SECURITIES AND EXCHANGE COMMISSION
                                
                     Washington, D.C.  20549
                                
                        (FIRST AMENDMENT)
                                
                          FORM 10-KT/A

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

          For the period ended     December 31, 1996

     [X]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
          OF THE SECURITIES EXCHANGE ACT OF 1934
                    
                    For the transition period from
               July 1, 1996    to   December 31, 1996
                                
                 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.)

      One Richmond Square, Providence, Rhode Island    02906
         (Address of principal executive offices)(Zip Code)


                         (401) 331-9640
      (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/T or any amendment to
this Form 10-K/T.       X



                         Exhibit Index is on Page _________






                                
                        INDEX OF EXHIBITS

                  Exhibit Number Description of Exhibit
             3.1  Certificate of Incorporation of the
                  Company, filed as an Exhibit to the Company's
                  Registration Statement on Form S18, Commission
                  File No. 286182-B, is hereby incorporated
                  herein by reference.

             3.2  Amendment to the Certificate of
                  Incorporation of the Company, dated December
                  5, 1985, filed as an Exhibit to the Company's
                  Form 8 amending the Company's Form 10-K for
                  the fiscal year ended June 30  1987 (the "1987
                  Form 8"), is hereby incorporated herein by
                  reference.

             3.3  Amendment to the Certificate of
                  Incorporation of the Company, dated December
                  4, 1986, filed as an Exhibit to the 1987 Form
                  8, is hereby incorporated herein by reference.

             3.4  Bylaws of the Company, as amended, filed
                  as Exhibit to the 1987 Form 8, is hereby
                  incorporated herein by reference.

             4    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.

             10.1 Non-Exclusive Field-of-Use License
                  Agreement dated June 21, 1988 between the
                  Company and Morgan Stanley & Co. Incorporated,
                  filed as an Exhibit to the Company's Form 10-K
                  for the fiscal year ended June 30, 1988, is
                  hereby incorporated herein by reference.

             10.2 Cooperative Marketing Agreement dated May
                  26, 1988 between the Company and Arthur D.
                  Little, Inc., filed as an Exhibit to the
                  Company's Form 10-K for the fiscal year ended
                  June 30, 1988, is hereby incorporated herein
                  by reference.

             10.3 Lease Rider dated February 6, 1985
                  between Richmond Square Technology Park
                  Associates and the Company, filed as an
                  Exhibit to the Company's Report on Form 10-K
                  for the fiscal year ended June 30, 1986, is
                  hereby incorporated herein by reference.

             10.4 Employment Agreement dated August 4, 1986
                  between the Company and Michael G. Buffa,
                  filed as Item 5 of the Company's Report on
                  Form 8-K dated September 11, 1986, is hereby
                  incorporated herein by reference.

             10.5 Joint Venture Agreement between the
                  Company and Oliver, Wyman & Co., dated
                  December 4, 1986, filed as an Exhibit to the
                  1987 Form 10-K, is hereby incorporated herein
                  by reference.

             10.6 Employment Agreement dated as of July 1,
                  1989 between the Company and David Fox filed
                  as an Exhibit to the 1989 Form 10-K is hereby
                  incorporated by reference.

             10.7 Employment Agreement dated as of
                  September 15, 1988 between the Company and
                  Douglas L. Reilly filed as an Exhibit to the
                  1989 Form 10-K is hereby incorporated by
                  reference.

             10.8 Memorandum dated January 1, 1989
                  regarding stock bonus plan for Douglas L.
                  Reilly filed as an Exhibit to the 1989 
                  Form 10-K is hereby incorporated by reference.

             10.9 Amendment to Joint Venture Agreement
                  dated May 8, 1990 between the Company and
                  Oliver, Wyman & Co. filed as an Exhibit to the
                  1992 Annual Report on Form 10-K is hereby
                  incorporated by reference.

            10.10 License Agreement dated October 26,
                  1990 by and between the Company and Sligos, S.
                  A. filed as an Exhibit to the Company's 1992
                  Annual Report on Form 10-K is hereby
                  incorporated by reference.

            10.11 Supplemental License Agreement dated
                  September 9, 1991 by and between the Company
                  and Sligos, S. A., filed as an Exhibit to the
                  Company's 1992 Annual Report on Form 10-K, is
                  hereby incorporated by reference.

            10.12 NestorWriterT License and
                  Development Agreement dated September 11, 1991
                  between the Company and Poqet Computer
                  Corporation.

            10.13 License Agreement for Product
                  Development and Marketing dated October 30,
                  1990 between the Company and Lyonnaise des
                  Eaux-Dumez.

            10.14 Software Development Agreement dated
                  October 30, 1990 between the Company and
                  Lyonnaise des Eaux-Dumez.

            10.15 License Agreement dated November 27,
                  1990 between the Company and Atari
                  Corporation.

            10.16 License Agreement for Product
                  Development and Marketing dated March 18, 1991
                  between the Company and Dassault Electronique.

            10.17 Agreement of Purchase and Sale dated
                  August 16, 1991 between the Company and
                  Diversified Research Partners filed as Item 5
                  of the Company's report on Form 8-K dated
                  August 21, 1991 is hereby incorporated herein
                  by reference.

            10.18 License Agreement dated October 15,
                  1993, between the Company and Intel
                  Corporation filed as an Exhibit to the
                  Company's 1994 Annual Report on Form 10-K is
                  hereby incorporated by reference.

            10.19 Exclusive Marketing Agreement dated
                  April 7, 1994, between the Company and Intel
                  Corporation filed as an Exhibit to the
                  Company's Current Report on Form 8-K dated
                  April 7, 1994, is hereby incorporated by
                  reference.

            10.20 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.

            10.21 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.

            10.22 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.

            10.23 Amendment Agreement dated December
                  20, 1994 between the Company and Sligos, S.A.,
                  filed as an Exhibit to the Company's
                  Registration Statement on Form S-2, Commission
                  File No. 33-93548, is hereby incorporated
                  herein by reference.

            10.24 Technology Development Subcontract
                  dated December 20, 1994, between the Company
                  and Alta Technology Corporation, filed as an
                  Exhibit to the Company's Registration
                  Statement on Form S-2, Commission File No. 33-
                  93548, is hereby incorporated herein by
                  reference.

            10.25 Agreements between the Company and
                  Europay International S.A. ("Europay")
                  consisting of: (i) Fraud Study Agreement dated
                  August 3, 1993, together with appendices and
                  exhibits thereto; (ii) Confidentiality
                  Agreement dated August 3, 1993; (iii) Nestor
                  Fraud Detection System User License dated
                  September 21, 1994; (iv) Source Code Addendum
                  to Nestor Fraud Detection System User License,
                  dated September 22, 1994; and (v) Memorandum
                  of Understanding dated May 5, 1995, filed as
                  an Exhibit to the Company's Registration
                  Statement on Form S-2, Commission File No. 33-
                  93548, is hereby incorporated herein by
                  reference.

            10.26 Lease of executive offices of the
                  Company, together with the most recent rider
                  thereto, filed as an Exhibit to the Company's
                  Registration Statement on Form S-2, Commission
                  File No. 33-93548, is hereby incorporated
                  herein by reference.

            10.27 Non-Exclusive License Agreement
                  between the Company and International Business
                  Machines Corporation, filed as an Exhibit to
                  the Company's Current Report on Form 8-K dated
                  January 30, 1996, is hereby incorporated by
                  reference.

            10.28 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.

            10.29 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.

            10.30 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.

            10.31 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.

             22   Subsidiaries of the Company, filed as an
                  Exhibit to the 1987 Form 10-K, is hereby
                  incorporated herein by reference.

             23   Consent of Gassman, Rebhun & Co. with
                  respect to the Consolidated Financial
                  Statements and Schedules of Nestor, Inc.
                  included in the Form 10-K/T for the year ended
                  December 31, 1996.




                                
                            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/David Fox, President and CEO
Date:  May 16, 1997