual  Report on Form 10-K for the  fiscal  year ended
              December 31, 1989 (File No. 0-11877)).

4.8           Exercise of Option and Assignment of Registration  Rights executed
              by ELX  Limited  Partnership  ("ELX") and The Airlie  Group,  L.P.
              ("Airlie")  dated  November  30,  1994.  (Incorporated  herein  by
              reference to Exhibit 4.6 of the  Company's  Annual  Report on Form
              10-K for the  fiscal  year  ended  December  31,  1994  (File  No.
              0-11877)).
<PAGE>

4.9           Amended and  Restated  Loan and  Security  Agreement,  dated as of
              December  30,  1996,  between  ELXSI and Bank of America  Illinois
              ("BofA"). (Incorporated herein by reference to Exhibit 4.12 of the
              Company's  Annual  Report on Form 10-K for the  fiscal  year ended
              December 31, 1996 (File No. 0-11877)).

4.10          Second  Amendment  to  Amended  and  Restated  Loan  and  Security
              Agreement,  dated as of September 24, 1997, between ELXSI and Bank
              of America National Trust and Savings  Association.  (Incorporated
              herein by  reference to Exhibit  4.18 of the  Company's  Quarterly
              Report on Form 10-Q for the quarter ended September 30, 1997 (File
              No. 0-11877)).

4.11          Trust  Indenture,  dated as of  September  24,  1997,  between the
              Orange County Industrial Development Authority and Sun Trust Bank,
              Central Florida, National Association,  as Trustee.  (Incorporated
              herein by  reference to Exhibit  4.19 of the  Company's  Quarterly
              Report on Form 10-Q for the quarter ended September 30, 1997 (File
              No. 0-11877)).

4.12          Loan Agreement,  dated as of September 24, 1997, between ELXSI and
              the Orange County Industrial Development Authority.  (Incorporated
              herein by  reference to Exhibit  4.20 of the  Company's  Quarterly
              Report on Form 10-Q for the quarter ended September 30, 1997 (File
              No. 0-11877)).

4.13          Mortgage and Security  Agreement,  dated as of September  24, 1997
              between  ELXSI  and  the  Orange  County  Industrial   Development
              Authority.  (Incorporated  herein by  reference to Exhibit 4.21 of
              the  Company's  Quarterly  Report on Form 10-Q for  quarter  ended
              September 30, 1997 (File No. 0-11877)).

4.14          Bond  Purchase  Agreement,  dated as of September 24, 1997, by and
              among the Orange County Industrial  Development  Authority,  ELXSI
              and  Bank of  America  National  Trust  and  Savings  Association.
              (Incorporated herein by reference to Exhibit 4.22 of the Company's
              Quarterly  Report on Form 10-Q for the quarter ended September 30,
              1997 (File No. 0-11877)).

4.15          Guaranty Agreement, dated as of September 24, 1997, by and between
              ELXSI  Corporation and Bank of America  National Trust and Savings
              Association.  (Incorporated herein by reference to Exhibit 4.23 of
              the Company's  Quarterly Report on Form 10-Q for the quarter ended
              September 30, 1997 (File No. 0-11877)).

4.16          Security Agreement,  dated as of September 24, 1997, between ELXSI
              and  the   Orange   County   Industrial   Development   Authority.
              (Incorporated herein by reference to Exhibit 4.24 of the Company's
              Quarterly  Report on Form 10-Q for the quarter ended September 30,
              1997 (File No. 0-11877)).

4.17          Rights  Agreement,  dated as of June 4, 1997,  between the Company
              and Continental  Stock Transfer & Trust Company,  as Rights Agent.
              (Incorporated herein by reference to Exhibit 4.17 to the Company's
              Form 8-A  Registration  Statement,  dated June 10,  1997 (File no.
              0-11877)).

4.18          Rights Agreement  Amendment,  dated as of March 16, 1999,  between
              the Company and  Continental  Stock Transfer & Trust  Company,  as
              Rights  Agent.  (Incorporated  herein by reference to Exhibit 2 to
              the Registrant's Form 8-A/A Registration Statement (Post-Effective
              Amendment No. 1) dated March 19, 1999 (File No. 0-11877)).

4.19          Standstill  Agreement,  dated  as of March  16,  1999,  among  the
              Company,  Alexander  M.  Milley  and the  "Kellogg  Person"  party
              thereto.  (Incorporated  herein by  reference  to Exhibit 3 of the
              Registrant's  Form 8-A/A  Registration  Statement  (Post-effective
              Amendment No. 1) dated March 19, 1999 (File No. 0-11877))

10.1          The  Company's  1987  Incentive  Stock  Option  Plan  as  amended.
              (Incorporated by reference to Exhibit 10.1 of the Company's Annual
              Report on Form 10-K for the fiscal  year ended  December  31, 1987
              (File No. 0-11877)).

10.2          The  Company's  1987  Supplemental  Stock  Option Plan as amended.
              (Incorporated by reference to Exhibit 10.2 of the Company's Annual
              Report on Form 10-K for the fiscal  year ended  December  31, 1987
              (File No. 0-11877)).

10.3          The  Company's  1993  Incentive  Stock Option Plan.  (Incorporated
              herein by reference to Exhibit 10.3 of the Company's Annual Report
              on Form 10-K for the fiscal year ended December 31, 1994 (File No.
              0-11877)).

<PAGE>

10.4          The  Company's  1995  Incentive  Stock Option Plan.  (Incorporated
              herein by  reference  to  Exhibit  4.1 to the  Company's  Form S-8
              Registration  Statement filed November 14, 1995  (Registration No.
              033-64205)).

10.5          The  Company's  1996  Incentive  Stock Option Plan.  (Incorporated
              herein by  reference  to  Exhibit  4.1 to the  Company's  Form S-8
              Registration  Statement filed December 2, 1996  (Registration  No.
              333-17131)).

10.6          The  Company's  1997  Incentive  Stock Option Plan.  (Incorporated
              herein by  reference  to  Exhibit  4.1 to the  Company's  Form S-8
              Registration  Statements filed January 30, 1998  (Registration No.
              333-45381)).

10.11         The  Company's  1998  Incentive  Stock Option Plan.  (Incorporated
              herein  by  reference  to  the  Annex  A to  the  Company's  Proxy
              Statement  included  in its  Schedule  14A Filed on April 17, 1998
              (File No. 0-11877)).

10.12         The  Company's  1999  Incentive  Stock Option Plan.  (Incorporated
              herein  by  reference  to  the  Annex  A to  the  Company's  Proxy
              Statement  included  in its  Schedule  14A Filed on April 23, 1999
              (File No. 0-11877)).

10.13         The  Company's  1999 Non  Qualified  Incentive  Stock Option Plan.
              (Incorporated  herein  by  reference  to the  Company's  Form  S-8
              Requested Status filed March 27, 2000 Registration No. 333-33300).


10.14         The ELXSI 1991 Phantom Stock Option Plan for the management of the
              Bickford's Division.  (Incorporated herein by reference to Exhibit
              10.4 of the  Company's  Annual  Report on Form 10-K for the fiscal
              year ended December 31, 1994 (File No. 0-11877)).

10.11         Amendment  No. 1 to the ELXSI 1991  Phantom  Stock Option Plan for
              the management of the Bickford's Division. (Incorporated herein by
              reference to Exhibit 10.5 of the  Company's  Annual Report on Form
              10-K for the  fiscal  year  ended  December  31,  1994  (File  No.
              0-11877)).

10.12         Non-Qualified  Stock Option Agreement issued to Robert C. Shaw for
              the purchase of 12,500 shares of Common  Stock,  dated October 30,
              1992.  (Incorporated  herein by  reference  to Exhibit 10.7 of the
              Company's  Annual  Report on Form 10-K for the  fiscal  year ended
              December 31, 1994 (File No. 0-11877)).

10.13         Non-Qualified  Stock Option Agreement issued to John C. Savage for
              the purchase of 10,000 shares of Common  Stock,  dated October 30,
              1992.  (Incorporated  herein by  reference  to Exhibit 10.8 of the
              Company's  Annual  Report on Form 10-K for the  fiscal  year ended
              December 31, 1994 (File No. 0-11877)).

10.14         Non-Qualified Stock Option Agreement issued to Farrokh K. Kavarana
              for the purchase of 10,000 shares of Common  Stock,  dated October
              30, 1992. (Incorporated herein by reference to Exhibit 10.9 of the
              Company's  Annual  Report on Form 10-K for the  Fiscal  year ended
              December 31, 1994 (File No. 0-11877)).

10.15         Non-Qualified  Stock Option Agreement issued to Kevin P. Lynch for
              the purchase of 20,000 shares of Common  Stock,  dated October 30,
              1992.  (Incorporated  herein by reference to Exhibit  10.10 of the
              Company's  Annual  Report on Form 10-K for the  fiscal  year ended
              December 31, 1994 (File No. 0-11877)).

10.16         Non-Qualified Stock Option Agreement issued to Alexander M. Milley
              for the purchase of 30,000 shares of Common  Stock,  dated October
              30, 1992.  (Incorporated  herein by reference to Exhibit  10.11 of
              the Company's Annual Report on Form 10-K for the fiscal year ended
              December 31, 1994 (File No. 0-11877)).

10.17         Stock and Note Purchase  Agreement  dated as of August 31, 1989 by
              and among the  Company,  Airlie and M&C.  (Incorporated  herein by
              reference to Exhibit 2.1 of the Company's  Current  Report on Form
              8-K filed October 3, 1989 (File No 0-11877)).

10.18         Management Agreement between Winchester National, Inc. (d/b/a M&C)
              and the Company dated September 25, 1989.  (Incorporated herein by
              reference to Exhibit 10.21 of the Company's  Annual Report on Form
              10-K for the  fiscal  year  ended  December  31,  1991  (File  No.
              0-11877)).

10.19         Assignment of Management  Agreement  dated June 28, 1991 among the
              Company,  Winchester  National,  Inc., ELXSI and Milley Management

<PAGE>

              Incorporated ("MMI"). (Incorporated herein by reference to Exhibit
              10.16 of the  Company's  Annual Report on Form 10-K for the fiscal
              year ended December 31, 1994 (File No. 0-11877)).

10.20         Management  Agreement  Extension  dated September 25, 1992 between
              ELXSI and MMI.  (Incorporated herein by reference to Exhibit 10.17
              of the  Company's  Annual  Report on Form 10-K for the fiscal year
              ended December 31, 1994 (File No. 0-11877)).

10.21         Form of Extension No. 2 to Management Agreement,  dated as of June
              30,  1997,  between  ELXSI  and  Cadmus.  (Incorporated  herein by
              reference to Exhibit 10.33 to the Company's Current Report on Form
              8-K dated and filed July 9, 1997 (File No. 0-11877)).

10.23         Assignment  to Cadmus  Corporation  ("Cadmus"),  dated  January 1,
              1994,  of MMI's  rights under the  extended  Management  Agreement
              dated  September  25,  1992,  as amended,  between  ELXSI and MMI.
              (Incorporated   herein  by  reference  to  Exhibit  10.18  of  the
              Company's  Annual  Report on Form 10-K for the  fiscal  year ended
              December 31, 1994 (File No. 0-11877)).

10.23         Promissory  Note of ELX payable to the Company  dated  December 8,
              1994  in  the  amount  of  $1,155,625.00  due  December  8,  1997.
              (Incorporated herein by reference to Exhibit 10.6 of the Company's
              Annual Report on Form 10-K for the fiscal year ended  December 31,
              1994 (File No. 0-11877)).

10.27         Letter  Agreement  dated December 8, 1997, from the Company to ELX
              extending  the  term of the  foregoing.  (Incorporated  herein  by
              reference to Exhibit 10.24 of the Company's  Annual Report on Form
              10-K for the  fiscal  year  ended  December  31,  1998  (File  No.
              0-11877)).

10.28         Form of  Promissory  Note of ELX  payable  to the  Company,  dated
              December 30,  1996,  in the amount of $909,150 due on December 30,
              1999.  (Incorporated  herein  by  reference  to  Exhibit  E to the
              Amendment No. 10 to the Schedule 13D of Alexander M. Milley,  MMI,
              ELX, Cadmus and EKLLC,  dated January 7, 1997, filed in respect of
              the Company's Common Stock).

10.29         Letter  Agreement dated December 30, 1999, from the Company to ELX
              extending  the term of the  foregoing  to  December  31,  2002 and
              increasing the amount to $1,150,959.

10.27         Form of Recapitalization Agreement, dated as of December 30, 1996,
              among   Azimuth   Corporation   ("Azimuth"),    Delaware   Electro
              Industries,  Inc. ("DEI"), Contempo Design, Inc. ("CDI"), Contempo
              Design West, Inc. ("CDW"), ELXSI and BofA. (Incorporated herein by
              reference to Exhibit F to the Amendment No. 10 to the Schedule 13D
              of Alexander M. Milley,  MMI, ELX, Cadmus and EKLLC, dated January
              7, 1997, filed in respect of the Company's Common Stock).

10.28         Second Amended and Restated Loan and Security Agreement,  dated as
              of October 9, 1995, between Azimuth and BofA. (Incorporated herein
              by reference to Exhibit  10.24 of the  Company's  Annual Report on
              Form 10-K for the fiscal  year ended  December  31, 1996 (File No.
              0-11877)).

10.29         Loan and Security Agreement,  dated as of October 9, 1995, between
              DEI and BofA.  (Incorporated  herein by reference to Exhibit 10.25
              of the  Company's  Annual  Report on Form 10-K for the fiscal year
              ended December 31, 1996 (File No. 0-11877)).

10.31         Loan and Security Agreement,  dated as of October 9, 1995, between
              CDI and BofA.  (Incorporated  herein by reference to Exhibit 10.26
              of the  Company's  Annual  Report on Form 10-K for the fiscal year
              ended December 31, 1996 (File No. 0-11877)).

10.31         Loan and Security Agreement,  dated as of October 9, 1995, between
              CDW and BofA.  (Incorporated  herein by reference to Exhibit 10.27
              of the  Company's  Annual  Report on Form 10-K for the fiscal year
              ended December 31, 1996 (File No. 0-11877)).

10.32         First  Omnibus  Amendment,  dated  as of  August  9,  1996,  among
              Azimuth, DEI, CDI, CDW and BofA. (Incorporated herein by reference
              to Exhibit 10.28 of the  Company's  Annual Report on Form 10-K for
              the fiscal year ended December 31, 1996 (File No. 0-11877)).

10.33         Second Omnibus  Amendment,  dated as of September 23, 1996,  among
              Azimuth, DEI, CDI, CDW and BofA. (Incorporated herein by reference
              to Exhibit 10.29 of the  Company's  Annual Report on Form 10-K for
              the fiscal year ended December 31, 1996 (File No. 0-11877)).

10.40         Third  Omnibus  Amendment,  dated as of November 27,  1996,  among
              Azimuth, DEI, CDI, CDW and BofA. (Incorporated herein by reference
              to Exhibit 10.30 of the  Company's  Annual Report on Form 10-K for
              the fiscal year ended December 31, 1996 (File No. 0-11877)).


<PAGE>

10.41         Second Amended and Restated Guaranty, dated as of October 9, 1995,
              made by DEI, CDI and CDW in favor of BofA. (Incorporated herein by
              reference to Exhibit 10.31 of the Company's  Annual Report on Form
              10-K for the  fiscal  year  ended  December  31,  1996  (File  No.
              0-11877)).

10.42         Second Amended and Restated Pledge Agreement,  dated as of October
              9, 1995,  among  Azimuth,  DEI,  CDI, CDW and BofA.  (Incorporated
              herein by  reference  to  Exhibit  10.32 of the  Company's  Annual
              Report on Form 10-K for the fiscal  year ended  December  31, 1996
              (File No. 0-11877)).

10.43         Form of letter,  dated June 1997 from ELXSI to Azimuth,  DEI, CDI,
              and CDW.  (Incorporated  herein by  reference  to Exhibit C to the
              Amendment No. 10 to the Schedule 13D of Alexander M. Milley,  MMI,
              ELX,  Cadmus and EKLLC,  dated January 7, 1997 filed in respect of
              the Company's Common Stock)

10.44         Form of Employment  Agreement,  dated as of June 30, 1997, between
              ELXSI and Alexander M. Milley.  (Incorporated  herein by reference
              to Exhibit  10.34 to the Company's  Form 8-K Current  Report dated
              July 9, 1997 filed on July 9, 1997 (File No. 0-11877)).

10.45         Form of Employment  Agreement,  dated as of June 30, 1997, between
              ELXSI and David M. Doolittle.

21.1          Subsidiaries of the Company. (Incorporated by reference to Exhibit
              22.1 to the  Company's  Annual  Report on Form 10-K for the fiscal
              year ended December 31, 1990 (File No. 0-11877)).

23.1          Consent of PricewaterhouseCoopers LLP

27            Financial Data Schedule