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
  
  
  
                                   December 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.
  
            CONVERSION OF SILVER STAR NOTE.
            -------------------------------
  
            On December 31, 2003,  Nestor,  Inc.  (the  "Company")  exercised  its
  option to satisfy its obligations to Silver Star Partners I, LLC ("Silver Star")
  under a $2,000,000  principal  amount  convertible  note (the "Note") by issuing
  676,384 shares of the Company's  common stock, par value $.01 per share ("Common
  Stock"), at a conversion price of $3.00 per share.
  
            PRIVATE PLACEMENT.
            ------------------
  
            The Company sold  2,238,000  shares of its Common Stock to  accredited
  investors in a private placement conducted during the weeks of December 29, 2003
  and January 5, 2004. The shares were sold at $3.00 per share,  with net proceeds
  to the Company,  excluding  expenses of the  offering,  of $2.76 per share.  The
  Company is obligated,  pursuant to a registration rights agreement,  to register
  the resale of those shares by their holders.  The Company has other  obligations
  in  connection  with  that  registration,  including  causing  the  registration
  statement filed to remain  continuously  effective for two years or, if earlier,
  until the  distribution  of shares  covered  by the  registration  statement  is
  complete and  indemnifying  the holders from  liabilities it may incur resulting
  from any untrue  statement  or omission of a material  fact in the  registration
  statement  and  related  documents  and from  other  liabilities  related to the
  registration.
  
            LAURUS MASTER FUND, LTD. TRANSACTIONS.
            --------------------------------------
  
            On January 14, 2004,  the Company  retired the $2 million  convertible
  note held by Laurus Master Fund, Ltd. ("Laurus")by  converting 492,904 shares at
  $1.55 per share and redeeming the remaining  $1,150,750 of the note. The Company
  also issued a new $1.5 million  convertible  note to Laurus bearing  interest at
  5.25% per annum,  and convertible  into common stock of the Company at $3.50 per
  share.
  
            On  January  14,  2004 the  Company  also  entered  into a  Securities
  Purchase Agreement (the "Agreement") with Laurus. Pursuant to the Agreement, the
  Company  issued to Laurus a new  Convertible  Note (the "Note") in the principal
  amount of $1,500,000  that bears  interest at the prime rate plus 1.25% (subject
  to a floor of 5.25% per year) and matures on January 14, 2006.  The net proceeds
  from the Note shall be used for the  construction,  installation and maintenance
  of the Company's  traffic  surveillance  systems and for other general corporate
  purposes. The Note may be repaid at the Company's option, in cash or, subject to
  certain limitations, through the issuance of shares of Common Stock. The Company
  will have an option to pay the monthly  amortized  amount in shares at the fixed
  conversion  price of $3.50  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 $60,000.
  
            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.
  
                                         2
  <PAGE>
  
  
            CrossingGuard,  Inc. ("CGI"), an indirectly wholly-owned subsidiary of
  the Company has  previously  granted 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 by Nestor in
  favor of Laurus;  such  security  interest and guaranty will continue and secure
  the Note. Nestor Traffic Systems, Inc., a wholly-owned subsidiary of the Company
  and sole stockholder of CGI, has previously  pledged the stock of CGI to Laurus,
  which pledge will secure the Note.
  
  
  A copy of the press release  relating to the events  described above is attached
  as Exhibit 99.1 and incorporated herein by reference.
  
  
  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
               --------------                  -----------
  
                   10.1       Security Purchase Agreement dated January 14, 2004
                              between Nestor, Inc. and Laurus Master Fund, Ltd.
  
                   10.2       Convertible Note dated January 14, 2004 made by
                              Nestor, Inc. to Laurus Master Fund, Ltd.
  
                   10.3       Registration Rights Agreement dated January 14, 2004
                              between Nestor, Inc. and Laurus Master Fund, Ltd.
  
                   99.1       Press Release dated January 15 2004.
  
  
  
  
  
  
                                     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:     January 14, 2004
  
  
                                         3
  <PAGE>
  
  
  
  
  
  
  
  
                                    EXHIBIT INDEX
                                    -------------
  
  
       Exhibit Number                    Description
       --------------                    -----------
  
         10.1            Security Purchase Agreement dated January 14, 2004
                         between Nestor, Inc. and Laurus Master Fund, Ltd.
  
         10.2            Convertible Note dated January 14,2004
                         made by Nestor, Inc. to Laurus Master Fund, Ltd.
  
         10.3            Registration Rights Agreement dated January 14, 2004
                         between Nestor, Inc. and Laurus Master Fund, Ltd.
  
         99.1            Press Release dated January 15 2004.
  
  
  
                                         4
  <PAGE>
metadata_documents: [{"type": "8-K", "sequence": "1", "filename": "form8k.txt", "description": "FORM 8K (LAURUS FUNDING)", "secsgml_size_bytes": 8533}]
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": "04526476"}, "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
  
                                   December 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.
  
            CONVERSION OF SILVER STAR NOTE.
            -------------------------------
  
            On December 31, 2003,  Nestor,  Inc.  (the  "Company")  exercised  its
  option to satisfy its obligations to Silver Star Partners I, LLC ("Silver Star")
  under a $2,000,000  principal  amount  convertible  note (the "Note") by issuing
  676,384 shares of the Company's  common stock, par value $.01 per share ("Common
  Stock"), at a conversion price of $3.00 per share.
  
            PRIVATE PLACEMENT.
            ------------------
  
            The Company sold  2,238,000  shares of its Common Stock to  accredited
  investors in a private placement conducted during the weeks of December 29, 2003
  and January 5, 2004. The shares were sold at $3.00 per share,  with net proceeds
  to the Company,  excluding  expenses of the  offering,  of $2.76 per share.  The
  Company is obligated,  pursuant to a registration rights agreement,  to register
  the resale of those shares by their holders.  The Company has other  obligations
  in  connection  with  that  registration,  including  causing  the  registration
  statement filed to remain  continuously  effective for two years or, if earlier,
  until the  distribution  of shares  covered  by the  registration  statement  is
  complete and  indemnifying  the holders from  liabilities it may incur resulting
  from any untrue  statement  or omission of a material  fact in the  registration
  statement  and  related  documents  and from  other  liabilities  related to the
  registration.
  
            LAURUS MASTER FUND, LTD. TRANSACTIONS.
            --------------------------------------
  
            On January 14, 2004,  the Company  retired the $2 million  convertible
  note held by Laurus Master Fund, Ltd. ("Laurus")by  converting 492,904 shares at
  $1.55 per share and redeeming the remaining  $1,150,750 of the note. The Company
  also issued a new $1.5 million  convertible  note to Laurus bearing  interest at
  5.25% per annum,  and convertible  into common stock of the Company at $3.50 per
  share.
  
            On  January  14,  2004 the  Company  also  entered  into a  Securities
  Purchase Agreement (the "Agreement") with Laurus. Pursuant to the Agreement, the
  Company  issued to Laurus a new  Convertible  Note (the "Note") in the principal
  amount of $1,500,000  that bears  interest at the prime rate plus 1.25% (subject
  to a floor of 5.25% per year) and matures on January 14, 2006.  The net proceeds
  from the Note shall be used for the  construction,  installation and maintenance
  of the Company's  traffic  surveillance  systems and for other general corporate
  purposes. The Note may be repaid at the Company's option, in cash or, subject to
  certain limitations, through the issuance of shares of Common Stock. The Company
  will have an option to pay the monthly  amortized  amount in shares at the fixed
  conversion  price of $3.50  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 $60,000.
  
            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.
  
                                         2
  CrossingGuard,  Inc. ("CGI"), an indirectly wholly-owned subsidiary of
  the Company has  previously  granted 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 by Nestor in
  favor of Laurus;  such  security  interest and guaranty will continue and secure
  the Note. Nestor Traffic Systems, Inc., a wholly-owned subsidiary of the Company
  and sole stockholder of CGI, has previously  pledged the stock of CGI to Laurus,
  which pledge will secure the Note.
  
  A copy of the press release  relating to the events  described above is attached
  as Exhibit 99.1 and incorporated herein by reference.
  
  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
               --------------                  -----------
  
                   10.1       Security Purchase Agreement dated January 14, 2004
                              between Nestor, Inc. and Laurus Master Fund, Ltd.
  
                   10.2       Convertible Note dated January 14, 2004 made by
                              Nestor, Inc. to Laurus Master Fund, Ltd.
  
                   10.3       Registration Rights Agreement dated January 14, 2004
                              between Nestor, Inc. and Laurus Master Fund, Ltd.
  
                   99.1       Press Release dated January 15 2004.
  
                                     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:     January 14, 2004
  
                                         3
  EXHIBIT INDEX
                                    -------------
  
       Exhibit Number                    Description
       --------------                    -----------
  
         10.1            Security Purchase Agreement dated January 14, 2004
                         between Nestor, Inc. and Laurus Master Fund, Ltd.
  
         10.2            Convertible Note dated January 14,2004
                         made by Nestor, Inc. to Laurus Master Fund, Ltd.
  
         10.3            Registration Rights Agreement dated January 14, 2004
                         between Nestor, Inc. and Laurus Master Fund, Ltd.
  
         99.1            Press Release dated January 15 2004.
  
                                         4