15





Exhibit 21.2







                      FINANCIAL STATEMENTS




                  NESTOR TRAFFIC SYSTEMS, INC.

                  (A Development Stage Company)




                        December 31, 1999



                  NESTOR TRAFFIC SYSTEMS, INC.

                  (A Development Stage Company)


                            CONTENTS




Independent Auditor's Report



                                                    Statement No.



Balance Sheet -                                    1
 December 31, 1999

Statement of Operations -
 For the Year Ended December 31, 1999              2

Statement of Stockholders' Equity -
 For the Year Ended December 31, 1999              3

Statement of Cash Flows -
 For the Year Ended December 31, 1999              4




Notes to Financial Statements

                 Report of Independent Auditors


The Board of Directors and Stockholders
   of Nestor Traffic Systems, Inc.

We  have audited the accompanying balance sheet of Nestor Traffic
Systems,  Inc. (a development stage company) as of  December  31,
1999,  and  the  related  statement of operations,  stockholders'
equity  and cash flows for the year then ended.  These  financial
statements  are  the responsibility of the Company's  management.
Our  responsibility is to express an opinion on  these  financial
statements based on our audit.

We  conducted  our  audit in accordance with  auditing  standards
generally accepted in the United States.  Those standards require
that we plan and perform the audit to obtain reasonable assurance
about  whether  the  financial statements are  free  of  material
misstatement.   An  audit includes examining, on  a  test  basis,
evidence  supporting the amounts and disclosures in the financial
statements.   An  audit  also includes assessing  the  accounting
principles used and significant estimates made by management,  as
well  as evaluating the overall financial statement presentation.
We  believe  that our audit provides a reasonable basis  for  our
opinion.

In  our opinion, the 1999 financial statements referred to  above
present  fairly, in all material respects, the financial position
of  Nestor  Traffic Systems, Inc. at December 31, 1999,  and  the
results  of its operations and its cash flows for the  year  then
ended,   in   conformity  with  accounting  principles  generally
accepted in the United States.

The accompanying financial statements have been prepared assuming
that  Nestor  Traffic  Systems, Inc. will  continue  as  a  going
concern.   As  discussed in Note 1, the Company is a  development
stage company that since inception has expended cash in excess of
cash  generated from operations.  Additionally, the  Company  has
not  achieved  sufficient revenues to support  future  operations
without additional financing.  These conditions raise substantial
doubt about the Company's ability to continue as a going concern.
Management's  plans in regard to these matters are  discussed  in
Note  1.  The financial statements do not include any adjustments
to  reflect the possible future effects on the recoverability and
classification  of  assets or the amounts and  classification  of
liabilities that may result from the outcome of this uncertainty.

                                                ERNST & YOUNG LLP



Providence, Rhode Island
February 18, 2000


<TABLE>

                  NESTOR TRAFFIC SYSTEMS, INC.
                  (A Development Stage Company)

                          Balance Sheet
                        December 31, 1999
<CAPTION>

                             ASSETS

<S>                                          <C>
Current assets:
 Cash and cash equivalents                   $   1,599,112
 Accounts receivable                                30,756
 Unbilled contract revenue                          20,000
 Inventory                                         442,493
 Other current assets                               33,241
   Total current assets                          2,125,602

Investment in leased equipment -
 net of accumulated depreciation                   138,961
Property and equipment at cost -
 net of accumulated depreciation                   156,997

Total Assets                                 $   2,421,560


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
 Accounts payable                            $     394,324
 Due to affiliate                                  320,459
   Deferred income                                   8,998
   Total current liabilities                       723,781

Commitments and contingencies                         ---

Stockholders' Equity:
 Common stock, $.01 par value,
   authorized 4,000,000 shares;
   issued and outstanding 2,150,000 shares          21,500
 Additional paid-in capital                      7,554,446
 Deficit accumulated during
   the development stage                       (5,878,167)
   Total stockholders' equity                    1,697,779

Total Liabilities and Stockholders' Equity   $   2,421,560


The Notes to the Financial Statements are an integral part of
this statement.
</TABLE>


<TABLE>
                  NESTOR TRAFFIC SYSTEMS, INC.
                  (A Development Stage Company)

                     Statement of Operations

<CAPTION>

                                                          (Unaudited)
                                                           Cumulative
                                  Year Ended           January 1, 1997 to
                              December 31, 1999        December 31, 1999
<S>                             <C>                     <C>
Revenue:
  Software licensing            $       18,474          $     27,735
  Engineering services                  92,317               301,036
  Tangible product sales                56,642               401,684

     Total revenue                     167,433               730,455

Operating Expenses:
  Engineering services                 675,315             1,207,852
  Tangible product costs                36,644               180,847
  Research and development             905,880             2,352,110
  Selling and marketing                717,004             1,767,093
  General and administrative           321,456             1,137,023

     Total operating expenses        2,656,299             6,644,925


Loss from operations               (2,488,866)           (5,914,470)

Other income - net                     36,333                36,303

Loss before income taxes           (2,452,533)           (5,878,167)

Income taxes                               ---                   ---

Net Loss                        $  (2,452,533)          $(5,878,167)




The Notes to the Financial Statements are an integral part of this
statement.

</TABLE>


<TABLE>
                          Nestor Traffic Systems, Inc.
                          (A Development Stage Company)

                        Statement of Stockholders' Equity
<CAPTION>
                                                                               Deficit
                                                                             Accumulated
                                                                              During the
                                    Common Stock          Additional         Development
                                  Shares     Amount    Paid-in Capital          Stage        Total

<S>                           <C>          <C>          <C>             <C>             <C>
Issuance of Common Stock            1,000  $       1    $      1,009    $         ---   $       1,010
Capital contributed
  by Nestor, Inc.                     ---        ---       1,565,780              ---       1,565,780
Loss for the year ended
  December 31, 1997                   ---        ---             ---      (1,491,701)     (1,491,701)
Balance at 12/31/97
  (unaudited)                       1,000  $       1    $  1,566,789    $ (1,491,701)   $      75,089



Capital contributed
  by Nestor, Inc.                     ---        ---       1,904,156              ---       1,904,156
Loss for the year ended
  December 31, 1998                   ---        ---             ---      (1,933,933)     (1,933,933)
Balance at 12/31/98
  (unaudited)                       1,000  $       1    $  3,470,945    $ (3,425,634)   $      45,312

Issuance of
 Common Stock                   2,149,000     21,499       4,083,501              ---       4,105,000
Loss for the year ended
 December 31, 1999                    ---        ---             ---      (2,452,533)     (2,452,533)
Balance at 12/31/99             2,150,000  $  21,500    $  7,554,446    $ (5,878,167)   $   1,697,779

The Notes to the Financial Statements are an integral part of this statement.
</TABLE>



<TABLE>
                  NESTOR TRAFFIC SYSTEMS, INC.
                  (A Development Stage Company)

                     Statement of Cash Flows


<CAPTION>
                                                              (Unaudited)
                                                  Year         Cumulative
                                                 Ended         1/1/97 to
                                                12/31/99        12/31/00
 <S>                                                  <C>            <C>
Cash flows from operating activities:
 Net loss                                    $(2,452,533)   $(5,878,167)
   Adjustments to reconcile net loss
     to net cash used by operating
     activities:
   Depreciation                                   51,033         94,863
    Increases in assets and liabilities:
    Accounts receivable                          (30,756)       (30,756)
    Unbilled contract revenue                    (11,659)       (18,048)
    Inventory                                   (210,880)      (323,035)
    Other assets                                 (19,186)       (29,116)
    Accounts payable and accrued expenses        121,939        270,555
    Deferred income                                8,998          8,998
Net cash used by operating
activities                                    (2,543,044)    (5,904,706)

Cash flows from investing activities:
 Purchase of property and equipment             (140,967)      (191,612)
 Investment in leased equipment                 (142,336)      (142,336)

    Net cash used by investing activities       (283,303)      (333,948)

Cash flows from financing activities:
 Due to affiliate                                320,459        320,459
 Capital investments by affiliate - net              ---      3,412,307
 Proceeds from issuance of
   common stock - net                          4,105,000      4,105,000

Net cash provided by
 financing activities                          4,425,459      7,837,766

Net change in cash and
   cash equivalents                            1,599,112      1,599,112
Cash and cash equivalents -
   beginning of period                               ---            ---

Cash and cash equivalents -
   end of period                            $  1,599,112   $  1,599,112

Supplemental cash flows information:
Interest paid                               $        ---   $        ---

Income taxes paid                           $        ---   $        ---

Non-cash transaction:
Net assets transferred from affiliate       $        ---   $     58,639




The Notes to the Financial Statements are an integral part of this
statement.
</TABLE>



NESTOR TRAFFIC SYSTEMS, INC.
NOTES TO THE FINANCIAL STATEMENTS


Note 1 -  Summary of significant accounting policies:
          A.   Organization
             Nestor  Traffic  Systems, Inc. (the  "Company")  was
          organized  on January 1, 1997 in Delaware as a  wholly-
          owned subsidiary of Nestor, Inc. to exploit and develop
          certain  patent rights and know-how, which the  Company
          licenses  from Nestor, Inc.  During 1999,  the  Company
          issued common stock to a group of private investors  in
          two   separate  transactions  aggregating   $4,105,000,
          representing  a 58.1% equity ownership in the  Company.
          The Company is no longer consolidated in Nestor, Inc.'s
          financial  statements.  Nestor, Inc. owns the remaining
          41.9%  equity  of  the  Company and  accounts  for  the
          investment  using  equity  accounting.   The  Company's
          principal office is located in Providence, RI,  and  it
          maintains a branch office in Irvine, CA.

             The  Company is a development stage company and  has
          had  limited revenues.  Activities through December 31,
          1999 consist primarily of raising capital, research and
          development,   establishing  supplies  and   production
          processes, and sales and marketing.

             The  financial statements have been  prepared  on  a
          going-concern   basis.   From  its  inception   through
          December  31,  1999, the Company has expended  cash  in
          excess    of    cash    generated   from    operations.
          Additionally,  the Company has not achieved  sufficient
          revenues   to   support   future   operations   without
          additional financing.   Management is in the process of
          identifying   new  customers  and  raising   additional
          capital   to   support  its  operations   and   provide
          sufficient  liquidity to enable it  to  continue  as  a
          going  concern (Note 10).  The financial statements  do
          not  include any adjustments that might result from the
          outcome of this uncertainty.

          B.   Cash equivalents
              The   Company  considers  all  highly  liquid  debt
          instruments  purchased with a maturity of  90  days  or
          less to be cash equivalents.

          C.   Depreciation
               Depreciable   assets   are   recorded   at   cost.
          Depreciation  is  provided on the straight-line  method
          over  the  estimated  useful lives  of  the  respective
          assets.

             Maintenance  and repairs are expensed  as  incurred.
          Major renewals and betterments are capitalized.

          D.   Revenue recognition
             The  Company derives revenue from software  licenses
          (Initial  License  Fees), user  fees  (Monthly  License
          fees),  other postcontract customer support  (PCS)  and
          engineering  services.  Postcontract  customer  support
          includes  maintenance agreements.  Engineering services
          range from installation, training, and basic consulting
          to  software  modification and  customization  to  meet
          specific customer needs.  In software arrangements that
          include  multiple elements, the Company  allocates  the
          total  arrangement fee among each deliverable based  on
          the  relative  fair value of each of  the  deliverables
          determined based on vendor-specific objective evidence.

            Revenue has been recognized as follows:

             Software  Licenses  -  The  Company  recognizes  the
          revenue allocable to software licenses upon delivery of
          the software product to the end user, unless the fee is
          not  fixed  or  determinable or collectibility  is  not
          probable.  The Company considers all arrangements  with
          payment terms extending beyond twelve months and  other
          arrangements with payment terms longer than normal  not
          to  be  fixed or determinable.  If the fee is not fixed
          or  determinable,  revenue is  recognized  as  payments
          become due from the customer.  In most situations,  the
          Company  considers its acceptance terms as perfunctory.
          Arrangements that include acceptance terms that are not
          considered   perfunctory  are  not   recognized   until
          acceptance  has  occurred.  If  collectibility  is  not
          considered probable, revenue is recognized when the fee
          is  collected.  Revenue on arrangements with  customers
          who  are  not  the ultimate users (distributors,  other
          resellers,  etc.) is not recognized until the  software
          is delivered to an end user.

                Product  returns  or  exchanges  are  charged  to
          operations  as incurred.  Where the Company anticipates
          significant  returns  of  products  sold,  the  Company
          establishes  an  allowance for anticipated  returns  or
          exchanges  at the time of sale.  If customer acceptance
          is  uncertain, revenue is recognized upon  approval  by
          the customer.

                Postcontract Customer Support - Revenue allocable
          to  PCS is recognized on a straight-line basis over the
          period the PCS is provided.

                Software  Services  - Arrangements  that  include
          software  services  are evaluated to determine  whether
          those  services  are essential to the functionality  of
          other  elements  of  the  arrangement.   When  software
          services  are considered essential, revenue  under  the
          arrangement  is  recognized using  contract  accounting
          (see  below).   When  the  software  services  are  not
          considered  essential,  the revenue  allocable  to  the
          software  services is recognized as  the  services  are
          performed.

               Training revenue is recognized upon the completion
          of training sessions with the customer.

          E.   Concentrations of credit risk
             The Company's financial instruments that are exposed
          to  concentrations of credit risk consist primarily  of
          cash   and   cash   equivalents  and   trade   accounts
          receivable.  The Company places its cash and  temporary
          cash investments with high credit quality institutions.
          At  times such investments may be in excess of the FDIC
          insurance  limit.  The Company routinely  assesses  the
          financial   strength  of  its  customers  and,   as   a
          consequence,   believes   that   its   trade   accounts
          receivable  credit  risk  exposure  is  limited.    The
          Company does not require collateral from its customers.
          Management believes the allowance carried for  doubtful
          accounts  receivable  is adequate  to  cover  potential
          losses    associated   with   uncollectible    accounts
          receivable.

          F.   Inventory
            Inventory is valued at the lower of cost or market on
          the  first-in,  first-out basis  and  consists  of  the
          following at December 31, 1999:

              Work-in-progress   $ 325,171
              Finished goods       117,322
              Total  inventory   $ 442,493

          G.   Estimates
            The preparation of financial statements in conformity
          with  generally accepted accounting principles requires
          management  to  make  estimates  and  assumptions  that
          affect  the  reported amounts of assets and liabilities
          and disclosure of contingent assets and liabilities  at
          the  date  of the financial statements and the reported
          amounts  of revenues and expenses during the  reporting
          period.    Actual  results  could  differ  from   those
          estimates.


Note 2 -    Investment in Leased Equipment:
       The  Company  entered  into  an  operating  lease  with  a
       customer providing for quarterly fixed payments of  system
       lease and software license fees of $13,497 over a term  of
       36  months, and providing for a lump-sum buyout at the end
       of  the  term.  Future minimum lease revenues are  $53,988
       in  2000  and 2001 and $49,489 in 2002, totaling  $161,964
       over  the  term of the lease.  In addition, the  agreement
       calls  for  software license and processing fees  tied  to
       citations  issued to red light violators.   Equipment  and
       installation  costs  related to these  systems  have  been
       capitalized  and  are being depreciated over  the  minimum
       lease  term  of  the  related lease  agreement,  currently
       three years.

 Equipment under operating leases        $     142,336
 Less: Accumulated depreciation                 (3,375)

 Net investment in leased equipment      $     138,961


Note 3 -  Property and equipment at cost - net:

                                                   Useful Life

  Computer equipment                    184,449     5 years
  Demonstration equipment                93,244     3 years
                                        277,693
  Less:  Accumulated depreciation      (120,696)
                                     $  156,997

       Depreciation expense on the above assets of $47,658 was
       recorded for the year ended December 31, 1999.


Note 4 -                    Due to affiliate:
       During the period January 1, 1999 through March 31,  1999,
       Nestor,  Inc.  advanced  the Company  financing  to  cover
       operating  expenses  amounting to approximately  $550,000.
       Of  this advance, $275,000 was reimbursed to Nestor,  Inc.
       in  March  1999, and the balance is due on the earlier  of
       the   Company's  raising  of  new  equity  of   at   least
       $3,000,000    or   December   31,   2000.    Periodically,
       additional  advances are made on behalf of the Company  by
       Nestor,  Inc.,  primarily as a result of shared  accounts,
       and these amounts are due and paid as invoiced.

Note 5 -  Common stock:
       On  March 25, 1999, the Company sold a 37.5% common  stock
       interest  to  a private group of investors for  $2,350,000
       in  cash  and  issued an option to purchase an  additional
       17.5% of its common stock for $1,750,000.  The option  was
       scheduled to expire on January 31, 2000.  On November  30,
       1999,  the  Company  and  the  investor  group  agreed  to
       accelerate  the  exercise of the option and  the  investor
       group  purchased  an  additional 20.6%  ownership  in  the
       Company  for  $1,755,000.   The  investor  group  includes
       three  officers  of  the Company who,  in  the  aggregate,
       contributed  $770,059 of cash invested on the  same  basis
       as third-party investors.

Note 6 -  Options:
       On  May 5, 1999, the Company adopted the 1999 Stock Option
       Plan  providing  for the granting of options  to  purchase
       shares  of the Company's common stock at a price equal  to
       the  fair market value of the common stock at the date  of
       grant  as determined by the Board of Directors.  The  1999
       Stock  Option Plan has authorized the grant of options  to
       employees  for  up  to  200,000 shares  of  the  Company's
       common  stock.   Options are exercisable  for  up  to  ten
       years from the date of grant.

       The Company has adopted the disclosure-only provisions  of
       Financial  Accounting Standards Board Statement  No.  123,
       Accounting for Stock-Based Compensation ("FAS 123").   The
       Company  will  continue to account for  its  stock  option
       plans  in  accordance  with  the  provisions  of  APB  25,
       Accounting  for  Stock Issued to Employees.   Accordingly,
       no  compensation cost has been recognized in the financial
       statements  for qualifying grants issued pursuant  to  the
       Company's Stock Option Plan.

       The   following  table  presents  the  activity   of   the
       Company's  Stock Option Plan for the year  ended  December
       31, 1999:

<TABLE>

<CAPTION>                                                  Weighted
                                                          Average
                                                          Exercise
                                              Shares       Price

 <S>                                         <C>            <C>
 Outstanding beginning of year                      ---
 Granted                                         90,000      $5.00
 Exercised                                          ---
 Canceled                                         3,000       5.00
 Outstanding end of year                         87,000      $5.00

 Options exercisable at year end                 17,400       5.00

 Weighted average fair value of options
    granted during the year                  $    1.42

</TABLE>

       All  options  granted and outstanding during 1999  have  a
       ten-year  life  and  vest  20%  upon  issuance  and   each
       anniversary thereafter until fully vested.

       Below  is  the  pro  forma net loss  for  the  year  ended
       December  31,  1999, as if the compensation cost  for  the
       option  plan had been determined based on the  fair  value
       at the grant date:

       Net loss:
         As Reported                $  (2,452,533)
         Pro Forma                  $  (2,468,730)



       The  fair  value of each option grant was estimated  using
       the  Minimum  Value method with a risk-free interest  rate
       of  5.3%  on  the  date of grant.  The Company  has  never
       declared  nor paid dividends on its common stock and  does
       not expect to in the foreseeable future.


Note 7 -                                   Other income  - net:
       Other  income as reflected in the statement of  operations
       consists   of  interest  income  realized  on   short-term
       investment grade investments.


Note 8 -  Income taxes:
       The  Company accounts for income taxes using the  deferred
       liability  method  as  required  by  Financial  Accounting
       Standards  Board Statement No. 109, Accounting for  Income
       Taxes.    Under   FAS  109,  deferred   tax   assets   and
       liabilities  are  determined based on differences  between
       financial  reporting  and  the tax  basis  of  assets  and
       liabilities, and are measured using the enacted rates  and
       laws  that  will  be  in effect when the  differences  are
       expected to reverse.

       Significant  components  of  the  Company's  deferred  tax
       liabilities  and  assets as of December 31,  1999  are  as
       follows:

       Deferred tax assets:
         Accrued expenses               $       25,000
         Net operating loss                  2,317,000
       Total deferred tax assets             2,342,000

       Valuation allowance                 (2,342,000)
       Net deferred tax assets                     ---
       Net deferred tax balance         $          ---

       In  accordance with FAS 109, a valuation allowance must be
       established  until it is more likely than not that  future
       benefits  arising  from net deferred tax  assets  will  be
       realized.   Realization  is  not  assured  in  future  tax
       projections.

         A  reconciliation of the provision for income  taxes  to
       the  amount computed using the Federal statutory tax rates
       consists of the following:

       Loss before taxes                    $   (2,453,000)

       Tax at statutory rate of 34%         $     (834,000)
       State income tax (net of
         federal benefit)                         (145,000)
       Effect of permanent differences                3,000
       Valuation allowance                          976,000

       Income tax expense                   $           ---


       The   Company   has  available  at  December   31,   1999,
       $5,800,000   of  net  operating  loss  carryforwards   for
       federal  and state purposes. These loss carryforwards  may
       be  applied  against future taxable income  and  begin  to
       expire  in  2002.   The  Company has had  numerous  equity
       transactions  during its history.  These transactions  may
       affect   the  Company's  ability  to  utilize  these   net
       operating  loss  carryforwards due to  certain  provisions
       contained in IRC Section 382.


Note 9 -                                        Related     party
       transactions:
       On  January 1, 1999, the Company entered into an exclusive
       license  with  Nestor, Inc. to apply  certain  proprietary
       technologies  in  the  fields of  using  video  and  other
       sensors  to  analyze, monitor and respond to  movement  of
       persons or objects in vehicular, rail, air or other  modes
       of   transportation  or  supporting  the  foregoing.   The
       license  expires  upon the expiration  of  the  underlying
       patents  protecting the technologies used in the Company's
       products.   The license provides for royalties to  Nestor,
       Inc.  starting  in  2000 equal to 5% of the  gross  margin
       realized  from sales or licensing of products  subject  to
       the license, and increasing to 10% of the gross margin  in
       calendar  years  2001  and beyond.  The  license  requires
       minimum  annual royalties of $125,000 in 2001,  increasing
       to  $1,000,000  in 2005 and beyond, in order  to  maintain
       exclusive  rights.  No royalties were due  or  payable  in
       1999.

       The  Company uses facility and administrative services  of
       Nestor,   Inc.,   including  use  of  office   space   and
       executive,  accounting and other support  personnel.   The
       Company   reimburses  Nestor,  Inc.  monthly   for   these
       services  at  a  rate  of $39,913 for  up  to  15  Company
       employees,  and  $47,267 for above  15  employees.   These
       fees  will be replaced with direct expenses as the Company
       obtains  its  own office space and develops an independent
       executive  and support staff.  Facility and administrative
       fees charged to the Company during 1999 were $479,000.


Note 10 - Commitments and contingencies:
       The   Company  leases  a  sales  and  support  office   in
       California  under an operating lease dated July  1,  1999.
       This  lease provides for monthly rentals of $650, and  can
       be  terminated upon 60 days advance notice.  Total expense
       under the lease for 1999 was $3,900.

       On   October  14,  1999,  the  Company  entered  into   an
       engagement letter with FAC Equities, a division  of  First
       Albany  Corporation,  to  provide financial  advisory  and
       investment  banking  services to the Company  relating  to
       the  potential sale of additional equity securities by the
       Company.   The Company issued a warrant to FAC to purchase
       up  to 10,000 shares of the company's common stock at $.01
       per  share  (expires October 14, 2004).  If a  transaction
       occurs,  FAC will receive a fee equal to 5% of  the  gross
       proceeds in cash plus a warrant equal to 3% of the  common
       shares, or equivalents, sold in the transaction.