content: SECURITIES AND EXCHANGE COMMISSION
  
                                   Washington D.C.
  
                                      FORM 8-K
  
                                   CURRENT REPORT
  
       Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
  
  
  
                                   July 31, 2003
  --------------------------------------------------------------------------------
                  Date              of Report (Date of earliest event reported)
                                    NESTOR, INC.
  --------------------------------------------------------------------------------
               (Exact name of registrant as specified in its charter)
                                      Delaware
  --------------------------------------------------------------------------------
                   (State or other jurisdiction of incorporation)
              0-12965                                     13-3163744
     --------------------------             --------------------------------------
      (Commission file number)               (IRS employer identification number)
  
                          400 MASSASOIT AVENUE, SUITE 200
                        EAST PROVIDENCE, RHODE ISLAND 02914
  --------------------------------------------------------------------------------
                      (Address of principal executive offices)
                                   (401) 434-5522
  --------------------------------------------------------------------------------
                (Registrant's telephone number, including area code)
  
  
  
  
                                         1
  <PAGE>
  
  
  
  
  
  
  
  
  ITEM 5.  OTHER EVENTS AND REGULATION FD DISCLOSURE.
  
           TRANSACTION WITH LAURUS MASTER FUND, LTD.
           -----------------------------------------
  
       On July 31, 2003,  Nestor,  Inc. (the "Company")  entered into a Securities
  Purchase  Agreement (the "Agreement") with Laurus Master Fund, Ltd.  ("Laurus").
  Pursuant to the Agreement,  the Company issued to Laurus a Convertible Note (the
  "Note") in the principal  amount of $2,000,000  that bears interest at the prime
  rate plus 1.25%  (subject  to a floor of 5.25% per year) and matures on July 31,
  2005.  The net  proceeds  from  the Note  shall  be used  for the  construction,
  installation and maintenance of the Company's traffic surveillance  systems. The
  Note,  which  will be  amortized  over a 20 month  period,  may be repaid at the
  Company's  option,  in cash or through the  issuance of shares of the  Company's
  common  stock.  The  Company  will have an option to pay the  monthly  amortized
  amount in shares at the fixed  conversion price of $1.55 per share if the shares
  are registered  with the Securities and Exchange  Commission  ("SEC") for public
  resale and the then  current  market  price is 120%  above the fixed  conversion
  price.  The Note includes a right of  conversion  in favor of Laurus.  If Laurus
  exercises its  conversion  right at any time or from time to time at or prior to
  maturity, the Note will be convertible into shares of the Company's common stock
  at  a  fixed  conversion  price,   subject  to  adjustments  for  stock  splits,
  combinations  and  dividends and for shares of common stock issued for less than
  the fixed conversion price (unless exempted pursuant to the Agreement).
  
       In conjunction with this transaction, Sage Investments, Inc. will be paid a
  fee of  $120,000  and will  receive an option to purchase  14,000  shares of the
  Company's  common  stock,  Laurus was paid a fee of $80,000,  had certain of its
  expenses  reimbursed  and received a warrant to purchase  140,000  shares of the
  Company's common stock. The warrant exercise price is computed as follows: $1.78
  per  share for the  purchase  of up to  83,000  shares;  $1.94 per share for the
  purchase of an additional 33,000 shares; and $2.25 per share for the purchase of
  an additional 24,000 shares.  The warrant exercise price may be paid in cash, in
  shares of the Company's common stock (if the fair market value of a single share
  of common stock exceeds the value of the per share warrant exercise  price),  or
  by a combination  of both.  The warrant  expiration  date is July 31, 2008.  The
  warrant  exercise  price and the number of shares  underlying  the  warrant  are
  subject to adjustments for stock splits,  combinations and dividends. The option
  exercise  price will be: $1.78 per share for the purchase of up to 8,300 shares;
  $1.94 per share for the purchase of an additional  3,300  shares;  and $2.25 per
  share for the purchase of an additional 3,400 shares. The option expiration date
  will be July 31,  2008.  The  option  exercise  price  and the  number of shares
  underlying  the  option  will  be  subject  to  adjustments  for  stock  splits,
  combinations and dividends.
  
       The Company  has agreed to file a  registration  statement  with the SEC to
  register  the  public  resale by Laurus of the  common  stock to be issued  upon
  conversion of the Note and/or exercise of the warrant.
  
       As security for payment of the Note, the  CrossingGuard,  Inc. ("CGI"),  an
  indirectly wholly-owned  subsidiary of the Company,  granted to Laurus a general
  security  interest  in its  assets,  which  primarily  comprise  contracts  with
  Cerritos,  CA;  Pasadena,  CA; Costa Mesa,  CA and  Fullerton,  CA, and issued a
  guaranty  of  payment in favor of Laurus and Nestor  Traffic  Systems,  Inc.,  a
  wholly-owned  subsidiary of the Company and sole stockholder of CGI, pledged the
  stock of CGI to Laurus.
  
       A copy of the press release relating to the transaction  described above is
  attached as Exhibit 99.1 and incorporated herein by reference.
  
  
                                         2
  <PAGE>
  
  
  ITEM 7.  FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
  
          (c) Exhibits:
  
          The following exhibits are filed as part of this report:
  
          Exhibit
          Number       Description
          -------      -----------
  
          10.42        Security Purchase Agreement dated July 31, 2003
                       between Nestor, Inc. and Laurus Master Fund, Ltd.
  
          10.43        Convertible Note dated July 31, 2003
                       made by Nestor, Inc. to Laurus Master Fund, Ltd.
  
          10.44        Registration Rights Agreement dated July 31, 2003
                       between Nestor, Inc. and Laurus Master Fund, Ltd.
  
          10.45        Common Stock Purchase Warrant dated July 31, 2003
                       issued by Nestor, Inc. to Laurus Master Fund, Ltd.
  
          10.46        Stock Pledge Agreement dated July 31, 2003
                       between Nestor Traffic Systems, Inc. and Laurus Master
                       Fund, Ltd.
  
          10.47        Pledge and Security Agreement dated July 31, 2003
                       between CrossingGuard, Inc. and Laurus Master Fund, Ltd.
  
          10.48        Guaranty dated July 31, 2003 by CrossingGuard, Inc. to
                       Laurus Master Fund, Ltd.
  
           99.1        Press Release dated August 4, 2003.
  
  
  
                                         3
  <PAGE>
  
  
                                     SIGNATURES
  
  
       Pursuant to the requirements of the Securities Exchange Act of 1934, the
  Registrant has duly caused this report to be signed on its behalf by the
  undersigned hereunto duly authorized.
  
  
                                         NESTOR, INC.
                                         (Registrant)
  
  
  
                                         By: /s/ Nigel P. Hebborn
                                            --------------------------------------
                                            Nigel P. Hebborn
                                            Treasurer and Chief Financial Officer
  
  
  Dated:     August 5, 2003
  
  
  
                                         4
  <PAGE>
  
  
  
  
  
  
  
                                    EXHIBIT INDEX
                                    -------------
  
  
      Exhibit
          Number       Description
          -------      -----------
  
          10.42        Security Purchase Agreement dated July 31, 2003
                       between Nestor, Inc. and Laurus Master Fund, Ltd.
  
          10.43        Convertible Note dated July 31, 2003
                       made by Nestor, Inc. to Laurus Master Fund, Ltd.
  
          10.44        Registration Rights Agreement dated July 31, 2003
                       between Nestor, Inc. and Laurus Master Fund, Ltd.
  
          10.45        Common Stock Purchase Warrant dated July 31, 2003
                       issued by Nestor, Inc. to Laurus Master Fund, Ltd.
  
          10.46        Stock Pledge Agreement dated July 31, 2003
                       between Nestor Traffic Systems, Inc. and Laurus Master
                       Fund, Ltd.
  
          10.47        Pledge and Security Agreement dated July 31, 2003
                       between CrossingGuard, Inc. and Laurus Master Fund, Ltd.
  
          10.48        Guaranty dated July 31, 2003 by CrossingGuard, Inc. to
                       Laurus Master Fund, Ltd.
  
           99.1        Press Release dated August 6, 2003.
  
  
  
                                         5
  <PAGE>
metadata_documents: [{"type": "8-K", "sequence": "1", "filename": "form8k.txt", "description": "FORM 8K (LAURUS FINANCING)", "secsgml_size_bytes": 9057}]
metadata_filer: {"company-data": {"conformed-name": "NESTOR INC", "cik": "0000720851", "assigned-sic": "7372", "irs-number": "133163744", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-12965", "film-number": "03824639"}, "business-address": {"street1": "400 MASSASOIT AVE", "street2": "STE 200", "city": "PROVIDENCE", "state": "RI", "zip": "02914", "phone": "4014345522"}, "mail-address": {"street1": "400 MASSASOIT AVE", "street2": "STE 200", "city": "PROVIDENCE", "state": "RI", "zip": "02914"}}
text: SECURITIES AND EXCHANGE COMMISSION
  
                                   Washington D.C.
  
                                      FORM 8-K
  
                                   CURRENT REPORT
  
       Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
  
                                   July 31, 2003
  --------------------------------------------------------------------------------
                  Date              of Report (Date of earliest event reported)
                                    NESTOR, INC.
  --------------------------------------------------------------------------------
               (Exact name of registrant as specified in its charter)
                                      Delaware
  --------------------------------------------------------------------------------
                   (State or other jurisdiction of incorporation)
              0-12965                                     13-3163744
     --------------------------             --------------------------------------
      (Commission file number)               (IRS employer identification number)
  
                          400 MASSASOIT AVENUE, SUITE 200
                        EAST PROVIDENCE, RHODE ISLAND 02914
  --------------------------------------------------------------------------------
                      (Address of principal executive offices)
                                   (401) 434-5522
  --------------------------------------------------------------------------------
                (Registrant's telephone number, including area code)
  
                                         1
  ITEM 5.  OTHER EVENTS AND REGULATION FD DISCLOSURE.
  
           TRANSACTION WITH LAURUS MASTER FUND, LTD.
           -----------------------------------------
  
       On July 31, 2003,  Nestor,  Inc. (the "Company")  entered into a Securities
  Purchase  Agreement (the "Agreement") with Laurus Master Fund, Ltd.  ("Laurus").
  Pursuant to the Agreement,  the Company issued to Laurus a Convertible Note (the
  "Note") in the principal  amount of $2,000,000  that bears interest at the prime
  rate plus 1.25%  (subject  to a floor of 5.25% per year) and matures on July 31,
  2005.  The net  proceeds  from  the Note  shall  be used  for the  construction,
  installation and maintenance of the Company's traffic surveillance  systems. The
  Note,  which  will be  amortized  over a 20 month  period,  may be repaid at the
  Company's  option,  in cash or through the  issuance of shares of the  Company's
  common  stock.  The  Company  will have an option to pay the  monthly  amortized
  amount in shares at the fixed  conversion price of $1.55 per share if the shares
  are registered  with the Securities and Exchange  Commission  ("SEC") for public
  resale and the then  current  market  price is 120%  above the fixed  conversion
  price.  The Note includes a right of  conversion  in favor of Laurus.  If Laurus
  exercises its  conversion  right at any time or from time to time at or prior to
  maturity, the Note will be convertible into shares of the Company's common stock
  at  a  fixed  conversion  price,   subject  to  adjustments  for  stock  splits,
  combinations  and  dividends and for shares of common stock issued for less than
  the fixed conversion price (unless exempted pursuant to the Agreement).
  
       In conjunction with this transaction, Sage Investments, Inc. will be paid a
  fee of  $120,000  and will  receive an option to purchase  14,000  shares of the
  Company's  common  stock,  Laurus was paid a fee of $80,000,  had certain of its
  expenses  reimbursed  and received a warrant to purchase  140,000  shares of the
  Company's common stock. The warrant exercise price is computed as follows: $1.78
  per  share for the  purchase  of up to  83,000  shares;  $1.94 per share for the
  purchase of an additional 33,000 shares; and $2.25 per share for the purchase of
  an additional 24,000 shares.  The warrant exercise price may be paid in cash, in
  shares of the Company's common stock (if the fair market value of a single share
  of common stock exceeds the value of the per share warrant exercise  price),  or
  by a combination  of both.  The warrant  expiration  date is July 31, 2008.  The
  warrant  exercise  price and the number of shares  underlying  the  warrant  are
  subject to adjustments for stock splits,  combinations and dividends. The option
  exercise  price will be: $1.78 per share for the purchase of up to 8,300 shares;
  $1.94 per share for the purchase of an additional  3,300  shares;  and $2.25 per
  share for the purchase of an additional 3,400 shares. The option expiration date
  will be July 31,  2008.  The  option  exercise  price  and the  number of shares
  underlying  the  option  will  be  subject  to  adjustments  for  stock  splits,
  combinations and dividends.
  
       The Company  has agreed to file a  registration  statement  with the SEC to
  register  the  public  resale by Laurus of the  common  stock to be issued  upon
  conversion of the Note and/or exercise of the warrant.
  
       As security for payment of the Note, the  CrossingGuard,  Inc. ("CGI"),  an
  indirectly wholly-owned  subsidiary of the Company,  granted to Laurus a general
  security  interest  in its  assets,  which  primarily  comprise  contracts  with
  Cerritos,  CA;  Pasadena,  CA; Costa Mesa,  CA and  Fullerton,  CA, and issued a
  guaranty  of  payment in favor of Laurus and Nestor  Traffic  Systems,  Inc.,  a
  wholly-owned  subsidiary of the Company and sole stockholder of CGI, pledged the
  stock of CGI to Laurus.
  
       A copy of the press release relating to the transaction  described above is
  attached as Exhibit 99.1 and incorporated herein by reference.
  
                                         2
  ITEM 7.  FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
  
          (c) Exhibits:
  
          The following exhibits are filed as part of this report:
  
          Exhibit
          Number       Description
          -------      -----------
  
          10.42        Security Purchase Agreement dated July 31, 2003
                       between Nestor, Inc. and Laurus Master Fund, Ltd.
  
          10.43        Convertible Note dated July 31, 2003
                       made by Nestor, Inc. to Laurus Master Fund, Ltd.
  
          10.44        Registration Rights Agreement dated July 31, 2003
                       between Nestor, Inc. and Laurus Master Fund, Ltd.
  
          10.45        Common Stock Purchase Warrant dated July 31, 2003
                       issued by Nestor, Inc. to Laurus Master Fund, Ltd.
  
          10.46        Stock Pledge Agreement dated July 31, 2003
                       between Nestor Traffic Systems, Inc. and Laurus Master
                       Fund, Ltd.
  
          10.47        Pledge and Security Agreement dated July 31, 2003
                       between CrossingGuard, Inc. and Laurus Master Fund, Ltd.
  
          10.48        Guaranty dated July 31, 2003 by CrossingGuard, Inc. to
                       Laurus Master Fund, Ltd.
  
           99.1        Press Release dated August 4, 2003.
  
                                         3
  SIGNATURES
  
       Pursuant to the requirements of the Securities Exchange Act of 1934, the
  Registrant has duly caused this report to be signed on its behalf by the
  undersigned hereunto duly authorized.
  
                                         NESTOR, INC.
                                         (Registrant)
  
                                         By: /s/ Nigel P. Hebborn
                                            --------------------------------------
                                            Nigel P. Hebborn
                                            Treasurer and Chief Financial Officer
  
  Dated:     August 5, 2003
  
                                         4
  EXHIBIT INDEX
                                    -------------
  
      Exhibit
          Number       Description
          -------      -----------
  
          10.42        Security Purchase Agreement dated July 31, 2003
                       between Nestor, Inc. and Laurus Master Fund, Ltd.
  
          10.43        Convertible Note dated July 31, 2003
                       made by Nestor, Inc. to Laurus Master Fund, Ltd.
  
          10.44        Registration Rights Agreement dated July 31, 2003
                       between Nestor, Inc. and Laurus Master Fund, Ltd.
  
          10.45        Common Stock Purchase Warrant dated July 31, 2003
                       issued by Nestor, Inc. to Laurus Master Fund, Ltd.
  
          10.46        Stock Pledge Agreement dated July 31, 2003
                       between Nestor Traffic Systems, Inc. and Laurus Master
                       Fund, Ltd.
  
          10.47        Pledge and Security Agreement dated July 31, 2003
                       between CrossingGuard, Inc. and Laurus Master Fund, Ltd.
  
          10.48        Guaranty dated July 31, 2003 by CrossingGuard, Inc. to
                       Laurus Master Fund, Ltd.
  
           99.1        Press Release dated August 6, 2003.
  
                                         5