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 HAS A HISTORY OF LOSSES AND MAY INCUR LOSSES IN THE FUTURE.

We have a history of net losses.  For the years ended  December 31, 2001,  2000,
1999,  1998  and  1997,  our net  losses  have  been  approximately  $1,565,000,
$2,994,000,  $837,000, $5,263,000 and $295,000, respectively. We expect to incur
continuing  losses for the  foreseeable  future due to significant  research and
development,  marketing and general and  administrative  expenses,  which losses
could be substantial. As a result, we will need to generate significantly higher
revenue to achieve  profitability,  which we may be unable to do.  Even if we do
achieve  profitability,   we  may  not  be  able  to  sustain  or  increase  our
profitability in the future.

NESTOR WILL NEED ADDITIONAL FINANCING,  WHICH MAY BE DIFFICULT TO OBTAIN AND MAY
RESTRICT OUR OPERATIONS AND DILUTE YOUR OWNERSHIP INTEREST.

We will need to raise  additional  funds in the  future to fund our  operations,
deliver our  products,  to expand or enhance  our  products  and  services or to
respond to competitive pressures or perceived opportunities.  We cannot make any
assurance that additional financing will be available on acceptable terms, or at
all. If adequate  funds are not available or not available on acceptable  terms,
our business and financial results may suffer.

If we raise additional funds by issuing equity  securities,  further dilution to
our then  existing  stockholders  will result and the terms of the financing may
adversely affect the holdings or the rights of such  stockholders.  In addition,
the terms and  conditions of debt  financing may result in  restrictions  on our
operations.  We  could be  required  to seek  funds  through  arrangements  with
collaborative  partners or others that may  require us to  relinquish  rights to
certain of our  technologies,  product  candidates  or  products  which we would
otherwise pursue on our own.

FLUCTUATIONS  IN OUR  RESULTS OF  OPERATIONS  MAKE IT  DIFFICULT  TO PREDICT OUR
FUTURE  PERFORMANCE  AND MAY RESULT IN  VOLATILITY  IN THE  MARKET  PRICE OF OUR
COMMON STOCK.

Our quarterly  operating  results have  fluctuated in the past and may fluctuate
significantly  in the future.  Most of our expenses are fixed in the short-term,
and we may not be able to reduce  spending  quickly if our revenue is lower than
expected. In addition,  our ability to forecast revenue is limited. As a result,
our  operating  results are volatile and difficult to predict and you should not
rely on the  results of one  quarter  as an  indication  of future  performance.
Factors  that may cause our  operating  results to  fluctuate  include the risks
discussed in this section as well as:

     o    costs related to customization of our products and services;

     o    the  planned  expansion  of  our  operations,  including  opening  new
          offices,  and the amount and  timing of  expenditures  related to this
          expansion;

     o    announcements  or  introductions  of new  products and services by our
          competitors;

     o    software defects and other product quality problems;

     o    the  discretionary  nature of our clients'  purchasing  and  budgetary
          cycles;

     o    the varying  size,  timing,  and  contractual  terms of orders for our
          products and services; and

     o    the mix of revenue from our products and services.

It is likely that in some future  quarters our operating  results may fall below
the expectations of securities analysts and investors. In this event, the market
price of our common stock could fall significantly.

IF WE LOSE OUR KEY  PERSONNEL  OR ARE  UNABLE TO ATTRACT  AND RETAIN  ADDITIONAL
PERSONNEL, OUR OPERATIONS WOULD BE DISRUPTED AND OUR BUSINESS WOULD BE HARMED.

We believe that the hiring and retaining of qualified  individuals at all levels
in our  organization  will be  essential  to our  ability to sustain  and manage
growth  successfully.  Competition for highly qualified  technical  personnel is
intense and we may not be successful  in attracting  and retaining the necessary
personnel,  which  may  limit  the  rate at which we can  develop  products  and
generate sales.  We will be particularly  dependent on the efforts and abilities
of our  senior  management  personnel.  The  departure  of  any  of  our  senior
management members or other key personnel could harm our business.

OUR  SALES  CYCLES  VARY  SIGNIFICANTLY  WHICH  MAKES IT  DIFFICULT  TO PLAN OUR
EXPENSES AND FORECAST OUR RESULTS.

Our  sales  cycles  typically  range  from six to twelve  months or more.  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:

     o    the complex nature of our products and services;

     o    our clients' budget cycles;

     o    approval processes at municipalities and other government entities;

     o    our clients' internal evaluation and approval requirements; and

     o    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.

OUR NEW PRODUCTS MIGHT NOT ACHIEVE MARKET ACCEPTANCE.

The market for our products is still emerging.  The rate at which businesses and
government entities have adopted our products has varied significantly by market
and by product  within each  market,  and we expect to  continue  to  experience
variations in the degree to which our products are accepted. Our ability to grow
will depend on the extent to which our potential  customers accept our products.
This acceptance may be limited by:

     o    The failure of  prospective  customers  to conclude  that  adaptive or
          pattern-recognition  solutions are valuable and should be acquired and
          used;

     o    The reluctance of our prospective  customers to replace their existing
          solutions with our products;

     o    Marketing efforts of our competitors; and

     o    The emergence of new technologies  that could cause our products to be
          less competitive or obsolete.

Because  the market for our  products  is still in a  relatively  early stage of
development,  we cannot  assess the size of the market  accurately,  and we have
limited  insight  into  trends  that may emerge and  affect  our  business.  For
example,  we may have  difficulty in predicting  customer  needs,  in developing
products  that could  address  those needs and in  establishing  a  distribution
strategy for these  products.  We may also have  difficulties  in predicting the
competitive environment that will develop.

OUR INTELLECTUAL  PROPERTY MIGHT NOT BE PROTECTIBLE,  AND, IF WE FAIL TO PROTECT
AND PRESERVE OUR  INTELLECTUAL  PROPERTY,  WE MAY LOSE AN IMPORTANT  COMPETITIVE
ADVANTAGE.

We rely on a combination of copyright, trademark, patent, and trade-secret laws,
employee and third-party  nondisclosure  agreements,  and other  arrangements to
protect our proprietary  rights.  Despite these precautions,  it may be possible
for  unauthorized  third  parties  to  copy  our  products  or  obtain  and  use
information  that we  regard as  proprietary  to create  products  that  compete
against  ours.  In  addition,   some  license   provisions   protecting  against
unauthorized use, copying, transfer, and disclosure of our licensed programs may
be unenforceable under the laws of certain  jurisdictions and foreign countries.
In addition, the laws of some countries do not protect proprietary rights to the
same extent as do the laws of the United States.  To the extent that we increase
our international  activities,  our exposure to unauthorized  copying and use of
our products and  proprietary  information  will  increase.  The scope of United
States patent  protection in the software  industry is not well defined and will
evolve as the  United  States  Patent and  Trademark  Office  grants  additional
patents.  Because some patent applications in the United States are not publicly
disclosed  until  the  patent is issued  or 18  months  after the  filing  date,
applications may exist that would relate to Nestor and NTS products and that are
not publicly accessible.  Moreover, a patent search has not been performed in an
attempt to identify patents applicable to the business of Nestor and/or NTS and,
even if such a search were  conducted,  all patents  applicable  to the business
might not be located.

WE ARE AT RISK OF CLAIMS THAT OUR PRODUCTS OR SERVICES  INFRINGE THE PROPRIETARY
RIGHTS OF OTHERS.

Given our ongoing efforts to develop and market new  technologies  and products,
we may from time to time be served with claims from third parties asserting that
our products or technologies infringe their intellectual property rights. If, as
a  result  of  any  claims,  we  were  precluded  from  using   technologies  or
intellectual property rights, licenses to the disputed third-party technology or
intellectual  property  rights might not be available on  reasonable  commercial
terms, or at all. We may initiate claims or litigation against third parties for
infringement  of our  proprietary  rights or to  establish  the  validity of our
proprietary rights.  Litigation,  either as plaintiff or defendant, could result
in  significant  expense and divert the efforts of our technical and  management
personnel from  productive  tasks,  whether or not litigation is resolved in our
favor.  An adverse ruling in any litigation  might require us to pay substantial
damages,  to discontinue  our use and sale of infringing  products and to expend
significant  resources in order to develop  non-infringing  technology or obtain
licenses to infringing  technology.  A court might also  invalidate our patents,
trademarks or other  proprietary  rights. A successful claim against us, coupled
with our failure to develop or license a substitute technology,  could cause our
business,  financial  condition  and  results  of  operations  to  be  adversely
affected.  As the number of software products increases and the functionality of
these products further overlaps, we believe that our risk of infringement claims
will increase.

IF WE ARE UNABLE TO SAFEGUARD THE INTEGRITY, SECURITY AND PRIVACY OF OUR DATA OR
OUR CLIENTS' DATA, OUR REVENUE MAY DECLINE,  OUR BUSINESS COULD BE DISRUPTED AND
WE MAY BE SUED.

We need to preserve  and protect our data and our clients'  data  against  loss,
corruption  and  misappropriation  caused by system  failures  and  unauthorized
access.  We could be  subject  to  liability  claims by  individuals  whose data
resides  in  our  databases  for  misuse  of  personal  information,   including
unauthorized marketing purposes. These claims could result in costly litigation.
Periodically,  we have  experienced  minor  systems  errors  and  interruptions,
including Internet  disruptions,  which we believe may occur periodically in the
future.  A  party  who  is  able  to  circumvent  our  security  measures  could
misappropriate or destroy proprietary  information or cause interruptions in our
operations.  We may be  required  to make  significant  expenditures  to protect
against systems failures or security breaches or to alleviate problems caused by
any failures or breaches.  Any failure that causes the loss or corruption of, or
unauthorized access to, this data could reduce client satisfaction, expose us to
liability and, if significant, could cause our revenue to decline.


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:

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

     o    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;

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

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

     o    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

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

RISKS RELATED TO NTS'S BUSINESS

The risks  discussed  below are applicable to the business and operations of the
Company and NTS.

WE FACE SUBSTANTIAL COMPETITION,  WHICH MAY RESULT IN OTHERS DEVELOPING PRODUCTS
AND SERVICES MORE SUCCESSFULLY THAN WE DO.

Many applications  software vendors offer products that are directly competitive
with CrossingGuard(R) and our other products.  Many of our current and potential
competitors have significantly greater financial, marketing, technical and other
competitive  resources  than  we  do.  Current  and  potential  competitors  may
establish  cooperative  relationships  with one another or with third parties to
compete more  effectively  against us. It is also possible that new  competitors
may emerge and acquire market share.

OUR FINANCIAL  RESULTS WILL DEPEND  SIGNIFICANTLY  ON OUR ABILITY TO CONTINUALLY
DEVELOP PRODUCTS AND TECHNOLOGIES.

The markets for which our products and  technologies  are designed are intensely
competitive and are characterized by short product lifecycles,  rapidly changing
technology  and  evolving  industry  standards.   As  a  result,  our  financial
performance  will depend to a significant  extent on our ability to successfully
develop and enhance our products.  Because of the rapidly changing  technologies
in the businesses in which we operate, we believe that significant  expenditures
for  research and  development  will  continue to be required in the future.  To
succeed in these  businesses,  we must anticipate the features and functionality
that  customers  will  demand.  We must  then  incorporate  those  features  and
functionality into products that meet the design  requirements of our customers.
The  success  of our  product  introductions  will  depend on  several  factors,
including:

     o    Proper product definition;

     o    Timely completion and introduction of enhanced product designs;

     o    The  ability  of   subcontractors   and  component   manufacturers  to
          effectively  design and implement the  manufacture  of new or enhanced
          products and technologies;

     o    The quality of our products and technologies;

     o    Product  and  technology   performance  as  compared  to  competitors'
          products and technologies;

     o    Market acceptance of the company's products; and

     o    Competitive pricing of products, services and technologies.

We must successfully  identify product and service opportunities and develop and
bring our products and technologies to market in a timely manner. We have in the
past experienced delays in completing the development or the introduction of new
products.  Our failure to  successfully  develop and  introduce  new or enhanced
products and technologies or to achieve market  acceptance for such products and
technologies may materially harm our business and financial performance.

WE MAY NOT BE ABLE TO OBTAIN ADEQUATE ADDITIONAL CAPITAL ON ACCEPTABLE TERMS, OR
AT ALL.

We must raise capital  through debt and/or equity  financing for our operations.
If adequate funds are not available on acceptable terms, our ability to continue
as a going concern will be adversely affected. We may need to raise capital to:

     o    maintain current operations;

     o    fulfill current and future contracts;

     o    support our expansion into other states,  cities, and  municipalities,
          as well as internationally;

     o    respond to competitive pressures; and

     o    acquire   complementary   businesses  or  technologies,   should  such
          opportunities arise.

Necessary  funding may not be available on terms acceptable to us, or at all. If
adequate funds are not available on acceptable  terms, our ability to develop or
enhance our products and services to take advantage of future  opportunities  or
respond to competitive pressures would be significantly limited. This limitation
could harm our business, operating results and financial condition.

THE FAILURE OF OUR SUPPLIERS TO DELIVER  COMPONENTS,  EQUIPMENT AND MATERIALS IN
SUFFICIENT  QUANTITIES  AND  IN A  TIMELY  MANNER  COULD  ADVERSELY  AFFECT  OUR
BUSINESS.

Our business employs a wide variety of components,  equipment and materials from
a limited  number of  suppliers.  To date,  we have found  that the  components,
equipment and materials necessary for the development,  testing,  production and
delivery of our products and services have  sometimes not been  available in the
quantities  or at the times we have  required.  Although we make every effort to
assure  alternative  sources are  available if the need  arises,  our failure to
procure  components,  equipment and  materials in particular  quantities or at a
particular  time may result in delays in meeting  our  customer's  needs,  which
could have a negative effect on our revenues and results of operations.

OUR FINANCIAL CONDITION MAY BE ADVERSELY AFFECTED IF WE ARE UNABLE TO SECURE AND
MAINTAIN FUTURE CONTRACTS WITH GOVERNMENT AGENCIES.

We have contracts with  government  agencies,  which accounted for 100% of NTS's
net revenues in 2001.  Many of these  contracts are subject to annual review and
renewal by the  government,  and may be  terminated at any time on short notice.
Each government  contract,  option and extension is only valid if the government
appropriates  enough  funds  for  expenditure  on  such  contracts,  options  or
extensions.  Accordingly,  we might  fail to derive  any  revenue  from sales of
software  to  government  agencies in any given  future  period.  If  government
agencies fail to renew or terminate any of these  contracts,  it would adversely
affect our business and results of operations.

WE ARE SUBJECT TO POTENTIAL PRODUCT LIABILITY CLAIMS THAT COULD RESULT IN COSTLY
AND TIME-CONSUMING LITIGATION.

Although our license agreements  typically contain provisions  designed to limit
our exposure to product liability claims, existing or future laws or unfavorable
judicial  decisions could negate these limitation of liability  provisions.  Any
product  liability claim brought against us, even if unsuccessful,  would likely
be  time-consuming  and  costly,  and  potential  liabilities  could  exceed our
available insurance coverage.

THE FAILURE OF  GOVERNMENTS  TO AUTHORIZE THE TICKETING OF MOTORISTS BY MAIL MAY
HINDER OUR GROWTH AND HARM OUR BUSINESS.

To date, fifteen states authorize law enforcement  agencies to send summonses to
traffic  violators  through  the  mail.  It is  uncertain  at  this  time  which
additional  states,  if any,  will  authorize  the use of the mail to  prosecute
traffic violators or if there will be other changes in the states that currently
allow the practice.  We could be subject to differing and inconsistent  laws and
regulations  with respect to the services we offer.  If that were to happen,  we
may find it necessary to eliminate,  modify or cancel components of our services
that could  result in  additional  development  costs and the  possible  loss of
revenue.  We cannot predict whether future legislative  changes or other changes
in the  fourteen  states  or other  states,  in the  administration  of  traffic
enforcement programs, will have an adverse effect on our business.


RISKS RELATED TO THE RISK MANAGEMENT AND OTHER BUSINESS OF NESTOR

The risks  discussed below are applicable to only the business and operations of
our  NestorCommerce  division,  which comprises both our PRISM(R) and eCLIPSE(R)
products.

Downturns in the banking  industry could harm our business and adversely  affect
our revenues.

The business of our major licensee, ACI Worldwide,  Inc., is concentrated in the
banking industry,  making our royalty revenues 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 fraud  detection  products
and services.  Furthermore, banks are continuing to consolidate,  decreasing the
overall  potential  number of buyers  for these  products  and  services.  These
factors, as well as others negatively affecting the banking industry, could have
a material adverse effect on our financial condition and results of operations.

A DECLINE IN THE PRICE OF, DEMAND FOR, OR MARKET ACCEPTANCE OF OUR PRISM CREDIT,
PRISM DEBIT, PRISM  MONEY-LAUNDERING AND PRISM MERCHANT PRODUCTS WOULD SERIOUSLY
HARM OUR BUSINESS.

We have derived a substantial  majority of our total revenues from licensing our
PRISM family of software products and providing services and maintenance related
to those  products.  Our future results from these products will depend upon the
continued ability of our licensee, ACI Worldwide, Inc., to market and distribute
the  PRISM(R)  products  and on the  continued  market  acceptance  of  PRISM(R)
products and ACI's related services. Any reduction in demand for, or increase in
competition  with respect to,  PRISM(R)  products would have a material  adverse
effect on our financial condition and results of operations.

OUR  REVENUES  MAY DECLINE  BECAUSE OF THE TERMS AND  CONDITIONS  OF OUR LICENSE
AGREEMENT WITH ACI WORLDWIDE, INC. TO MARKET OUR FRAUD DETECTION PRODUCTS.

Pursuant  to the  license  agreement  entered  into on February 1, 2001 with ACI
Worldwide, Inc., we granted to ACI a non-exclusive,  perpetual worldwide license
to market  software  products in the field of fraud detection  (including  money
laundering).  Prior  to  entering  into  this  license  agreement,  ACI  was the
principal  distributor of our fraud detection products and as such accounted for
approximately  63% of our gross  revenues  during the fiscal year ended December
31, 2000.

While we will  realize  a  reduction  in  expenses  resulting  primarily  from a
transfer  of  employees  to ACI,  there  can be no  assurance  that the  royalty
revenues  we receive  under the license  will  continue at the same volume as in
prior  years.  The failure of ACI to continue  to  generate  additional  royalty
income under the license  agreement  may have a negative  impact on our revenues
and results of operations.


RISKS RELATED TO NESTOR'S COMMON STOCK

OUR COMMON STOCK PRICE IS VOLATILE AND MAY DECLINE IN THE FUTURE.

The market price of our common  stock has  fluctuated  significantly  and may be
affected  by our  operating  results,  changes in our  business,  changes in the
industries  in which we  conduct  business,  and  general  market  and  economic
conditions  which are beyond our  control.  In  addition,  the stock  markets in
general have recently experienced extreme price and volume  fluctuations.  These
fluctuations  have affected  stock prices of many  companies  without  regard to
their specific  operating  performance.  These market  fluctuations  may make it
difficult for shareholders to sell their shares at a price equal to or above the
price at which the  shares  were  purchased.  In  addition,  if our  results  of
operations are below the  expectations  of market  analysts and  investors,  the
market price of our common stock could be adversely affected.

OUR BOARD OF DIRECTORS CAN, WITHOUT STOCKHOLDER APPROVAL,  CAUSE PREFERRED STOCK
TO BE ISSUED ON TERMS THAT ADVERSELY AFFECT COMMON STOCKHOLDERS.

Under our certificate of incorporation,  our board of directors is authorized to
issue up to  10,000,000  shares of preferred  stock and to determine  the price,
rights,  preferences,  privileges and restrictions,  including voting rights, of
those  shares  without any further  vote or action by our  stockholders.  If the
board causes any preferred stock to be issued,  the rights of the holders of our
common stock would be adversely  affected.  The board's ability to determine the
terms of preferred stock and to cause its issuance,  while  providing  desirable
flexibility  in  connection  with  possible  acquisitions  and  other  corporate
purposes, could have the effect of making it more difficult for a third party to
acquire a majority of our outstanding  voting stock. We have no current plans to
issue  shares of  preferred  stock.  In  addition,  Section 203 of the  Delaware
General  Corporation Law restricts  business  combinations  with any "interested
stockholder"  as  defined by the  statute.  The  statute  may have the effect of
delaying, deferring or preventing a change in control of our company.

OUR DIRECTORS,  OFFICERS AND PRINCIPAL SHAREHOLDERS EXERCISE SIGNIFICANT CONTROL
OVER THE BUSINESS AND AFFAIRS OF NESTOR.

After the merger, our directors,  officers,  and principal  stockholders who own
greater than 5% of the outstanding  common stock,  and entities  affiliated with
them, beneficially own over 50% of our common stock. These stockholders,  acting
together, will be able to exert substantial influence over all matters requiring
approval by our stockholders.  These matters include the election and removal of
directors and any merger,  consolidation or sale of all or substantially  all of
our 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 our stockholders.

THE PRICE OF OUR COMMON STOCK MAY DECLINE  BECAUSE A  SUBSTANTIAL  AMOUNT OF OUR
COMMON STOCK IS AVAILABLE FOR TRADING IN THE PUBLIC.

Availability of additional shares of our common stock could depress the price of
our common stock. A substantial  amount of additional  common stock is available
for trading in the public market as a result of the merger. The additional stock
in the market may cause the price of our common  stock to decline.  In addition,
if our stockholders sell substantial numbers of stock of our common stock in the
public  market,  the market  price of our common  stock could fall.  These sales
might  also make it more  difficult  for us to sell  equity  or  equity  related
securities  at a time  and  price  that we would  deem  appropriate.  There  are
approximately  50,241,000  shares of our common  stock  outstanding.  All of the
stock issued is freely tradeable  without  restrictions or further  registration
under the Securities Act of 1933, unless shares of such stock are (i) subject to
standstill  agreements  or  similar  restrictions,  or (ii)  held by any  Nestor
"affiliate"  as that  term is  defined  under  the  Securities  Act of 1933,  as
amended.  The term "affiliate"  would generally  include directors and executive
officers of NTS.

OUR  COMMON  STOCK  TRADES ON THE OTC  BULLETIN  BOARD AND MAY BE SUBJECT TO THE
SEC'S "PENNY STOCK" RULES.

Our  stockholders  may  find  it  difficult  to buy,  sell  and  obtain  pricing
information,  as well as news  coverage  about our  common  stock  because it is
traded on the OTC Bulletin Board. Being traded on the OTC Bulletin Board, rather
than on a national  securities  exchange,  may lessen investors' interest in our
securities  generally and  materially  adversely  affect the trading  market and
prices for those securities and its ability to issue additional securities or to
secure  additional  financing.  The price of our common stock could make it more
difficult  for  shareholders  to sell their  shares.  Our  common  stock will be
subject to Rule 15g-9 under the  Securities  Exchange Act of 1934 as long as its
price is less than $5.00 per share.  The closing  price on December 31, 2001 was
$.84.

A low stock  price  could also cause our common  stock to become  subject to the
SEC's "penny stock" rules and the Securities  Enforcement and Penny Stock Reform
Act of 1990. The penny stock rules impose additional sales practice requirements
on  broker-dealers  who  sell  penny  stock  securities  to  people  who are not
established customers or accredited investors. For example, the broker must make
a special  suitability  determination  for the buyer and the buyer must be given
written consent before the sale. The rules also require that the broker-dealer:

     o    send buyers an SEC-prepared  disclosure schedule before completing the
          sale, disclose the broker's commissions and current quotations for the
          security;

     o    disclose  whether the  broker-dealer  is the sole market maker for the
          penny stock and, if so, the broker's control over the market; and

     o    send monthly  statements  disclosing  recent price information held in
          the customer's  account and information on the limited market in penny
          stocks.

These   additional   burdens  may  discourage   broker-dealers   from  effecting
transactions  in Nestor's  common stock.  Thus, if our common stock were to fall
within the  definition  of a penny stock,  our liquidity  could be reduced,  and
there could be an adverse effect on the trading market in its common stock.

WE HAVE NOT PAID, AND DO NOT INTEND TO PAY, DIVIDENDS AND THEREFORE,  UNLESS OUR
COMMON STOCK  APPRECIATES  IN VALUE,  OUR INVESTORS MAY NOT BENEFIT FROM HOLDING
OUR COMMON STOCK.

We have not paid any cash dividends since inception. We do not anticipate paying
any cash dividends in the foreseeable  future.  As a result,  our investors will
not be able to benefit  from owning our common  stock unless the market price of
our common stock  becomes  greater than the basis that these  investors  have in
their shares.