SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                    FORM 10-Q

(Mark One)

[X]    QUARTERLY  REPORT  PURSUANT  TO  SECTION  13 OR 15(d)  OF THE  SECURITIES
       EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 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
--------------------------------------------------------------------------------
(State or other jurisdiction of                         (I.R.S. employer
 incorporation or organization)                        identification no.)



      3600 Rio Vista Avenue, Suite A, Orlando, Florida            32805
--------------------------------------------------------------------------------
           (Address of principal executive offices)             (Zip code)


Registrant's telephone number, including area code:      (407) 849-1090
                                                   -----------------------------

--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report.)


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. Yes [X] No [ ]

On August 3, 1999,  the  registrant  had  outstanding 4,276,175 shares of Common
Stock, par value $0.001 per share.

<PAGE>


THIS  QUARTERLY  REPORT  ON FORM 10-Q  (THIS  "10-Q")  INCLUDES  FORWARD-LOOKING
STATEMENTS,  PARTICULARLY  IN  THE  "MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF
FINANCIAL  CONDITION  AND  RESULTS  OF  OPERATIONS"  SECTION  (ITEM  2  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 STATEMENT 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  COMMISSIONS FILING 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.

                                       2
<PAGE>


                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS


                                ELXSI CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                             (Dollars in Thousands)

                                   A S S E T S


                                                 June 30,    December 31,
                                                  1999           1998
                                                 --------    ------------
                                                Unaudited
Current assets:

     Cash and cash equivalents                   $ 1,954        $ 1,587

     Accounts receivable, net                      5,698          3,493

     Inventories, net                             11,789         10,114

     Prepaid expenses and other current assets       346            292

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

         Total current assets                     25,271         20,970

Property, buildings and equipment, net            32,356         31,888

Intangible assets, net                             5,672          5,163

Deferred debt costs, net                              91            105

Notes receivable - related party                   4,200          4,200

Deferred tax asset - noncurrent                    2,540          3,532

Other                                                905            778
                                                 -------        -------

         Total assets                            $71,035        $66,636
                                                 =======        =======

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

                                       3
<PAGE>


                                ELXSI CORPORATION
                     CONSOLIDATED BALANCE SHEETS (CONTINUED)
                             (Dollars in Thousands)

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                      June 30,    December 31,
                                                        1999          1998
                                                      ---------   ------------
                                                      Unaudited
Current liabilities:
     Accounts payable                                 $   5,314    $   3,526
     Accrued expenses                                     6,628        5,289
     Capital lease obligations - current                     35           52
     Current portion of long-term debt                      928          887
                                                      ---------    ---------
         Total current liabilities                       12,905        9,754

Capital lease obligations - non current                   1,020        1,037
Long-term debt                                            7,345        6,689
Other non-current liabilities                             4,096        3,596
                                                      ---------    ---------

         Total liabilities                               25,366       21,076

Commitments and contingencies                                --           --

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--4,276,175 and
         4,453,460 at June 30, 1999 and
         December 31, 1998, respectively                      4            5
   Additional paid-in capital                           224,190      226,103
   Accumulated deficit                                 (178,263)    (180,343)
   Accumulated other comprehensive income                  (262)        (205)
                                                      ---------    ---------

         Total stockholders' equity                      45,669       45,560
                                                      ---------    ---------

         Total liabilities and stockholders' equity   $  71,035    $  66,636
                                                      =========    =========


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

                                       4
<PAGE>


<TABLE>
<CAPTION>
                                        ELXSI CORPORATION
                              CONSOLIDATED STATEMENTS OF OPERATIONS
                          (Amounts in Thousands, Except Per Share Data)
                                           (Unaudited)

                                                     Three Months Ended       Six Months Ended
                                                          June 30,                June 30,
                                                    --------------------    --------------------
                                                     1999         1998        1999        1998
                                                    --------    --------    --------    --------
<S>                                                 <C>         <C>         <C>         <C>
Net  sales                                          $ 26,517    $ 25,108    $ 50,029    $ 48,529

Costs and expenses:
     Cost of sales                                    20,770      19,528      39,679      38,293
     Selling, general and administrative               2,510       2,328       4,876       4,447
     Depreciation and amortization                       944         868       1,886       1,725
                                                    --------    --------    --------    --------

Operating income                                       2,293       2,384       3,588       4,064

Other income (expense):
     Interest income                                     146         154         294         305
     Interest expense                                   (187)       (268)       (363)       (526)
     Other income (expense)                                6         (26)         (2)        (35)
                                                    --------    --------    --------    --------

Income before income taxes                             2,258       2,244       3,517       3,808

Provision for income taxes                               925         897       1,437       1,523
                                                    --------    --------    --------    --------

Net income                                             1,333       1,347       2,080       2,285

Other comprehensive income net of tax:
   Foreign currency translation adjustment               (32)         (7)        (57)        (47)
                                                    --------    --------    --------    --------

Comprehensive income                                $  1,301    $  1,340    $  2,023    $  2,238
                                                    ========    ========    ========    ========


Net income per common share:
     Basic                                          $   0.30    $   0.30    $   0.47    $   0.50
                                                    ========    ========    ========    ========
     Diluted                                        $   0.27    $   0.26    $   0.42    $   0.44
                                                    ========    ========    ========    ========
Weighted average number of common
  and common equivalent shares:
     Basic                                             4,431       4,569       4,442       4,612
                                                    ========    ========    ========    ========
     Diluted                                           4,900       5,149       4,902       5,187
                                                    ========    ========    ========    ========


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

                                                5
</TABLE>
<PAGE>


<TABLE>
<CAPTION>
                                           ELXSI CORPORATION
                             CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                         (Amounts in Thousands)
                                              (Unaudited)

                                                                                           Accumulated
                                        Common Stock        Additional       Accum-           Other
                                ------------------------      Paid-In        ulated       Comprehensive
                                  Shares        Dollars       Capital        Deficit          Income
                                ----------    ----------    ----------    ------------    -------------
<S>                              <C>          <C>           <C>           <C>               <C>
Balance at December 31, 1998     4,453,460    $        5    $  226,103    $   (180,343)     $     (205)

Foreign currency translation
  adjustment, net of tax                --            --            --              --             (57)

Purchase and retirement of
  Common Stock                    (177,348)           (1)       (1,913)             --              --

Issuance of fractional shares           63            --            --              --              --

Net income                              --            --            --           2,080              --
                                ----------    ----------    ----------    ------------      ----------

Balance at June 30, 1999         4,276,175    $        4    $  224,190    $   (178,263)     $     (262)
                                ==========    ==========    ==========    ============      ==========


                   The accompanying notes are an integral part of these consolidated
                                         financial statements.
</TABLE>
                                                   6
<PAGE>


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

                                                     Six Months Ended June 30,
                                                     -------------------------
                                                       1999            1998
                                                      -------        -------
CASH FLOWS USED IN OPERATING ACTIVITIES:

Net income                                            $ 2,080        $ 2,285
Adjustments to reconcile net income to net
    cash provided by operating activities:
     Depreciation and amortization                      1,886          1,725
     Amortization of deferred debt costs                   14             38

(Increase) decrease in assets:
     Accounts receivable                               (2,205)        (1,111)
     Inventories                                       (1,537)           672
     Prepaid expenses and other current assets            (54)          (362)
     Deferred tax asset                                   992          1,129
     Other                                               (184)          (219)
Increase (decrease) in liabilities:
     Accounts payable                                   1,788           (617)
     Accrued expenses                                   1,339            508
     Other non-current liabilities                        500            450
                                                      -------        -------
     Net cash provided by operating activities          4,619          4,498
                                                      -------        -------

CASH FLOWS USED IN INVESTING ACTIVITIES:
     Purchase of property, building and equipment      (2,223)        (1,904)
     Acquisition of product line                         (778)            --
     Investment in notes receivable - related party        --           (135)
                                                      -------        -------
     Net cash used in investing activities             (3,001)        (2,039)
                                                      -------        -------

CASH FLOWS USED IN FINANCING ACTIVITIES:
     Net borrowings (payments) of long-term debt          697         (1,118)
     Purchase of Common Stock                          (1,914)        (1,248)
     Proceeds from exercise of Common Stock
         Options                                           --              2
     Principal payments of capital lease                  (34)           (66)
                                                      -------        -------
     Net cash used in financing activities            $(1,251)       $(2,430)
                                                      -------        -------

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

                                       7
<PAGE>


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



                                                   Six Months Ended June 30,
                                                   -------------------------
                                                    1999              1998
                                                   -------           -------
Increase in cash and cash equivalents              $   367           $    29

Cash and cash equivalents, beginning of period       1,587             1,079
                                                   -------           -------

Cash and cash equivalents, end of period           $ 1,954           $ 1,108
                                                   =======           =======


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid during the period for:
    Income taxes                                   $   556           $   476
    Interest                                           333               499

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

                                       8
<PAGE>


                                ELXSI CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1999
                                   (Unaudited)

NOTE 1.  THE COMPANY

GENERAL.  The  information  contained  in  this  report  is  unaudited  but,  in
management's  opinion,  all adjustments  necessary for a fair  presentation have
been  included and were of a normal and  recurring  nature.  The results for the
three and six  months  ended June 30,  1999 are not  necessarily  indicative  of
results to be expected for the entire year. These financial statements and notes
should be read in  conjunction  with ELXSI  Corporation's  Annual Report on Form
10-K for the year ended December 31, 1998.

ELXSI  Corporation  (together  with  its  subsidiary,  the  "Company")  operated
principally  through its wholly-owned  California  subsidiary,  ELXSI.  Prior to
1990,  the  principal  business of ELXSI was the design,  manufacture,  sale and
support of  minisupercomputers.  In July 1989,  the  Company  announced  a major
restructuring  of its  computer  operations.  In  September  1989,  the  Company
discontinued all computer operations.

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

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 Abdow's and converted  nine of the remaining  Abdow's
into Bickford's Restaurants.  During 1999 the Howard Johnson's lease expired and
the  restaurant  was closed  and one new  Bickford's  was opened in  Somerville,
Massachusetts.  As of June 30,  1999,  ELXSI owned 59  Bickford's  and 4 Abdow's
Restaurants (the "Restaurants" or Restaurant Division).

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, (together referred to as "Cues").

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

NOTE 2.  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

                                       9
<PAGE>


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 3. COMMON  STOCK.

Effective on June 28, 1999,  the Company  completed the 1-for-100  reverse split
voted on and approved by the Company's  stockholders  during it's 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 stock during the immediately preceding 20 trading
days. This resulted in the repurchase of approximately  157,000 shares at $10.83
per share.  The total cost of the odd-lot buyback was  approximately  $1,704,000
and is reflected in accrued  expenses at June 30, 1999. The cash will be paid in
subsequent months as shareholders  return their  certificates in compliance with
the  reverse  split  instructions.  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.

NOTE 4. SEGMENT REPORTING.

The Company has two  reportable  segments,  restaurant  operations and equipment
manufacturing,  each of which has separate management teams and infrastructures.
Each business  requires  different  employee  skills,  technology  and marketing
strategies.  The restaurant operations segment includes 63 stores 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.

The Company  evaluates the performance of each segment based upon profit or loss
from operations before income taxes not including non-recurring gains and losses
and foreign exchange gains and losses.

There has been no significant  difference in the basis of segmentation or in the
measurement  of segment  profit since the  Company's  last annual report on Form
10-K for the year ended December 31, 1998.  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.

Summarized  financial  information by business  segment for the six months ended
June 30, 1999 and 1998 is summarized in the following table.

                                              1999                 1998
                                        ----------------     ----------------
Revenues From External Customers:
     Restaurants                        $     35,554,000     $     34,816,000
     Equipment                                14,475,000           13,713,000
                                        ----------------     ----------------
                                        $     50,029,000     $     48,529,000
                                        ================     ================
Segment Profit:
     Restaurants                        $      3,172,000     $      3,504,000
     Equipment                                 1,487,000            1,550,000
     Other                                    (1,071,000)            (990,000)
                                        ----------------     ----------------
                                        $      3,588,000     $      4,064,000
                                        ================     ================
Segment Assets:
     Restaurants                        $     32,381,000     $     30,619,000
     Equipment                                24,340,000           21,442,000
     Other                                    14,314,000           14,541,000
                                        ----------------     ----------------
                                        $     71,035,000     $     66,602,000
                                        ================     ================

                                       10
<PAGE>


There were no  inter-segment  sales or transfers  during the first six months of
1999 or 1998.  Operating income by business  segment  excludes  interest income,
interest expense, and other income and expenses.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

RESULTS OF OPERATIONS

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

COMPARISON OF FIRST HALF 1999 RESULTS TO 1998 RESULTS

Six month sales increased $1,500,000,  gross profit increased $114,000, selling,
general and  administrative  expense  increased  $429,000 and  depreciation  and
amortization  increased  $161,000  resulting in an operating  income decrease of
$476,000.  Interest expense decreased by $163,000,  interest income decreased by
$11,000,  other  expense  decreased  by $33,000 and income  taxes  decreased  by
$86,000 resulting in a decrease in net income of $205,000.

RESTAURANT DIVISION.  Restaurant sales increased by $738,000,  or 2.1% and gross
profit decreased by $202,000,  or 3.4% in the first half of 1999 compared to the
same period in the prior year.  Operating  income  decreased  $332,000,  or 9.5%
after  deducting an increase in selling  general and  administrative  expense of
$41,000 and an increase in depreciation and  amortization of $89,000.  The sales
increase was mainly due to an increase in same store sales of $632,000, or 2.3%,
sales from the opening of new  Bickford's  Restaurants  of $1,254,000  partially
offset by a decrease in sales due to closed Restaurants of $850,000. The Company
was unable to renew the expiring Howard Johnson Restaurant lease and as a result
first half sales and operating  income were negatively  impacted by $721,000 and
$113,000,  respectively  compared to the same period in the prior year. Customer
counts at Restaurants operated in both periods decreased 1.4%.

As a result of the sales  increase,  partially  offset by a 0.9% decrease in the
gross profit  percentage from 17.2% to 16.3%,  restaurant gross profit decreased
by  $202,000,  or 3.4% in the first half of 1999  compared to the same period in
1998.  The decrease in the gross profit  percentage  was mainly the result of an
increase  in labor cost of 1.1%  attributable  to higher  average  hourly  rates
caused by a competitive  labor market and customer count decreases due to poorer
weather in 1999 compared to 1998. In addition, variable costs increased 0.2% due
to snow plowing and maintenance  costs related to the more severe winter weather
in 1999. A decrease in food costs of 0.5% attributable to the lower cost of eggs
and coffee compared to the first half of 1998 partially  offset the higher labor
and variable costs.

                                       11
<PAGE>


Restaurant selling,  general and administrative expense increased by $41,000, or
4.0% during the first half of 1999.

Restaurant  depreciation and amortization  increased by $89,000,  or 6.1% during
the first half of 1999.  Restaurant  depreciation and amortization will continue
to increase each year with the addition of new restaurants.

As a result of the above items,  operating  income decreased by $332,000 or 9.5%
in the first half of 1999.

CUES DIVISION.  Cues's sales  increased by $762,000 or 5.6% in the first half of
1999 compared to the same period in the prior year.  The primary  reason for the
sales  increase was an increase in sales of  truck-mounted  systems and sales by
Cues B.V. The six month increase reversed the decline in the first quarter ended
March 31, 1999 as  customers  continued  to  recognized  the  benefits of Cues's
equipment and Cues was able to increase the number of truck units delivered.  As
a  result  of the  sales  increase  and a 0.5%  increase  in  the  gross  profit
percentage  from  31.0% in the first  half of 1998 to 31.5% in the first half of
1999,  gross profit  increased  by $316,000,  or 7.4% in the first half of 1999.
Operating  income  decreased  by $63,000,  or 4.1%.  Included in the decrease in
operating  income  is  the  effect  of  an  increase  in  selling,  general  and
administrative expense of $307,000, or 12.6% and an increase in depreciation and
amortization expense of $72,000, or 26.7%. The increase in expenses in the first
half of 1999 compared to the corresponding period in the prior year is primarily
attributable  to  increases  in wages  resulting  from both  rate and  headcount
increases,  sales and  marketing  expenses  including  an increase in west coast
sales efforts,  where a satellite  service and sales office was  established and
facility  costs  increases.  Subsequent  to June 30,  1999,  Cues entered into a
mutually  exclusive  agreement  with Hansen  Information  Technologies,  Inc., a
leading provider of software to  municipalities.  The agreement provides for the
interchange  of data  between the Cues  DataCap  3.0  Pipeline  Data  Collection
Software  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.
We  anticipate  that this will lead to  additional  truck and computer  software
sales.

CORPORATE.  Corporate general and  administrative  expenses increased by $81,000
during the first half of 1999.  Interest expense  decreased by $161,000 due to a
lower  average  debt balance in 1999.  Interest  and other  income  increased by
$14,000 and $7,000,  respectively in the first half of 1999 compared to the same
period in 1998.

Income  tax  expense  decreased  from  $1,523,000  in the first  half of 1998 to
$1,437,000 in the first half of 1999. The decrease in tax expense  resulted from
a decrease in pre-tax income.  Both periods include non-cash  expense  resulting
from  calculating  the  deferred  tax  provision in  accordance  with  Financial
Accounting  Standards Board Statement No. 109 "Accounting For Income Taxes". The
first  half of 1999 and 1998  included  deferred  tax  expense of  $992,000  and
$1,129,000,  respectively. The Company will continue to pay taxes at the rate of
approximately  11%, but will recognize a 40% tax expense on future quarterly and
annual income statements.

                                       12
<PAGE>


EARNINGS  PER  SHARE.  Basic and  diluted  earnings  per share for the first six
months  ended  June 30,  1999 were $0.47 and $0.42  respectively.  The basic and
diluted weighted  average number of shares  outstanding for the six months ended
June 30, 1999 were 4,442,000 and 4,902,000, respectively. This compares to basic
and diluted  earnings per share of $0.50 and $0.44 per share,  respectively  for
the  corresponding  period in 1998 when there were  basic and  diluted  weighted
average  shares  outstanding  of  4,612,000  and  5,187,000,  respectively.  The
decrease in the diluted weighted average shares outstanding in the first half of
1999 compared to the first half of 1998 resulted  mainly from the  repurchase of
Common Stock during 1998 and to a lesser  extent a decrease in the average stock
market price during the first half of 1999 compared to the corresponding  period
in 1998.  The average  stock  market price for the first half of 1999 was $10.55
compared to an average of $12.56 in the corresponding period of 1998. A decrease
in the stock price results in a slightly lesser number of shares outstanding for
purposes of  determining  the weighted  average shares  outstanding  used in the
earnings per share calculation.

COMPARISON OF SECOND QUARTER 1999 RESULTS TO 1998 RESULTS

Three  month  sales  increased  $1,409,000,  gross  profit  increased  $167,000,
selling,  general and administrative expense increased $182,000 and depreciation
and amortization  increased $76,000 resulting in an operating income decrease of
$91,000.  Interest  expense  decreased by $81,000,  interest income decreased by
$8,000, other expense decreased by $32,000 and income taxes increased by $28,000
resulting in a decrease in net income of $14,000.

RESTAURANT DIVISION.  Restaurant sales increased by $295,000,  or 1.6% and gross
profit decreased by $115,000,  or 3.4% in the second quarter of 1999 compared to
the same period in the prior year. Operating income decreased $188,000,  or 8.9%
after  deducting an increase in selling  general and  administrative  expense of
$30,000 and an increase in depreciation and  amortization of $43,000.  The sales
increase was mainly due to an increase in same store sales of $206,000, or 1.4%,
sales from the  opening of new  Bickford's  Restaurants  of  $578,000  partially
offset by a decrease in sales due to closed Restaurants of $378,000. The Company
was unable to renew the expiring Howard Johnson Restaurant lease and as a result
second quarter sales and operating  income were negatively  impacted by $378,000
and $64,000, respectively compared to the same period in the prior year.
Customer counts at Restaurants operated in both periods decreased 2.4%.

As a result of the sales  increase,  partially  offset by a 0.9% decrease in the
gross profit  percentage from 18.5% to 17.6%,  restaurant gross profit decreased
by $115,000,  or 3.4% in the second  quarter of 1999 compared to the same period
in 1998. The decrease in the gross profit percentage was mainly the result of an
increase in labor cost  attributable  to higher average hourly rates caused by a
competitive  labor  compared to the second  quarter of 1998.  A decrease in food
costs  attributable  to the lower cost of eggs and coffee  compared to the first
half of 1999 partially offset the higher labor costs.

Restaurant selling,  general and administrative expense increased by $30,000, or
5.8% during the second quarter of 1999.

Restaurant  depreciation and amortization  increased by $43,000,  or 5.9% during
the second  quarter  of 1999.  Restaurant  depreciation  and  amortization  will
continue to increase each year with the addition of new restaurants.

                                       13
<PAGE>


As a result of the above items,  operating  income decreased by $188,000 or 8.9%
in the second quarter of 1999.

CUES  DIVISION.  Cues's  sales  increased by  $1,114,000  or 16.1% in the second
quarter of 1999  compared  to the same  period in the prior  year.  The  primary
reason for the sales increase was an increase in sales of truck-mounted  systems
and sales by Cues B.V. As a result of the sales  increase and a 0.9% decrease in
the gross profit percentage from 32.1% in the second quarter of 1998 to 31.2% in
the second quarter of 1999, gross profit increased by $282,000,  or 12.7% in the
second  quarter of 1999.  Operating  income  increased  by  $138,000,  or 18.0%.
Included  in the  increase in  operating  income is the effect of an increase in
selling, general and administrative expense of $111,000, or 8.2% and an increase
in depreciation and amortization expense of $33,000, or 24.3%.

CORPORATE.  Corporate general and  administrative  expenses increased by $41,000
during the second quarter of 1999.  Interest expense decreased by $78,000 due to
a lower  average  debt balance in 1999.  Interest and other income  increased by
$6,000 and $7,000,  respectively  in the second  quarter of 1999 compared to the
same period in 1998.

Income tax expense  increased  from  $897,000  in the second  quarter of 1998 to
$925,000 in the  corresponding  period in 1999.  Both periods  include  non-cash
expense resulting from calculating the deferred tax provision in accordance with
Financial  Accounting  Standards  Board Statement No. 109 "Accounting For Income
Taxes".  The second  quarter of 1999 and 1998  included  deferred tax expense of
$637,000 and $665,000, respectively

EARNINGS PER SHARE.  Basic and diluted earnings per share for the second quarter
ended June 30,  1999 were $0.30 and $0.27  respectively.  The basic and  diluted
weighted  average number of shares  outstanding  for the three months ended June
30, 1999 were 4,431,000 and 4,900,000,  respectively. This compares to basic and
diluted  earnings per share of $0.30 and $0.26 per share,  respectively  for the
corresponding  period in 1998 when there were basic and diluted weighted average
shares outstanding of 4,569,000 and 5,149,000, respectively. The decrease in the
diluted  weighted  average  shares  outstanding  in the  second  quarter of 1999
compared to the second  quarter of 1998 resulted  mainly from the  repurchase of
Common Stock during 1998 and to a lesser  extent a decrease in the average stock
market price  during the second  quarter of 1999  compared to the  corresponding
period in 1998.  The average  stock market price for the second  quarter of 1999
was $10.68 compared to an average of $12.69 in the corresponding period of 1998.

YEAR 2000 COMPLIANCE

The year 2000 issue is 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 properly  recognize  the year 2000 (and  subsequent  dates) and
errors may  result.  The  company has  instituted  a program to  identify  these
computer  programs and modify or replace its systems so that they will  function
properly in the year 2000 as well as any  non-information  technology systems in
place.

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

                                       14
<PAGE>


programming  changes are not  required.  Peripheral  hardware  and  software and
equipment at each  restaurant  location and the Restaurant head office are being
evaluated for year 2000 compliance.

Cues is  currently  in the testing  phase of 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
have been 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,  sales
database  tracking,  etc.  While not as critical  to the  ongoing  nature of the
business,  Cues is currently  assessing the effect of year 2000 on each hardware
and software  component.  Cues does not utilize any computer aided  machinery in
its production process.

The Company is in the process of assessing formal communications with all of its
significant suppliers to determine the extent to which the Company is vulnerable
to potential third parties' failures to remediate their own year 2000 issues. It
is in the  interest of the  Company to use this  information  to mitigate  these
risks. However, because of the complexity of this issue, the Company can give no
assurances  that the systems of other companies on which the Company relies will
be  remedied  for the year 2000  issue on time or that a failure  to remedy  the
problem  by another  company  would not have a  material  adverse  effect on the
Company.  Plans are therefore under  development in order to attempt to mitigate
the extent of such potential adverse effects.

The Company is expensing the costs to modify or replace computer applications as
incurred,  the  majority of which are being  handled  internally  utilizing  its
normal  information  technology  budget  and  personnel.  The  Company  does not
anticipate any significant  increases in costs due to year 2000  conversions nor
does it  anticipate  any  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. Based on the above, management does not
anticipate  that the cost of achieving year 2000 compliance will exceed $50,000,
and  therefore  will not have a  material  impact  on the  Company's  operation,
financial condition or liquidity.

LIQUIDITY AND CAPITAL RESOURCES

AVAILABLE RESOURCES.  The Company's consolidated cash positions at June 30, 1999
and  December 31, 1998 was  $1,954,000  and  $1,587,000.  The Company has a cash
management  system whereby cash  generated by operations is immediately  used to
reduce bank debt.  The  immediate  reduction of  outstanding  debt  provides the
Company with a reduction in interest  expense  greater than the interest  income
that cash could safely earn from alternative investments. Working capital needs,
when they arise, are met by daily borrowings.

During the first half of 1999,  the  Company  had cash flow from  operations  of
$4,619,000.  The cash from  operations  and  borrowings of $697,000 of long-term
debt  funded  the  acquisition  of  property,   plant  and  equipment   totaling
$2,223,000,  a business  acquisition  totaling $778,000,  the purchase of Common
Stock totaling  $1,914,000  and the repayment of capital  leases  obligations of
$34,000.  During the first half of 1999,  current assets increased by $4,301,000
primarily due to an increase in Cues's inventory, an increase in Cues's accounts
receivable  and  Corporate  advances  to a  related  party.  The Cues  inventory

                                       15
<PAGE>


increase of $1,724,000 resulted from an increase in work in process inventory to
support an increase in production of  truck-mounted  systems and trucks used for
sales and product  demonstrations.  The increase in Cues accounts  receivable of
$1,052,000  resulted  mainly  from the large  sales  volume in the month of June
1999.  Also  included in accounts  receivable  are  advances to a related  party
totaled  $1,463,000 at June 30, 1999. A portfolio of private and public  company
equities  including the Company's  Common Stock secures the advances.  Partially
offsetting  the  increase  in  current  assets,  current  liabilities  increased
$3,151,000  mainly due to an increase in accounts payable and accrued  expenses.
Current liabilities  contains $1,704,000 payable to stockholders  related to the
Company's  June 28, 1999 reverse stock split,  which  resulted in the repurchase
and retirement of 157,000 shares of Common Stock.

During the first half of 1998,  the  Company  had cash flow from  operations  of
$4,498,000.  The cash from operations funded the acquisition of property,  plant
and equipment totaling $1,904,000,  the payment of long-term debt of $1,118,000,
the repayment of capital  leases  obligations  of $66,000,  the  investment in a
related  party note  receivable  of $135,000 and the purchase of Common Stock of
$1,248,000.  During the first half of 1998, current assets increased by $830,000
primarily  due to a  $1,090,000  increase  in  Cues's  accounts  receivable,  an
increase in prepaid expenses of $362,000 partially offset by a $682,000 decrease
in Cues's  inventory.  Current  liabilities  increased  $459,000 mainly due to a
reduction in Bickford's accounts payable, an increase in accrued expenses and an
increase in the current portion of long-term debt.

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

IMPACT OF  INFLATION.  Inflationary  factors such as increases in food and labor
costs directly affect the Company's operation.  Many of the Restaurant employees
are paid hourly rates  related to the federal  minimum  wage,  and  accordingly,
increases in the minimum wage will result in  increases in the  Company's  labor
costs.  In  addition,  the cost of food  commodities  utilized by the Company is
subject to market supply and demand pressures. Shifts in these costs may have an
impact on the  Company's  food  cost.  The  Company  anticipates  that food cost
increases  can  be  offset  through  selective  price  increases,   although  no
assurances can be given that the Company will be successful in this regard.

Increases in interest rates could negatively affect the Company's operations.

                                       16
<PAGE>


                           PART II. OTHER INFORMATION

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

The Company's  annual meeting was held on May 27, 1999. In connection  therewith
the Company  submitted the following  proposals to stockholders in its notice of
Annual meeting of Stockholders and Proxy Statement dated April 23, 1999.

All of the directors of the Company were  re-elected at the 1999 Annual  Meeting
of Stockholders, having received votes as follows:

                                         Against/                      Broker
      Nominee               For          Withheld      Abstentions    Non Votes
      -------            ---------       --------      -----------    ---------
Farrokh H. Kavarana      3,639,780       124,126           --            --
Kevin P. Lynch           3,639,830       124,076           --            --
Alexander M. Milley      3,639,835       124,071           --            --
Denis M. O'Donnell       3,639,830       124,076           --            --
Robert C. Shaw           3,639,834       124,072           --            --

A majority of the  stockholders  approved the  Company's  1999  Incentive  Stock
Option Plan, voting as follows:

                                         Against/                      Broker
                            For          Withheld      Abstentions    Non Votes
                         ---------       --------      -----------    ---------
    Number of votes      3,694,702        50,367          9,916         8,919

A majority of the stockholders  approved the amendment to the Company's  charter
in order to effect:  (i) a  1-for-100  reverse  stock  split of the  outstanding
shares of Common Stock in order to cash-out  stockholders  holding less than 100
shares,  and (ii)  immediately  thereafter,  a  100-for-1  forward  stock  split
resulting  in the stock  ownership  of all  non-cashed  out  stockholders  being
restored to pre-existing levels.

                                         Against/                      Broker
                            For          Withheld      Abstentions    Non Votes
                         ---------       --------      -----------    ---------
    Number of votes      3,605,449       151,807          6,650          --


A   majority    of   the    stockholders    approved    the    appointment    of
PricewaterhouseCoopers  LLP as the  Company's  independent  accountants  for the
fiscal year ending December 31, 1999, voting as follows:

                                         Against/                      Broker
                            For          Withheld      Abstentions    Non Votes
                         ---------       --------      -----------    ---------
    Number of votes      3,752,416         3,008          8,480          --

                                       17
<PAGE>


ITEM 5.  OTHER INFORMATION

         None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     (a) Exhibits required by Item 601 of Regulation S-K

         27.1  Financial Data Schedule

     (b) Reports on Form 8-K

         None

                                       18
<PAGE>


                                   SIGNATURES


Pursuant  to the  requirements  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
                                ------------------------------------------------
                                                (Registrant)



Date: August 12, 1999           /s/  ALEXANDER M. MILLEY
                                ------------------------------------------------
                                     Alexander M. Milley, Chairman of the Board,
                                     President and Chief Executive Officer
                                     (Principal Executive Officer)




Date: August 12, 1999           /s/  THOMAS R. DRUGGISH
                                ------------------------------------------------
                                     Thomas R. Druggish, Vice President,
                                     Treasurer and Secretary (Chief Accounting
                                     Officer and Principal Financial Officer)

                                       19