EXHIBIT 13


<TABLE>
  ------------------------------------------------------------------------------
  SELECTED FINANCIAL DATA

  Years ended December 31, (In thousands except per-share data)
  ------------------------------------------------------------------------------
                                   1999      1998      1997     1996     1995
  ------------------------------------------------------------------------------
  <S>                             <C>       <C>       <C>      <C>      <C>
  Earnings Data:

  Net sales                       $38,335   $42,590   $42,989  $36,668  $28,301
  Earnings (loss) from operations
   excluding special charges
   & gain on sale of fixed assets    (723)    1,505     1,124      563     (375)
  Special charges                    -         -         -        -        (886)
  Gain on sale of fixed assets       -         -         -        -         358
  Net earnings (loss)             $(1,190)  $   974   $   775  $   403  $(1,059)
  ------------------------------------------------------------------------------
  Basic net earnings (loss)
    per share                     $ (0.26)  $  0.22   $  0.18  $  0.09  $ (0.25)

  Diluted net earnings (loss)
   per share                      $ (0.26)  $  0.21   $  0.17  $  0.09  $ (0.25)
  ------------------------------------------------------------------------------
  Balance Sheet Data:

  Inventory                       $ 8,510   $ 8,579   $ 9,257  $ 7,344  $ 8,930
  Working capital                 $10,481   $10,199   $10,915  $ 9,017  $10,213
  Total assets                    $18,789   $19,671   $17,520  $14,125  $16,570
  General debt                    $ 1,510      -      $ 1,800  $ 1,300  $ 3,125
  Acquisition debt                $ 2,736   $ 3,350      -        -        -
  Shareholders' equity            $11 661   $12,720   $11,385  $10,095  $ 9,633
  -----------------------------------------------------------------------------
  COMMON SHARE MARKET PRICE

       The Company's common  shares  are traded  on the  American   Stock
    Exchange  under the  symbol WGA.  On December  31,  1999,  there were
    approximately  700 holders of record  of the  common  shares.  A five
    percent  (5%)  stock dividend was paid in  1999, no dividend was paid
    in  1998.  High and low sales prices the the last two years were:

                         1999 Prices      1998 Prices
  ------------------------------------------------------
                        High      Low    High      Low
  ------------------------------------------------------
  Quarter ended:
    March 31,          3  5/8    2 1/2   6 3/4    5 5/16
    June 30,           3  1/2    2       5 1/2    3 7/8
    September 30,      4  1/16   2 3/4   5        2 5/8
    December 31        3 11/16   2 3/4   3 5/8    2 3/8
  ------------------------------------------------------

   Wells-Gardner Electronics Corporation                            [ 1 ]
</TABLE
<PAGE>

  PRESIDENT'S REPORT


  TO OUR SHAREHOLDERS, CUSTOMERS, SUPPLIERS & EMPLOYEES:


       1999 was a  major transition year  for Wells-Gardner.  The Company
  announced a dramatic  new strategic direction  designed to make  Wells-
  Gardner  globally  competitive  and   to  increase  profitability   and
  shareholder value.

  Our New Strategic Plan

       As part of this new strategy for the 21st Century, the Company  is
  re-engineering itself from a manufacturer of monitors primarily for the
  video amusement  market to  a manufacturing,  service and  distribution
  Company with nearly 60% of our sales in the rapidly growing gaming  and
  service markets.

       This new  strategy includes  a shift  away from  being a  strictly
  U.S.-based manufacturer to a distribution and service Company with both
  US-based and off-shore manufacturing.

       During 1999 and early 2000, Wells-Gardner took the following vital
  steps toward realizing its new strategy:

         * In  September 1999, the Company  announced the release of  two
         families of digital  products that cover the gaming,  amusement,
         industrial and  medical markets, thus the  Company to be on  the
         leading edge of technology for its markets.

         * On  January 4, 2000, the  Company announced the  establishment
         of a 50/50 monitor manufacturing joint venture in Malaysia  with
         Eastern Asia  Technology Ltd. of Singapore.   This new  company,
         Wells  Eastern  Asia  Displays  (M)  Sdn.  Bhd.,  will   produce
         globally  competitive  products to  our  leading  edge  designs,
         including  digital  products.   This  is  our  first   off-shore
         manufacturing investment.

         * On January  13, 2000, Wells-Gardner announced the  acquisition
         of  American Gaming  & Electronics,  Inc.  (AG&E). AG&E  is  the
         number  one independent  distributor  of parts  and  service  to
         gaming customers in North America, and has leased facilities  in
         Las  Vegas,  New  Jersey  and  Florida.  AG&E  also  sells   re-
         manufactured gaming machines.  Wells-Gardner expects to add  new
         locations domestically  and internationally in conjunction  with
         AG&E.

         *  As  part  of  its  strategy  to  increase  its   distribution
         capabilities,  Wells-Gardner  announced  various  agreements  to
         distribute  high quality  products  from vendors  such  as  Mars
         Electronics, JCM, Pacific Electronics, among others.

  Company to Develop Own Sales Force

       Wells-Gardner will  develop its  own sales  force while  retaining
  James Industries for specific accounts,  thereby taking control of  our
  brand name and customer relationships as well as reducing the company's
  overall selling expenses.

  1999 Sales and Earnings

       The  company reported  1999 sales  of $38.3 million, down 10% from
  $42.6 million in 1998.  The net loss for 1999 was $1.2 million or $0.26
  per share, compared to a profit of $974,000, or $0.22 per share in 1998.
<PAGE>


  Tragic Loss of One of Our Own

       With deep regrets, I  report to you the  tragic passing of  Robert
  Smith  our  purchasing  manager.   Bob  was  38   years  old  and   his
  contributions and upbeat personality will be  greatly missed by all  of
  us at Well-Gardner.

       Thank  you  all for your continued support.  We are confident that
  the strategic  realignment  of  Wells-Gardner will  lead  to  increased
  profitability and improved shareholder value.


  /s/ Anthony Spier
  -----------------
  Anthony Spier
  Chairman of the Board, President
  and Chief Executive Officer

   March 10, 2000


<PAGE>
  -----------------------------------------------------------------------
  MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS  OF
  OPERATIONS

  Year Ended December 31, 1999 Compared to Year Ended December 31, 1998

       Net sales  decreased  10.0%  to  $38,335,000  in  1999compared  to
  $42,590,000  in  1998,  while  gross  margin  for  1999  decreased   to
  $4,964,000 or 12.9% of sales compared  to $7,107,000 or 16.7% of  sales
  in 1998.  The percentage  decrease is  attributed to  lower  production
  based on lower sales.  Engineering, selling and administrative expenses
  increased to 14.8% of sales or $5,687,000 in 1999 compared to 13.2%  or
  $5,602,000 in  1998.  The  percentage increase  is  reflective  of  the
  Company's initiative  to invest  in  international sales,  new  product
  development, corporate  marketing  and the  amortization  of  goodwill.
  Operating loss for 1999  was $723,000 compared  to operating income  of
  $1,505,000 in  1998.  Other expense was  $467,000 in  1999  compared to
  $505,000 in 1998 as the Company  continued to incur debt financing  and
  interest expense for  the acquisition it  closed in  1998.  The Company
  recorded no income tax provision in  1999 compared to $25,000 in  1998.
  As of December 31, 1999,the Company has available a net operating  loss
  carryforward of  approximately  $2.9 million.  Net  loss for  1999  was
  $1,190,000 compared to net income of $974,000 in 1998.  For 1999, basic
  and diluted loss per share was 26 cents, compared to basic earnings per
  share of 22 cents and diluted earnings per share of 21 cents for 1998.
<PAGE>

  Year Ended December 31, 1998 Compared to Year Ended December 31, 1997

       Net sales  decreased  0.9%  to $42,590,000  in  1998  compared  to
  $42,989,000  in  1997,  while  gross  margin  for  1998  increased   to
  $7,107,000 or 16.7% of sales compared  to $6,801,000 or 15.8% of  sales
  in 1997.  Gross  margin  improved as  the  Company  introduced  10  new
  products and  realized a  benefit  of procuring  standard-product  from
  Asia.  Engineering, selling and administrative expenses  were 13.2%  of
  sales or $5,602,000 in  1998 compared to 13.2%  or $5,677,000 in  1997.
  Operating income  for 1998  was $1,505,000  compared to  $1,124,000  in
  1997, an increase of 33.9%. Other expense increased to $505,000 in 1998
  compared to $339,000 in 1997 as the Company incurred debt financing and
  interest expense for  the acquisition it  closed in  1998.  The Company
  recorded an income tax provision of $25,000 in 1998 compared to $10,000
  in 1997.  The  Company continues  to  utilize its  net  operating  loss
  carryforward.  As of December 31, 1998, the Company has available a net
  operating loss carryforward of  approximately $1.5 million.  Net income
  for 1998 was  $974,000 compared  to $775,000  in 1997,  an increase  of
  25.7%.  For 1998, basic earnings per  share were 22  cents and  diluted
  earnings per share were 21 cents, compared to basic earnings per  share
  of 18 cents and diluted earnings per share of 17 cents for 1997.

       On June 5, 1998, the Company acquired the mechanical coin door and
  mechanical  coin  mechanism  business  of  Coin  Controls,  Inc.   This
  consisted  of  the  manufacturing,  service,  sales  and  marketing  of
  mechanical coin door and  coin mechanisms.  These  products are sold to
  the coin-operated video gaming, pinball, redemption and other  markets.
  Under the  terms  of  the  agreement,  Wells-Gardner  acquired  certain
  inventory, machinery, equipment, tooling and certain contract rights.

  Market and Credit Risks

       The Company is  subject to certain  market risks, mainly  interest
  rates.  At December 31, 1999, the  Company had  a $1,510,000  revolving
  note payable with a variable rate of the London Interbank Offered  Rate
  (LIBOR) plus 175 basis points.  Additionally, at December 31, 1999, the
  Company had a $2,736,000 installment note payable with a variable  rate
  of the London  Interbank Offered Rate  (LIBOR) plus  225 basis  points.
  This  note  has a term of five years with  equal  monthly principal and
  interest payments which began in 1999.  Both notes are unsecured.

     The Company believes that its exposure to interest rate fluctuations
  will be  limited  due to  the  Company's philosophy  of  maintaining  a
  minimal cash balance in  an effort to effectively  use any excess  cash
  flows to reduce outstanding debt.  As of December 31, 1999, the Company
  had variable rate  debt of $4,246,000.  An adverse  change in  interest
  rates during the  time that  this debt  is outstanding  would cause  an
  increase in the amount of interest  paid.  The Company may pay down the
  loan at any time.  However, a  100 basis point increase in LIBOR  would
  result in  an increase  of approximately  $43,000 in  interest  expense
  recognized in the  financial statements.  The Company will continue  to
  monitor   changing   economic   conditions   and   based   on   current
  circumstances, does not expect  to incur a  substantial loss in  future
  earnings or cash flows as a result of changing interest rates.
<PAGE>
      The Company is exposed to credit  risk on certain assets, primarily
  accounts receivable.  The Company provides credit  to customers in  the
  ordinary course of  business and performs  ongoing credit  evaluations.
  Concentrations of credit  risk with  respect to  trade receivables  are
  limited due to the large number  of customers comprising the  Company's
  customer  base.  The  Company  currently  believes  its  allowance  for
  doubtful accounts is sufficient to cover customer credit risks.

  Liquidity & Capital Resources

       Accounts receivable decreased to  $4,795,000  in 1999  compared to
  $5,149,000 in  1998,  while  days outstanding  were  50  days  in  1999
  compared to  44 in  1998.  Inventory  decreased  to $8,510,000  in 1999
  compared to  $8,579,000 in  1998.  Inventory  turns  were 3.92 in  1999
  compared to 4.17 in 1998.  Accounts payable decreased to $2,128,000  in
  1999 compared  to $2,548,000  in 1998.  The decrease  is  attributed to
  lower  inventory  purchases.  Long-term   note  payable  increased   to
  $1,510,000 in 1999 compared to $0 in 1998. In 1998, the Company entered
  into a long-term installment  note payable for  $3,350,000 to  fund the
  acquisition  consummated  during  1998.  At  December  31,  1999,   the
  outstanding balance on the  long-term installment note was  $2,736,000.
  Shareholders' equity decreased to $11,661,000 in 1999 from  $12,720,000
  in 1998 as book value was $2.57 per share in 1999 compared to $2.97 per
  share in 1998.  Overall, the Company believes that its future financial
  requirements can be met with funds generated from operating  activities
  and from its credit facility.

  Subsequent Events

      On January 4, 2000, the Company announced that it entered into a 50
  /50 joint venture with Eastern Asia Technology Limited of Singapore  to
  produce and  manufacture open  frame video  monitors in  Malaysia.  The
  Company anticipates that production will  begin in the second  quarter,
  2000.

      On January 13, 2000, the Company announced that it acquired certain
  assets of  American Gaming  and Electronics  (AG&E) of  Las Vegas,  New
  jersey and  Florida.  AG&E is the  largest independent  distributor  of
  gaming parts and services  in North America and  will be operated as  a
  wholly owned subsidiary.  This acquisition  will be accounted for under
  the purchase method of accounting.

  Inflation

      During the past three years, management believes that the effect of
  inflation on past operations has  not been significant and  anticipates
  that inflation will not have a significant impact on future operations.

  Year 2000

      The Company experienced no difficulties with Y2K compliance and all
  systems functioned properly on  or after january  1, 2000.  The Company
  incurred no significant additional costs in its Y2K compliance efforts.
<PAGE>

</TABLE>
<TABLE>
  ------------------------------------------------------------------------
  BALANCE SHEETS
  Years ended December 31,

<CAPTION>
  ------------------------------------------------------------------------
  Assets                                           1999            1998
  ------------------------------------------------------------------------
  <S>                                          <C>             <C>
  Current Assets:
    Cash & cash equivalents                    $   118,944     $    26,052
    Accounts receivable, net of allowances
      of $60,000 in 1999, & $85,000 in 1998      4,795,411       5,148,712
    Note receivable                                   -            232,369
    Inventory                                    8,510,275       8,579,344
    Prepaid expenses                               608,917         428,209
  ------------------------------------------------------------------------
  Total current assets                         $14,033,547     $14,414,686
  ------------------------------------------------------------------------
  Property, Plant & Equipment (at cost):
    Land                                           206,144         206,144
    Land improvements                               71,970          71,970
    Buildings & improvements                     3,569,252       3,529,124
    Machinery & equipment                        7,161,344       6,839,416
  ------------------------------------------------------------------------
    Total property, plant & equipment           11,008,710      10,646,654
    Less accumulated depreciation               (8,441,676)     (7,997,720)
  ------------------------------------------------------------------------
  Property, plant & equipment, net             $ 2,567,034     $ 2,648,934
  ------------------------------------------------------------------------
  Other Assets:
    Note receivable                                   -            255,152
    Intangibles, net                             2,188,635       2,352,379
  ------------------------------------------------------------------------
  Total other assets                           $ 2,188,635     $ 2,607,531
  ------------------------------------------------------------------------
  Total Assets                                 $18,789,216     $19,671,151
  ------------------------------------------------------------------------
<PAGE>
  Liabilities & Shareholders' Equity
  ------------------------------------------------------------------------
  Current Liabilities:
    Accounts payable                           $ 2,127,745     $ 2,547,993
    Accrued expenses                               755,097       1,053,159
    Installment note payable                       669,996         614,163
  ------------------------------------------------------------------------
  Total current liabilities                    $ 3,552,838     $ 4,215,315
  ------------------------------------------------------------------------
  Long-Term Liabilities:
    Note payable                                 1,510,000            -
    Installment note payable                     2,065,841       2,735,837
  ------------------------------------------------------------------------
  Total long-term liabilities                  $ 3,575,841     $ 2,735,837
  ------------------------------------------------------------------------
  Total Liabilities                            $ 7,128,679     $ 6,951,152
  ------------------------------------------------------------------------
  Shareholders' Equity:
    Common shares, $1 par value; 25,000,000
      shares authorized; 4,543,570 shares
      issued at December 31, 1999 4,285,912
      shares issued at December 31, 1998         4,543,570       4,285,912
    Capital in excess of par value               1,869,111       1,526,760
    Retained earnings                            5,247,856       6,907,327
  ------------------------------------------------------------------------
  Total Shareholders' Equity                   $11,660,537     $12,719,999
  ------------------------------------------------------------------------
  Total Liabilities & Shareholders' Equity     $18,789,216     $19,671,151
  ------------------------------------------------------------------------

  See accompanying notes to financial statements.
</TABLE>
<PAGE>

<TABLE>
 ------------------------------------------------------------------------------
 STATEMENTS OF OPERATIONS
 Years ended December 31,

 ------------------------------------------------------------------------------
                                             1999         1998         1997
 ------------------------------------------------------------------------------
 <S>                                      <C>          <C>          <C>
 Net sales                                $38,334,557  $42,590,394  $42,988,526
 ------------------------------------------------------------------------------
 Cost & expenses:
   Cost of sales                           33,370,294   35,483,712   36,187,438
   Engineering, selling & administrative    5,687,305    5,602,115    5,677,183
 ------------------------------------------------------------------------------
   Operating income (loss)                   (723,042)   1,504,567    1,123,905
   Other expense, net                         466,709      505,433      338,665
 ------------------------------------------------------------------------------
 Earnings (loss) before income taxes       (1,189,751)     999,134      785,240
   Income tax                                       0       25,000       10,000
 ------------------------------------------------------------------------------
 Net earnings (loss)                      $(1,189,751) $   974,134   $  775,240
 ------------------------------------------------------------------------------
 Basic net earnings (loss) per share            (0.26)        0.22         0.18
 ------------------------------------------------------------------------------
 Diluted net earnings (loss) per share          (0.26)        0.21         0.17
 ------------------------------------------------------------------------------
 Basic average common
   shares outstanding                       4,517,492    4,469,833    4,343,253
 Diluted average common
   shares outstanding                       4,517,492    4,621,372    4,531,097
 ------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>

STATEMENTS OF SHAREHOLDERS' EQUITY

                           -------------------------------------------------------------
                                       Capital In                             Total
                             Common    Excess Of   Retained   Unearned     Shareholders'
                             Shares    Par Value   Earnings  Compensation     Equity
----------------------------------------------------------------------------------------
  <S>                      <C>         <C>        <C>         <C>          <C>
  December 31, 1996        $4,068,426  $1,158,308 $ 5,157,953 $(290,101)   $10,094,586
--------------------------------------------------------------------------------------
  Net earnings                   -           -        775,240      -           775,240
  Issuance of stock awards     30,400      86,750        -     (115,050)         2,100
  Stock options exercised     116,257     179,438        -         -           295,695
  Amortization of unearned
    compensation                 -           -           -      217,301        217,301
--------------------------------------------------------------------------------------
  December 31, 1997        $4,215,083  $1,424,496 $ 5,933,193 $(187,850)   $11,384,922
  Net earnings                   -           -        974,134      -           974,134
  Issuance of stock awards     14,050      51,700        -      (65,750)          -
  Stock options exercised      56,779      50,564        -         -           107,343
  Amortization of unearned
    compensation                 -           -           -      253,600        253,600
--------------------------------------------------------------------------------------
  December 31, 1998        $4,285,912  $1,526,760 $ 6,907,327      -       $12,719,999
  Net loss                       -           -     (1,189,751)     -        (1,189,751)
  Stock dividend issued       214,627     255,093    (469,720)     -              -
  Issuance of stock awards     29,679      62,038        -         -            91,717
  Shares issued from
    stock purchase plan        12,473      24,459        -         -            36,932
  Stock options exercised         879         761        -         -             1,640
--------------------------------------------------------------------------------------
  December 31, 1999        $4,543,570  $1,869,111 $ 5,247,856      -       $11,660,537
--------------------------------------------------------------------------------------

  See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
  STATEMENTS OF CASH FLOWS

  Years ended December 31,
                                         ---------------------------------------
                                              1999          1998         1997
--------------------------------------------------------------------------------
<S>                                      <C>           <C>          <C>
Cash flows from operating activities:
  Net earnings (loss)                    $(1,189,751)  $   974,134  $   775,240
  Adjustments to reconcile net earnings
    (loss) to net cash provided by
    (used in) operating activities:
    Depreciation & amortization              646,677       507,816      403,989
    Amortization of unearned compensation        -         253,600      217,301
  Changes in current assets & liabilities
    (net of effect of acquisition):
  Accounts receivable                        353,301        83,123   (1,336,030)
  Note receivable                            487,521      (113,013)    (374,508)
  Inventory                                   69,069     1,123,958   (1,912,709)
  Prepaid expenses                          (180,708)     (190,754)     212,141
  Accounts payable                          (420,248)     (905,259)   1,690,515
  Income taxes payable                          -             -          10,000
  Accrued expenses                          (298,062)      170,948      (95,071)
--------------------------------------------------------------------------------
Net cash provided by (used in)
    operating activities                 $  (532,201)  $ 1,904,553   $ (409,132)
--------------------------------------------------------------------------------
Cash used in investing activities:
  Payment for acquisition                       -       (3,350,000)        -
  Additions to property, plant
    & equipment, net                        (401,033)     (335,631)    (296,357)
--------------------------------------------------------------------------------
Net cash used in investing activities    $  (401,033)  $(3,685,631)  $ (296,357)
--------------------------------------------------------------------------------
Cash provided by (used in)
    financing activities:
  Borrowings (repayments) from
    note payable                           1,510,000    (1,800,000)     500,000
  Proceeds from (repayments of)
    installment note payable                (614,163)    3,350,000         -
  Proceeds from options exercised
    & purchase plan                          130,289       107,343      297,795
--------------------------------------------------------------------------------
Net cash provided by financing
    activities                           $ 1,026,126   $ 1,657,343   $  797,795
--------------------------------------------------------------------------------
Net increase (decrease) in cash
    & cash equivalents                        92,892      (123,735)      92,306
Cash & cash equivalents at
    beginning of year                         26,052       149,787       57,481
--------------------------------------------------------------------------------
Cash & cash equivalents at
    end of year                          $   118,944   $    26,052   $  149,787
--------------------------------------------------------------------------------
Supplemental cash flows disclosure:
  Income taxes paid                            -       $    35,000         -
  Interest paid                          $   407,616   $   400,719   $  222,375
--------------------------------------------------------------------------------

See accompanying notes to financial statements.
</TABLE>
<PAGE>

  NOTES TO FINANCIAL STATEMENTS


  Note 1.  DESCRIPTION OF THE BUSINESS

       Founded  in  1925,  Wells-Gardner  Electronics  Corporation  is  a
  distributor  and  ISO  9001  certified  manufacturer  of  color   video
  monitors, video  liquid crystal  & plasma  displays, coin  doors,  coin
  mechanisms and other related distribution  products for a wide  variety
  of markets  including,  but  not limited  to,  gaming  machines,  coin-
  operated  video  games,  leisure  and  fitness,  automotive,   display,
  intranet, medical, service and video walls.


  Note 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Cash & Cash Equivalents

       For purposes of  reporting cash flows,  cash and cash  equivalents
  include cash on  hand, commercial  paper, certificates  of deposit  and
  money market funds, which have an original maturity of three months  or
  less.

  Inventory

       Inventory is valued  at the  lower of  first-in, first-out  (FIFO)
  cost or market.


  Property, Plant & Equipment

       Property,  plant  and  equipment  are  stated  at  cost  and   are
  depreciated for financial reporting purposes over the estimated  useful
  lives on a straight-line basis as follows:

  Buildings                       15 - 31 1 /2 years
  Machinery & Equipment                 5 - 15 years


  Revenue Recognition

       Revenue from sales of products is recorded at time of shipment.

  Earnings Per Share

       Basic earnings per share ("EPS") is based on the weighted  average
  number of shares outstanding whereas diluted EPS includes the  dilutive
  effect of unexercised common stock  options.  For all periods reported,
  EPS have been restated to reflect the stock dividend issued in 1999.

  Financial Instruments

       The fair value  of the  Company's financial  instruments does  not
  materially vary from the carrying value of such instruments.
<PAGE>

  Reclassifications

       Certain amounts  in previously  issued financial  statements  have
  been reclassified to conform to the current year's presentation.

  Research & Development

       Research and development  costs for the  years ended December  31,
  1999, 1998  and  1997  were approximately  $1,334,000,  $1,536,000  and
  $1,786,000, respectively,  which were  3.5%, 3.6%  and 4.2%  of  annual
  sales, respectively.

  Use of Estimates

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

  Long-Lived Assets

       Long-lived assets to be held and used are reviewed for  impairment
  whenever events or changes in circumstances indicate that the  carrying
  amounts should be evaluated.  Impairment  is measured by comparing  the
  carrying value to the estimated undiscounted future cash flows expected
  to  result  from the use of the  assets and their eventual disposition.
  The Company has determined, on the basis that there  are no indicators,
  that  as of December 31,  1999 there  has  been  no impairment  in  the
  carrying values of long-lived assets.

  Intangibles

       Intangible  assets  consist  primarily  of the cost of a purchased
  business in  excess  of the  fair value  of net assets acquired and are
  amortized on a straight-line  basis  over periods  of  five and  twenty
  years.  The  Company regularly reviews the performance  of the acquired
  business  to evaluate  the  realizability of  the underlying  goodwill.
  Amortization expense in 1999, 1998 and 1997 was approximately $163,000,
  $89,000 and $0 respectively.

  Significant Customers

       Approximately  32%,  33%  and 34% of  net sales in  1999, 1998 and
  1997, respectively, were to the Company's largest customer.

  Stock Dividend

       On  March 16, 1999,  the Company announced  a  five  percent stock
  dividend  payable to  all  common stock  shareholders of  record as  of
  April  13, 1999. The stock dividend resulted in the issuance of 214,627
  additional common shares.  All reported  earnings per  share disclosure
  has been restated to reflect this dividend.
<PAGE>

  Note 3.  RELATED-PARTY TRANSACTIONS

       During the  period 1997 to 1999, a majority of the Company's sales
  were  made  through a sales representative firm, James Industries Inc.,
  whose Chairman and principal shareholder is  a  substantial  beneficial
  shareholder and director  of the Company.  Commissions earned by  James
  Industries Inc. for the  years ended December 31,  1999, 1998 and  1997
  were approximately $1,076,000, $1,386,000 and $1,541,000, respectively.
  Commissions owed to James Industries Inc. as of December 31, 1999, 1998
  and  1997   were   approximately   $72,000,   $148,000   and   $246,000
  respectively.  Total commissions as a percentage of sales for the years
  ended December  31, 1999,  1998  and 1997  were  2.8%, 3.2%  and  3.6%,
  respectively.  Sales  to  James Industries Inc.  for  the  years  ended
  December 31, 1999, 1998 and  1997 were approximately $261,000, $258,000
  and $406,000, respectively.  Outstanding accounts  receivable due  from
  James Industries  Inc.  at  December  31,  1999,  1998  and  1997  were
  approximately $99,000, $156,000 and $100,000, respectively.

       During 1997, the Company  entered  into  an  agreement with  James
  Industries whereby  it  agreed to  sell  certain specific  products  on
  extended terms in exchange for a promissory note.  Shipments under this
  agreement began  in September,  1997 and  were fully  completed in  the
  first quarter of  1998.  The note  carries interest at  a rate of prime
  plus 200  basis points  and is  personally guaranteed  by Jim  Roberts,
  Chairman and John Blouin, President of James Industries,  respectively.
  During 1999, James  Industries elected to  pay off  the entire  balance
  due, thus at December 31, 1999 the balance due was $0.


  Note 4.  INVENTORY

  Inventory consisted of the following components:

  -----------------------------------------------
                               December 31,
  -----------------------------------------------
                            1999          1998
  -----------------------------------------------
  Raw materials          $6,122,748    $6,225,344
  Work in progress          401,880       440,049
  Finished goods          1,985,647     1,913,951
  -----------------------------------------------
  Total                  $8,510,275    $8,579,344
  -----------------------------------------------

<PAGE>
   Note 5.  DEBT

       The long-term note payable consisted of a revolving line of credit
  balance of $1,510,000 and $0 at December 31, 1999 and 1998, respective-
  ly, bearing interest at  7.57%  at December 31, 1999.  During 1998, the
  Company entered into a new,  long-term  banking agreement with American
  National Bank and Trust Company of Chicago.  The new agreement provides
  for an $8,000,000 revolving line of  credit at a rate  of either  prime
  or the London Interbank Offered  Rate  (LIBOR) plus  175 basis  points.
  This agreement runs  through May  31,  2001.  At December 31, 1999  the
  Company had an unused balance of $6,490,000 on its line of credit.  The
  long-term note is uncollateralized with certain covenant restrictions.

       During  1998,  the  Company   entered  into   an  uncollateralized
  installment note payable  for $3,350,000 at  a rate of  LIBOR plus  225
  basis points.  The proceeds of this note were used for the  acquisition
  discussed in Note 11.  This note has  a term of  five years with  sixty
  equal monthly  principal and  interest payments,  commencing  February,
  1999.


  Note 6.  STOCK PLANS

       The Company maintains  a Non-Qualified Option and Stock Award Plan
  under which employees may acquire up  to a maximum of 1,470,000  common
  shares and a Nonemployee Director Stock Plan under which directors  may
  acquire up  to  262,500 common  shares.  Options may  be  granted  thru
  December 31, 2008 at an option price not less than fair market value on
  the date of grant and are  exercisable not earlier than six months  nor
  later than ten years from the date of grant.  Options vest over two and
  three  year  periods.  As  of  December  31,  1999,  48  persons   held
  outstanding options and were eligible to participate in the plans. Such
  options expire on dates ranging from April 24, 2000 to January 4, 2009.

       The Company applies APB Opinion No. 25 and related Interpretations
  in accounting for its plans. Accordingly, no compensation cost has been
  recognized for its fixed stock option plans.  Had compensation cost for
  the Company's stock option plans  been determined consistent with  FASB
  Statement of Financial  Accounting Standards No.  123 ("FAS 123"),  the
  Company's net earnings (loss) available to common shareholders and  net
  earnings (loss) per common share would have been as follows:

  ------------------------------------------------------------------
                                                1999           1998
  ------------------------------------------------------------------
  Net earnings (loss) available to
    common shareholders:
    As reported                            $(1,189,751)   $  974,134
    Pro forma                               (1,225,882)      846,988

  Net earnings (loss) per common
    and common equivalent share:
    Basic as reported                           (0.26)          0.22
    Diluted as reported                         (0.26)          0.21
    Pro forma - Basic                           (0.26)          0.19
    Pro forma - Diluted                    $    (0.26)     $    0.18
  ------------------------------------------------------------------
<PAGE>
       Under the stock  option plans, the exercise  price of  each option
  equals the market price  of the Company's stock  on the date of  grant.
  For purposes of calculating the  compensation cost consistent with  FAS
  123, the fair value  of each grant  is estimated on  the date of  grant
  using  the  Black-Scholes  option-pricing  model  with  the   following
  weighted-average assumptions used for grants  in fiscal 1999, 1998  and
  1997, respectively:  expected  volatility  of  20  percent;  risk  free
  interest rates ranging from  5.7 percent to  6.8 percent; and  expected
  lives of 5 years.  Additional information  on shares subject to options
  is as follows:

<TABLE>

  NOTES TO FINANCIAL STATEMENTS
  -------------------------------------------------------------------------------------------------
                                                1999                  1998                  1997
                                      -------------------------------------------------------------
                                               Weighted              Weighted              Weighted
                                               average               average               average
                                               exercise              exercise              exercise
                                      Options   price     Options     price     Options     price
  -------------------------------------------------------------------------------------------------
  <S>                                 <C>       <C>       <C>         <C>       <C>         <C>
  Outstanding at beginning of year    867,864   $3.98     663,774     $3.56     523,215     $3.35
  Granted                             334,492    2.51     327,342      4.73     285,789      3.73
  Forfeited                           (38,327)   3.69     (41,583)     4.30      (8,000)     3.50
  Exercised                            (1,251)   2.50     (81,669)     3.49    (137,230)     3.02
  -------------------------------------------------------------------------------------------------
  Outstanding at end of year        1,162,778   $3.48     867,864     $3.98     663,774     $3.56
  -------------------------------------------------------------------------------------------------
  Weighted average fair value of
    options granted                             $3.54                 $1.38                 $1.18
  -------------------------------------------------------------------------------------------------
  Options exercisable at year end     726,812             449,927               286,405
  -------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
  The following table summarizes information about stock options outstanding
  at December 31, 1999:
  ---------------------------------------------------------------------------
                                      Weighted
                       Options         average       Weighted    Options
       Range of     outstanding at    remaining      average   exercisable at
   exercise prices   December 31,    contractual     exercise   December 31,
                         1999           life         price         1999
  ---------------------------------------------------------------------------
  <S>                  <C>              <C>          <C>          <C>
  $2.05 - 2.56         282,248          9.0          $2.50         69,608
   2.57 - 3.07         229,276          5.1           2.84        229,276
   3.08 - 3.58         267,029          6.9           3.55        201,360
   3.59 - 4.10          21,288          6.3           4.05         21,288
   4.11 - 4.61         281,530          8.4           4.40        142,398
   4.62 - 5.12          81,407          5.0           5.12         62,882
  ---------------------------------------------------------------------------
                     1,162,778          7.3          $3.54        726,812
  ---------------------------------------------------------------------------
</TABLE>
<PAGE>

  Note 7.  ACCRUED EXPENSES

  Accrued expenses consisted of the following components:

  ---------------------------------------------------------
                                        December 31,
                                 1999                1998
                               ----------------------------
  Payroll & salary             $ 84,028           $ 410,184
  Sales commissions              72,191             148,456
  Insurance                     300,262             149,861
  Warranty                      185,832             191,115
  Other accrued expenses        112,784             153,543
  ---------------------------------------------------------
  Total                       $ 755,097          $1,053,159
  ---------------------------------------------------------


  Note 8.  OTHER EXPENSE, NET

  Other expense, net consisted of the following  components:

  ---------------------------------------------------------
                                      December 31,
                          ---------------------------------
                            1999         1998        1997
  ---------------------------------------------------------
  Interest expense        $407,616     $400,719    $222,375
  Other expense, net       110,993      183,590     151,019
  Other income, net       (51,900)      (78,876)    (34,729)
  ---------------------------------------------------------
  Other expense, net      $466,709     $505,433    $338,665
  ---------------------------------------------------------


  Note 9.  INCOME TAXES

  The  effective  income tax  rates for 1999, 1998 and 1997 differed from
  the expected Federal income tax rate (34%)for the following reasons:

  -------------------------------------------------------------------
                                       1999        1998       1997
  -------------------------------------------------------------------
  Computed expected
    tax expense
    (benefit)                        $(405,000)  $ 340,000  $ 281,000
  State income tax
    expense (benefit) net
    of Federal tax effect             (51,000       37,000     40,000
  Other, net                           40,000      (59,000)    12,000
  Change in valuation
    allowance                         416,000     (293,000)  (323,000)

                                          -       $ 25,000   $ 10,000

<PAGE>
      Deferred income taxes reflect the impact  of temporary  differences
  between the amounts of assets  and liabilities for financial  reporting
  purposes  and  as  measured   by  income  tax  regulations.   Temporary
  differences which gave  rise to deferred  tax assets  and deferred  tax
  liabilities at December 31 1999 and 1998 consisted of:

  -------------------------------------------------------------
                                          1999           1998
  -------------------------------------------------------------
  Deferred tax assets:
   Allowance for doubtful
     accounts                       $     23,000    $    33,000
   Warranty reserve                       72,000         74,000
   Inventory reserve                     114,000        175,000
   Deferred compensation                       -          1,000
   Net operating loss
     carryforwards                     1,135,000        586,000
   Alternative minimum tax
     credit carryforwards                 62,000         74,000
   General business credit
     carryforwards                       129,000        129,000
   Other                                   9,000          6,000
  -------------------------------------------------------------
     Total gross deferred tax
       assets                          1,544,000      1,078,000
     Less valuation allowance         (1,423,000)    (1,007,000)
  -------------------------------------------------------------
     Net deferred tax assets             121,000         71,000
  Deferred tax liabilities:
   Deferred compensation                  41,000           -
   Property, plant & equipment,
     principally depreciation             80,000         71,000
  -------------------------------------------------------------
  Net deferred taxes                        -              -
  -------------------------------------------------------------

       A valuation allowance is provided when it is more likely than  not
  that some  portion  or all  of  the deferred  tax  assets will  not  be
  realized.  The net change in the valuation allowance for the year ended
  December 31, 1999 was  an increase of $416,000.  At December 31,  1999,
  the Company has net operating loss carryforwards for Federal income tax
  purposes of  approximately $2,940,000  which  are available  to  offset
  future Federal taxable income, if any,  through 2019.  The Company also
  has alternative  minimum  tax  credit  carryforwards  of  approximately
  $62,000 which are  available to  reduce future  Federal regular  income
  taxes, if any, over an indefinite period.  In addition, the Company has
  general business credit carryforwards  of approximately $129,000  which
  are available to reduce  future Federal regular  income taxes, if  any.
  These general  business credits  are scheduled  to expire  during  2004
  through 2008.
<PAGE>

  Note 10.  EARNINGS (LOSS) PER SHARE

       During  1999, the  Company announced a five percent stock dividend
  payable to all  common stock  shareholders of  record as  of April  13,
  1999.  All reported earnings per share  disclosure has been restated to
  reflect this  dividend.  In  accordance  with  Statement  of  Financial
  Accounting  Standards  No.  128  "Earnings  Per  Share  ("EPS"),"   the
  following  table  presents  a  reconciliation  of  the  numerators  and
  denominators of basic  and diluted earnings  per common  share for  the
  years ended December 31, 1999, 1998 and 1997:

  ------------------------------------------------------------------------
                                              December 31,
  ------------------------------------------------------------------------
                                   1999            1998            1997
  ------------------------------------------------------------------------
  Basic EPS:
    Net income (loss)          $(1,189,751)    $   974,134     $   775,240
  Weighted average
    common shares
    outstanding                  4,517,492       4,469,833       4,343,253
    Per share amount           $     (0.26)    $      0.22      $     0.18
  ------------------------------------------------------------------------
  Diluted EPS:
    Net income (loss)          $(1,189,751)    $   974,134      $  775,240
  Weighted average
    common shares
    outstanding                  4,517,492       4,469,833       4,343,253
    Add: Effect of dilutive
      stock options                   -            151,539         187,844
  ------------------------------------------------------------------------
  Adjusted weighted average
    common shares outstanding    4,517,492       4,621,372       4,531,097
  Per share amount             $     (0.26)    $      0.21      $     0.17
  ------------------------------------------------------------------------

     Options which had an anti-dilutive effect at December 31, 1999, 1998
  and 1997  were  679,205,  374,092 and  58,000,  respectively  and  were
  excluded from the diluted earnings per share calculation.


  Note 11.  ACQUISITION

       In 1998,  the  Company  acquired  the  mechanical  coin  door  and
  mechanical  coin  mechanism  business  of  Coin  Controls,  Inc.   This
  acquisition was accounted for under the purchase method of  accounting.
  The effect of the pro forma  results of operations had the  acquisition
  occurred at the beginning of each year was immaterial.
<PAGE>

  Note 12.  LEASE COMMITMENTS

     The Company leases certain data processing and other equipment under
  lease agreements expiring  through the year  2003.  The  following is a
  schedule of  future minimum  lease  payments required  under  operating
  leases as of December 31, 1999:

  -------------------------------------------
  Years ending December 31,            Amount
  -------------------------------------------
  2000                               $185,677
  2001                                184,754
  2002                                 81,069
  2003                                 22,684
  2004                                 13,945
  Thereafter
  -------------------------------------------
                                     $488,129
  -------------------------------------------

     Rent expense related to operating leases was approximately $161,000,
  $50,000 and $38,000 during the years ended December 31, 1999, 1998  and
  1997, respectively.


  Note 13.  UNAUDITED QUARTERLY FINANCIAL DATA

      Selected quarterly  data for 1999  and  1998 are  as  follows:  (In
  thousands except per-share data)

       ------------------------------------------------------------------
                                                   1999
       ------------------------------------------------------------------
                                 First      Second      Third     Fourth
       ------------------------------------------------------------------
       Net sales                $9,207     $11,035    $ 9,086     $9,007
       Net earnings (loss)        (245)        404         31     (1,380)
       Basic net earnings
         (loss) per share        (0.05)       0.09       0.00      (0.30)
       Diluted net earnings
         (loss) per share       $(0.05)    $  0.09     $ 0.00     $(0.30)
       ------------------------------------------------------------------


       ------------------------------------------------------------------
                                                   1998
       ------------------------------------------------------------------
                                  First      Second     Third      Fourth
       ------------------------------------------------------------------
       Net sales                 $8,983     $12,983   $ 9,965     $10,659
       Net earnings                 154         547       131         142
       Basic net earnings
         per share                 0.04         013      0.03        0.02
       Diluted net earnings
         per share               $ 0.04     $  0.12    $ 0.03      $ 0.02
       ------------------------------------------------------------------
<PAGE>

  [KPMG LOGO]


  INDEPENDENT AUDITORS' REPORT


  The Board of Directors and Shareholders of
  Wells-Gardner Electronics Corporation:


  We  have  audited  the  accompanying  balance sheets  of  Wells-Gardner
  Electronics Corporation  as  of December  31,  1999 and  1998  and  the
  related statements of operations,  shareholders' equity and cash  flows
  for each of the years in the three-year period ended December 31, 1999.
  These financial  statements are  the  responsibility of  the  Company's
  management.  Our responsibility  is  to express  an  opinion  on  these
  financial statements based on our audits.

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

  In our  opinion, the  financial statements  referred to  above  present
  fairly, in  all material  respects, the  financial position  of  Wells-
  Gardner Electronics Corporation at December 31, 1999 and 1998, and  the
  results of its operations and its cash  flows for each of the years  in
  the three-year  period  ended December  31,  1999, in  conformity  with
  generally accepted accounting principles.

  /s/ KPMG

  Chicago, Illinois
  January 27, 2000

<PAGE>

  --------------------------------------------------------------------------
  BOARD OF DIRECTORS                      OFFICERS
  ------------------                      --------
  Anthony Spier                           Anthony Spier
  Chairman, President &                   Chairman, President &
  Chief Executive Officer                 Chief Executive Officer

  John R. Blouin                          Kathleen E. Hoppe
  President of James                      Director of Information Technology
  Industries, Inc.
                                          Mark E. Komorowski
  Marshall L. Burman                      Vice President of Sales
  Counsel with Wildman,
  Harrold, Allen & Dixon                  Larry S. Mahl
                                          Director of Materials
  Jerry Kalov
  President of Kay Consulting             John S. Pircon
                                          Vice President of Marketing
  Ira J. Kaufman
  Senior Managing Director of             Jeffrey A. Sterling
  Mesirow Financial, Inc.                 Vice President of Engineering

  Frank R. Martin                         Eric A. Slagh
  Senior Partner of Righeimer,            Director of Quality
  Martin & Cinquino, P.C.
                                          George B. Toma CPA, CMA
  James J. Roberts, Jr.                   Vice President of Finance,
  Chairman & Chief Executive Officer      Chief Financial Officer, Treasurer
  of James Industries, Inc.               & Corporate Secretary

  Randall S. Wells                        Randall S. Wells
  Executive Vice President                Executive Vice President
  & General Manager                       & General Manager

  Ernest R. Wish
  Chairman of WRM, Inc.
  --------------------------------------------------------------------------
<PAGE>
  OFFICES                                 WHOLLY OWNED SUBSIDIARIES
  CORPORATE                               American Gaming & Electronics, Inc.
  Wells-Gardner Electronics Corporation   6255 McLeod Drive, Suite 22
  2701 North Kildare Avenue               Las Vegas, Nevada 89120
  Chicago, Illinois 60639                 Telephone: 702/798-5752
  Telephone: 773/252-8220                 19 Tilton Street
  Fax: 773/252-8072                       Hammonton, New Jersey 08037
  Internet: www.wgec.com                  Telephone: 609/567-1117
                                          2046 McKinley Street
  JOINT VENTURE                           Hollywood, Florida 33020
  -------------                           Telephone: 954/922-9952
  Wells Eastern Asia                      280 Greg Street, Suite 3
  Displays (M) SDN BHD                    Reno, Nevada 89502
  Lot 316 & 317                           Telephone: 775/786-8112
  Jalan PKNK 3/2
  Sungai Petani Industrial Estate
  08000
  Sungai Petani, Kedah, Malaysia
  Telephone: 60-4-441-1336
  --------------------------------------------------------------------------

  CORPORATE INFORMATION                   CORPORATE BANKERS
                                          -----------------
                                          American National Bank & Trust
  ANNUAL MEETING                          Chicago, Illinois
  --------------
  The annual meeting of shareholders      INDEPENDENT AUDITORS
  will take place on April 25, 2000       --------------------
  at 2:00 p.m. at the corporate           KPMG LLP
  offices of the Company.                 Chicago, Illinois


  FORM 10-K                               GENERAL COUNSEL
  ---------                               ---------------
  A copy of the Company's annual report   Katten Muchin & Zavis
  on Form 10-K, without exhibits, as      Chicago, Illinois
  filed with the Securities and
  Exchange Commission is available        INVESTMENT BANKERS
  without charge upon written request     ------------------
  to Mr. George B. Toma at the            Mesirow Financial
  corporate offices of the Company.       Chicago, Illinois

  TRANSFER AGENT
  LaSalle National Bank
  135 South LaSalle Street
  Chicago, Illinois 60603
  Telephone: 800/246-5761