**UNITED        STATES SECURITIES AND EXCHANGE COMMISSION**

**Washington,        D.C. 20549**

**FORM        10-K**

**ANNUAL        REPORT PURSUANT TO SECTION 13 OR 15(d)**

**OF        THE SECURITIES EXCHANGE ACT OF 1934**

**For        the fiscal year ended December 31, 2006**

**Commission        File Number 1-8250**

**WELLS-GARDNER        ELECTRONICS CORPORATION**

**(Exact        name of registrant as specified in its charter)**

|                                                                                        |   |                                                                |
|---------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------|
| **ILLINOIS**(State                  or other jurisdiction of incorporation or organization) |   | **36-1944630**(IRS                  Employer Identification Number) |

**9500        West 55**
**th**

**        Street, Suite A**

**McCook,        Illinois 60525-3605**

**        708/290-2100**

|                                               |   |                                                                        |
|----------------------------------------------------|--------|-----------------------------------------------------------------------------|
| **Common                  Stock, $1.00 par value** |   | **American                  Stock Exchange**                                |
| Title                  of each class               |   | Name                  of each exchange on which                  registered |

| Large                  accelerated filer o | Accelerated                  filer o | Non-accelerated                  filer x |
|--------------------------------------------|--------------------------------------|------------------------------------------|

**DOCUMENTS        INCORPORATED BY REFERENCE**

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**TABLE        OF CONTENTS**

|                                                                               |                                                                                                                                                            |   |   |   |   |   |   |   |
|------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| PART                  I                                                            |
|                                                                               | Item 1.                  BUSINESS                                                                                                                          |
|                                                                               | Item 2.                  PROPERTIES                                                                                                                        |
|                                                                               | Item 3.                  LEGAL PROCEEDINGS                                                                                                                 |
|                                                                               | Item 4.                  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                                               |
| PART                  II                                                           |
|                                                                               | Item 5.                  MARKET FOR THE REGISTRANT’S COMMON STOCK AND RELATED STOCKHOLDERS                  MATTERS                                  |
|                                                                               | Item 6.                  SELECTED FINANCIAL DATA                                                                                                           |
|                                                                               | Item 7.                  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF                  OPERATIONS                      |
|                                                                               | Item 7A.                  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET                  RISK                                                      |
|                                                                               | Item 8.                  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                                                       |
|                                                                               | Item 9.                  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND                  FINANCIAL                  DISCLOSURE            |
|                                                                               | Item 9A.                  CONTROLS AND PROCEDURES                                                                                                          |
|                                                                               | Item 9B.                  OTHER INFORMATION                                                                                                                |
| PART                  III                                                          |
|                                                                               | Item 10.                  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                                                               |
|                                                                               | Item 11.                  EXECUTIVE COMPENSATION                                                                                                           |
|                                                                               | Item 12.                  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                  AND RELATED                  STOCKHOLDER MATTERS |
|                                                                               | Item 13.                  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                                                   |
|                                                                               | Item 14.                  PRINCIPAL ACCOUNTING FEES AND SERVICES                                                                                           |
| PART                  IV                                                           |
|                                                                               | Item 15.                  EXHIBITS, FINANCIAL STATEMENT SCHEDULES                                                                                          |
| SIGNATURES                                                                         |
| WEA                  Audited Financial Statements                                  |
| Union                  Contract with IBEW Local 1031                               |
| Amended                  and Restated By-Laws                                      |
| Annual                  Report to Shareholders                                     |
| Consent                  of Blackman Kallick Bartelstein LLP                       |
| Certification                  of CEO Pursuant to Section 302                      |
| Certification                  of CFO Pursuant to Section 302                      |
| Statement                  of CEO and CFO Pursuant to Section                  906 |

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**TABLE            OF CONTENTS**

**PART        I**

**Item 1.        BUSINESS**

**OVERVIEW**

**PRODUCTS**

|                  Market |   |   |   |   | 2006  |   |   |   | 2005  |   |   |   | 2004  |
|------------------------------|--------|--------|--------|--------|------------|--------|--------|--------|------------|--------|--------|--------|------------|
| Gaming                       |   |   |   |   | 83         | %      |   |   |       | 76     | %      |   |       |   | 72 | % |
| Amusement                    |   |   |   |   | 16         | %      |   |   |       | 22     | %      |   |       |   | 24 | % |
| Other                        |   |   |   |   | 1          | %      |   |   |       | 2      | %      |   |       |   | 4 | % |
| Totals                       |   |   |   |   | 100        | %      |   |   |       | 100    | %      |   |       |   | 100 | % |

**MANUFACTURING        AND ASSEMBLY**

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**TABLE            OF CONTENTS**

**MARKETING        AND SALES**

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**TABLE            OF CONTENTS**

**RISK        FACTORS RELATED TO OUR BUSINESS AND INDUSTRY**

***Technology        changes as required by our customers could limit and impair our ability to        produce products.***

***Technology        changes may also initially negatively affect margins.***

***The        loss or interruption of supply from our key suppliers could limit our ability        to        manufacture our products.***

***The        loss of our significant customer Aristocrat would reduce our revenues and        our        profitability.***

***Our        growth could be impaired if we are not able to continue to develop and maintain        the success of our Asian subcontract relationships.***

***Intense        competition in our industry could impair our ability to grow and achieve        profitability.***

***The        gaming business is heavily regulated and we depend on our ability to        obtain/maintain regulatory approvals.***

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**TABLE            OF CONTENTS**

***The        loss of our bank line would severely limit our ability to fund        operations.***

***The        market price for our shares is susceptible to significant changes in market        price.***

***Available        Information***

**CAUTIONARY        NOTE REGARDING FORWARD-LOOKING STATEMENTS**

**Item 2.        PROPERTIES**

**Item 3.        LEGAL PROCEEDINGS**

**Item 4.        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**

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**TABLE            OF CONTENTS**

**PART        II**

**Item 5.        MARKET FOR THE REGISTRANT’S COMMON STOCK AND RELATED STOCKHOLDERS        MATTERS**

**Item 6.        SELECTED FINANCIAL DATA**

**Item 7.        MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF        OPERATIONS**

**Item 7A.        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

**Item 8.        FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**

|   |   |   |   |                                                                                                                                           |
|--------|--------|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | -      |   | Consolidated                  Balance Sheets as of December 31, 2006 and 2005                                                             |
|   |   | -      |   | Consolidated                  Statements of Operations for years ended December 31, 2006, 2005, and                  2004                 |
|   |   | -      |   | Consolidated                  Statements of Shareholders’ Equity for years ended December 31, 2006,                  2005, and 2004 |
|   |   | -      |   | Consolidated                  Statements of Cash Flows for years ended December 31, 2006, 2005, and                  2004                 |
|   |   | -      |   | Notes                  to the Consolidated Financial Statements                                                                                |
|   |   | -      |   | Independent                  Auditors’ Reports                                                                                           |

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

**Item 9A.        CONTROLS AND PROCEDURES**

**Item 9B.        OTHER INFORMATION**

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**TABLE            OF CONTENTS**

**PART        III**

**Item 10.        DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT**

**Item 11.        EXECUTIVE COMPENSATION**

**Item 12.        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED        STOCKHOLDER MATTERS**

**Item 13.        CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**

**Item 14.        PRINCIPAL ACCOUNTING FEES AND SERVICES**

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**TABLE            OF CONTENTS**

**PART        IV**

**Item 15.        EXHIBITS, FINANCIAL STATEMENT SCHEDULES**

|   |   |   |   |                                                                                                                                           |
|--------|--------|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | -      |   | Consolidated                  Balance Sheets as of December 31, 2006 and 2005                                                             |
|   |   |   |   |                                                                                                                                           |
|   |   | -      |   | Consolidated                  Statements of Operations for years ended December 31,2006, 2005, and                  2004                  |
|   |   |   |   |                                                                                                                                           |
|   |   | -      |   | Consolidated                  Statements of Shareholders’ Equity for years ended December 31, 2006,                  2005, and 2004 |
|   |   |   |   |                                                                                                                                           |
|   |   | -      |   | Consolidated                  Statements of Cash Flows for years ended December 31, 2006, 2005, and                  2004                 |
|   |   |   |   |                                                                                                                                           |
|   |   | -      |   | Notes                  to the Consolidated Financial Statements                                                                                |
|   |   |   |   |                                                                                                                                           |
|   |   | -      |   | Independent                  Auditors’ Reports                                                                                           |

| 3.1    |   | Articles                  of Incorporation of the Company, as amended, filed as Exhibit 3.1 of                  the Company’s Annual Report on Form 10-K for the year ended                  December 31, 1994 and incorporated herein by                  reference.                                                             |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |
| 3.2    |   | By-Laws                  of the Company, as amended and restated and in force August 3,                  2006.                                                                                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                              |
| 4.1    |   | Form                  of Warrant filed as Exhibit 4.1 to the Company’s Form 8-K dated                  September 23, 2004 and incorporated herein by                  reference.                                                                                                                                                  |
|   |   |
| 4.2    |   | Form                  of Warrant filed as Exhibit 4.2 to the Company’s Form 8-K dated                  September 23, 2004 and incorporated herein by                  reference.                                                                                                                                                  |
|   |   |
| 10.1   |   | Employment                  Agreement dated February 29, 1996 between the Company and Anthony                  Spier, as amended, filed as Exhibit 10.1 of the Company’s Annual                  Report on Form 10-K for the year ended December 31, 1995 and                  incorporated herein by reference.             |
|   |   |
| 10.2   |   | First,                Second, Third and Fourth Amendment to the Employment Agreement between                the                Company and Anthony Spier filed as Exhibit 10.15 of the Company's                Form                10-K for the year ended December 31, 2004 and incorporated herein                by                reference. |
|   |   |                                                                                                                                                                                                                                                                                                                                              |
| 10.3   |   | Wells-Gardner                  Electronics Corporation Employee 401K Plan dated January 1, 1990, as                  amended, filed as Exhibit 10.10 of the Company’s Annual Report on                  Form 10-K for the year ended December 31, 1993 and incorporated                  herein by reference.                |
|   |   |
| 10.4   |   | Wells-Gardner                  Electronics Corporation 1996 Nonemployee Director Plan filed as                  Annex A to                  the Company’s Proxy Statement for the Annual Meeting of Shareholders to be                  held on April 23, 1996 and incorporated herein by                  reference.                       |
|   |   |
| 10.5   |   | Wells-Gardner                  Electronics Corporation Amended and Restated Incentive Stock Plan,                  as                  amended and filed as Exhibit 4.1 of the Company’s Form S-8, dated                  August 21, 1998 and incorporated herein by                  reference.                                  |
|   |   |
| 10.6   |   | Amended                  and Restated Sales Representative Agreement dated December 9, 1998,                  filed as Exhibit 10.1 of the Company’s Form 10-Q dated                  November 10, 1999 and incorporated herein by                  reference.                                                               |
|   |   |
| 10.7   |   | Acquisition                  of Certain Assets of American Gaming and Electronics dated                  January 12, 2000, filed as Exhibits 2.1, 2.2 and 2.3 on Form 8-K,                  dated January 27, 2000 and incorporated herein by                  reference.                                                               |

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**TABLE            OF CONTENTS**

| 10.8   |   | Executive                  Stock Award Plan, filed as Exhibits 4.1 and 4.2 of the Company’s Form S-8,                  dated May 12, 2000 and incorporated by reference.                                                                                                                                                                                        |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |
| 10.9   |   | Agreement                  dated July 3, 2006, between the Company and Local 1031, I.B.E.W.,                  AFL-CIO.                                                                                                                                                                                                                                                     |
|   |   |
| 10.10  |   | Securities                  Purchase Agreement dated as of September 20, 2004 by and among the                  Company and the purchasers identified on the signature page thereto                  filed                  as Exhibit 10.1 to the Company’s Form 8-K dated September 23,                  2004 and incorporated herein by reference. |
|   |   |
| 10.11  |   | Credit                  and Security Agreement with Wells-Fargo Bank, National                  Association, dated August 21, 2006 filed as Exhibit 10.1 to the                  Company’s Form 8K/A dated August 25, 2006 and incorporated herein by                  reference.                                                           |
|   |   |
| 10.12  |   | Audited                  financial statements of the Company’s joint venture, Wells-Eastern Asia                  Displays (m) Sdn. Bhd. for the year ended December 31,                  2006.                                                                                                                                                            |
|   |   |
| 13.0   |   | Company’s                  Annual Report to Shareholders for the year ended December 31,                  2006.                                                                                                                                                                                                                                                 |
|   |   |
| 23.0   |   | Consent                  of Blackman Kallick Bartelstein LLP                                                                                                                                                                                                                                                                                                               |
|   |   |
| 31.1   |   | Certification                  of Chief Executive Officer Pursuant to Section 302 of the                  Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                  |
|   |   |
| 31.2   |   | Certification                  of Chief Financial Officer Pursuant to Section 302 of the                  Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                  |
|   |   |
| 32.1   |   | Statement                  of Chief Executive Officer and Chief Financial Officer Pursuant                  to 18                  U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the                  Sarbanes-Oxley Act of 2002                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                       |

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**TABLE            OF CONTENTS**

**PRESS        RELEASES**

|  **DATE** | ** TITLE**                                                                                                                                                                                                                      |
|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 03/07/06       | Financial                        Results for the Fourth Quarter and Full Year, 2005                                                                                                                                                  |
| 03/09/06       | 5%                        Stock Dividend Payable on March 30, 2006 to Holders of record                        as of March                        16, 2006                                                                           |
| 03/31/06  | Wells                        Gardner LCDs Have Been Approved for IGT Machines in Jurisdictions                        Throughout North America                                                                                       |
| 04/25/06  | Wells-Gardner                        Announces First Quarter 2006 Results                                                                                                                                                            |
| 05/02/06  | Wells-Gardner                        Announces Filing of a Lawsuit Against Tovis                                                                                                                                                     |
| 06/07/06  | Wells-Gardner                        Announces Introduction of Four New LCD Products for IGT                        Games                                                                                                            |
| 08/03/06  | Wells-Gardner                        Announces Second Quarter 2006 Earnings of $239,000 Compared                        to a Loss of                        ($509,000)                                                               |
| 08/09/06  | Wells-Gardner                        Announces Presentation at Merriman Investor Conference                                                                                                                                          |
| 08/22/06  | Wells-Gardner                        Announces New Four Year $15 Million Banking Agreement With                        Wells                        Fargo                                                                            |
| 08/29/06  | Wells-Gardner                        Announces Filing of Three New Patents for LCDs                                                                                                                                                  |
| 09/12/06  | The                        Entire Family of Wells Gardner IGT LCDs Have Been Approved                        for IGT                        Machines                                                                                 |
| 10/05/06  | A                        Family of Wells Gardner LCDs Have Been Approved for IGT Machines                        by                        Independent Gaming Agencies                                                               |
| 10/10/06  | Wells-Gardner                        Announces Presentation at Goldman Sachs Deutsche Bank Securities                        Gaming                        Investment Forum at G2E                                                   |
| 10/12/06  | Wells-Gardner                        Announces Filing of Two New Patent Applications for Gaming                        Devices                        Involving LCDs                                                                 |
| 11/03/06  | Tovis                        and Wells-Gardner Announce Amicable Resolution of Their Legal                        Claims                        Against Each Other                                                                   |
| 11/06/06  | Wells-Gardner                        Announces Third Quarter 2006 Earnings of $326,000 Compared                        to a Loss of                        $(993,000)                                                                |
| 02/13/07  | Wells-Gardner                        Announces Fiscal 2006 Earnings Of $343,000 Compared To A                        Loss Of $(3)                        Million.                                                                    |
| 02/23/07  | Wells-Gardner                        Announces 5-Year Agreement to Supply Global Requirements                        of Aristocrat                        Technologies                                                               |
| 02/27/07  | Wells-Gardner                        Announces Stock Dividend                                                                                                                                                                        |
| 03/06/07  | Wells-Gardner                        Announces That Its AG&E Subsidiary and Par 4 of New Jersey Have Agreed                        to a Long-Term Contract to Combine Their Used Gaming Device                        Businesses |
| 03/09/07  | Wells-Gardner                        Announces That Its AG&E Subsidiary Has Been Awarded a Florida Gaming                        License                                                                                         |

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**TABLE            OF CONTENTS**

**SIGNATURES**

**WELLS-GARDNER        ELECTRONICS CORPORATION**

|   |   |                                    |   |   |   |                                                  |   |   |   |                                 |
|--------|--------|-----------------------------------------|--------|--------|--------|-------------------------------------------------------|--------|--------|--------|--------------------------------------|
| By:    |   | **/s/                  ANTHONY SPIER**  |   |   |   | Chairman                  of the Board, President     |   |   |   |                                 |
|   |   | Anthony                  Spier          |   |   |   | &                  Chief Executive Officer        |   |   |   | March 13,                  2007 |
|   |   |                                    |   |   |   |                                                  |   |   |   |                                 |
|   |   | **/s/                  JAMES F. BRACE** |   |   |   | Vice                  President, Secretary, Treasurer |   |   |   |                                 |
|   |   | James                  F. Brace         |   |   |   | &                  Chief Financial Officer        |   |   |   |                                 |
|   |   |                                    |   |   |   | (Principal                  Accounting Officer)       |   |   |   | March 13,                  2007 |

|                                        |   |   |   |                                              |   |   |   |                                 |
|---------------------------------------------|--------|--------|--------|---------------------------------------------------|--------|--------|--------|--------------------------------------|
| **/s/                  ANTHONY SPIER**      |   |   |   | Chairman                  of the Board, President |   |   |   |                                 |
|                    Anthony Spier       |   |   |   | &                  Chief Executive Officer    |   |   |   | March 13,                  2007 |
|                                        |   |   |   |                                              |   |   |   |                                 |
| **/s/                  MERLE BANTA**        |   |   |   |                                              |   |   |   |                                 |
|                    Merle Banta         |   |   |   | Director                                          |   |   |   | March 13,                  2007 |
|                                        |   |   |   |                                              |   |   |   |                                 |
| **/s/                  MARSHALL L. BURMAN** |   |   |   |                                              |   |   |   |                                 |
| Marshall                  L. Burman         |   |   |   | Director                                          |   |   |   | March 13,                  2007 |
|                                        |   |   |   |                                              |   |   |   |                                 |
| **/s/                  FRANK R. MARTIN**    |   |   |   |                                              |   |   |   |                                 |
|                    Frank R. Martin     |   |   |   | Director                                          |   |   |   | March 13,                  2007 |

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**TABLE            OF CONTENTS**

**FINANCIAL        SCHEDULE**

**SCHEDULE        II**

**VALUATION        AND QUALIFYING ACCOUNTS (in $000’s)**

|                                                             |   | Year                  Ended December 31,  |
|-------------------------------------------------------------|--------|------------------------------------------------|
| *ALLOWANCE                  FOR DOUBTFUL ACCOUNTS*     |   | 2006                                           | 2005 | 2004 |
| Beginning                  balance                          |   |                                           |   |   | $ | 134 |   |   |   |   | $ | 100 |   |   |   |   | $ | 146 |   |
| Additions                  charged to expense               |   |                                           |   |   | $ | 214 |   |   |   |   | $ | 38 |   |   |   |   | $ | 14 |   |
| Deductions                                                  |   |                                           |   |   | $ | (95 | ) |   |   |   | $ | (4 | ) |   |   |   | $ | (60 | ) |
| Balance                  at end of year                     |   |                                           |   |   | $ | 253 |   |   |   |   | $ | 134 |   |   |   |   | $ | 100 |   |
|                                                        |   |                                           |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
| *INVENTORY                  OBSOLESCENCE RESERVE:*          |   |                                           |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
| Beginning                  balance                          |   |                                           |   |   | $ | 993 |   |   |   |   | $ | 380 |   |   |   |   | $ | 193 |   |
| Additions                  charged to expense               |   |                                           |   |   | $ | 2,018 |   |   |   |   | $ | 697 |   |   |   |   | $ | 494 |   |
| Deductions                                                  |   |                                           |   |   | $ | (1,076 | ) |   |   |   | $ | (84 | ) |   |   |   | $ | (307 | ) |
| Balance                  at end of year                     |   |                                           |   |   | $ | 1,935 |   |   |   |   | $ | 993 |   |   |   |   | $ | 380 |   |
|                                                        |   |                                           |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
| *DEFERRED                  TAX ASSET VALUATION ALLOWANCE:*  |   |                                           |  |   |   |  |   |   |  |   |   |  |   |   |  |   |   |  |   |
| Beginning                  balance                          |   |                                           |   |   | $ | 3,886 |   |   |   |   | $ | 2,678 |   |   |   |   | $ | 2,974 |   |
| Additions                  charged (credited to) to expense |   |                                           |   |   | $ | (175 | ) |   |   |   | $ | 1208 |   |   |   |   | $ | (296 | ) |
| Balance                  at end of year                     |   |                                           |   |   | $ | 3,711 |   |   |   |   | $ | 3,886 |   |   |   |   | $ | 2,678 |   |

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