Exhibit 99.1

                                  NESTOR, INC.

     SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS UNDER THE PRIVATE SECURITIES
                          LITIGATION REFORM ACT OF 1995

                 CERTAIN CAUTIONARY STATEMENTS AND RISK FACTORS

Nestor,  Inc.  and  its  subsidiaries  (collectively,   the  Company)  or  their
representatives   from  time  to  time  may  make  or  may  have  made   certain
forward-looking  statements,  whether  orally or in writing,  including  without
limitation,  any  such  statements  made  or  to be  made  in  the  Management's
Discussion  and  Analysis  contained  in its  various  SEC  filings or orally in
conferences  or  teleconferences.   The  Company  wishes  to  ensure  that  such
statements are accompanied by meaningful cautionary statements,  so as to ensure
to the fullest extent possible the protections of the safe harbor established in
the Private Securities Litigation Reform Act of 1995.

ACCORDINGLY,  THE FORWARD-LOOKING  STATEMENTS ARE QUALIFIED IN THEIR ENTIRETY BY
REFERENCE  TO  AND  ARE  ACCOMPANIED  BY  THE  FOLLOWING  MEANINGFUL  CAUTIONARY
STATEMENTS IDENTIFYING CERTAIN IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS
TO DIFFER MATERIALLY FROM THOSE IN SUCH FORWARD-LOOKING STATEMENTS.

This list of factors is likely not exhaustive. The Company operates in a rapidly
changing and evolving business involving  electronic commerce and payments,  and
new risk  factors  will  likely  emerge.  Management  cannot  predict all of the
important  risk  factors,  nor can it assess the  impact,  if any,  of such risk
factors  on the  Company's  business  or the  extent  to which  any  factor,  or
combination of factors, may cause actual results to differ materially from those
in any forward-looking statements.

ACCORDINGLY,  THERE CAN BE NO ASSURANCE THAT FORWARD-LOOKING  STATEMENTS WILL BE
ACCURATE  INDICATORS  OF FUTURE  ACTUAL  RESULTS  AND IT IS LIKELY  THAT  ACTUAL
RESULTS WILL DIFFER FROM RESULTS PROJECTED IN FORWARD-LOOKING  STATEMENTS.  SUCH
DIFFERENCES MAY BE MATERIAL.

Nestor is dependent on its PRISM products

Nestor has derived a substantial  majority of its total  revenues from licensing
its PRISM family of software  products and  providing  services and  maintenance
related  to  those  products.  The  PRISM  products  and  related  services  and
maintenance  are  expected to provide the  majority of Nestor's  revenues in the
foreseeable   future.   Nestor's  results  will  depend  upon  continued  market
acceptance  of its PRISM  products  and  related  services  as well as  Nestor's
ability to continue to adapt and modify them to meet the  changing  needs of its
customers.  Any reduction in demand for, or increase in competition with respect
to, PRISM  products would have a material  adverse effect on Nestor's  financial
condition and results of operations.

Nestor is subject to risks of conducting international operations

Nestor  has  derived a  material  portion  of its total  revenues  from sales to
customers  outside the United  States.  International  operations  generally are
subject to certain risks, including:

         -  difficulties in staffing and management,

         -  reliance on independent distributors,

         -  fluctuations in foreign currency exchange rates,

         -  compliance with foreign regulatory requirements,

         -  variability of foreign economic conditions, and

         -  changing restrictions imposed by U.S. export laws.

There can be no assurance  that Nestor will be able to manage the risks  related
to selling its products and services in international markets.

Nestor is dependent on the banking industry

Nestor's  business  is  concentrated  in the  banking  industry,  making  Nestor
susceptible  to a downturn in that  industry.  For  example,  a decrease in bank
spending  for software and related  services  could result in a smaller  overall
market for electronic  payment  software.  Furthermore,  banks are continuing to
consolidate,  decreasing  the overall  potential  number of buyers for  Nestor's
products and services.  These factors as well as others negatively affecting the
banking  industry  could have a material  adverse  effect on Nestor's  financial
condition and results of operations.

Nestor must manage its growth effectively

Nestor is  experiencing  a period  of growth  which is  placing  demands  on its
managerial and  operations  resources.  Nestor's  inability to manage its growth
effectively  or to maintain  its current  level of growth  could have a material
adverse effect on its financial condition and results of operations.

Nestor may not be able to attract and retain key personnel

Nestor's success depends on certain of its executive  officers,  the loss of one
or more of whom could  have a  material  adverse  effect on  Nestor's  financial
condition  and  results of  operations.  None of Nestor's  U.S.-based  executive
officers is a party to an employment agreement.  Nestor believes that its future
success  also  depends  on its  ability to  attract  and  retain  highly-skilled
technical,   managerial  and  marketing  personnel,  including,  in  particular,
additional  personnel in the areas of research  and  development  and  technical
support.  Competition  for personnel is intense.  There can be no assurance that
Nestor will be successful in attracting and retaining the personnel it requires.

The market for software and related services is highly competitive

Many applications  software vendors offer products that are directly competitive
with PRISM and other  products of Nestor.  Nestor also  experiences  competition
from  software  developed  internally  by potential  customers  and  experiences
competition   for   its   consulting   services   from   professional   services
organizations.  In addition,  processing  companies  provide services similar to
those made possible by Nestor's products. Many of Nestor's current and potential
competitors have significantly greater financial, marketing, technical and other
competitive resources than Nestor. Current and potential competitors,  including
providers of transaction-based  software,  processing, or professional services,
may establish  cooperative  relationships with one another or with third parties
to  compete  more  effectively  against  Nestor.  It is also  possible  that new
competitors  may emerge and  acquire  market  share.  In either  case,  Nestor's
financial condition and results of operations could be adversely affected.

Nestor's  future  success  depends on its  ability to timely  develop and market
product enhancements and new products.

The market for software in general is  characterized by rapid change in computer
hardware and software  technology and is highly  competitive with respect to the
need  for  timely  product  innovation  and new  product  introductions.  Nestor
believes that its future success depends upon its ability to enhance its current
applications  and develop new  products  that address the  increasingly  complex
needs of  customers.  In  particular,  Nestor  believes that it must continue to
respond quickly to users' needs for additional  functionality and multi-platform
support.  The  introduction and marketing of new or enhanced  products  requires
Nestor to manage the  transition  from  current  products  in order to  minimize
disruption  in customer  purchasing  patterns.  There can be no  assurance  that
Nestor will continue to be successful in the timely development and marketing of
product  enhancements  or new products that respond to  technological  advances,
that its new products will adequately address the changing needs of the domestic
and  international  markets or that it will  successfully  manage the transition
from current products.

Nestor is continually  developing new products,  product versions and individual
features within a complex software system.  Development  projects can be lengthy
and  are  subject  to  changing  requirements,   programming   difficulties  and
unforeseen  factors  which  can  result in  delays  in the  introduction  of new
products and features.  Delays could have a material  adverse effect on Nestor's
financial condition and results of operations.

In addition, new products,  versions or features, when first released by Nestor,
may contain  undetected errors that,  despite testing by Nestor,  are discovered
only  after a  product  has  been  installed  and  used by  customers.  To date,
undetected errors have not caused significant delays in product introduction and
installation or required substantial design modifications. However, there can be
no assurance that Nestor will avoid problems of this type in the future.

Nestor is dependent on proprietary technology

Nestor relies on a  combination  of patents,  trade secret and  copyright  laws,
nondisclosure  and other  contractual  and  technical  measures  to protect  its
proprietary  rights  in its  products.  There  can be no  assurance  that  these
provisions will be adequate to protect its proprietary rights. In addition,  the
laws of certain foreign countries do not protect intellectual property rights to
the same extent as the laws of the United States.  Although Nestor believes that
its intellectual  property rights do not infringe upon the proprietary rights of
third  parties,  there can be no  assurance  that third  parties will not assert
infringement claims against Nestor.

Fluctuations in quarterly operating results may result in volatility in Nestor's
stock price

Nestor's quarterly revenues and operating results may fluctuate depending on the
timing of executed  contracts,  license  upgrades and the delivery of contracted
business  during the  quarter.  In  addition,  quarterly  operating  results may
fluctuate due to the extent of commissions  associated  with third party product
sales,  timing of Nestor's hiring of additional  staff, new product  development
and other  expenses.  No assurance can be given that operating  results will not
vary due to these factors.

Our  sales  cycles  vary  significantly  which  makes it  difficult  to plan our
expenses and forecast our results

Nestor's sales cycles  typically  range from six to twelve months,  but may take
longer.  It is therefore  difficult to predict the quarter in which a particular
sale will occur and to plan our  expenses  accordingly.  The period  between our
initial  contact with potential  clients and their licensing of our products and
services varies due to several factors, including:

          -    the complex nature of our products and services,

          -    our clients' budget cycles,

          -    our clients' internal evaluation and approval requirements, and

          -    our clients' delays of licensing due to  announcements or planned
               introductions of new products or services by our competitors.

Any delay or failure to complete sales in a particular  quarter could reduce our
revenue in that quarter,  as well as  subsequent  quarters over which revenue or
the  license  would  likely  be  recognized.  If our sales  cycles  unexpectedly
lengthen  in general or for one or more large  engagements,  it would  delay our
receipt of the  related  revenue.  If we were to  experience  a delay of several
weeks or longer on a large  engagement,  it could  harm our  ability to meet our
forecasts for a given quarter.

Customers may cancel contracts

Nestor derives a substantial portion of its total revenues from maintenance fees
and monthly  software  license fees pursuant to contracts which the customer has
the right to cancel. A substantial  number of cancellations of these maintenance
or  monthly  license  fee  contracts  would have a  material  adverse  effect on
Nestor's financial condition and results of operations.

Nestor's stock price may be volatile

The stock  market  has from time to time  experienced  extreme  price and volume
fluctuations,  particularly in the high technology sector, which have often been
unrelated to the operating performance of particular companies. Any announcement
with  respect to any  variance  in revenue or  earnings  from  levels  generally
expected by  securities  analysts for a given period could have an immediate and
significant  effect  on the  trading  price  of the  Class A  Common  Stock.  In
addition,  factors such as  announcements  of  technological  innovations or new
products by Nestor, its competitors or other third parties,  as well as changing
market  conditions in the computer software or hardware  industries,  may have a
significant impact on the market price of the Class A Common Stock.

We cannot  predict our future  capital  needs,  and we may not be able to secure
additional financing in the future

We believe that our existing cash, working capital,  backlog, and line of credit
will be sufficient to meet our  anticipated  cash needs for working  capital and
capital  expenditures for at least the next 12 months.  However,  we may need to
raise  additional  funds in the  future  to fund our  operations,  to  expand or
enhance our  products  and  services or to respond to  competitive  pressures or
perceived opportunities. Nestor cannot be assured that additional financing will
be available on acceptable terms, or at all. If adequate funds are not available
or not available on acceptable  terms,  Nestor's  business and financial results
may suffer.

Nestor's growth strategy involves numerous risks and challenges

Nestor has  expanded and may seek to continue to expand its  operations  through
the  acquisition of additional  businesses  that  complement its core skills and
have the  potential to increase its overall  value.  Nestor's  future growth may
depend, in part, upon the continued success of its acquisition strategy.  Nestor
may not be able to  successfully  identify  and  acquire,  on  favorable  terms,
compatible  businesses.  Acquisitions  involve  many  risks,  which could have a
material adverse effect on Nestor's business, financial condition and results of
operations, including:

     -    Acquired businesses may not achieve anticipated revenues,  earnings or
          cash flow;

     -    Integration  of  acquired  businesses  and  technologies  may  not  be
          successful   and  Nestor  may  not   realize   anticipated   economic,
          operational  and other  benefits in a timely manner,  particularly  if
          Nestor  acquires a business in a market in which Nestor has limited or
          no  current  expertise  or with a  corporate  culture  different  from
          Nestor's;

     -    Potential  dilutive  effect on Nestor's  stockholders  from  continued
          issuance of Common Stock as consideration for acquisitions;

     -    Adverse  effect  on net  income of  amortization  expense  related  to
          goodwill  and other  intangible  assets and other  acquisition-related
          charges, costs and expenses on net income;

     -    Competing with other companies,  many of which have greater  financial
          and other  resources  to acquire  attractive  companies  makes it more
          difficult to acquire suitable companies on acceptable terms; and

     -    Disruption of Nestor's  existing  business,  distraction of management
          and other  resources and  difficulty in maintaining  Nestor's  current
          business standards, controls and procedures.


Directors, officers and principal shareholders exercise significant control over
the Company.

Nestor's directors, officers, and principal shareholders who own greater than 5%
of the outstanding common stock, and entities affiliated with them, beneficially
own approximately 49% of our common stock. These shareholders,  acting together,
will be able to exert substantial  influence over all matter requiring  approval
by Nestor's  shareholders.  These  matters  include the  election and removal of
directors and any merger,  consolidation or sale of all or substantially  all or
Nestor's  assets.  This  concentration  of  ownership  may  have the  effect  of
delaying,  deferring or  preventing  a change in control,  or impeding a merger,
consolidation, takeover or business combination even if the transaction might be
beneficial to Nestor's shareholders.