We present a neural network employing Hebbian storage and sparse inter
nal coding, which is capable of memorizing and correcting sequences of
binary vectors by association. A ternary version of the Kanerva memor
y, folded into a feedback configuration, is shown to perform the basic
sequence memorization and regeneration function. The inclusion of lat
eral connections between the internal cells increases the network capa
city considerably and facilitates the correction of individual input p
atterns and the detection of large errors. The introduction of higher
delays in the transmission lines between the external input-output lay
er and the internal memory layer is shown to further improve the netwo
rk's error correction capability.