8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 22, 2008

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)

42 Oriental Street; Third Floor, Providence, Rhode Island

(Address of principal executive offices)

(401) 274-5658

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 3.01 Notice of Failure to Satisfy a Continued Listing Rule or Standard.

Nestor, Inc. (the “Company”) announced today that it received notice from the Nasdaq Stock Market (“Nasdaq”) dated April 22, 2008, a copy of which is appended hereto as Exhibit 99.1, that the Company has not regained compliance with Marketplace Rule 4310(c)(4) (the “Rule”) and Nasdaq Staff has determined to delist the Company’s securities from the Capital Market.  Accordingly, unless the Company requests an appeal of this determination, trading of the Company’s common stock will be suspended at the opening of business on May 1, 2008, and a Form 25-NSE will be filed with the Securities and Exchange Commission (the “SEC”), which will remove the Company’s securities from listing and registration on the Nasdaq Stock Market.

On April 23, 2007, Nasdaq had notified the Company that the bid price of the Company’s common stock had closed at less than $1.00 per share for more than 30 consecutive business days.  As a result, the Company did not comply with the Rule.  In accordance with Marketplace Rule 4310(c)(8)(D), the Company had 180 calendar days, or until October 22, 2007, to regain compliance with the Rule.  As of October 22, 2007, the Company had not achieved compliance with the Rule.  On October 23, 2007, because the Company met the Nasdaq Capital Market initial inclusion criteria set forth in Rule 4310(c) (except for the bid price), the Company was given an additional 180 calendar day compliance period through April 21, 2008.

The Company’s press release announcing the Nasdaq notice, the unqualified opinion with going concern language from its independent registered public accountants, and the receipt of a Waiver and Forbearance from the holders of its Senior Secured Notes and associated warrants is attached as Exhibit 99.2.

Item 9.01.                      Financial Statements and Exhibits

(d)   Exhibits

Exhibit No.	Description
99.1	NASDAQ correspondence dated April 22, 2008
99.2	Press Release dated April 22, 2008

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		NESTOR, INC.
	By:	/s/ Brian R. Haskell
		Brian R. Haskell
		Vice President and General Counsel
Date:April 22, 2008

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EX-99.1

EXHIBIT 99.1

NASDAQ®   THE NASDAQ STOCK MARKET 8800 BLACKWELL ROAD ROCKVILLE, MD  20850  

By Electronic Delivery to: bhaskell@nestor.com

April 22, 2008

Mr. Brian Haskell

Vice President, General Counsel and Secretary

Nestor, Inc.

42 Oriental Street

Providence, RI  02908

Re:  Nestor, Inc. (the “Company”)

       Nasdaq Symbol:  NEST

Dear Mr. Haskell:

On April 23, 2007, Staff notified the Company that the bid price of its common stock had closed at less than $1.00 per share over the previous 30 consecutive business days, and, as a result, did not comply with Marketplace Rule 4310(c) (4)  (the “Rule”).  Therefore, in accordance with Marketplace Rule 4310(c)(8)(D), the Company was provided 180 calendar days, or until October 22, 2007, to regain compliance with the rule.  On October 23, 2007, given that the Company met The Nasdaq Capital Market (the “Capital Market”) initial inclusion criteria set forth in Marketplace Rule 4310(c), (except the bid price) the Company was provided an additional 180 calendar day compliance period, or until April 21, 2008, to demonstrate compliance.

The Company has not regained compliance with the Rule and Staff has determined to delist the Company’s securities from the Capital Market.  Accordingly, unless the Company requests an appeal of this determination as described below, trading of the Company’s common stock will be suspended at the opening of business on May 1, 2008, and a Form 25-NSE will be filed with the Securities and Exchange Commission (the “SEC”), which will remove the Company’s securities from listing and registration on The Nasdaq Stock Market.

Marketplace Rule 4804(b) requires that the Company, as promptly as possible but no later than four business days from the receipt of this letter, make a public announcement through the news media which discloses receipt of this letter and the Nasdaq rules upon which it is based.1   The Company must provide a copy of this announcement to Nasdaq’s MarketWatch Department, the Listing Qualifications Department, and the Listing Qualifications Hearings

 

1 We also note that Item 3.01 of Forms 8-K requires disclosure of the receipt of this notification within four business days. See, SEC Release No. 34-49424.

Mr. Brian Haskell

April 22, 2008

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Department (the “Hearings Department”) at least 10 minutes prior to its public dissemination.2  For your convenience, we have enclosed a list of news services.3

In the event the Company does not make the required public announcement, trading in your securities will be halted, even if the Company appeals Staff’s determination to a Nasdaq Listing Qualifications Panel (the “Panel”) as described below.

The Company may appeal Staff’s determination to the Panel, pursuant to the procedures set forth in the Nasdaq Marketplace Rule 4800 Series.  Please note that the Company will be asked to provide a plan to regain compliance to the Panel.  Historically, Panels have generally viewed a reverse stock split in 30-60 days as the only definitive plan acceptable to resolve a bid price deficiency.4  Recently, however, the authority of the Panel to grant additional time to companies was modified so that a Panel could allow up to 180 calendar days from the date of this letter, if the Panel deems it appropriate.  Accordingly, the company may wish to consider presenting a plan that includes a discussion of the events that it believes will enable it to regain compliance in this time frame and a commitment to effect a reverse stock split, if necessary.

A hearing request will stay the suspension of the Company’s securities and the filing of the Form 25-NSE pending the Panel’s decision.  Hearing requests should not contain arguments in support of the Company’s position.  The Company may request either an oral hearing or a hearing based solely on written submissions.  The fee for an oral hearing is $5,000; the fee for a hearing based on written submissions is $4,000.  Please send your non-refundable hearing fee by wire transfer to “The NASDAQ Stock Market LLC” in accordance with the instructions on the attached Hearing Fee Payment Form.5  The request for a hearing must be received by the Hearings Department no later than 4:00 p.m. Eastern Time on April 29, 2008.   The request and confirmation of the wire transfer6 should be sent to the attention of Lanae Holbrook, Chief Counsel, Nasdaq Office of General Counsel, via email at: hearings@nasdaqomx.com.

 

2 The notice should be submitted to Nasdaq’s Market Watch department through the Electronic Disclosure service available at www.NASDAQ.net. The facsimile numbers for Nasdaq’s Listing Qualifications and Hearings Departments are (301) 978-4028 and (301) 978-8080, respectively.

 

3 The Company must ensure that the full text of the required announcement is disseminated publicly. The Company has not satisfied this requirement if the announcement is published as a headline only or if the news service determines not to publish the full text of the story. Nasdaq cannot render advice to the Company with respect to the format or content of the public announcement. The following is provided only as a guide that should be modified following consultation with securities counsel: the Company received a Nasdaq Staff Determination on (date of receipt of staff DETERMINATION) indicating that the Company fails to comply with the (stockholders’ equity, minimum bid price, market value of publicly held shares, filing etc.) requirement(s) for continued listing set forth in Marketplace Rule(s)_________, and that its securities are, therefore, subject to delisting from (The NasdaqGlobal select /Global /Capital Market). The Company has requested a hearing before a Nasdaq Listing Qualifications panel to review the Staff Determination. There can be no assurance the Panel will grant the Company’s request for continued listing.

 

4 Panels do not typically consider a plan that relies on the market reaction to news as a definitive plan.

 

5 The Form also includes instructions for pay by check.

 

6 The confirmation of the wire transfer should be provided in an electronic file such as a PDF document attached to the email request.

Mr. Brian Haskell

April 22, 2008

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Please note that the suspension and delisting will be stayed only if the Hearings Department (the Rockville, MD location) receives the Company’s hearing request on or before 4:00pm Eastern Time on April 29, 2008.

Please refer to our website for information regarding the hearing process: http://www.nasdaq.com/about /LegalComplianceFAQs.stm#hearings.  If you would like additional information regarding the hearing process, please call the Hearings Department at (301)-978-8203.

Marketplace Rule 4815 prohibits communications relevant to the merits of a proceeding under the Marketplace Rule 4800 Series between Series between the Company and the Hearings Department unless Staff is provided notice and an opportunity to participate. In that regard, Staff waived its right to participate in any oral communications between the Company and the Hearings Department. Should Staff determine to revoke such waiver, the Company will be immediately notified, and the requirements of Marketplace Rule 4815 will be strictly enforced.

If the Company does not appeal Staff’s determination to the Panel, the Company’s securities will not be immediately eligible to trade on the OTC Bulletin Board or in the “Pink Sheets.” The securities may become eligible if a market maker makes application to register in and quote the security in accordance with SEC Rule 15c2-11, and such application (a “Form 211”) is cleared.7  Only a market maker, not the Company, may file a form 211.

While the suspension announcement will be included on the “Daily List”, which is posted and available to subscribers of www.Nasdaqtrader.com at approximately 2:00 p.m. on April 30, 2008, news of the suspension may not be deemed publicly disseminated until the Company makes an announcement through a Regulation FD compliant means of communication.

If you have any questions, please contact Brie Charles, Associate Director, at 301-978-8039.

Sincerely,

/s/Stanley Higgins

Stanley Higgins

Director

Nasdaq Listing Qualifications

Enclosures

 

7 Pursuant to NASD Marketplace Rules 6530 and 6540, a Form 211 cannot be cleared if the issuer is not current in its filing obligations.

EX-99.2

EXHIBIT 99.2

PRESS RELEASE	FOR IMMEDIATE RELEASE
PROVIDENCE, RI	APRIL 22, 2008

Nestor Receives Delisting Notice from NASDAQ; Receives Waiver and Forbearance from Senior Note holders

PROVIDENCE, RI – April 22, 2008 – Nestor, Inc. (NASDAQ: NEST), a leading provider of video-based traffic safety systems and services, today announced that it has received a Nasdaq staff determination letter dated April 22, 2008, notifying the Company that it has not complied with Nasdaq Marketplace Rule 4310(c)(4).  The Company had initially been notified on April 23, 2007 that the bid price of its common stock had closed at less than $1.00 per share over the previous 30 consecutive business days.  In accordance with Marketplace Rule 4310(c)(8)(D), the Company was provided 180 calendar days, or until October 22, 2007, to regain compliance with the Rule.  On October 23, 2007, because the Company met The Nasdaq Capital Market initial inclusion criteria set forth in Rule 4310(c) (except the bid price), the Company was given an additional 180 calendar day compliance period through April 21, 2008.  Because the Company has not regained compliance with Rule 4310(c), the Nasdaq Staff has determined to delist the Company’s securities from the Capital Market.

Accordingly, unless the Company requests an appeal of this determination, trading of the Company’s common stock will be suspended at the opening of business on May 1, 2008 and a Form 25-NSE will be filed with the Securities and Exchange Commission (the “SEC”), which will remove the Company’s securities from listing and registration on The NASDAQ Stock Market.

The Company was advised by NASDAQ that the Company may appeal Staff’s determinations to the Panel, pursuant to the procedures set forth in the NASDAQ Marketplace Rule 4800 Series. The Company was advised that in connection with any such appeal, it would be asked to provide a plan to regain compliance to the Panel.  Historically, Panels have generally viewed a reverse stock split in 30 to 60 days as the only definitive plan acceptable to resolve a bid price deficiency.  A hearing request will stay the suspension of the Company’s securities and the filing of the Form 25-NSE pending the Panel’s decision, if received by April 29, 2008 prior to 4:00 pm.  If the Company does not appeal Staff’s determination to the Panel, the Company’s securities will not be immediately eligible to trade on the OTC Bulletin Board or in the “Pink Sheets.”  The securities may become eligible if a market maker makes application to register in and quote the security in accordance with SEC Rule 15c2-11, and such application (a “Form 211”) is cleared.  Only a market maker, not the Company, may file a Form 211.  Pursuant to Marketplace Rules 6530 and 6540, a form 211 cannot be cleared if the issuer is not current in its filing obligations.

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The failure of the Company to maintain the listing of its common stock on the Nasdaq Stock Market or on another national stock market or exchange would constitute an Event of Default under its existing Senior Debt and under certain Warrants issued in connection with that Senior Debt.  The Company, however, has secured a Waiver and Forbearance from the Required Holders of its Senior Secured Notes and Warrants temporarily waiving the Events of Default until June 30, 2008.  The purpose of the Waiver and Forbearance is to provide the Company and the Holders with an opportunity to negotiate a modification of the Senior Notes and the Warrants or to consummate another transaction that would be of mutual benefit.  More details regarding these Senior Secured Notes may be found in our 2007 Annual Report on Form 10-K filed with the Securities and Exchange Commission on April 15, 2008.  Because the Company has obtained the Waiver and Forbearance, it does not expect that it will appeal the Staffs delisting determination.  Instead, the Company intends to focus on consummating a transaction with the Holders of its Senior Notes and Warrants which will permit the Company to continue its operations in a positive manner.  The Company intends to seek to be traded on the OTC Bulletin Board.

The opinion of our auditors included in our 2007 Annual Report on Form 10-K, and as further discussed by management in Note 1 to the audited financial statements and elsewhere in the Form 10-K filed with the Securities and Exchange Commission on April 15, 2008, contained an unqualified opinion with an explanatory paragraph regarding our substantial net losses in recent years which raised doubt regarding the Company’s ability to continue as a going concern. As a result, we continue to seek additional sources of equity and debt financing to fund system installations and to position ourselves to capitalize on new market and growth opportunities; however, there can be no assurance that the funds will be available on terms acceptable to us, if at all.

Clarence A. Davis, Chief Executive Officer of Nestor, Inc. stated the following: “Although we are disappointed that the market has not yet recognized the dramatic advances the Company has made, we remain confident in the Company’s future and look forward to finalizing a transaction with our Senior Note Holders that will give the Company the runway it needs to succeed in the marketplace.  We are delivering some of the finest service and best conviction rates in the industry and will continue to grow our operations through strategic sales initiatives.”

Statements in this press release about future expectations, plans and prospects for Nestor, including statements containing the words "expects," "will," and similar expressions, are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934.  We may not meet the expectations disclosed in our forward-looking statements and investors should not place undue reliance on those statements. Actual results may differ materially from those indicated by such forward-looking statements as a result of various factors, including: market acceptance of our products, competition, legal and legislative challenges to automated traffic enforcement, and other factors discussed in Risk Factors in our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q filed with the SEC.  Investors are advised to read Nestor's Annual Report, quarterly reports on Form 10-Q and current reports on Form 8-K filed after our most recent annual or quarterly report.  The forward-looking statements in this letter represent our current views and we disclaim any obligation to update these forward-looking statements.

For more information, call (401) 274-5658 or visit www.nestor.com.

CONTACT: Brian Haskell

General Counsel

401-274-5658 ext. 738

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