8-K

               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 18, 1997
                                

                          NESTOR, INC.

        (Exact name of registrant as specified in charter)

                                

                                

Delaware                      0-12-965        13-3163744
(State of other jurisdiction  (Commission     IRS employer
of incorporation)             file number)    identification no.




        One Richmond Square, Providence, Rhode Island  02906
              (Address of principal executive offices)




Registrant's telephone number, including area code: 401-331-9640

                                

                              N/A

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







Item 5.        Other Events

       1)    On  April 18, 1997, the Corporation entered into  an
       Amendment  to  the Prism Non-Exclusive License  Agreement,
       by    and    between   the   Corporation    and    Applied
       Communications, Inc. ("ACI") allowing ACI expanded  rights
       to  distribute the Corporation's PRISM product line and to
       share in enhanced future royalty income.  An initial  non-
       refundable   royalty  of  $2,000,000  was  paid   to   the
       Corporation.






                            EXHIBITS

The following exhibit is filed herewith:

Exhibit No.         Description
   10.35            Amendment to Prism Non-Exclusive License
                    Agreement dated as of April 18, 1997 between
                    Nestor, Inc. and Applied Communications,
                    Inc.*

* Portions of the exhibit omitted pursuant to a request for
  confidential treatment.







                           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 thereunto duly authorized.

Dated:  April 30, 1997             NESTOR, INC.
                                   (Registrant)


                                   By:/s/ Nigel P. Hebborn
                                     Chief Financial Officer

EX-10

                            
       AMENDMENT TO PRISM NON-EXCLUSIVE LICENSE AGREEMENT
                                

This   amendment   dated  April  18,  1997   ("the   Amendment"),
constitutes  a  modification in writing, subscribed  to  by  each
Party,  of a certain PRISM NON-EXCLUSIVE LICENSE AGREEMENT  dated
September   19,   1996   between   Nestor,   Inc.   and   Applied
Communications, Inc. ("the Agreement"), as provided in  paragraph
X  I  of  the Agreement.  Unless otherwise specified herein,  all
terms used in the Amendment shall have the same meanings as  they
have in the Agreement.

The following modifications are hereby made to the Agreement:

Paragraph  I.A.5 of the Agreement is amended to delete the  words
"make and" and the word "Related".

Paragraph I.A.6.(1) of the Agreement is amended to read "Licensee
shall  not  deliver to any Intermediary any part  of  the  Nestor
Software in source code, except as provided in Paragraph I.E."

Paragraph I.A.6.(iii) of the Agreement is amended to read "except
as   provided  in  paragraphs  I.A.5.  and  I.E.,  no   Unrelated
Intermediary   (as  hereinafter  defined)  shall  take   physical
possession of any copy,".

Paragraph I.B. of the Agreement is amended to add to the  end  of
the first paragraph ", except as provided in Paragraph I.E."


Paragraph I of the Agreement is amended by adding a new paragraph
I E, as follows:

     "E.  Licensee has annexed hereto a complete list of its
     Intermediaries,   with   full  particulars   of   their
     locations and addresses.  Licensee may disclose to  any
     such  Intermediary  who  is a  sublicensee  under  this
     Agreement the source code described in paragraph I A 1,
     but  only  for the purpose of translation into  foreign
     languages  as permitted by paragraph I A  1  (ii),  and
     provided  that such Intermediary is bound by the  terms
     of  its  sublicense  to adhere to  the  all  applicable
     provisions of this Agreement including, but not limited
     to,  paragraph  VII of this Agreement.  Licensee  shall
     guarantee  to  Nestor  the  performance  by  each  such
     Intermediary  of  all  such obligations,  and  Licensee
     further  indemnifies and holds harmless Nestor  against
     any  all  claims,  losses, costs (including  reasonable
     attorneys' fees) and direct or indirect damages arising
     from the use or disclosure by such Intermediary of  the
     source  code disclosed to it by Licensee. The foregoing
     shall  only be deemed to permit Intermediaries to  make
     copies of the Nestor Software for internal use for  the
     limited purposes described in this paragraph I.E. In no
     event  shall any Unrelated Intermediary have the  right
     to deliver, disseminate, or otherwise transfer any part
     of the Nestor Software to any third party."

The  first Paragraph of section IV.A. of the Agreement is amended
in its entirety to read:

A.  "Provided Licensee has promptly upon learning of a claim
or  action (but in any event with sufficient notice  not  to
cause  Nestor's loss of its right to defend) notified Nestor
in  writing  of any claim or action in which it  is  alleged
that  the  Nestor  Software infringes (i)  a  United  States
issued patent, trade secret, or copyright, or (ii) a foreign
patent  or  copyright and Licensee, at  no  cost  to  Nestor
(except   for  reasonable  out-of-pocket  expenses),   fully
cooperates  with Nestor in such settlement or defense,  then
Nestor  shall  take sole control of the settlement  of  such
claim  and  the  defense of any litigation resulting  solely
therefrom  and  shall be responsible for the costs  of  such
defense  and will indemnify and hold Licensee harmless  from
the  cost  of  any  settlement or judgment resulting  solely
therefrom."


The second Paragraph of section IV.A. of the Agreement is amended
to  delete the phrase "(whether or not Nestor assumes control  of
the defense or settlement thereof)".

Paragraph V.B. of the Agreement is amended to read as follows:

     "B.  Nestor warrants that no claim has been made by any
     third  party  that  the Nestor Software  infringes  any
     United States issued patent, trade secret, or copyright
     of any such third party.  Nestor warrants that it knows
     of no claim by any third party that the Nestor Software
     infringes any foreign patent, copyright or trade secret
     of  such  third  party.  Nestor warrants  that,  for  a
     period of ninety (90) days after each installation, (a)
     PRISM  as  defined in the Schedule, shall substantially
     conform   to  the  document  titled,  Prism  Functional
     Description,  which is annexed hereto  solely  for  the
     purpose  of  listing  such  functions,  (b)  any  other
     portion  of  the  Nestor Software developed  by  Nestor
     shall   substantially   conform   to   the   functional
     description of such software agreed to by the  parties;
     provided,  however, that such warranty shall be  voided
     in  its  entirety  if  Licensee  shall  have  made  any
     functional modification to the Nestor Software or shall
     have  installed the Nestor Software in a manner not  in
     accordance  with an installation guide to  be  mutually
     agreed upon by the Parties."

Paragraph  VIII A of the Agreement is amended in its entirety  to
read:
          
     "A.   During  the term of this Agreement, and  provided
     that  Licensee  is  then and always has  been  in  full
     compliance with all of the terms and conditions of this
     Agreement  (except for breaches which have  been  fully
     and  timely  cured), Nestor shall provide  to  Licensee
     such  services  related to the use and installation  of
     the  Nestor  Software as are described  in  the  Nestor
     document  titled  PRISM  Software  and  Client  Support
     (excluding the Installation Program described therein),
     a  specimen  of  which is attached to  this  Agreement.
     Nestor  will  use  reasonable  commercial  efforts   to
     furnish such maintenance support. If Licensee deems the
     aforementioned  level of support, or  Nestor's  support
     staffing,  to be inadequate, Licensee may request  that
     Nestor  secure  and maintain additional support  staff,
     all at Licensee's expense, and Nestor will use its best
     efforts to do so. Such request by Licensee shall entail
     a  commitment by Licensee to reimburse Nestor  for  all
     costs  and expenses related to securing and maintaining
     such additional staff for a period of not less than two
     years.   Such  commitment, if made, shall  survive  any
     termination  or  expiration of this Agreement  for  the
     balance of the commitment."

Paragraph  IX of the Agreement is amended to insert the following
after the third sentence thereof:

     "Notwithstanding  the  foregoing,  Licensee  shall   be
     permitted  to  deliver to any Sublicensee  such  source
     code  delivered out of escrow as shall be necessary  to
     permit   such  Sublicensee  to  maintain  the   Subject
     Products,  namely,  (i) source code to  the  analytical
     workflow  model  known  as  the  PRISM  Analysis/Review
     System  and  (ii)  source code to  the  user  and  data
     input/output interfaces that link to the PRISM  Scoring
     System in order to update or to modify existing scoring
     models  or  to  create  new  scoring  models.   It   is
     understood and agreed that such source code shall  only
     be  delivered to Sublicensees who are bound by terms of
     their sublicenses that are substantially similar to the
     provisions of paragraph VII of this Agreement. Licensee
     indemnifies and holds harmless Nestor against  any  all
     claims,  losses, costs (including reasonable attorneys'
     fees)  and direct or indirect damages arising from  the
     use  or  disclosure by such Intermediary of the  source
     code disclosed to it by Licensee.  Licensee's right  to
     obtain   source   code   shall  constitute   Licensee's
     exclusive  remedy and Nestor's exclusive liability  for
     the  failure  of Nestor or any successor to  Nestor  to
     provide  the  technical support  contemplated  by  this
     Agreement."


The  Schedule to the Agreement is amended in its entirety to read
as follows:


                            SCHEDULE

Nestor Software:

"Nestor Software" shall mean Master Copies of PRISMT, adapted  to
function  in conjunction with those products marketed by Licensee
and  known  as  Base24  and Trans24 or in  conjunction  with  any
environment  for  which  Nestor generally  offers  PRISM.   PRISM
currently  consists of a credit-card fraud-scoring model  ("PRISM
Scoring   System")  and  an  analytical  workflow  model  ("PRISM
Analysis/Review System").  The Prism Scoring System runs in batch
mode on Tandem NSK computers and under the UNIX and MVS operating
systems,  and   will  accept standardized  inputs  defined  by  a
document  titled Base24 PRISM Data Interface dated as  of  August
15,  1996.  The  PRISM Analysis/Review System  runs  on  personal
computers  under  Windows NT.  As used  in  this  Agreement,  the
Master Copy adapted to function in conjunction with Base24  on  a
Tandem  computer is sometimes referred to as the  "Base24  Master
Copy";  the  Master Copy adapted to function with  Trans24  under
UNIX  or  MVS  is  sometimes referred to as the  "Trans24  Master
Copy";  and  the  Master Copy adapted to  function  in  a  fault-
tolerant mode with Trans24 under UNIX is sometimes referred to as
the  "Trans24  Fault-tolerant Master Copy".  The  Trans24  Fault-
tolerant Master Copy contains calls to object-code modules  of  a
database  management  system  known  as  "Kala",  which   modules
Licensee  will obtain directly from their owner and will  deliver
to those sublicensees requiring fault-tolerant Subject Products.

It  is  understood  that the Nestor Software  shall  include  any
bankruptcy-prediction   model  and  any   other   financial-risk-
assessment model that is (i) developed by Nestor during the  term
of  this  Agreement, (ii) generally offered by  Nestor  to  third
parties, (iii) applicable within the Field of Use, as hereinafter
defined, and (iv) may be legally delivered by Nestor. Unless such
model has been developed at the request of Licensee, Nestor shall
not  be reimbursed by Licensee for any development cost but  only
for  the cost of using reasonable commercial efforts to adapt  or
modify   such   model  to  function  under  Base24  or   Trans24.
Notwithstanding the foregoing, it is understood that Nestor  will
use  reasonable  commercial efforts, at  Licensee's  expense,  to
extend the scope of the Nestor Software to include any or all  of
(i)  a debit-card fraud-scoring model, (ii) a retail-merchant and
private-label  fraud-scoring model, (iii) a third-party-processor
fraud-detection model, and (iv) a "Trans24 Interface", which will
be  an  interface between the PRISM Scoring System and Licensee's
Trans24  product running under the UNIX or MVS operating systems.
The  Trans24 Interface will be developed by Nestor in  accordance
with  specifications to be mutually agreed between  the  Parties,
and  will accept authorization data and master-file data  from  a
"Neural  Network  Interface" to be developed by  Licensee,  which
Neural   Network   Interface  will  convert  authorization   data
generated  by a Trans24 system to a format acceptable  by  PRISM.
The  Trans24  Interface  and the Neural Network  Interface,  when
developed,  shall,  together  with  their  counterparts  in   the
interface between PRISM and Licensee's Base24 product, be  deemed
to  be  included within the meaning of the term "Nestor Software"
for  the  purpose of determining the Royalty Base. Neither  party
may deliver any such interface product in its entirety except for
use  in  conjunction  with PRISM and Base24  or  Trans24  by  (a)
Intermediaries of Licensee approved in advance by Nestor  or  (b)
end-users.   If Licensee delivers the interface to a customer  to
whom  it  has or will sublicense the Nestor Software, all amounts
received  for  such interface will be deemed part of  the  Earned
Royalty Base.   Subject to the foregoing,  neither Party will owe
the  other  Party  any amount or be entitled to any  credit,  for
authorized    deliveries    of    such    interface     products.
Notwithstanding  the foregoing, either Party  may  use   for  any
purpose  the  portion of the interface that such party  developed
without  any  obligation to account to the other Party,  provided
that  such  use does not result in any use or disclosure  of  the
other  Party's  confidential information  or  other  intellectual
property.  All other extensions of the Nestor Software, including
without  limitation the extensions described  in  (i),  (ii)  and
(iii)  of  this  paragraph, shall be and remain the  property  of
Nestor.

Prior  to  the first commercial use of any version of the  Neural
Network Interface, Licensee shall deliver to Nestor a source-code
copy of such version, together with all related documentation.
     
The  portion  of the Nestor Software which is to be delivered  in
source  code is the (i) Application Program Interface and  Visual
Basic code needed to integrate PRISM within Base24, and (ii)  the
PRISM  Analysis Review System. All of the remainder of the Nestor
Software is to be delivered in object code.

Licensee or each sublicensee shall be required to obtain licensed
copies   of   third-party  software  specified  in   the   System
Requirements  document  annexed  to  this  Agreement   including,
without  thereby limiting,  Windows NT, Atlas GIS and, for  UNIX-
based  systems, Kala database-management software  for  use  with
Trans24 Fault-tolerant Subject Products.
     
Subject Products:

"Subject  Products" shall mean (a) computer software and hardware
consisting of the products marketed by Licensee known  as  Base24
(Tandem  NSK operating system) and Trans24 (UNIX or MVS) systems,
(i)  with  which Licensee shall have integrated, at the  time  of
installation, the object-code portions of the Nestor Software  or
(ii)  if  previously installed, to which the object-code portions
of  the Nestor Software are added pursuant to this Agreement, (b)
any  other  product or service of Licensee into which the  Nestor
Software is integrated or with which the Nestor Software is sold,
and  (c), if Licensee licenses the Nestor Software standing alone
and  not  substantially at the same time as any other product  or
service, the Nestor Software.


Field-of-Use:

The  term "Field-of-Use" shall mean credit- and debit-card  fraud
detection  and  other  forms  of  financial-risk  assessment,  by
commercial  banks, retail merchant organizations, and only  those
entities  identified  as  "Approved  Processing  Entities"   that
provide such services to retail merchants or commercial banks.

Approved Processing Entities:

Licensee  has  furnished to Nestor a copy of its  customer  list,
which  is  attached  to  this  Agreement,  on  which  Nestor  has
indicated  processors who are not approved.  All other  customers
of  Licensee  on  such  list who may be processors  are  Approved
Processing  Entities and are included in the  Field-of-Use.   The
name of any customer or prospective customer of Licensee who is a
processor and is not so approved must be submitted to Nestor  for
such approval and inclusion, at Nestor's sole discretion, in  the
Field-of-Use.

Royalties:

Initial Royalty:

Licensee  shall  pay  to  Nestor,  upon  the  execution  of  this
Amendment,  a  non-refundable Initial Royalty in  the  amount  of
$2,000,000,  which Initial Royalty shall not be credited  against
any  other  amount  owed  or to be owed  by  Licensee  to  Nestor
pursuant to the Agreement.

Earned Royalties:

Licensee  shall  pay  to Nestor the greater of  (i)  the  Minimum
Earned  Royalties  or (ii) the product of the applicable  Royalty
Rate times the Royalty Base, all of which are set forth below  in
this Schedule.

Earned Royalty Base:

The  following  revenues  received from sublicenses,  whether  by
Licensee  or  Related Intermediaries, directly or  indirectly  in
connection  with the installation, delivery and  use  of  Subject
Products  shall  constitute the Royalty Base:  all  fees  of  any
nature  whatsoever  arising  from  a  Sublicense  of  the  Nestor
Software,  including without limitation (i) initial license  fees
(including  license  fees  charged by  Licensee  for  the  Nestor
Software  and  for software that interfaces the  Nestor  Software
with  the remainder of any Subject Product, and installation fees
to the extent that such fees exceed Licensee's normal charges for
engineering services), (ii) maintenance fees, and (iii) use fees.
If  any  portion  of  such  revenue is  withheld  for  income-tax
purposes,  the  Earned  Royalty Base will be  include  the  gross
amount of revenues without regard to such withholding.

Any  amount  paid  to Nestor by Licensee or any  sublicensee  for
engineering  or  consulting services, including  without  thereby
limiting  amounts paid to Nestor for installation,  modeling,  or
modification of the Nestor Software, shall be excluded  from  the
Royalty Base.

Earned Royalty Rate:

The  Royalty Rate to be applied in the calculation of any  Earned
Royalty  shall be [SEEKING CONFIDENTIAL TREATMENT] of the  Earned
Royalty Base.

Minimum Earned Royalties:

In  no event shall Earned Royalties payable by Licensee to Nestor
with respect to any Sublicense be less than the following:






                                                Minimum Earned
               Royalty Base                        Royalty

Initial license fee for sublicensee having         [SEEKING
fewer than [SEEKING CONFIDENTIAL                 CONFIDENTIAL
TREATMENT]total accounts                          TREATMENT]

Initial license fee for sublicensee having         [SEEKING
more than [SEEKING CONFIDENTIAL                  CONFIDENTIAL
TREATMENT]and up to [SEEKING CONFIDENTIAL         TREATMENT]
TREATMENT]total accounts

Initial license fee for sublicensee having         [SEEKING
more than [SEEKING CONFIDENTIAL TREATMENT]       CONFIDENTIAL
total accounts                                    TREATMENT]

Use fees                                           [SEEKING
                                                 CONFIDENTIAL
                                                  TREATMENT]

For  the  purposes of calculating Minimum Earned  Royalties,  the
term  "active  account"  shall mean  any  cardholder  account  of
sublicensee (or, in the case of a sublicensed processor, that  is
processed by sublicensee) that had a positive balance or at least
one  transaction (whether a charge or a payment)  or  posting  or
authorization  during the twelve (12) months  preceding  (i)  the
execution  of  the  relevant Sublicense in the  case  of  initial
license  fees,  and  (ii) each anniversary of  the  term  of  the
Sublicense in the case of use fees.

Quota

Notwithstanding the foregoing, commencing on the first day of the
sixth  year following execution of this Amendment, Licensee shall
pay  to  Nestor  during  each Year of  this  Agreement  aggregate
royalties of not less than [SEEKING CONFIDENTIAL TREATMENT].   If
Earned Royalties payable during any Year of this Agreement  shall
aggregate  less  than [SEEKING CONFIDENTIAL TREATMENT],  Licensee
may elect to pay the difference between such Earned Royalties and
[SEEKING CONFIDENTIAL TREATMENT].  If Licensee elects not to  pay
such  difference  to Nestor when due, Nestor may  at  its  option
terminate the License and this Agreement forthwith.

Credits
     
Earned  Royalties paid by Licensee to Nestor during any  Year  of
this  Agreement shall be credited toward the Quota for such  Year
of this Agreement.
     
Exceptions to Earned Royalty Rates:

Any  copy  of  the  Nestor Software that is (i) installed  at  an
office  of  Licensee or any of its subsidiaries  solely  for  the
purpose of demonstrating the Nestor Software, (ii) not used as  a
production system, and (iii) does not entail any charge to  third
parties  for its use, shall not be subject to the Minimum  Earned
Royalty set forth above.


Engineering and Modeling Fees:

Licensee shall pay to Nestor fees for model development and other
engineering in accordance with the following fee schedule:

     for model development, [SEEKING CONFIDENTIAL TREATMENT] per
person-day; and

     for other engineering or consulting, [SEEKING CONFIDENTIAL
TREATMENT] per person-day.

If  Licensee  requests that Nestor develop  any  new  model,  the
foregoing modeling fees shall apply:

                       Model                             Fee

Bank credit-card fraud model for use by sublicensee  [SEEKING
with fewer than [SEEKING CONFIDENTIAL TREATMENT]     CONFIDENTIAL
total accounts                                       TREATMENT]

Bank credit-card fraud model for use by sublicensee  [SEEKING
with more than [SEEKING CONFIDENTIAL TREATMENT] and  CONFIDENTIAL
fewer than [SEEKING CONFIDENTIAL TREATMENT] total    TREATMENT]
accounts

Bank credit-card fraud model for use by sublicensee  to be
with more than [SEEKING CONFIDENTIAL TREATMENT]      negotiated
total accounts

Bank debit-card fraud model or retail-merchant       [SEEKING
fraud model for sublicensee with fewer than          CONFIDENTIAL
[SEEKING CONFIDENTIAL TREATMENT] total accounts      TREATMENT]

Bank debit-card fraud model or retail-merchant       
fraud model for sublicensee with [SEEKING            to be
CONFIDENTIAL TREATMENT] or more total accounts       negotiated


Payment Terms:

Earned Royalties related to Initial License Fees and installation
of  the  Nestor Software shall be paid no later than the earliest
of (i) (30) days of receipt of the related Earned Royalty Base by
Licensee   or  any  Intermediary,  (ii)  sixty  (60)  days   from
acceptance by the relevant sublicensee of the Subject Product, or
(iii)  120  days  from  the  date of execution  of  the  relevant
Sublicense, except for the first two Sublicenses entered into  by
Licensee,  for which the applicable period in this  clause  (iii)
shall  be 150 days.  Earned Royalties relating to Use Fees  shall
be  payable the earliest of (i) thirty (30) days from receipt  by
Licensee or any Intermediary, (ii) thirty (30) days from the date
on  which  payment  of  such use fee by the relevant  sublicensee
shall be due, or (iii) sixty (60) days after the commencement  of
the period to which such use fees apply.

Cost-of-Living Adjustments:

All  royalties, engineering and modeling fees, any  other  amount
payable by Licensee to Nestor, and any other amount expressed  in
this  Agreement as a dollar rate or absolute dollar amount  shall
be adjusted during each Year of this Agreement beginning with the
first  anniversary  date of the execution of  this  Agreement  in
proportion to increases in the Consumer Price Index from year  to
year  during  the term of this Agreement. For any  Year  of  this
Agreement  in  which the Consumer Price Index has increased  over
the  preceding  Year of this Agreement, such  increase  shall  be
calculated  by  multiplying each such  dollar  rate  or  absolute
amount  then  in  effect by the most recently published  Consumer
Price  Index  as  at  such  anniversary  date  and  dividing  the
resulting product by the Consumer Price Index as at the preceding
anniversary date of execution of this Agreement or, in  the  case
of  the  first  anniversary of the execution of  this  Agreement,
dividing the resulting product by the Consumer Price Index as  at
the date of execution of this Agreement.

For  purposes of Paragraph VI. of the Agreement, the commencement
of  the  initial term of the Agreement will be the date  of  this
Amendment.

ACCEPTED AND AGREED TO AS OF
THE DATE FIRST SET FORTH ABOVE:


APPLIED COMMUNICATIONS,INC.     NESTOR, INC.



By:  /s/David Stokes            By:  /s/ Nigel P. Hebborn

Title: General Counsel &        Title:  Chief Financial Officer
         Secretary