-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
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 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 DnzUoBkk2OQd+5TOQkxrKFqklJlCB+E4XPQ98hGqqKEdUydFz4fRoK7SVnFR/ypY
 EWmfKbSBJEPQkavjnifzig==

<SEC-DOCUMENT>0001144204-06-004941.txt : 20060209
<SEC-HEADER>0001144204-06-004941.hdr.sgml : 20060209
<ACCEPTANCE-DATETIME>20060209210921
ACCESSION NUMBER:		0001144204-06-004941
CONFORMED SUBMISSION TYPE:	4
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20060131
FILED AS OF DATE:		20060209
DATE AS OF CHANGE:		20060209

REPORTING-OWNER:	

	OWNER DATA:	
		COMPANY CONFORMED NAME:			DANZELL WILLIAM B
		CENTRAL INDEX KEY:			0001275983

	FILING VALUES:
		FORM TYPE:		4
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-12965
		FILM NUMBER:		06595212

	BUSINESS ADDRESS:	
		STREET 1:		65 BRAMS POINT ROAD
		CITY:			HILTON HEAD ISLAND
		STATE:			SC
		ZIP:			29926

ISSUER:		

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NESTOR INC
		CENTRAL INDEX KEY:			0000720851
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-PREPACKAGED SOFTWARE [7372]
		IRS NUMBER:				133163744
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	BUSINESS ADDRESS:	
		STREET 1:		42 ORIENTAL STREET
		STREET 2:		THIRD FLOOR
		CITY:			PROVIDENCE
		STATE:			RI
		ZIP:			02908
		BUSINESS PHONE:		4012745658

	MAIL ADDRESS:	
		STREET 1:		42 ORIENTAL STREET
		STREET 2:		THIRD FLOOR
		CITY:			PROVIDENCE
		STATE:			RI
		ZIP:			02908
</SEC-HEADER>
<DOCUMENT>
<TYPE>4
<SEQUENCE>1
<FILENAME>v035129_ex.xml
<TEXT>
<XML>
<?xml version="1.0"?>
<ownershipDocument>

    <schemaVersion>X0202</schemaVersion>

    <documentType>4</documentType>

    <periodOfReport>2006-01-31</periodOfReport>

    <notSubjectToSection16>0</notSubjectToSection16>

    <issuer>
        <issuerCik>0000720851</issuerCik>
        <issuerName>NESTOR INC</issuerName>
        <issuerTradingSymbol>NESO</issuerTradingSymbol>
    </issuer>

    <reportingOwner>
        <reportingOwnerId>
            <rptOwnerCik>0001275983</rptOwnerCik>
            <rptOwnerName>DANZELL WILLIAM B</rptOwnerName>
        </reportingOwnerId>
        <reportingOwnerAddress>
            <rptOwnerStreet1>NESTOR, INC.</rptOwnerStreet1>
            <rptOwnerStreet2>400 MASSASOIT AVE., SUITE 200</rptOwnerStreet2>
            <rptOwnerCity>PROVIDENCE</rptOwnerCity>
            <rptOwnerState>RI</rptOwnerState>
            <rptOwnerZipCode>02914</rptOwnerZipCode>
            <rptOwnerStateDescription></rptOwnerStateDescription>
        </reportingOwnerAddress>
        <reportingOwnerRelationship>
            <isDirector>1</isDirector>
            <isOfficer>1</isOfficer>
            <isTenPercentOwner>1</isTenPercentOwner>
            <isOther>0</isOther>
            <officerTitle>Chairman, CEO &amp; President</officerTitle>
        </reportingOwnerRelationship>
    </reportingOwner>

    <nonDerivativeTable>
        <nonDerivativeHolding>
            <securityTitle>
                <value>Common Stock</value>
            </securityTitle>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>2000</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>I</value>
                    <footnoteId id="F4"/>
                </directOrIndirectOwnership>
                <natureOfOwnership>
                    <value>See Footnote</value>
                    <footnoteId id="F1"/>
                </natureOfOwnership>
            </ownershipNature>
        </nonDerivativeHolding>
        <nonDerivativeTransaction>
            <securityTitle>
                <value>Common Stock</value>
            </securityTitle>
            <transactionDate>
                <value>2006-01-31</value>
            </transactionDate>
            <transactionCoding>
                <transactionFormType>4</transactionFormType>
                <transactionCode>P</transactionCode>
                <equitySwapInvolved>0</equitySwapInvolved>
            </transactionCoding>
            <transactionAmounts>
                <transactionShares>
                    <value>220589</value>
                </transactionShares>
                <transactionPricePerShare>
                    <value>4.42</value>
                </transactionPricePerShare>
                <transactionAcquiredDisposedCode>
                    <value>A</value>
                </transactionAcquiredDisposedCode>
            </transactionAmounts>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>9836430</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>I</value>
                    <footnoteId id="F4"/>
                </directOrIndirectOwnership>
                <natureOfOwnership>
                    <value>See Footnote</value>
                    <footnoteId id="F2"/>
                </natureOfOwnership>
            </ownershipNature>
        </nonDerivativeTransaction>
        <nonDerivativeHolding>
            <securityTitle>
                <value>Common Stock</value>
            </securityTitle>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>85690</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>I</value>
                    <footnoteId id="F4"/>
                </directOrIndirectOwnership>
                <natureOfOwnership>
                    <value>See Footnote</value>
                    <footnoteId id="F3"/>
                </natureOfOwnership>
            </ownershipNature>
        </nonDerivativeHolding>
        <nonDerivativeHolding>
            <securityTitle>
                <value>Common Stock</value>
            </securityTitle>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>8800</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </nonDerivativeHolding>
    </nonDerivativeTable>

    <derivativeTable>
        <derivativeTransaction>
            <securityTitle>
                <value>Stock Options</value>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>4.95</value>
            </conversionOrExercisePrice>
            <transactionDate>
                <value>2004-10-31</value>
            </transactionDate>
            <transactionCoding>
                <transactionFormType>4</transactionFormType>
                <transactionCode>A</transactionCode>
                <equitySwapInvolved>0</equitySwapInvolved>
            </transactionCoding>
            <transactionAmounts>
                <transactionShares>
                    <value>500000</value>
                </transactionShares>
                <transactionPricePerShare>
                    <value>0</value>
                </transactionPricePerShare>
                <transactionAcquiredDisposedCode>
                    <value>A</value>
                </transactionAcquiredDisposedCode>
            </transactionAmounts>
            <exerciseDate>
                <footnoteId id="F5"/>
            </exerciseDate>
            <expirationDate>
                <value>2012-10-13</value>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>500000</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>500000</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </derivativeTransaction>
        <derivativeTransaction>
            <securityTitle>
                <value>Stock Options</value>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>4.95</value>
            </conversionOrExercisePrice>
            <transactionDate>
                <value>2004-10-31</value>
            </transactionDate>
            <transactionCoding>
                <transactionFormType>4</transactionFormType>
                <transactionCode>A</transactionCode>
                <equitySwapInvolved>0</equitySwapInvolved>
            </transactionCoding>
            <transactionAmounts>
                <transactionShares>
                    <value>500000</value>
                </transactionShares>
                <transactionPricePerShare>
                    <value>0</value>
                </transactionPricePerShare>
                <transactionAcquiredDisposedCode>
                    <value>A</value>
                </transactionAcquiredDisposedCode>
            </transactionAmounts>
            <exerciseDate>
                <footnoteId id="F6"/>
            </exerciseDate>
            <expirationDate>
                <value>2014-10-13</value>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>500000</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>500000</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </derivativeTransaction>
    </derivativeTable>

    <footnotes>
        <footnote id="F1">By Danzell Investment Management, Ltd.</footnote>
        <footnote id="F2">By Silver Star Partners, LLC. Silver Star acquired the 220,589 shares with additional capital contributions from some, but
 not all, of its members. Mr. Danzell did not make an additional capital contribution, but as Managing Director of Silver
 Star, he has the power to vote and/or dispose of the 220,589 shares even though he has no pecuniary or economic interest in
 them.</footnote>
        <footnote id="F3">By Managed Accounts.</footnote>
        <footnote id="F4">Mr. Danzell disclaims beneficial ownership of shares beneficially owned indirectly.</footnote>
        <footnote id="F5">Exercisable as to 100,000 shares on 12/31/2004, an additional 200,000 shares on 12/31/2005 and an additional 200,000 shares
 on 12/31/2006.</footnote>
        <footnote id="F6">Exercisable on the earlier of (1) 10/13/12 or (2) as to 100,000 shares on the date on which the 10-day average of the last
 reported sale price exceeds 117.5% of the exercise price, as to an additional 200,000 shares on the date on which the 10-day
 average of the last reported sale price exceeds 138.0625% of the exercise price, and as to an additional 200,000 shares on
 the date on which the 10-day average of the last reported sale price exceeds 162,223,437.50% of the exercise price.</footnote>
    </footnotes>

    <ownerSignature>
        <signatureName>/s/ William B. Danzell</signatureName>
        <signatureDate>2006-02-09</signatureDate>
    </ownerSignature>
</ownershipDocument>
</XML>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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