<PAGE>

================================================================================


                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549

                           _________________________

                                   Form 10-K

         For Annual and Transition Reports pursuant to Sections 13 or
                 15(d) of the Securities Exchange Act of 1934

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

                    For the Fiscal Year Ended December 31, 1999

                                      OR

     [_]            TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
                    SECURITIES EXCHANGE ACT OF 1934

                        For the transition period from

                          ___________ to ____________

                        Commission File Number 0-23478

                           _________________________

                         TurboChef Technologies, Inc.
            (Exact name of Registrant as specified in its Charter)


                DELAWARE                                 48-1100390
    (State or other jurisdiction of                    (IRS employer
     incorporation or organization)                identification number)
     10500 Metric Drive, Suite 128                          75243
             Dallas, Texas                                (Zip Code)
  (Address of principal executive offices)

              Registrant's telephone number, including area code:
                                (214) 341-9471
     SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE EXCHANGE ACT:

                                                  Name of Each Exchange on
          Title of Each Class                         Which Registered
          -------------------                         ----------------
                None                                         None

     SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE EXCHANGE ACT:
                         Common Stock, $0.01 Par Value
                               (Title of Class)

                           _________________________

   Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [_]

   Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part II of this Form 10-K or any amendment to this
Form 10-K. YES [_] NO [_]

Aggregate Market Value of voting stock held by non-affiliates of the Registrant
                                      at
                         March 17, 2000:  $71,074,928

   Indicate the number of shares outstanding of each of the Registrant's classes
of Common Stock, as of the latest practicable date.

                                               Number of Shares Outstanding
          Title of Each Class                        at March 17, 2000
          -------------------                        -----------------
      Common Stock, $0.01 Par Value                      15,728,423

                           _________________________

                      DOCUMENTS INCORPORATED BY REFERENCE

Selected portions of the Registrant's definitive proxy materials for its 2000
Annual Meeting of Stockholders are incorporated by reference in Part III hereof.

================================================================================
<PAGE>

                         TURBOCHEF TECHNOLOGIES, INC.
                               TABLE OF CONTENTS

Form 10-K Item                                                           Page
--------------                                                           ----

Part I.

     Item 1.      Business...............................................   2

     Item 2.      Properties.............................................  15

     Item 3.      Legal Proceedings......................................  15

     Item 4.      Submission of Matters to a Vote of Security Holders....  15

Part II.

     Item 5.      Market for Registrant's Common Equity and Related
                    Stockholder Matters..................................  16

     Item 6.      Selected Financial Data................................  17

     Item 7.      Management's Discussion and Analysis of Financial
                    Condition and Results of Operations..................  18

     Item 7a.     Quantitative and Qualitative Disclosures about
                    Market Risk..........................................  25

     Item 8.      Financial Statements and Supplementary Data............  26

     Item 9.      Changes in and Disagreements with Accountants on
                    Accounting and Financial Disclosure..................  26

Part III.

     Item 10.     Directors and Executive Officers of the Registrant.....  27

     Item 11.     Executive Compensation.................................  27

     Item 12.     Security Ownership of Certain Beneficial Owners
                    and Management.......................................  27

     Item 13.     Certain Relationships and Related Transactions.........  27

Part IV.

     Item 14.     Exhibits, Financial Statement Schedules, and Reports
                    on Form 8-K..........................................  28

                  Signatures.............................................  32

<PAGE>

                                    Part I

Item 1.   Business
          --------

General

     TurboChef Technologies, Inc. ("TurboChef Technologies" or "the Company") is
a leading technology development company that heretofore has engaged primarily
in designing, developing and licensing its proprietary high-speed cooking
technologies. The TurboChef high-speed cooking system employs proprietary
hardware and software technologies to "cook-to-order" a variety of food products
at faster speeds and to quality standards comparable, and in many instances
superior to other conventional residential and commercial ovens currently
available. In addition, the Company's high-speed cooking systems use a
microprocessor to control the cooking processes to ensure consistent quality and
also has the ability to communicate with users and service personnel over
computer networks and the Internet.

     As a result of the explosion in the Internet and intelligent appliance
innovation, the Company has embarked on an internal development effort to couple
the computer intelligence and cooking performance of the Company's proprietary
rapid cook technologies with the Internet.  The strategy behind this product
development effort is to provide lifestyle changing benefits to consumers that
make cooking, shopping and meal planning a less time consuming activity.  The
first stage of product development, a prototype appliance ("iAppliance") that
couples the Company's rapid cook oven with a wireless web pad that provides
connectivity to the Internet and intuitive touch screen controls for the oven,
was completed in March 2000.

     The Company's commercial products and technologies have been validated
through utilization and extensive testing by both the Company and a variety of
foodservice operators around the world.  The latest version of the Company's
commercial product, the C-3 commercial counter top, was recognized as the best
innovative new product at the Hotelympia international foodservice show in
London in February 2000.

     The Company's current strategic alliance partner in North America, Maytag
Corporation ("Maytag"), recently introduced the Company's high-speed cooking
technologies to the US residential market, when it launched the Jenn-Air(R)
Accellis(TM) 5XP wall oven. The Accellis(TM) 5XP is expected to become available
to consumers during the second quarter of 2000.

     Since September 1997, the Company has received approximately $8.4 million
in research and development fees from Maytag in connection with product
development under the Strategic Alliance (approximatley 50%, 57% and 18% of
total revenues for 1999, 1998 and 1997, respectively). The Maytag Alliance, and
its related projects, can be cancelled by either party with 30 days written
notice. The Company is presently exploring additional alliance relationships to
introduce both the commercial and residential high-speed cooking technologies
into major international markets.

     The Company intends to continue to build upon its core technology
competency, expand its technology portfolio by developing other innovative
products, increase market penetration through joint venture, strategic alliance
and/or licensing arrangements with companies already engaged in the mass
marketing and/or manufacture of foodservice products and to complete the
development of the iAppliance.

     The Company's high-speed commercial cooking technologies are currently
being marketed in North America by G. S. Blodgett Corporation ("Blodgett"),
Maytag's wholly-owned commercial foodservice equipment subsidiary.  Pursuant to
this arrangement, Maytag has

                                      -2-
<PAGE>

exclusive rights to market TurboChef's high-speed commercial cooking products
throughout North America and to certain North American based foodservice chains
with international locations. The Company continues with its direct commercial
sales efforts in Europe and is exploring the expansion of its commercial
distribution and marketing through licensing, joint venture and alliance
agreements with large appliance and electronic manufacturers, as well as through
established foodservice equipment distributors.

     The Company's commercial cooking systems, marketed under the name TurboChef
outside of North America and Blodgett or Accellis in North America, employ the
Company's proprietary cooking technologies to quickly, efficiently and evenly
transfer, disperse and control the heat used in the cooking process.  The
Company's proprietary computerized control platform monitors the cooking process
and automatically adjusts cook settings during the cooking cycle for optimum
performance.  These technologies provide foodservice operators the flexibility
to "cook-to-order" a variety of food items at speeds which the Company believes
are significantly faster than those permitted by conventional commercial ovens,
grills, microwave ovens, and other currently available high-speed ovens, without
sacrificing quality.  For example, the commercial TurboChef system can cook an
18-ounce beef tenderloin in 180 seconds (versus 40-45 minutes in a conventional
commercial oven), a 16-inch pizza in 80 seconds (versus 8-12 minutes) and a 7-
ounce salmon fillet in 55 seconds (versus 8-10 minutes).

     In addition, because of the TurboChef cooking system's moisture retention,
browning and crisping capabilities, the Company believes that the
characteristics of most food items cooked in a TurboChef cooking system
(including their flavor, texture and appearance) are superior in quality to
those achieved using other rapid cook ovens, or microwave ovens, and are equal
to, or, in some cases, superior in quality to those achieved using conventional
ovens and grills.

     The Company is currently preparing to launch its "next generation"
commercial high-speed cooking system, which will be smaller, less expensive and
offer more features than its existing commercial cooking platform. This product,
known as the TurboChef C-3 counter top, is expected to be commercially available
in the second quarter of 2000.

Rapid Cook Technology

     Traditional cooking systems employ a wide range of processes for
transferring heat energy to food.  These include: conduction (direct energy
transfer from a hot surface, as in a grill); natural convection (energy transfer
to and from naturally moving air, as in a typical home oven); forced convection
(energy transfer to and from mechanically circulated air, as in a typical
convection oven); air impingement (forced convection with rapidly moving air
directed at the food); induction (heating by the generation of electromagnetic
fields); microwave radiation (heating by the dissipation of microwave energy in
food); and infra-red radiation (heating by light whose wavelength falls below
that of the color red in the electromagnetic spectrum).

     Newer cooking systems have begun to incorporate two or more of these
conventional sources of energy.  For example, some cooking systems employ
microwaves and air impingement or microwave and halogen light.  However, the
Company does not believe that these systems provide the speed or the tangible
quality results that are achieved in the TurboChef

                                      -3-
<PAGE>

high-speed cooking systems. Additionally, the Company has been working with the
Massachusetts Institute of Technology staff to scientifically validate the
TurboChef systems cooking characteristics in order to provide an independent,
scientific basis for food quality and competitive product testing. Moreover the
Company's technologies incorporate advanced computer hardware and software that
enables communication and connectivity capabilities that may ultimately enable
the Company to leverage the scope and efficiencies of the Internet.

     In its simplest form, the Company's unique, patented system couples hot air
with microwave energy.  The close coupling of the two energy sources enables
faster cooking at higher quality levels than is possible by each energy source
operating independently. The air is forced down from the top of the oven and at
the same time pulled out through a return path that results in a tight air wrap
around food.  This air wrap ensures that there is a constant interaction between
the heated air and the entire surface area of the food product in the cooking
cavity, resulting in not only evenly browned food products on the outside, but
also creates temperature and moisture gradients that enable precisely targeted
microwaves to energize water molecules that cook the food on the inside.  The
microwave energy is introduced from a direction directly opposite that of the
direction of the airflow, thus capturing the food between the two opposing
energy gradients resulting in faster cooking times and enhanced quality in the
food products being cooked.

Other Products and Applications

     The presence of the microprocessor as an intrinsic element of the cooking
system also gives TurboChef cooking systems a powerful tool to communicate with
its users. For example, cooking programs can be downloaded via computer modem
into the cooking system and the cooking system routinely monitors its own
performance and diagnoses possible problems. To facilitate this process, for its
commercial customers, the Company continues to develop, enhance and refine
ChefComm, a software that enables executive chefs of foodservice chains to
program the cooking systems centrally. Thus, for most foodservice chains, the
use of this system can provide a higher level of cooking quality than is
currently possible. Planned enhancements to ChefComm, will also improve oven
reliability -- a critically important food service need. The Company is also
engaged in hardware and software development that will enable the TurboChef
high-speed cooking system to leverage the Internet to further enhance and
simplify the cooking process. The Company intends to develop an open platform
system that will enable its high-speed cooking system to communicate with other
appliances and computers, enabling users to better utilize the system's
communications capabilities and Internet connectivity.

Opportunities and Strategy

     The Company believes that its long-term success is dependent upon the
successful commercialization of its cooking technologies in commercial and
residential products, upon leveraging its core competencies of developing new
innovative technologies and adding value to the consumer by enhancing these
technologies with Internet connectivity.  The Company will pursue both
residential and commercial high-speed cooking opportunities nationally and
internationally, with the North American market as the launching point.  With
market research revealing that "time" and "quality" are two of the most
important considerations taken into

                                      -4-
<PAGE>

account for food preparation, the Company believes that its patented cooking
technologies are well suited for adoption in both the residential and commercial
kitchens.

     Over the last decade, the residential marketplace has experienced a
definitive shift in the family paradigm and the Company intends taking full
advantage of this shift. Traditionally, the husband was the primary breadwinner
and would arrive home in time for dinner, while the wife generally did not work
outside the home and would prepare dinner for the family each evening. The shift
to two-income families, coupled with longer working hours, children's activities
and increased commute times have threatened to render the traditional family
dinner obsolete. While many families have worked hard to maintain the
traditional family dinner, the length of time required for the meal preparation
process has made this difficult. Families have shifted to eating at fast-food
restaurants, buying pre-packaged frozen foods that can be prepared quickly in a
microwave oven, or eating so-called "junk-food", often sacrificing food quality
and nutrition, as well as the interaction between family members once prevalent
at the evening meal. The Company believes that its rapid cook technologies
provide a potential solution to this dilemma along with an overall improvement
in family lifestyle. The Company's residential oven will reduce cooking times to
as little as one-fifth of traditional cook times. For example, a three-pound
whole chicken can be cooked to perfection in 21 minutes, a task that typically
takes 1 hour and 15 minutes. When available to consumers, the residential
cooking system will be the first appliance that delivers the possibility of a
stress-free approach to building family ties over a home-cooked meal. In
addition, it will enable the preparation of quality meals at the spur of the
moment. Whether people decide to prepare home-cooked meals on a nightly basis or
simply cook frozen casseroles, they are likely to experience more time to enjoy
dinner. Just as importantly, the cooking system will bake, roast, broil, brown
and crisp while at least maintaining nutrition, taste, texture and appearance
that is at least comparable to that of food cooked in conventional ovens.

     Similarly, the commercial foodservice market continues to experience rising
real estate costs, increased food product costs and intense competition. These
factors have forced many commercial foodservice operators to rethink their
operations and become more efficient and cost effective in their food
preparation. While many operators have initiated cost saving mechanisms in their
kitchens, their available options have been somewhat limited. The Company
believes that its patented technologies not only provide operators the
opportunity to achieve operating cost savings (i.e.: energy, ventilation, food
waste and labor), but enables operators to produce quality meals in less time
from a smaller, more efficient and less labor intensive kitchen. The Company
believes that this value proposition will become even more compelling as
operating costs and competition increases, particularly from non-traditional
operators who generally have significantly lower set-up and operating costs.

     TurboChef also believes that it is in a unique position to benefit from the
evolution from a 'PC-based' technology standard to a 'PC-plus' platform of on-
demand information access. The iAppliance application of TurboChef's cooking
technology represents a paradigm shift in the value of kitchen appliances and
the Company believes that its web enabled, rapid-cook oven will elicit 'want-in'
versus 'wear-out' consumer demand and open many new avenues for product and
service revenues. The Company also believes that this 'next generation' product
has the potential to reach a broader market through an open-platform system
supported by low-cost, high-volume OEM and branded OEM partners; and that its
technologies will attract interest from

                                      -5-
<PAGE>

both major international food manufacturers trying to participate in the new
economy and supermarkets seeking new ways to capitalize on changes in the home
meal replacement industry.

Strategy

     The Company will continue to expand and execute its stated strategy of
growing through partnerships. The Company has targeted four primary partnership
strategies that are essential to the success of the Company.

1. Market partners - The Company intends to leverage the marketing and
   ---------------
   distribution capabilities of large appliance and consumer electronics
   manufacturers to broadly distribute the Company's high-speed cooking
   technologies worldwide. By entering into licensing, joint venture and
   marketing alliances, the Company believes that it can realize the
   distribution of its technologies without having to incur the huge costs
   generally associated with this process. The Company believes that this is the
   best approach to achieve broad acceptance of its technologies and to achieve
   the Company's objective of becoming the dominant high-speed cooking platform
   in this newly emerging cooking category.

   The Company's technologies have been launched in North America through the
   Maytag Alliance. The Company intends to expand the market partners in North
   America on a non-exclusive basis once Maytag's exclusivity ends. The Company
   also intends to expand its current model line up to encompass a variety of
   embodiments at various price points. The Company is currently exploring
   market partner opportunities in Europe and Asia and will pursue license
   agreements, joint ventures and alliances with prospective partners in these
   regions.

2. Manufacturing partners  - The Company is actively seeking partnerships with
   ----------------------
   large original equipment manufacturers ("OEM's") and appliance manufacturers
   to set up high volume, low cost, manufacturing facilities for components
   and/or entire systems, so that turnkey packages can be offered to marketing
   partners. These partnerships enable the Company to consolidate manufacturing
   efforts thereby providing economies of scale for potential market partners
   that may not have appliance manufacturing facilities of their own. This
   strategy will enable the Company to expand its channels to market and create
   a wider distribution of the TurboChef high-speed cooking technologies.

3. Technology partners - The Company continues to seek out potential partners
   -------------------
   that have expertise, competencies and knowledge in particular areas, where
   the Company may be limited. Such partnerships can be leveraged to facilitate
   improvements to the Company's core technologies, reduce in manufacturing
   costs and expedite time to market. Examples of these partners include the Gas
   Research Institute, with whom the Company has a cooperative agreement to
   develop natural gas fueled versions of TurboChef's rapid cook system for
   residential and commercial markets. The Company is also working with the
   Massachusetts Institute of Technology staff to scientifically quantify and
   validate the performance characteristics of the Company's cooking
   technologies.

                                      -6-
<PAGE>

4. Consumables partners - The Company is in the process of developing
   --------------------
   relationships with consumer products companies to develop products that
   compliment and expand the Company's technologies. Specifically, the Company
   is targeting packaged food manufacturers and packaging companies to develop
   TurboChef compatible products that will further assist in establishing the
   Company's technologies as the standard in the rapid cooking market.

A strategic synopsis by region is as follows:

     North America: Since inception, the Company has maintained a direct sales
     -------------
and marketing organization focused on the commercial foodservice industry in
North America. However, the revolutionary nature of the Company's technologies,
coupled with large restaurant chain operators' historical resistance to change
and the Company's lack of brand strength, industry credibility and
infrastructure have limited commercial sales. To address these issues, the
Company entered into a Commercial License Agreement with Maytag that grants
Maytag certain exclusive rights to market the Company's rapid cook commercial
cooking technologies throughout North America, as well as certain worldwide
rights to sell to North American based chains with international locations. The
Company is currently preparing to market its next generation high-speed cooking
system, which is expected to become commercially available in the second quarter
of 2000.

     The Company's cooking technologies were recently launched into the North
American residential market with the introduction of Maytag's Jenn-Air Accellis
5XP wall oven. This product is expected to be introduced to consumers during the
second quarter of 2000. The Company intends to expand the distribution of its
high-speed cooking technologies throughout North America through non-exclusive
license agreements with other major North American appliance manufacturers once
Maytag's exclusivity expires. The Company will also continue to aggressively
promote the expansion of the rapid cook product line by developing prototypes of
multiple configurations that could be offered at a variety of price points in
the future.

     Europe:  Direct marketing efforts utilizing a consultative selling program
     ------
have been established and implemented in the UK, in part, by leveraging the
existing brand equity and reputation gained from the successful placement of
over 450 cooking systems with Whitbread PLC ("Whitbread"). In addition to the
success with Whitbread, the Company's C3, commercial counter top prototype was
awarded a gold medal for best innovative new product at the Hotelympia
foodservice show, held in London during February 2000. The Company won this
prestigious award while in competition against some of the top foodservice
companies in the world.

     The Company intends to continue to leverage its successes and expand the
direct marketing efforts for commercial high-speed cooking systems. The Company
is currently seeking distributors and dealers to market and distribute the
Company's next generation high-speed cooking systems in Europe. The Company will
continue its efforts to attract additional partners and pursue alliances in this
region to ensure the broadest possible availability of its technologies
throughout this region.

                                      -7-
<PAGE>

     Asia:  The Company has initiated missionary marketing efforts in Asia and
     ----
intends to gather data from such beta test sites and incorporate such
information into future generations of the Company's technologies. The Company
is currently exploring low cost, high volume manufacturing alternatives in Asia
for production of its commercial counter top model for direct sale through
distributors outside of North America.

     The Company believes that the combination of the Maytag Alliance for sales
and marketing in North America, its own international selling activities and
success in developing other alliances, joint venture and/or licensing
arrangements outside of North America, coupled with its core technologies and
iAppliance connectivity, will enable the broad commercialization of the
Company's technologies in both commercial and residential markets.

Internet Strategy

     The Company is exploring opportunities to leverage Internet and wireless
communications technologies to enhance its high-speed cooking system, as well as
improving the entire cooking experience. While many appliance manufacturers are
working to develop "intelligent" appliances, the Company believes that it has a
competitive advantage in this arena in that it is focused on connecting truly
innovative and "smart" appliances. The Company believes that its approach to
connecting and developing truly innovative and intelligent appliances will
deliver recognizable enhancements to the quality of life of the typical family.
TurboChef believes that an appliance that has both advanced and innovative
hardware and software can truly leverage the benefits of Internet and
communications technologies, as opposed to just adding communications
capabilities to a "traditional" appliance.

Production and Supply

     During 1999, the Company transitioned the manufacturing of its commercial
cooking systems from, Techniform Waterford LTD, based in Waterford, Ireland, to
G.S. Blodgett Corporation, a wholly-owned subsidiary of Maytag, specializing in
manufacturing and selling commercial foodservice equipment. The Company is
currently exploring low cost, high volume manufacturing alternatives in Asia for
production of its commercial counter top model for direct sale through
distributors outside of North America.

     The Company has been and will continue to be dependent on third parties for
the supply and manufacture of all of its component and electronic parts,
including both standard components and specially-designed component parts, such
as the printed circuit computer boards and wiring harnesses used in the
TurboChef cooking systems.  The Company generally does not maintain supply
agreements with such third parties but instead purchases components and
electronic parts pursuant to purchase orders in the ordinary course of business.
The Company is substantially dependent on the ability of its manufacturers and
suppliers to, among other things, meet the Company's design, performance and
quality specifications. Failure by the Company's manufacturers and suppliers to
comply with these and other requirements could have a material adverse effect on
the Company.

     The Company has required that its contract manufacturers follow generally
accepted industry standard quality control procedures. In addition, the Company
maintains its own quality

                                      -8-
<PAGE>

assurance personnel and testing capabilities to assist its contract
manufacturers with their respective quality programs and to perform periodic
audits of manufacturing facilities and finished products to ensure the integrity
of the quality assurance procedures. Component parts furnished to the Company by
its suppliers and manufacturers are generally covered by a one-year limited
warranty and contract manufacturers furnish a limited warranty for any of their
manufacturing or assembly defects.

     The Company's manufacturing cycle, which is the period from the execution
of a purchase order until actual shipment of the product to the customer,
generally ranges from two to six weeks for small volume cooking system sales and
up to one or two months longer for initial shipments to commence under large
multi-unit purchase contracts. Pursuant to the Company's warranty policy, the
Company will accept the return of a cooking system if the cooking system does
not perform according to product specifications. For certain potentially large
customers, who wish to test and evaluate a cooking system prior to purchase, the
Company occasionally offers one or more units at a reduced price for such
evaluation.

Research and Development

     During the years ended December 31, 1999, 1998 and 1997, the Company
incurred costs related to research and development activities in the amounts of
$4,092,000, $2,311,000 and $1,220,000, respectively. It is the intention of the
Company to continue to invest in the continued development of its core
technologies and related applications to the extent needed to establish them as
a major world-wide cooking platform. In particular, in the area of cooking, the
Company plans to continue improving the performance of its commercial system and
embody the core technologies in a broader range of cooking appliances. During
1999, the Company completed the development of its first residential cooking
system and began to develop other residential embodiments of its cooking
technologies. In addition, the Company plans to develop and enhance a range of
software products for residential and commercial kitchens to enable users to
extract more value from their cooking systems and achieve new levels of
communication and connectivity through the Internet.

Competition

     The commercial cooking and warming segment of the foodservice equipment
market is characterized by intense competition. The Company competes with
numerous well-established manufacturers and suppliers of conventional commercial
ovens, grills and fryers (including those that cook through the use of
conduction, convection, induction, air impingement, infrared, halogen and/or
microwave heating methods). In addition, the Company is aware of others who are
developing, and in some cases have introduced, commercial ovens based on high-
speed heating methods and technologies. Most of the Company's competitors
possess substantially greater financial, marketing, personnel

                                      -9-
<PAGE>

and other resources than TurboChef Technologies and have established reputations
relating to the development, manufacture, marketing and service of cooking
equipment. Among the Company's major competitors in the cooking and warming
segment of the foodservice equipment market are: The Middleby Corporation and
certain of its subsidiaries; the commercial foodservice equipment division of
Welbilt Corporation, including, Lincoln Foodservice Products, Inc.; Quadlux,
Inc.; Vulcan-Hart Corporation, a subsidiary of Premark International, Inc.;
Groen, Inc., a subsidiary of Dover Corporation; Amana and MerryChef, PLC.

     The competitive activity has also increased in the emerging residential
rapid cook sector, and there can be no assurance that other companies with
greater financial resources and expertise will not attempt to develop or are
currently developing functionally competitive products that may become available
in the near future. Certain competitors have already introduced products into
the rapid cook sector, including; the General Electric Advantium over the range
oven (utilizing microwave and halogen light technology), the Quadlux Flashbake
wall oven (utilizing infrared and invisible light technology), the Whirlpool
Speedcook wall oven (utilizing convection, microwave and halogen light
technology) and the Amana Lightwave (utilizing microwave and infrared light
technology). In addition, other competitive products are scheduled to be
launched in the near future including the Thermador Jetdirect (utilizing
microwave and air impingement) and the General Electric wall oven (utilizing
microwave and halogen light technology). Although the Company is not aware of
any competitive products, either being marketed or under development, which it
believes are functionally equivalent to the TurboChef cooking system (i.e., that
have the similar computer capabilities, that can produce the variety of food
items, cooked to the same high quality standards, at the same speeds), there can
be no assurance that other companies with greater financial resources will not
attempt to develop functionally equivalent competitive products in the near
future.

Regulation and Accreditation

     The Company is subject to regulations administered by various federal,
state, local and international authorities, such as the United States Food and
Drug Administration, the Federal Communication Commission, the European
Community Council and the Japanese Government's Ministry of International Trade
(MITI) (including those regulations limiting radiated emissions from the
Company's cooking system products), which impose significant compliance burdens
on the Company. Failure to comply with these regulatory requirements may subject
the Company to civil and criminal sanctions and penalties. While the Company
believes that its products are in compliance in all material respects with all
laws and regulations applicable to the Company and such products, there can be
no assurance of such compliance. The Company tests, from time to time, the
cooking systems in order to confirm continued compliance with applicable
regulatory requirements. Management believes that compliance with these laws and
regulations will not require substantial capital expenditures or have a material
adverse effect on the Company's future operations.

     New legislation and regulations, as well as revisions to existing laws and
regulations (at the federal, state and local levels, in the United States and/or
in foreign markets) affecting the foodservice equipment and residential
appliance industries may be proposed in the future. Such proposals could affect
the Company's operations, result in material capital expenditures, affect

                                      -10-
<PAGE>

the marketability of the Company's existing products and technologies and/or
could limit or create opportunities for the Company with respect to
modifications of its existing products or with respect to its new or proposed
products or technologies. In addition, an expanded level of operations of the
Company in the future could require the Company to modify or alter its methods
of operation at costs which could be substantial and could subject the Company
to increased regulation, and expansion of the Company's operations into
additional foreign markets may require the Company to comply with additional
regulatory requirements.

     The Company has received certification from Underwriter's Laboratories,
Inc. ("UL(R)") as to compliance of the Company's Model D-2, D-2 Max and D-3
TurboChef cooking systems with applicable UL(R) requirements relating to product
safety accreditation standards and with the applicable requirements of the
National Sanitation Federation ("NSF") relating to cleanability and sanitation
accreditation standards. UL(R) and NSF are agencies which have established
certain standards for a variety of categorized products and can be engaged to
inspect a manufacturer's products for compliance with the applicable standards.
Certification by each agency authorizes the marking of any such product with the
agency's labels, which indicates that the product is approved by the agency for
such use. Such certifications, which require periodic renewal, only represent
compliance with established standards and are not legally required. However,
failure by the Company to comply with these accreditation standards in the
future could have a material adverse effect on the Company's marketing efforts.
In addition, the Company has met the requirements necessary to apply the "CE"
mark (which indicates compliance with the European Community Council directive
relating to electromagnetic compatibility and low voltage) to its Model D-2, D-2
Max and D-3 TurboChef cooking systems. As an equipment manufacturer, the Company
is allowed to "self-certify" compliance with this directive and have a third
party attest to the results. The Company is required by law to meet this
European Community Council directive in order to apply the "CE" mark and thereby
sell its cooking systems in the European Union. The TurboChef model D-2 cooking
system has also been approved by the Japanese Government's MITI, thereby
permitting sales of such system in Japan.

Warranty and Service

     The Company offers to purchasers a one-year limited warranty covering the
TurboChef cooking system's workmanship and materials, during which period the
Company or its authorized service representative will make repairs and replace
parts which become defective due to normal use. Although the cost of servicing
TurboChef cooking systems under this one-year warranty has been in line with
expectations to date, there can be no assurance that future expenses incurred on
the one year warranty will not have a material adverse effect upon the Company.

     The Company did allow the purchase of an extended warranty program for a
particular customer during 1999, 1998 and 1997, which covered units that were
older than one year. The Company recorded revenues of $201,000, $417,000 and
$253,000 in 1999, 1998 and 1997, respectively, for this extended warranty
program. The costs associated with this extended warranty program in excess
of revenues was $150,000, $462,000 and $146,000 for the years ended December 31,
1999, 1998 and 1997, respectively. The results of research associated with the
extended warranty program coupled with research findings from the Company's
accelerated

                                      -11-
<PAGE>

life cycle testing facility have lead to design improvements that should improve
both the durability and reliability of the Company's products and will be
incorporated into future products. The above extended warranty program has been
completed.

     On September 1, 1999, the Company entered into an agreement to upgrade and
warranty 262 cooking systems installed with Whitbread PLC. The Company received
approximately $1.4 million from Whitbread PLC to complete the upgrade and
warranty the cooking systems for a three-year period, beginning in September
1999. The cooking system upgrades include design changes that should
substantially increase the life and durability of the cooking systems and were
completed in February 2000. The $1.4 million was recorded as an accrued
liability and has been reduced as expenses relating to the upgrade and warranty
are incurred. During 1999, the Company accrued an additional $755,000 for
expenses in excess of payments from Whitbread PLC, relating to the completion
of the upgrade and remainder of the warranty period. At this time, the Company
believes that it has accrued expenses sufficient to cover the total cost of the
upgrades and any charges arising during the three-year warranty period. However,
there can be no assurances that future expenses incurred on the upgrade and
three-year warranty will not have a material adverse effect upon the Company.

     In those areas where TurboChef cooking systems are located, the Company
has established relationships with independent factory authorized service
representatives who provide installation and repair services and carry a parts
inventory. The Company expects its market partners to establish parts and
service capabilities in the markets in which they sell TurboChef licensed
products through Maytag Corporation and G.S. Blodgett Corporation will utilize
their national service retailers to support their respective sales of TurboChef
rapid cook products.

Insurance

     The Company is engaged in a business which could expose it to possible
liability claims from others, including from foodservice operators and their
staffs, as well as from consumers, for personal injury or property damage due to
design or manufacturing defects or otherwise. The Company maintains a general
liability insurance policy, which the Company believes is adequate coverage for
the type of products currently marketed.  In addition, the Company believes that
its third party manufacturer currently maintains similar levels of liability
insurance.

Patents and Proprietary Rights

     The Company holds six United States patents which cover certain fundamental
aspects of the Company's high-speed cooking technologies. Additionally, the
Company has received notification from the U.S. Patent and Trademark Office that
another patent application covering fundamental new aspects of the Company's
residential high-speed cooking technology has been allowed. The Company has
pending patent applications or patents corresponding to one or more of these
United States patents filed in at least seven countries (including the various
countries of the European Patent Convention). These United States patents expire
in 2011-2018. The Company further holds one pending United States patent
application on a vent catalytic converter for use in such high-speed cooking
technologies and patent applications covering other aspects of the Company's
high-speed cooking technology. The Company also holds one United States patent
relating to the Company's "par-baked" pizza dough setting technology, which
patent expires in 2014. The patent laws of other countries may differ from those
of the United States as to the patentability of the Company's technologies and
products and the degree of protection afforded. The Company believes that its
patents and patent applications provide it with a competitive advantage.

                                      -12-
<PAGE>

Accordingly, in the event the Company's products and technologies gain market
acceptance, patent protection would be important to the Company's business.
There can be no assurance as to the breadth or degree of protection which
existing or future patents, if any, may afford the Company, or that any patent
applications will result in issued patents, or that the Company's patent rights
will be upheld if challenged, or that competitors will not develop similar or
superior methods or products outside the protection of any patents issued to the
Company.

     The Company believes that product and brand name recognition is an
important competitive factor in the foodservice equipment industry. Accordingly,
the Company promotes the TurboChef(R) name in connection with its marketing
activities. The Company holds a United States trademark for the TurboChef(R)
name and also a United States Trademark for TurboChef Technologies, Inc.(R). The
Company also holds various other trademarks and has pending applications on
others.

     The Company also relies on trade secrets and proprietary know-how, and
typically enters into confidentiality and non-competition agreements with its
employees and appropriate suppliers and manufacturers, to protect the concepts,
ideas and documentation relating to its proprietary technologies. However, such
methods may not afford the Company complete protection. There can be no
assurance that others will not independently obtain access to the Company's
trade secrets and know-how or independently develop products or technologies
similar to those of the Company. Since the Company believes that its proprietary
technologies are important to its business, failure to protect such information
could have a material adverse effect on the Company.

Employees

     As of March 17, 2000, the Company employed 50 persons, all of whom are
full-time employees, including three executive officers and six senior managers.
Of its employees, twenty-five are engaged in technological development, twelve
in management and administration, and thirteen in sales, marketing, and customer
service. None of the Company's employees are represented by labor unions.  The
Company considers its relations with its employees to be good.

                                      -13-
<PAGE>

Executive Officers of the Company

The executive officers of the Company as of March 29, 2000, are as follows:

<TABLE>
<CAPTION>
               Name                          Age              Position(s)
               ----                          ---              -----------
<S>                                          <C>  <C>
Jeffrey B. Bogatin........................    51  Chairman of the Board of Directors

Richard N. Caron..........................    43  President and Chief Executive Officer

Dennis J. Jameson.........................    46  Executive Vice President, Chief Financial
                                                  Officer, Secretary and Treasurer
</TABLE>

     Jeffrey B. Bogatin is a co-founder of the Company, has been a director of
the Company since its inception in 1991 and served as Chairman of the until
April 1998. Mr. Bogatin was re-appointed as Chairman of the Board of Directors
on March 5, 2000. Mr. Bogatin has also served as Treasurer of the Company until
June 1996. Since 1975, Mr. Bogatin has served as President of Whitemarsh
Industries, Inc., which was engaged in manufacturing and importing ladies
apparel and is now involved with making venture capital investments.

     Richard N. Caron was elected President and Chief Executive Officer and
appointed to the TurboChef Technologies Board in September 1998. Mr. Caron was
employed by Arthur D. Little, Inc., an international technology and innovation
consulting firm, from 1979 to 1998, holding the title of Director from 1991 and
Practice Leader for Consumer Goods in North America from 1997 until he joined
the Company.

     Dennis J. Jameson was elected Executive Vice President and Chief Financial
Officer of the Company in December 1995, Treasurer in 1996 and Secretary in
1997. From 1988 to 1995 he served as a director, Senior Vice President Finance
and Administration, and Chief Financial Officer of Black-eyed Pea Restaurants,
Inc. in Dallas, Texas, which operates casual dining and quick service Mexican
restaurants located primarily in the Southwest and Southeast.

                                      -14-
<PAGE>

Item 2    Properties
          ----------

     The Company owns no real estate. The Company leases approximately 18,600
square feet of space at 10500 Metric Drive, Dallas, Texas, which it uses for
executive offices, technology development, limited assembly and other purposes,
under a lease agreement, which expires on January 31, 2002.  The Company also
leases approximately 3,000 square feet of space at 5151 Beltline Road, Dallas,
Texas, which is currently sub-leased to another firm.  This lease will expire on
April 30, 2000.

     The Company leases approximately 5,500 square feet of general office space
at 745 5th Avenue, New York, New York, pursuant to a lease that is scheduled to
expire on December 20, 2000.

     The Company leases approximately 1,000 square feet of general office space
in the Cranfield Innovation Centre, in Cranfield, U.K. In addition, the Company
occupies approximately 1,000 square feet of office space, which is used as a
training facility, in Bedfordshire, U.K., pursuant to a lease that is scheduled
to expire on February 28, 2001.

     The Company believes that its facilities are generally well maintained, in
good operating condition and adequate for its current needs.


Item 3    Legal Proceedings
          -----------------

     Neither the Company nor any of its subsidiaries is a party to any pending
legal proceedings, other than ordinary routine litigation incidental to its
business, none of which is material.


Item 4    Submission of Matters to a Vote of Security Holders
          ---------------------------------------------------

     None.

                                      -15-
<PAGE>

                                    Part II

Item 5     Market for Registrant's Common Equity and Related Stockholder Matters
           ---------------------------------------------------------------------

     The Company's common stock traded on the NASDAQ Small Cap Market under the
symbol "TRBO" from the Company's initial public offering in April 1994 until
February 1999.  On March 1, 1999, the Company's stock began trading on the
NASDAQ National Market.  The following table sets forth the high and low bid
quotations for the common stock for the periods indicated as reported by NASDAQ
Small Cap Market and the NASDAQ National Market, as applicable. The per share
quotations represent inter-dealer prices without adjustment for retail mark-ups,
mark-downs or commissions and may not necessarily represent actual transactions.


                                  Per Share Price
                                  ---------------
     Period                        High     Low
     ------                        ----     ---

Fiscal Year 1999
----------------

     First Quarter                 $    13  $  9 1/4

     Second Quarter                $12 5/8  $  7 3/4

     Third Quarter                 $ 9 5/8  $  4 7/8

     Fourth Quarter                $8 9/32  $3 11/16

Fiscal Year 1998
----------------

     First Quarter                 $    10  $ 7 7/16

     Second Quarter                $13 1/8  $  7 3/8

     Third Quarter                 $     9  $      4

     Fourth Quarter                $ 9 7/8  $  5 7/8

     As of March 17, 2000, there were approximately 143 shareholders of record
of the Company's common stock.

Dividends

     The Company has not paid cash dividends on the common stock since its
organization and does not expect to pay any cash dividends on the common stock
in the foreseeable future. Rather, the Company intends to continue a policy of
retaining earnings for the Company's operations and planned expansion of its
business. The payment of any future cash dividends would be at the discretion of
the Company's Board of Directors and would depend on future earnings, capital
requirements, the Company's financial condition and other factors deemed
relevant by the Board of Directors.

                                      -16-
<PAGE>

Item 6    Selected Financial Data
          -----------------------

     The following selected financial data for each of the fiscal years ended
December 31, 1999, 1998 and 1997 has been derived from the Company's audited
financial statements, and should be read in conjunction with those statements,
which are included in this Form 10-K.  The following selected financial data for
each of the fiscal years ended December 31, 1996 and 1995 have been derived from
the Company's audited financial statements, and should be read in conjunction
with those statements, which are not included in this Form 10-K.   The selected
financial data should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the financial
statements and notes thereto which are included elsewhere in this Form 10-K.

<TABLE>
<CAPTION>
                                                                    Year Ended December 31,
                                                           (Amounts in Thousands, Except Share Data)
                                 ------------------------------------------------------------------------------------------
                                      1999                1998               1997               1996                1995
                                      ----                ----               ----               ----                ----
<S>                              <C>                 <C>                <C>                <C>                <C>
Statement of Operations
-----------------------
Data:
-----
Revenues                         $      7,063        $     7,137        $      4,222       $      2,802       $       1,228
Operating Loss                   $     (7,805)       $    (4,152)       $     (4,822)      $     (3,197)      $      (1,698)
Net Loss                         $     (8,779)       $    (3,954)       $     (4,662)      $     (2,941)      $      (1,585)
Per Share Data (1)
Net Loss per Share - basic       $       (.57)       $      (.27)       $       (.33)      $       (.22)      $        (.13)
 and diluted

Weighted Average Number of
 Shares Outstanding                14,983,486         14,611,724          14,032,796         13,339,431          12,451,786

Balance Sheet Data:
-------------------
Working Capital                  $     14,484        $    18,566        $      9,527       $      8,523       $       1,083
Total Assets                     $     21,069        $    20,800        $     16,440       $      9,743       $       2,218
Total Liabilities                $     11,218        $     1,607        $        811       $        810       $         770
Accumulated Deficit              $    (30,010)       $   (21,231)       $    (17,277)      $    (12,615)      $      (9,673)
Total Stockholders' Equity       $      9,851        $    19,193        $     15,629       $     (8,933)      $       1,448
</TABLE>

     (1)  On December 12, 1995, the Company's Board of Directors approved a two
          for one stock split effective in the form of a stock dividend paid on
          January 11, 1996 to stockholders of record on December 29, 1995. Share
          data is based upon the weighted average common shares and share
          equivalents outstanding for each period, adjusted to reflect the
          split.

                                      -17-
<PAGE>

Item 7  Management's Discussion and Analysis of Financial Condition and Results
        -----------------------------------------------------------------------
        of Operations
        -------------

General

     From its inception in April 1991 until March 1994, the Company was engaged
primarily in research and development, limited production operations and test
marketing of its cooking systems. In March 1994, the Company introduced its
first commercial product, the Model D-1 cooking system. In June 1995, the
Company entered into its first major contract with Whitbread PLC ("Whitbread")
and introduced an enhanced product, the Model D-2 cooking system. The Company
concentrated its efforts on the Whitbread rollout throughout 1996. Upon the
completion of the secondary public offering of common stock in June 1996 the
Company began development of a direct sales organization. By the end of the
first quarter of 1997, the Company had substantially developed a U.S. direct
sales and European sales infrastructure and marketing programs. However, the
revolutionary nature of the Company's technologies, coupled with large
restaurant chain operators' historical resistance to change and the Company's
lack of brand strength has limited commercial sales.

     The Company believes its long-term success is dependent on its core
competencies of developing new technologies and products for the foodservice and
residential appliance industries. Consequently, the Company has sought to
establish alliances with major corporations with strengths in manufacturing,
sales, marketing and distribution. An alliance of this nature was successfully
established in September 1997, when the Company announced a strategic alliance
with Maytag Corporation ("Maytag Alliance") to jointly develop new products
incorporating the Company's technologies. The Maytag Alliance entailed a mutual
exchange of each Company's common stock then valued at approximately $10 million
and Maytag's payment to TurboChef Technologies for certain research and
development activities related to targeted product initiatives. The Company also
announced in July 1998 that the Maytag Alliance had been expanded to establish a
cooperative effort to market and sell commercial cooking products in North
America. During the first quarter of 1999, TurboChef Technologies and G.S.
Blodgett Corporation, a wholly-owned subsidiary of Maytag, engaging in the
manufacturing and selling of commercial foodservice equipment, began arranging
for the transition of the manufacturing of the Company's commercial unit to
Blodgett's facilities. This transition was completed during the second quarter
of 1999. In November 1999, the Maytag Alliance was further expanded to include
the development of two "next generation" commercial cooking systems. The Maytag
Alliance enables the Company to focus on its core competency of technology
development while utilizing the strengths of well-established leaders within the
commercial and residential appliance industries to manufacture, market, and
distribute the Company's products in North America. The Company is currently
seeking potential marketing and manufacturing partners in Europe and Asia to
expand the model line up and reach of its technologies.

     The Company has invested heavily in research, prototype development,
strategic alliance development and sales and marketing personnel. As a result of
these investments, and the heretofore limited revenues generated through sales
of cooking systems, the Company has incurred substantial operating losses in
each year of its operations (including net losses of $8.8

                                      -18-
<PAGE>

million, $4.0 million and $4.7 million for the years ended December 31, 1999,
1998 and 1997, respectively) resulting in an accumulated deficit of $30.0
million as of December 31, 1999.

     Although the Company has historically incurred significant losses, the
Company expects to generate future cash flows from the direct sale of its
commercial cooking systems, royalties from the sale of its commercial and
residential cooking systems, license fees for the non-exclusive licensing of its
technologies, research and development fees for product development and, as
necessary, raising capital through future equity or debt financing. As discussed
in the accompanying footnotes, the Company is currently dependent on a single
company, Maytag Corporation, for its research and development funding and
royalty revenues. In addition, the Company is dependent on Maytag to
manufacture, market and sell its products in North America. The Company is
currently pursuing potential marketing and manufacturing partners in Europe and
Asia. No such partnerships currently exist. If Maytag chooses to cancel the
Alliance and its related agreements, by giving the Company 30 days written
notice, the Company would not receive additional research and development
funding or minimum royalties or have access to Maytag's manufacturing, marketing
or selling capabilities after the end of the 30 day period. If revenues from
cooking system sales, cash from its financing agreements and external financing
is not sufficient, the Company may be required to revise its plan of operations,
including a curtailment of expansion and product development activities and
reduction of other general and administrative expenses.

     The Company will continue to pursue business growth through implementation
of the following strategies: (i) joint development and commercialization of
residential and commercial products in North America through the Maytag
Alliance, (i) joint development and commercialization of residential and
commercial products in North America through the Maytag Alliance, (ii) pursuit
of strategic alliances and license agreements in major international markets,
(iii) continued direct marketing to European restaurants, hotels, convenience
stores and other foodservice operators, (iv) continued development of new
hardware, software and food solutions for residential and commercial
applications utilizing the Company's patented technologies, (v) the development
of new foodservice technologies, and (vi) the development and execution of an
Internet and connectivity strategy for both residential and commercial
appliances including the filing of key business process patents. The Company's
future liquidity will depend upon, among other things, the successful
implementation of these initiatives.

     The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of the Company's results
of operations and financial condition.  The discussion should be read in
conjunction with the financial statements and notes thereto contained elsewhere
in this report.

Results of Operations for the Year Ended December 31, 1999 Compared to the Year
Ended December 31, 1998

     Revenues for the year ended December 31, 1999 were $7,063,000 and are
comparable to revenues of $7,137,000 for the year ended December 31, 1998. A
scheduled reduction in payments to the Company for research and development
activities under the Maytag Alliance.

     Cost of sales for the year ended December 31, 1999 were $3,267,000, an
increase of $590,000 when compared to $2,677,000 for cost of sales in the prior
year.  This increase is attributable to an increase in the sales of the
Company's commercial cooking systems and costs relating to the upgrade and
warranty of products sold to a major customer in Europe.

     Gross profit on product sales for the year ended December 31, 1999
decreased to $124,000, when compared to gross profit on sales of $385,000 during
the prior year.  Gross margin for the year ended December 31, 1999 was 4% of
sales, compared 13% of sales for the year ended December 31, 1998.  The
reduction in gross profit was principally due to the costs relating to the
upgrade and warranty of 262 units for a major customer in Europe.

     Research and development expenses for the year ended December 31, 1999
increased to $4,092,000.  This represents an increase of $1,781,000 from
$2,311,000 for the year ended December 31, 1998.  The increase is due to
additions of engineering and technical personnel to support the Company's
product development requirements, costs associated with the Maytag Commercial
License and development agreement, development of "next generation" residential

                                      -19-
<PAGE>

cooking systems and the ongoing operating costs associated with the Company's
accelerated life cycle testing facility, established for the durability and
reliability testing of the Company's products.

     Selling, general and administrative expenses for the year ended December
31, 1999 increased $1,408,000, to $7,709,000 from comparable expenses of
$6,301,000 for 1998.  The increase over 1998 is due to the addition of executive
officers and other administrative support personnel and the expansion of the
Company's European sales and marketing organization.

     Other expense was $774,000 for the year ended December 31, 1999 compared to
other income of $198,000 for the year ended December 31, 1998. The $972,000
increase in expenses is primarily due to accrued interest charges and the
amortization of the premium on the purchased put option purchased to hedge
against market fluctuations of the Company's Maytag common stock. A portion of
such shares are collateral for the Company's long-term credit facility. The
increase in other expenses was partially offset by the elimination of expenses
relating to the Company's interest in a former joint venture.

Results of Operations for the Year Ended December 31, 1998 Compared to the Year
Ended December 31, 1997

     Revenues for the year ended December 31, 1998 were $7,137,000, an increase
of $2,915,000 when compared to revenues of $4,222,000 for the year ended
December 31, 1997.  The increase is primarily due to payments to the Company for
research and development activities under the Maytag Alliance and an increase in
the average selling price of its cooking system, offset partially by a decrease
in commercial cooking system unit sales.

     Cost of sales for the year ended December 31, 1998 were $2,677,000, a
decrease of $166,000 when compared to $2,843,000 for cost of sales in the prior
year.  This decrease is attributable to the reduction in cooking system unit
sales, partially offset by an increase in costs associated with an extended
warranty program provided to one of the Company's major customers.

     Gross profit on product sales for the year ended December 31, 1998
decreased to $385,000, when compared to gross profit on sales of $619,000 during
the prior year.  Gross margin for the year ended December 31, 1998 was 13% of
sales, compared 18% of sales for the year ended December 31, 1997.  The
reduction in gross profit was principally due to a decrease in oven sales,
higher average unit manufacturing costs and the higher costs of providing the
extended warranty program.

     Research and development expenses for the year ended December 31, 1998
increased to $2,311,000. This represents an increase of $1,091,000 from
$1,220,000 for the year ended December 31, 1997. The increase is due to
significant additions of engineering and technical personnel to support the
Company's product development requirements associated with the Maytag Alliance.
Furthermore, the Company established an accelerated life cycle testing facility
for the durability and reliability testing of the Company's products.

     Selling, general and administrative expenses for the year ended December
31, 1998 increased $1,320,000, to $6,301,000 from comparable expenses of
$4,981,000 for 1997.  The increase over 1997 is due to the addition of executive
officers and other administrative support

                                      -20-
<PAGE>

personnel along with the transfer of the European sales and marketing
organization to TurboChef Technologies from its former joint venture, TurboChef
Europe.

     Other income was $198,000 for the year ended December 31, 1998 compared to
$160,000 for the year ended December 31, 1997. The increase was primarily due to
dividends received as a result of ownership of the Maytag stock for an entire
year compared to only the fourth quarter of 1997. Offsetting this increase was a
decrease in interest income due to reduced amounts of cash invested in
securities.

Liquidity and Capital Resources

     The Company's capital requirements in connection with its product and
technology development and marketing efforts have been and will continue to be
significant. In addition, capital is required to operate and expand the
Company's operations. Since its inception, the Company has incurred operating
losses and has been substantially dependent on loans and capital contributions
from its principal stockholders, private placements of its securities and the
proceeds from stock offerings.

     Although the Company has historically incurred significant losses, the
Company expects to generate future cash flows from the direct sale of its
commercial cooking systems, royalties from the sale of its commercial and
residential cooking systems, license fees for the non-exclusive licensing of its
technologies, research and development fees for product development and, as
necessary and available, raising capital through future equity or debt
financing. As discussed in Note 12 of the consolidated financial statements, the
Company is currently dependent on a single company, Maytag Corporation, for its
research and development funding and royalty revenues. Accordingly, future
revenues from the Alliance will depend upon the establishment of additional fee
based on research and development projects that embody the Company's
technologies. However, if additional projects are not initiated with Maytag, the
Alliance is cancelled or if revenues from cooking system sales, cash from its
financing agreements and external financing is not sufficient, the Company may
be required to revise its plan of operations, including a curtailment of
expansion, product development activities and reduction of other general and
administrative expenses. Furthermore, there is no assurance that the Company
would be able to find alternative sources of funding which could have a
significant adverse effect on the Company's current and future operations.

     Since October 1997, the Company's cash requirements have been met in part
by Maytag. In accordance with the Maytag Alliance, the Company has been paid an
aggregate of $5.9 million for technology transfer initiatives by the Company.

     In October 1999, the Company entered into a Commercial License Agreement
that broadens Maytag's distribution rights with respect to commercial cooking
products utilizing the Company's rapid cook technologies. Pursuant to the terms
of the agreement, Maytag now has exclusive rights to market and sell throughout
North America and certain worldwide rights to sell to North American based
chains with international locations. This exclusivity extends until March 2002,
with certain applications extending until March 2003. In consideration for these
rights, Maytag has agreed to pay the Company per unit royalties of approximately
10% of targeted wholesale prices. In the event that actual gross margins exceed
target levels, the Company will share equally in the incremental margin. Maytag
has also agreed to establish $5.75 million as the minimum royalty threshold over
the first two years of exclusivity, as well as provide the Company with up to
$4.6 million in additional research and development funding ($2.5 million during
the fourth quarter of 1999, $1.85 million during the first quarter of 2000 and
250,000 during the second quarter of 2000), for the development of
prototype units relating to this agreement. This agreement is cancelable by
either Maytag or the Company with 30 days written notice. If canceled by Maytag,
monies previously received would not be refundable and Maytag would lose its
exclusive rights. The cancellation of this agreement could have a material
adverse effect on the operations and the financial position of the Company if
they were unable to enter into a agreement with another party with similar
terms.

     The Maytag Alliance called for the mutual exchange of each company's stock
with a value of approximately $10.0 million. In 1997, Maytag purchased 564,668
shares of the Company's common stock, and the Company purchased 293,846 shares
of Maytag common stock.

                                      -21-
<PAGE>

     In July 1999, the Company entered into a research and development agreement
with the Gas Research Institute ("GRI"). Through this agreement, the Company has
received $2,000,000 in funding in for the development of gas fueled cooking
platforms. In exchange for the funding, GRI received warrants to purchase 50,000
shares of the Company's common stock and a percentage of the royalty that the
Company receives on the sale of various commercial products containing
technology developed from the GRI funding in North America and Europe. The
maximum cumulative royalty that GRI will receive under this agreement is $4.0
million.

     As of December 31, 1999, the Company had the right to sell, pledge or
transfer 100% of these securities. As of March 17, 2000, the Maytag stock owned
by the Company had a market value of approximately $8.0 million.

     In January 1999, the Company entered into an agreement with Banque AIG,
London Branch (an affiliate of American International Group, Inc. ("AIG")). The
AIG facility provides for the Company to pledge its Maytag shares in the form of
a "Variable Stock Transaction" and to receive cash advances against the value of
the Maytag shares. All advances mature on January 14, 2002. Interest is imputed
at rates ranging from 5.8% to 7.4%. The Company may satisfy any outstanding
obligation by surrendering Maytag shares equal to the fair value of the
obligation or with cash at any time up to and including January 14, 2002. The
transaction allows the Company to benefit from the appreciation over $63.25 per
share in the Maytag share price over the three-year period and provides down-
side protection to the Company in the form of a purchase put option for the
293,846 shares of Maytag stock. The purchase put option establishes a minimum
realizable value for the Maytag shares of approximately $57 per share.

     As of December 31, 1999 and as of March 17, 2000, the Company has pledged
165,000 shares of the Maytag stock, received advances totaling $7.9 million and
has accrued approximately $0.4 million in interest. As of March 17, 2000, the
Company has approximately $6.3 million in advances available through its long-
term financing agreement.

     In February 1999, the Company entered into a revolving credit agreement
with its bank. The credit agreement is set to expire in May 2000. The agreement
is secured by 6,923 shares of Maytag common stock owned by the Company. The
Company can borrow up to the lesser of $315,000 or 75% of the market value of
the Maytag stock at the prime interest rate less 0.5%. As of December 31, 1999,
the Company had no outstanding borrowings and approximately $249,000 in
borrowings available through this facility.

                                      -22-
<PAGE>

     At December 31, 1999, the Company had working capital of $14,484,000 as
compared to working capital of $18,566,000 at December 31, 1998.  The $4,082,000
working capital decrease from December 31, 1998 resulted primarily from the
decline in value of the Company's investment in Maytag common stock, partially
offset by funds received through the Company's long-term credit facility with
AIG and the increased value of the purchased put option recorded in marketable
securities available for sale.

     Cash used in operating activities was $4,308,000 for the year ended
December 31, 1999 as compared to cash used in operating activities of $2,887,000
for the year ended December 31, 1998. The net loss of $8,779,000 in 1999
included $1,524,000 of non-cash contributions to net loss (depreciation,
amortization and non-cash compensation expenses), compared to $625,000 in 1998.
Net cash used in operating activities in 1999 was positively impacted by a
$1,678,000 increase in deferred revenue, a $735,000 increase in accrued expenses
and a $429,000 increase in accounts payable. These operating cash requirements
were partially offset by a $391,000 net increase in accounts receivable and a
$168,000 increase in prepaid expenses.

     Cash used in investing activities for the year ended December 31, 1999 was
$2,435,000 and primarily resulted from the premium paid for a purchased put
option, used to hedge the Company's Maytag common stock, of $1,943,000 and
equipment and leasehold improvement purchases of $492,000.

     Cash provided by financing activities was $8,507,000 for the year ended
December 31, 1999, of which $7,879,000 was obtained through the Company's long-
term credit agreement with AIG, while the remaining $628,000 is the net proceeds
from stock options and stock warrant transactions.

     At December 31, 1999, the Company had cash and cash equivalents of
$1,928,000, compared to cash and cash equivalents of $164,000 at December 31,
1998.

Authoritative Pronouncements

     In June 1998, the Financial Accounting Standards Board (FASB) issued
Statements of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities". SFAS No. 133 requires companies
to report derivatives on the balance sheet as assets or

                                      -23-
<PAGE>

liabilities, measured at fair value. Gains or losses resulting from changes in
the values of those derivatives would be accounted for depending on the use of
the derivative and whether it qualifies for hedge accounting. The Company is
currently reviewing the standard and its effect on the financial statements.
SFAS No. 133 was amended when the FASB issued SFAS No. 137, which defers the
effective date of this statement until January 1, 2001.

Forward Looking Statements

     Although the Company has historically incurred significant losses,
management believes that it will generate sufficient cash flows for future
operations from the direct sale of its commercial cooking systems, royalties
from the sale its commercial and residential cooking systems, license fees for
the non-exclusive licensing of its technologies, research and development fees
for product development and, as necessary and available, raising capital through
future equity or debt financing. If revenues from cooking system sales, cash
from its financing agreements and external financing is not sufficient, the
Company may be required to revise its plan of operations, including a
curtailment of expansion, product development activities and reduction of other
general and administrative expenses. Furthermore, there is no assurance that the
Company would be able to find alternative sources of funding. Any of the
aforementioned factors could have a significant adverse effect on the Company's
current and future operations and financial position.

     The Company anticipates that it will complete its targeted commercial
cooking system research and development in April 2000 and, subsequently, will
cease receiving the monthly research and development funding payments associated
with such projects. The Maytag Alliance, however, is ongoing, and provides for
the opportunity to establish additional residential and commercial product
development projects in the future. Accordingly, future revenues from the Maytag
Alliance will depend upon the establishment of additional fee based research and
development projects with Maytag and royalties from the successful
commercialization and sales of the products that embody the Company's
technologies. The Company's goals are to continue its development of innovative
and commercially viable products, to support the Maytag Alliance efforts and to
establish additional strategic alliances, partnerships and license agreements in
major international markets.

     The Company's future performance will be subject to a number of business
factors, including those beyond the Company's control, such as economic
downturns and evolving industry needs and preferences, as well as to the level
of the Company's competition and the ability of the Company to successfully
market its products and effectively monitor and control its costs.  The Company
believes that increases in revenues sufficient to offset its expenses could be
derived from its currently proposed plans within the next 18 to 24 months, if
such plans are successfully completed.  These plans include: (i) joint
development and commercialization of residential and commercial products in
North America through the Maytag Alliance, (ii) pursuit of strategic alliances
and license agreements in major international markets, (iii) continued direct

                                      -24-
<PAGE>

marketing to European restaurants, hotels, convenience stores and other
foodservice operators, (iv) continued development of new hardware, software and
food solutions for residential and commercial applications utilizing the
Company's patented technologies, (v) the development of new foodservice
technologies, and (vi) the development and execution of an Internet and
connectivity strategy for both residential and commercial appliances including
the filing of key business process patents.  However, there can be no assurance
that the Company will be able to successfully implement any of the foregoing
plans, that either its revenues will increase or its rate of revenue growth will
continue or that it will ever be able to achieve profitable operations.

     This report and other reports and statements filed by the Company from time
to time with the Securities and Exchange Commission (collectively, "SEC
Filings") contain or may contain certain forward looking statements and
information that are based on the beliefs of the Company's management as well as
estimates and assumptions made by, and information currently available to, the
Company's management.  When used in SEC Filings, the words "anticipate,"
"believe," "estimate," "expect," "future," "intend," "plan," and similar
expressions, as they relate to the Company or the Company's management, identify
forward looking statements.  Such statements reflect the current views of the
Company with respect to future events and are subject to certain risks,
uncertainties and assumptions relating to the Company's operations and results
of operations, competitive factors and pricing pressures, shifts in market
demand, the performance and needs of the segments of the foodservice industry
served by the Company, the costs of product development and other risks and
uncertainties, in addition to any uncertainties specifically identified in the
text surrounding such statements, uncertainties with respect to changes or
developments in social, economic, business, industry, market, legal, and
regulatory circumstances and conditions and actions taken or omitted to be taken
by third parties, including the Company's stockholders, customers, suppliers,
business partners, and competitors, legislative, regulatory, judicial and other
governmental authorities and officials.  Should one or more of these risks or
uncertainties materialize, or should the underlying assumptions prove incorrect,
actual results may vary significantly from those anticipated, believed,
estimated, expected, intended or planned.

     As of December 31, 1999, the amount of backlog orders believed to be firm
was approximately $0.2 million, as compared to approximately $0.4 million as of
December 31, 1998. The Company anticipates that the majority of this backlog
will be filled during the current year. The December 31, 1999 backlog is
negatively impacted by the Company's transition from marketing its Model D
cooking system to the commercial counter top system to be introduced in the
second quarter of 2000.

Item 7a   Quantitative and Qualitative Disclosures about Market Risk
          ----------------------------------------------------------

     In January 1999, the Company invested approximately $1.9 million in the
form of a purchased put option that covered all of the Company's Maytag common
stock. The function of the purchased put option is to guarantee a minimum value
of the Company's Maytag common stock for a three-year period. This purchased put
option is an integral part of the AIG credit facility as it established a
minimum borrowing base from which the Company could draw upon from time to time.
The market value of the purchased put option is based upon the current price of
Maytag common stock and the amount of time remaining on the option. The Company
is currently amortizing the amount of the premium on the purchased put option on
a straight-line basis, over the three-year contract period. The maximum
potential exposure that the Company has, with respect to the purchased put
option, is $1.9 million, the initial premium of the purchased put option. For
further information regarding the Company's credit facility see the "Liquidity
and Capital Resources" section of this document.

                                      -25-
<PAGE>

Item 8   Financial Statements and Supplementary Data
         -------------------------------------------

     The financial statements set forth herein commence on page F- 1 of this
report.

Item 9   Changes In and Disagreements with Accountants on Accounting and
         ----------------------------------------------------------------
         Financial Disclosure
         --------------------

     Effective December 21, 1998, the Company appointed the accounting firm of
Arthur Andersen LLP as the Company's independent public accountants for fiscal
1998 to replace KPMG LLP, which resigned on that same date.  The Company's Board
of Directors approved the selection of Arthur Andersen LLP as independent public
accountants upon the recommendation of the Board's Audit Committee.

     During the year ended December 31, 1997, and the period from January 1,
1998 through December 21, 1998, there were no disagreements with KPMG LLP on any
matter of accounting principle or practice, financial statement disclosure or
auditing scope or procedures, which disagreements, if not resolved to their
satisfaction would have caused them to make reference in connection with their
opinion to the subject matter of the disagreement. KPMG LLP's report on the
Company's financial statements for the year ended December 31, 1997, contained
no adverse opinion or disclaimer of opinion and was not qualified or modified as
to uncertainty, audit scope or accounting principles.

                                      -26-
<PAGE>

                                   Part III

Item 10   Directors and Executive Officers of the Registrant
          --------------------------------------------------

     The information required by this item is contained in the definitive proxy
materials of the Company to be filed in connection with its 2000 Annual Meeting
of Stockholders, except for the information regarding executive officers of the
Company which is contained in Part I of this Annual Report on Form 10-K.  The
information required by this item contained in such definitive proxy material is
incorporated herein by reference.

Item 11   Executive Compensation
          ----------------------

     The information required by this item is contained in the definitive proxy
materials of the Company to be filed in connection with its 2000 Annual Meeting
of Stockholders, which information is incorporated herein by reference.

Item 12   Security Ownership of Certain Beneficial Owners and Management
          --------------------------------------------------------------

     The information required by this item is contained in the definitive proxy
materials of the Company to be filed in connection with its 2000 Annual Meeting
of Stockholders, which information is incorporated herein by reference.

Item 13   Certain Relationships and Related Transactions
          ----------------------------------------------

     The information required by this item is contained in the definitive proxy
materials of the Company to be filed in connection with its 2000 Annual Meeting
of Stockholders, which information is incorporated herein by reference.

                                      -27-
<PAGE>

                                    Part IV

Item 14   Exhibits, Financial Statement Schedules, and Reports on Form 8-K
          ----------------------------------------------------------------

(a)  The following documents are filed as part of this report:

     1.      Financial Statements
     2.      List of Financial Statement Schedules (None)
     3.      List of Exhibits

Exhibit No.   Description

3.1       Restated Certificate of Incorporation.  (1)

3.2       Restated By-Laws.  (1)

4.1       Form of Certificate for Common Stock  (1)

10.1      Form of Stock Option Agreement between stockholders of the Company and
          certain other persons dated as of August 10, 1993. (1)

10.2      Stock Option Plan, as amended.  (1)

10.4      Stock Purchase Agreement with Donald J. Gogel dated April 17, 1993,
          together with Amendment to Stock Purchase Agreement dated as of
          December 31, 1993. (1)

10.5      Consulting Agreement with Whale Securities Co., L.P. dated April 14,
          1994. (2)

10.6      Warrant Agreement with Whale Securities Co., L.P. dated April 7, 1994.
          (2)

10.7      Amendment No. 1 dated as of June 12, 1996 to the Warrant Agreement
          between the Company and Whale Securities Co., L.P. dated as of April
          14, 1996. (6)

10.8      Warrant Agreement between the Company and Whale Securities Co., L.P.
          dated as of June 17, 1996. (7)

10.11     Lease Agreement with The Fidelity Mutual Life Insurance Company, in
          Rehabilitation, dated August 24, 1995. (5)

10.12     Lease Agreement with The Fidelity Mutual Life Insurance Company, in
          Rehabilitation, dated March 21, 1996. (4)

                                      -28-
<PAGE>

10.14     Option Agreement between the Company and Acadia International Limited
          dated as of March 31, 1995. (5)

10.18     Purchase Contract between the Company and Whitbread PLC dated June 30,
          1995. (4)

10.19     Purchase Contract between the Company and Whitbread PLC dated December
          27, 1995. (4)

10.20     Purchase Order from The Southland Corporation dated December 13, 1996.
          (8)

10.21     Purchase Contract between the Company and Whitbread PLC
          dated February 18, 1997.  (8)

10.22     Employment Agreement with Philip R. McKee dated March 1, 1996.  (1)

10.25     Lease Agreement with Prestonwood Tower dated March 19, 1997. (7)

10.26     Strategic Alliance Agreement dated as of September 26, 1997, by and
          between TurboChef Technologies, Inc. and Maytag Corporation. (8)

10.27     Lease Agreement with Jonathan Woodner dated April 15, 1997. (9)

10.28     First Extension of the Project Agreement (RCAP-II) dated March 4, 1998
          by and between TurboChef Technologies, Inc. and Maytag Corporation (9)

10.29     Employment agreement between TurboChef, Inc. and Marion H. Antonini.
          (10)

10.30     Commercial Cooking Appliance Project Agreement dated as of July 29,
          1998 by and between TurboChef Technologies, Inc. and Maytag
          Corporation. (11)

10.31     Revolving Credit Agreement between Chase Bank of Texas NA and
          TurboChef Technologies, Inc. dated July 1, 1998. (11)

10.32     Employment Letter between Richard N. Caron and TurboChef Technologies,
          Inc. dated September 2, 1998. (12)

10.33     Master Agreement dated January 11, 1999 by and between TurboChef
          Technologies, Inc. and AIG Financial Securities Corp. (13)

10.34     Variable Stock Agreement dated January 14, 1999 by and between
          TurboChef Technologies, Inc. and AIG Financial Securities Corp. (13)

10.35     Pledge Agreement dated January 11, 1999 by and between TurboChef
          Technologies, Inc. and AIG Financial Securities Corp. (13)

                                      -29-
<PAGE>

10.36     Research and Development Contract dated July 29, 1999 by and between
          Gas Research Institute and TurboChef Technologies, Inc. (14)

10.37     License Agreement dated as of October 28, 1999 by and between Maytag
          Corporation and TurboChef Technologies, Inc. (14)

11        Statement Re: Computation of Per Share Earnings is not necessary
          because the computation of per share earnings on both a basic and
          diluted basis can be clearly determined from this report.

21        Subsidiaries of the Company.  (9)

_______________


   (1)  Filed as an exhibit to the Company's Registration Statement on Form SB-2
        (File No. 33-75008), and incorporated herein by reference.

   (2)  Filed as an exhibit to the Company's Quarterly Report on Form 10-QSB for
        the quarter ended March 31, 1994, and incorporated herein by reference.

   (3)  Filed as an exhibit to the Company's Annual Report on Form 10-KSB for
        the fiscal year ended December 31, 1994, and incorporated herein by
        reference.

   (4)  Filed as an exhibit to the Company's Registration Statement on Form SB-2
        (File No. 333-2992), and incorporated herein by reference.

   (5)  Filed as an exhibit to the Company's Annual Report on Form 10-KSB for
        the fiscal year ended December 31, 1995, and incorporated herein by
        reference.

   (6)  Filed as an exhibit to the Company's Quarterly Report on Form 10-QSB for
        the quarter ended June 30, 1996, and incorporated herein by reference.

   (7)  Filed as an exhibit to the Company's Annual Report on Form 10-K for the
        fiscal year ended December 31, 1996, and incorporated herein by
        reference.

   (8)  Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for
        the quarter ended September 30, 1997, and incorporated herein by
        reference.

   (9)  Filed as an exhibit to the Company's Annual Report on Form 10-K for the
        fiscal year December 31, 1997, and incorporated herein by reference.

   (10) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for
        the quarter ended March 31, 1998, and incorporated herein by reference.

   (11) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for
        the quarter ended June 30, 1998, and incorporated herein by reference.

                                      -30-
<PAGE>

   (12) Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for
        the quarter ended September 30, 1998, and incorporated herein by
        reference.

   (13) Filed as an Exhibit to the Company's Annual Report on Form 10-K for the
        fiscal year ended December 31, 1998, and incorporated herein by
        reference.

   (14) Filed as an Exhibit to the Company's Quarterly Report on Form 10-Q for
        the quarter ended September 30, 1999, and incorporated herein by
        reference.

(b)  Reports on Form 8-K

     None

                                      -31-
<PAGE>

                                  SIGNATURES

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


                                     TURBOCHEF TECHNOLOGIES, INC.

                                     By:/s/ Richard N. Caron
                                     Richard N. Caron
                                     President, Chief Executive Officer
                                     and Director

     Dated March 29, 2000

                                      -32-
<PAGE>

     Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated:

       Name                    Title                    Date
       ----                    -----                    ----

/s/ Jeffrey B. Bogatin      Chairman of the Board of Directors   March 29, 2000
Jeffrey B. Bogatin

/s/ Richard N. Caron        President, Chief Executive Officer   March 29, 2000
Richard N. Caron            and Director (Principal Executive
                            Officer)

/s/ Dennis J. Jameson       Executive Vice President, Chief      March 29, 2000
Dennis J. Jameson           Financial Officer (Principal
                            Accounting and Financial Officer)

/s/ Marion H. Antonini      Director                             March 29, 2000
Marion H. Antonini

/s/ Donald J. Gogel         Director                             March 29, 2000
Donald J. Gogel

/s/ Sir Anthony Jolliffe    Director                             March 29, 2000
Sir Anthony Jolliffe

                                      -33-
<PAGE>

                         INDEX TO FINANCIAL STATEMENTS


<TABLE>
<CAPTION>

<S>                                                                                    <C>
Report of Independent Public Accountants                                                F-2
Independent Auditors' Report                                                            F-3
Financial Statements:
  Balance Sheets as of December 31, 1999 and 1998                                       F-4
  Statements of Operations for the years ended December 31, 1999, 1998 and 1997         F-5
  Statements of Stockholders' Equity for the years ended
    December 31, 1999, 1998 and 1997                                                    F-6
  Statements of Cash Flows for the years ended December 31, 1999, 1998 and 1997         F-7
  Notes to Financial Statements for the years ended December 31, 1999, 1998 and 1997    F-8

</TABLE>
All financial statement schedules are omitted since the required information is
not present or is not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the financial
statements and notes thereto.

                                      F-1
<PAGE>

                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


The Board of Directors and Stockholders
TurboChef Technologies, Inc.:


We have audited the accompanying balance sheets of TurboChef Technologies, Inc.
(a Delaware corporation) as of December 31, 1999 and 1998, and the related
statements of operations, stockholders' equity, and cash flows for the years
then ended. These financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of TurboChef Technologies, Inc. as
of December 31, 1999 and 1998, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles.


                                                       Arthur Andersen LLP

Dallas, Texas
March 30, 2000

                                      F-2
<PAGE>

                          INDEPENDENT AUDITORS' REPORT


The Board of Directors and Stockholders
TurboChef Technologies, Inc.:


We have audited the accompanying statements of operations, stockholders' equity,
and cash flows of TurboChef Technologies, Inc. for the year ended December 31,
1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of TurboChef
Technologies Inc. for the year ended December 31, 1997, in conformity with
generally accepted accounting principles.


                                            KPMG LLP

Dallas, Texas
January 30, 1998

                                      F-3
<PAGE>

                          TurboChef Technologies, Inc.
                                 Balance Sheets
                    (Amounts in Thousands, Except Share Data)
<TABLE>
<CAPTION>

                                                                               At December 31,
                                                                               1999       1998
                                                                               ----       ----
<S>                                                                         <C>         <C>
                                   Assets
                                   ------
Current assets:
Cash and cash equivalents                                                   $  1,928    $    164
Marketable securities available for sale, at fair value                        7,335      18,292
Marketable securities - pledged, at fair value                                 7,920         -
Accounts receivable net of allowance for doubtful accounts of
 $117 and $92 at December 31, 1999 and 1998, respectively                      1,280         914
Inventories, net                                                                 252         762
Prepaid expenses                                                                 209          41
                                                                            --------    --------
                               Total current assets                           18,924      20,173
                                                                            --------    --------
Property and equipment:
  Leasehold improvements                                                         315         130
  Furniture and fixtures                                                         720         475
  Equipment                                                                      518         456
                                                                            --------    --------
                                                                               1,553       1,061
  Less accumulated depreciation and amortization                                (822)       (563)
                                                                            --------    --------
                               Net property and equipment                        731         498
                                                                            --------    --------
Premium on purchased put option, net                                           1,295         -
Other assets                                                                     119         129
                                                                            --------    --------
                               Total assets                                 $ 21,069    $ 20,800
                                                                            ========    ========

                    Liabilities and Stockholders' Equity
                    ------------------------------------
Current liabilities:
  Accounts payable                                                          $  1,000    $    571
  Accrued payroll                                                                141         223
  Accrued upgrade and warranty costs                                           1,069         259
  Accrued expenses                                                               481         474
  Deferred revenue                                                             1,727          49
  Other                                                                           22          31
                                                                            --------    --------
                               Total current liabilities                       4,440       1,607

Long-term liabilities:
  Long-term debt                                                               6,406         -
  Accrued interest                                                               372         -
                                                                            --------    --------
                               Total long-term liabilities                     6,778         -

Commitments and contingencies

Stockholders' equity:
  Preferred stock, $1.00 par value.  Authorized 5,000,000 shares
    None issued at December 31, 1999 and 1998, respectively                      -           -
  Common stock, $.01 par value. Authorized 50,000,000 shares
    Issued 15,090,373 and 14,659,134 shares at December 31,
    1999 and 1998, respectively                                                  151         148
  Additional paid-in capital                                                  34,119      32,435
  Accumulated deficit                                                        (30,010)    (21,231)
  Notes receivable from employees                                               (685)        -
  Accumulated other comprehensive income                                       6,727       8,292
  Treasury stock - at cost 32,130 shares in 1999 and 1998                       (451)       (451)
                                                                            --------    --------
                               Total stockholders' equity                      9,851      19,193
                                                                            --------    --------

                               Total liabilities and stockholders' equity   $ 21,069    $ 20,800
                                                                            ========    ========
</TABLE>

The accompanying notes are an integral part of these financial statements

                                      F-4
<PAGE>

                          TurboChef Technologies, Inc.
                            Statements of Operations
                    (Amounts in Thousands, Except Share Data)

<TABLE>
<CAPTION>

                                                          Years Ended December 31,
                                                     1999           1998            1997
                                                     ----           ----            ----

<S>                                              <C>             <C>             <C>
Revenues:
  Product sales                                  $      3,391    $      3,062    $      3,462
  Research and development fees                         3,645           4,075             760
  Royalties                                                27             -               -
                                                 ------------    ------------    ------------
                      Total revenues                    7,063           7,137           4,222


Costs and expenses:
  Cost of goods sold                                    3,267           2,677           2,843
  Research and development expenses                     4,092           2,311           1,220
  Selling, general and administrative expenses          7,709           6,301           4,981
                                                 ------------    ------------    ------------
                      Total costs and expenses         14,068          11,289           9,044
                                                 ------------    ------------    ------------

                      Operating loss                   (8,005)         (4,152)         (4,822)
                                                 ------------    ------------    ------------


Other income (expense):
  Interest income                                          79              92             269
  Interest expense                                       (372)            -               -
  Dividend income                                         206             200              47
  Amortization of purchased put option premium           (647)            -               -
  Equity in loss of joint venture                         -              (105)           (156)
  Other income (expense)                                  (40)             11             -
                                                 ------------    ------------    ------------
                                                         (774)            198             160
                                                 ------------    ------------    ------------

                      Net loss                   $     (8,779)   $     (3,954)   $     (4,662)
                                                 ============    ============    ============

Loss per common share - basic and diluted        $      (0.57)   $      (0.27)   $      (0.33)
                                                 ============    ============    ============

 Weighted average number of common
    shares outstanding - basic and diluted         14,983,486      14,611,724      14,032,796
                                                 ============    ============    ============

</TABLE>

The accompanying notes are an integral part of these financial statements


                                      F-5
<PAGE>

                          TurboChef Technologies, Inc.
                       Statements of Stockholders' Equity
                    (Amounts in Thousands, Except Share Data)
<TABLE>
<CAPTION>

                                                               Common stock        Additional paid-      Accumulated
                                                            Shares       Amount       in capital           deficit
                                                            ------       ------       ----------           -------
<S>                                                         <C>          <C>          <C>                  <C>
Balance, December 31, 1996                                13,785,244   $      138   $   21,577           $  (12,615)

     Net loss                                                    -            -            -                 (4,662)
     Net unrealized gain on marketable securities                -            -            -                    -

     Comprehensive Income (Loss)                                 -            -            -                    -

     Exercise of warrants                                     87,815            1          284                  -
     Issuance of stock in payment of director's fee            1,960          -             30                  -
     Exercise of stock options                               111,607            1          244                  -
     Issuance of common stock                                564,668            6        9,995                  -
     Purchase of treasury stock (9,067 shares)                   -            -            -                    -
                                                    ---------------------------------------------------------------
Balance, December 31, 1997                                14,551,294          146       32,130              (17,277)

     Net loss                                                    -            -            -                 (3,954)
     Net unrealized gain on marketable securities                -            -            -                    -
      Comprehensive Income (Loss)                                -            -            -                    -

     Exercise of warrants                                     51,014            1          164                  -
     Exercise of stock options                                56,826            1          141                  -
     Purchase of treasury stock (14,748 shares)                  -            -            -                    -
                                                    ---------------------------------------------------------------
Balance, December 31, 1998                                14,659,134          148       32,435              (21,231)

     Net loss                                                    -            -            -                 (8,779)
     Net unrealized loss on marketable securities                -            -            -                    -
     Net unrealized gain on purchased put option                 -            -            -                    -

      Comprehensive Income (Loss)                                -            -            -                    -

     Compensation expense                                        -            -            374                  -
     Notes receivable                                            -            -            -                    -
     Issuance of warrants                                        -            -            153                  -
     Exercise of warrants                                    121,172            1          392                  -
     Exercise of stock options                               310,067            2          765                  -
                                                      -------------------------------------------------------------
Balance, December 31, 1999                                15,090,373   $      151   $   34,119           $  (30,010)
                                                      =============================================================

<CAPTION>
                                                                     Notes       Accumulated
                                                                  receivable        other                     Total
                                                                     from       comprehensive  Treasury    stockholders'
                                                                  employees         income      stock         equity
                                                                  ----------    -------------  --------      ----------
<S>                                                               <C>           <C>            <C>           <C>
Balance, December 31, 1996                                          $   -                 -    $    (167)        (8,933)

     Net loss                                                           -                 -          -           (4,662)
     Net unrealized gain on marketable securities                       -                 964        -              964
                                                                                                             ----------
     Comprehensive Income (Loss)                                        -                 -          -           (3,698)

     Exercise of warrants                                               -                 -          -              285
     Issuance of stock in payment of director's fee                     -                 -          -               30
     Exercise of stock options                                          -                 -          -              245
     Issuance of common stock                                           -                 -          -           10,001
     Purchase of treasury stock (9,067 shares)                          -                 -         (167)          (167)
                                                                  -----------------------------------------------------
Balance, December 31, 1997                                              -                 964       (334)        15,629

     Net loss                                                           -                 -          -           (3,954)
     Net unrealized gain on marketable securities                       -               7,328        -            7,328
                                                                                                             ----------
      Comprehensive Income (Loss)                                       -                 -          -            3,374

     Exercise of warrants                                               -                 -          -              165
     Exercise of stock options                                          -                 -          -              142
     Purchase of treasury stock (14,748 shares)                         -                 -         (117)          (117)
                                                                  -----------------------------------------------------
Balance, December 31, 1998                                              -               8,292       (451)        19,193
                                                                        -
     Net loss                                                           -                 -          -           (8,779)
     Net unrealized loss on marketable securities                       -              (4,188)       -           (4,188)
     Net unrealized gain on purchased put option                        -               2,623        -            2,623
                                                                                                             ----------
      Comprehensive Income (Loss)                                       -                 -          -          (10,344)

     Compensation expense                                               -                 -          -              374
     Notes receivable                                                  (685)              -          -             (685)
     Issuance of warrants                                               -                 -          -              153
     Exercise of warrants                                               -                 -          -              393
     Exercise of stock options                                          -                 -          -              767
                                                                  -----------------------------------------------------
Balance, December 31, 1999                                             (685)       $    6,727    $  (451)      $  9,851
                                                                  =====================================================
</TABLE>

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

                                      F-6
<PAGE>

                                             TurboChef Technologies, Inc.
                                               Statements of Cash Flows
                                                (Amounts in Thousands)
<TABLE>
<CAPTION>


                                                                                  Years Ended December 31,
                                                                            1999            1998             1997
                                                                            ----            ----             ----
<S>                                                                         <C>             <C>              <C>
Cash flows from operating activities:
   Net loss                                                                  $ (8,779)       $ (3,954)        $ (4,662)
   Adjustments to reconcile net loss to net cash used in
     operating activities:
         Equity in loss of joint venture                                            -             105              156
         Depreciation and amortization                                            503             505              172
         Amortization of premium on purchased put option                          647               -                -
         Noncash compensation expense                                             374              15               29
         Provision for doubtful accounts                                           25              76                -
         Change in assets and liabiliteis:
            Increase in accounts receivable                                      (391)           (365)             (62)
            Decrease (increase) in inventories                                    266            (130)            (274)
            Decrease (increase) in prepaid expenses                              (168)             47              174
            Decrease (increase) in other assets                                    10              18              (47)
            Increase in accounts payable                                          429              52               60
            Increase (decrease) in accrued expenses                               735             722              (62)
            Increase in deferred revenue                                        1,678              27               11
            Decrease in other liabilities                                          (9)             (5)              (8)
            Accrued interest                                                      372               -                -
                                                                       ---------------  --------------   --------------
               Net cash used in operating activities                           (4,308)         (2,887)          (4,513)
                                                                       ---------------  --------------   --------------

Cash flows from investing activities:
   Sales of marketable securities                                                   -           1,795            5,514
   Premium on purchased put option                                             (1,943)              -
   Purchase of equipment and leasehold improvements                              (492)           (186)            (327)
   Investment in joint venture                                                      -            (145)            (117)
                                                                       ---------------  --------------   --------------
               Net cash provided by (used in) investing activities             (2,435)          1,464            5,070
                                                                       ---------------  --------------   --------------

Cash flows from financing activities:
   Borrowings under long-term debt                                              7,879               -                -
   Notes receivable from employees                                               (685)              -                -
   Proceeds from the exercise of stock options                                    767              26               78
   Proceeds from the issuance of warrants                                         153               -                -
   Proceeds from the exercise of warrants                                         393             164              285
                                                                       ---------------  --------------   --------------
               Net cash provided by financing activities                        8,507             190              363
                                                                       ---------------  --------------   --------------

Net increase (decrease) in cash and cash equivalents                            1,764          (1,233)             920
Cash and cash equivalents at beginning of period                                  164           1,397              477
                                                                       ---------------  --------------   --------------
Cash and cash equivalents at end of period                                    $ 1,928           $ 164          $ 1,397
                                                                       ===============  ==============   ==============

Supplemental disclosures of noncash activities:
Noncash investing activity - net unrealized gain/(loss)
on marketable securities                                                     $ (4,188)        $ 7,328            $ 964
                                                                       ===============  ==============   ==============
Noncash investing activity - net unrealized gain
on purchased put option                                                       $ 2,623             $ -              $ -
                                                                       ===============  ==============   ==============

Noncash financing activities:
Issuance of stock in payment of director's fee                                    $ -             $ -             $ 30
                                                                       ===============  ==============   ==============
Issuance of stock to Maytag                                                       $ -             $ -         $ 10,000
                                                                       ===============  ==============   ==============

</TABLE>

The accompanying notes are an integral part of these financial statements


                                      F-7
<PAGE>

                         TurboChef Technologies, Inc.

                         Notes to Financial Statements
                       December 31, 1999, 1998 and 1997


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
   ------------------------------------------

   General
   -------

   TurboChef Technologies, Inc. (the "Company") was incorporated on April 3,
   1991. Prior to its name change in July 1998, the Company operated under the
   name TurboChef, Inc. The Company is a foodservice technology company engaged
   primarily in designing, developing and marketing high-speed cooking systems.
   The Company believes its primary markets are with both residential and
   commercial food service operators throughout North America, Europe and Asia.
   Management believes that the Company operates in one primary business
   segment.

   In September 1997, the Company and Maytag Corporation ("Maytag") entered into
   a "Strategic Alliance Agreement" ("Alliance") for the purpose of the
   development and commercialization of innovative products based on new
   technologies in the areas of heat transfer and thermodynamics. In connection
   with the Alliance, the Company issued 564,668 shares of common stock with an
   aggregate fair market value of approximately $10.0 million for 293,846 shares
   of Maytag common stock at the same aggregate market value. In addition, the
   Company received fees from Maytag for research and development activities.
   These fees totaled $4,075,000 and $750,000 in 1998 and 1997, respectively. In
   July 1998, the Company announced a commercial sales agreement with Maytag
   whereby Maytag will lead the Company's North American commercial sales and
   marketing initiatives. In November 1999, the Company announced a Commercial
   License Agreement with Maytag. The Company received $2,500,000 in research
   and development fees during the fourth quarter of 1999 relating to this
   agreement. The Company is scheduled to receive an additional $2,100,000 in
   research and development fees, relating to this agreement, during the first
   half of 2000. However, the Maytag Alliance and its related agreements are
   cancelable by either party with 30 days written notice.

   During the second half of 1999, the Company completed the transition of its
   North American Sales and Marketing responsibilities to G.S. Blodgett
   Corporation ("Blodgett"), a wholly owned subsidiary of Maytag, engaging in
   the manufacturing and sales of commercial foodservice equipment.  In
   addition, Blodgett has also adopted the responsibility of manufacturing of
   the Company's commercial products.  Blodgett is currently the Company's sole
   source of supply for its cooking systems.

   The Maytag Alliance is ongoing, and provides for the opportunity to establish
   additional residential and commercial product development projects in the
   future.  Accordingly, future revenues from the Alliance will depend upon the
   establishment of additional fee based research and development projects with
   Maytag and royalties from the successful commercialization and sales of the
   products that embody the Company's technologies.

   In addition, the Company is dependent on Maytag to manufacture, market and
   sell its products in North America.  The Company is currently pursuing
   potential marketing and manufacturing partners

                                      F-8
<PAGE>

   in Europe and Asia. No such partnerships currently exist. If Maytag chooses
   to cancel the Alliance and its related agreements, by giving the Company 30
   days written notice, the Company would not receive additional research and
   development funding or minimum royalties after the end of that 30 day period.
   If the Alliance is cancelled or if any of the alliance projects are
   cancelled, there is no assurance that the Company would be able to find
   alternate sources of funding on acceptable terms for further research and
   development of current and future products or operations. The failure to find
   acceptable alternative financing could have a significant adverse impact on
   the Company's current and future operations. However, management is confident
   that through the sales of its commercial cooking systems, royalties from the
   sale of its licensed products and financing agreements, it will have adequate
   funding to finance its operations throughout 2000.

   In July 1999, the Company entered into a research and development agreement
   with the Gas Research Institute ("GRI").  Through this agreement, the Company
   has received $2,000,000 in funding for the development of gas fueled cooking
   platforms.  In exchange for the funding, GRI received 50,000 warrants to
   purchase the Company's common stock and a defined percentage of the royalty
   that the Company receives on the sale of various European and North American
   commercial products developed by research and development efforts undertaken
   as a result of the GRI agreement.  Such royalty payments terminate upon the
   cumulative payments of $4,000,000 to GRI.

   Cash Equivalents
   ----------------

   For the purpose of these statements, the Company considers all highly liquid
   debt instruments with original maturities of three months or less to be cash
   equivalents.  As of December 31, 1999, cash equivalents consisted of
   overnight investments.

   Financial Instruments
   ---------------------

   Investments in marketable securities at December 31, 1999 and 1998, consisted
   of Maytag common stock.  All Maytag common stock is considered available for
   sale under Statement of Financial Accounting Standards No. 115, Accounting
   for Certain Investments in Debt and Equity Securities, and are stated at fair
   value, adjusted as described below.  Unrealized holding gains and losses on
   available for sale securities are excluded from earnings and are reported as
   a separate component of stockholders' equity until realized.  Realized gains
   and losses from the sale of available for sale securities are determined on a
   specific identification basis.

   As further discussed in note 3 and 4, during 1999 the Company entered into a
   secured borrowing agreement and a purchased put option.  The unrealized gains
   on the purchased put options are excluded from earnings and are reported as a
   separate component of stockholders' equity until realized.  Unrealized gains
   related to marketable securities pledged under the secured borrowing
   agreement are recorded as a reduction to long-term debt and unrealized gains
   related to marketable equity securities that are not pledged are recorded as
   an increase to the value of such securities.

   Inventories
   -----------

   Inventories are valued at the lower of cost or market and primarily consist
   of completed cooking systems and replacement parts.  The Company determines
   cost for cooking systems by the specific cost method.  Cooking systems used
   for demonstration and testing (demo systems) are generally depreciated over
   one-year period.  Depreciation for demo systems was $244,000, $303,000 and
   $25,000 for the years ended December 31, 1999, 1998 and 1997 respectively.
   The following table

                                      F-9
<PAGE>

   details the various components of inventory for the years ended December 31,
   1999 and 1998, respectively (Amounts shown in Thousands):

                                                      1999          1998
                                                      ----          ----
           Cooking systems                            $ 252         $ 633
           Parts, net                                     -            82
           Demo systems, net                              -            47
                                                      -----         -----
           Total Inventory                            $ 252         $ 762
                                                      =====         =====

   Property and Equipment
   ----------------------

   Property and equipment are recorded at cost.  Depreciation is computed using
   the straight-line method over the estimated useful lives of the respective
   assets.  Computer equipment is generally depreciated over a three-year
   period.  All other property and equipment is generally depreciated over a
   five-year period.  Depreciation for all property and equipment was $259,000,
   $179,000 and $141,000 for the years ended December 31, 1999, 1998 and 1997,
   respectively.

   Sales Deposits
   --------------

   Sales deposits consist of amounts received from customers for future
   purchases of cooking systems.  Deferred amounts will be recognized as revenue
   when the cooking systems are installed for the customer.

   Revenue Recognition
   -------------------

   The Company records product sales when the product is installed for the
   customer.  Fees for research and development services or technology transfers
   are recorded on a proportional performance basis.  Royalty revenues consist
   of royalties received from Maytag from the sale of products embodying the
   Company's technologies.  Royalty revenues are recorded when earned which is
   the period in which the products are sold.  Reserves for sales returns and
   allowances are recorded in the same accounting period as the related
   revenues.  As of December 31, 1999 and 1998, there were no reserves
   established as sales returns and allowances were not significant.

   Other Assets
   ------------

   Other assets consist primarily of patents.  Generally, amortization is
   computed on the straight-line method over ten years.  Patent amortization was
   $13,000, $23,000 and $5,000 for the years ended December 31, 1999, 1998 and
   1997, respectively.

   Research and Development Expenses
   ---------------------------------

   Research and development expenses consist of all costs incurred in planning,
   design and testing of the high-speed commercial cooking systems, including
   salary costs related to research and development, and are expensed as
   incurred.

                                      F-10
<PAGE>

   Product Warranty
   ----------------

   The Company's cooking systems are under warranty against defects in material
   and workmanship for a period of one year.  Anticipated future warranty costs
   are estimated, based upon historical expenses, and are recorded in the period
   cooking systems are sold.  During 1999, a cooking system upgrade and extended
   warranty coverage was sold to a major customer in Europe. The estimated costs
   associated with this extended warranty agreement in excess of revenues were
   $905,000, $462,000 and $146,000 for the years ended December 31, 1999, 1998
   and 1997, respectively.  (see Note 6).

   Income Taxes
   ------------

   The Company accounts for income taxes using the asset and liability method.
   Deferred tax assets and liabilities are recognized for the future tax
   consequences attributable to differences between the financial statement
   carrying amounts of existing assets and liabilities and their respective tax
   bases and operating loss carryforwards.  Deferred tax assets and liabilities
   are measured using enacted rates expected to apply to taxable income in the
   years in which those temporary differences are expected to be recovered or
   settled.  The effect on deferred tax assets and liabilities of a change in
   tax rates is recognized in income in the period that includes the enactment
   date.

   Loss Per Share
   --------------

   Basic EPS is computed by dividing income available to common shareholders by
   the weighted-average number of common shares outstanding for the period.
   Diluted EPS reflects the potential dilution that could occur if securities or
   other contracts to issue common stock were exercised or converted into common
   stock or resulted in the issuance of common stock that then shared in
   earnings of the entity.

   Basic net loss per common share is based on 14,983,486, 14,611,724 and
   14,032,796 weighted average shares outstanding for the years ended December
   31, 1999, 1998 and 1997, respectively.  For the years ended December 31,
   1999, 1998 and 1997, diluted earnings per share is the same as basic earnings
   per share because the effect of all other potentially dilutive securities on
   the net loss was antidilutive.  Other potentially dilutive securities
   (warrants and options) as of December 31, 1999, 1998 and 1997 totaled
   3,145,000, 3,278,239 and 2,363,079, respectively.

   Stock Option Plans
   ------------------

   The Company accounts for its stock option plans in accordance with the
   provisions of Accounting Principles Board Opinion No. 25 ("APB 25"),
   Accounting for Stock Issued to Employees, and related interpretations.
   Compensation expense for options granted to employees is recorded on the date
   of grant only if the market price of the underlying stock exceeds the
   exercise price.  Since the Company grants substantially all stock options
   with an exercise price equal to or greater than the current market price of
   the stock on the grant date, no compensation expense is recorded.  On January
   1, 1996, the Company adopted Statement of Financial Accounting Standards No.
   123, Accounting for Stock-Based Compensation ("SFAS 123").  Under SFAS 123
   the Company has elected the disclosure provisions, rather than the
   recognition provision, and will continue to account for stock-based
   compensation under APB 25.

                                      F-11
<PAGE>

   Use of Estimates
   ----------------

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

   Fair Value of Financial Instruments
   -----------------------------------

   The carrying amount of cash and cash equivalents, pledged marketable
   securities, accounts receivable, note payable to shareholder, accounts
   payable and accrued expenses approximates fair value due to the short
   maturity of these instruments.

   The carrying amount of the marketable securities available for sale is equal
   to the stock price of the underlying securities of approximately $6.2 million
   at December 31, 1999, plus the difference between the strike price of the
   purchased put option (approximately $57.00/share) covering these shares and
   the market price of the underlying security ($48.00/share) of approximately
   $1.1 million.

   The carrying amount of the Company's long term debt is equal to the amount of
   borrowings through December 31, 1999, of approximately $7.9 million, less the
   unrealized gain on the Company's purchased put option covering the pledged
   shares of approximately $1.5 million.  The unrealized gain on the pledged
   shares is calculated by taking the difference between the strike price of the
   purchased put option (approximately $57.00/share) and the market price of the
   underlying pledged security ($48.00/share).


   The carrying amount of the premium paid on the purchased put option is equal
   to the original cost of the investment ($1.9 million), less the straight line
   amortization over the three-year life of the investment. As of December 31,
   1999, a total of $647,000 of the purchased put option premium has been
   amortized.

   The total fair value of the purchased put option is calculated by using the
   Black-Scholes option pricing model.  As of December 31, 1999, the total fair
   value of the purchased put option premium is $2.9 million.


       Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of
       -----------------------------------------------------------------------


   The Company reviews long-lived assets and certain identifiable intangibles
   for impairment whenever events or changes in circumstances indicate that the
   carrying amount of an asset may not be recoverable.  Recoverability of assets
   to be held and used is measured by a comparison of the carrying amount of an
   asset to future net cash flows expected to be generated by the asset.  If
   such assets are considered to be impaired, the impairment to be recognized is
   measured by the amount by which the carrying amount of the assets exceeds the
   fair value of the assets.  Assets to be disposed of are reported at the lower
   of the carrying amount or fair value, less estimated sales expenses.


       Reclassifications
       -----------------


   Certain amounts in prior periods financial statements have been reclassified
   to conform to current year presentation.

                                      F-12
<PAGE>

2. LIQUIDITY
   ---------

   The Company's capital requirements in connection with its product and
   technology development and marketing efforts have been and will continue to
   be significant.  In addition, capital is required to operate and expand the
   Company's operations.  Since its inception, the Company has incurred
   operating losses and has been substantially dependent on loans and capital
   contributions from its principal stockholders, private placements of its
   securities, the proceeds from stock offerings to fund its activities.
   Although the Company has historically incurred significant losses, the
   Company expects to generate future cash flows from the direct sale of its
   commercial cooking systems, royalties from the sale its commercial and
   residential cooking systems, license fees for the non-exclusive licensing of
   its technologies, research and development fees for product development and,
   as necessary and available, raising capital through future equity or debt
   financing. As discussed in Note 12, the Company is currently dependent on a
   single company, Maytag Corporation, for its research and development funding
   and royalty revenues. In addition, the Company is dependent on Maytag to
   manufacture, market and sell its products in North America. The Company is
   currently pursuing potential marketing and manufacturing partners in Europe
   and Asia. No such partnerships currently exist. If Maytag chooses to cancel
   the Alliance and its related agreements, by giving the Company 30 days
   written notice, the Company would not receive additional research and
   development funding or minimum royalties or have access to Maytag's
   manufacuring, marketing or selling capabilities after the end of that 30 day
   period. If revenues from cooking system sales, cash from its financing
   agreements and external financing is not sufficient, the Company may be
   required to revise its plan of operations, including a curtailment of
   expansion, product development activities and reduction of other general and
   administrative expenses. Furthermore, there is no assurance that the Company
   would be able to find alternative sources of funding which could have a
   significant adverse effect on the Company's current and future operations and
   financial position.

   Since October 1997, the Company's capital requirements have been met in part
   by Maytag.  In accordance with the Maytag Alliance, the Company has been paid
   aggregate research and development fees of $5.9 million  for product
   development initiatives by the Company.

   In October 1999, the Company entered into a Commercial License Agreement with
   Maytag that broadens their distribution rights with respect to commercial
   cooking products utilizing the Company's rapid cook technologies. Pursuant to
   the terms of the agreement, Maytag now has exclusive rights to market and
   sell throughout North America and certain worldwide rights to sell to North
   American based chains with international locations. This exclusivity extends
   until March 2002, with certain applications extending until March 2003. In
   consideration for these rights, Maytag has agreed to pay the Company per unit
   royalties or approximately 10% of targeted wholesale prices. In the event
   that actual gross margins exceed target levels, the Company will share
   equally in the incremental margin. Maytag has also agreed to establish $5.75
   million as the minimum royalty threshold over the first twenty four months of
   exclusivity ($1.5 million in 2000, $3.3 million in 2001 and $0.9 million in
   2002). Maytag has also agreed to provide the Company with $2.5 million in
   1999 and up to $2.1 million in 2000, for the research and development of
   prototype units relating to this agreement. However, this agreement is
   cancelable with 30 days notice by either party. If Maytag chooses to cancel
   this agreement, by giving the Company 30 days written notice, the Company
   would not receive additional research and development funding or minimum
   royalties after the end of that 30 day period.

                                      F-13
<PAGE>

   In July 1999, the Company entered into an agreement with the Gas Research
   Institute ("GRI") to develop natural gas-fueled versions of the Company's
   commercial and residential cooking systems. The agreement provided the
   Company with $2 million in funding during 1999.  In addition to the funding,
   the Company is allowed access to GRI's extensive patent portfolio and years
   of experience with natural gas related products.  In exchange for the
   funding, GRI received 50,000 warrants to purchase the Company's common stock
   and a defined percentage of the royalty that the Company receives on the sale
   of various commercial products in North America and Europe.  Such payments
   terminate upon the cumulative payments of $4,000,000 to GRI.

3. DEBT
   ----

   In January 1999, the Company terminated an existing revolving credit
   agreement with its bank and entered into a secured borrowing agreement with
   Banque AIG, London Branch (an affiliate of American International Group, Inc.
   ("AIG Facility")). The AIG Facility provides for the Company to pledge its
   Maytag shares in the form of a "Variable Stock Transaction" and to receive
   cash advances against the value of the Maytag shares. All advances mature on
   January 14, 2002. Interest is imputed at rates ranging from 5.8% to 7.4%. The
   Company may satisfy any outstanding obligation by surrendering Maytag shares
   equal to the fair value of the obligation or with cash at any time up to and
   including January 14, 2002. The transaction allows the Company to benefit
   from all appreciation in the Maytag share price over the three-year period
   and provides down-side protection to the Company in the form of a "put
   option" for the 293,846 shares of Maytag stock. The put option establishes a
   minimum realizable value for the Maytag shares of approximately $57 per share
   on January 14, 2002.


   In February 1999, the Company entered into a revolving credit agreement with
   its bank. The credit agreement is set to expire in May 2000. The agreement is
   secured by 6,923 shares of Maytag common stock owned by the Company. The
   Company can borrow up to the lesser of $315,000 or 75% of the market value of
   the Maytag stock at the prime interest rate less 0.5%.

4. FINANCIAL INSTRUMENTS
   ---------------------

   As part of its strategic alliance efforts, the Company invested in equity
   securities of Maytag Corporation. These securities are subject to
   fluctuations from market value changes in stock prices. In connection with
   the Variable Stock Transaction and in order to mitigate market risk, the
   Company hedged its investment in Maytag securities by purchasing, on January
   14, 1999, put options to sell the 293,846 shares of Maytag common stock owned
   by the Company. The purchase of the put options required an initial cash
   outlay (the "premium" amount) of $1.9 million. The premium will be amortized
   over three years, the life of the investment. The purchased put options
   protect the Company from a decline in the market value of the security below
   a minimum level of approximately $57.00 per share (the put "strike" price) on
   January 14, 2002. The total value of the put options at risk is equal to the
   unamortized premium, which was $1,295,000 as of December 31, 1999. The
   Company's purchased put options are accounted for as a hedge of its
   investment in the Company's Maytag stock in accordance with GAAP. Hedge
   accounting under GAAP requires the following criteria to be met: (i) the item
   to be hedged is exposed to price risk (ii) the options position reduces the
   price exposure and (iii) the options position is designated as a hedge. No
   options have been purchased to cover the Company's investment in Maytag stock
   after January 14, 2002.

                                      F-14
<PAGE>

   At December 31, 1999, the market value of the Company's Maytag common stock
   was less than the strike price of the purchased put options.  The net
   unrealized gain of approximately $2.6 million on the purchased put options is
   equal to the difference between the strike price of the options and the
   market value of the Maytag common stock as of December 31, 1999 and is
   recorded as an increase in accumulated other comprehensive income.  The net
   unrealized gain on the pledged shares of approximately $1.5 million as of
   December 31, 1999 has been recorded as a reduction to the Company's long term
   debt. The net unrealized gain of approximately $1.1 million on shares not
   pledged as of December 31, 1999 has been recorded as an increase in
   marketable securities available for sale.


   The Company could be exposed to losses related to the above financial
   instrument should its counterparty default.  This risk is mitigated through
   credit monitoring procedures.


   Proceeds from the sale of investment securities were $1,795,000 in 1998 and
   resulted in no gain or loss.


5. INVESTMENT IN JOINT VENTURE
   ---------------------------


   During 1997, the Company contributed $117,000 for a 50% interest in a joint
   venture, TurboChef Europe, created for the purpose of establishing
   distributorships and direct sales relationships within certain Western
   European countries.  The Company's share of the net loss of TurboChef Europe
   for the year ended December 31, 1997 was $156,000.


   During 1998, the Company contributed $145,000 to its joint venture. The
   Company's net loss in the joint venture for the year ended December 31, 1998
   was $105,000. In June 1998, the joint venture was terminated.


6. CERTAIN TRANSACTIONS WITH STOCKHOLDERS
   --------------------------------------

   Notes Receivable
   ----------------

   In February, March and April 1999, the Company loaned an aggregate of
   $37,500, $72,500 and $600,000, respectively, to three of its employees and
   two of the Company's directors.  The loaned amounts were used by such
   employees and directors to exercise 284,000 (15,000 in February 1999, 29,000
   in March 1999 and 240,000 in April 1999) stock options at an exercise price
   of $2.50 per share.  All such loans are full-recourse and are secured by the
   underlying securities and the general assets of the respective borrower. Four
   of the loans have a term of two years and are payable, along with accrued
   interest, in February, March and April 2001. One of the loans has a term of
   five years and is payable, along with accrued interest, on April 2004.  All
   of the notes are recorded as a reduction to Stockholders' Equity.  The notes
   bear interest at a rate of 4.8%.  The market rate of interest on March 31,
   1999 was 7.0%, based upon margin rates obtained through various discount
   brokers.  The difference between interest earned by the Company on the notes
   and the market rate of interest is recorded as compensation expense.  In
   December 1999, the loan amount of $37,500 plus accrued interest was repaid in
   full.  Total compensation expense related to notes receivable from such
   employees and directors was $11,000 for the year ended December 31, 1999.

   In February 2000, the Company loaned an aggregate of $13,500 to two of its
   employees.  These amounts were used by such employees to exercise 9,000 stock
   options at an exercise price of $1.50 per share in February 2000.  All such
   loans are full-recourse and are secured by the underlying

                                      F-15
<PAGE>

   securities and the general assets of the respective borrower. Each loan has a
   term of five years and is payable, along with accrued interest in February
   2005. The notes are recorded as a reduction to Stockholders' Equity. The
   notes bear interest at a rate of 6.7%. The market rate of interest on
   February 15, 2000 was 7.5%, based upon margin rates obtained through various
   discount brokers. The difference between interest earned by the Company on
   the notes and the market rate of interest is recorded as compensation
   expense.

7. ACCRUED WARRANTY AND UPGRADE COSTS
   ----------------------------------

   On September 1, 1999, the Company entered into an agreement to upgrade and
   warranty 262 cooking systems installed for Whitbread PLC.  The Company
   received approximately $1.4 million from Whitbread PLC to complete the
   upgrade and warranty the cooking systems for a three-year period, beginning
   in September 1999.  The cooking system upgrades will include design changes
   that should substantially increase the life and durability of the cooking
   systems. The Company recorded a corresponding liability of  $1.4 million
   representing the estimated cost of upgrade and warranty.  The liability is
   reduced as services related to the upgrade and warranty are incurred.  During
   1999, the Company accrued an additional $755,000 for expenses relating to the
   completion of the upgrade and remainder of the warranty period.  The cooking
   system upgrades were completed in February 2000.  At this time, the Company
   believes that it has accrued expenses sufficient to cover the total cost of
   the upgrades and any charges arising during the three-year warranty period.
   The liability has been estimated and is subject to a high degree of
   judgement.  There can be no assurance that future expenses incurred on the
   upgrade and three-year warranty will not have a material adverse effect upon
   the Company.

8. LEASE COMMITMENTS
   -----------------

   The Company is obligated under certain non-cancelable leases for office space
   and equipment, the majority of which have remaining terms of less than one
   year.  Obligations for office space, which extends beyond one year, are
   $370,000, $146,000 and $12,000 in 2000, 2001 and 2002 respectively.  The
   Company has sub-let one of the properties thus reducing the actual net rent
   expense by $23,000 for the year ended December 31, 2000.  Rent expense was
   $361,000, $325,000 and $323,000 for the years ended December 31, 1999, 1998
   and 1997, respectively.

9. INCOME TAXES
   ------------

   The following is a reconciliation of the provision for income taxes at the
   U.S. federal income tax rate to the income taxes reflected in the Statements
   of Operations:

                                          1999       1998       1997
                                          ----       ----       ----
Computed "expected" tax benefit           $(2,917)   $(1,344)   $(1,585)
Research and development credit                 -        (98)       (47)
Other                                        (205)        83        132
Valuation Allowance                         3,122      1,359      1,500
                                          -------    -------    -------
Income tax benefit                        $     -    $     -    $     -
                                          =======    =======    =======


                                      F-16
<PAGE>

   The components of the Company's net deferred tax asset were as follows:


<TABLE>
<CAPTION>
                                                                             December 31
                                                                        -------------------
                                                                     1999                  1998
                                                                     ----                  ----
<S>                                                                <C>                  <C>
Deferred tax assets:
   Warranty reserves                                                $   363               $    39
   Amortization of premium on purchased put option                      220                     -
   Research and development credit carryforwards                        245                   245
   Net operating loss carryforwards                                   8,180                 5,518
   Other                                                                150                   234
                                                                    -------               -------
        Total gross deferred tax assets                               9,158                 6,036
   Less valuation allowance                                          (9,158)               (6,036)
                                                                    -------               -------
        Net deferred tax assets                                           -                     -
                                                                    -------               -------
Deferred tax liabilities:                                                 -                     -
                                                                    -------               -------
        Net                                                        $      -               $     -
                                                                    =======               =======
</TABLE>

    In assessing the realizability of deferred income tax assets, management
    considers whether it is more likely than not that some portion or all of the
    deferred income tax assets will not be realized. The ultimate realization of
    deferred income tax assets is dependent upon the generation of future
    taxable income during the periods in which those temporary differences
    become deductible. Due to the historical operating results of the Company,
    management is unable to conclude on a more likely than not basis that
    deferred income tax assets will be realized.

    At December 31, 1999, the Company has net operating loss carryforwards for
    federal income tax purposes of $23.8 million, which may be used against
    future taxable income, if any, and which expire in years 2009 to 2014. Any
    change in ownership under Internal Revenue Code Section 382 could limit the
    annual utilization of these carryforwards and cause some amount of the
    carryforwards to expire unutilized.

    The Company also has research and development credit carryforwards of
    approximately $245,000, which may be used to offset future federal tax
    liability, if any.


10. STOCKHOLDERS' EQUITY
    --------------------

    Authorized Shares
    -----------------

    In June 1997, the Board of Directors of the Company approved a proposal to
    increase the number of authorized shares of common stock from 20,000,000
    shares to 50,000,000 million shares.

    In June 1999, the Board of Directors of the Company approved a proposal to
    authorize the issuance of up to 5,000,000 shares of Preferred Stock.

    Stock Option Plan
    -----------------

    The Company adopted the 1994 Stock Option Plan ("the Stock Option Plan"),
    which was amended in March 1994, June 1995, February 1997, June 1997, June
    1998 and October 1998, pursuant to which stock options covering an aggregate
    of 3,650,000 shares of the Company's common stock may be granted. Options
    awarded under the Stock Option Plan (i) are generally granted at exercise
    prices which equate to or are above quoted market price on the date of the
    grant; (ii) generally become

                                      F-17
<PAGE>

    exercisable over a period of one to four years; and (iii) generally expire
    five, seven or ten years subsequent to award.

    At December 31, 1999 there were 123,834 shares available for grant under the
    Plan. The per share weighted-average fair value of stock options granted
    during 1999, 1998 and 1997 was $4.25, $3.28 and $5.16, respectively, on the
    date of grant using the BlackScholes option-pricing model with the following
    weighted-average assumptions: For 1999, Risk-free interest rate, ranging
    from 5.19% to 6.24%; expected life, seven and ten years; expected dividend
    yield, 0%; and volatility, 39%. For 1998, Risk-free interest rate, ranging
    from 4.02% to 5.63%; expected life, seven years; expected dividend yield,
    0%; and volatility, 41%. For 1997, Risk-free interest rate, ranging from
    5.77% to 6.56%; expected life, seven years; expected dividend yield, 0%; and
    volatility, 45%.

    The Company applies APB Opinion 25 in accounting for its Plan and,
    accordingly, no compensation cost has been recognized for its stock options
    in the financial statements. Had the Company determined compensation cost
    based on the fair value at the grant date for its stock options under SFAS
    No. 123, the Company's net loss would have been increased to the pro forma
    amounts indicated below (Amounts shown in thousands except share amounts).

<TABLE>
<CAPTION>
                                                         1999                1998                1997
                                                         ----                ----                ----
      <S>                                                <C>                 <C>                 <C>
       Net loss:
         As reported                                     $(8,779)            $(3,954)            $(4,662)
         Loss per common share - basic
          and diluted                                    $  (.57)            $  (.27)            $  (.33)
         Pro forma                                       $(8,403)            $(5,448)            $(5,959)
         Loss per common share - basic
          and diluted                                    $  (.56)            $  (.37)            $  (.42)
</TABLE>

    Pro forma net loss reflects only options granted since January 1, 1995.
    Therefore, the full impact of calculating compensation cost for stock
    options under SFAS No. 123 is not reflected in the pro forma net loss
    amounts presented above because compensation cost is reflected over the
    options vesting period of up to four years and compensation cost for options
    granted prior to January 1, 1995 is not considered.

                                      F-18
<PAGE>

    A summary of stock option activity follows:

<TABLE>
<CAPTION>
                                                                                        Weighted
                                                                   Number of            Average
                                                                     Shares          Exercise Price
                                                               ------------------  ------------------
<S>                                                            <C>                 <C>
Options outstanding at December 31, 1996                               2,040,833               $ 6.32
                                                                       =========               ======

Options granted                                                          424,500                 9.61
Options exercised                                                       (111,607)                2.19
Options canceled                                                        (242,833)                9.17
                                                                       ---------               ------
Options outstanding at December 31, 1997                               2,110,893               $ 6.87
                                                                       =========               ======

Options granted                                                        1,245,000                 6.40
Options exercised                                                        (56,826)                2.50
Options canceled                                                        (222,000)                9.51
                                                                       ---------               ------
Options outstanding at December 31, 1998                               3,077,067               $ 6.57
                                                                       =========               ======

Options granted                                                          422,500                 8.14
Options exercised                                                       (310,067)                2.47
Options canceled                                                        (458,000)               12.73
                                                                       ---------               ------
Options outstanding at December 31, 1999                               2,731,500               $ 6.13
                                                                       =========               ======
</TABLE>

   At December 31, 1999, the range of exercise prices and weighted-average
   remaining contractual life of outstanding options was $1.50 - $11.88 and 4.2
   years, respectively.  The following table summarizes information about the
   Company's stock options outstanding at December 31, 1999:


<TABLE>
<CAPTION>
                              Options Outstanding                                     Options Exercisable
                              -------------------                                     -------------------
                                                     Weighted
                                                      Average        Weighted                       Weighted
                                Outstanding as       Remaining        Average     Exercisable as     Average
     Range of Exercise          of December 31,     Contractual      Exercise       of December     Exercise
           Prices                    1999              Life            Price         31, 1999         Price
--------------------------------------------------------------------------------  ----------------------------
<S>                            <C>                <C>              <C>            <C>              <C>
        $ 1.50-5.00                      854,000              1.6         $ 3.03          704,666       $ 2.66
        $5.01-10.00                    1,717,500              5.6         $ 7.23          580,334       $ 7.11
        $10.01-11.88                     160,000              3.0         $10.81          150,000       $10.86
</TABLE>

   At December 31, 1999, 1998 and 1997, the number of options exercisable was
   1,435,000, 1,291,566 and 1,146,970, respectively, and the weighted-average
   exercise price of those options was $5.32, $4.22 and $2.88, respectively.

   Two former joint venture partners have options to purchase 262,500 and 21,000
   shares of common stock at $2.50 and $9.00 per share, respectively.  These
   options expire on March 31, 2002 and March 1, 2006.  In addition, the
   Company's former US Sales & Marketing employees have been extended their
   options to purchase 146,000 shares of common stock at prices ranging from
   $1.50 share to $9.25 share.  These options expire at various dates in 2000,
   2004, 2005 and 2006.   Compensation expense in the amount of $363,000 has
   been recorded and is included in selling,

                                      F-19
<PAGE>

    general and administrative expense of the Company's statement of operations.
    As of December 31, 1999, none of these options have been exercised.


    Stock Issuances
    ---------------

    During 1997, the Company issued 564,668 shares of stock to Maytag in
    exchange for 293,846 shares of Maytag's common stock under the terms of the
    "Strategic Alliance Agreement." The Company stock was valued at $17.71 per
    share and the Maytag stock was valued at $34.03 per share both of which
    approximates the fair value of the respective stocks at the issuance date.

    During 1997, the Company issued 1,960 shares of stock to a director in
    payment of director fees. The stock was valued at $15.25 per share, which
    approximates the fair value of the stock at the issuance date.

    Treasury Stock
    --------------

    During the years ended December 31, 1998 and 1997 the Company accepted
    issued shares of stock, at market value, as payment to exercise vested stock
    options at their granted price. Treasury stock transactions for the years
    ended December 31, 1998 and 1997 were $117,000 and $167,000. There were no
    treasury stock transactions during 1999.

    Stock Warrants
    --------------

    In connection with the Company's initial public offering, the Company sold
    the underwriters warrants to purchase 260,000 shares at $3.25 per share (the
    IPO Warrants) of which 121,172 warrants were exercised in 1999, 51,014
    warrants were exercised in 1998 and 87,814 warrants were exercised in 1997.
    As of December 31, 1999, all of the IPO Warrants had been exercised.

    In June 1996, the Company sold the underwriters of the secondary public
    offering warrants to purchase 80,000 shares at $24.00 per share (the June
    1996 Warrants). None of the June 1996 Warrants had been exercised as of
    December 31, 1999.

    In July 1999, the Company issued warrants to the Gas Research Institute, in
    accordance with a research and development agreement, to purchase 50,000
    shares at $13.87 per share (the GRI Warrants). None of the GRI Warrants had
    been exercised as of December 31, 1999. The Company valued the warrants at
    $153,000 and are recorded in stockholders' equity in the accompanying
    financial statements.

11. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
    --------------------------------------------

    In the fourth quarter of 1998, the Company incurred aggregate charges in the
    amount of $53,000 relating to the termination of its manufacturing
    relationship with a European company.

12. RELATED-PARTY TRANSACTIONS
    --------------------------

    Since inception of the Company, an entity (which was founded and is
    principally owned by the Company's former Vice President - Engineering) has
    performed engineering and development work for the Company. During the years
    ended December 31, 1999, 1998 and 1997, the Company paid

                                      F-20
<PAGE>

    the entity fees of $172,000 $112,000 and $256,000, respectively, relating
    primarily to research and development charges incurred on behalf of the
    Company.

    For the year ended December 31, 1999, the Company made net purchases of
    cooking system inventory and related equipment from Blodgett, a North
    American foodservice equipment manufacturer, in the amount of $918,000.
    Blodgett is a wholly-owned subsidiary of Maytag Corporation.

    For the year ended December 31, 1999, the Company received $27,000 in
    royalties from Blodgett for sales of cooking systems that utilized the
    Company's licensed technology. For the years ended December 31, 1998 and
    1997, royalty payments from Blodgett were zero.

    For the years ended December 31, 1999, 1998 and 1997, the Company made net
    purchases of cooking system inventory and related equipment from Techniform
    Waterford Ltd. ("Techniform"), an Ireland based manufacturer, in the amounts
    of $773,000, $1,523,000 and $1,032,000, respectively. The manufacturing
    relationship with Techniform was terminated in March 1999. Techniform is
    owned and operated by The Queally Group, a 50% owner of the Company's former
    joint venture, TurboChef Europe.

    For the years ended December 31, 1998 and 1997, the Company had net cooking
    system sales of $572,000 and $226,000, respectively, to its European joint
    venture, TurboChef Europe. This joint venture was terminated in June 1998.

13. CONCENTRATION OF BUSINESS RISKS
    -------------------------------

    For the years ended December 31, 1999, 1998 and 1997, the Company received
    $3,525,000 $4,075,000 and $750,000, respectively, in fees for research and
    development services and technology transfers from the Maytag Alliance. This
    represents 50%, 57% and 18% of the Company's total revenues for the years
    ended December 31, 1999, 1998 and 1997, respectively. The Maytag Alliance
    and its related projects can be cancelled by either party with 30 days
    written notice. Additional revenues from the Alliance will depend upon the
    establishment of additional fee based research and development projects with
    Maytag and royalties from the successful commercialization and sales of the
    products that embody the Company's technologies.

    However, if additional projects are not initiated with Maytag there is no
    assurance that the Company would be able to find alternate sources of
    funding on acceptable terms for further research and development of current
    and future products. The failure to find acceptable alternative financing
    could have a significant impact on the Company's current and future
    operations. The termination of the Maytag Alliance could have a material
    adverse effect on the Company.

    During 1999, the Company transitioned its manufacturing requirements to
    Blodgett, a wholly-owned subsidiary of Maytag. While the Company currently
    relies upon a single source for the manufacture of its commercial cooking
    systems, it is the Companies intention to develop other manufacturing
    relationships and partnerships outside of North America.

    As of December 31, 1999, 100% of marketable equity securities and their
    related unrealized gain on the purchased put options and 81% of current
    assets are comprised of Maytag common stock and related purchase put value.
    The Company has taken steps to partially reduce this concentration of risk
    through its financing agreement with AIG.

                                      F-21
<PAGE>

14. COMMITMENTS AND CONTINGENCIES
    -----------------------------

    Under the terms of a three-year upgrade and extended warranty agreement, the
    Company has committed to upgrade and warranty 262 cooking systems installed
    for a European customer prior to September 1999.

15. AUTHORITATIVE PRONOUNCEMENTS
    ----------------------------

    In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
    Instruments and Hedging Activities". This Statement is now effective for
    fiscal years beginning after June 15, 2000. Previously, the Company would
    have had to adopt the Statement no later than January 1, 2000. Under the new
    guidelines, the Company will be required to adopt this Statement no later
    than January 1, 2001. SFAS No. 133 requires companies to report derivatives
    on the balance sheet as assets or liabilities, measured at fair value. Gains
    or losses resulting from changes in the values of those derivatives would be
    accounted for depending on the use of the derivative and whether it
    qualifies for hedge accounting. Under FASB 133, the Company's derivative
    investments would be marked to market on a quarterly basis and any gain or
    loss would be recorded within the Company's Condensed Statements of
    Operations. On December 31, 1999, the fair market value of the Company's
    derivative instruments was $2,861,000.


                                      F-22