Exhibit 99.1



Nestor, Inc.
42 Oriental Street
Providence, RI 0290
8Ph: (401) 274-5658
Fax: (401) 274-5707
www.nestor.com



FOR IMMEDIATE RELEASE


CONTACT:   Nigel P. Hebborn,
           Chief Financial Officer
           (866) 434-5522 ext. 714
           www.nestor.com

  NESTOR ANNOUNCES $5.47 MILLION PRIVATE PLACEMENT OF COMMON STOCK AND WARRANTS

Providence,  RI -January 31, 2006- Nestor,  Inc.  (NASDAQ:  NEST), the parent of
Nestor  Traffic  Systems,  Inc.,  announced that it privately  placed  1,237,811
shares of its Common Stock and warrants to purchase 371.339 shares of its Common
Stock today in an  offering  exempt from the  registration  requirements  of the
Securities  Act of 1933.  The selling price was $4.42 for a unit  comprising one
share and 0.30 warrants,  resulting in gross  aggregate  proceeds of $5,471,144.
The warrants are  exercisable at $4.91 per share and expire in three years.  The
net  proceeds  (after  expenses  of the  offering  and  placement  agent fees or
investor  rebates in lieu of  placement  agent  fees)  will be used for  general
corporate  purposes,  working capital and to repay a Secured  Promissory Note of
$1.25 million held by one of the purchasers.

The securities sold will not be registered  under the Securities Act of 1933 and
may not be  offered  or sold in the  United  States  absent  registration  or an
applicable  exemption from registration  requirements.  This press release shall
not  constitute  an  offer  to sell or a  solicitation  of an  offer to buy such
securities and is issued pursuant to Rule 135c under the Securities Act of 1933.



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