UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-K/A
                                 AMENDMENT NO. 1

         [X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
               SECURITIES EXCHANGE ACT OF 1934

               For the period ended      December 31, 2003
                                    --------------------------------

                                    OR

         [  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
               OF THE SECURITIES EXCHANGE ACT OF 1934

               For the transition period from               to
                                                -----------    -----------

                         Commission file Number 0-12965

                                  NESTOR, INC.
             (Exact name of registrant as specified in its charter)

           DELAWARE                                       13-3163744
---------------------------------                    ---------------------
      (State of incorporation)                        (I.R.S. Employer
                                                      Identification No.)

  400 Massasoit Avenue; Suite 200, East Providence, Rhode Island 02914
  --------------------------------------------------------------------
  (Address of principal executive offices)                  (Zip Code)


                                 (401) 434-5522
                                 --------------
              (Registrant's Telephone Number, Including Area Code)

          Securities registered pursuant to Section 12(b) of the Act:
                                      NONE

          Securities registered pursuant to Section 12(g) of the Act:
                          Common Stock, $.01 Par Value
                                (Title of Class)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period than the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                            Yes   X       No
                                -----

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
           ----------------

                                       1
<PAGE>


Indicate  by check mark  whether  the  Registrant  is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act).

                            Yes           No   X
                                             -----

The  aggregate  market  value of the  4,897,156  shares of voting  stock held by
non-affiliates of the registrant on June 30, 2003, based on the closing price of
such stock on June 30, 2003, was $9,794,312.

The number of shares  outstanding of the Registrant's  Common Stock at March 16,
2004 was 18,009,526.





                                       2
<PAGE>




                                                                       PART III


ITEM 10. Directors and Executive Officers of the Registrant.
         --------------------------------------------------

Directors and Executive Officers

The  following  table  sets  forth  information,  regarding  the  directors  and
executive  officers of the Company.  None of the directors or executive officers
are related by blood,  marriage or adoption to any other  director or  executive
officer.

                               Director/              Capacities
                                Officer                in which
          Name          Age      Since                  Served
          ----          ---    --------               ----------

George L. Ball          65       2003      Director

Albert H. Cox, Jr.      71       2003      Director

William B. Danzell      49       2003      Director, President and
                                           Chief Executive Officer

Terry E. Fields         56       2003      Director

David N. Jordan         60       2003      Director

Susan A. Keller         42       2003      Director

Robert M. Krasne        48       2003      Chairman of the Board of Director

Nigel P. Hebborn        45       1996      COO of Nestor, Inc. and President and
                                           CEO of Nestor Traffic Systems, Inc.

Claire M. Iacobucci     43       2004      Chief Financial Officer

Benjamin M. Alexander   44       2003      Secretary


George L. Ball is the  Chairman  of Sanders  Morris  Harris  Group,  the largest
investment banking firm  headquartered in the Southwest.  Mr. Ball was appointed
to the  board of  directors  at the time of the  merger  between  Harris  Webb &
Garrison and Sanders Morris Mundy. Prior to the merger, he served as Chairman of
the Board and a director of Sanders Morris Mundy Inc. Since the merger, Mr. Ball
has served as Chairman of the Board and a director of Sanders  Morris Harris and
as a director of Pinnacle Management & Trust Co. and SMH Capital. From September
1992 to January  1994,  Mr. Ball was Senior  Executive  Vice  President of Smith
Barney  Shearson Inc. From September 1991 to September 1992, he was a consultant
to J. & W. Seligman & Co. Incorporated.  In 1982, Mr. Ball was elected President
and Chief Executive Officer of Prudential-Bache Securities, Inc. and in 1986 was
elected Chairman of the Board,  serving in those positions until his resignation
in 1991.  He also  served as a member  of the  Executive  Office  of  Prudential
Insurance Company of America from 1982 to 1991. Before joining  Prudential,  Mr.
Ball  served as  President  of E.F.  Hutton  Group,  Inc.  Mr.  Ball is a former
governor of the American Stock Exchange and the Chicago Board Options  Exchange,
and served on the Executive Committee of the Securities Industries  Association.
He is a graduate and former trustee of Brown  University and currently serves on
the boards of national nonprofit institutions.

Albert H. Cox, Jr. is a private investor and economic  consultant.  From 1970-85
he was an executive with Merrill Lynch & Co. in New York. During that period, he
served as Chief Economist,  President of Merrill Lynch Economics (consultants to
over 150 major  corporations)  and Executive  Vice President and Board member of


                                       3
<PAGE>

Lionel D. Edie & CO.  (investment  counsel  subsidiary of Merrill  Lynch).  From
1985-91,he  was a Board member and Senior  Economic  Adviser with BIL Management
and its successor Trainer,  Wortham & CO. in New York,  subsidiaries of the Bank
in Liechtenstein.  From 1994-97 he was a Board member of Siebels Bruce insurance
group (Columbia,  S.C.).  Earlier in his career, Dr. Cox served in Washington as
Special  Assistant  to the  Chairman of  President  Nixon's  Council of Economic
Advisers. In 1980, he was a member of President-elect  Reagan's Inflation Policy
Task Force.  Dr. Cox holds a Ph.D. in Finance and Economics  from the University
of Michigan and an M.B.A. in Finance from the University of Texas.

William B. Danzell is the Chief Executive Officer and President of Nestor,  Inc.
Mr. Danzell serves as Nestor Traffic  Systems,  Inc.'s  Chairman of the Board of
Directors.  Mr.  Danzell  also  holds  the  position  of  President  of  Danzell
Investment  Management,  Ltd., a private  investment  management  and consulting
company to restructuring  corporations  and is Managing  Director of Silver Star
Partners I, LLC. He was employed by  Prudential  Securities,  Inc.  from 1983 to
1995 and held the position of Senior Vice President-Portfolio  Manager. He began
his career in the financial  industry in 1981 with Merrill  Lynch.  Mr.  Danzell
received his Economics degree from Colgate University (Hamilton, NY) in 1977.

Terry E. Fields is the Chief  Financial  Officer of  Community  Loans of America
Inc., a national  consumer  finance  company in Atlanta,  Georgia.  From 1993 to
1995, Mr. Fields was the Chief Financial Officer and a Director of Seibels Bruce
Group, Inc., an insurance holding company, in Columbia, South Carolina. Prior to
that, he was the Chief Financial Officer of 1st Franklin Financial  Corporation,
a Georgia based consumer finance  company,  for 12 years. Mr. Fields, a graduate
of Indiana  University,  is a CPA and is a member of the  American  Institute of
CPAs, the Georgia Society of CPAs and the Financial Executives Institute.

David  N.  Jordan  is  President  of  L-J  Inc.,  a  general   contracting  firm
headquartered in Columbia,  South Carolina. Mr. Jordan began working for the L-J
Inc. in 1966 as a Field  Supervisor and became President of the company in 1973.
Mr.  Jordan  holds a B.S.  degree  in  Marketing  from the  University  of South
Carolina.

Susan A. Keller is a Partner at Edwards & Angell, LLP, a law firm, headquartered
in Boston, specializing in representation of corporate clients both publicly and
privately  traded and held, as well as start-ups.  Ms. Keller's legal career has
focused  on mergers  and  acquisitions,  private  equity  financing,  senior and
subordinated  debt  transactions and general  corporate work. She is a member of
the American Bar Association and the Rhode Island Bar Association. Ms. Keller is
a graduate of Miami University and holds a Juris Doctor degree from Case Western
Reserve University School of Law.

Robert  M.  Krasne  is  principal  in  The  Krasne  Group,   Inc.,  a  strategic
business-consulting firm established in 2002. Previously, Mr. Krasne served as a
partner in the  Washington,  D.C.  law firm of Williams & Connolly,  L.L.P.  Mr.
Krasne is  presently of counsel to the firm  (neither Mr.  Krasne nor Williams &
Connolly,  L.L.P.  provide  legal  services to the  Company).  Mr. Krasne joined
Williams & Connolly in 1986 from the Office of the  Comptroller of the Currency,
a bureau of the U.S. Department of the Treasury. Mr. Krasne is also currently an
Adjunct Professorial  Lecturer at the McDonough School of Business at Georgetown
University, where he presents a class on corporate governance to MBA candidates.
Mr. Krasne is a graduate of Georgetown  University and Georgetown University Law
Center.

Nigel P.  Hebborn,  Chief  Operating  Officer of Nestor,  Inc. and President and
Chief Executive  Officer of Nestor Traffic Systems,  Inc., joined the Company in
October  1996.  He  is  responsible  for  the  Company's  corporate  development
activities,  including working with the Company's  management in the development
and  roll-out of  commercial  applications.  He was most  recently  President of
Wolffish Consulting Services,  Inc., a consulting and background reporting firm.
Prior to forming Wolffish Consulting Services,  Inc., Mr. Hebborn served as Vice
President  Finance of Nova American  Group,  Inc.,  in Buffalo,  New York and as
President of various subsidiaries of this insurance and banking holding company.
Earlier in his career, Mr. Hebborn, a CPA, was employed by Price Waterhouse.

                                       4
<PAGE>

Claire M. Iacobucci, Chief Financial Officer of Nestor, Inc., joined the Company
in September  1996. She is responsible for the Company's  financial  activities.
She was most recently MRP System Coordinator and Controller of  AAi.FosterGrant,
a  global  accessories   company  that  sells  optical  products,   jewelry  and
timepieces.  Prior to joining AAi, Ms. Iacobucci, a CPA, was a senior manager at
Ernst &  Young  LLP.  Ms.  Iacobucci  holds  a B.S.  degree  in  Accounting  and
Management Information Systems from the University of Rhode Island.

Benjamin M. Alexander is the Secretary of Nestor,  Inc. Mr. Alexander,  a lawyer
in Partridge Snow & Hahn LLP's Corporate  Practice Group and Chair of the firm's
Technology,  Medical and Life Science Practice Group,  practices in all areas of
business law including  securities law,  mergers and  acquisitions,  and general
corporate  counseling.  Mr.  Alexander  has been at Partridge  Snow & Hahn since
2002.  Before  joining  Partridge Snow & Hahn, he was a partner in Hale and Dorr
LLP.  Before  entering the legal  profession,  he worked as a systems  engineer,
specializing in digital circuit design, programming and systems integration. Mr.
Alexander  is a  graduate  of the  University  of  Pennsylvania  Law  School and
Marymount University.

AUDIT COMMITTEE

The Company has an audit committee  comprised of the following three  Directors:
Mr. Terry E. Fields,  Dr. Albert H. Cox, Jr. and Ms. Susan A. Keller.  The Audit
Committee  operates under a written charter adopted by the Board of Directors on
December 17, 2003. The Board of Directors has determined that each member of the
Audit  Committee  qualifies as  independent  director,  as required by the Audit
Committee Charter. In making this determination,  the Board of Directors applies
the independence  criteria of the Marketplace  Rules of the NASDAQ Stock Market,
Inc. and the Securities and Exchange Act.

AUDIT COMMITTEE FINANCIAL EXPERT

The Board of  Directors  determined  that the  Chairman of the Audit  Committee,
Terry E. Fields,  qualifies as an "Audit Committee Financial Expert." Mr. Fields
is  "independent"  of Nestor's  management  under the  National  Association  of
Securities Dealers, Inc.'s Marketplace Rule 4200(a)(15).

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section  16(a) of the  Securities  Exchange Act of 1934  requires the  Company's
directors,  officers and holders of more than 10% of the Company's  Common Stock
to  file  with  the  Securities  and  Exchange  Commission  initial  reports  of
beneficial  ownership and reports of changes in  beneficial  ownership of Common
Stock  and  any  other  equity  securities  of the  Company.  To  the  Company's
knowledge,  based solely upon a review of the forms,  reports,  and certificates
furnished  to the Company by such  persons with respect to the fiscal year ended
December 31, 2003,  all such reports with respect to such fiscal year were filed
on a timely basis with the following exceptions.  Subsequent to the consummation
of the first and second closings of the initial  financing  transaction  between
the Company and Silver Star,  each of (i) Silver Star,  (ii) William B. Danzell,
(iii)  Stephen  Marbut  and (iv)  Robert  Krasne  were  late in  filing  initial
statements  of  beneficial  ownership  and  statements  of changes in beneficial
ownership.  Subsequent to the  conversion  of the Silver Star note,  each of (i)
Silver Star,  (ii) William B.  Danzell,  (iii) George L. Ball and (iv) Robert M.
Krasne  were late in filing  statements  of  changes  in  beneficial  ownership.
Subsequent  to their  election to the Board,  each of (i) Terry E. Fields,  (ii)
Susan A.  Keller,  (iii) George L. Ball and (iv) Albert H. Cox, Jr. were late in
filing initial statements of beneficial ownership.

CODE OF ETHICS

The Company has adopted a written code of ethics that applies to all  employees,
including  but not  limited  to,  its  principal  executive  officer,  principal
financial  officer,  principal  accounting  officer  or  controller,  or persons
performing  similar  functions.  A copy of Nestor's  code of ethics is available
without charge by writing to: Nestor,  Inc.,  400 Massasoit  Avenue,  Suite 200,
East Providence, Rhode Island 02914-2020, Attention: Nigel P. Hebborn.

                                       5
<PAGE>

ITEM 11. Executive Compensation.
         ----------------------

SUMMARY COMPENSATION TABLE

The following table sets forth information for the calendar years ended December
31, 2003, 2002 and 2001  compensation paid by the Company to the chief executive
officer and to each of the officers of the Company whose total annual salary and
bonus exceed $100,000. All options are reported on a post-split basis.

<TABLE>


<CAPTION>

                                                                                               Long-Term Compensation Awards
                                                                                    ------------------------------------------------
                                                                                    Restricted
                             Calendar                             Other Annual        Stock       Options/                 All Other
Name and Principal Position    Year     Salary ($)  Bonus ($)    Compensation (1)     Awards      SARs (2)     Payouts      Comp ($)
---------------------------    ----     ----------  ---------    ----------------     ------      --------     -------      --------
<S>                            <C>       <C>           <C>           <C>                <C>        <C>           <C>        <C>
William B. Danzell             2003      177,083         500           115               0              0         0               0
President and CEO
Compensation began 4/1/03


David Fox (3)                  2003            0           0         1,143               0              0         0         125,000
President and CEO until
6/30/02                        2002      135,417           0         1,219               0              0         0          83,493

                               2001      247,753           0         1,295               0         26,800         0               0


Nigel P. Hebborn (4)           2003      180,000       1,400           153               0              0         0               0
President (7/1/02 -
6/25/03); CEO (7/1/02 -        2002      160,500           0           102               0          6,000         0               0
1/15/03); and
 Chief Financial Officer       2001      136,905           0            72               0          8,249         0               0


Douglas Reilly (4) (5)         2003       52,500         900            78               0              0         0         196,654
Executive Vice President
and Chief Operating Officer    2002      183,250           0           235               0          6,000         0               0
until 4/10/03
                               2001      149,111           0           153               0         12,500         0               0


C. Ross McKenrick (6)          2003      125,000       1,100            63               0              0         0               0
Vice President
Engineering until 4/9/04       2002      120,000           0            42               0          2,000         0               0

                               2001       55,000           0            42               0          2,000         0               0


Michael T. Glier (7)           2002            0           0             0               0              0         0         103,942
Senior Vice President -
Operations                     2001      115,179           0           179               0          5,850         0               0



(1)  Payment of group term life insurance premiums.

(2)  Includes  converted number of options  originally granted by Nestor Traffic
     Systems, Inc. to Mr. Hebborn in 2001.

                                       6
<PAGE>

(3)  Mr.  Fox  resigned  from the  Company  on June 30,  2002 and has a two year
     severance agreement.  All other compensation includes severance payments of
     $125,000 in 2003 and $57,291 in 2002,  and $26,202 of unused  vacation paid
     in 2002.

(4)  The 2002  salaries of Messrs.  Hebborn and Reilly each  include  $39,000 of
     voluntary deferred  compensation  earned in 2002, which was paid in January
     2003.

(5)  Mr.   Reilly's   employment   terminated  on  April  10,  2003.  All  other
     compensation included payment of unused vacation and severance benefits.

(6)  Mr.  McKenrick  joined  the  Company  in July 2001 and was Vice  President,
     Engineering of Nestor Traffic Systems, Inc. until April 9, 2004.

(7)  Mr.  Glier  resigned  from  the  Company  and  as  Senior  Vice  President,
     Operations of Nestor Traffic  Systems,  Inc. on December 17, 2001. In 2002,
     he received  $86,250 for nine months of severance and $17,692 as payment of
     unused vacation.
</TABLE>


OPTION/SAR GRANTS IN YEAR ENDED DECEMBER 31, 2003

There were no individual  grants of stock options or stock  appreciation  rights
during the year ended  December 31, 2003 to any of the executive  officers named
in the Summary Compensation Table.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES

The following table presents the value of exercised and unexercised options held
by the named executives at fiscal year-end:

<TABLE>
<CAPTION>
                                                                            Number of Securities
                                                                           Underlying Unexercised          Value of Unexercised
                                                                           Options/SARs at Fiscal      In-the-Money Options/SARs at
                            Shares Acquired on                            Year-End Exercisable (E)/         Fiscal Year-End($)
Name                             Exercise          Value Realized ($)         Unexercisable (U)               Exercisable(E)/
----                             --------          ------------------         -----------------               ---------------
                                                                                                             Unexercisable (U)
<S>                                 <C>                    <C>                      <C>                        <C>
David Fox                           0                      0                        80,461 (E)                      0 (E)

Nigel P. Hebborn                    0                      0                        23,349 (E)                  4,560 (E)
                                                                                     6,900 (U)                  6,840 (U)

Douglas Reilly                      0                      0                         6,000 (E)                 11,400 (E)

C. Ross McKenrick                   0                      0                         2,300 (E)                 10,560 (E)
                                                                                     1,700 (U)                 15,840 (U)

Michael T. Glier                    0                      0                        25,598 (E)                      0 (E)

</TABLE>


LONG TERM INCENTIVE PLAN AWARDS IN YEAR ENDED DECEMBER 31, 2003

There were no long term incentive plan awards during the year ended December 31,
2003 to any of the executive officers named in the Summary Compensation Table.

DIRECTOR COMPENSATION

The Company does not pay directors who are also Company employees any additional
compensation  for  their  service  as a  director.  The  Company  does  pay  its
non-employee   directors  for  their   service  as   directors.   The  Company's
non-employee  directors  received  cash  compensation  of $1,250 per quarter for
their services as directors,  and reimbursement for all reasonable out-of-pocket
expenses  incurred in connection with each board of directors  meeting attended.
Such cash  compensation  was revised  effective July 1, 2003 to $1,250 per Board
meeting and $500 per committee  meeting,  except for special committee  meetings
held in  conjunction  with  meetings  of the board or  standing  committees.  In
addition,  20,000  (post-split)  qualified  stock  options  were granted to each
non-employee director on May 6, 2003.

                                       7
<PAGE>

EMPLOYMENT AGREEMENTS

Nestor Traffic Systems ("NTS"), a subsidiary of the Company, agreed to pay David
Fox, its former Chief Executive  Officer,  an annual salary of $250,000,  with a
severance  payment of  $250,000  in the event that his  employment  with NTS was
terminated. Mr. Fox was terminated in June of 2002. Pursuant to the terms of his
agreement  with NTS, as the result of his  termination he is entitled to receive
$250,000, payable in twenty-four equal monthly installments, and continuation of
company provided employee benefits. Mr. Fox received severance payments from NTS
totaling $57,291 in 2002 and $125,000 in 2003.

The Company has agreed to pay Nigel Hebborn, its CFO, and Douglas Reilly, former
President & CEO of NTS, annual salaries of $180,000 effective July 1, 2002. Each
officer is entitled to severance  payments,  including  continuation of employee
benefits,  of six months if  terminated  for reasons other than cause and twelve
months if terminated as a result of a change in control of the Company.

On  May 6,  2003,  The  Board  approved  a  recommendation  of the  Compensation
Committee to pay William B. Danzell,  the Company's Chief Executive Officer,  an
annual  salary of $250,000 and standard  employee  benefits  effective  April 1,
2003.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The  Management  Compensation  Committee  of the  board of  directors  currently
consists of Messrs.  Cox, Fields and Ms. Keller.  None of these  individuals had
any contractual or other  relationships  with the Company during the fiscal year
ended December 31, 2003 except as directors. No interlocking relationship exists
between any member of the  Management  Compensation  Committee and any member of
any other Company's board of directors or compensation committee.

COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION

OVERALL POLICY. The Company's executive  compensation  program is designed to be
closely linked to corporate  performance  and returns to  stockholders.  To this
end, the Company has developed a compensation strategy and specific compensation
plans that tie a significant portion of executive  compensation to the Company's
success in meeting specified  performance  goals. The overall objectives of this
strategy  are to attract  and  retain the best  possible  executive  talent,  to
motivate  these  executives  to  achieve  the goals  inherent  in the  Company's
business  strategy  and  to  provide  a  compensation  package  that  recognizes
individual contributions as well as overall business results.

The  Compensation  Committee  determines the compensation of the Company's chief
executive  officer  and sets the  policies  for and  recommends  and reviews the
compensation awarded to other executive officers.

The key elements of the Company's executive compensation program consist of base
salary,  annual bonus and stock awards.  The Compensation  Committee's  policies
with  respect  to each of these  elements  are  discussed  below.  Although  the
elements  of  compensation  described  below  are  considered  separately,   the
Compensation  Committee  generally  takes  into  account  the full  compensation
package afforded to the executive.

BASE SALARIES.  The base salary for an executive officer is initially determined
by evaluating  the  responsibilities  of the position held and the experience of
the individual,  and by reference to the  competitive  marketplace for executive
talent,  including a comparison  to base  salaries for  comparable  positions at
other companies.

Annual  salary  adjustments  are  exclusive of those which have been  determined
pursuant to employment agreements,  if any, and are determined by (i) evaluating
the Company's performance and (ii) the performance of each executive,  including
any new  responsibilities  assumed  by such  person.  In the  case of  executive
officers with responsibility for a particular business division, such division's
financial results also are considered.  In evaluating the Company's performance,
the Compensation  Committee,  where  appropriate,  also considers  non-financial
indicia,  including,  but not limited to,  increased  market  share,  efficiency
gains,  improvements  in quality and  improvements  in relations with customers,
suppliers and employees.

                                       8
<PAGE>

ANNUAL  BONUSES.  No annual  bonuses were paid to  executives  in the past three
fiscal  years.  In  2003,  the  Company  paid a 2%  bonus  to all  employees  in
connection  with  achievement of its first quarter  performance  target and also
paid a $500 holiday bonus to all employees.

STOCK AWARDS.  Stock awards are  recommended  by management  and approved by the
board.  Executive stock awards are recommended and approved by the  Compensation
Committee.

CONCLUSION.  As is indicated by the programs  described  above, a portion of the
Company's executive  compensation is linked directly to individual and corporate
performance.  The  Compensation  Committee  intends to continue  its practice of
linking  executive   compensation  to  corporate  performance  and  stockholders
returns,  recognizing  that the cyclical  nature of the Company's  business may,
from time to time,  result in a temporary  imbalances among the three components
of compensation over a particular period.

THE COMPENSATION COMMITTEE:
Susan A. Keller (Chair)
Albert H. Cox, Jr.
Terry E. Fields


                                       9
<PAGE>


PERFORMANCE GRAPH

The  Company is  required  to present a chart  comparing  the  cumulative  total
shareholder  return  on its  Common  Stock  over a  five-year  period  with  the
cumulative total shareholder return of (i) a broad equity market index, and (ii)
a published industry index or peer group.

                Comparison of Five-Year Cumulative Total Returns
                              Performance Graph for
                                  Nestor, Inc.
                 Produced 4/1/2004 including data to 12/31/2003



              [OBJECT OMITTED: THE PRINTED GRAPH IS INCLUDED IN THE
                    FORM 10K/A STATEMENT MAILED TO SHAREHOLDERS.]




                                       10
<PAGE>




ITEM 12. Security Ownership of Certain Beneficial Owners and Management.
         --------------------------------------------------------------

The following table sets forth, as of April 1, 2004, the beneficial ownership of
shares of the Common Stock and Convertible Preferred Stock of (i) any person who
is known by the  Company  to own more than 5% of the  voting  securities  of the
Company,  (ii) the Chief  Executive  Officer and each of the Company's other two
most  highly  compensated  executive  officers  whose  salary  and bonus  exceed
$100,000 for the calendar  year ended  December  31, 2003,  (iii) each  director
(including  nominees),  and (iv) all  directors  and  Executive  Officers of the
Company as a group. Except as otherwise herein indicated,  the Company believes,
based on information  furnished by such owners,  that the  beneficial  owners of
shares of the Company's  Common Stock and Convertible  Preferred Stock described
below have sole investment voting power with respect to such shares,  subject to
any applicable community property laws:

Name and address                        Amount and nature of          Percent
of beneficial owner                     beneficial ownership         of class
-------------------                     --------------------         ---------

Silver Star Partners I, LLC                 9,739,766(1)                54.0
Suite 300
The Professional Building
2 Corpus Christi
Hilton Head Island, SC 29938

William B. Danzell                          9,739,766(1)                54.0
400 Massasoit Ave., Suite 200
East Providence, RI  02906

Robert M. Krasne
c/o Silver Star Partners I, LLC                      (2)                (2)
Suite 300
The Professional Building
2 Corpus Christi
Hilton Head Island, SC 29938

David N. Jordan
c/o Silver Star Partners I, LLC                      (2)                (2)
Suite 300
The Professional Building
2 Corpus Christi
Hilton Head Island, SC 29938

George L. Ball
c/o Silver Star Partners I, LLC                      (2)                (2)
Suite 300
The Professional Building
2 Corpus Christi
Hilton Head Island, SC 29938

Albert H. Cox, Jr.
c/o Silver Star Partners I, LLC                 5,000                    *
Suite 300
The Professional Building
2 Corpus Christi
Hilton Head Island, SC 29938





                                       11
<PAGE>

Terry E. Fields
Community Loans of America, Inc.                    0                    0
8601 Dunwoody Place, Suite 406
Atlanta, GA  30350

Susan A. Keller
c/o Silver Star Partners I, LLC                     0                    0
Suite 300
The Professional Building
2 Corpus Christi
Hilton Head Island, SC 29938

Nigel P. Hebborn                               24,049(3)                 *
400 Massasoit Ave., Suite 200
East Providence, RI  02906

All executive officers and                  9,768,815(4)                55.8
directors as a group
(8 persons)

---------------------
*Less than 1%.


(1)  William B. Danzell has an 11.9% ownership  interest in, and is the Managing
     Director  of,  Silver  Star  Partners I, LLC and as such shares with Silver
     Star  Partners  I, LLC the power to vote and  dispose of the shares held by
     it. This number  represents  (i)  9,589,941  shares of Common Stock held by
     Silver Star  Partners I, LLC;  (ii)  143,625  shares of Common  Stock owned
     through  investment  management  accounts  that Mr.  Danzell  has  power of
     attorney  over and (iii)  6,200  shares of Common  Stock held by William B.
     Danzell, having the sole power to vote and dispose of such shares.
(2)  Messrs.  Ball,  Krasne  and  Jordan,  directors  of  the  Company,  do  not
     individually own shares of Company Common Stock; however, Mr. Ball's spouse
     has a 0.88%  ownership  interest in Silver Star Partners I, LLC, Mr. Krasne
     has a 0.65%  ownership  interest  in Silver  Star  Partners  I, LLC and Mr.
     Jordan is the president of L-J Inc., which has a 21.91% ownership  interest
     in Silver  Star  Partners  I, LLC (such  membership  percentages  are as of
     December 31,  2003,  the last date for which Silver Star Partner I, LLC has
     calculated ownership interests.
(3)  Includes  23,349 shares of Common Stock which Mr.  Hebborn may acquire on a
     fully vested basis upon the exercise of options granted under the Company's
     Incentive  Stock Option  Plan.  Mr.  Hebborn is a corporate  officer of the
     Company.
(4)  This number  includes:  (i) 25,649  vested  options  owned or controlled by
     officers of the Company and (ii) all other shares beneficially owned by the
     current directors and executive officers of the Company.


SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS


<TABLE>
<CAPTION>
                                                                                Number of securities
                                                                               remaining available for
                                                                                future issuance under
                            Number of securities to      Weighted-average        equity compensation
                            be issued upon exercise     exercise price of         plans (excluding
                            of outstanding options,    outstanding options,    securities reflected in
                              warrants and rights      warrants and rights           column (a))
                            -----------------------    -------------------     -----------------------
<S>                                 <C>                       <C>                      <C>
Equity compensation plans
approved by security
holders                             312,397                   $5.75                    338,505
Equity compensation plans
not approved by security
holders                                ---                      ---                        ---
                                    ------                    -----                    -------

          Total                     312,397                   $5.75                    338,505
                                    =======                   =====                    =======
</TABLE>



                                       12
<PAGE>




ITEM 13. Certain Relationships and Related Transactions.
         ----------------------------------------------

Silver Star Equity Financing

In a first closing on January 15, 2003,  Silver Star purchased 49 million shares
of Nestor common stock (pre-reverse stock split) for $2,376,500 and on April 16,
2003,  completed a second  closing,  purchasing an additional  4,013,557  shares
(post-reverse stock split) for $1,946,575.  Danzell Investment Management, Ltd.,
in which William B.  Danzell,  the Managing  Director of Silver Star,  serves as
president,  has  provided   investment-related  services  (including  consulting
services)  to the Company  and has  received a fee for  services  rendered in an
amount equal to 3% of the cash  proceeds  generated by the Company in connection
with the financing  transactions with Silver Star. Upon completion of the second
closing,  Silver Star owned 64% of the issued and outstanding  shares of Company
common stock (63.7% at December 31, 2003).

Silver Star Convertible Note

On October 15, 2003,  the Company sold a $2,000,000  convertible  note  ("Silver
Star Note") to Silver Star Partners I, LLC ("Silver Star"). The Silver Star Note
was due on January  15, 2004 and bore  interest at the rate of 7% per year.  The
Company's  obligations  under  the  note  could,  at the  Company's  option,  be
satisfied,  in whole or part, by issuing shares of the Company's common stock to
Silver  Star at a  conversion  price  equal to the  gross  price  from the first
offering of a similar number of such shares made after October 15, 2003.

On December 31,  2003,  the Company  exercised  its option to satisfy the Silver
Star note and accrued  interest by issuing 676,384 shares of Nestor common stock
at $3.00 per share. See Common and Preferred Stock footnote also.

Silver Star has the right to require the Company to register with the SEC Silver
Star's resale of all shares of common stock that it owns as soon as  practicable
after Silver Star  requests that  registration.  The Company is obligated to pay
all  expenses   associated  with  that  registration.   The  Company  has  other
obligations  in  connection  with  that  registration,   including  causing  the
registration   statement  filed  to  remain  continuously  effective  until  the
distribution  of shares  covered by the  registration  statement is complete and
indemnifying Silver Star from liabilities it may incur resulting from any untrue
statement  or  omission of a material  fact in the  registration  statement  and
related  documents  and from  other  liabilities  related  to the  registration.
Danzell Investment  Management,  Ltd. received a 3% finders fee from the Company
in connection with the Silver Star Note.

William B. Danzell is the Chief Executive Officer of Nestor, Inc., the President
of Danzell Investment Management,  Ltd. and the Managing Director of Silver Star
Partners I, LLC.  Robert M. Krasne,  David N. Jordan and George L. Ball,  each a
director of Nestor,  are each also  affiliates  of Silver Star  Partners I, LLC.
Stephen H. Marbut,  a former director of Nestor,  is also an affiliate of Silver
Star  Partners I, LLC. The sale of the note by Nestor to Silver Star Partners I,
LLC and the  satisfaction  of our  obligations  under it by issuing common stock
were  approved  by the  directors  of Nestor not  affiliated  with  Silver  Star
Partners I, LLC.

Legal Fees

Benjamin  Alexander,  secretary of the Company (as of June 2003), is an attorney
with the firm of Partridge,  Snow and Hahn LLP, which the Company uses for legal
services.  For the year ended December 31, 2003, the Company  recorded legal and
stockholder  expenses  to Mr.  Alexander's  firm in the  amounts of $63,973  and
$24,354,  respectively.  In addition,  $11,261 was recorded relating to the July
2003 Laurus financing, which was fully expensed as financing fees.



                                       13
<PAGE>



Herbert S. Meeker,  a former  director of the  Company,  is a partner in the law
firm of Brown Raysman  Millstein  Felder & Steiner,  LLP, which the Company used
for legal services.  For the years ended December 31, 2003,  2002, and 2001, the
Company  recorded  an  expense  to Mr.  Meeker's  firm of  $41,316,  $7,254  and
$121,065,  respectively.  In addition, for the years ended December 31, 2003 and
2002,  the  Company  recorded  $42,657  and $9,919 of fees  relating to the 2003
Silver Star stock purchase agreement.  Lastly, $369,501 of fees were recorded in
2001 as acquisition costs related to the NTS merger.

Consulting

Bruce W.  Schnitzer,  a former  director  of the  Company,  is  Chairman of Wand
Partners,  Inc., a private  investment firm that the Company used for management
consulting.  For the year ended  December  31,  2001,  the  Company  recorded an
expense  for Wand  Partners,  Inc.  of $49,636.  In 2002,  the Company  reversed
$71,848 of previously expensed Wand fees (recorded as a reduction to general and
administrative  expenses) in connection with a Termination and Release Agreement
agreed to in principle  prior to December  31, 2002 but dated  January 15, 2003.
Included  in accrued  liabilities  at  December  31, 2002 is $96,250 due to Wand
Partners, Inc.


Investment Banking

George L. Ball, a director of the  Company,  is Chairman of the Board of Sanders
Morris Harris and its parent corporation,  Sanders Morris Harris Group.  Sanders
Morris  Harris  served  as a  placement  agent in  connection  with the  private
placement of common stock of the Company in December 2003 and January 2004.



ITEM 14. Principal Accounting Fees and Services.
         --------------------------------------

AGGREGATE FEES FOR 2003 AND 2002

This table shows the aggregate fees billed to the Company for the fiscal years
ended December 31, 2003 and December 31, 2002 by Carlin, Charron & Rosen, LLP
("CCR") and the Company's predecessor auditors, Ernst & Young LLP ("EY").

                                          2003             2002
                                          ----             ----
     Audit Fees (1):                   $ 85,990         $ 90,225
     Audit-Related Fees:                    ---              ---
     Tax Fees (2):                        9,500           15,362
     All Other Fees:                        ---              ---

     ---------------------
(1)  These fees are for the audit of our financial statements for 2003 and 2002,
     respectively, for quarterly reviews, registration statements and accounting
     consultations related to the audited financial statements

(2)  Tax fees consisted of tax compliance paid to CCR in 2003 and EY in 2002.


PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES

All of the fees for 2003 and 2002  shown  above were  pre-approved  by the Audit
Committee.  The Audit  Committee  pre-approves  all  audit  and other  permitted
non-audit  services  provided  by  our  independent  auditors.  Pre-approval  is
generally provided for up to one year, is detailed as to the particular category
of services and is subject to a monetary  limit.  Our  independent  auditors and
senior  management  periodically  report to the Audit  Committee  the  extent of
services   provided  by  the   independent   auditors  in  accordance  with  the
pre-approval,  and the fees  for the  services  performed  to  date.  The  Audit
Committee may also pre-approve particular services on a case-by-case basis.




                                       14
<PAGE>





                                                                         PART IV

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
         ---------------------------------------------------------------

          (a)  The following documents are filed as part of this report:

               (1)  The  financial  statements  of the Company and  accompanying
                    notes,  as set  forth  in  the  contents  to  the  financial
                    statements annexed hereto, are included in Part II, Item 8.

               (2)  Consolidated  Financial  Statement  Schedule:  Valuation and
                    Qualifying Accounts and Reserves

                    All other schedules are omitted because such  information is
                    not applicable (3) Exhibits numbered in accordance with Item
                    601 of Regulation S-K and filed herewith.

                    See Exhibit Index.

          (b)  Reports on Form 8-K:

               On October 17, 2003,  the  Corporation  filed with the Securities
               and  Exchange  Commission  a  current  report  on Form 8-K  dated
               September 23, 2003 under Items 5 and 7, reporting the increase in
               the number of directors of the Corporation to seven, the election
               to the Board of Albert H. Cox, Jr.,  Terry E. Fields and Susan A.
               Keller  and the  purchase  by Silver  Star  Partners  I, LLC of a
               convertible  note in the principal  amount of $2,000,000 from the
               Corporation.

               On October 28, 2003,  the  Corporation  filed with the Securities
               and  Exchange  Commission  a  current  report  on Form 8-K  dated
               October 22, 2003 under Items 5 and 7,  reporting the  resignation
               of Stephen H. Marbut from the  Corporation's  Board of  Directors
               and the election of George L. Ball thereto.















                                       15
<PAGE>





                                    SIGNATURE

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934,  the registrant has duly caused the report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                  NESTOR, INC.
                                  (Registrant)

                                  /s/ Nigel P. Hebborn
                                  ----------------------------------------------
                                  Nigel P. Hebborn, Chief Operating Officer



Date:  April 19, 2004














                                       16
<PAGE>





                               INDEX OF EXHIBITS


       Exhibit
         No.                      Description of Exhibit
       -------                    ----------------------

         3.1    Restated Certificate of Incorporation.

         4.1    Specimen Certificate for shares of Common Stock, $.01 par value,
                of  the  Registrant   filed  as  an  Exhibit  to  the  Company's
                Registration  Statement  on  Form  S-2,  as  amended  (File  No.
                333-108432), is hereby incorporated by reference.

         10.1   Securities  Purchase Agreement dated August 1, 1994, between the
                Company and Wand/Nestor  Investments L.P. ("Wand") filed as Item
                5 of the  Company's  report on Form 8-K dated August 8, 1994, is
                hereby incorporated herein by reference.

         10.2   Standby  Financing and Purchase  Agreement dated as of March 16,
                1995  between the  Company and Wand,  filed as an Exhibit to the
                Company's  Current  Report on Form 8-K, dated March 16, 1995, is
                hereby incorporated by reference.

         10.3   First  Amended  and  Restated  Standby  Financing  and  Purchase
                Agreement  dated June 30,  1995  between  the  Company and Wand,
                filed as an Exhibit to the Company's Current Report on Form 8-K,
                dated July 7, 1995, is hereby incorporated by reference.

         10.4   Securities  Purchase and Exchange  Agreement between the Company
                and  Wand/Nestor  Investments  L.P.,  filed as an Exhibit to the
                Company's  Current Report on Form 8-K dated January 30, 1996, is
                hereby incorporated by reference.

         10.5   Securities   Purchase   Agreement   between   the   Company  and
                Wand/Nestor  Investments  L.P.,  filed  as  an  Exhibit  to  the
                Company's  Current  Report on Form 8-K dated  March 7, 1996,  is
                hereby incorporated by reference.

         10.6   Asset  Purchase  Agreement  and  License  Agreement  between the
                Company and National Computer Systems, Inc., filed as an Exhibit
                to the Company's Current Report on Form 8-K dated June 11, 1996,
                is hereby incorporated by reference.

         10.7   PRISM  Non-Exclusive  License  Agreement between the Company and
                Applied  Communications,  Inc.,  filed  as  an  Exhibit  to  the
                Company's  Current Report on Form 8-K dated  September 19, 1996,
                is hereby  incorporated  by  reference.  Portions of the Exhibit
                omitted, pursuant to a grant of confidential treatment.

         10.8   License  Agreement  dated as of March 28, 1997,  between Nestor,
                Inc. and Total System Services,  Inc. filed as an Exhibit to the
                Company's  Current  report on Form 8-K dated  April 8, 1997,  is
                hereby  incorporated  by  reference.  Portions  of  the  Exhibit
                omitted, pursuant to a grant of confidential treatment.

         10.9   Amendment to the PRISM Non-Exclusive  License Agreement dated as
                of  April  18,   1997,   between   Nestor,   Inc.   and  Applied
                Communications,  Inc.  filed  as an  Exhibit  to  the  Company's
                Current  Report  on Form 8-K  dated  April  30,  1997 is  hereby
                incorporated  by  reference.  Portions  of the  Exhibit  omitted
                pursuant to a grant of confidential treatment.

        10.10   Exclusive  License  Agreement  between  Nestor,  Inc. and Nestor
                Traffic Systems,  Inc. dated January 1, 1999 filed as an Exhibit
                to the  Company's  Current  Report on Form 8-K  dated  March 25,
                1999.

        10.11   Secured Note Agreement by and among Nestor, Inc., Nestor Traffic
                Systems,  Inc. and NTS  Investors  LLC dated January 9, 2001 and
                filed as an Exhibit to the Company's  Current Report on Form 8-K
                on January 18, 2001 is hereby incorporated by reference.

        10.12   License Agreement between Nestor,  Inc. and ACI Worldwide,  Inc.
                dated  February  1, 2001 filed as an  Exhibit  to the  Company's
                Current  Report  on Form  8-K on  February  9,  2001  is  hereby
                incorporated by reference.





                                       17
<PAGE>





       Exhibit
         No.                      Description of Exhibit
       -------                    ----------------------


        10.13   License  Agreement  dated May 18,  2001  between the Company and
                Retail  Decisions,  Inc.  filed as an exhibit  to the  Company's
                current  report  on Form 8K dated May 18,  2001  which is hereby
                incorporated by reference.

        10.14   Security Purchase  Agreement dated July 31, 2003 between Nestor,
                Inc.  and Laurus  Master Fund,  Ltd.  filed as an exhibit to the
                Company's  current report on Form 8-K dated July 31, 2003, which
                is hereby incorporated by reference.

        10.15   Convertible  Note dated July 31,  2003 made by Nestor,  Inc.  to
                Laurus  Master Fund,  Ltd.  filed as an exhibit to the Company's
                current  report on Form 8-K dated July 31,  2003 which is hereby
                incorporated by reference.

        10.16   Registration  Rights  Agreement  dated  July  31,  2003  between
                Nestor, Inc. and Laurus Master Fund, Ltd. filed as an exhibit to
                the  Company's  current  report on Form 8-K dated July 31, 2003,
                which is hereby incorporated by reference.

        10.17   Common  Stock  Purchase  Warrant  dated July 31,  2003 issued by
                Nestor,  Inc. to Laurus Master Fund, Ltd. filed as an exhibit to
                the  Company's  current  report on Form 8-K dated July 31,  2003
                which is hereby incorporated by reference.

        10.18   Stock  Pledge  Agreement  dated  July 31,  2003  between  Nestor
                Traffic  Systems,  Inc. and Laurus Master Fund, Ltd. filed as an
                exhibit to the Company's  current  report on Form 8-K dated July
                31, 2003, which is hereby incorporated by reference.

        10.19   Pledge  and  Security  Agreement  dated  July 31,  2003  between
                CrossingGuard,  Inc. and Laurus  Master Fund,  Ltd.  filed as an
                exhibit to the Company's  current  report on Form 8-K dated July
                31, 2003 which is hereby incorporated by reference.

        10.20   Guaranty  dated July 31, 2003 by  CrossingGuard,  Inc. to Laurus
                Master Fund,  Ltd. filed as an exhibit to the Company's  current
                report  on  Form  8-K  dated  July  31,  2003  which  is  hereby
                incorporated by reference.

        10.21   Nestor,  Inc. Incentive Stock Option Plan, as amended,  filed as
                an Exhibit to the Company's  Registration Statement on Form S-8,
                filed May 5, 1987, is hereby incorporated herein by reference

        10.22   Nestor, Inc. 1997 Incentive Stock Option Plan, as amended, filed
                as an Exhibit to the  Company's  Registration  Statement on Form
                S-8, filed May 16, 1997, is hereby incorporated by reference.

        10.23   Securities   Purchase   Agreement  dated  April  28,  1998  with
                Transaction  Systems  Architects,  Inc.  to  purchase  2,500,000
                common  shares of the Company  and a warrant  for an  additional
                2,500,000  common shares filed as an Exhibit to Nestor's Current
                Report on Form 8-K dated May 7, 1998 is hereby  incorporated  by
                reference.

        10.24   Nestor Traffic  Systems,  Inc., Form of  Subscription  Agreement
                dated March 25,  1999,  to sell a 37.5%  equity  position in its
                common stock and issue a warrant for an additional  17.5% common
                stock interest filed as an Exhibit to Nestor's Current Report on
                Form  8-K  dated  April  23,  1999  is  hereby  incorporated  by
                reference.

        10.25   Security  Purchase  Agreement  dated  January 14,  2004  between
                Nestor, Inc. and Laurus Master Fund, Ltd. filed as an Exhibit to
                Nestor's  Current  Report on Form 8-K dated December 31, 2003 is
                hereby incorporated by reference.

        10.26   Convertible Note dated January 14, 2004 made by Nestor,  Inc. to
                Laurus Master Fund, Ltd. filed as an Exhibit to Nestor's Current
                Report  on  Form  8-K  dated   December   31,   2003  is  hereby
                incorporated by reference.





                                       18
<PAGE>





       Exhibit
         No.                      Description of Exhibit
       -------                    ----------------------


        10.27   Registration  Rights  Agreement  dated  January 14, 2004 between
                Nestor, Inc. and Laurus Master Fund, Ltd. filed as an Exhibit to
                Nestor's  Current  Report on Form 8-K dated December 31, 2003 is
                hereby incorporated by reference.

        10.28   Redemption  and  Conversion  Agreement  dated  January  14, 2004
                between  Nestor,  Inc. and Laurus Master Fund,  Ltd. filed as an
                Exhibit to the Company's  Registration Statement on Form S-2, as
                amended  (File  No.  333-108432),   is  hereby  incorporated  by
                reference.

        10.29   Placement  Agent Agreement dated December 24, 2003 among Nestor,
                Inc., Sanders Morris Harris,  Inc., and Barrett & Company,  Inc.
                filed as an Exhibit to the Company's  Registration  Statement on
                Form  S-2,  as  amended   (File  No.   333-108432),   is  hereby
                incorporated by reference.


        10.30   Registration  Rights  Agreement  dated  December  31, 2003 among
                Nestor,  Inc.,  Sanders  Morris  Harris,  Inc.,  and  Barrett  &
                Company, Inc. filed as an Exhibit to the Company's  Registration
                Statement  on Form S-2,  as amended  (File No.  333-108432),  is
                hereby incorporated by reference.

         31.1   Certification  of Chief Executive  Officer  required by Exchange
                Act Rules  13a-14(a)  and  15d-14(a),  as  adopted  pursuant  to
                Section 302 of the Sarbanes-Oxley Act of 2002.

         31.2   Certification  of Chief Financial  Officer  required by Exchange
                Act Rules  13a-14(a)  and  15d-14(a),  as  adopted  pursuant  to
                Section 302 of the Sarbanes-Oxley Act of 2002.

         32.1   Certification  of Chief Executive  Officer  required by Exchange
                Act Rules  13a-14(b)  and  15d-14(b),  as  adopted  pursuant  to
                Section 906 of the Sarbanes-Oxley Act of 2002.*

         32.2   Certification  of Chief Financial  Officer required by ExchangeA
                ct Rules 13a-14(b) and 15d-14(b), as adopted pursuant to Section
                906 of the Sarbanes-Oxley Act of 2002.*

         99.1   Safe  Harbor for  Forward-Looking  Statements  Under the Private
                Securities Litigation Reform Act of 1995.



*Certification  is not deemed "filed" for purposes of Section 18 of the Exchange
Act, or otherwise subject to the liability of that section.  Such  certification
is not  deemed  to be  incorporated  by  reference  into any  filing  under  the
Securities  Act or the Exchange  Act,  except to the extent that the  registrant
specifically incorporates it by reference.




                                       19