UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10K/A
                                 (Amendment #2)

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

                  For the period ended      December 31, 2000
                                       --------------------------

                                       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.)

    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 or any amendment to this
Form 10-K.   X
            ---

                                                  Exhibit Index is on Page:   46



The  aggregate  market  value of the  7,750,616  shares of voting  stock held by
non-affiliates  of the registrant,  based on the average bid and asked prices of
such stock on February 28, 2001 was $5,692,052. The number of shares outstanding
of the Registrant's Common Stock at February 28, 2001 was 17,688,449.




<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/ David Fox
                                           ------------------------------------
                                           David Fox, President and CEO

Date:  April 30, 2001

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.

    Signatures            Title                                   Date
    ----------            -----                                   ----


/s/ Leon N Cooper
----------------------
Leon N Cooper             Co-Chairman of the Board and Director   April 30, 2001


/s/ Charles Elbaum
----------------------
Charles Elbaum            Co-Chairman of the Board and Director   April 30, 2001


/s/ David Fox
----------------------
David L. Fox              President, CEO and Director             April 30, 2001


/s/ Herbert S. Meeker
----------------------
Herbert S. Meeker         Secretary and Director                  April 30, 2001


/s/ Sam Albert
----------------------
Sam Albert                Director                                April 30, 2001


/s/ Jeff Harvey
----------------------
Jeffrey Harvey            Director                                April 30, 2001


/s/ Thomas F. Hill
----------------------
Thomas F. Hill            Director                                April 30, 2001


/s/ Bruce W. Schnitzer
----------------------
Bruce W. Schnitzer        Director                                April 30, 2001


<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, nominees and executive officers of the Company:

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

Sam Albert           67        1991         Director

Leon N Cooper        71        1983         Co-Chairman and Director

Charles Elbaum       74        1983         Co-Chairman and Director

David Fox            65        1983         President, Chief Executive
                                              Officer and Director

Jeffrey B. Harvey    51        1993         Director

Thomas F. Hill       55        1994         Director

Herbert S. Meeker    76        1983         Secretary and Director

Bruce W. Schnitzer   56        1994         Director

Nigel P. Hebborn     42        1996         Executive Vice President and
                                            Chief Financial Officer

Sushmito Ghosh       42        1995         President - NestorCommerce Division

Douglas L. Reilly    49        1983         Senior Vice President
                                             Strategic Analysis & Technology





<PAGE>


     Sam Albert became a Director of the Company as of April 1991. Mr. Albert is
currently  President  of  Sam  Albert  Associates,   an  independent  management
consulting firm specializing in developing marketing strategies and facilitating
strategic relationships for the information technology industry. Mr. Albert is a
former IBM Corporation  executive who retired after thirty years in 1989, as IBM
Director of Business and Management Services Industries. These segments included
the  CPA,  legal  and  consulting  professions  and the  software  and  services
industries.  Mr. Albert also serves on the Boards of the Outsourcing  Institute,
the  Information  Technology  Services  Division of the  Information  Technology
Association of America (ITAA), the Computer Museum (Boston). He is also a member
of the  Executive  Committee of the New York  Venture  Group and a member of the
Independent  Computer  Consultants  Association  (ICCA).  Mr. Albert also writes
Albert's  Analysis for Enterprise  Systems  Journal/Midrange  Systems and is the
creator, producer and on-air talent for CompuTips(R) carried on The Infinity New
York affiliate, 1010 WINS.

     Leon N Cooper is the Thomas J. Watson Senior  Professor of Science at Brown
University,  his principal  occupation.  He specializes  in theoretical  physics
including  low-temperature  physics,  and  has  also  done  theoretical  work in
modeling neural  networks,  which are networks of nerve cells. Dr. Cooper is the
Director  of the Brown  University  Institute  for Brain and Neural  Systems and
Brain Science  program which consist of a group of scientists  applying  various
disciplines to the study of the brain as well as Professor in the Departments of
Physics and  Neuroscience.  He was awarded the  Comstock  Prize by the  National
Academy  of  Science  in 1968 and the  Nobel  Prize in  Physics  in 1972 for his
contributions to the theory of superconductivity. He is a Fellow of the American
Physical Society and the American Academy of Arts and Sciences,  a member of the
American  Philosophical Society and the National Academy of Sciences, and is the
author of many  publications.  He is chairman of  Nemogen,  Inc. a company  that
specializes  in products  that affect the process of memory  storage and is also
chairman of the  Scientific  Advisory Board of Spectra  Science,  a company that
commercializes innovative laser products. Professor Cooper was a general partner
of Nestor  Associates  ("Nestor"),  the  predecessor  of the  Company,  from its
inception  until  May 1983,  and is  currently  a  part-time  consultant  to the
Company.

     Charles  Elbaum,  Founding  Co-Chairman  of the  Company,  he is the Hazard
Professor of Physics at Brown University.  He has been a Professor of Physics at
Brown University since 1963,  specializing in experimental  solid-state physics,
including  the design of  circuits  and  information-processing  systems,  which
represents  his  principal  occupation.  He was  also  Chairman  of the  Physics
Department at Brown. He is a Fellow of the American Physical  Society,  a member
of  several  scientific  and  professional  societies  and is the author of many
publications.  Professor  Elbaum  was a general  partner  of  Nestor  Associates
("Nestor"),  the  predecessor of the Company from its inception  until May 1983,
and is currently a part-time consultant to the Company.

     David Fox was President of Container Transport  International,  a container
leasing concern,  from 1971 to 1982. Mr. Fox was President of Cognitive Systems,
Inc. ("CSI"),  a computer software company,  from 1983 until 1986 and a director
of CSI from 1983 until 1987. A director of Nestor,  Inc. since 1983, Mr. Fox was
appointed  President and Chief Executive Officer of the Company in July 1989. He
has also  served  as  President  of the  Company's  subsidiary,  Nestor  Traffic
Systems, Inc. since its inception in January 1997.

     Jeffrey B. Harvey  joined the  Company's  Board of  Directors  in September
1993. Mr. Harvey has been in the brokerage  business since 1976 and is currently
Account  Vice  President  of  UBS  Paine  Webber.   He  is  a  graduate  of  the
Massachusetts  Institute of  Technology  where he received his Master of Science
Degree in Nuclear  Engineering.  Mr.  Harvey is also a director of Nova American
Group an insurance underwriter in Buffalo, NY.

     Nigel P. Hebborn,  Executive Vice President and Chief Financial  Officer of
Nestor,  Inc.,  joined the Company in October  1996. He is  responsible  for the
Company's financial and 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 associated with Price Waterhouse.
<PAGE>

     Thomas F. Hill joined the  Company's  Board of Directors in August 1994. He
is President of Thomas F. Hill, Inc., a consulting firm with broad experience in
marketing,   sales  and  business  planning.   Mr.  Hill's  clients  during  his
twenty-five  year career have included Marsh & McLennan,  Bristol Meyers,  Royal
Dutch Shell, CBS, Nestle, Procter & Gamble, Toyota and Unilever. Mr. Hill serves
as a director of Diagraph  Corporation,  a  manufacturer  of  automated  product
identification   systems;   Information   Management   Associates,   a  customer
interaction software provider;  and Yankelovich Partners, a marketing and social
research company.

     Herbert S. Meeker is an attorney  and partner in the law firm of Baer Marks
& Upham LLP, which acts as general  counsel to Nestor.  Mr. Meeker was a general
partner of Nestor  Associates  from its  inception  until May 1983,  when Nestor
succeeded to the business of Nestor Associates. He has also served as a director
and   Secretary   of  Nestor  and  NTS  since  the  date  of  their   respective
incorporation. Mr. Meeker is currently a shareholder of Nestor and NTS.

     Bruce W. Schnitzer  joined the Company's  Board of Directors in August 1994
and has been  Chairman of the  Executive  Committee  of the Board of the Company
since  December  1996.  Mr.  Schnitzer is Chairman of Wand  Partners,  a private
equity  investment  firm,  specializing  in the  application  of  Internet-based
technology and database  management to established  businesses.  Mr. Schnitzer's
experience  prior  to  establishing  Wand  in 1987  includes  having  served  as
President  and  CEO of  Marsh &  McLennan,  Inc.  and  head  of the  Merger  and
Acquisition  Advisory Department of J. P. Morgan. Mr. Schnitzer presently serves
as director of AMRESCO Inc. (real estate investment manager).

     Sushmito Ghosh, President,  NestorCommerce Division,  joined the Company in
1986 and was named an  officer  in 1995.  He is  responsible  for the  strategic
positioning,  business  development  and  delivery of  Nestor's  products in the
e-commerce and financial  services  market  segments.  Mr. Ghosh has an in-depth
knowledge of Nestor's  technology  and its value  proposition  to customers  and
strategic partners. He holds a Masters Degree in Engineering from the University
of  Rhode  Island  and  has   co-authored  a  number  of  papers  and  technical
publications.

     Douglas L. Reilly is Senior Vice President Strategic Analysis & Technology.
From 1983 until 1989, he served as the Company's Vice President for Research and
Development.  From  1983 to  1989,  he  served  as Vice  President  for  Product
Development  and  Financial  Applications.  He led Nestor's  financial  services
division  until 1994, at which time he became Senior Vice President of Strategic
Analysis and Technology.  In that position,  he had  responsibility for business
development, marketing and sales of Nestor Traffic System's products. He now has
responsibility for Nestor's marketing,  sales,  product development and delivery
into the rail market.  Dr. Reilly  received his Doctoral  Degree in Physics from
Brown University in 1980,  specializing in the area of neural networks under the
direction of Leon Cooper and Charles  Elbaum.  Dr.  Reilly  became the Company's
first  full  time  employee  in  1983,  with   responsibility  for  the  hiring,
development and day-to-day  management of the Company's technical  organization.
He led the teams that  developed  the first  prototype  systems of the Company's
technology, producing prototypes and products for character recognition, machine
vision,  and  applications  of  the  technology  to  decision  making  and  risk
assessment in financial services. He is a co-author on a number of the Company's
patents and has written numerous  articles in the field of neural network design
and application.

Resignation of Director

     Thomas H. Boje resigned as a director of the Company as of April 24, 2001.

Committees and Meetings of the Board of Directors

     The Company's  Board of Directors held seven meetings during the year ended
December 31, 2000. The incumbent  directors  attended all of these meetings.  In
2000,  the Directors  did not receive fees for attending  meetings of the Board.
The Company does not have a Nominating Committee.

     The Company has an Audit and Finance  Committee.  This committee  generally
selects and reviews  recommendations  made by the Company's  independent  public
accountants.  The Audit and Finance Committee,  consisting of Herbert Meeker and
Sam Albert met once during the year ended  December 31,  2000.  The Company also
has a Management  Compensation  Committee  consisting of Jeffrey B. Harvey,  Sam
Albert and Herbert S. Meeker.  The Committee  meets  periodically  to review and
consider compensation matters relating to employees of the Company.




<PAGE>



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

         The following table sets forth information for the calendar years ended
December 31, 2000, 1999 and 1998 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.

<TABLE>

<CAPTION>
                                                                                              Long-Term Compensation Awards
                                                                                       ------------------------------------------
                                                                         Other         Restricted                            All
Name and                      Calendar                                  Annual            Stock     Options/                Other
Principal Position              Year       Salary ($)  Bonus ($)   Compensation (1)      Awards       SARs (4)  Payouts   Comp ($)
------------------            --------     ----------  ---------   ----------------      ------       ----      -------   --------
<S>                             <C>           <C>        <C>            <C>                 <C>      <C>           <C>    <C>
David Fox                       2000          165,000         0           673               0        60,000        0           0
President and CEO               1999          165,000         0         1,615               0             0        0           0
                                1998          156,875         0           340               0             0        0      24,551 (2)

Sushmito Ghosh                  2000          134,615    53,480            90               0        50,000        0           0
President - NestorCommerce      1999          125,000    50,067           153               0             0        0           0
                                1998          118,205    36,000           265               0        30,000        0           0

Nigel P. Hebborn                2000          110,000         0            72               0        60,000        0           0
Executive Vice President        1999          110,000         0           122               0             0        0           0
and Chief Financial Officer     1998          101,875         0           239               0             0        0           0

Douglas Reilly (3)              2000          120,417         0           128               0             0        0           0
Douglas Reilly                  1999          115,000         0           226               0             0        0           0
Senior Vice President           1998          106,875         0           252               0        20,000        0           0


(1)  Payment of group term life insurance premiums.

(2)  Reimbursement of relocation expenses.

(3)  Compensation paid by Nestor Traffic Systems, Inc., an affiliate of the Company, in 2000.

(4)  Excludes options granted by Nestor Traffic Systems, Inc. of 12,000, 6,000 and 10,000 to
     Messrs. Fox, Hebborn and Reilly, respectively, in 1999 and 40,000 and 5,000 to Messrs.
     Fox and Reilly, respectively, in 2000.


</TABLE>


Options and Warrants

     The  shareholders  of the Company  approved on May 6, 1997,  the 1997 Stock
Option Plan ("1997 Plan") of the Company  authorizing the granting to employees,
officers,  directors, and others options to acquire up to a maximum of 1,000,000
shares of Common Stock of the Company. The shares issued by the Company upon the
exercise of the options  granted under the 1997 Plan were  registered on June 6,
1997 on Form S-8  (Registration  No. 333-27271) under the Securities Act of 1933
as amended.  During the year ended  December  31,  2000,  270,500  options  were
granted under the 1997 Plan, 35,873 options were cancelled or expired and 17,372
options were exercised. There was an aggregate of 826,530 options outstanding on
December 31, 2000 of which  565,262 were vested as of that date.  There were, in
addition,  314,249  options of which  276,624  were  vested and  outstanding  at
December 31, 2000 granted to employees under an option plan  previously  adopted
by the Company.  There were 61,750 options exercised under this plan and 679,000
options  were  canceled  or  expired  in 2000.  The  shares  issued  under  such
previously  adopted plan were registered on Form S-8 under the Securities Act of
1933 as amended pursuant to Registration No. 01-12965.



<PAGE>

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

     The  following  table sets  forth,  as of March 31,  2001,  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 three most highly  compensated  executive  officers whose salary
and bonus  exceed  $100,000  for the  calendar  year  ended  December  31,  2000
(collectively, the "Names of Executive Officers"), (iii) each director, 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 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
-------------------                      --------------------        --------

Entities associated with                    6,803,293(1)               33.6
  Wand Partners, Inc.
Bruce W. Schnitzer, Chairman
630 Fifth Avenue; Suite 2435
New York, NY  10111


Transaction Systems Architects, Inc.        5,000,000(2)               24.5
Thomas H. Boje, Vice President
Corporate Development
224 South 108 Avenue
Omaha, Nebraska  68154


Charles Elbaum                              1,245,391(3)                7.0
85 Lorraine Avenue
Providence, RI  02906


Leon Cooper                                 1,076,212(4)                6.9
49 Intervale Road
Providence, RI  02906


David Fox                                     773,283(5)                4.3
29 Orchard Avenue
Providence, RI  02906


Herbert S. Meeker                             281,863(6)                1.6
233 Reeder Street
Easton, PA  18042


Douglas L. Reilly                             210,011(7)                1.2
9 Island View Road
Narragansett, RI   02882


Thomas F. Hill                                158,750(8)                 *
320 East 57th Street
New York, NY  10022


Jeffrey B. Harvey                             130,983(9)                 *
114 Woodbury Drive
Amherst, NY  14226


Sushmito Ghosh                                112,160(7)                 *
25 Brookway Road
Providence, RI  02906


Nigel P. Hebborn                               97,000(7)                 *
84 Coolidge Road
Greenville, RI  02828


Sam Albert                                     12,393(10)                *
27 Kingwood Road
Scarsdale, NY  10583


All executive officers                     15,901,339(11)              67.2
and directors as a group
(15 persons)

* Less than 1%.
----------------
<PAGE>

     (1)  Bruce W.  Schnitzer is the  Chairman  and owns 66% of the  outstanding
          common stock of Wand (Nestor) Inc., a Delaware corporation,  which, as
          a general partner, controls Wand/Nestor Investments L. P., Wand/Nestor
          Investments II L. P. and Wand/Nestor  Investments  III L.P.,  Delaware
          limited  partnerships,  which hold an aggregate of 4,446,860 shares of
          Common Stock, and Common Stock Purchase  Warrants to acquire 3,349,040
          shares of Common  Stock of the  Company at prices  from $.65 to $2.00.
          Bruce W. Schnitzer disclaims  beneficial ownership of these securities
          except to the  extent  of his  "pecuniary  interest,"  as such term is
          defined in Rule 16a-1 of the Securities Exchange Act, therein as owner
          of a 10.7103% limited partnership interest in Wand/Nestor  Investments
          L.P.  and as the  owner  of 66% of Wand  (Nestor)  Inc.'s  1%  general
          partnership  interest in  Wand/Nestor  Investments  L. P. Common Stock
          totaling 305,869 shares is held by holders subject to the Bank Holding
          Company Act of 1958, as amended, and have no voting rights.

          Bruce W. Schnitzer holds 7,393 vested stock options  directly,  and is
          the  Chairman  and owns 66% of the  outstanding  Common  Stock of Wand
          Partners  Inc.,  a Delaware  corporation,  which,  as general  partner
          controls Wand Partners L. P., a Delaware  limited  partnership,  which
          has been granted by the Company a Common Stock Fee Purchase Warrant to
          acquire  207,500  shares of Common  Stock of the  Company  exercisable
          until April 1, 2004 at a price of $2.00 per share.  Bruce W. Schnitzer
          disclaims beneficial ownership of this Warrant except to the extent of
          his "pecuniary  interest," as defined in Rule 16a-1,  therein,  as the
          indirect owner of a 33% partnership interest in Wand Partners L. P.

     (2)  Includes a Common Stock Purchase  Warrant to acquire  2,500,000 shares
          of Common Stock of the Company,  exercisable until March 1, 2002, at a
          price of $3.00 per share.  Thomas H. Boje, Vice  President,  Corporate
          Development of Transaction Systems Architects,  Inc. was a director of
          the Company since April 2000 and resigned on April 24, 2001.

     (3)  Includes  5,372 shares of Common Stock which Mr. Elbaum may acquire on
          a fully vested basis upon the  exercise of options  granted  under the
          Company's Incentive Stock Option Plan, and 360,000 held in the name of
          family members over which he exercises voting control.

     (4)  Includes  5,372 shares of Common Stock which Mr. Cooper may acquire on
          a fully vested basis upon the  exercise of options  granted  under the
          Company's Incentive Stock Option Plan, and 183,000 held in the name of
          family members over which he exercises voting control.

     (5)  Includes 275,809 shares of Common Stock which Mr. Fox may acquire on a
          fully  vested  basis upon the  exercise of options  granted  under the
          Company's Incentive Stock Option Plan, and 137,074 held in the name of
          family members over which he exercises voting control.

     (6)  Includes 58,750 shares of Common Stock which Mr. Meeker may acquire on
          a fully vested basis upon the  exercise of options  granted  under the
          Company's Incentive Stock Option Plan.

     (7)  Includes  140,000,  111,877  and 90,000  shares of Common  Stock which
          Messrs.  Reilly,  Ghosh and  Hebborn,  respectively,  may acquire on a
          fully  vested  basis upon the  exercise of options  granted  under the
          Company's Incentive Stock Option Plan.

     (8)  Includes  8,750 vested  stock  options and a Common Stock Fee Purchase
          Warrant to acquire  150,000  shares of the Common Stock of the Company
          exercisable until August 1, 2004, at a price of $2.00 per share issued
          to Thomas F. Hill, Inc. of which Mr. Hill is President and sole owner.

     (9)  Includes 13,750 shares of Common Stock which Mr. Harvey may acquire on
          a fully vested basis upon the  exercise of options  granted  under the
          Company's Incentive Stock Option Plan.

     (10) Includes 12,393 shares of Common Stock which Mr. Albert may acquire on
          a fully  vested  basis  upon  exercise  of options  granted  under the
          Company's Incentive Stock Option Plan.

     (11) Includes  5,728,506 vested options and warrants owned or controlled by
          officers and directors of the Company,  including  2,500,000  warrants
          owned by TSAI and 2,349,040 warrants controlled by Wand partnerships.




<PAGE>




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

     See Notes 6, 7, 8, 12 and 13 of the Nestor, Inc. Financial Statements.