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 September 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 November 1, 1999, the registrant had outstanding  4,282,417  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

<TABLE>
<CAPTION>

                                                             September 30,               December 31,
                                                                  1999                       1998
                                                             ---------------            ---------------
                                                               Unaudited
<S>                                                          <C>                        <C>
Current assets:

     Cash and cash equivalents                               $         1,541            $         1,587

     Accounts receivable, net                                          4,516                      3,493

     Accounts receivable - related party                               3,083                         --

     Inventories, net                                                 12,112                     10,114

     Prepaid expenses and other current assets                           302                        292

     Deferred tax asset                                                4,719                      5,484
                                                             ---------------            ---------------

         Total current assets                                         26,273                     20,970

Property, buildings and equipment, net                                32,620                     31,888

Intangible assets, net                                                 5,612                      5,163

Deferred debt costs, net                                                  85                        105

Notes receivable - related party                                       4,200                      4,200

Deferred tax asset - noncurrent                                       16,366                      3,532

Other                                                                    992                        778
                                                             ---------------            ---------------

         Total assets                                        $        86,148            $        66,636
                                                             ===============            ===============
</TABLE>


              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
<TABLE>
<CAPTION>

                                                          September 30,     December 31,
                                                             1999               1998
                                                         --------------    ---------------
                                                           Unaudited
<S>                                                      <C>               <C>
Current liabilities:
     Accounts payable                                    $        4,217    $         3,526
     Accrued expenses                                             6,088              5,289
     Capital lease obligations - current                             34                 52
     Current portion of long-term debt                            1,289                887
                                                         --------------    ---------------
         Total current liabilities                               11,628              9,754

Capital lease obligations - non current                           1,012              1,037
Long-term debt                                                    7,750              6,689
Other non-current liabilities                                     4,346              3,596
                                                         --------------    ---------------

         Total liabilities                                       24,736             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--4,280,965 and
         4,453,460 at September 30, 1999 and
         December 31, 1998, respectively                              4                  5
   Additional paid-in capital                                   224,215            226,103
   Accumulated deficit                                         (162,565)          (180,343)
   Accumulated other comprehensive income                          (242)              (205)
                                                         --------------    ---------------

         Total stockholders' equity                              61,412             45,560
                                                         --------------    ---------------

         Total liabilities and stockholders' equity      $       86,148    $        66,636
                                                         ==============    ===============
</TABLE>

              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      Nine Months Ended
                                                 September 30,          September 30,
                                             --------------------    --------------------
                                               1999        1998        1999        1998
                                             --------    --------    --------    --------
<S>                                          <C>         <C>         <C>         <C>
Net sales                                    $ 28,719    $ 25,558    $ 78,748    $ 74,087

Costs and expenses:
     Cost of sales                             22,270      19,796      61,949      58,089
     Selling, general and administrative        2,513       2,387       7,389       6,834
     Depreciation and amortization                980         893       2,866       2,618
                                             --------    --------    --------    --------

Operating income                                2,956       2,482       6,544       6,546

Other income (expense):
     Interest income                              251         154         545         459
     Interest expense                            (224)       (219)       (587)       (745)
     Other income (expense)                       (13)        (24)        (15)        (59)
                                             --------    --------    --------    --------

Income before income taxes                      2,970       2,393       6,487       6,201

Benefit (provision) for income taxes           12,728      (1,124)     11,291      (2,647)
                                             --------    --------    --------    --------

Net income                                     15,698       1,269      17,778       3,554

Other comprehensive income net of tax:
   Foreign currency translation adjustment         20          (1)        (37)        (48)
                                             --------    --------    --------    --------

Comprehensive income                         $ 15,718    $  1,268    $ 17,741    $  3,506
                                             ========    ========    ========    ========


Net income per common share:
     Basic                                   $   3.58    $   0.27    $   4.05    $   0.77
                                             ========    ========    ========    ========
     Diluted                                 $   3.22    $   0.25    $   3.64    $   0.69
                                             ========    ========    ========    ========
Weighted average number of common
  and common equivalent shares:
     Basic                                      4,385       4,556       4,391       4,593
                                             ========    ========    ========    ========
     Diluted                                    4,854       5,042       4,889       5,145
                                             ========    ========    ========    ========
</TABLE>

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

                                       5
<PAGE>
                                ELXSI CORPORATION
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                             (Amounts in Thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                               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                --            --            --                 --          (37)

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

Exercise of Common Stock Options
to Purchase Common Stock                4,790            --            25                 --           --

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

Net income                                 --            --            --             17,778           --
                                    ---------    ----------    ----------        -----------   ----------

Balance at September 30, 1999       4,280,965    $        4    $  224,215       $   (162,565)  $     (242)
                                    =========    ==========    ==========       ============   ==========
</TABLE>

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

                                       6
<PAGE>

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

                                                 Nine Months Ended September 30,
                                                 -------------------------------
                                                        1999        1998
                                                      --------    --------
CASH FLOWS USED IN OPERATING ACTIVITIES:

Net income                                            $ 17,778    $  3,554
Adjustments to reconcile net income to net
    cash provided by operating activities:
     Depreciation and amortization                       2,866       2,618
     Amortization of deferred debt costs                    19          44

(Increase) decrease in assets:
     Accounts receivable                                (1,023)       (847)
     Accounts receivable - related party                (3,083)         --
     Inventories                                        (1,860)        437
     Prepaid expenses and other current assets             (10)       (174)
     Deferred tax asset                                (12,069)      1,870
     Other                                                (249)       (404)
Increase (decrease) in liabilities:
     Accounts payable                                      691        (998)
     Accrued expenses                                      799         546
     Other non-current liabilities                         750         675
                                                      --------    --------
     Net cash provided by operating activities           4,609       7,321
                                                      --------    --------

CASH FLOWS USED IN INVESTING ACTIVITIES:
     Purchase of property, building and equipment       (3,408)     (4,282)
     Acquisition of product line                          (778)         --
     Investment in notes receivable - related party         --        (135)
                                                      --------    --------
     Net cash used in investing activities              (4,186)     (4,417)
                                                      --------    --------

CASH FLOWS USED IN FINANCING ACTIVITIES:
     Net borrowings (payments) of long-term debt         1,463      (1,384)
     Purchase of Common Stock                           (1,914)     (1,953)
     Proceeds from exercise of Common Stock
         Options                                            25          25
     Principal payments of capital lease                   (43)        (92)
                                                      --------    --------
     Net cash used in financing activities            $   (469)   $ (3,404)
                                                      --------    --------

              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)

<TABLE>
<CAPTION>

                                                           Nine Months Ended September 30,
                                                      ----------------------------------------
                                                           1999                      1998
                                                      --------------             -------------

<S>                                                   <C>                        <C>
Increase in cash and cash equivalents                 $          (46)            $        (500)

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

Cash and cash equivalents, end of period              $        1,541             $         579
                                                      ==============             =============


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Cash paid during the period for:
    Income taxes                                      $          903             $       1,014
    Interest                                                     550                       831
</TABLE>


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

                                       8
<PAGE>

                                ELXSI CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 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 nine months ended September 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 two new  Bickford's  Restaurants  were opened in
Somerville,  Massachusetts and Warwick,  Rhode Island. As of September 30, 1999,
ELXSI  owned 60  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  intangible  assets  including  the trade  names,

                                       9
<PAGE>


patents, customer and vendor lists, product literature and engineering drawings.
The intangible assets are being amortized over ten years.

NOTE 3. ACCOUNTS  RECEIVABLE - RELATED PARTY.  During 1999, the Company advanced
Cadmus Corporation ("Cadmus") a total of approximately  $3,083,000.  A portfolio
of private  and public  company  equities  purchased  with the  proceeds  of the
advances  fully secures the  receivable.  During the third quarter of 1999,  the
Company charged  interest on the receivable at prime plus 2% and earned $116,000
of interest  income in the third quarter.  Certain  officers,  directors  and/or
shareholders  of Cadmus are  officers  and/or  directors  of the Company  and/or
ELXSI.

NOTE 4. 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 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  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.  Through September 30, 1999, the Company
had paid  approximately  $1,143,000 of this liability.  The remaining balance of
$561,000 is reflected in accrued expenses at September 30, 1999 and 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 5. 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  payable  for the year 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.

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.

The Company's third quarter 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  Proxy
Statement dated April 23, 1999). Accordingly, and taking into account reasonable
and prudent tax planning strategies and future income projections, for the third
quarter of 1999, the Company reduced the valuation allowance by $13,061,000. The
resulting  net  deferred  tax asset of  $21,085,000  represents  the amount that
management  believes  more likely than not will be realized  over the  remaining

                                       10
<PAGE>


life of the net  operating  loss and tax  credit  carryforwards.  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
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.

NOTE 6.  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 64 stores located in the
New England states  operating under the Bickford's and Abdow's brand names.  The
equipment manufacturing segment produces pipe line 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 nine months ended
September 30, 1999 and 1998 is summarized in the following table.

                                                1999                1998
                                          ----------------    ----------------
Revenues From External Customers:
     Restaurants                          $     55,716,000    $     53,742,000
     Equipment                                  23,032,000          20,345,000
                                          ----------------    ----------------
                                          $     78,748,000    $     74,087,000
                                          ================    ================
Segment Profit:
     Restaurants                          $      5,717,000    $      5,855,000
     Equipment                                   2,436,000           2,221,000
     Other                                      (1,609,000)         (1,530,000)
                                          ----------------    ----------------
                                          $      6,544,000    $      6,546,000
                                          ================    ================
Segment Assets:
     Restaurants                          $     32,139,000    $     31,620,000
     Equipment                                  24,782,000          21,351,000
     Other                                      29,227,000          13,807,000
                                          ----------------    ----------------
                                          $     86,148,000    $     66,778,000
                                          ================    ================

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

                                       11
<PAGE>

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 NINE MONTHS 1999 RESULTS TO 1998 RESULTS

Nine month sales increased $4,661,000, gross profit increased $801,000, selling,
general and  administrative  expense  increased  $555,000 and  depreciation  and
amortization  increased  $248,000  resulting in an operating  income decrease of
$2,000.  Interest  expense  decreased by $158,000,  interest income increased by
$86,000,  other  expense  decreased by $44,000 and income taxes were credited by
$13,938,000 resulting in an increase in net income of $14,224,000.

RESTAURANT  DIVISION.  Restaurant  sales  increased by $1,974,000,  or 3.7%, and
gross  profit  increased by $91,000,  or 0.9%,  in the first nine months of 1999
compared  to the same  period  in the prior  year.  Operating  income  decreased
$138,000,   or  2.4%,  after  deducting  an  increase  in  selling  general  and
administrative   expense  of  $94,000  and  an  increase  in  depreciation   and
amortization  of $135,000.  The sales  increase was mainly due to an increase in
same  store  sales  of  $1,494,000,  or 3.5%,  sales  from  the  opening  of new
Bickford's Restaurants of $1,917,000 partially offset by a decrease in sales due
to  closed  Restaurants  of  $1,214,000.  The  Company  was  unable to renew the
expiring Howard Johnson  Restaurant lease and as a result first nine month sales
and  operating  results  were  negatively  impacted by  $1,108,000  and $173,000
respectively  compared to the same period in the prior year.  Customer counts at
Restaurants operated in both periods decreased 0.5%.

As a result of the sales  increase,  partially  offset by a 0.5% decrease in the
gross profit  percentage from 17.9% to 17.4%,  restaurant gross profit increased
by  $91,000,  or 0.9%,  in the first nine  months 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 0.8%  attributable  to higher  average
hourly rates caused by a competitive  labor market and higher levels of staffing
during peak business periods in order to provide better service to customers

                                       12
<PAGE>

Restaurant selling,  general and administrative expense increased by $94,000, or
6.1% during the first nine months of 1999.

Restaurant  depreciation and amortization  increased by $135,000, or 6.1% during
the first nine months 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 $138,000 or 2.4%
in the first nine months of 1999.

CUES DIVISION. Cues's sales increased by $2,687,000, or 13.2%, in the first nine
months 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 nine 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 0.6%  decrease in the gross
profit  percentage  from 31.5% in the first nine  months of 1998 to 30.9% in the
first nine months of 1999, gross profit increased by $710,000,  or 11.1%, in the
first nine months of 1999.  Operating  income  increased by  $215,000,  or 9.7%.
Included  in the  increase in  operating  income is the effect of an increase in
selling,  general  and  administrative  expense of  $382,000,  or 10.2%,  and an
increase in depreciation  and  amortization  expense of $113,000,  or 27.0%. The
increase  in  expenses  in  the  first  nine  months  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 $79,000,
or 5.2%,  during the first nine months of 1999.  Interest  expense  decreased by
$133,000,  or 27.6%,  due to a lower average debt balance in 1999.  Interest and
other income  increased by $124,000,  or 30.8%,  and $7,000  respectively in the
first nine months of 1999 compared to the same period in 1998.

During the first nine months of 1999, the Company recorded an income tax benefit
of  $11,291,000  resulting  from  recording  a deferred  income  tax  benefit of
$12,069,000  (see Note 5) and a current  income tax  expense of  $778,000.  This
compares  to income tax expense of  $2,647,000  in the first nine months of 1998
resulting from a deferred  income tax expense of $1,870,000 and a current income
tax expense of $777,000.  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.

                                       13
<PAGE>

EARNINGS  PER SHARE.  Basic and  diluted  earnings  per share for the first nine
months ended September 30, 1999 were $4.05 and 3.64 respectively.  The basic and
diluted weighted average number of shares  outstanding for the nine months ended
September 30, 1999 were 4,391,000 and 4,889,000,  respectively. This compares to
basic and diluted earnings per share of $0.77 and $0.69 per share,  respectively
for the corresponding  period in 1998 when there were basic and diluted weighted
average  shares  outstanding  of  4,593,000  and  5,145,000,  respectively.  The
decrease in the diluted  weighted  average shares  outstanding in the first nine
months of 1999  compared to the first nine months of 1998  resulted  mainly from
the  repurchase  of Common Stock  during 1998 and 1999 and to a lesser  extent a
decrease in the average  stock market price during the first nine months of 1999
compared to the corresponding period in 1998. The average stock market price for
the first nine months of 1999 was $11.16 compared to an average of $11.87 in the
corresponding  period of 1998. A decrease in the stock price results in a slight
decrease in the number of shares  outstanding  for purposes of  determining  the
weighted average shares outstanding used in the earnings per share calculation.


COMPARISON OF THIRD QUARTER 1999 RESULTS TO 1998 RESULTS

Three-month  sales  increased  $3,161,000,   gross  profit  increased  $687,000,
selling,  general and administrative expense increased $126,000 and depreciation
and amortization  increased $87,000 resulting in an operating income increase of
$474,000.  Interest  expense  increased by $5,000,  interest income increased by
$97,000,  other  expense  decreased  by $11,000 and income  taxes  decreased  by
$13,852,000 resulting in an increase in net income of $14,429,000.

RESTAURANT  DIVISION.  Restaurant  sales  increased by $1,236,000,  or 6.5%, and
gross  profit  increased  by  $293,000,  or 8.1%,  in the third  quarter of 1999
compared  to the same  period  in the prior  year.  Operating  income  increased
$194,000,   or  8.3%,  after  deducting  an  increase  in  selling  general  and
administrative   expense  of  $53,000  and  an  increase  in  depreciation   and
amortization  of $46,000.  The sales  increase  was mainly due to an increase in
same store sales of $861,000,  or 5.7%, sales from the opening of new Bickford's
Restaurants  of $663,000  partially  offset by a decrease in sales due to closed
Restaurants  of $363,000.  The Company was unable to renew the  expiring  Howard
Johnson  Restaurant  lease and as a result  third  quarter  sales and  operating
income were negatively impacted by $363,000 and $61,000 respectively compared to
the same period in the prior year.  Customer  counts at Restaurants  operated in
both periods increased 1.1%.

As a result of the  sales  increase  and a 0.3%  increase  in the  gross  profit
percentage from 19.1% to 19.4%,  restaurant  gross profit increased by $293,000,
or 8.1%, in the third  quarter of 1999 compared to the same period in 1998.  The
increase in the gross profit  percentage was mainly the result of an increase in
menu prices that offset increased costs.

The  increase in sales is a result of a higher  average  guest check  during the
quarter,  which is due to an increase  in menu  prices,  suggestive  selling and
increased customers.

Restaurant selling,  general and administrative expense increased by $53,000, or
10.3%, during the third quarter of 1999.

                                       14
<PAGE>

Restaurant  depreciation and amortization  increased by $46,000, or 6.2%, during
the  third  quarter  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 increased by $194,000 or 8.3%,
in the third quarter of 1999.

CUES  DIVISION.  Cues's sales  increased by $1,925,000,  or 29.0%,  in the third
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.
As a result of the  sales  increase  and a 2.7%  decrease  in the  gross  profit
percentage from 32.4% in the third quarter of 1998 to 29.8% in the third quarter
of 1999,  gross profit  increased by $394,000,  or 18.3% in the third quarter of
1999. Operating income increased by $278,000, or 41.4%. Included in the increase
in  operating  income is the  effect of an  increase  in  selling,  general  and
administrative  expense of $75,000, or 5.6%, and an increase in depreciation and
amortization expense of $41,000, or 27.7%.

CORPORATE.  Corporate general and  administrative  expenses  decreased by $2,000
during  the third  quarter  of 1999.  Interest  expense  increased  by  $28,000.
Interest  income  increased by $110,000 in the third quarter of 1999 compared to
the same period in 1998.

During the third quarter of 1999, the Company  recorded an income tax benefit of
$12,728,000   resulting  from  recording  a  deferred   income  tax  benefit  of
$13,061,000  and a current  income tax  expense of  $333,000.  This  compares to
income tax expense of $1,124,000 in the third quarter of 1998  resulting  from a
deferred  income tax  expense of  $741,000  and a current  income tax expense of
$383,000.

EARNINGS PER SHARE.  Basic and diluted  earnings per share for the third quarter
ended  September  30,  1999 were  $3.58 and  $3.22  respectively.  The basic and
diluted weighted average number of shares outstanding for the three months ended
September 30, 1999 were 4,385,000 and 4,854,000,  respectively. This compares to
basic and diluted earnings per share of $0.27 and $0.25 per share,  respectively
for the corresponding  period in 1998 when there were basic and diluted weighted
average  shares  outstanding  of  4,556,000  and  5,042,000,  respectively.  The
decrease in the diluted weighted average shares outstanding in the third quarter
of  1999  compared  to the  third  quarter  of 1998  resulted  mainly  from  the
repurchase of Common Stock during 1998 and 1999.  The average stock market price
for the third quarter of 1999 was $12.39 compared to an average of $10.48 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.

                                       15
<PAGE>

During 1998, the Restaurant  division  installed new accounting systems that are
fully  operational  and are year 2000  compliant.  With the  exception  of three
Restaurants  that do have compliant point of sale systems,  the other 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  head office are
being evaluated for year 2000 compliance.

Cues is currently in the final 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 September 30,
1999 and December 31, 1998 was $1,541,000 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 nine months of 1999, the Company had cash flow from  operations
of $4,609,000. The cash from operations, long-term debt borrowings of $1,463,000
and proceeds from the exercise of common stock options  totaling  $25,000 funded

                                       16

<PAGE>

the acquisition of property, plant and equipment totaling $3,408,000, a business
acquisition totaling $778,000,  the purchase of Common Stock totaling $1,914,000
and the repayment of capital  leases  obligations  of $43,000.  During the first
nine months of 1999, current assets increased by $5,303,000  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 increase of $1,910,000
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 $1,051,000 resulted
mainly from the large sales volume in the month of September 1999. Also included
in current assets is an increase in an account  receivable  from a related party
totaling $3,083,000 at September 30, 1999 (see Note 3). Partially offsetting the
increase in current assets,  current liabilities increased $1,874,000 mainly due
to an increase in accounts  payable and accrued  expenses.  Current  liabilities
contains the remaining $561,000 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 nine months of 1998, the Company had cash flow from  operations
of  $7,321,000.  The cash from  operations  funded the  acquisition of property,
plant and  equipment  totaling  $4,282,000,  the  payment of  long-term  debt of
$1,384,000,  the  repayment  of  capital  leases  obligations  of  $92,000,  the
investment  in a related  party note  receivable of $135,000 and the purchase of
Common Stock of $1,953,000. During the first nine months of 1998, current assets
increased by $840,000  primarily due to a $847,000  increase in Cues's  accounts
receivable,  an increase in prepaid  expenses of $174,000  partially offset by a
$437,000 decrease in Cues's inventory.  Current  liabilities  increased $930,000
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.


ITEM 3.  OTHER INFORMATION

           None

                                       17

<PAGE>

ITEM 4.  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: November 5, 1999              /s/ ALEXANDER M. MILLEY
                                    --------------------------------------------
                                    Alexander M. Milley, Chairman of the Board,
                                     President and Chief Executive Officer
                                     (Principal Executive Officer)




Date: November 5, 1999              /s/ DAVID M. DOOLITTLE
                                    --------------------------------------------
                                    David M. Doolittle, Vice President,
                                     Treasurer and Secretary (Chief Accounting
                                     Officer and Principal Financial Officer)



                                       19