As filed with the
Securities and Exchange Commission
on May 16, 1997                              Registration No. 33-
                                
               SECURITIES AND EXCHANGE COMMISSION
                     WASHINGTON, D.C. 20549
                                
                                
                            FORM S-8
                     REGISTRATION STATEMENT
                              Under
                   THE SECURITIES ACT OF 1933
                                
                                
                          NESTOR, INC.
     (Exact name of Registrant as specified in its charter)

          Delaware                    13-3163744
(State or other jurisdiction       (I.R.S. Employer
             of                   Identification No.)
       incorporation or
        organization)

     One Richmond Square                 02906
  Providence, Rhode Island            (Zip Code)
    (Address of Principal
     Executive Offices)


                1997 INCENTIVE STOCK OPTION PLAN
                    (Full title of the Plan)
                                
                                
                     Herbert S. Meeker, Esq.
                     Baer Marks & Upham LLP
                        805 Third Avenue
                    New York, New York 10022
             (Name and address of agent for service)
                                
                         (212) 702-5700
  (Telephone number, including area code, of agent for service)
                                
               Copies to:  Herbert S. Meeker, Esq.
                     Baer Marks & Upham LLP
                        805 Third Avenue
                    New York, New York 10022
                         (212) 702-5700

                CALCULATION OF REGISTRATION FEE

Title of      Amount to be   Proposed    Proposed    Amount of
Securities   Registered(1)   Maximum     Maximum   Registration
to be                        Offering    Aggregate     Fee
Registered                  Price Per    Offering
                             Share(2)    Price(2)

Common          1,000,000     $2.00     $2,000,000     $606.00
Shares, $.01     shares
par value
per share

(1)  Pursuant  to  Rule  416,  this Registration  Statement  also
     covers such additional securities as may become issuable  to
     prevent   dilution  resulting  from  stock   splits,   stock
     dividends and similar events.

(2)  Estimated   solely  for  the  purpose  of  calculating   the
     registration  fee pursuant to Rule 457(h)  and  (c)  on  the
     basis of the average of the high and low sale prices of  the
     Registrant's Common Shares on the Nasdaq National Market  on
     April 3, 1997.





                            PART II

       INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. Incorporation of Documents by Reference.

      The  following documents, which have been filed by  Nestor,
Inc.,  a  corporation  formed under the  laws  of  the  State  of
Delaware  (the  "Registrant"), with the Securities  and  Exchange
Commission  (the  "Commission"),  are  incorporated   herein   by
reference:

      (a)   The Registrant's Annual Report on Form 10-K  for  its
fiscal  year ended 12/31/96 under the Securities Exchange Act  of
1934 ("Exchange Act"), that contains audited financial statements
for  the Registrant's latest fiscal year for which such statement
has been filed.

     (b)  The Registrant's Proxy Statement relating to the annual
meeting of Shareholders held on May 6, 1997 pursuant to which the
1997 Incentive Stock Option Plan was described and approved.

      (c)   The description of the Registrant's shares of  Common
Stock  $.01  par  value which is contained  in  the  Registrant's
Registration  Statement  filed with the Commission  on  Form  8-A
under  Section 12 of the Exchange Act including any amendment  or
report filed for the purpose of updating such description.

      (d)   Form  8-K  filed under the Exchange  Act  on  4/8/97,
4/10/97, 4/30/97 and 5/7/97.

      (e)  The Registrant's Quarterly Report on Form 10Q for  the
three month period ended March 31, 1997.

      In addition, all documents filed subsequent to the date  of
this Registration Statement by the Registrant pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934,
as  amended, prior to the filing of a post-effective amendment to
this  Registration Statement which indicates that all  securities
offered  have been sold or which deregisters all securities  then
remaining unsold, shall be deemed to be incorporated by reference
in  this Registration Statement and to be a part hereof from  the
date of the filing of such documents.  Any statement contained in
a  document incorporated or deemed to be incorporated  herein  by
reference  shall  be  deemed  to be modified  or  superseded  for
purposes  of  this Registration Statement to the  extent  that  a
statement  contained  herein or in any other  subsequently  filed
document  which  also  is  or is deemed  to  be  incorporated  by
reference herein modifies or supersedes such statement.


Item 4.  Description of Securities.

     Not Applicable.

Item 5.  Interests of Named Experts and Counsel.

     Not Applicable.


Item 6. Indemnification of Directors and Officers.

      The Registrant shall indemnify and advance expenses to  the
fullest   extent  permitted  by  Section  145  of   the   General
Corporation  Law  of Delaware ("GCL"), as amended  from  time  to
time,  each  person who is or was a director or  officer  of  the
Registrant and the heirs, executors and administrators of such  a
person.   Any  expenses (including attorneys' fees)  incurred  by
each  person  who  is  or  was  a  director  or  officer  of  the
Registrant, and the heirs, executors and administrators of such a
person  in  connection  with defending  any  such  proceeding  in
advance of its final disposition shall be paid by the Registrant;
provided,  however, that if the GCL requires, an  advancement  of
expenses  incurred by an indemnitee in his capacity as a director
or officer (and not in any other capacity in which service was or
is  rendered  by such indemnitee, including, without  limitation,
service  to  an  employee benefit plan) shall be made  only  upon
delivery  to the Registrant of an undertaking by or on behalf  of
such  indemnitee, to repay all amounts so advanced, if  it  shall
ultimately be determined that such indemnitee is not entitled  to
be indemnified for such expenses under this Article or otherwise.


Item 7.  Exemption from Registration Claimed.

     Not Applicable.


Item 8.  Exhibits.

Exhibit
Number

       4.1   1997  Incentive Stock Option Plan  of  Nestor,  Inc.
       (incorporated  by  reference  to  Exhibit  10.34  to   the
       Registrant's Report on Form 8-K filed with the  Commission
       on  May  9, 1997 and approved by the Stockholders  of  the
       Registrant  on  May  6,  1997 with  respect  to  1,000,000
       shares of Common Stock of the Registrant.)

       *5.1      Opinion of Baer Marks & Upham LLP.

       *23.1     Consent of Ernst & Young LLP.

       *23.2     Consent of Baer Marks & Upham LLP (contained  in
                 Exhibit 5.1).

       *23.3     Consent of Gassman, Rebhun & Co., P.C.

       *24.1      Powers of Attorney (included on signature  page
                  of this Registration Statement).

_____________________
*Filed herewith.



Item 9.  Undertakings.

     The undersigned Registrant hereby undertakes:

     (1)  To file, during any period in which offers or sales are
being  made,  a  post-effective amendment  to  this  registration
statement:

        (i)      To  include any prospectus required  by  Section
10(a)(3) of the Securities Act of 1933;

       (ii)      To reflect in the prospectus any facts or events
arising  after  the effective date of the registration  statement
(or  the  most  recent post-effective amendment  thereof)  which,
individually or in the aggregate, represent a fundamental  change
in the information set forth in the registration statement;

      (iii)      To include any material information with respect
to  the  plan  of  distribution not previously disclosed  in  the
registration statement or any material change to such information
in the registration statement;

provided,  however, that paragraphs (a)(1)(i)  and  (ii)  do  not
apply if the registration statement is on Form S-3 or S-8 and the
information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
Registrant  pursuant  to  Section 13  or  Section  15(d)  of  the
Securities  Exchange  Act  of  1934  that  are  incorporated   by
reference in the registration statement.

      (2)   That,  for the purpose of determining  any  liability
under  the  Securities  Act  of 1933,  each  such  post-effective
amendment  shall  be  deemed to be a new  registration  statement
relating  to the securities offered therein, and the offering  of
such  securities at that time shall be deemed to be  the  initial
bona fide offering thereof.

      (3)   To  remove  from registration by  means  of  a  post-
effective amendment any of the securities being registered  which
remain unsold at the termination of the offering.

      (4)  The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933,  each filing of the Registrant's annual report pursuant  to
Section 13(a) or Section 15(d) of the Securities Exchange Act  of
1934  that  is  incorporated by reference  in  this  registration
statement  shall  be  deemed to be a new  registration  statement
relating  to the securities offered therein, and the offering  of
such  securities at that time shall be deemed to be  the  initial
bona fide offering thereof.

      (5)   Insofar  as  indemnification for liabilities  arising
under  the  Securities Act of 1933 may be permitted to directors,
officers  and controlling persons of the Registrant  pursuant  to
the  foregoing provisions, or otherwise, the Registrant has  been
advised  that  in  the  opinion of the  Securities  and  Exchange
Commission  such  indemnification is  against  public  policy  as
expressed  in the Act and is, therefore, unenforceable.   In  the
event  that  a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid  by  a  director,  officer  or  controlling  person  of  the
registrant  in  the  successful defense of any  action,  suit  or
proceeding)  is asserted by such director, officer or controlling
person  in  connection with the securities being registered,  the
Registrant will, unless in the opinion of its counsel the  matter
has  been settled by controlling precedent, submit to a court  of
appropriate    jurisdiction    the    question    whether    such
indemnification  by it is against public policy as  expressed  in
the  Act  and will be governed by the final adjudication of  such
issue.
SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933,
the  registrant  certifies  that it  has  reasonable  grounds  to
believe that it meets all of the requirements for filing on  Form
S-8  and has duly caused this Registration Statement to be signed
on  its behalf by the undersigned, thereunto duly authorized,  in
Providence, Rhode Island, on the 6th day of May, 1997.

                    Nestor, Inc.

                    By:  /s/David Fox
                         David Fox
                         President and Chief Executive Officer

      KNOW  ALL  MEN  BY THESE PRESENTS, that each  person  whose
signature  appears below constitutes and appoints David  Fox  and
Herber  S.  Meeker  his  true  and lawful  attorneys-in-fact  and
agents,  with full power of substitution and resubstitution,  for
him  and in his name, place and stead, in any and all capacities,
to   sign   any  and  all  amendments  (including  post-effective
amendments) to this Registration Statement, and to file the same,
with  all  exhibits  thereto and other  documents  in  connection
therewith, with the Securities and Exchange Commission,  granting
unto  said attorneys-in-fact and agents, full power and authority
to  do  and  perform  each and every act and thing  requisite  or
necessary to be done in and about the premises, as fully  to  all
intents  and  purposes as he might or could do in person,  hereby
ratifying  and  confirming  all that said  attorneys-in-fact  and
agents or his substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.

      Pursuant to the requirements of the Securities Act of 1933,
this  Registration  Statement  has  been  signed  below  by   the
following persons in the capacities and on the dates indicated.

Signature                  Title                          Date
                                                     
/s/David Fox               Chief Executive Officer   May 6, 1997
David Fox                  (principal executive
                           officer) and Director
                                                     
/s/Nigel Hebbron           Chief Financial Officer   May 6, 1997
Nigel Hebbron              (principal financial
                           officer and principal
                           accounting officer)
                                                     
/s/Herbert S. Meeker       Director                  May 6, 1997
Herbert S. Meeker
                                                     
/s/Jeffrey B. Harvey       Director                  May 6, 1997
Jeffrey B. Harvey
                                                     
/s/Thomas F. Hill          Director                  May 6, 1997
Thomas F. Hill
                                                     
/s/Charles Elbaum          Director                  May 6, 1997
Charles Elbaum
                                                     
/s/Leon N. Cooper          Director                  May 6, 1997
Leon N. Cooper
                                                     
/s/Sam Albert              Director                  May 6, 1997
Sam Albert
                                                     
/s/Bruce W. Schnitzer      Director                  May 6, 1997
Bruce W. Schnitzer



                              Section 10(a)

                                PROSPECTUS

                               NESTOR, INC.



    This  Section  10(a) Prospectus (the "Prospectus")  is  being
furnished  by  Nestor,  Inc.  (the  "Company")  to  all   persons
("Optionees")  selected  by the Company  to  participate  in  the
Company's  1997  Incentive Stock Option Plan  (the  "1997  Option
Plan").

   The information contained herein relating to the Plan is being
provided to Optionees in accordance with Rule 428 of the  General
Rules  and  Regulations  under the Securities  Act  of  1933,  as
amended (the "Securities Act").  Such information is qualified in
its  entirety by the specific provisions of the option  agreement
that  each  Optionee has executed or will execute  in  connection
with the grant of options to such Optionee.



                   THIS DOCUMENT CONSTITUTES PART OF A
                 PROSPECTUS COVERING SECURITIES THAT HAVE
            BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.




               The date of this Prospectus is May 16, 1997.







General

    The  Company's stockholders approved on May 6, 1997 the  1997
Stock Option Plan (the "1997 Option Plan").  The 1997 Option Plan
is  intended to help the Company to attract, retain and  motivate
key employees (including officers) of the Company.

    The  1997  Option  Plan provides for  the  grant  of  options
("Options") to purchase Common Stock that are intended to qualify
as  incentive  stock options ("Incentive Options") under  Section
422 of the Internal Revenue Code of 1986, as amended (the "Code")
as  well  as  options  that  do  not so  qualify  ("Non-Qualified
Options").


Description of the 1997 Option Plan

    The  following is a summary of the principal features of  the
1997  Option Plan.  This summary is qualified in its entirety  by
reference  to the specific provisions of the plan, the full  text
of  which  is available to all persons granted options under  the
1997 Option Plan in the offices of the Corporation.


Administration of the 1997 Option Plan

    The  1997  Option Plan will be administered by the  Board  of
Directors  or by a committee (the "Committee") which is appointed
by the Board of Directors.  The Committee will consist of two non-
employee members of the Company's Board of Directors, neither  of
whom  is  eligible at any time for the grant of Incentive Options
under  the  1997 Option Plan and each of whom is a  "non-employee
director" within the meaning of Rule 16b-3 promulgated under  the
Exchange  Act  and an "outside director" within  the  meaning  of
Treasury Regulation Section 1.162-27(e)(3).  The Company's  Board
of Directors or the Committee is authorized to interpret the 1997
Option  Plan, adopt and amend rules and regulations  relating  to
the  1997  Option Plan, and determine the recipients,  form,  and
terms of Options granted under the 1997 Option Plan.  All Options
must be evidenced by a written agreement.


Shares Available

    Under  the 1997 Option Plan, the maximum number of shares  of
Common  Stock  that may be subject to Options may not  exceed  at
this  time an aggregate of 1,000,000 shares.  The maximum  number
of  shares  will be adjusted in certain events, such as  a  stock
split, reorganization or recapitalization.


Eligibility

   Employees (including officers and directors who are employees)
of  the Company or its subsidiaries are eligible for the grant of
Incentive Options under the 1997 Option Plan.  Directors who  are
not  employees  or officers are not eligible to participate.   In
the  event of Incentive Options, the aggregate fair market  value
(determined  at  the time the Option is granted)  of  the  Common
Stock  with respect to which Incentive Options become exercisable
for  the first time by the Option holder (i.e., vest) during  any
calendar year cannot exceed $100,000.  This limit does not  apply
to Non-Qualified Options.  To the extent an Option that otherwise
would be an Incentive Option exceeds this $100,000 threshold,  it
will be treated as a Non-Qualified Option.


Exercise Price of Options

    The  Company will receive no monetary consideration  for  the
grant  of  Options under the 1997 Option Plan.   In  case  of  an
Incentive Option, the exercise price cannot be less than the fair
market  value (as defined in the 1997 Option Plan) of the  shares
on  the  date  the  Option is granted, and if an  optionee  is  a
shareholder  who beneficially owns 10% or more of the outstanding
Common  Stock, the exercise price of Incentive Options cannot  be
less than 110% of such fair market value.  The exercise price  of
Non-Qualified Options shall be determined by the Company's  Board
of  Directors  or the Committee.  The exercise price  of  Options
will  be  adjusted  in certain events, such  as  a  stock  split,
reorganization or recapitalization.


Payment upon Exercise of Options

    Payment for shares purchased by exercising an Option is to be
made  by cash or check, or by any other means which the Board  of
Directors determines are consistent with the purposes of the 1997
Option Plan and with applicable laws and regulations.


Term of Options

   The term of an Option cannot exceed ten years, and in the case
of  an  optionee  who owns 10% or more of the outstanding  Common
Stock, cannot exceed five years.


Termination of Employment

    Individual option agreements generally will provide that  the
Options  will expire upon termination of employment  except  that
(i) in the case of termination that is not for cause or otherwise
attributable  to  a breach by the optionee of  an  employment  or
confidentiality or non-disclosure agreement, the Option  will  be
exercisable for three months after termination to the same extent
that it was exercisable prior to termination, (ii) in the case of
termination due to disability, the Option will be exercisable for
one  year after termination (or within such lesser period as  may
be  specified  in the applicable option agreement)  to  the  same
extent that it was exercisable prior to termination and (iii)  in
the  case of death while in the employ of the Company or,  within
the  three  month period referred to in (i), the Option  will  be
exercisable  for  one  year after death (or  within  such  lesser
period  as  may be specified in the applicable option agreement).
After the death of an optionee, the Option is exercisable by  the
legal  representative  of the optionee  or  by  the  person  that
acquired the Option by reason of the death of the Optionee.

Non-Transferability of Options

   Options are not transferable by the optionee except by will or
by  the  laws  of  descent and distribution.  The disposition  of
shares  acquired pursuant to the exercise of an  Option  will  be
subject to any applicable restrictions on transferability imposed
by the Commission's regulations.


Effective Date

    The  1997  Option Plan became effective when adopted  by  the
Company's shareholders on May 6, 1997.


Duration of the 1997 Option Plan

    The  1997  Option  Plan will terminate automatically  and  no
Options may be granted after ten years have elapsed from the date
the  1997 Option Plan was approved by the Company's shareholders.
The  1997 Option Plan may be terminated at any prior time by  the
Board of Directors.  Termination of the 1997 Option Plan will not
affect Options that were granted prior to the termination date.


Amendments or Modifications

    The 1997 Option Plan may be amended or modified from time  to
time  by  the Company's Board of Directors.  However, if  at  any
time  the approval of the shareholders of the Company is required
under  Section  422  of  the Code or Rule  16b-3,  the  Board  of
Directors  may not effect such modification or amendment  without
such approval.


Certain Federal Income Tax Consequences

    The  following  summary outlines certain federal  income  tax
consequences  of  the  1997  Option  Plan  to  the  Company   and
participants under present law.


Incentive Options

   A participant will not recognize income for federal income tax
purposes  upon  the grant of an Incentive Option.  A  participant
also  will  not be taxed on the exercise of an Incentive  Option,
provided  that  the Common Stock acquired upon  exercise  of  the
Incentive Option is not sold by the participant within two  years
after  the  Option was granted and one year after the  Option  is
exercised (the "required holding period").

    However,  for  alternative minimum tax ("AMT") purposes,  the
difference between the exercise price of the Incentive Option and
the  fair market value of the Common Stock acquired upon exercise
is  an item of tax preference in the year the Incentive Option is
exercised.  The participant is required to include such amount in
AMT  income  in  such year and to compute the tax  basis  of  the
shares  so  acquired  in the same manner as  if  a  Non-Qualified
Option  had  been  exercised, including  the  availability  of  a
Section  83  election (discussed below).  Whether  a  participant
will  be  liable  for  AMT in the year the  Incentive  Option  is
exercised  will  depend  on  the  participant's  particular   tax
circumstances.  AMT paid in such year will be allowed as a credit
to the extent regular tax exceeds AMT in subsequent years.

    On a sale, after the required holding period, of Common Stock
that  was  acquired  by  exercising  an  Incentive  Option,   the
difference  between  the participant's tax basis  in  the  Common
Stock  and  the amount received in the sale is taxed as long-term
capital gain or loss.

    If  Common  Stock acquired upon the exercise of an  Incentive
Option  is  disposed  of by the participant during  the  required
holding  period (a "disqualifying disposition"), the  excess,  if
any,  of (i) the amount realized on such disposition (up  to  the
fair  market value of the Common Stock on the exercise date) over
(ii)  the  exercise  price, will be taxed to the  participant  as
ordinary income.  If a participant pays the exercise price of  an
Incentive  Option by delivering Common Stock that was  previously
acquired  by  exercising an Incentive Option  and  such  delivery
occurs  before  the end of the required holding  period  of  such
Common Stock, the participant is treated as making a disqualified
disposition of the Common Stock so delivered.

    The  Code puts a $100,000 limit on the value of stock subject
to  Incentive Options that first become exercisable  in  any  one
year,  based  on  the fair market value of the underlying  Common
Stock  on  the date of grant.  To the extent Options exceed  this
limit, they are taxed as Non-Qualified Options.


Non-Qualified Options

    A  participant who receives a Non-Qualified Option  does  not
recognize  taxable  income  on the grant  of  the  Option.   Upon
exercise of a Non-Qualified Option,  a participant generally  has
ordinary  income  in an amount equal to the excess  of  the  fair
market  value  of  the shares at the time of  exercise  over  the
exercise price paid for the shares.

    However, if the participant (i) is an officer or director  of
the  Company  or  the beneficial owner of more than  10%  of  the
Company's equity securities (in each case, within the meaning  of
Section  16  of the Exchange Act -- as so defined, an "Insider"),
(ii)  does  not  make  a Section 83 election and  (iii)  receives
shares   upon  the  exercise  of  a  Non-Qualified  Option,   the
recognition  of income (and the determination of  the  amount  of
income) is deferred until the earlier of (a) six months after the
shares are acquired or (b) the earliest date on which the Insider
could  sell  the  shares  at a profit without  being  subject  to
liability  under  Section 16(b) of the Exchange Act  (six  months
after  the  Non-Qualified Option is granted, in the  case  of  an
"in-the-money" Option).  If the participant makes  a  Section  83
election,  income is not deferred.  Rather, income is  recognized
on  the date of exercise of the Non-Qualified Option in an amount
equal  to  the  excess  of the fair market value  of  the  shares
acquired  upon exercise over the exercise price.   A  Section  83
election  must be filed with the Internal Revenue Service  within
thirty (30) days after an Option is exercised.

    A participant's tax basis in shares received upon exercise of
a  Non-Qualified Option is equal to the amount of ordinary income
recognized on the receipt of the shares plus the amount of  cash,
if  any,  paid upon exercise.  The holding period for the  shares
begins  on the day after the shares are received or, in the  case
of an Insider that has not made a Section 83 election, on the day
after  the  date on which income is recognized by the Insider  on
account of the receipt of the shares.

     If  a  participant  exercises  a  Non-Qualified  Option   by
delivering  previously  held shares in payment  of  the  exercise
price,  the  participant does not recognize gain or loss  on  the
delivered  shares, even if their fair market value  is  different
from the participant's tax basis in the shares.  The exercise  of
the  Non-Qualified  Option  is taxed  however,  and  the  Company
generally is entitled to a deduction, in the same amount  and  at
the  same time as if the participant had paid the exercise  price
in   cash.    Provided  the  participant  receives   a   separate
identifiable  stock certificate therefor, his tax  basis  in  the
number  of shares received that is equal to the number of  shares
surrendered on exercise will be the same as his tax basis in  the
shares surrendered.  His holding period for such number of shares
will include his holding period for the shares surrendered.   The
participant's  tax  basis and holding period for  the  additional
shares received upon exercise will be the same as it would if the
participant had paid the exercise price in cash.

    If  a  participant  receives shares upon the  exercise  of  a
Non-Qualified Option and thereafter disposes of the shares  in  a
taxable  transaction, the difference between the amount  realized
on  the disposition and the participant's tax basis in the shares
is taxed as capital gain or loss (provided the shares are held as
a  capital  asset on the date of disposition), which is long-term
or  short-term depending on the participant's holding period  for
the shares.


Deduction by the Company

    The Company is not allowed a federal income tax deduction  on
the  grant or exercise of an Incentive Option or the disposition,
after  the  required  holding  period,  of  shares  acquired   by
exercising  an Incentive Option.  On a disqualifying  disposition
of  such  shares,  the Company is allowed a  federal  income  tax
deduction in an amount equal to the ordinary income recognized by
the  participant  as  a result of the disqualifying  disposition,
provided  that such amount constitutes an ordinary and  necessary
business expense of the Company, is reasonable in amount  and  is
not disallowed by Section 162(m) of the Code (discussed above).

    The  ordinary income recognized by an employee of the Company
on  account of the exercise of a Non-Qualified Option is  subject
to  both wage withholding and employment taxes.  A deduction  for
federal  income  tax purposes is allowed to  the  Company  in  an
amount  equal  to the amount of ordinary income  taxable  to  the
participant,  provided that such amount constitutes  an  ordinary
and  necessary business expense of the Company, that such  amount
is  reasonable, and that the Company satisfies any tax  reporting
obligation that it has with respect to such income.


                          AVAILABLE INFORMATION

    The  Company  is  subject  to certain  of  the  informational
requirements  of the Securities and Exchange Act  (the  "Exchange
Act"),  and  in  accordance therewith files certain  reports  and
information statements and other information with the  Securities
and  Exchange  Commission (the "Commission").  Such  reports  and
other  information  can be inspected and  copied  at  the  public
reference  facilities maintained by the Commission at Room  1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.  20549,
and  at  the  following Regional Offices of the Commission:   500
West  Madison Street, Suite 1400, Chicago, IL 60661 and  7  World
Trade  Center,  13th Floor, New York, NY 10048.  Copies  of  such
material  can also be obtained from the Public Reference  Section
of  the  Commission at Judiciary Plaza, 450 Fifth  Street,  N.W.,
Washington, D.C. 20549, at prescribed rates.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

    The  following documents have been filed with the  Commission
and are incorporated herein by reference:

    (a)  The Company's Annual Report on Form 10-K for its  fiscal
year  ended  12/31/96 under the Securities Exchange Act  of  1934
("Exchange Act"), that contains audited financial statements  for
the  Company's latest fiscal year for which such statements  have
been filed.

    (b) The Company's Quarterly Report on Form 10-Q for the three
month period ended March 31, 1997.

    (c)  The description of the Company's Common Shares, .01  par
value per share, which is contained in the Company's Registration
Statement  on  Form 8-A filed under Section 12 of the  Securities
Exchange  Act  of  1934, as amended, including any  amendment  or
report filed for the purpose of updating such description.

    (d) Form 8-K filed under the Exchange Act on 4/8/97, 4/10/97,
4/30/97 and 5/17/97.

    (e)  The Registrant's Proxy Statement relating to the  annual
meeting of Shareholders held on May 6, 1997 pursuant to which the
1997 Incentive Stock Option Plan was described and approved.

    In  addition, all other documents subsequently filed  by  the
Company  pursuant to Sections 13(a), 13(c), 14 and 15(d)  of  the
Exchange  Act,  prior to the filing by the  Company  of  a  post-
effective  amendment to the Company's Registration Statement  (of
which  this  Prospectus forms a part) which  indicates  that  all
securities  under the 1997 Option Plan and each Option  Agreement
have  been  sold or which deregisters all securities  under  such
plans  and  agreements remaining unsold, are also  deemed  to  be
incorporated by reference herein.

   The Company will provide without charge to each person to whom
a  copy of this Prospectus is delivered, upon the written or oral
request  of  such person, a copy of any or all of  the  documents
referred  to  above  which have been or may  be  incorporated  by
reference  herein  (other than exhibits to such documents  unless
such  exhibits are specifically incorporated by reference in such
documents),  as  well  as  any  other  documents  (including  all
documents sent to the Company's stockholders generally)  required
to   be  delivered  to  such  persons  pursuant  to  Rule  428(b)
promulgated  under  the  Exchange Act.   Requests  for  any  such
documents  should be directed to Herbert S. Meeker, Secretary  of
the Company.
[{"type": "S-8", "sequence": "1", "secsgml_size_bytes": 33484}]
{"company-data": {"conformed-name": "NESTOR INC", "cik": "0000720851", "assigned-sic": "7372", "irs-number": "133163744", "state-of-incorporation": "DE", "fiscal-year-end": "0630"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-27271", "film-number": "97610444"}, "business-address": {"street1": "ONE RICHMOND SQ", "city": "PROVIDENCE", "state": "RI", "zip": "02906", "phone": "4013319640"}, "mail-address": {"street1": "1 RICHMOND SQUARE", "city": "PROVIDENCE", "state": "RI", "zip": "02906"}}
As filed with the
Securities and Exchange Commission
on May 16, 1997                              Registration No. 33-
                                
               SECURITIES AND EXCHANGE COMMISSION
                     WASHINGTON, D.C. 20549
                                
                                
                            FORM S-8
                     REGISTRATION STATEMENT
                              Under
                   THE SECURITIES ACT OF 1933
                                
                                
                          NESTOR, INC.
     (Exact name of Registrant as specified in its charter)

          Delaware                    13-3163744
(State or other jurisdiction       (I.R.S. Employer
             of                   Identification No.)
       incorporation or
        organization)

     One Richmond Square                 02906
  Providence, Rhode Island            (Zip Code)
    (Address of Principal
     Executive Offices)

                1997 INCENTIVE STOCK OPTION PLAN
                    (Full title of the Plan)
                                
                                
                     Herbert S. Meeker, Esq.
                     Baer Marks & Upham LLP
                        805 Third Avenue
                    New York, New York 10022
             (Name and address of agent for service)
                                
                         (212) 702-5700
  (Telephone number, including area code, of agent for service)
                                
               Copies to:  Herbert S. Meeker, Esq.
                     Baer Marks & Upham LLP
                        805 Third Avenue
                    New York, New York 10022
                         (212) 702-5700

                CALCULATION OF REGISTRATION FEE

Title of      Amount to be   Proposed    Proposed    Amount of
Securities   Registered(1)   Maximum     Maximum   Registration
to be                        Offering    Aggregate     Fee
Registered                  Price Per    Offering
                             Share(2)    Price(2)

Common          1,000,000     $2.00     $2,000,000     $606.00
Shares, $.01     shares
par value
per share

(1)  Pursuant  to  Rule  416,  this Registration  Statement  also
     covers such additional securities as may become issuable  to
     prevent   dilution  resulting  from  stock   splits,   stock
     dividends and similar events.

(2)  Estimated   solely  for  the  purpose  of  calculating   the
     registration  fee pursuant to Rule 457(h)  and  (c)  on  the
     basis of the average of the high and low sale prices of  the
     Registrant's Common Shares on the Nasdaq National Market  on
     April 3, 1997.

                            PART II

       INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. Incorporation of Documents by Reference.

      The  following documents, which have been filed by  Nestor,
Inc.,  a  corporation  formed under the  laws  of  the  State  of
Delaware  (the  "Registrant"), with the Securities  and  Exchange
Commission  (the  "Commission"),  are  incorporated   herein   by
reference:

      (a)   The Registrant's Annual Report on Form 10-K  for  its
fiscal  year ended 12/31/96 under the Securities Exchange Act  of
1934 ("Exchange Act"), that contains audited financial statements
for  the Registrant's latest fiscal year for which such statement
has been filed.

     (b)  The Registrant's Proxy Statement relating to the annual
meeting of Shareholders held on May 6, 1997 pursuant to which the
1997 Incentive Stock Option Plan was described and approved.

      (c)   The description of the Registrant's shares of  Common
Stock  $.01  par  value which is contained  in  the  Registrant's
Registration  Statement  filed with the Commission  on  Form  8-A
under  Section 12 of the Exchange Act including any amendment  or
report filed for the purpose of updating such description.

      (d)   Form  8-K  filed under the Exchange  Act  on  4/8/97,
4/10/97, 4/30/97 and 5/7/97.

      (e)  The Registrant's Quarterly Report on Form 10Q for  the
three month period ended March 31, 1997.

      In addition, all documents filed subsequent to the date  of
this Registration Statement by the Registrant pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934,
as  amended, prior to the filing of a post-effective amendment to
this  Registration Statement which indicates that all  securities
offered  have been sold or which deregisters all securities  then
remaining unsold, shall be deemed to be incorporated by reference
in  this Registration Statement and to be a part hereof from  the
date of the filing of such documents.  Any statement contained in
a  document incorporated or deemed to be incorporated  herein  by
reference  shall  be  deemed  to be modified  or  superseded  for
purposes  of  this Registration Statement to the  extent  that  a
statement  contained  herein or in any other  subsequently  filed
document  which  also  is  or is deemed  to  be  incorporated  by
reference herein modifies or supersedes such statement.

Item 4.  Description of Securities.

     Not Applicable.

Item 5.  Interests of Named Experts and Counsel.

     Not Applicable.

Item 6. Indemnification of Directors and Officers.

      The Registrant shall indemnify and advance expenses to  the
fullest   extent  permitted  by  Section  145  of   the   General
Corporation  Law  of Delaware ("GCL"), as amended  from  time  to
time,  each  person who is or was a director or  officer  of  the
Registrant and the heirs, executors and administrators of such  a
person.   Any  expenses (including attorneys' fees)  incurred  by
each  person  who  is  or  was  a  director  or  officer  of  the
Registrant, and the heirs, executors and administrators of such a
person  in  connection  with defending  any  such  proceeding  in
advance of its final disposition shall be paid by the Registrant;
provided,  however, that if the GCL requires, an  advancement  of
expenses  incurred by an indemnitee in his capacity as a director
or officer (and not in any other capacity in which service was or
is  rendered  by such indemnitee, including, without  limitation,
service  to  an  employee benefit plan) shall be made  only  upon
delivery  to the Registrant of an undertaking by or on behalf  of
such  indemnitee, to repay all amounts so advanced, if  it  shall
ultimately be determined that such indemnitee is not entitled  to
be indemnified for such expenses under this Article or otherwise.

Item 7.  Exemption from Registration Claimed.

     Not Applicable.

Item 8.  Exhibits.

Exhibit
Number

       4.1   1997  Incentive Stock Option Plan  of  Nestor,  Inc.
       (incorporated  by  reference  to  Exhibit  10.34  to   the
       Registrant's Report on Form 8-K filed with the  Commission
       on  May  9, 1997 and approved by the Stockholders  of  the
       Registrant  on  May  6,  1997 with  respect  to  1,000,000
       shares of Common Stock of the Registrant.)

       *5.1      Opinion of Baer Marks & Upham LLP.

       *23.1     Consent of Ernst & Young LLP.

       *23.2     Consent of Baer Marks & Upham LLP (contained  in
                 Exhibit 5.1).

       *23.3     Consent of Gassman, Rebhun & Co., P.C.

       *24.1      Powers of Attorney (included on signature  page
                  of this Registration Statement).

_____________________
*Filed herewith.

Item 9.  Undertakings.

     The undersigned Registrant hereby undertakes:

     (1)  To file, during any period in which offers or sales are
being  made,  a  post-effective amendment  to  this  registration
statement:

        (i)      To  include any prospectus required  by  Section
10(a)(3) of the Securities Act of 1933;

       (ii)      To reflect in the prospectus any facts or events
arising  after  the effective date of the registration  statement
(or  the  most  recent post-effective amendment  thereof)  which,
individually or in the aggregate, represent a fundamental  change
in the information set forth in the registration statement;

      (iii)      To include any material information with respect
to  the  plan  of  distribution not previously disclosed  in  the
registration statement or any material change to such information
in the registration statement;

provided,  however, that paragraphs (a)(1)(i)  and  (ii)  do  not
apply if the registration statement is on Form S-3 or S-8 and the
information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
Registrant  pursuant  to  Section 13  or  Section  15(d)  of  the
Securities  Exchange  Act  of  1934  that  are  incorporated   by
reference in the registration statement.

      (2)   That,  for the purpose of determining  any  liability
under  the  Securities  Act  of 1933,  each  such  post-effective
amendment  shall  be  deemed to be a new  registration  statement
relating  to the securities offered therein, and the offering  of
such  securities at that time shall be deemed to be  the  initial
bona fide offering thereof.

      (3)   To  remove  from registration by  means  of  a  post-
effective amendment any of the securities being registered  which
remain unsold at the termination of the offering.

      (4)  The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933,  each filing of the Registrant's annual report pursuant  to
Section 13(a) or Section 15(d) of the Securities Exchange Act  of
1934  that  is  incorporated by reference  in  this  registration
statement  shall  be  deemed to be a new  registration  statement
relating  to the securities offered therein, and the offering  of
such  securities at that time shall be deemed to be  the  initial
bona fide offering thereof.

      (5)   Insofar  as  indemnification for liabilities  arising
under  the  Securities Act of 1933 may be permitted to directors,
officers  and controlling persons of the Registrant  pursuant  to
the  foregoing provisions, or otherwise, the Registrant has  been
advised  that  in  the  opinion of the  Securities  and  Exchange
Commission  such  indemnification is  against  public  policy  as
expressed  in the Act and is, therefore, unenforceable.   In  the
event  that  a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid  by  a  director,  officer  or  controlling  person  of  the
registrant  in  the  successful defense of any  action,  suit  or
proceeding)  is asserted by such director, officer or controlling
person  in  connection with the securities being registered,  the
Registrant will, unless in the opinion of its counsel the  matter
has  been settled by controlling precedent, submit to a court  of
appropriate    jurisdiction    the    question    whether    such
indemnification  by it is against public policy as  expressed  in
the  Act  and will be governed by the final adjudication of  such
issue.
SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933,
the  registrant  certifies  that it  has  reasonable  grounds  to
believe that it meets all of the requirements for filing on  Form
S-8  and has duly caused this Registration Statement to be signed
on  its behalf by the undersigned, thereunto duly authorized,  in
Providence, Rhode Island, on the 6th day of May, 1997.

                    Nestor, Inc.

                    By:  /s/David Fox
                         David Fox
                         President and Chief Executive Officer

      KNOW  ALL  MEN  BY THESE PRESENTS, that each  person  whose
signature  appears below constitutes and appoints David  Fox  and
Herber  S.  Meeker  his  true  and lawful  attorneys-in-fact  and
agents,  with full power of substitution and resubstitution,  for
him  and in his name, place and stead, in any and all capacities,
to   sign   any  and  all  amendments  (including  post-effective
amendments) to this Registration Statement, and to file the same,
with  all  exhibits  thereto and other  documents  in  connection
therewith, with the Securities and Exchange Commission,  granting
unto  said attorneys-in-fact and agents, full power and authority
to  do  and  perform  each and every act and thing  requisite  or
necessary to be done in and about the premises, as fully  to  all
intents  and  purposes as he might or could do in person,  hereby
ratifying  and  confirming  all that said  attorneys-in-fact  and
agents or his substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.

      Pursuant to the requirements of the Securities Act of 1933,
this  Registration  Statement  has  been  signed  below  by   the
following persons in the capacities and on the dates indicated.

Signature                  Title                          Date
                                                     
/s/David Fox               Chief Executive Officer   May 6, 1997
David Fox                  (principal executive
                           officer) and Director
                                                     
/s/Nigel Hebbron           Chief Financial Officer   May 6, 1997
Nigel Hebbron              (principal financial
                           officer and principal
                           accounting officer)
                                                     
/s/Herbert S. Meeker       Director                  May 6, 1997
Herbert S. Meeker
                                                     
/s/Jeffrey B. Harvey       Director                  May 6, 1997
Jeffrey B. Harvey
                                                     
/s/Thomas F. Hill          Director                  May 6, 1997
Thomas F. Hill
                                                     
/s/Charles Elbaum          Director                  May 6, 1997
Charles Elbaum
                                                     
/s/Leon N. Cooper          Director                  May 6, 1997
Leon N. Cooper
                                                     
/s/Sam Albert              Director                  May 6, 1997
Sam Albert
                                                     
/s/Bruce W. Schnitzer      Director                  May 6, 1997
Bruce W. Schnitzer

                              Section 10(a)

                                PROSPECTUS

                               NESTOR, INC.

    This  Section  10(a) Prospectus (the "Prospectus")  is  being
furnished  by  Nestor,  Inc.  (the  "Company")  to  all   persons
("Optionees")  selected  by the Company  to  participate  in  the
Company's  1997  Incentive Stock Option Plan  (the  "1997  Option
Plan").

   The information contained herein relating to the Plan is being
provided to Optionees in accordance with Rule 428 of the  General
Rules  and  Regulations  under the Securities  Act  of  1933,  as
amended (the "Securities Act").  Such information is qualified in
its  entirety by the specific provisions of the option  agreement
that  each  Optionee has executed or will execute  in  connection
with the grant of options to such Optionee.

                   THIS DOCUMENT CONSTITUTES PART OF A
                 PROSPECTUS COVERING SECURITIES THAT HAVE
            BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.

               The date of this Prospectus is May 16, 1997.

General

    The  Company's stockholders approved on May 6, 1997 the  1997
Stock Option Plan (the "1997 Option Plan").  The 1997 Option Plan
is  intended to help the Company to attract, retain and  motivate
key employees (including officers) of the Company.

    The  1997  Option  Plan provides for  the  grant  of  options
("Options") to purchase Common Stock that are intended to qualify
as  incentive  stock options ("Incentive Options") under  Section
422 of the Internal Revenue Code of 1986, as amended (the "Code")
as  well  as  options  that  do  not so  qualify  ("Non-Qualified
Options").

Description of the 1997 Option Plan

    The  following is a summary of the principal features of  the
1997  Option Plan.  This summary is qualified in its entirety  by
reference  to the specific provisions of the plan, the full  text
of  which  is available to all persons granted options under  the
1997 Option Plan in the offices of the Corporation.

Administration of the 1997 Option Plan

    The  1997  Option Plan will be administered by the  Board  of
Directors  or by a committee (the "Committee") which is appointed
by the Board of Directors.  The Committee will consist of two non-
employee members of the Company's Board of Directors, neither  of
whom  is  eligible at any time for the grant of Incentive Options
under  the  1997 Option Plan and each of whom is a  "non-employee
director" within the meaning of Rule 16b-3 promulgated under  the
Exchange  Act  and an "outside director" within  the  meaning  of
Treasury Regulation Section 1.162-27(e)(3).  The Company's  Board
of Directors or the Committee is authorized to interpret the 1997
Option  Plan, adopt and amend rules and regulations  relating  to
the  1997  Option Plan, and determine the recipients,  form,  and
terms of Options granted under the 1997 Option Plan.  All Options
must be evidenced by a written agreement.

Shares Available

    Under  the 1997 Option Plan, the maximum number of shares  of
Common  Stock  that may be subject to Options may not  exceed  at
this  time an aggregate of 1,000,000 shares.  The maximum  number
of  shares  will be adjusted in certain events, such as  a  stock
split, reorganization or recapitalization.

Eligibility

   Employees (including officers and directors who are employees)
of  the Company or its subsidiaries are eligible for the grant of
Incentive Options under the 1997 Option Plan.  Directors who  are
not  employees  or officers are not eligible to participate.   In
the  event of Incentive Options, the aggregate fair market  value
(determined  at  the time the Option is granted)  of  the  Common
Stock  with respect to which Incentive Options become exercisable
for  the first time by the Option holder (i.e., vest) during  any
calendar year cannot exceed $100,000.  This limit does not  apply
to Non-Qualified Options.  To the extent an Option that otherwise
would be an Incentive Option exceeds this $100,000 threshold,  it
will be treated as a Non-Qualified Option.

Exercise Price of Options

    The  Company will receive no monetary consideration  for  the
grant  of  Options under the 1997 Option Plan.   In  case  of  an
Incentive Option, the exercise price cannot be less than the fair
market  value (as defined in the 1997 Option Plan) of the  shares
on  the  date  the  Option is granted, and if an  optionee  is  a
shareholder  who beneficially owns 10% or more of the outstanding
Common  Stock, the exercise price of Incentive Options cannot  be
less than 110% of such fair market value.  The exercise price  of
Non-Qualified Options shall be determined by the Company's  Board
of  Directors  or the Committee.  The exercise price  of  Options
will  be  adjusted  in certain events, such  as  a  stock  split,
reorganization or recapitalization.

Payment upon Exercise of Options

    Payment for shares purchased by exercising an Option is to be
made  by cash or check, or by any other means which the Board  of
Directors determines are consistent with the purposes of the 1997
Option Plan and with applicable laws and regulations.

Term of Options

   The term of an Option cannot exceed ten years, and in the case
of  an  optionee  who owns 10% or more of the outstanding  Common
Stock, cannot exceed five years.

Termination of Employment

    Individual option agreements generally will provide that  the
Options  will expire upon termination of employment  except  that
(i) in the case of termination that is not for cause or otherwise
attributable  to  a breach by the optionee of  an  employment  or
confidentiality or non-disclosure agreement, the Option  will  be
exercisable for three months after termination to the same extent
that it was exercisable prior to termination, (ii) in the case of
termination due to disability, the Option will be exercisable for
one  year after termination (or within such lesser period as  may
be  specified  in the applicable option agreement)  to  the  same
extent that it was exercisable prior to termination and (iii)  in
the  case of death while in the employ of the Company or,  within
the  three  month period referred to in (i), the Option  will  be
exercisable  for  one  year after death (or  within  such  lesser
period  as  may be specified in the applicable option agreement).
After the death of an optionee, the Option is exercisable by  the
legal  representative  of the optionee  or  by  the  person  that
acquired the Option by reason of the death of the Optionee.

Non-Transferability of Options

   Options are not transferable by the optionee except by will or
by  the  laws  of  descent and distribution.  The disposition  of
shares  acquired pursuant to the exercise of an  Option  will  be
subject to any applicable restrictions on transferability imposed
by the Commission's regulations.

Effective Date

    The  1997  Option Plan became effective when adopted  by  the
Company's shareholders on May 6, 1997.

Duration of the 1997 Option Plan

    The  1997  Option  Plan will terminate automatically  and  no
Options may be granted after ten years have elapsed from the date
the  1997 Option Plan was approved by the Company's shareholders.
The  1997 Option Plan may be terminated at any prior time by  the
Board of Directors.  Termination of the 1997 Option Plan will not
affect Options that were granted prior to the termination date.

Amendments or Modifications

    The 1997 Option Plan may be amended or modified from time  to
time  by  the Company's Board of Directors.  However, if  at  any
time  the approval of the shareholders of the Company is required
under  Section  422  of  the Code or Rule  16b-3,  the  Board  of
Directors  may not effect such modification or amendment  without
such approval.

Certain Federal Income Tax Consequences

    The  following  summary outlines certain federal  income  tax
consequences  of  the  1997  Option  Plan  to  the  Company   and
participants under present law.

Incentive Options

   A participant will not recognize income for federal income tax
purposes  upon  the grant of an Incentive Option.  A  participant
also  will  not be taxed on the exercise of an Incentive  Option,
provided  that  the Common Stock acquired upon  exercise  of  the
Incentive Option is not sold by the participant within two  years
after  the  Option was granted and one year after the  Option  is
exercised (the "required holding period").

    However,  for  alternative minimum tax ("AMT") purposes,  the
difference between the exercise price of the Incentive Option and
the  fair market value of the Common Stock acquired upon exercise
is  an item of tax preference in the year the Incentive Option is
exercised.  The participant is required to include such amount in
AMT  income  in  such year and to compute the tax  basis  of  the
shares  so  acquired  in the same manner as  if  a  Non-Qualified
Option  had  been  exercised, including  the  availability  of  a
Section  83  election (discussed below).  Whether  a  participant
will  be  liable  for  AMT in the year the  Incentive  Option  is
exercised  will  depend  on  the  participant's  particular   tax
circumstances.  AMT paid in such year will be allowed as a credit
to the extent regular tax exceeds AMT in subsequent years.

    On a sale, after the required holding period, of Common Stock
that  was  acquired  by  exercising  an  Incentive  Option,   the
difference  between  the participant's tax basis  in  the  Common
Stock  and  the amount received in the sale is taxed as long-term
capital gain or loss.

    If  Common  Stock acquired upon the exercise of an  Incentive
Option  is  disposed  of by the participant during  the  required
holding  period (a "disqualifying disposition"), the  excess,  if
any,  of (i) the amount realized on such disposition (up  to  the
fair  market value of the Common Stock on the exercise date) over
(ii)  the  exercise  price, will be taxed to the  participant  as
ordinary income.  If a participant pays the exercise price of  an
Incentive  Option by delivering Common Stock that was  previously
acquired  by  exercising an Incentive Option  and  such  delivery
occurs  before  the end of the required holding  period  of  such
Common Stock, the participant is treated as making a disqualified
disposition of the Common Stock so delivered.

    The  Code puts a $100,000 limit on the value of stock subject
to  Incentive Options that first become exercisable  in  any  one
year,  based  on  the fair market value of the underlying  Common
Stock  on  the date of grant.  To the extent Options exceed  this
limit, they are taxed as Non-Qualified Options.

Non-Qualified Options

    A  participant who receives a Non-Qualified Option  does  not
recognize  taxable  income  on the grant  of  the  Option.   Upon
exercise of a Non-Qualified Option,  a participant generally  has
ordinary  income  in an amount equal to the excess  of  the  fair
market  value  of  the shares at the time of  exercise  over  the
exercise price paid for the shares.

    However, if the participant (i) is an officer or director  of
the  Company  or  the beneficial owner of more than  10%  of  the
Company's equity securities (in each case, within the meaning  of
Section  16  of the Exchange Act -- as so defined, an "Insider"),
(ii)  does  not  make  a Section 83 election and  (iii)  receives
shares   upon  the  exercise  of  a  Non-Qualified  Option,   the
recognition  of income (and the determination of  the  amount  of
income) is deferred until the earlier of (a) six months after the
shares are acquired or (b) the earliest date on which the Insider
could  sell  the  shares  at a profit without  being  subject  to
liability  under  Section 16(b) of the Exchange Act  (six  months
after  the  Non-Qualified Option is granted, in the  case  of  an
"in-the-money" Option).  If the participant makes  a  Section  83
election,  income is not deferred.  Rather, income is  recognized
on  the date of exercise of the Non-Qualified Option in an amount
equal  to  the  excess  of the fair market value  of  the  shares
acquired  upon exercise over the exercise price.   A  Section  83
election  must be filed with the Internal Revenue Service  within
thirty (30) days after an Option is exercised.

    A participant's tax basis in shares received upon exercise of
a  Non-Qualified Option is equal to the amount of ordinary income
recognized on the receipt of the shares plus the amount of  cash,
if  any,  paid upon exercise.  The holding period for the  shares
begins  on the day after the shares are received or, in the  case
of an Insider that has not made a Section 83 election, on the day
after  the  date on which income is recognized by the Insider  on
account of the receipt of the shares.

     If  a  participant  exercises  a  Non-Qualified  Option   by
delivering  previously  held shares in payment  of  the  exercise
price,  the  participant does not recognize gain or loss  on  the
delivered  shares, even if their fair market value  is  different
from the participant's tax basis in the shares.  The exercise  of
the  Non-Qualified  Option  is taxed  however,  and  the  Company
generally is entitled to a deduction, in the same amount  and  at
the  same time as if the participant had paid the exercise  price
in   cash.    Provided  the  participant  receives   a   separate
identifiable  stock certificate therefor, his tax  basis  in  the
number  of shares received that is equal to the number of  shares
surrendered on exercise will be the same as his tax basis in  the
shares surrendered.  His holding period for such number of shares
will include his holding period for the shares surrendered.   The
participant's  tax  basis and holding period for  the  additional
shares received upon exercise will be the same as it would if the
participant had paid the exercise price in cash.

    If  a  participant  receives shares upon the  exercise  of  a
Non-Qualified Option and thereafter disposes of the shares  in  a
taxable  transaction, the difference between the amount  realized
on  the disposition and the participant's tax basis in the shares
is taxed as capital gain or loss (provided the shares are held as
a  capital  asset on the date of disposition), which is long-term
or  short-term depending on the participant's holding period  for
the shares.

Deduction by the Company

    The Company is not allowed a federal income tax deduction  on
the  grant or exercise of an Incentive Option or the disposition,
after  the  required  holding  period,  of  shares  acquired   by
exercising  an Incentive Option.  On a disqualifying  disposition
of  such  shares,  the Company is allowed a  federal  income  tax
deduction in an amount equal to the ordinary income recognized by
the  participant  as  a result of the disqualifying  disposition,
provided  that such amount constitutes an ordinary and  necessary
business expense of the Company, is reasonable in amount  and  is
not disallowed by Section 162(m) of the Code (discussed above).

    The  ordinary income recognized by an employee of the Company
on  account of the exercise of a Non-Qualified Option is  subject
to  both wage withholding and employment taxes.  A deduction  for
federal  income  tax purposes is allowed to  the  Company  in  an
amount  equal  to the amount of ordinary income  taxable  to  the
participant,  provided that such amount constitutes  an  ordinary
and  necessary business expense of the Company, that such  amount
is  reasonable, and that the Company satisfies any tax  reporting
obligation that it has with respect to such income.

                          AVAILABLE INFORMATION

    The  Company  is  subject  to certain  of  the  informational
requirements  of the Securities and Exchange Act  (the  "Exchange
Act"),  and  in  accordance therewith files certain  reports  and
information statements and other information with the  Securities
and  Exchange  Commission (the "Commission").  Such  reports  and
other  information  can be inspected and  copied  at  the  public
reference  facilities maintained by the Commission at Room  1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.  20549,
and  at  the  following Regional Offices of the Commission:   500
West  Madison Street, Suite 1400, Chicago, IL 60661 and  7  World
Trade  Center,  13th Floor, New York, NY 10048.  Copies  of  such
material  can also be obtained from the Public Reference  Section
of  the  Commission at Judiciary Plaza, 450 Fifth  Street,  N.W.,
Washington, D.C. 20549, at prescribed rates.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

    The  following documents have been filed with the  Commission
and are incorporated herein by reference:

    (a)  The Company's Annual Report on Form 10-K for its  fiscal
year  ended  12/31/96 under the Securities Exchange Act  of  1934
("Exchange Act"), that contains audited financial statements  for
the  Company's latest fiscal year for which such statements  have
been filed.

    (b) The Company's Quarterly Report on Form 10-Q for the three
month period ended March 31, 1997.

    (c)  The description of the Company's Common Shares, .01  par
value per share, which is contained in the Company's Registration
Statement  on  Form 8-A filed under Section 12 of the  Securities
Exchange  Act  of  1934, as amended, including any  amendment  or
report filed for the purpose of updating such description.

    (d) Form 8-K filed under the Exchange Act on 4/8/97, 4/10/97,
4/30/97 and 5/17/97.

    (e)  The Registrant's Proxy Statement relating to the  annual
meeting of Shareholders held on May 6, 1997 pursuant to which the
1997 Incentive Stock Option Plan was described and approved.

    In  addition, all other documents subsequently filed  by  the
Company  pursuant to Sections 13(a), 13(c), 14 and 15(d)  of  the
Exchange  Act,  prior to the filing by the  Company  of  a  post-
effective  amendment to the Company's Registration Statement  (of
which  this  Prospectus forms a part) which  indicates  that  all
securities  under the 1997 Option Plan and each Option  Agreement
have  been  sold or which deregisters all securities  under  such
plans  and  agreements remaining unsold, are also  deemed  to  be
incorporated by reference herein.

   The Company will provide without charge to each person to whom
a  copy of this Prospectus is delivered, upon the written or oral
request  of  such person, a copy of any or all of  the  documents
referred  to  above  which have been or may  be  incorporated  by
reference  herein  (other than exhibits to such documents  unless
such  exhibits are specifically incorporated by reference in such
documents),  as  well  as  any  other  documents  (including  all
documents sent to the Company's stockholders generally)  required
to   be  delivered  to  such  persons  pursuant  to  Rule  428(b)
promulgated  under  the  Exchange Act.   Requests  for  any  such
documents  should be directed to Herbert S. Meeker, Secretary  of
the Company.