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**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**FORM      10-K/A**

**Amendment      No. 2**

| x                                             | ANNUAL                REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE                ACT OF                1934    |
|-----------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------|
|                                          | For                the period ended                                                                                                   | December                31, 2005 |
|                                          | 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.) |
|                                                                       |
| 42                Oriental Street; Providence, Rhode Island                | 02908 |
| (Address                of principal executive offices)                    | Zip                Code |
|                                                                       |   |
| (401)                274-5658                                              |
| (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) |

| Indicated                by check mark if the registrant is a well-known seasoned issuer,                as                defined in Rule 405 of the Securities Act.                                                                                                                                                                                                                                                                         | Yes:                                    | ¨ | No:    | x                                 |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------|--------|--------|-----------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| Indicate                by check mark if the registrant is not required to file reports pursuant                to Section 13 or Section 15(d) of the Act.                                                                                                                                                                                                                                                                                    | Yes:                                    | ¨ | No:    | x                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| 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                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| Indicate                by check mark whether the Registrant is a large accelerated filer,                an                accelerated filer, or a non-accelerated filer. See definition of                “accelerated filer and large accelerated filer” in Rule 12b-2 of the                Exchange Act. (Check one):                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                          | Large                Accelerated filer: | ¨ |   | Accelerated                filer: | ¨ |   | Non-accelerated                filer: | x |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| Indicated                by check mark whether the registrant is a shell company:                                                                                                                                                                                                                                                                                                                                                             | Yes:                                    | ¨ | No:    | x                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| The                aggregate market value of the 7,471,357 shares of voting stock held                by                non-affiliates of the registrant on June 30, 2005, based on the closing                price of such stock on June 30, 2005, was $44,828,142.                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| The                number of shares outstanding of the Registrant’s Common Stock at June 13,                2006 was 20,365,916.                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| **DOCUMENTS                INCORPORATED BY REFERENCE**                                                                                                                                                                                                                                                                                                                                                                                        |
| None                                                                                                                                                                                                                                                                                                                                                                                                                                          |

**-          1 -**

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**EXPLANATORY      NOTE**

*Controls      and Procedures.*

**-          2 -**

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**Part      II**

**Item      9A.**
**Controls      and Procedures.**

*Management’s      Report on Internal Control Over Financial Reporting*

**-          3 -**

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**Exhibits**

| **Exhibit                  Number** | **Description**                                                                                                                                                                         |
|-------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                |                                                                                                                                                                                    |
| 31.1                                | Certification                  of principal executive officer pursuant to Rule 13a-14(a)/15d-14(a)                  of the                  Securities Exchange Act of 1934, as amended |
|                                |                                                                                                                                                                                    |
| 31.2                                | Certification                  of principal financial officer pursuant to Rule 13a-14(a)/15d-14(a)                  of the                  Securities Exchange Act of 1934, as amended |
|                                |                                                                                                                                                                                    |
| 32                                  | Statement                  Pursuant to 18 U.S.C. §1350                                                                                                                             |
|                                |                                                                                                                                                                                    |

**-          4 -**

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**SIGNATURE**

|   |                                                 | NESTOR,                INC. |
|--------|------------------------------------------------------|-----------------------------|
|   | (Registrant)                                         |
|   |                                                 |
|   | /s/                William B. Danzell                |
|   | William                B. Danzell, President and CEO |
|   |                                                 |
|   |                                                 |
| Date:  | June                14, 2006                         |                        |
|   |                                                 |

**-          5 -**

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