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

                    FORM 10-K

(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 PURSUANT TO SECTION
         13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ------------- to --------------


Commission file number 0-21456

ELECTRONIC RETAILING SYSTEMS INTERNATIONAL, INC.
------------------------------------------------
(Exact name of registrant as specified in its charter)

	Delaware						                     	06-1361276
--------------------------					      -------------
(State or other jurisdiction of		 	   (I.R.S. Employer
incorporation or organization)				 Identification No.)

	488 Main Avenue
	Norwalk, Connecticut							            06851
---------------------------				       -------------
(Address of principal executive offices)			    (Zip Code)

Registrant's telephone number, including area code: 203-849-2500
                                                    ------------
Securities registered pursuant to Section 12(b) of the Act: None
                                                            ----
Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $.01 par value
(Title of class)


<PAGE>
	Indicate by a 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 as 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 (Section 229.405 of this
chapter) is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [  X  ]

	State the aggregate market value of the voting and non-voting
common equity held by non-affiliates of the registrant. The
aggregate market value shall be computed by reference to the price
at which the common equity was sold, or the average bid and asked
prices of such common equity, as of a specified date within 60 days
prior to the date of filing.

Aggregate market value as of March 15, 2000  		$10,144,770

	Indicate the number of shares outstanding of each of the
registrant's classes of common stock as of the latest practicable
date.

		Common Stock, $.01 par value,
		  as of March 15, 2000			21,282,637 shares

DOCUMENTS INCORPORATED BY REFERENCE

	List hereunder the documents, all or portions of which are
incorporated by reference herein, and the part of the Form 10-K into
which the document is incorporated: Proxy Statement to be filed with
respect to the 2000 Annual Meeting of Stockholders-Part III.


<PAGE>
PART I
ITEM 1.  BUSINESS

General

	Electronic Retailing Systems International, Inc. (the "Company"
or "ERS") develops and provides electronic shelf label ("ESL")
systems designed to allow supermarket chains and other retailers to
increase productivity, reduce labor costs and improve management
information systems. The ERS ShelfNet(R) system (the "ERS ShelfNet
System") has been designed as a productivity enhancing center store
automation system, which replaces paper price tags on retail shelves
with electronic liquid crystal display units and provides a suite of
applications to enhance a retailer's pricing, inventory, shelf
management, merchandising and promotional activities. The ERS
ShelfNet System is comprised of proprietary hardware and software
that electronically link a store's shelves to its point-of-sale
("POS") systems and central computer.

	The ERS ShelfNet System functions as a local area network,
utilizing open systems networking architecture driven by the
Company's software and communications hardware, which are designed
to interface with other store and vendor applications. Each ESL is a
miniature data transceiver that is capable of storing, receiving and
returning alphanumeric messages. An ERS store-based local area
network has up to 30,000 individual ESLs connected to a central
server. The ERS ShelfNet System is designed to allow retailers to:

 .	Implement price changes almost instantaneously from the
store's central computer or directly from corporate or
regional headquarters;

 .	Ensure pricing integrity by accurately displaying and
monitoring product prices;

 .	Streamline stock monitoring activities to reduce lost
sales resulting from the failure to properly stock items;

 .	Increase the speed and accuracy of placing product
displays and promotional material by reducing and
simplifying the tasks required of store employees; and

 .	Audit inventory more efficiently and improve computerized
inventory ordering systems.

<PAGE>
ERS believes these features enable retailers to reduce labor costs,
increase productivity and pricing accuracy, and improve inventory
management, thereby raising such retailers' gross margins and
lowering their operating costs in the highly competitive U.S.
retailing market.

The market for ESL systems, such as the ERS ShelfNet System, is
in the development stage, and market acceptance of, and demand for,
these systems are subject to a high level of uncertainty. The
Company's success will be dependent upon, among other things, the
extent to which retailers choose to install ESL systems. The demand
for such systems may be affected by numerous factors, many of which
are beyond the Company's control, including the actual savings and
benefits experienced by the individual stores using the ESL systems,
and there can be no assurance that supermarket chains or other
retailers will choose to install ESL systems in a significant number
of their stores. See "Customers" below.

	In February 2000, the Company acquired an interest in NewCheck
Corporation ("NewCheck"), of Jacksonville, Florida, which also does
business under the name of Productivity Solutions, Inc. NewCheck is
engaged in the development and commercialization of retailing
productivity solutions, for use in supermarkets and other retail
environments similar to those addressed by the Company's system.
NewCheck's ACM(R) self-checkout system (the "ACM Checkout System")
is designed to enable shoppers to scan their items at a self-
checkout lane and then either pay at the lane or at a centrally-
located pay station. The securities acquired by the Company at
closing represent approximately 19% of NewCheck's outstanding voting
securities. The Company has the right to acquire additional
securities of NewCheck and, under a management agreement extended to
NewCheck, to manage NewCheck's operations. See "Agreements with
NewCheck Corporation" below.

	As more fully described under "Item 7. Management's Discussion
and Analysis of Financial Condition and Results of Operations-
Liquidity and Capital Resources," the Company is highly leveraged,
and at March 1, 2000 had outstanding $76.4 million principal amount
at maturity of its 13-1/4% Senior Discount Notes due 2004 (the
"Senior Discount Notes"), following the acquisition by the Company
during fourth quarter 1999 and first quarter 2000 of an aggregate of
$70.9 principal amount at maturity of Senior Discount Notes. The
Company expects its net losses and negative cash flows from
operations to continue through the current fiscal year. Although
management believes the Company's resources will enable the Company
to fund operations into the second quarter of 2001, thereafter the
Company's ability to meet its continuing debt service and other
obligations will depend largely on the extent to which the Company

<PAGE>
can implement successfully its business strategy of achieving large
scale commercialization of the ERS ShelfNet System. If the Company
is unable to place the system as a result of lack of market
acceptance or otherwise, the Company will be unable to implement
fully, or realize the anticipated results, of its strategy and may
need to raise additional long-term financing to support operations
and service debt. The Company has no current arrangement with
respect to, or sources of, any additional financing, and there can
be no assurance that any such additional financing would be
available on terms reasonable to the Company. In the event the
Company were unable to raise any required additional financing, the
Company's operations would need to be scaled back or discontinued.

	This Annual Report on Form 10-K contains various forward-
looking statements and information that are based on information
currently available to management and management's beliefs and
assumptions. When used in this document, the words "anticipate",
"designed to", "estimate", "believes", "plans", and similar
expressions are intended to identify forward-looking statements, but
are not the exclusive means of identifying such statements. Such
statements are subject to risks and uncertainties, and the Company's
actual results may vary materially from those anticipated, estimated
or projected due to a number of factors, including, without
limitation, the timely availability and acceptance of new products,
the rate of development of the emerging market for ESL systems, the
impact of competitive products and pricing, the ability to obtain
system components from suppliers, the management of growth, and
other factors set forth in reports and other documents filed by the
Company with the Securities and Exchange Commission from time to
time.

Business Strategy

	The Company's principal objective is to achieve increasing
revenue through greater market penetration of the ERS ShelfNet
System.  To achieve this objective, the Company is pursuing a
strategy that includes the following key elements:

	.	Initial Focus on Supermarket Sector.  The Company
intends initially to focus its marketing efforts on the
supermarket sector because of the Company's established
relationships with supermarket chains and because of the
Company's belief that supermarket operators generally are
more receptive than other retailers to utilizing technology
to reduce operating costs and improve productivity. The

<PAGE>
	Company estimates that, as of December 31, 1999, of the
approximately 30,700 supermarkets in the United States,
approximately 200 stores were operating ESL systems.

	.	Reduce Manufacturing Costs.  The Company intends to
continue its efforts to reduce the cost of manufacturing
its wireless ESLs through the application of established
chip manufacturing techniques to the ESL's integrated
circuit, the integration of various components in the ESL
and the achievement of significant economies of scale
expected as a result of the higher manufacturing volumes
the Company believes will arise from the implementation of
its marketing plans.

	.	Value-Added Applications.  In order to increase the
appeal of the Company's system to prospective customers (by
increasing the level of potential cost savings) and to
encourage existing customers to install additional systems,
the Company intends to develop additional productivity
enhancing applications for the ERS ShelfNet System.

Retail Industry Overview

	The Company's target market consists of retailers that stock a
large number of stockkeeping units ("SKUs"), operate in highly
competitive environments, have relatively low margins and change
prices frequently. Such retailers include supermarkets, discount
mass merchandisers, chain drug stores and convenience stores. The
approximate number of supermarkets, discount mass merchandisers,
chain drug stores and convenience stores in the United States is set
forth in the table below. The table does not include the European
market, where the aggregate number of comparable stores is greater
than in the United States.

			Type of Store			              Number of Stores

		Supermarkets. . .  . . . . .	  	 30,700
		Discount mass merchandisers.     10,000
		Chain drug stores. . . . . .	    19,750
		Convenience stores . . . . .	    57,000
                                  -------
		Total  . . . . . . . . . . .   	117,450
                                  =======

Source:  Progressive Grocer Annual Report, April 1999; Chain Store
Guide 1999.

<PAGE>
The Company believes there is a widespread need among retailers
for a cost-effective and efficient communications system to improve
pricing accuracy and efficiency, to reduce labor costs associated
with price change activity and to provide the basis for strategic
pricing programs to enable sophisticated merchandising so as to
support margin improvement programs. The Company believes that such
retailers generally seek automated solutions to reduce labor costs
and improve efficiencies and obtain other benefits in operations.

Supermarket Sector

	The supermarket sector is mature, intensely competitive and
tends to have margins that are among the lowest in the retailing
industry. The Company estimates that an average supermarket stocks
approximately 19,500 SKUs, most of which are available at
competitive stores, and runs frequent promotions with respect to
many of these items. As a result, a supermarket's success depends in
large part on the efficiency of its operations, which in turn
affects its ability to offer competitive prices and maintain
acceptable operating margins. Supermarkets are under constant
pressure to reduce costs, manage inventory more effectively and
offer competitive prices.

	Historically, supermarkets have been among the first retailers
to adopt technologies designed to reduce labor and other costs,
improve operations and enhance customer service. For example, POS
scanners were first introduced in the supermarket sector and have
achieved the greatest level of market penetration there. While fewer
than 15 supermarkets in the United States had POS scanners in 1974,
by 1995 approximately 95% of all chain supermarket stores and
approximately 80% of independent supermarket stores had installed
POS scanners. POS systems have enabled retailers to reduce labor
costs, improve pricing integrity and increase efficiency while also
providing additional applications such as electronic funds transfer
and computerized inventory management. The Company believes that
supermarkets and other retailers will more quickly adopt other
technological innovations as a result of their experience with POS
scanners. As a result, and because of the Company's established
relationships with supermarket chains and its installed base of ERS
ShelfNet Systems in supermarkets, the Company intends to continue to
focus its marketing efforts in the supermarket sector.


<PAGE>
Challenges Facing Retailers That Affect the Company

	The Company has designed the ERS ShelfNet System to address
retailer productivity, labor costs, merchandising and competitive
market share issues, as summarized below:

	Manual Price Changes

	Although POS systems have enabled supermarkets to achieve
efficiencies at the "front end" of the store, the center of the
typical store has not been automated and remains labor intensive.
The Company estimates that an average supermarket carries
approximately 19,500 SKUs and changes approximately 2,500 prices per
week at the shelf with newly printed paper labels. These price
changes require numerous manual steps resulting in (i) significant
labor costs and (ii) delays in implementing price changes following
special promotions or increases in wholesale costs, both of which
adversely affect supermarket profitability.

Pricing Integrity

	In addition to being labor intensive and time-consuming, manual
implementation of price changes is also more susceptible to pricing
inaccuracy. Stores with inaccurate prices risk customer
dissatisfaction as well as fines and penalties levied by
governmental agencies. As a result, supermarket operators incur
significant expense in auditing pricing integrity and correcting
pricing inaccuracies.

	Merchandising Management

	Supermarkets actively promote products at the shelf with a
variety of merchandising materials such as "hangers" or "bibs",
which are affixed to the shelf or a product's price label and alert
consumers to pricing or promotional activities. Supermarkets install
and remove bibs manually, with employees generally spending time in
the aisle hanging and removing bibs from sale items. Store managers
walk the aisle auditing promotional items against a printed list.
The Company believes that current in-aisle promotional maintenance
and promotional compliance procedures are an unnecessarily time-
consuming, inaccurate and costly process.

	Replenishment/Inventory Management

	Supermarkets can lose sales (and their corresponding margins)
when products are inadvertently missing from designated shelves
arranged according to shelf set schematics (called "planograms"),

<PAGE>
often due to lost or damaged paper labels. In addition, damaged and
handwritten paper labels result in increased order entry errors,
which increases both out-of-stocks (resulting in lost sales) and
labor costs associated with the product ordering process.

	Shelfset Management

	Typically, supermarkets carefully develop planograms for the
management of products and product categories in the stores, on the
belief that products perform best in the aggregate when arranged on
shelves in the quantities and with the facings prescribed by the
planogram. When paper labels are lost, damaged or moved, deviations
from the planogram occur, possibly resulting in a higher incidence
of out-of-stock items, loss of sales of potentially high margin
items, continued stocking of discontinued or unauthorized products,
and increased time and labor associated with new cut-ins to a
shelfset that differ from the planogram.

ERS ShelfNet Applications

	The ERS ShelfNet System has been designed (i) to replace paper
price tags on retail shelves with electronic liquid crystal display
units, and (ii) to provide a suite of applications to address the
challenges to retailers of manual price changes, pricing integrity,
merchandising management, replenishment/ inventory management and
shelfset management. The ERS ShelfNet System's applications are
designed to include the following features to address the needs of
retailers:

Retail Challenge						ERS Solution
----------------						------------

Manual Price         Changes	The ERS ShelfNet System allows retailers
                     to implement price changes almost
                     instantaneously from the store's central
                     computer or directly from corporate or
                     regional headquarters, which the Company
                     believes facilitates significant labor
                     savings from manual implementation of
                     price changes. In addition, electronic
                     price changes are significantly faster to
                     implement, which the Company believes
                     leads to increased margins as prices may

<PAGE>
                    	be increased promptly following special
                     promotions or increases in wholesale
                     prices.

Pricing Integrity 	  The ERS ShelfNet System electronically
                     links a store's POS systems and its ESLs,
                     virtually eliminating discrepancies
                     between prices displayed on the store
                     shelves and prices charged at checkout.
                     This assurance of pricing integrity
                     permits retailers to reduce or eliminate
                     manual pricing audits and fines paid to
                     governmental entities for pricing
                     inaccuracies. In addition, such pricing
                     accuracy can result in fewer price checks
                     and errors at checkout, can result in
                     faster checkout times, improved cashier
                     productivity and increased customer
                     satisfaction.

Merchandising
 Management	         The ERS ShelfNet System is designed to
                     increase the speed and accuracy of placing
                     product displays and promotional material
                     by displaying a signal on the ESLs of
                     products that require the addition or
                     removal of merchandising bibs or hangers.
                     This is intended to eliminate the time-
                     consuming and potentially inaccurate
                     manual process of checking promotional
                     items against a printed list. The ERS
                     system is designed to enable conduct of
                     audits of promotional programs quickly and
                     accurately in the store aisle.

Replenishment/
 Inventory
 Management	         The ERS ShelfNet System is designed to
                     allow authorized store personnel to change
                     ESLs from a price display to an out-of-
                     stock message. This procedure replaces the
                     current system of noting out-of-stocks
                     manually, with the use of a label scanner,
                     which requires follow-up by the store
                     employee. The ERS ShelfNet System
                     facilitates simple

<PAGE>
                    	annotation of out-of-stocks during normal
                     stocking procedures, with the system
                     automatically generating an out-of-stock
                     report that can be resolved quickly by
                     store management. In addition, the display
                     of an out-of-stock message, rather than
                     removal of a paper label, holds the shelf
                     placement for the missing product,
                     increasing planogram integrity.

Shelfset Management	The ERS ShelfNet System is designed to
                    maintain shelfsets more easily, because
                    the ESLs stay locked in place and cannot
                    be moved back and forth as can paper tags.
                    In addition, the ESL is designed to
                    display product facing information and
                    section, shelf, and bay locations for
                    simple, more accurate and less paper-
                    intensive planogram implementations or
                    changes. These features are intended to
                    reduce labor associated with shelfset
                    management and stocking and increase
                    planogram compliance and monitoring.

The ERS ShelfNet System

	The Company's ESL system replaces paper price tags on retail
shelves with liquid crystal display labels and transmits pricing and
other information to and from the shelf edge. The Company's new
generation ERS ShelfNet System provides spread spectrum microwave
transmission of data directly to wireless ESLs. The enhanced ERS
ShelfNet System is designed to provide additional flexibility and
convenience to customers by expanding potential coverage by the
Company's ESLs to the entire store and allowing the retailer to
change store placement of the ESLs more easily. The Company believes
that the cost of installing and maintaining its wireless ESLs will
be lower than that of its prior ESL system, which required the
wiring of store aisles.

	Each ERS ShelfNet System generally consists of up to 30,000
ESLs and the necessary communication and support infrastructure to
link the ESLs with the store's central computer and POS systems. The
Company's new generation system consists of the following
components:

<PAGE>
	Electronic Shelf Label

	Each ESL is a mini data transceiver contained in a plastic
case, which displays price and other information by means of a wide-
angle view liquid crystal display window. The ESL is also able to
display pricing and other promotional information for the consumer
and inventory and reorder information for store employees, and is
equipped with two buttons designed to allow store staff to interact
with the store computers from the ESL on the shelf. The Company
offers five different sizes and types of ESLs for use in different
applications, such as SKUs for coolers and freezers. The Company's
prior generation ESLs are powered through the rails to which they
are connected, whereas the wireless ESLs are powered by long-life
batteries.

	Spread Spectrum Wireless Network

	Communication to the ESLs is managed by a high frequency, real-
time communication system that uses spread spectrum technology.
Active cell antennae in the store ceiling send and receive signals
to and from wireless ESLs in their respective coverage areas. The
cells form a radio frequency infrastructure in which multiple, non-
overlapping cells may be active simultaneously, while overlapping
cells synchronize their transmissions, permitting spectrum re-use.
The redundancy of transmission provided by ERS' spread spectrum
network helps to eliminate interference problems and to ensure that
complete information is clearly communicated.

	Communication Hub

	The local area network's communication hub, located in the
store's back office area, has two functions: (i) the hub distributes
signals to the ESLs through computerized information processors
which relay information to active cell antennae in the store ceiling
and from the antennae to the individual product ESLs located on the
shelf and (ii) the hub receives information from the information
processors which has been relayed by the antennae in the ceiling
after receipt from the ESLs located on the shelf.

	System Controller

	The system controller is a personal computer or the existing
in-store processor, also located in the store's back office area,
which is linked directly to the store's electronic POS system. The
system software resides in the system controller, and allows the
same pricing data that is incorporated into the POS system to be

<PAGE>
used with the ERS ShelfNet System simultaneously. The system
controller communicates the pricing or other data directly to and
from the communication hub. The system controller is designed to
receive information from the store's corporate or regional
headquarters (such as product price or promotional information) and
to communicate data to such headquarters (such as product order
information).

	Software System

	The Company's ESL system is designed to be compatible with
electronic POS scanning systems and is compatible with systems
provided by the three major worldwide suppliers of POS systems, IBM,
NCR, and Fujitsu-ICL. The Company's system may also be interfaced
with major store operating systems, such as OS/2, Windows NT and
Unix. Because the "intelligence" of the ERS ShelfNet System is
located in the system controller and not the individual ESLs, the
Company is able to incorporate new functions into its system by
upgrading software without replacing any hardware.

	The Company's system can be linked to an in-store laser printer
capable of printing paper overlays for ESLs, paper labels for non-
electronic shelves and other promotional items. The Company
furnishes its customers with specific procedures and guidelines for
each application that show store managers how to utilize the ERS
system and software tools, and a data collection and analysis format
to document productivity increases and to monitor ongoing
improvements in store operations.

Marketing and Sales

	The Company will continue to focus its marketing efforts on
major national and regional supermarket chains. The Company believes
that each supermarket chain will typically choose a single supplier
of ESL systems to maximize chainwide efficiency. Therefore, the
Company's marketing strategy is to make installations in a small
number of stores in each of the largest supermarket chains in North
America and then to build upon such installations by installing
systems through the rest of the chain's stores. In response to
retailing trends, the Company has also increased its marketing
efforts to mass merchandisers.

	Based upon its experience to date, the Company expects that the
adoption process for the ERS ShelfNet System will occur in four
successive phases, as follows:

<PAGE>
 .	Detailed review of store procedures and systems and
  documentation of expected cost savings and benefits;

 .	Agreement for multi-store adoption of the ERS
  ShelfNet System subject to design, installation and
  implementation of a single store evaluation system
  and concurrent design of integration plans, operating
  procedures and training programs for broader use by
  the retailer;

 .	Installation of the first group of stores within a
  chain, defined by a geographic or merchandising
  region, to establish final chain-wide operating
  procedures; and

 .	Chain-wide commercial rollout.

	The Company currently markets its products to major retail
chains through a direct marketing and sales force. The Company's
marketing and sales personnel have significant retail experience,
including experience in the POS system and local area network
industries. The Company's marketing staff works with existing and
potential customers to define their needs for ESL systems and to
coordinate their implementation of the ERS ShelfNet System. The
Company exhibits its system at major trade shows and produces and
distributes promotional materials to increase market awareness of
the Company's system.

	In addition, the Company will continue to investigate the
feasibility of marketing its system through indirect channels such
as value added resellers and distributors, and has obtained a letter
of intent, subject to definitive contract terms, with Stores
Automated Systems, Inc. In 1997, the Company entered into a five-
year agreement with Symbol Technologies, Inc. ("Symbol"), granting
Symbol the right, subject to specified exceptions and exclusion of
certain markets in the United States, to resell the Company's
products worldwide and, subject to achievement of specified market
penetration objectives, the exclusive right to resell the Company's
products in Europe. Pursuant to such arrangements and subject to
meeting certain minimum sales criteria, Symbol would also have the
right to manufacture the Company's ESL system. The Company has not
yet generated revenues under its arrangements with Symbol.


<PAGE>
	The Company historically has marketed its ERS ShelfNet System
for sale, at prices generally in excess of $100,000 per store, and
will continue to pursue maximum sales of the system. The Company
believes that many of its target retailers are capital constrained,
and compare potential investments in the ERS ShelfNet System to
alternative capital expenditures and, accordingly, has marketed the
ERS ShelfNet System under its arrangements called Save-As-You-Go
(the "SayGo Plan"). Under the SayGo Plan, the Company owns the
system and, with no upfront cash cost to the retailer, furnishes the
system to retailers who pay monthly fees to the Company based
largely on their actual usage of the system. Under the SayGo Plan,
the Company furnishes the system to qualified customers, identified
by the Company as those retailers who meet minimum requirements with
respect to price change potential per store and number of ESLs
ordered. The Company's contract with such customers typically
provides for charges to be billed to the customer monthly based on
usage of the system. The Company believes that the SayGo Plan has,
to a limited extent, facilitated market acceptance of its system,
principally as a result of diminution of the risk perceived by new
customers in an investment in new technology. During the year ended
December 31, 1999, of the 25 systems installed by the Company, seven
were acquired by customers under the SayGo Plan and the remainder
were purchased.

The Company also intends, during its current fiscal year, to
develop additional strategies to accelerate market recognition and
acceptance of the system and its benefits. There can be no
assurance that any such approaches will be material to the
determination of additional retailers to install the Company's
systems in the emerging market for ESLs.

	System sales revenue from the Company's hardware and software
products is recognized at the time of shipment to customers, or upon
completion of an installation of a trial system, while revenue from
providing installation services to customers is recognized upon the
completion of an installation. Under the SayGo Plan, the Company
recognizes revenues as monthly usage and other fees are billed to
customers, and depreciates the cost of hardware components of its
systems over the shorter of their estimated useful lives or five
years. Maintenance revenue for services provided under maintenance
contracts is recognized over the service contract period, and other
revenue for parts and services is recognized when provided. In
connection with implementing the SayGo Plan, the Company incurs
substantial cash requirements for manufacturing and carrying costs
which are not initially covered by revenues.

<PAGE>
	The Company has collaborated with supermarket retailers and
suppliers of in-store wireless networks, printing services,
merchandise planning systems and other retail systems providers in
order to develop a better understanding of customer needs and to
offer comprehensive customer solutions. The Company will continue to
pursue such efforts and will seek additional strategic partners to
assist the Company in the broad market adoption and roll-out of the
Company's new generation system.

Customers

As of December 31, 1999, the Company's ESL systems were
installed in 80 U.S. retail stores, including those owned by such
leading supermarket chains as Stop & Shop Supermarket Company ("Stop
& Shop"), Big Y Foods, Inc., Shaw's Supermarkets, Inc. ("Shaw's"),
The J.H. Harvey Company ("Harvey's"), K Mart Corporation, Winco
Foods, Inc. ("Winco"), E.W. James & Sons Supermarkets Inc. ("E.W.
James") and Schnuck Markets, Inc. ("Schnucks"), and in chain drug
stores owned by Rite-Aid Corporation ("Rite-Aid"). Installations at
December 31, 1999 reflect the election of H.E. Butt Grocery Co.
("HEB") to deinstall the Company's previous generation product.

	As of December 31, 1999, the Company had installed its new
generation system in eleven Shaw's stores, twenty-one Stop & Shop
stores, one Harvey's store, one E.W. James store, one Schnucks
store, one Winco store and ten Rite-Aid stores. Subsequent to
year-end, Rite-Aid determined not to renew the arrangements
covering its stores, under which the Company furnished the systems
in exchange for charges based on usage, and the systems were
removed from these stores. As of December 31, 1999, the Company
had received purchase orders covering five new generation systems
from Stop & Shop, which the Company plans to install in 2000.  As
of such date the Company has also entered into an agreement with
City Markets, Inc., a subsidiary of The Kroger Company, for the
installation of one system and with E.W. James for the
installation of four systems, in each case subject to satisfaction
with the performance of the initial installed system.

	During the year ended December 31, 1999, Stop & Shop and Shaw's
accounted for 80% and 10%, respectively, of the Company's
consolidated revenues; during the year ended December 31, 1998, Stop
& Shop and Shaw's, accounted for 59% and 29%, respectively, of the
Company's consolidated revenues; and during the year ended December
31, 1997, Stop & Shop, Shaw's and HEB accounted for 41%, 22% and
11%, respectively, of the Company's consolidated revenues.

<PAGE>
The failure of such customers to continue to utilize systems from
the Company could have a material adverse effect on the business of
the Company. Additionally, customers who account for significant
portions of the Company's revenues may have the ability to negotiate
prices for the Company's products and services that are more
favorable to such customers and that result in lower profit margins
for the Company.

	The Company is actively engaged in pursuing its efforts to
procure additional orders for its systems, and may also in the
ordinary course of its business enter into letters of intent
contemplating the installation of its system. Such letters of intent
are not binding obligations, will be subject to conditions such as
the negotiation and execution of definitive contract terms, and
there can be no assurance that any such arrangements will be
consummated.

Installation and Customer Service

	The ERS ShelfNet System is designed to be installed in a store
without disrupting normal store operations. The Company uses a team
comprised of one Company employee and two sub-contracted installers
to install communications infrastructure and software and, if rail
strips are also ordered by the customer, up to an additional five
sub-contracted installers to install such hardware. The ESLs
generally are programmed by the customer or at the Company's
facilities and shipped to the site where they are installed by the
customer.

	The Company's customer service group is staffed with employees
experienced in POS and other retail systems. The Company also has an
agreement with Data Cabling & Engineering, Inc., under which the
Company obtains support in installation and project management
services. The Company offers standard maintenance contracts to its
customers which, under the SayGo Plan do not entail additional
charges other than for specified extended services.

Manufacturing

	The Company utilizes third parties to manufacture and assemble
the components comprising the ERS ShelfNet System. The Company's
ESLs currently incorporate a microprocessor which is supplied solely
by Sanyo Semiconductor Corporation ("Sanyo"). While the Company, on
the basis of its familiarity with the design of such microprocessor
and the capabilities of other sources, believes that other suppliers
could produce equivalent

<PAGE>
microprocessors within approximately four months of notification by
the Company, any inability to obtain microprocessors from its
current supplier in sufficient quantities could result in a
temporary interruption of the Company's production of ESLs and any
such replacement supplier could charge more for such production or
produce a lower-quality unit, thus diminishing the Company's
revenues and income from operations.  The Company's policy is to
maintain an inventory of microprocessors sufficient to meet
substantially all of its requirements during any such period. The
Company intends to evaluate, from time to time, establishing
relationships with other manufacturers of microprocessors to provide
a second source of supply for its ESLs.

	The Company intends to maintain its practice of utilizing
manufacturing subcontractors, and has a supply arrangement with
Surface Mount Technology Ltd., of Hong Kong, for the assembly of
ESLs. Although the Company has not experienced interruptions or
delays in the manufacture or assembly of its systems, and believes
that alternative sources of system components are readily available,
the termination of the Company's relationship with one or more of
its contract manufacturers or legal or regulatory changes in any
country in which such manufacturer resides may result in a temporary
interruption in the manufacture and assembly of the Company's system
and, thus, in the delay or loss of placements of the ERS ShelfNet
System, with a corresponding loss of revenues.

Engineering and Development

	The Company's principal engineering and development efforts
have been conducted through software and hardware development groups
located at its facilities in Connecticut and Massachusetts. These
groups focus on improvements to current technology and also on new
applications of existing technology. The Company's engineering staff
also generates the functional specifications and development
schedules for each of the Company's customers. The Company has also
from time to time engaged third parties to design hardware
components based upon requirements or specifications developed by
the Company, and entered into arrangements with hardware and
software developers to augment the Company's internal activities in
the area of long-term product development. The Company's
arrangements with such developers are typically subject to
termination by the Company without penalty, and continuation of such
arrangements will in each case depend upon the satisfactory
achievement by such developers of specified milestones or other
satisfactory performance by them.

<PAGE>
	During the years ended December 31, 1999, 1998, and 1997, the
Company incurred expenses for research and development activities of
$5,460,000, $3,928,000, and $3,409,000, respectively. In the years
ended December 31, 1998 and 1997, the Company capitalized an
aggregate of $373,000 and $375,000, respectively, in costs of
internal labor and outside services associated with product
development. No such costs were capitalized during 1999.

Intellectual Property

	The Company has aggressively pursued an intellectual property
rights strategy to protect its product developments. The Company's
policy is to file patent applications to protect its technology,
inventions and improvements that are important to the development of
its business, and to seek copyright protection with respect to its
software. The Company also relies upon trade secrets, know-how,
continuing technological innovation and licensing opportunities to
develop and maintain its competitive position.

	The Company holds 16 United States patents and six foreign
patents, and has seven additional United States patent applications,
six U.S. provisional patent applications and six foreign patent
applications pending. The Company also has other applications under
preparation and intends to continue to file patent applications on
its novel products and systems. Certain of these patents and patent
applications are directed to salient features of the Company's ESL
system, in particular relating to the ESL and associated hardware,
and the communications network linking the components of the system.

	The Company's wholly-owned subsidiary, Amacrine International,
Inc. ("Amacrine"), is entitled to use, and to grant sublicenses with
respect to, certain patents directed to an alphanumeric display
module and radio frequency communications system, which Amacrine
designed and developed for Telepanel Systems Inc. ("Telepanel")
under a technical services agreement which existed between such
companies. The Company is aware of certain statements made by
Telepanel, which the Company believes are without merit, regarding
whether Telepanel is entitled to a sublicense fee in respect of such
patents or will otherwise protect its rights.

	The Company attempts to protect certain computer software and
service applications through the use of copyright and trade secret
law. The Company relies on non-disclosure agreements with its
employees, customers, consultants, and strategic partners.

<PAGE>
	Although the Company believes that patents and other
intellectual property rights are important to its business, there
can be no assurance that patents will issue from any applications
therefor, or if patents issue, that the claims allowed will be of
adequate scope to protect the Company's technology or that issued
patents or other technology rights will not be challenged or
invalidated. The Company's business could be adversely affected by
increased competition in the event that any patent granted to it is
adjudicated to be invalid or is inadequate in scope to protect the
Company's operations, or if any of the Company's other arrangements
related to technology are breached or violated.

	Although the Company believes that its products and technology
do not infringe intellectual property rights of others, there can be
no assurance that third parties will not assert infringement claims
in the future or that such claims will not be successful.
Furthermore, the Company could incur substantial costs in defending
itself in patent infringement suits brought by others and in
prosecuting suits against patent infringers.

Competition

	The Company believes that the only ESL system suppliers
offering a product currently competing with the Company's system in
the United States are Telepanel, Pricer and, recently, NCR and
Display Edge Technology, Ltd. ("DET"). Telepanel has publicly
reported the existence of an arrangement with IBM whereby IBM may
market the Telepanel system. NCR and DET also have developed and
have introduced ESL systems in the United States. Outside of the
United States, in addition to Pricer, the Company expects to compete
with a number of companies with ESL systems under development.

	The emerging ESL system market is characterized by rapid
technological advances and evolving industry standards, and the
Company may be subject to a high degree of potential competition
with additional companies which may attempt to develop or market
competing ESL systems. These companies may be larger than the
Company and have greater financial and other resources than the
Company. In the future, the Company may face competition from
vendors of POS systems, or scanner manufacturers which offer
products related to POS systems, who may elect to enter the market
for ESL systems. The ERS ShelfNet System is also subject to
competition from vendors selling traditional paper labeling methods,
as well as providers of hand-held portable data terminals.

<PAGE>
	The principal competitive factors in the Company's business are
product functionality, price/performance and reliability. The
Company believes that it competes favorably on each of these
factors.

Government Regulation

	Accuracy in pricing on the part of supermarkets has been an
objective of state and local regulation. At least 20 states
currently have laws or regulations requiring some form of "unit
pricing" (which require prices and price per measure to be displayed
either on the package or the shelf), and at least six states (and
other local jurisdictions) have laws requiring "item pricing" (which
require the marking of prices on individual consumer packages for
some or all products in the retail store). The existence of item
pricing laws applicable to any of the Company's intended customers
increases such customers' costs of providing price information to
consumers and may decrease or eliminate some of the potential
benefits of implementation of the ERS ShelfNet System. In the State
of Minnesota, item pricing is not required if the price is clearly
presented on the shelf and consumers are offered the means by which
to mark individual items. In the State of Connecticut, the item
pricing law allows the State's Commissioner of Consumer Protection
to exempt from item pricing requirements stores employing an
approved ESL system. The Commonwealth of Massachusetts has
authorized and is conducting trials of ESL systems in support of its
consideration of regulation which may encourage the installation of
such systems.

	The United States Federal Communications Commission has
established standards for radio frequency emissions from computer
products, and certain components utilized in the Company's ESL
system must comply with such criteria. All components currently
incorporated into the ERS ShelfNet System comply with such
standards, and the Company does not anticipate any material delays
in securing any required certification for components under
development by the Company. Certain foreign countries also regulate
radio frequency emissions.

Agreements with NewCheck Corporation

	In February 2000, in exchange for payments aggregating $6.5
million, the Company acquired 262,802 shares of the newly-created
Series C Convertible Preferred Stock, $.0001 par value (the "Senior
Preferred Stock"), of NewCheck, together with NewCheck's 8%
Convertible Promissory Note (the "Convertible Note") in the
aggregate principal amount of $4.6 million, convertible into an

<PAGE>
additional 613,205 shares of Senior Preferred Stock. The shares of
Senior Preferred Stock acquired by the Company at closing represent
approximately 19% of NewCheck's outstanding voting securities. For
additional information concerning the terms of the securities
acquired by the Company, see "Item 7. Management's Discussion and
Analysis of Financial Condition and Results of Operations-Liquidity
and Capital Resources," which information is incorporated by
reference herein.

	ACM Checkout System

	NewCheck is engaged in the development and commercialization of
retailing technology productivity solutions for use in supermarkets
and other retail environments similar to those addressed by the
Company's system. NewCheck's ACM Checkout System is designed to
enable shoppers to scan their items at a self-checkout lane and then
either pay at the lane or at a centrally located pay station. The
ACM Self Checkout System contains multimedia instructions and help
menus to support customer use, and is equipped with both touch
screen and voice synthesized assistance. The system is designed to
reduce labor requirements at the front-end of the store by allowing
customers to scan and pay for their own items. In addition, the ACM
Checkout System enhances store  security procedures by checking each
item's characteristics against a security data base and is
integrated with the store's POS system, allowing price and
description verification as the customer scans.

	Management Arrangements

	The Company and NewCheck have entered into a management
agreement dated February 11, 2000 (the "Management Agreement"),
under which, for an initial term of five years, the Company will
manage NewCheck's operations. Under the Management Agreement, the
Company is obligated to develop an annual business plan for
NewCheck, subject to review and approval by the Board of Directors
of NewCheck, and subsequently, within the parameters of the business
plan, to supervise and manage NewCheck's business. The initial term
of the Management Agreement may be extended by an additional period
of five years, at the option of the Company upon notice to NewCheck,
as long as the Company is not in default under the agreement and,
together with its affiliates, continues to own or has the right to
acquire at least seven percent of the outstanding equity of
NewCheck.


<PAGE>
	In exchange for the Management Agreement, the Company is
entitled to reimbursement of the costs of performance, including an
allocated portion of the Company's general and administrative
expense. In addition, in exchange for the Management Agreement, the
Company has been issued 1,110,000 ten-year warrants, with an
exercise price of $.001 per share, exercisable after the first year
to acquire shares of NewCheck's common stock, $.0001 par value (the
"NewCheck Common Stock"), equal to approximately 16% of NewCheck's
voting securities outstanding at closing (giving effect to such
warrants and to the conversion of the Convertible Note). The Company
received additional ten-year warrants, exercisable at the same price
per share with respect to specified percentages of the outstanding
NewCheck Common Stock, that vest in the event the equity value of
NewCheck exceeds specified levels during the three years after
closing. Under the Management Agreement, the Company will administer
a stock option plan authorized by NewCheck's Board of Directors with
respect to shares of NewCheck Common Stock, equal to up to 15% of
the securities of NewCheck outstanding at closing (on a fully-
diluted basis), which may be granted to officers, employees and
consultants of NewCheck (including officers and employees of the
Company).

	The Management Agreement provides for NewCheck to indemnify the
Company for activities by the Company under the Management
Agreement, except insofar as may be attributable to any gross
negligence or willful misconduct of the Company, and, except as may
be attributable to such matters, provides for any liability of the
Company under the Management Agreement to be limited to amounts
received by the Company and the fair market value of the warrants,
and warrant stock, issued under the Management Agreement.

	Other Arrangements

	Under the agreements pursuant to which the Company, and other
subscribers to NewCheck's Senior Preferred Stock, contemporaneously
acquired their securities, NewCheck is obligated to observe
covenants addressing such matters as the ability to incur debt,
effect acquisitions, dispose of assets and undertake other actions,
unless waived by the requisite consent of holders of the Senior
Preferred Stock, Convertible Note and NewCheck's prior issued Series
B Convertible Preferred Stock. NewCheck's arrangements with the
Company and such other subscribers extend, among other matters, to
demand and incidental registration rights covering the NewCheck
Common Stock issuable upon conversion of the Senior Preferred Stock
(and the warrants issued to the Company) and rights of first offer
regarding new issues of securities by

<PAGE>
NewCheck. The Company is also entitled to name one of the three
directors allocated to the Senior Preferred Stock on NewCheck's
seven member Board of Directors.

Employees

	As of December 31, 1999, the Company had 105 full-time
employees, consisting of 49 engaged in engineering, development and
manufacturing support, 16 in marketing and sales activities, 28 in
customer services and 12 in general administrative and executive
functions. The Company does not have a collective bargaining
agreement with any of its employees and considers its relationship
with its employees to be excellent.

Executive Officers

	The executive officers of the Company, and their respective
ages and positions with the Company, are as follows:

	Name					               Age		        Position
 ----		               			---	        	--------

Norton Garfinkle			      69		    Chairman of the Board
Bruce F. Failing, Jr.		  51		    Vice Chairman of the
                                   Board and Chief
                                   Executive Officer
Michael Persky				       36     	President
Jerry McAuliffe				      36	    	Vice President, Chief
                                   Financial Officer
Frank Romano				         37		    Vice President,
                         								  Engineering
Paul Lavoie				          39		    Vice President, Sales
Norman Tsang				         35		    Vice President, Marketing

	Mr. Garfinkle, the Company's Chairman of the Board, is a
founder of the Company. Since 1970, Mr. Garfinkle has also been the
Chairman of Cambridge Management Corporation, which manufactures and
markets the DAP series of massively parallel processing computers,
and has also served during this period as Chairman of its
affiliates, including Oxford Management Corporation, which
specialize in the research and development of new technologies. From
1985 to 1988, Mr. Garfinkle was Chairman of Oral Research
Laboratories, Inc., a manufacturer of dental hygiene products
founded by Mr. Garfinkle. Mr. Garfinkle also served as a director of
Actmedia, Inc. from 1975 to 1978 and from 1983 to 1988. In December
1995, pursuant to an agreement with New York

<PAGE>
State authorities, Mr. Garfinkle admitted to a misdemeanor relating
to his 1989 New York State return and paid all taxes required by the
agreement.

	Mr. Failing, the Company's Vice Chairman of the Board and Chief
Executive Officer, is a founder of the Company, and served as
President through February 1997. In 1973, Mr. Failing co-founded
Actmedia, Inc., a provider of in-store advertising for the
supermarket industry, and was President and Chief Executive Officer
of Actmedia, Inc. until its sale in 1989.

	Mr. Persky has been President and Chief Operating Officer of
the Company since 1998, having joined the Company and become Vice
President-Marketing in 1997. Prior to joining the Company, Mr.
Persky was Vice President-Marketing for Executone, Inc., a
manufacturer of telephone systems, since 1996. From prior to 1995 to
1996, Mr. Persky held various marketing positions with Octel
Communications (formerly VMX, Inc.), a voice mail supplier, the last
of which was as Marketing Director, Europe, Middle East and Africa.

Mr. McAuliffe has been Vice President, Chief Financial Officer
of the Company since January 1999. From 1997 until joining the
Company, Mr. McAuliffe was Chief Financial Officer of Ubiq
Communications, Inc., a specialty wireless messaging and information
company, and from prior to 1995 to 1997 served as Chief Financial
Officer of Ovid Technologies, Inc., a software and internet based
information technology company.

Mr. Romano has been Vice President, Engineering of the Company
since March 2000, having joined the Company as Director, Hardware
Engineering in May 1999.  Prior to joining the Company, Mr. Romano
served as Director, Manufacturing and Corporate Quality of Comtec
Information Systems Inc., a developer of  wireless portable printers
and hand held terminals, since 1997.  From 1990 to 1996, Mr. Romano
held various positions in product development with GTECH
Corporation, which provides online gaming systems, the last of which
was as Manager, Product Engineering.

Mr. Lavoie has been Vice President, Sales of the Company since
January 1999, having joined the Company as Vice President, Marketing
in 1998. From prior to 1995 to 1998, Mr. Lavoie held various
marketing positions with News America Marketing, Inc. (formerly,
Actmedia, Inc.), the last of which was as Senior Vice President,
Retail Marketing.

<PAGE>
Mr. Tsang has been Vice President, Marketing of the Company
since January 1999.  Prior to joining the Company, Mr. Tsang was
Vice President, Marketing of Star Markets Company, a regional
supermarket and natural foods chain from 1995 to December 1998,
prior to which he  was a consultant with McKinsey & Company, a
strategic consulting company.

ITEM 2. PROPERTIES

	The Company's executive offices are located at 488 Main Avenue,
Norwalk, Connecticut, where the Company currently leases
approximately 20,800 square feet of space under a lease requiring
payment of annual rent (in addition to utility charges and increases
in operating expenses and real estate taxes) in an amount,
currently, at approximately $335,000 increasing to approximately
$447,000 in the final year of the lease (which expires August 2007),
subject to the Company's right to terminate the lease in July 2002
or July 2004 upon payment of specified sums. Of the Company's
currently leased space in Norwalk, approximately 6,100 square feet
is devoted to office and administrative uses, approximately 5,300
square feet to engineering and development activities and
approximately 6,100 square feet to marketing, sales and customer
service functions. The Company has terminated its lease effective in
June 2000 with respect to approximately 1,500 square feet of space
and is currently negotiating to terminate its lease with respect to
the remaining 1,800 square feet of space.

	The Company has entered into a lease arrangement in Boxborough,
Massachusetts, with respect to approximately 22,500 square feet,
which expires in September 2002 and requires annual rent (in
addition to increases in operating expenses and real estate taxes)
in an amount currently of approximately $270,000, increasing to
approximately $290,000 in the final year of the lease. The space is
used for engineering and development activities. The Company leases
additional space at other smaller locations where required to
support operations. The foregoing facilities are regarded by
management as adequate in all material respects for the current
requirements of the Company's business.

ITEM 3. LEGAL PROCEEDINGS

	The Company is involved in certain litigation incidental to the
conduct of its business and affairs. Management does not believe
that the outcome of any such litigation will have a material adverse
effect on the financial condition or results of operations of the
Company.

<PAGE>

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

	Not applicable.

PART II

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

	(a) The Company's Common Stock is currently quoted on the OTC
Bulletin Board under the symbol "ERSI." From November 6, 1998 to
September 2, 1999, the Company's Common Stock was quoted on the
Nasdaq SmallCap Market, and prior to November 6, 1998 was quoted on
the Nasdaq National Market. The following table sets forth, for the
calendar periods indicated, the range of quarterly high and low
sales prices for the Common Stock, as reported on the Nasdaq
National Market prior to November 6, 1998 and on the Nasdaq SmallCap
Market from and after such date until September 2, 1999, and the
range of high and low bid prices for the Common Stock as reported on
the OTC Bulletin Board from and after September 2, 1999. Quotations
represent prices between dealers, do not include retail mark-ups,
mark-downs or commissions, and may not represent actual
transactions.

	1998			   High			  Low
	----			   ----			  ---

	First Quarter. .  $5.00			$3.00
	Second Quarter . . 4.50			2.50
	Third Quarter. . . 4.50			2.56
	Fourth Quarter . . 3.94			1.00

	1999			   High			  Low
	----			   ----			  ---
	First Quarter. . .$3.13	$1.06
	Second Quarter . . 2.25	1.13
	Third Quarter. .   2.00	0.63
	Fourth Quarter . . 2.06	0.75


	Since July 11, 1996, the Common Stock has also been admitted to
trading on the Alternative Investment Market of the London Stock
Exchange.

	As of March 15, 2000, the number of record holders of the
Company's Common Stock was 526.

<PAGE>
	The Company has never paid or declared any cash dividends on
its Common Stock and does not intend to pay cash dividends on its
Common Stock in the foreseeable future. The Company intends to
retain its earnings, if any, for the future operation and expansion
of its business. The payment of dividends in the future will depend
upon the restrictions imposed by the indenture pursuant to which the
Senior Discount Notes were issued, the Company's available earnings,
the capital requirements of the Company, its general financial
condition and other factors deemed pertinent by the Board of
Directors. See Note 4 of the Notes to the Company's Consolidated
Financial Statements included in response to "Item 14. Exhibits,
Financial Statement Schedules and Reports on Form 8-K" and "Item 7.
Management's Discussion and Analysis of Financial Condition and
Results of Operations-Liquidity", which information is incorporated
herein by reference.

	(b)	Not applicable.


ITEM 6. SELECTED FINANCIAL DATA

	The following tables reflect summary historical consolidated
financial data with respect to the Company for the periods indicated
and should be read in conjunction with the Company's Consolidated
Financial Statements included in response to "Item 14. Exhibits,
Financial Statement Schedules and Reports on Form 8-K" and "Item 7.
Management's Discussion and Analysis of Financial Condition and
Results of Operations".

	The following selected consolidated statement of operations and
balance sheet data, insofar as it relates to each of the five years
in the period ended December 31, 1999, has been derived from audited
consolidated financial statements, including the consolidated
balance sheet as of December 31, 1999 and 1998 and the related
consolidated statement of operations for each of the three years in
the period ended December 31, 1999 and the notes thereto.

<PAGE>
<TABLE>
<CAPTION>
                     							 	                 Year Ended December 31,
									                     ----------------------------------------------
                              1999       1998     1997      1996       1995
                  									  -----      -----    -----     -----      -----
                                (Amounts in thousands, except per share data)
<S>                           <C>        <C>     <C>       <C>         <C>
Consolidated Statement
 of Operations Data:

Revenues....................  $ 4,631    $ 3,764  $  1,972  $  5,002   $  2,973
Cost of goods sold..........    7,035      8,095     3,699     6,204      4,113
                              -------    -------  --------  --------   --------
  Gross loss................   (2,404)    (4,331)   (1,727)   (1,202)    (1,140)
Operating expenses:           -------    -------  --------  --------   --------
 Selling, general and
  administrative............   11,476     12,671     12,394     6,310     6,896
 Research and development...    5,460      3,928      3,409     1,614     2,547
Depreciation and amorti-
  zation....................      402        375       301        162       107
Stock option compensation...      --          --        --         44        27
                              -------    -------   --------  --------  --------
  Total operating expenses..   17,338     16,974     16,104     8,130     9,577
                              -------    -------   --------  --------  --------
  Loss from operations......  (19,742)   (21,305)   (17,831)   (9,332)  (10,717)
Other income (expenses):      -------    -------   --------  --------  --------
 Interest income............    2,680      3,982      4,982      302        134
 Interest expense...........  (18,844)   (16,886)   (14,024)    (382)      (291)
Loss on disposals ..........     (787)      (104)       --        --        --
Gain on short-term
  investments...............      --         --          --        --         6
                              -------    -------   --------  --------  --------
Total other expense, net....  (16,951)   (13,008)    (9,042)      (80)     (151)
Net loss before               -------    -------   --------  --------  --------
  extraordinary item.......   (36,693)   (34,313)   (26,873)   (9,412)  (10,868)
                              -------    -------   --------  --------  --------
Extraordinary item:
   Gain on extinguishment	   $ 34,582	     --	         --	       --	       --
   of debt
Net loss					                $ (2,111)  $(34,313)  $(26,873) $ (9,412) $(10,868)
Loss per share:              ========    ========  ========  ========  ========

 Weighted average number
  of common shares out-
  standing.................    21,264      21,233    21,096    16,169    11,743
Basic gain/(loss) per common ========    ========  ========  ========  ========
  share
	Loss per share before
     extraordinary items     $  (1.73)   $  (1.62)  $ (1.27) $  (0.60)  $ (0.95)
   Extraordinary item        $   1.63         --        --        --        --
Net (loss)		                 $  (0.10)   $  (1.62)  $ (1.27)  $ (0.60)  $ (0.95)

</TABLE>

<PAGE>
<TABLE>
<CAPTION>
 						 	                         December 31,
     			                     ----------------------------------------------
                              1999       1998     1997      1996       1995
				                  					  -----      -----    -----     -----      -----
                                         (Dollars in thousands)
<S>                         <C>       <C>       <C>       <C>        <C>
Consolidated Balance
 Sheet Data:

Net working capital.......  $ 41,165  $ 65,697  $  88,372  $ 8,764    $ 5,283
Total assets..............    49,516    81,626    100,208   12,260      8,316
Long-term debt............    98,208   124,057    113,102    4,989      3,335
Common stock purchase
 warrants.................     5,100     5,100      5,100      --         --
Stockholders' (deficit)
 equity...................   (56,854)  (54,742)   (20,476)   5,723      3,215



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

Overview

	The market for ESL systems is in the development stage, and the
Company estimates that, as of December 31, 1999, approximately 200
stores in the United States were operating such systems, out of a
potential market in excess of 100,000 supermarkets and other stores.
As a result, market acceptance of and demand for these systems are
subject to a high level of uncertainty. The Company's success will
depend upon the rate at and extent to which retailers choose to
install ESL systems throughout their stores. The initial acceptance
and rate of installation by retailers may be affected by numerous
factors beyond the Company's control, including the customer's
assessment of the benefits of and the need for ESL systems and the
customer's available capital resources, and  there can be no
assurance that supermarket chains or other retailers will choose to
install ESL systems in a significant number of their stores.

Since its inception in 1990, the Company has been engaged
primarily in the development, design, market testing and sale of the
ERS ShelfNet System. The Company subcontracts to third parties the
manufacture and assembly of the components comprising the ERS
ShelfNet System. In addition, the Company engages unaffiliated
parties to augment its internal development resources and to assist
it in the continued development of the ERS ShelfNet System.

<PAGE>
 The Company has never been profitable and has incurred significant
net operating losses and negative cash flow from operations to date.
Since inception and through December 31, 1999, the Company has
generated cumulative revenues of $22.9 million, and has incurred a
cumulative net loss of approximately $163.6 million (prior to
recording an extraordinary gain in 1999 of $34.6 million in
connection with the Company's acquisition of Senior Discount Notes).
The Company expects losses and negative cash flow from operations to
continue through the current fiscal year, and the accumulated
deficit to increase, while the Company concentrates on the foregoing
activities and until it has established a sufficient revenue-
generating customer base.

	The Company historically has marketed the ERS ShelfNet System
for sale at prices generally in excess of $100,000 per store. The
purchase of an ESL system from the Company has therefore represented
a significant capital expenditure for capital-constrained retailers.
The Company has also marketed its ERS ShelfNet System on a fee-based
arrangement under its SayGo Plan. The Company intends to continue,
during its current fiscal year, to develop additional strategies to
accelerate market recognition and acceptance of the system and its
benefits, but there can be no assurance that any such approaches
will be material to the determination of additional retailers to
install the Company's system in the emerging market for ESLs.

	In February 2000, the Company acquired an interest in NewCheck,
which is engaged in the development and commercialization of
retailing productivity solutions for use in supermarkets and other
retail environments similar to those addressed by the Company's
system. Under a management agreement extended to NewCheck, the
Company manages NewCheck's operations within the parameters of a
business plan authorized by NewCheck's board of directors.

	In order to pursue its business strategy, the Company has
incurred substantial indebtedness. As of March 1, 2000, the Company
had outstanding $76.4 million principal amount at maturity of its
Senior Discount Notes, following the acquisition by the Company
during fourth quarter 1999 and first quarter 2000 of an aggregate of
$70.9 principal amount at maturity of Senior Discount Notes. As a
result of its high degree of leverage (and as more fully-described
below under "Liquidity and Capital Resources"): (i) a substantial
portion of the Company's cash flow from operations, if any, will be
required to be dedicated to the Company's interest expense
obligations and may not be available to

<PAGE>
the Company for its operations, working capital, capital
expenditures or other purposes, (ii) the Company's ability to obtain
financing that may be needed may be limited, (iii) the Company's
flexibility to adjust to changing market conditions and ability to
withstand competitive pressures as compared to less highly-leveraged
competitors could be limited (including by reason of the covenants
contained in the Company's debt instruments), and (iv) the Company
may be more vulnerable to downturns in general economic conditions
or in its business or be unable to undertake capital expenditures
that are important for its growth strategy, any of which could have
a material adverse effect on the Company and its ability to make
payments of principal of, and interest on, its indebtedness.

	Commencing August 1, 2000, cash interest on the Senior Discount
Notes will be payable semi-annually at the rate of 13-1/4% per
annum. The full accreted principal amount at maturity of the Senior
Discount Notes will become due on February 1, 2004. The Company's
ability to meet its continuing debt service and other obligations
will depend largely on the extent to which the Company can implement
successfully its business strategy of achieving large-scale
commercialization of the ERS ShelfNet System, and  there can be no
assurance that the Company will be able to implement fully its
strategy, that the anticipated results of its strategy will be
realized, or that the Company will be able to generate sufficient
cash flow or otherwise obtain funds in the future to cover interest
and principal payments associated with the Senior Discount Notes and
any other debt of the Company. See "Liquidity and Capital Resources"
below.

 Results of Operations

	Year ended December 31, 1999 compared to
	    year ended December 31, 1998

	Revenues.  The Company's revenues were $4,631,000 in 1999,
compared to $3,764,000 in 1998, reflecting the increased demand for
ERS' new generation product. In 1999, revenues were concentrated
among two significant customers within the supermarket industry
comprising 90% of total revenues, with one customer accounting for
80%. Approximately 59% of revenues in 1998 was attributable to a
single customer, with two customers accounting for 88% of total
revenues. In 1998, the Company recognized non-recurring revenue of
$122,000 for software license fees, while no such revenue was
recognized in 1999. For the year ended December 31, 1999,
maintenance revenues decreased to $788,000 from $864,000 in the
prior year, due primarily to a

<PAGE>
reduction in maintenance revenue per installation for the Company's
wireless system compared with the previous generation system.

	Cost of Goods Sold.  Cost of goods sold consists of the cost
of hardware components of the ERS ShelfNet System, system
installation costs, depreciation of tools and dies owned by the
Company and utilized in the manufacturing of hardware components,
amortization of capitalized product development costs, warranty and
maintenance costs, freight and inventory obsolescence. Under the
SayGo Plan, the Company depreciates the cost of hardware components
of its system over the shorter of their estimated useful lives or
five years.

	Cost of goods sold decreased to $7,035,000 in 1999 from
$8,095,000 in 1998, resulting in a gross loss (cost of goods sold in
excess of revenues) in 1999 of 52% of total revenues compared to
115% in 1998. The decrease in gross loss as a percent of revenues is
primarily the effect of a decrease in inventory reserves and
material costs as a percent of sales, and a decrease in the
amortization of product development costs as a share of cost of
goods sold, resulting from increased installation volumes. During
the years 1999 and 1998, the Company recorded charges of  $1,700,000
and $3,099,000, respectively, representing increases in its reserves
for inventory.

	Warranty and maintenance expenses included in cost of goods sold
increased to $677,000 in 1999 from $654,000 in 1998, attributable to
an increased installation base offset by reductions in the cost to
maintain the Company's wireless product. The Company anticipates
that future warranty and maintenance expenses per installation will
decrease, as a greater percentage of the installed base consists of
wireless installations, and that the cost of goods sold as a
percentage of revenues will decrease as a result of higher
manufacturing volumes of its components, a decrease in the costs of
the components and as the installation process is improved.

	Selling, General and Administrative.  Selling, general and
administrative costs consist of costs associated with selling and
administrative staff, overhead, market research and development,
and customer service personnel. Selling, general and administrative
costs decreased $1,195,000, to $11,476,000 in 1999, compared to
$12,671,000 in 1998. The 1999 results reflect a decrease in
compensation related expense from 1998 resulting from an overall
decrease in employee headcount and the absence of costs associated
with the proposed acquisition of Telepanel.

<PAGE>
	As more fully described in Note 9 of the Notes to the
Company's Consolidated Financial Statements included in response to
"Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K," in October 1997 the Company and Telepanel executed an
agreement to combine, as a result of which the Company would have
become the sole beneficial owner of the outstanding Telepanel
common shares. In April 1998, such arrangements were terminated.
Results for the year ended December 31, 1998 include direct
transaction costs associated with the proposed combination of
$381,000, while no such expense was recorded in 1999.

	Research and Development.  Research and development expenses
increased $1,532,000 to $5,460,000 in 1999 from $3,928,000 in 1998.
Such increases reflect expanded hardware and software engineering
activities, primarily to enhance the functionality of the Company's
new system, creation of improved POS data integration tools and the
development of training programs. During the year ended December
31, 1998, the Company also capitalized product development costs of
$373,000, while no such costs were capitalized in 1999.

	Interest Income.  Interest income decreased to $2,680,000 in
1999 compared to $3,982,000 in 1998, due to decreased cash and cash
equivalents available for investment.

	Interest Expense.  Interest expense increased to $18,844,000
in 1999 compared to $16,886,000 in 1998. Interest expense
represents interest on amounts borrowed from the Connecticut
Development Authority (the "CDA"), which matured in August 1999,
and, non-cash interest on the Senior Discount Notes. With the
consummation in January 1997 of the private sale (the "Private
Placement") of 147,312 units (the "Units"), each consisting of
Senior Discount Notes with a principal amount at maturity of $1,000
and one warrant (collectively, the "1997 Warrants") to purchase
17.23 shares of Common Stock, the Company commenced recording
interest on an amount equal to the gross proceeds from the Private
Placement plus prior recorded and unpaid interest at an annual rate
of 13.25%. Additional expense is being recorded as a result of the
amortization of the discount recorded on the Senior Discount Notes
(for value attributed to the 1997 Warrants) and the amortization of
costs of issuance.

	Income Taxes.  The Company has incurred net losses since
inception which have generated net operating loss carryforwards for
federal income tax purposes of approximately $67.7 million, which
are available to offset future taxable income and expire through
the year 2013 for federal income tax purposes. In

<PAGE>
consideration of the Company's accumulated losses and the
uncertainty of its ability to utilize any future tax benefits
resulting from these losses, a full valuation allowance has been
provided against the impact of this potential tax benefit in the
Company's consolidated financial statements as of December 31, 1999
and 1998 (see Note 8 of the Notes to the Company's Consolidated
Financial Statements included in response to "Item 14. Exhibits,
Financial Statement Schedules and Reports on Form 8-K"). During the
year ended December 31, 1999, the Company's net operating loss
carryforwards were reduced as a consequence of the Company's
recognition of extraordinary gain as hereinafter described, and
after utilizing the Company's 1999 operating loss to offset such
gain for tax purposes.

	Extraordinary Gain. In 1999, the Company recognized an
extraordinary gain of $34,582,000 as the result of the acquisition
of $46,345,000 principal amount at maturity of Senior Discount
Notes for a cost of $7,183,000 net of fees. The extraordinary gain
is net of transaction fees of $818,000 and the write-off of
$1,232,000 of debt issuance costs.

	Year ended December 31, 1998 compared to
	    year ended December 31, 1997

	Revenues.  The Company's revenues were $3,764,000 in 1998,
compared to $1,972,000 in 1997, reflecting the increased demand for
ERS' new generation product. In 1998, revenues were concentrated
among two significant customers within the supermarket industry
comprising 88% of total revenues, with one customer accounting for
59% thereof. Approximately 41% of revenues in 1997 was attributable
to a single customer, with three customers accounting for 74% of
total revenues. For the years ended December 31, 1998 and 1997
software license fees were $122,000, or 4% and 11% of product
sales, respectively. For the year ended December 31, 1998,
maintenance revenues increased to $864,000 from $825,000 in the
prior year, due primarily to an increase in the number of installed
locations.

	Cost of Goods Sold. Cost of goods sold increased to $8,095,000
in 1998 from $3,699,000 in 1997, resulting in a gross loss (cost of
goods sold in excess of revenues) in 1998  of 115% of total revenues
compared to 88% in 1997. The increase in gross loss as a percent of
revenues is primarily the effect of an increase in the inventory
reserve, offset by reduced material cost and by a decrease in
depreciation related to manufacturing equipment and amortization of
product development costs, as a share of cost of goods sold,
resulting from increased installation volumes. During

<PAGE>
1998, the Company recorded a charge of $2,970,000 representing an
increase in its reserve for inventory valuation.

	Warranty and maintenance expenses included in the cost of goods
sold decreased to $654,000 in 1998 from $758,000 in 1997,
attributable to maturity of the product.  ERS anticipates that
future warranty and maintenance expenses per installation will
decrease as a greater percentage of the installed base consists of
wireless installations, and that the cost of goods sold as a
percentage of revenues will decrease as a result of higher
manufacturing volumes of its components and as the installation
process is improved.

	Selling, General and Administrative. Selling, general and
administrative costs increased $277,000, to $12,671,000 in 1998,
compared to $12,394,000 in 1997. The 1998 results reflect an
increase in compensation related expenses from 1997 consisting of
an increase in severance related costs and slightly higher salaries
offset by an overall decrease in employee headcount. The 1997
results include the effect of a special non-cash charge of $510,000
for the issuance of common stock purchase warrants. Results for the
years ended December 31, 1998 and 1997 include direct transaction
costs associated with the proposed combination of the Company and
Telepanel of $381,000 and $585,000, respectively.

	Research and Development.  Research and development expenses
increased $519,000 to $3,928,000 in 1998 from $3,409,000 in 1997.
Such increases reflect expanded hardware and software engineering
activities, primarily greater functionality of the Company's new
system, creation of improved POS data integration tools and the
development of training programs. During the years ended December
31, 1998 and 1997, the Company also capitalized product development
costs of $373,000 and $375,000, respectively.

	Interest Income.  Interest income decreased to $3,982,000 in
1998 compared to $4,982,000 in 1997, due to decreased cash and cash
equivalents available for investment.

	Interest Expense.  Interest expense increased to $16,886,000
in 1998 compared to $14,024,000 in 1997. Interest expense
represents interest on amounts borrowed from the CDA and non-cash
interest on the Senior Notes.

	Income Taxes. In consideration of the Company's accumulated
losses and the uncertainty of its ability to utilize any future tax
benefits resulting from these losses, a full valuation

<PAGE>
allowance has been provided against the impact of this potential
tax benefit in the Company's consolidated financial statements as
of December 31, 1998 and 1997 (see Note 8 of the Notes to the
Company's Consolidated Financial Statements included in response to
"Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K").

      Liquidity and Capital Resources

	As of December 31, 1999, the Company had net working capital
of $41,165,000 reflecting cash and cash equivalents of $37,386,000,
compared to net working capital of $65,697,000, reflecting cash and
cash equivalents of $63,877,000 at December 31, 1998. The decrease
in net working capital and in cash and cash equivalents resulted
primarily from funding the Company's operations, the acquisition by
the Company of certain of its Senior Discount Notes during 1999,
and the repayment of the indebtedness to the CDA (which matured in
August 1999).

	Net cash used in operations was $12,820,000 in 1999, compared
to net cash of $16,606,000 used for operating activities in 1998,
resulting primarily from the net losses (prior to accounting for
the extraordinary gain of $34,582,000) of $36,693,000 and
$34,313,000, respectively, for such periods. In 1999, the net loss
(prior to accounting for the extraordinary gain of $34,582,000)
included $17,151,000 of non-cash interest expense, compared to
$15,441,000 of such expense in the prior year. During the year
ended December 31, 1999, the Company's net loss was reduced to
$2,111,000 after accounting for $34,582,000 of gain recognized upon
acquisition by the Company of Senior Discount Notes.

	Net cash used in operations during 1999 reflected an increase
in trade accounts receivable (net of allowance for doubtful
accounts) of $1,045,000 and a decrease in inventory (net of
reserves) of $2,840,000, compared to an increase in accounts
receivable (net of allowance for doubtful accounts) of $1,057,000
and a decrease of inventory (net of reserves) of $660,000 during
the prior year. During 1999, current liabilities increased by
$848,000 reflecting an increase in outstanding trade payables,
compared to a decrease of $268,000 in the prior year.

	Cash used in investing activities totaled $1,076,000 in 1999
compared to $1,964,000 in 1998. Investing activities included
capital expenditures of $1,076,000 and $1,730,000 in 1999 and 1998,
respectively. The Company also incurred $373,000 in

<PAGE>
product development costs during the year ended December 31, 1998,
compared to no such expense in 1999.

	To the extent the Company continues to offer its system under
the SayGo Plan in addition to pursuing maximum sales of the system,
the Company will require substantial funds for manufacturing and
carrying costs not initially covered by revenues calculated on the
basis of usage fees paid by customers. Under the SayGo Plan, the
Company will retain ownership of the system, which will be
reflected as long-term assets on the Company's consolidated balance
sheet and which will be depreciated on a straight-line basis over
the shorter of their economic lives or five years. The Company
intends, during its current fiscal year, to continue to develop
additional strategies to accelerate market recognition and
acceptance of the system and its benefits, but there can be no
assurance that any such approaches will be material to the
determination of additional retailers to install the Company's
system in the emerging market for ESLs.

	In February 2000, in exchange for payments aggregating $6.5
million, the Company acquired shares of NewCheck's Senior Preferred
Stock representing approximately 19% of NewCheck's voting
securities outstanding at closing, together with NewCheck's
Convertible Note. NewCheck's Senior Preferred Stock is entitled,
pursuant to its terms, to receive preferential dividends, payable
semi-annually in additional shares of Senior Preferred Stock, at the
rate of 8% per annum on the liquidation preference per share, which
cumulate if not paid. The Senior Preferred Stock is redeemable, at a
price equal to the greater of the original issue price or fair
market value, upon specified dates, if so elected by the requisite
vote of the Senior Preferred Stock. In the event of the liquidation
or sale of, or specified business combinations involving, NewCheck,
or in the event of other specified transactions or liquidity events,
the Senior Preferred Stock will, prior to other series of preferred
stock, receive an amount equal to its liquidation preference
(calculated initially as capital invested), and then participate on
an "as converted" basis with NewCheck's Common Stock and other
participating series, in remaining amounts available for
distribution.

	Each share of Senior Preferred Stock is convertible into three
shares of NewCheck Common Stock at the election of the holder, and
is automatically converted in specified circumstances. Each share of
Senior Preferred Stock carries a number of votes equal to the number
of shares of NewCheck Common Stock issuable

<PAGE>
upon conversion, and votes together with the NewCheck Common Stock
and other voting securities of NewCheck. The Convertible Note
accrues interest, payable at maturity, at the per annum rate of 8%,
matures on the fifth anniversary of issue, and is repayable
(together with interest) in shares of Senior Preferred Stock at the
election of NewCheck. The Convertible Note is convertible after two
years (and earlier in specified circumstances) into shares of Senior
Preferred Stock.

	Under the Management Agreement extended by the Company to
NewCheck, the Company will manage NewCheck's operations and, in
addition to warrants issued to the Company with respect to NewCheck
Common Stock, the Company will be reimbursed for the costs of its
performance. See "Item 1. Business-Agreements with NewCheck
Corporation," which information is incorporated by reference in
response to this item.

	To date, the Company has not generated positive cash flow from
operations, and has historically funded its operations primarily
through loans from its stockholders, the sale of interests in an
affiliated partnership, its initial public offering of Common Stock
consummated in 1993, its arrangements with the CDA, the sale of
Series A Preferred Stock, $1.00 par value, to the Company's
principal stockholders and members of the Company's Board of
Directors and their affiliates, an offshore public offering and
contemporaneous private placement of Common Stock in 1996 and the
Private Placement.

	Cash used in financing activities was $12,595,000 in 1999
which included $4,997,000 for the repayment of debt and $7,598,000
for the acquisition of $46,345,000 principal amount at maturity of
Senior Discount Notes, compared to the $47,000 of cash provided by
financing activities in 1998 from the exercise of stock options.
During the first quarter of 2000, the Company used an additional
$4,652,000 to acquire $24,549,000 principal amount at maturity of
Senior Discount Notes. In January 1997, the Company completed the
private sale of 147,312 Units, consisting of $147,312,000 principal
amount at maturity of its Senior Discount Notes and the 1997
Warrants, which were sold to investors at a price aggregating $100
million ($95 million net proceeds to the Company). The Senior
Discount Notes mature on February 1, 2004, with accrual of cash
interest at the rate of 13.25% per annum commencing February 1,
2000, such interest payable thereafter on February 1 and August 1
of each year commencing August 1, 2000. The Senior Discount Notes
may be called, at the Company's option, in whole or in part, at any
time after February 1, 2001, and, upon specified change in control

<PAGE>
events, each holder has the right to require the Company to
purchase its Senior Discount Notes at specified prices.

	The indenture under which the Senior Discount Notes were
issued places limitations on operations and sales of assets by the
Company or its subsidiaries, requires maintenance of certain
financial ratios in order for the Company to incur additional
indebtedness (subject to specified exceptions), requires the
delivery by the Company's subsidiaries of guaranties if specified
debt is subsequently incurred by such subsidiaries, and limits the
Company's ability to pay cash dividends or make other distributions
to the holders of its capital stock or to redeem such stock. The
1997 Warrants are exercisable through February 1, 2004 with respect
to an aggregate of 2,538,258 shares of Common Stock, at a per share
price of $5.23.

     In August 1999, the Company repaid to the CDA, in accordance
with its terms, an aggregate of $5,000,000 principal amount of
indebtedness, which prior to repayment was convertible to shares of
Common Stock at an adjusted conversion price calculated at $3.00
plus the average price of the Common Stock during the twelve months
prior to conversion.  In August 1999, warrants to purchase 699,724
shares (as adjusted) of Common Stock, held by the CDA and
exercisable at an adjusted price calculated at $2.58 plus the
average market price of the Common Stock during the twelve months
prior to exercise, expired without exercise. If the Company
relocates outside of Connecticut before 2004, the Company remains
obligated to pay a penalty to the CDA of $250,000.

	The Company expects net losses and negative cash flows from
operations to continue through the current fiscal year. The Company
has been utilizing and will continue to utilize the net proceeds
from the Private Placement in connection with its liquidity
requirements, including the funding of the Company's ongoing
engineering, development and marketing efforts. The Company
believes the proceeds of the Private Placement, together with its
other cash and cash equivalents, will be sufficient to meet the
Company's currently anticipated operating and capital expenditure
requirements as it implements its business strategy and as required
debt service under the outstanding Senior Discount Notes commences,
and fund operations into the second quarter of 2001. As more fully
described above, the Company's ability to meet its continuing debt
service and other obligations will depend, among other factors, on
the acceptance of the Company's system in its intended market and
the Company's success in implementing its business strategy and
achieving large scale commercialization of the ERS ShelfNet System.

<PAGE>
	In the event commercialization does not result in sufficient
liquidity to the Company, the Company may need to raise additional
long-term financing to support operations and service debt. The
Company has no current arrangement with respect to, or sources of,
any additional financing, and there can be no assurance that any
such additional financing would be available on terms reasonable to
the Company. In the event the Company were unable to raise any
required additional financing, the Company's operations would need
to be scaled back or discontinued. During the fourth quarter of
1999, the Company engaged Jefferies & Co. and BNY Capital Markets,
Inc. to advise it in connection with the development or
consideration of proposals relating to the Senior Discount Notes.
The Company continues to be engaged in the development and
consideration of proposals with respect to the Senior Discount
Notes intended to enhance the Company's long-term liquidity, but
there can be no assurance that any such proposal will be
implemented.

Year 2000

	The "year 2000" problem relates to computer systems that have
time and date sensitive programs that were designed to read years
beginning with "19", but may not properly recognize the year 2000.
If the ERS ShelfNet System or a computer system or software
application used by the Company or a third party dealing with the
Company fails because of the inability of the system or application
to properly read the year "2000", the results may adversely affect
the Company. Accordingly, prior to December 31, 1999 the Company
reviewed the ERS ShelfNet System and its internal computer programs
and systems to ensure year 2000 compliance and established a
project team designed to address year 2000 risks in a methodical
manner, concentrating in four separate areas of activity: (i)
internal systems, (ii) products, (iii) customers and (iv)
suppliers. The Company's project team provided consulting services
where needed in the areas of project planning and estimating,
testing and technical issues, and ran remedial projects where
needed.

	The Company has addressed any internal year 2000 issues
through upgrades or modifications to its systems. The project team
found the new generation software of the ERS ShelfNet System to be
year 2000 compliant in all material respects, and also determined
that the new generation software may be utilized to upgrade non-
compliant prior generation software. Given the terms of the
Company's arrangements with customers of its prior generation
software, and the Company's upgrade of or other measures taken
regarding such software, the Company does not

<PAGE>
anticipate any material financial exposure resulting from its prior
generation software. The Company has not identified any other
material difficulty presented by its major customers or suppliers
and has not experienced any material business interruption in
connection with year 2000 difficulties.

Market Risk

	The Company is subject to market risks related to changes in
interest rates and, accordingly, the Company's objective is to
minimize any impact on its financial position from these risks. The
Company's cash and cash equivalents predominantly consist of short-
term, highly-liquid U.S. treasury bills and certificates of deposit,
in order to minimize interest rate risk. The Company does not enter
into transactions involving derivative financial instruments for
speculative trading purposes.

	The Company utilizes sensitivity analysis, along with other
techniques, as a basis for measuring the impacts that market risk
exposure may have on the fair value of the Company's debt and
financial instruments. If market interest rates were to increase
immediately and uniformly by ten percent from levels at December 31,
1999, the decline in fair value of the portfolio would not be
material. The Company's long-term term debt bears interest, for the
most part, at a fixed rate and, therefore, relative to its long-term
debt, an immediate ten percent change in the market interest rates
would not materially impact the Company's financial statements.

	These effects of hypothetical changes in interest rates,
however, ignore other effects the same movement may have arising
from other variables, and actual results could differ from the
sensitivity calculations of the Company.  The Company regularly
assesses additional relevant variables, establishes policies and
business practices to protect against the adverse effects of using
any given financial instruments and does not anticipate any material
losses generated by these risks.

Recently Issued Accounting Pronouncements

	In June 1998, the Financial Accounting Standards Board issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended by SFAS 137, which the Company is required
to adopt effective beginning January 1, 2001. The Company is
currently evaluating the impact on its financial statements of
adopting the standard and will comply as required; however, the

<PAGE>
impact is not expected to be material on the Company's financial
statements.

	In December of 1999, the staff of the Securities and Exchange
Commission issued its Staff Accounting Bulletin ("SAB") No. 101
"Revenue Recognition". SAB No. 101, as amended, provides guidance on
the measurement and timing of revenue recognition in financial
statements of public companies. Changes in accounting policies to
apply the guidance of SAB No. 101 must be adopted by recording the
cumulative effect of the change in the fiscal quarter ending June
30, 2000. Management of the Company has not yet determined the
effect SAB No. 101 will have, if any, on its accounting policies or
the amount of the cumulative effect to be recorded from adopting SAB
No. 101.

In 1999, the Company adopted Statement of Position 98-1 ("SOP
98-1"), "Accounting for the costs of Computer Software Developed or
Obtained for Internal Use." This statement requires capitalization
of certain costs incurred in the development of internal use
software. The Company has applied the guidance outlined in SOP 98-1
and the impact of the adoption has not been significant.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

	For information concerning this item, see "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of
Operations-Market Risk," which information is incorporated herein by
reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

	For information concerning this item, see "Item 14. Exhibits,
Financial Statement Schedules, and Reports on Form 8-K", which
information is incorporated herein by reference.

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

		Not applicable.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

	For information concerning this item, see "Item 1. Business-
Executive Officers" and the Proxy Statement to be filed with respect
to the 2000 Annual Meeting of Stockholders (the "Proxy

<PAGE>
Statement"), which information is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION

	For information concerning this item, see the Proxy Statement,
which information is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
         MANAGEMENT

	For information concerning this item, see the Proxy Statement,
which information is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

	For information concerning this item, see the Proxy Statement
which information is incorporated herein by reference.

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

		(a) 	1. Financial Statements:

			The consolidated financial statements filed in this
Annual Report on Form 10-K are listed in the attached Index to
Consolidated Financial Statements and Schedules.

			2. Financial Statement Schedules:

			No consolidated financial statement schedules are
filed in this Annual Report on Form 10-K because they are not
required or are inapplicable or the required information is
otherwise shown in the consolidated financial statements or notes
thereto.

			3. Exhibits:

			The exhibits required to be filed as part of this
Annual Report on Form 10-K are listed in the attached Index to
Exhibits.

		(b) 	Current Reports on Form 8-K:

			During the quarter ended December 31, 1999, the
Company filed Current Reports on Form 8-K dated, respectively,
November 17 and December 15, 1999 reporting, under "Item 5. Other

<PAGE>
Events" thereunder, the commencement and consummation of the
Company's tender offer for Senior Discount Notes. The Company also
filed a Current Report on Form 8-K dated February 11, 2000
reporting, under "Item 2. Acquisition or Disposition of Assets"
thereunder, the acquisition by the Company of its interest in
NewCheck. No financial statements were included with any such
report.


<PAGE>
                     POWER OF ATTORNEY

	The issuer and each person whose signature appears below hereby
appoint Norton Garfinkle, Bruce F. Failing, Jr. and Jerry McAuliffe
as attorneys-in-fact with full power of substitution, severally, to
execute in the name and on behalf of the registrant and each such
person, individually and in each capacity stated below, one or more
amendments to the annual report which amendments may make such
changes in the report as the attorney-in-fact acting deems
appropriate and to file any such amendment to the report with the
Securities and Exchange Commission.

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.

Dated:	March  30, 2000			           ELECTRONIC RETAILING SYSTEMS
                              							 INTERNATIONAL, INC.

                                    By s/Bruce F. Failing, Jr.
                                       ---------------------------------
                                       Bruce F. Failing, Jr.
                                       Vice Chairman of the Board
                                       and Principal Executive Officer

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

Signature		                Title		              Date

s/Bruce F. Failing, Jr.    Vice Chairman of the  	March  30, 2000
------------------	        Board and Principal
Bruce F. Failing, Jr.	     Executive Officer

s/Jerry McAuliffe
------------------	        Vice President and	   	March  30, 2000
Jerry McAuliffe	           Principal Financial
                         	 and Accounting
                         	 Officer


<PAGE>


s/David Diamond
--------------------	      Director	              March  30, 2000
David Diamond



s/Norton Garfinkle
---------------------	     Director	              March  30, 2000
Norton Garfinkle


s/Donald E. Zilkha
---------------------	     Director	              March  30, 2000
Donald E. Zilkha

<PAGE>
      INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES


Financial Statements:

Report of Independent Accountants. . . . . . . . .F-2

Consolidated Balance Sheet, December 31,
  1999 and 1998. . . . . . . . . . . . . . . . . .F-3

Consolidated Statement of Operations for
  the years ended December 31, 1999, 1998
  and 1997 . . . . . . . . . . . . . . . . . . . .F-4

Consolidated Statement of Cash Flows
  for the years ended December 31, 1999, 1998
  and 1997 . . . . . . . . . . . . . . . . . . . .F-5

Consolidated Statement of Changes in
  Stockholders' (Deficit) Equity for the years
  ended December 31, 1999, 1998 and 1997 . . . . .F-6

Notes to Consolidated Financial Statements . . . .F-7


Financial Statement Schedules:

No Financial Statement Schedules are included herein because they
are not required, are inapplicable, or the information is otherwise
shown in the consolidated financial statements or the notes
thereto.












F-1


<PAGE>
	REPORT OF INDEPENDENT ACCOUNTANTS



To the Board of Directors and Stockholders of
  Electronic Retailing Systems International, Inc.

In our opinion, the consolidated financial statements listed in the
index on page F-1 present fairly, in all material respects, the
financial position of Electronic Retailing Systems International,
Inc. and its subsidiaries at December 31, 1999 and 1998, and the
results of their operations and their cash flows for each of the
three years in the period ended December 31, 1999, in conformity
with accounting principles generally accepted in the United States.
These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits
of these statements in accordance with auditing standards generally
accepted in the United States which 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, assessing the
accounting principles used and significant estimates made by
management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for the opinion expressed above.



PRICEWATERHOUSECOOPERS LLP



Stamford, Connecticut
March 29, 2000








F-2

<PAGE>

</TABLE>
<TABLE>
                  Electronic Retailing Systems International, Inc.
                            Consolidated Balance Sheet
                (in thousands, except per share and share amounts)
<CAPTION>
                                                     December 31,
                                                   ----------------
                                                    1999       1998
                                                    ----       ----
<S>                                             <C>         <C>
Assets
Current assets
 Cash and cash equivalents (Note 2)              $ 37,386   $ 63,877
 Accounts receivable - net of allowance
   for doubtful accounts of $206 in 1999
   and $352 in 1998                                 2,304      1,260
 Installations in progress                            482        398
 Inventories - net of reserves of $5,583 in
   1999 and $3,991 in 1998 (Note 2)                 3,772      6,612
 Prepayments and other current assets                 283        761
                                                 ---------   --------
   Total current assets                            44,227     72,908
                                                 ---------   --------
Furniture and equipment (Note 2)                    4,802      5,113
 Accumulated depreciation                          (2,287)    (1,462)
                                                 ---------   --------
Furniture and equipment, net                        2,515      3,651
                                                 ---------   --------
Debt issuance costs (Note 2)                        2,599      4,475
Other non-current assets                              175        592
                                                 ---------   --------
Total assets                                    $  49,516   $ 81,626
                                                =========   ========
Liabilities and Stockholders' Deficit
Current liabilities
  Accounts payable and accrued expenses          $  2,422   $  1,551
  Accrued salaries and benefits                       135        337
  Deferred revenue                                    505        326
  Notes payable                                       --	  4,997
                                                 --------    -------
    Total current liabilities                       3,062      7,211
                                                 --------    -------
 Long-term debt (Note 4)                           98,207    124,057
                                                 --------    -------
 Common stock purchase warrants (Note 4)            5,100      5,100
 Commitments and contingencies (Note 6)                 -         -
Stockholders' deficit
 Preferred stock, undesignated (par value
  $1.00 per share; 2,000,000 shares
     authorized, none issued and outstanding)		       -	     -
 Common stock (par value $0.01 per share;
  35,000,000 authorized; 21,282,637 and
  21,249,447 shares issued and outstanding
  in 1999 and 1998, respectively)                     212        212
 Additional paid-in capital                        51,374     51,374

 Accumulated deficit                             (108,439)  (106,328)
                                                  -------    -------
   Total stockholders' deficit                    (56,853)   (54,742)
                                                  -------    -------
Total liabilities and stockholders'
  deficit                                        $ 49,516    $81,626
                                                 ========    =======
	See accompanying notes to consolidated financial statements
</TABLE>                            F-3

<PAGE>
<TABLE>
                      Electronic Retailing Systems International, Inc.
                         Consolidated Statement of Operations
                       (in thousands, except per share amounts)
 <CAPTION>
                                                       Year Ended December 31,
                                                    ----------------------------
                                                    1999        1998        1997
                                                    ----        ----        ----
<S>                                             <C>          <C>         <C>
Revenues
 Product sales                                  $  3,843     $ 2,900     $  1,147
 Maintenance                                         788         864          825
                                                --------    --------    ---------
 Total revenues                                    4,631       3,764        1,972
                                                --------    --------    ---------
Cost of goods sold
 Product sales                                     6,358       7,441        2,941
 Maintenance                                         677         654          758
                                         			    --------    --------    ---------
  Total cost of goods sold                         7,035       8,095        3,699
                                                --------    --------    ---------
 Gross loss                                       (2,404)     (4,331)      (1,727)
                                                --------    --------    ---------
Operating expenses
 Selling, general and administrative
  (including amounts to related parties
   of $45 in 1999, $192 in 1998 and $125
   in 1997)  (Note 3)                             11,476      12,671       12,394
 Research and development                          5,460       3,928        3,409
 Depreciation and amortization                       402         375          301
                                                --------    --------     --------
  Total operating expenses                        17,338      16,974       16,104
                                                --------    --------     --------
 Loss from operations                            (19,742)    (21,305)     (17,831)
                                                --------    --------     --------
Other income (expenses)
 Interest income                                   2,680       3,982        4,982
 Interest expense                                (18,844)    (16,886)     (14,024)
 Loss on disposals                                  (787)       (104)           -
                                                --------    --------    ---------
  Total other expense, net                       (16,951)    (13,008)      (9,042)
                                                --------    --------    ---------
  Loss before extraordinary gain
      on extinguishment of debt                 $(36,693)   $(34,313)   $ (26,873)

Extraordinary item
  Gain on extinguishment of debt                  34,582

  Net loss                                    $   (2,111)   $(34,313)    $(26,873)
                                               =========    ========     ========
Loss per share
 Weighted average common shares
  outstanding                                     21,264      21,233       21,096
                                               =========    ========     ========
Basic loss per common share (Note 2)
Loss per share before extraordinary item       $   (1.73)    $ (1.62)    $  (1.27)
Extraordinary item                             $    1.63          --           --
Net loss                                       $   (0.10)   $  (1.62)    $  (1.27)

	See accompanying notes to consolidated financial statements
</TABLE>                             F-4

<PAGE>
<TABLE>
                   Electronic Retailing Systems International, Inc.
                          Consolidated Statement of Cash Flows
                                     (in thousands)
<CAPTION>
                                                    Year Ended December 31,
                                                 ----------------------------
                                                 1999        1998        1997
                                                 ----        ----        ----
<S>                                           <C>         <C>          <C>
Net Cash Flows from Operating Activities:
Net loss                                      $ (2,111)   $(34,313)    $(26,873)
Adjustments to reconcile net loss
 to net cash used in operating activities:
  Depreciation and amortization                  2,397       2,994        1,799
  Extraordinary gain on early debt retirement  (34,582)          -            -
  Loss on disposal of fixed assets		               787         104            -
	Common stock purchase warrants                     -           -          510
  Provision for inventory obsolescence           1,700       3,099          392
  Provision for doubtful accounts                    -         165          252
 	Accrued interest                              17,151      15,441       12,798
  Accounts receivable                           (1,045)     (1,222)         606
  Inventories                                    1,140      (2,438)      (6,844)
  Other current and non-current assets             895        (168)        (405)
  Current liabilities                              848        (268)         934
                                               ---------   ---------   ----------
    Net cash used in operating activities      (12,820)    (16,606)     (16,831)
                                               ---------   ---------   ----------
Cash Flows from Investing Activities:
 Capital expenditures                           (1,076)     (1,730)      (3,334)
 Capitalized product development costs              --        (373)        (375)
 Disposal of fixed assets                           --	      139	  	   -
                                               ---------   ---------   ---------
    Net cash used in investing
      activities                                (1,076)     (1,964)      (3,709)
                                               ---------   ---------   ---------
Cash Flows from Financing Activities:
 Net proceeds from the issuance of long-
   term debt                                         -          -        89,478
 Net proceeds from the issuance of common stock      -          47          164
 Repayment of Debt net of discount               (4,997)        -            -
 Cash used for early debt retirement             (7,598)
 Net proceeds from the issuance of common stock
   purchase warrants                                 -          -         5,100

                                                ---------   ---------  ---------
   Cash (used in) provided by financing
      activities                                (12,595)         47      94,742
                                                ---------   --------- ----------
Net (decrease) increase in cash and cash
 equivalents                                    (26,491)    (18,523)     74,202
                                                ---------   --------- ----------
Cash and cash equivalents at beginning of
  period                                         63,877      82,400       8,198
                                                ---------   --------- ----------
Cash and cash equivalents at end of period      $37,386     $63,877   $  82,400
                                                =========   ========= ==========

There were no cash payments for income taxes in the years 1999, 1998 and
1997. Cash payments for interest expense were $216, $401, and $339 in 1999,
1998 and 1997, respectively.

See accompanying notes to consolidated financial statements
</TABLE>                           F-5

<PAGE>
<TABLE>
                     Electronic Retailing Systems International, Inc.
               Consolidated Statement of Changes in Stockholders'
(Deficit) Equity
                          (in thousands, except share amounts)
<CAPTION>
                                                        Additional
                                     Common      Paid-in    Accumulated
                                        Stock       Capital    Deficit        Total
                                      --------   ---------   -----------   ---------
  <S>                                 <C>        <C>        <C>           <C>
Balances at December 31, 1996       $    210   $ 50,655   $ (45,142)    $  5,723

 Issuance of common stock
  purchase warrants                                 510                      510
 Issuance of 139,929 common
  shares with exercise of stock
   options                                 1        163                      164
 Net loss for year                                          (26,873)     (26,873)
                                    ---------  ---------  ----------    ---------
Balances at December 31, 1997       $    211   $ 51,328   $ (72,015)    $(20,476)

Issuance of 52,412 common
  shares with exercise of stock
   options                                 1         46                       47
 Net loss for year                                          (34,313)     (34,313)
                                   ---------  ---------  ----------    ---------
Balances at December 31, 1998      $     212   $ 51,374   $(106,328)    $(54,742)

Issuance of 33,190 common
  shares with exercise of stock
   options
 Net loss for year                                           (2,111)      (2,111)
                                   ---------  ---------  ----------    ---------
Balances at December 31, 1999      $    212   $ 51,374    $(108,439)    $(56,853)
                                   =========  =========  ===========   =========
See accompanying notes to consolidated financial statements

</TABLE>













F-6

<PAGE>
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 -Organization:

	Electronic Retailing Systems International, Inc. ("ERS" or
the "Company"), was incorporated in 1993 under the laws of
the State of Delaware as a holding company for the business
and assets of Electronic Retailing Systems International,
Inc., incorporated in 1990 under the laws of Connecticut,
and an affiliated partnership. The Company develops and
supplies electronic shelf labeling systems. Electronic
shelf labeling systems replace paper price tags on retail
shelves with liquid crystal display labels and transmit
pricing and other information to and from the aisle. The
Company's system is designed to address retailers' needs
for improved pricing accuracy and labor efficiencies by
electronically linking a store's shelves to its POS
scanners and central computer. The Company currently
operates primarily in North America.

	The Company has sustained net losses and negative cash
flows from operations since its inception and management
expects these conditions to continue into the year ending
December 31, 2000. Management believes that existing
resources will enable the Company to fund operations into
the second quarter of 2001; thereafter, the Company may
need to raise additional long-term financing to support
operations and service debt. There can be no assurance that
additional financing would be available on terms reasonable
to the Company. In the event the Company were unable to
raise any required additional financing, the Company's
operations would need to be scaled back or discontinued.

Note 2 -Summary of Significant Accounting Policies:

	Basis of Consolidation

	The consolidated financial statements include the accounts
of the Company and all of its subsidiaries. All significant
intercompany balances and transactions have been
eliminated.

	Use of Estimates

	The preparation of financial statements in conformity with
generally accepted accounting principles requires
management to make estimates and assumptions covering
F-7
<PAGE>
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	a broad spectrum of the Company's financial activities, and
	while the Company believes these estimates to be prudent,
there exists a possibility that unexpected events might
affect these estimates. Actual results could differ from
those estimates and the difference could be material. The
Company's future results and inventory valuation could be
adversely affected by a number of factors, including (a)
the timely availability and acceptance of ESL systems, (b)
the impact of competitive products and pricing, and (c) the
Company's ability to obtain system components from
suppliers.

	Cash Equivalents

	Cash equivalents consist of short-term, highly-liquid U.S.
Treasury Bills and certificates of deposit with original
maturities of less than three months and are stated at
cost, which approximates market. Interest income is accrued
as earned.

	Financial Instruments

	Financial instruments include cash, cash equivalents, notes
payable, long-term debt and common stock purchase warrants.
Financial instruments are carried at cost or accrued
carrying value which approximates fair market value.

	Inventories

	Inventories are stated at the lower of cost (determined on
a first in, first out basis) or market value. Inventories
at December 31, 1999 consist of approximately $2,000,000 of
materials and supplies and $1,772,000 of finished goods.
Inventories at December 31, 1998 consisted of approximately
$2,167,000 of materials and supplies and $4,445,000 of
finished goods.

	Charges for excess, slow moving and obsolete inventory for
the years 1999, 1998 and 1997 were $1,700,000, $3,099,000,
and $392,000, respectively.


F-8

<PAGE>
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Furniture and Equipment

	Furniture and equipment is stated at cost. Depreciation is
provided on the straight-line method over the estimated
useful lives of the respective assets, none of which
exceeds five years.

	In 1999, the Company adopted Statement of Position 98-1
("SOP 98-1"), "Accounting for the costs of Computer
Software Developed or Obtained for Internal Use."  This
statement requires capitalization of certain costs incurred
in the development of internal use software.  The Company
has applied the guidance outlined in SOP 98-1 and the
impact of the adoption has not been significant.

	Furniture and equipment as of December 31, 1999 and 1998,
was comprised of the following (in 000s):

                                    			1999	          1998
                                							----	          ----
	Furniture					                       $1,350	        $1,350
	Equipment		                      		 	 3,452          3,763
	Furniture and equipment,           		------	         -----
	  at cost	                       				 4,802	         5,113
	Accumulated depreciation		           (2,287)	       (1,462)
			                               				------	         -----
	Furniture and equipment, net         $2,515	        $3,651
                                						======	        ======

	Fully depreciated furniture and equipment no longer in use
of $462 was written-off during 1999. In addition, during
1999 equipment with a cost of $948 was written off
resulting in a loss of $787.

	Product Development Costs

	The Company capitalizes product development costs,
principally wages and contractor fees, after establishing
commercial and technical viability. Product development
costs are stated at the lower of cost or net realizable
value. These costs are amortized using the straight-line
method over the shorter of the estimated useful life of the
product or three years. The Company's policy is to make


F-9

<PAGE>

ELECTRONIC RETAILING SYSTEMS INTERNATIONAL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	regular evaluations of the remaining product development
costs for potential impairments of value through analysis
of operating results and related cash flows, trends and
prospects as well as competitive and economic factors.
Amortization commences when the product is available for
general release to customers. As of December 31, 1999 and
1998, unamortized capitalized costs of $186,000 and
$559,000, respectively, are included as other non-current
assets in the accompanying consolidated balance sheet.
Amortization expense totaled $373,000, $783,000 and
$262,000 for 1999, 1998 and 1997, respectively.

	Long-Lived Assets

	Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of", requires that long-
lived assets and certain intangible assets be reviewed for
impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable.
If undiscounted expected future cash flows are less than
the carrying value of the assets, an impairment loss is to
be recognized based on the fair value of the assets.  No
impairment losses have been recognized to date.

	Debt Issuance Costs

	The Company has capitalized costs incurred in connection
with the issuance of debt. Such costs are principally
investment banking, legal, accounting, financial printing,
and other related fees and costs. These costs are amortized
using the effective interest method over the lives of the
respective debt arrangements. As of December 31, 1999 and
1998, unamortized debt issuance costs of $2,599,000 and
$4,475,000, respectively, are included as other non-current
assets in the accompanying consolidated balance sheet.
Amortization expense totaled $644,000, $563,000 and $440,000
for 1999, 1998 and 1997, respectively. As a result of the
acquisition of $46,345,000 principal amount of maturity of
Senior Discount Notes, $1,232,000 of debt issuance costs
were written off during 1999.



F-10
<PAGE>

ELECTRONIC RETAILING SYSTEMS INTERNATIONAL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Revenue Recognition

	Revenue is recognized when the product is shipped or upon
completion of installation of a trial electronic shelf
label system, provided that no significant obligations
remain and collection of the resulting receivable is deemed
probable. Revenue from providing installation services to
customers is recognized upon the completion of an
installation. Under the SayGo Plan, the Company recognizes
revenues as monthly usage, and other fees are billed to
customers, and depreciates the cost of hardware components
of its systems over the shorter of their estimated useful
lives or five years. Maintenance revenue for services
provided under maintenance contracts is recognized over the
service contract period. Other revenue for parts and
services is recognized when provided.

	Income Taxes

	The Company accounts for income taxes in accordance with
Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes", which requires an asset and
liability approach to the recognition of deferred tax
assets and liabilities for the expected future tax
consequences of events that have been recognized in the
Company's financial statements or tax returns. Deferred
income taxes relate to timing differences between financial
and income tax reporting for stock option compensation,
product development costs, depreciation and other items.

	Stock Based Compensation

	The Company accounts for incentive plans and stock options
using the provisions of Accounting Principle Board Opinion
No. 25, "Accounting for Stock Issued to Employees." Pro
forma information required by Financial Accounting
Standards No. 123, "Accounting for Stock Based
Compensation," is included in Note 10.





F-11

<PAGE>

ELECTRONIC RETAILING SYSTEMS INTERNATIONAL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Earnings Per Share

	Basic earnings per share ("EPS") is calculated by dividing
the net loss available to common stockholders by the
weighted average number of common shares outstanding for
the period, without consideration for common stock
equivalents.  Diluted EPS is computed by dividing net loss
for the period by the weighted average number of common
shares outstanding and dilutive common stock equivalents.

	Due to the Company's loss position, the Company has
reported only "basic" EPS. The presentation of "dilutive"
EPS is not required as common stock equivalents are anti-
dilutive. The number of securities at December 31, 1999,
1998, and 1997 that could potentially dilute basic EPS in
the future are 5,319,150, 5,745,496 and 5,969,004,
respectively. Such securities, which have been excluded
from the calculation of basic EPS as they are anti-
dilutive, include employee and director stock options,
convertible debt, and common stock purchase warrants.

	Segment Information

	The Company is in one business segment, the electronic
shelf labeling business, and follows the requirements of
FAS 131, "Disclosures about Segments of an Enterprise and
Related Information;" however, the requirements have not
had a material impact on the financial statements for the
periods presented.

	Comprehensive Income

	The Company has adopted Statement of Financial Accounting
Standards No. 130 "Reporting Comprehensive Income" ("FAS
130"). FAS 130 establishes new rules for the reporting and
display of comprehensive income and its components. The
adoption of this standard had no material impact on the
Company's financial statements.






F-12
<PAGE>

ELECTRONIC RETAILING SYSTEMS INTERNATIONAL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Recently Issued Accounting Pronouncements

	In June 1998, the Financial Accounting Standards Board
issued SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities," as amended by SFAS 137, which the
Company is required to adopt effective beginning January 1,
2001. The Company is currently evaluating the impact on its
financial statements of adopting the standard and will
comply as required; however, the impact is not expected to
be material on the Company's financial statements.

	In December of 1999, the staff of the Securities and
Exchange Commission issued its Staff Accounting Bulletin
("SAB") no. 101 "Revenue Recognition". SAB no. 101, as
amended, provides guidance on the measurement and timing of
revenue recognition in financial statements of public
companies.  Changes in accounting policies to apply the
guidance of SAB No. 101 must be adopted by recording the
cumulative effect of the change in the fiscal quarter
ending June 30, 2000.  Management has not yet determined
the effect SAB no. 101 will have, if any, on its accounting
policies or the amount of the cumulative effect to be
recorded from adopting SAB No. 101.

	Reclassifications

	Certain prior year amounts have been reclassified to
conform to current year presentation.

Note 3 -Related Party Transactions:

	The Company has received consulting services and paid a
current and a former member of its Board of Directors,
through an affiliate of the Company, fees of  $45,000,
$192,000 and $125,000 in 1999, 1998 and 1997, respectively.


F-13

<PAGE>

ELECTRONIC RETAILING SYSTEMS INTERNATIONAL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4 - Debt and Common Stock Purchase Warrants

	In August 1999, the Company repaid to the Connecticut
Development Authority (the "CDA"), in accordance with its
terms, an aggregate of $5,000,000 principal amount of
indebtedness, which prior to repayment was convertible to
shares of Common Stock at an adjusted conversion price
calculated at $3.00 plus the average price of the Common
Stock during the twelve months prior to conversion. This
note was classified as short term on the Company's balance
sheet at December 31, 1998.In August 1999, warrants to
purchase 699,724 shares (as adjusted) of Common Stock, held
by the CDA and exercisable at an adjusted price calculated
at $2.58 plus the average market price of the Common Stock
during the twelve months prior to exercise, expired without
exercise.  If the Company relocates outside of Connecticut
before 2004, the Company remains obligated to pay a penalty
to the CDA of $250,000.

	In January 1997, the Company completed the sale, in a
private offering (the "Private Placement"), of 147,312
Units ("Units") consisting of $147,312,000 principal amount
at maturity of 13.25% Senior Discount Notes due February 1,
2004 (the "Notes") together with warrants to purchase an
aggregate of 2,538,258 shares of Common Stock, at an
exercise price of $5.23 per share, exercisable from the
period commencing on the first anniversary of closing
through February 1, 2004.

	The Units were sold to investors at a price aggregating
$100 million, representing a yield to maturity on the Notes
of 13.25%. No cash interest will accrue on the Notes prior
to February 1, 2000. Interest will be payable thereafter on
the outstanding Notes on February 1 and August 1 of each
year commencing August 1, 2000. The Notes are non-callable
prior to February 1, 2001. Upon specified change in control
events, each holder has the right to require the Company to
purchase its Note at a specified price. The net proceeds to
the Company from the Private Placement approximated $95
million.




F-14
<PAGE>

ELECTRONIC RETAILING SYSTEMS INTERNATIONAL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	The indenture under which the Notes were issued places
limitations on operations and sales of assets by the
Company or its subsidiaries, requires maintenance of
certain financial ratios in order for the Company to incur
additional indebtedness (subject to specified exceptions),
requires the delivery by the Company's subsidiaries of
guaranties if specified debt is subsequently incurred by
such subsidiaries, and limits the Company's ability to pay
cash dividends or make other distributions to the holders
of its capital stock or to redeem such stock.

	With the consummation of the Private Placement in January
1997, the Company commenced recording interest on the
outstanding Notes on an amount equal to the gross proceeds
from the Private Placement plus prior recorded and unpaid
interest at the annual rate of 13.25%. Additional interest
expense is being recorded as a result of the amortization
of the discount recorded on the Notes (for value attributed
to the warrants) and the amortization of the costs of
issuance.

During the fourth quarter of 1999, the Company engaged
Jefferies & Co. and BNY Capital Markets, Inc. to advise it
in connection with the development or consideration of
proposals relating to the Senior Discount Notes. During the
fourth quarter of 1999, the Company repurchased: (i) $45.25
million aggregate principal amount at maturity of Notes in
open market transactions from holders not affiliated with
the Company for an aggregate purchase price of $7.01
million; and (ii) $1.095 million aggregate principal amount
at maturity of Notes as the result of a tender offer by the
Company for an aggregate purchase price of $.170 million.
The Company incurred $818,000 in transaction fees related
to these purchases. During the first quarter of 2000, the
Company repurchased $24.549 million aggregate principal
amount at maturity of Notes in open market transactions
from holders who were not affiliated with the Company for
an aggregate purchase price of $4.65 million. The Company
continues to be engaged in the development and
consideration of proposals with respect to the Senior
Discount Notes intended to enhance the Company's long-term
liquidity, but there can be no assurance that any such
proposal will be implemented.

F-15
<PAGE>

ELECTRONIC RETAILING SYSTEMS INTERNATIONAL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Long-term debt as of December 31, 1999 and 1998 was
comprised of 13.25% Senior  Notes totaling $98,208,000 and
$124,057,000, respectively.

	The Company engaged Patricof & Co. in connection with
certain corporate finance services and, in addition to fees
paid, issued three-year warrants in the second quarter of
1997 exercisable with respect to 250,000 shares of Common
Stock at a price of $5.24 per share. The estimated fair
value of warrants issued to Patricof & Co. approximated
$510,000, and has been recorded as an increase to
Additional Paid-in Capital.

Note 5 - Customer Information:

	All of the Company's sales are to customers in the retail
food market industry. Significant customer sales for the
years ended December 31, 1999, 1998 and 1997 were as
follows:

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

	The Stop & Shop Supermarket Company	 80%	 59%	 41%

	Shaw's Supermarkets, Inc.	           10%	 29%	 22%

	H.E. Butt Grocery Co.	               -- 	 -- 	 11%


	Accounts receivable at December 31, 1999 and 1998 are
unsecured and concentrated among major supermarket chains
in the United States. If the customers within this
concentration failed to pay according to the terms of their
agreements these receivables would be reduced to nominal
value.

Note 6 - Commitments and Contingencies:

	The Company leases its facilities under non-cancelable
operating lease agreements. During 1999, 1998 and 1997
rental expense amounted to approximately $786,000, $946,000
and $424,000, respectively.

F-16
<PAGE>

ELECTRONIC RETAILING SYSTEMS INTERNATIONAL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Future minimum lease payments on a calendar year basis
under these  leases, as of December 31, 1999, are as
follows:

                   							  Total
							                  Commitments
						                  	-----------

		2000		               			$  633,000
		2001					                  632,000
		2002					                  582,000
		2003					                  388,000
		2004	and thereafter		    1,562,000
						                   	----------
                  						 	$3,797,000
                   							==========

The Company is involved in certain litigation incidental to
the conduct of its business and affairs. Management does
not believe that the outcome of any such litigation will
have a material adverse effect on the financial condition
or results of operations of the Company.

Note 7 - Stock Option and Defined Contribution Plan:

	The Company has an employee stock option plan whereby
options to purchase shares of Common Stock may be granted
to key employees of the Company. The stockholders have
approved successive increases in the number of shares of
Common Stock available for issuance under the plan, which
currently authorizes the grant of options covering
3,500,000 shares. As of December 31, 1999 there were
1,069,108 shares available for future grants. Options
granted under the plan typically become exercisable over a
period of four years and have a term of 10 years.

	A summary of all option activity pursuant to the employee
stock option plan is as follows:



F-17

<PAGE>
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
						  	                                  Price Range	Options
 <S>                                      <C>
	Options outstanding December 31, 1996    $ .01-$5.875    878,492
                                              										---------
	   Options granted                       $4.88-$6.19   1,117,117
	   Options exercised                     $ .01-$5.00    (139,929)
	   Options canceled                      $ .01-$6.13    (120,552)
                                              										---------
	Options outstanding December 31, 1997    $ .01-$6.19   1,735,128
                                              										---------
	   Options granted                       $2.25-$4.00   1,118,099
	   Options exercised                     $ .01-$2.25     (52,412)
	   Options canceled                      $ .01-$6.13  (1,181,853)
                                              										---------
	Options outstanding December 31, 1998    $ .01-$6.19   1,618,962
                                              										=========

    Options granted                       $ .97-3.00    1,385,000
	   Options exercised                     $ .01           (33,190)
	   Options canceled                      $ .01-$5.00    (539,880)
                                              										---------
	Options outstanding December 31, 1999    $ .01-$6.19   2,430,892
                                              										=========


		December 31, 1999			604,807
		December 31, 1998			280,165
		December 31, 1997			271,450
</TABLE>

	The following table summarizes information about employee
stock options outstanding and exercisable at December 31, 1999:
<TABLE>
<CAPTION>
                          		 Weighted	     Weighted		                 Weighted
Range of		                    Average	     Average     		             Average
Exercise	     Number	        Remaining	    Exercise 	  Number	        Exercise
 Prices      	Outstanding	    Life  	      Price      	Exercisable	   Price
<S>           <C>            <C>           <C>         <C>            <C>
$ .01           211,172       2 years       $ .01       113,466         $ .01
$0.97-$1.44     754,000      10              1.27        25,000          1.39
$1.53-$2.25     583,532       9              2.05        58,923          2.25
$2.38-$3.50     710,194       9              3.14       321,174          3.04
$3.63-$4.00      93,000       8              3.74        24,187          3.74
$4.88-$6.19      78,994       6             $5.19        62,057         $5.17
              ---------      			                        -------
              2,430,892                                 604,807
              =========		                               =======
</TABLE>







F-18
<PAGE>
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Additionally, the Company has a director stock option plan
under which options covering 750,000 shares of Common Stock
may be granted to directors of the Company. During 1998,
47,500 options were granted to directors of the Company to
purchase an equal number of common shares pursuant to this
plan at option prices of $2.75 and $4.00. As of December 31,
1999 options covering an aggregate of 100,000 shares of
Common Stock were outstanding under the plan.

In June 1998, the Company's Board of Directors approved a
plan to issue new options with a lower exercise price and a
different vesting period upon surrender by the employee of
existing options. Employee options with exercise prices
ranging from $4.875 to $6.1875 to purchase 508,863 shares
of common stock were exchanged for 508,863 shares at the
price of $3.50, which was the fair market value at the time
of exchange. The tables above have been adjusted to reflect
these reduced exercise prices, and the extension of the
option's life.

	The Company applies APB Opinion 25 and related
interpretations in accounting for its employee and director
stock option plans. Had compensation expense for the
Company's employee stock option plan been determined based
on the fair value at the grant dates of awards under the
plan, consistent with FAS 123, the Company's net loss and
basic loss per common share would have been the pro forma
amounts indicated below:
<TABLE>
<CAPTION>
                         	 		1999	       1998         	1997
                         			------	     ------	       ------
		<S>                     	<C>		        <C>	          <C>
		Net loss:
		   As reported          	($2,111,000)	($34,313,000)	($26,873,000)
		   Pro forma	            ($2,306,000)	($35,781,000)	($28,052,000)

		Basic loss per common share:
	  	   As reported	             ($0.10)      	($1.62)	      ($1.27)
	   Pro forma	                  ($0.15)	      ($1.64)	      ($1.33)
</TABLE>

	The fair value of each stock option grant was estimated on
the date of grant using the Black-Scholes option-pricing
model with the following weighted-average assumptions used
in 1999, 1998 and 1997:

F-19
<PAGE>
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      						1999		 1998		 1997

	Dividend yield			           0%		  0%		  0%
	Expected volatility		     122%		112%		114%
	Risk-free interest rate	    6%		  5%		  5%
	Expected life		        	6 years	6 years	6 years

	The weighted average fair value of stock options granted
during the years ended December 31, 1999, 1998 and 1997 was
$1.42, $2.89 and $4.82, respectively.

	The Company has a defined contribution profit sharing and
savings plan which qualifies under Section 401(k) of the
Internal Revenue Code for employees meeting certain service
requirements. Participants may contribute up to 15% of their
gross wages, not to exceed in any given year a limitation
set by Internal Revenue Service regulations (such limitation
was $10,000 in 1999). The plan provides for discretionary
matching contributions, as determined by the Board of
Directors, to be made by the Company. There was  $38,000 and
$34,000 contributed to the plan, by the Company, for the
year ended December 31, 1999 and 1998, respectively. There
were no discretionary amounts contributed to the plan as of
December 31, 1997.

Note 8 - Income Taxes:

	The Company has incurred operating net losses since
inception which have generated loss carryforwards of $67.7
million for federal income tax purposes. Loss carryforwards
are available to offset future taxable income and begin to
expire in the year 2008. These loss carryforwards are
subject to limitation on future years utilization should
certain ownership changes occur.

	The Company has loss carryforwards and temporary
differences between the carrying amounts of assets and
liabilities for financial reporting and income tax purposes
resulting in a deferred tax benefit at December 31, 1999
and 1998 of $47.1 million and $44.5 million, respectively.
Based on the Company's history of losses it has been
determined that the utilization of these deferred tax
benefits is not considered more likely than not and as a
result a valuation allowance is being recorded to fully
offset the net deferred tax asset.

F-20

<PAGE>
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Significant components of the deferred tax asset at December
31, 1999 and 1998 are as follows:
<TABLE>
<CAPTION>
                               		1999	        1998
<S>		                            <C>			       <C>
Net operating loss carryforwards	$ 28,604,000	$30,662,000
Deferred interest expense	         13,831,000	 10,113,000
Stock option compensation	          2,648,000	  2,726,000
Other 		                            1,982,000     977,000
                               		------------		-----------
Total deferred tax benefit	        47,065,000	 44,478,000
                               		------------
Valuation allowance	              (47,065,000)(44,478,000)
                                            		------------
Net deferred tax asset	          $     --    	$     --
                               		============	============
</TABLE>

In 1999, 1998 and 1997 a statutory Federal income tax rate of
35% and a state income tax rate of 7.6%, net of the Federal tax
benefit, were applicable to the Company. Due to the Company's
taxable losses the effective tax rate was nil in each year.

The income tax provision calculated for financial reporting
purposes differs from income taxes determined by applying the
statutory Federal income tax rate to the financial statement net
loss for the years ended December 31, 1999, 1998 and 1997 as a
result of the following:
  <TABLE>
  <CAPTION>
	                                		  1999	        1998	        1997
  <S>	                               <C>		        <C>	         <C>
  Tax benefit at Federal statutory
     rate   	                       $ 13,246,000  $ 11,156,000  $ 9,083,000
  State income tax benefit, net of
   Federal tax charge  	               1,870,000     2,494,000    2,031,000
  Net loss not providing current
   year tax benefits      	          (14,110,000)  (12,641,000) (11,063,000)
  Non-deductible interest    	          (985,000)     (987,000)      --
  Other              	                   (21,000)      (22,000)     (51,000)
                                			 ------------	 ------------ 	-----------
    Provision for income taxes      $    -   	    $    -       	$   -
                                			 ============  ============= ===========
</TABLE>

Note 9 - Proposed ERS/Telepanel Combination:

In October 1997, the Company and Telepanel Systems Inc.
("Telepanel") executed an agreement providing for the
combination of the Company and Telepanel, as a result of

F-21

<PAGE>
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

which ERS would have become the sole beneficial owner of
the outstanding Telepanel Common Shares. In February 1998,
as an interim arrangement pursuant to the combination
agreement, the Company and Telepanel entered into a joint
distribution agreement providing for the creation of a
joint venture (the "Joint Venture") that would hold
specified distribution rights.  Pursuant to such
arrangements, in February 1998 the Company advanced the
amount of $2,000,000 to the Joint Venture, which accrued
interest payable monthly, at the prime rate plus 2.5% per
annum, was guaranteed by Telepanel and its subsidiaries,
and was collateralized by all of the assets of Telepanel
and its subsidiaries (such collateral subordinated in right
to specified bank indebtedness but prior in right to any
other interest).

		In March 1998, the Company announced that the condition to
closing contained in the combination agreement requiring
confirmation that the transaction would qualify for
pooling-of-interests accounting treatment failed to be
satisfied, and the Company's Board of Directors determined
that it did not intend to waive the condition to combine
regarding qualification for pooling-of-interests accounting
treatment. In April 1998, the Company and Telepanel
executed a formal agreement to terminate their combination
agreement and executed reciprocal releases thereunder.  In
addition, the parties agreed: (i) to terminate their joint
distribution agreement; (ii) that the Company would
withdraw its demand for acceleration of payment of the
outstanding working capital advances to the Joint Venture
(as a result of the failure of the Joint Venture to pay
interest when due); and (iii) that such balances would be
due in October 1998, subject to earlier repayment from
equity or debt offerings of Telepanel.  The outstanding
advances to the Joint Venture were repaid in full in
October 1998.

Note 10 - Subsequent Events:

On February 11, 2000, in exchange for payments aggregating
$6.5 million, the Company acquired 262,802 shares of the
newly-created Series C Convertible Preferred Stock, $.0001
par value (the "Senior Preferred Stock"), of NewCheck
Corporation ("NewCheck"), together with NewCheck's 8%
F-22
<PAGE>
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Convertible Promissory Note (the "Convertible Note") in the
aggregate principal amount of $4,550,000, convertible into
an additional 613,205 shares of Senior Preferred Stock. The
shares of Senior Preferred Stock acquired by the Company at
closing represent approximately 19% of NewCheck's
outstanding voting securities.

NewCheck's Senior Preferred Stock is entitled, pursuant to
its terms, to receive preferential dividends, payable semi-
annually in additional shares of Senior Preferred Stock, at
the rate of 8% per annum on the liquidation preference per
share, which cumulate if not paid. The Senior Preferred
Stock is redeemable, at a price equal to the greater of the
original issue price or fair market value, upon specified
dates, if so elected by the requisite vote of the Senior
Preferred Stock. In the event of the liquidation or sale
of, or specified business combinations involving, NewCheck,
or in the event of other specified transactions or
liquidity events, the Senior Preferred Stock will, prior to
other series of preferred stock, receive an amount equal to
its liquidation preference (calculated initially as capital
invested), and then participate on an "as converted" basis
with NewCheck's common stock, $.0001 par value (the
"NewCheck Common Stock"), and other participating series,
in remaining amounts available for distribution.

Each share of Senior Preferred Stock is convertible into
three shares of NewCheck Common Stock at the election of
the holder, and is automatically converted in specified
circumstances. Each share of Senior Preferred Stock carries
a number of votes equal to the number of shares of NewCheck
Common Stock issuable upon conversion, and votes together
with the NewCheck Common Stock and other voting securities
of NewCheck. The Company is also entitled to name one of
the three directors allocated to the Senior Preferred Stock
on NewCheck's seven member Board of Directors.

The Convertible Note accrues interest, payable at maturity,
at the per annum rate of 8%, matures on the fifth
anniversary of issue, and is repayable (together with
interest) in shares of Senior Preferred Stock at the
election of NewCheck. The Convertible Note is convertible
after two years (and earlier in specified circumstances)
into shares of Senior Preferred Stock.

F-23
<PAGE>
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL SYSTEMS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company and NewCheck have also entered into a
management agreement under which, for an initial term of
five years, the Company will manage NewCheck's operations.
In exchange for the agreement, and in addition to
continuing reimbursements to the Company of the costs of
performance, at closing the Company was issued 1,110,000
ten-year warrants, with an exercise price of $.001 per
share, exercisable after the first year to acquire shares
of NewCheck Common Stock equal to approximately 16% of
NewCheck's voting securities outstanding at closing (giving
effect to such warrants and to the conversion of the
Convertible Note). The Company received additional ten-year
warrants that vest with respect to specified percentages of
the outstanding NewCheck Common Stock in the event the
equity value of NewCheck exceeds specified levels during
the three years after closing.



























F-24

<PAGE>
                            INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number 			Document Description
--------------			--------------------
<S>	 <C><C>
3.1			-	Certificate of Incorporation of the Company
        (Incorporated by reference to Exhibit 3.1 of
        the Registration Statement on Form S-4 No. 333-
        21893).

3.2			-	By-laws of the Company (Incorporated by reference to
        Exhibit 3.2 to the Annual Report on Form 10-K
        for the year ended December 31, 1997).

10.1			-	Restated Stockholders' Agreement dated March 12, 1993
         among Norton Garfinkle, The G/N Garfinkle
         Trust, Bruce F. Failing, Jr., The Failing Trust
         and Elizabeth Z. Failing (Incorporated by
         reference to Exhibit 10.3 to the Registration
         Statement on Form S-1 No. 33-59486), together
         with Amendment No. 1 to Restated Stockholders
         Agreement dated October 29, 1997 (Incorporated
         by reference to Exhibit 10.4 to the Annual
         Report on Form 10-K for the year ended December
         31, 1997) and Amendment No. 2 to Restated
         Stockholders Agreement dated April 25, 1998
         (Incorporated by reference to Exhibit 10.1 to
         the Quarterly Report on Form 10-Q for the
         period ended March 31, 1998).

10.2			-	Registration Rights Agreement dated March 12, 1993
         among the Company, Norton Garfinkle, The G/N
         Garfinkle Trust, Bruce F. Failing, Jr., The
         Failing Trust, Elizabeth Z. Failing, Robert D.
         Power and John Stevens (Incorporated by
         reference to Exhibit 10.2 to the Registration
         Statement on Form S-1 No. 33-59486).

10.3			-	Registration Rights Agreement dated March 12, 1993
         among the Company and the limited partners of
         the ERS Associates, L.P. (Incorporated by
         reference to Exhibit 10.5 to the Registration
         Statement on Form S-1 No. 33-59486).

10.4			-	Registration Rights Agreement dated as of July 24,
         1995 among the Company, Donald E. Zilkha, Bruce
         F. Failing, Jr., Hanseatic Corporation and
         Garfinkle Limited Partnership II (Incorporated
         by reference to Exhibit 5(d) of the Current
         Report on Form 8-K dated July 24, 1995).






E-1
10.5			-	Technical Services Agreement dated October 1, 1985
         between Telepanel, Inc. and Amacrine
         International, Inc. (Incorporated by reference
         to Exhibit 10.10 to the Registration Statement
         on Form S-1 No. 33-59486).

10.6			-	Placing Agreement dated July 5, 1996 between the
         Company and Henderson  Crosthwaite
         Institutional Brokers Limited (Incorporated by
         reference to Exhibit 5(c) to the Company's
         Current Report on Form 8-K dated July 11,
         1996), together with Agreement with respect to
         U.S. Securities Laws dated July 2, 1996 between
         the Company and Henderson Crosthwaite
         Institutional Brokers Limited (Incorporated by
         reference to Exhibit 5(d) to the Company's
         Current Report on Form 8-K dated July 11,
         1996).

10.7			-	Forms of Subscription Agreement accepted July 5, 1996
         by the Company (Incorporated by reference to
         Exhibit 5(f) to the Company's Current Report on
         Form 8-K dated July 11, 1996, together with
         Registration Rights Agreement dated July 11,
         1996 between the Company and the subscribers
         parties thereto (Incorporated by reference to
         Exhibit 5(g) to the Company's Current Report on
         Form 8-K dated July 11, 1996).

10.8			-	Warrant Agreement dated as of January 24, 1997
         between the Company and American Stock Transfer
         & Trust Company (Incorporated by reference to
         Exhibit 10.20 to the  Registration Statement on
         Form S-4 No. 333-21893).

10.9			-	Indenture dated as of January 24, 1997 between the
         Company and United States Trust Company of New
         York (Incorporated by reference to Exhibit 4.1
         to the Registration Statement on Form S-4 No.
         333-21893).

10.10			-	Lease Agreement dated May 30, 1997 between 488 Main
          Avenue Associates, LLC and the Company,
          together with Amendment No. 1 thereto
          (Incorporated by reference to Exhibit 10.17 to
          the Annual Report on Form 10-K for the year
          ended December 31, 1997).

10.11			-	Partial Lease Termination dated January 27, 2000
          between 488 Main Avenue Associates, LLC and the
          Company.



E-2

10.12			-	Lease Agreement dated October 1, 1997 between Kurian
          Limited Partnership and the Company
          (Incorporated by reference to Exhibit 10.18 to
          the Annual Report on Form 10-K for the year
          ended December 31, 1997).

10.13			-	Stock and Convertible Note Purchase Agreement dated as
          of February 11, 2000 entered into by, inter
          alia, the Company and NewCheck Corporation
          (Incorporated by reference to Exhibit 2(a) to
          the Current Report on Form 8-K dated February
          11, 2000).

10.14			-	8% Convertible Note dated February 11, 2000 issued by
          NewCheck Corporation to the Company
          (Incorporated by reference to Exhibit 2(b) to
          the Current Report on Form 8-K dated February
          11, 2000).

10.15			-	Management Agreement dated as of February 11, 2000
          between the Company and NewCheck Corporation
          (Incorporated by reference to Exhibit 2(c) to
          the Current Report on Form 8-K dated February
          11, 2000).

10.16			-	Warrant Certificate dated February 11, 2000 issued by
          NewCheck Corporation to the Company
          (Incorporated by reference to  Exhibit 2(d) to
          the Current Report on Form 8-K dated February
          11, 2000).

10.17			-	Warrant Certificate dated February 11, 2000 issued by
          NewCheck Corporation to the Company
          (Incorporated by reference to Exhibit 2(e) to
          the Current Report on Form 8-K dated February
          11, 2000).

10.18			-	Amended and Restated Registration Rights Agreement
          dated as of February 11, 2000 entered into,
          inter alia, by the Company and NewCheck
          Corporation (Incorporated by reference to
          Exhibit 2(f) to the Current Report on Form 8-K
          dated February 11, 2000).

10.19			-	Amended and Restated Securityholders Agreement dated
          as of February 11, 2000 entered into, inter
          alia, by the Company and NewCheck Corporation
          (Incorporated by reference to Exhibit 2(g) to
          the Current Report on Form 8-K dated February
          11, 2000).

10.20			-	Electronic Retailing Systems International, Inc. 1993
          Employee Stock Option Plan (Incorporated by
          reference to Exhibit 10.21 of the Annual Report
          on Form 10-K for the year ended December 31,
          1997).
E-3



10.21			-	Electronic Retailing Systems International, Inc. 1993
          Director Stock Option Plan (Incorporated by
          reference to Exhibit 10.22 of the Annual Report
          on Form 10-K for the year ended December 31,
          1997).

11.1			-	Statement of Computation of Per Share Earnings.

12.1			-	Statement of Computation of Ratio of Earnings to Fixed
         Charges.

21			-	Subsidiaries of the Company.

23			-	Consent of PricewaterhouseCoopers LLP.

24			-	Power of Attorney (See "Power of Attorney" in this
       Annual Report on Form 10-K).

27			-	Financial Data Schedule.





























E-4

</TABLE>