Edgar Filing: SIMTROL INC

As filed with the Securities and Exchange Commission on December 2, 2004

Registration No. 333-120782
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Amendment No. 1 to

FORM SB-2
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933

SIMTROL, INC.
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(Name of small business issuer in its charter)

DELAWARE 3663 58-2028246
------------------------------ ------------------------- ---------------
(State or other jurisdiction of (Primary Standard (IRS Employer
incorporation or organization) Industrial Classification Identification
Code Number) Number)

2200 NORCROSS PARKWAY, SUITE 255
NORCROSS, GEORGIA 30071
(770) 242-7566
---------------------------------
(Address and telephone number
of principal executive offices)

STEPHEN N. SAMP
SIMTROL, INC.
2200 NORCROSS PARKWAY, SUITE 255
NORCROSS, GEORGIA 30071
(678) 533-1201
---------------------------------
(Name, address and telephone number
of agent for service)

Copies Requested to:
WILLIAM L. MEYER, ESQ.
SMITH, GAMBRELL & RUSSELL, LLP
SUITE 3100, PROMENADE II
1230 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30309
(404) 815-3500

---------------------------------

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act, check
the following box. |X|

If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. |_|

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|

If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. |_|

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(A), MAY
DETERMINE.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL AND COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

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PROSPECTUS
SIMTROL, INC.
1,376,192 SHARES OF COMMON STOCK

2,515,384 SHARES OF COMMON STOCK
UNDERLYING COMMON STOCK PURCHASE WARRANTS

--------------

This prospectus covers a total of 3,891,576 common shares registered on
behalf of selling securityholders for resale. Some of these common shares have
been issued already and some may be issued under warrants owned by the selling
securityholders. All of the 3,891,576 common shares covered by this prospectus
may be sold from time to time by the named selling securityholders. We are not
selling any of these common shares and will not receive any of the proceeds from
their sale. We will receive the proceeds from any cash exercises of any of the
warrants by the selling securityholders.

Our common shares are quoted on the Electronic Bulletin Board,
Over-The-Counter Market under the symbol "SMRL." On December 1, 2004 the closing
price for our common stock was $1.25.

You may contact us at our principal executive offices located at 2200
Norcross Parkway, Suite 255, Norcross, Georgia 30071 or by phone at (770)
242-7566.

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

THIS INVESTMENT INVOLVES CERTAIN HIGH RISKS. SEE "RISK FACTORS" BEGINNING
ON PAGE 3.

The date of this prospectus is December 2, 2004.

TABLE OF CONTENTS

PAGE
----

Prospectus Summary............................................................1

Risk Factors..................................................................3

Forward-Looking Statements....................................................7

Where You Can Find More Information...........................................7

Use of Proceeds...............................................................8

Market For Our Common Stock And Related Shareholder Matters...................8

Selling Securityholders......................................................10

Shares Eligible For Future Sale..............................................13

Management...................................................................15

Executive Compensation.......................................................17

Security Ownership of Certain Beneficial Owners and Management...............20

Description of Capital Stock.................................................21

Business ....................................................................22

Management's Discussion and Analysis of Financial Condition and Results
of Operations..............................................................29

Related Party Transactions...................................................36

Legal Matters................................................................37

Experts......................................................................37

Financial Statements........................................................F-1

(i)

PROSPECTUS SUMMARY

This summary is qualified in its entirety by the more detailed information
appearing elsewhere in this prospectus.

THE COMPANY

We were incorporated under the laws of the State of Delaware on September
19, 1988. From 1990 to 2001, we primarily designed, manufactured, marketed and
supported hardware-based command and control systems, including
videoconferencing systems. We still provide maintenance support for certain of
these systems.

We design, develop and market Windows-based software solutions that enable
the command, control and monitoring of otherwise incompatible electronic
devices, particularly corporate audiovisual ("AV") assets. Our end-to-end
solutions are designed to provide Fortune 1000 corporations, government entities
and other end users a cost-effective solution to simplify the automation and
integration of AV and information technology ("IT") assets. Originally, we
developed and marketed hardware-based videoconferencing and control systems.
However, in 2000, management recognized an increased interest by computer and
computer-related manufacturers to expand their existing technologies into the AV
industry. A number of these manufacturers began to offer plasma screen
televisions, digital projection equipment and other similar devices. At that
time, management believed that this would lead to the commoditization of other
AV control hardware, such as touch panel displays. Accordingly, in conjunction
with the commencement of a contract with Boeing, we shifted our business
strategy to a PC-centric software model, thereby positioning us as the first to
market with a fully integrated software solution. In April 2001, we released the
first version of our ONGOERTM PC-based control software just as a major trend
began taking place: IT professionals were taking over the management of AV
applications. We believe that we are well positioned to take advantage of this
growing trend and can become a popular Windows application for enterprise users
over the next three to seven years. As a result of our strategic shift, we no
longer sell videoconferencing systems directly, although we still maintain
service contracts with certain videoconferencing customers that we are beginning
to leverage into future sales opportunities of our software products. To date,
we have spent approximately $3 million in research and development for our
software product offerings.

All share amounts in this document reflect the 1:10 reverse split effected
on May 7, 2004 for all periods presented.

THE OFFERING

Securities Offered 3,891,576 shares of common stock, $0.001 par
value, including 2,515,384 shares of common stock
issuable upon the exercise of outstanding stock
purchase warrants. See "Selling Securityholders" at
page 10.

Selling Securityholders The selling securityholders are identified in
this prospectus at page 10 together with the maximum
amount of our common shares that each may sell either
outright or upon conversion or exercise of rights
under their respective warrants or convertible notes.
See "Selling Securityholders" at page 10.

Plan of Distribution Up to 3,891,576 shares of common stock may be offered
and sold by the selling securityholders through agents
or brokers, which may involve block transactions, on the
Electronic Bulletin Board, Over-The-Counter market or on
other exchanges on which the shares are then listed,
pursuant to the rules of the applicable exchanges or in
the over-the-counter market, or otherwise, at market
prices prevailing at the time of sale, at negotiated
prices or at fixed prices; through brokers or agents in
private sales at negotiated prices; or by any other
legally available means.

Offering Price At prevailing market prices on the Electronic Bulletin
Board or on other exchanges on which the shares are
then listed or at negotiated prices.

Use of Proceeds We will not obtain any funds from the sale of the common
stock sold by the selling securityholders. We will
receive up to $5,030,768 in proceeds from the cash
exercise of the warrants currently outstanding and
included in this prospectus. However, due to current
market conditions as well as the fact that the exercise
prices of most of these warrants have been higher than
the current market price of our stock, it is unlikely
that we will realize the receipt of any proceeds from
the exercise of these warrants. If the market price for
our common stock increases to permit the exercise of
these warrants, we intend to use any such cash proceeds
received for general corporate purposes, which may
include repaying indebtedness, making additions to our
working capital, funding future acquisitions or for
further developing our products and hiring additional
personnel.

Securities Outstanding We are authorized to issue up to an aggregate of
40,000,000 shares of common stock and 800,000 shares of
preferred stock, of which 3,712,914 common shares and no
preferred shares were issued and outstanding at November
15, 2004. If the selling securityholders exercise all of
their rights to exercise all of their warrants, an
additional 2,515,384 common shares, representing part of
the shares being registered, will be outstanding.

Risk Factors An investment in our common shares is highly speculative
and any purchasers will suffer substantial dilution per
common share compared to the purchase price. We have
suffered net losses for the third quarter of 2004 of
$283,170, net losses for the nine months ended September
30, 2004 of $612,832 and net losses for 2003 of
$1,645,374 and net losses of $2,289,787 during 2002. We
will need additional funding. No person should invest in
our common shares who cannot afford to risk the loss of
his or her entire investment. See "Risk Factors" at page
3.

RISK FACTORS

You should carefully consider the risks described below when evaluating an
investment in our common stock. The risks and uncertainties described below are
not the only ones we face. Additional risks and uncertainties we are presently
not aware of or that we currently consider immaterial may also impair our
business operations.

If any of the following risks actually occurs, our business, financial
condition or results of operations could be materially adversely affected. In
such case the trading price of our common stock could decline significantly.

WE HAVE LIMITED RESOURCES AVAILABLE TO SERVICE OUR EXISTING INDEBTEDNESS AND
LIMITED SOURCES OF ADDITIONAL WORKING CAPITAL.

The degree to which we are leveraged could have important consequences.
For example, it could:

o make it more difficult for us to obtain additional financing for
working capital, capital expenditures and other general corporate
purposes;

o require a substantial portion of our cash flow from operations to be
dedicated to the payment of principal and interest on our existing
indebtedness, thereby reducing the availability of any cash flow for
other purposes;

o place us at a relative competitive disadvantage to our less highly
leveraged competitors; or

o make us more vulnerable to economic downturns.

We currently have no credit lines available and must satisfy all of our
working capital and capital expenditure requirements from cash provided by
operating activities, from external capital sources or from the sale of assets.

Our long-term viability, as well as our ability to meet our existing and
future debt and other obligations and future capital commitments, depends on our
financial and operating performance, which is subject to, among other things,
prevailing economic conditions and to certain other financial, business and
other factors beyond our control. We require additional capital or other funding
to finance our operations, as we do not generate sufficient cash from operations
to sustain our operations. If we are unable to attain sufficient funding, we
will not be able to continue to operate. We can not assure that projected sales
will occur and, therefore, that our operating results or other financing
activities will be sufficient to meet debt and other obligations and future
working capital needs.

THE LACK OF A DEVELOPED TRADING MARKET MAY MAKE IT DIFFICULT TO SELL THE
SECURITIES.

Trading of our common stock is conducted on the OTC Bulletin Board.
Trading activity in our common stock has fluctuated and at times been limited.
We cannot guarantee that a consistently active trading market will develop in
the future. A holder of our common stock may find it difficult to dispose of or
to obtain quotations as to the market value of our common stock.

THE MARKET PRICE FOR OUR COMMON STOCK MAY BE VOLATILE.

The market price for our common stock could be subject to significant
fluctuations in response to variations in quarterly operating results,
announcements of technological innovations or new products by us or our
competitors, or our failure to achieve operating results consistent with any
securities analysts' projections of our performance.

The stock market has experienced extreme price and volume fluctuations and
volatility that have particularly affected the market price of many emerging
growth and development stage companies. Such fluctuations and volatility have
often been unrelated or disproportionate to the operating performance of such
companies.

OUR COMMON STOCK IS SUBJECT TO "PENNY STOCK" REGULATIONS AND RESTRICTIONS ON
INITIAL AND SECONDARY BROKER-DEALER SALES.

The Securities and Exchange Commission ("SEC") has adopted regulations
which generally define "penny stock" to be any listed, trading equity security
that has a market price less than $5.00 per share or an exercise price of less
than $5.00 per share, subject to certain exemptions. Penny stocks are subject to
certain additional oversight and regulatory requirements. These requirements may
restrict your ability to sell our common stock.

WE MAY NOT BE ABLE TO ACHIEVE OR SUSTAIN PROFITABILITY.

After 16 years of operations, we have not reported any profits for a full
year of operations and, as of September 30, 2004, we had an accumulated deficit
of $62,264,213. We may not be able to achieve or sustain profitability in the
future, as sales of our ONGOER product have not proven to be sufficient to fund
our operations. As a result, we may incur additional losses and negative cash
flow from operations for the foreseeable future.

IF WE FAIL TO SECURE SUFFICIENT CAPITAL OR FAIL TO CREATE A STRONG MARKETING
SUPPORT TEAM, THEN OUR EFFORTS TO PENETRATE NEW MARKETS COULD FAIL, RESULTING IN
DECREASED CASH FLOW.

Expanding our presence in the audiovisual command and control market will
require capital for further software product development and the creation of new
sales channels. The inability to secure sufficient capital or the failure to
create a strong sales channel/marketing support organization could result in a
failed effort to penetrate these new markets and adversely affect operating
results and cash flow.

WE DEPEND ON PURCHASES FROM A FEW SIGNIFICANT CUSTOMERS AND ANY LOSS,
CANCELLATION, OR REDUCTION OF PURCHASES BY THESE CUSTOMERS COULD HARM OUR
BUSINESS.

We currently sell control software and service previously sold
videoconferencing systems for a small number of major customers. During the year
ended December 31, 2003, approximately 73% of our revenues were from five large
customers. Further, we do not have long-term contracts with these or any of our
other customers, so our customers could stop purchasing our products at any
time. The loss of any of our major customers, or any reduction in purchases by
these customers, could significantly harm our business.

IF WE CANNOT ATTRACT, RETAIN, TRAIN OR MANAGE OUR KEY MANAGEMENT OR TECHNICAL
PERSONNEL EFFECTIVELY, OUR ABILITY TO DEVELOP AND SELL NEW PRODUCTS COULD BE
HINDERED, RESULTING IN A REDUCTION IN SALES.

Our development, management of our growth and other activities depend on
the efforts of key management and technical employees. Competition for such
persons is intense. Because we do not have long-term employment agreements with
our key management personnel or technical employees, we could lose one or more
of our key management or technical personnel, which could result in significant

harm to our business. Our future success is also dependent upon our ability to
effectively attract, retain, train, motivate and manage our employees and
failure to do so could hinder the development and marketing of our products and
result in a reduction in sales and our customers could shift their purchases to
our competitors.

FLUCTUATIONS IN OUR QUARTERLY PERFORMANCE COULD ADVERSELY AFFECT OUR TOTAL
REVENUES AND NET INCOME LEVELS.

Our revenues have historically occurred predominantly in the third month
of each fiscal quarter. Accordingly, our quarterly results of operations are
difficult to predict and delays in the closing of sales near the end of the
quarter could cause quarterly revenues and, to a greater degree, operating and
net income to fall substantially short of anticipated levels. Our total revenues
and net income levels could also be adversely affected by:

o cancellations or delays of orders,
o changes in customer base or product mix,
o seasonal patterns of capital spending by customers,
o delays in purchase decisions due to new product announcements by us
or our competitors and
o increased competition and reductions in average selling prices.

OUR PC-BASED CONTROL SYSTEM IS UNPROVEN TECHNOLOGY AND MAY NOT BE ACCEPTED BY
THE INDUSTRY.

There is no industry standard for the control of AV systems. Generally,
the market is dominated by proprietary, closed-architecture control systems by
manufacturers such as AMX and Crestron. Our open-architecture, PC-based control
system, which we believe is superior and provides greater flexibility for
end-users than the traditional proprietary systems, is a relatively new
technology for the market. Given the relatively short operating history of such
PC-based systems, it is impossible to determine at this time whether or not
PC-based systems will gain wide acceptance in the marketplace. To increase our
sales, we must establish a greater presence in the AV system control market by
convincing AV integrators and IT Managers and ultimately end-users, to utilize a
PC-based control system rather than the traditional proprietary systems. There
can be no assurance that use of PC-based control systems, such as our ONGOERTM,
will be accepted by the industry. If the use of PC-based AV control systems is
not accepted in the marketplace or if another industry standard is adopted, our
projected sales will not materialize, thereby causing potentially poor financial
performance.

WE RELY ON THIRD PARTIES FOR THE SALE OF OUR PRODUCTS.

Sales of our ONGOERTM and OnGuard products are primarily made through
third-party OEMs and AV integrators. Generally, we do not have initial access to
the end-users of AV systems in the marketplace and must, therefore, rely on
third parties for the distribution and sale of our products. We have entered
into dealer agreements with third-party OEM and AV integrators, such as Telaid
and IBM Global Services, for the sale of our products. However, such agreements
are non-exclusive and such third parties may, therefore, also sell products that
directly compete with ours. In addition, such agreements may be terminated at
any time. If our relationships with such third-party OEMs and AV integrators
such as Telaid and IBM Global Services, who combined accounted for 31% of our
revenue in 2003, were terminated, we would have to seek a new distribution
channel for our products, which would potentially have a material adverse effect
on our operations.

WE MAY BE UNABLE TO ACCURATELY EVALUATE OUR BUSINESS AND TO FORECAST OUR
PROSPECTS, WHICH MAY PREVENT US FROM MEETING THE PRODUCT DEMANDS OF OUR
POTENTIAL CUSTOMERS IN A TIMELY MANNER.

It is difficult to forecast our future revenues accurately and to plan
future operating expenses. The revenue and income potential of our products and
business are largely unproven. Although proprietary, closed-architecture AV
control systems have been sold successfully, the PC-based AV control system is
largely unproven. Our ability to license our ONGOER software and achieve success
will depend on, among other things, the level of demand for PC-based control
systems and our capacity to meet demand and performance standards of our
prospective clients.

WE MAY NOT BE ABLE TO MAINTAIN OR IMPROVE OUR COMPETITIVE POSITION BECAUSE WE
FACE INTENSE COMPETITION IN THE AV CONTROL SYSTEM MARKET FROM EXISTING
COMPETITORS WITH FAR GREATER TECHNICAL AND FINANCIAL RESOURCES AND OTHER
COMPANIES MAY ENTER THE MARKETPLACE IN THE FUTURE.

Competition in the command and control and video communications markets is
intense. In the command and control market, our primary competitors are AMX,
Inc. and Crestron Electronics, Inc. We compete with AMX and Crestron on features
such as ease of use, scalability and price. Although we feel that our PC-based
system is superior to the proprietary systems developed by AMX and Crestron in
each of these areas, we do not have the name recognition in the industry that is
currently enjoyed by AMX and Crestron, which may result in fewer sales of our
products. In addition, both AMX and Crestron have greater financial and
personnel resources than we do. Given their market share, resources and
reputation, if either or both of these companies choose to develop a PC-based
control system, it could have a serious adverse effect on our results of
operations. In addition, as use of AV systems becomes more widespread in both
businesses and homes, we expect other competitors, some with significantly
greater technical and financial resources such as Microsoft, to enter the
marketplace. If any such competitors choose to develop their own PC-based
control systems, rather than licensing software from us, it could have a serious
adverse effect on our sales. If we cannot continue to offer new command and
control and videoconferencing products with improved performance and reduced
cost, our competitive position will erode. Moreover, competitive price
reductions may adversely affect our results of operations.

OUR SUCCESS WILL DEPEND IN PART UPON OUR ABILITY TO SAFEGUARD OUR PROPRIETARY
SOFTWARE.

We rely on a combination of patents, copyrights, trade secret laws and
licensing agreements to protect the proprietary software that we have developed
as part of our business. There can be no assurance that these measures taken by
us will provide significant proprietary protection of our intellectual property
or that competitors will not be able to legitimately ascertain proprietary
information embedded in our products which are not covered by such measures. In
such case, we may be precluded from preventing our competitors from making use
of such information.

There are no pending lawsuits or claims against us regarding infringement
of any existing patents, copyrights or other intellectual property rights of
others. There can be no assurance, however, that such infringement claims will
not be asserted in the future, nor can there be any assurance, if such claims
are made, that we will be able to defend such claims successfully or, if
necessary, obtain licenses on reasonable terms. Adverse determinations in any
litigation naming us could subject us to significant liabilities to third
parties, require us to seek licenses from third parties and prevent us from
selling our products. The occurrence of any of these events could have a
material adverse effect on us.

We will also rely on unpatented or copyrighted trade secrets and propriety
know-how. We generally require our employees, consultants, advisors and
prospective partners to enter into confidentiality agreements. There is no
assurance, however, that these agreements will protect any current or future
proprietary information or that others will not gain access to or independently
develop similar trade secrets or know-how. Our competitive position and amount
of potential future income will depend in part upon our ability to obtain and
maintain copyright and other intellectual property protection in various
jurisdictions for proprietary technologies, existing products and products we
may develop in the future.

IF NECESSARY LICENSES OF THIRD-PARTY TECHNOLOGY BECOME UNAVAILABLE TO US OR
BECOME VERY EXPENSIVE, IT COULD ADVERSELY IMPACT OUR BUSINESS.

We currently license technology for use in our ONGOER product and may,
from time to time, be required to license additional technology from third
parties to develop new applications or application enhancements. We cannot
assure you that third-party licenses will be available to us on commercially
reasonable terms, if at all. The inability to obtain any third-party license
required to develop new applications and application enhancements could require
us to obtain substitute technology of lower quality or performance standards or
at greater cost, either of which could have an adverse effect on our business.

OUR SUCCESS WILL DEPEND ON OUR ABILITY TO ADAPT TO RAPID TECHNOLOGICAL CHANGE.

The AV industry typically experiences rapid technological change, changing
market conditions and customer demands and the emergence of new industry
standards and practices that could render our products obsolete. Our future
success will substantially depend on our ability to enhance our products and
services, develop new services and proprietary technology and respond to
technological advances in a timely and cost-effective manner. The development of
additional products and other proprietary information entails significant
technical and business risk. There can be no assurance that we will succeed in
developing and using new technologies or in adapting our technology and systems
to meet emerging industry standards and customer requirements. If we are unable,
for technical, legal, financial, or other reasons, to adapt in a timely manner
in response to changing market conditions or customer requirements, or if our
new products and services do not achieve market acceptance, our business,
financial condition and results of operations would be materially adversely
affected.

FORWARD-LOOKING STATEMENTS

When used in this prospectus, the words or phrases "will likely result,"
"are expected to," "will continue," "is anticipated," "estimate," "projected,"
"intends to" or similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such statements are subject to certain risks and uncertainties,
including but not limited to economic conditions, changes in laws or
regulations, our history of operating losses, demand for our software products
and services, newly developed technologies and software, regulatory matters,
protection of technology, lack of industry standards, our ability to obtain
contracts and licensing sales, the effects of competition and our ability to
obtain additional financing. Such factors, which are discussed in "Risk
Factors," "Business" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the notes to consolidated financial
statements, could affect our financial performance and could cause our actual
results for future periods to differ materially from any opinions or statements
expressed with undue reliance on any such forward-looking statements, which
speak only as of the date made. See "Risk Factors," "Business" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

WHERE YOU CAN FIND MORE INFORMATION

We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. Our SEC filings are
available to the public via the Internet at the SEC's web site at www.sec.gov.
You may also read and copy any document we file at the SEC's public reference
room located at 450 Fifth Street, N.W., Washington, DC 20549. Please call the
SEC at 1-800-SEC-0330 for further information on the public reference room and
their copy charges.

This prospectus is part of a Form SB-2 registration statement that we
filed with the SEC. This prospectus provides you with a general description of
the securities that may be offered for sale, but does not contain all of the
information that is in the registration statement. For more detail, you should
read the entire registration statement and the exhibits filed with the
registration statement. Copies of the registration statement and the exhibits
are on file at the offices of the SEC and may be obtained upon payment of the
fees prescribed by the SEC, or examined without charge at the public reference
facilities of the SEC described above.

You should rely only on the information provided in this prospectus or any
prospectus supplement. We have not authorized anyone to provide you with
different information.

Neither Simtrol nor any selling securityholder is making an offer of the
securities covered by this prospectus in any state where the offer is not
permitted. You should not assume that the information in this prospectus or any
prospectus supplement is accurate as of any date other than the date on the
front of those documents.

Upon request, we will provide without charge a copy of our Annual,
Quarterly and Current Reports we have filed electronically with the SEC.
Requests for such copies should be directed to Simtrol, Inc., 2200 Norcross
Parkway, Suite 255, Norcross, Georgia 30071 (telephone: 770-242-7566).

USE OF PROCEEDS

The selling securityholders will receive all of the net proceeds from the
resale of any of our common shares offered in this prospectus. We will not
receive any of the proceeds from any sale of the shares by the selling
securityholders. We may receive up to $5,030,768 in proceeds from the cash
exercise of the warrants currently outstanding and included in this prospectus
and we intend to use any such cash proceeds received for general corporate
purposes, which may include repaying indebtedness, making additions to our
working capital, funding future acquisitions or for further developing our
products and hiring additional personnel. However, due to current market
conditions and the fact that the exercise prices for most of these warrants are
higher than the current market price for our common stock, it is unlikely that
we will receive any funds from the exercise of these instruments.

MARKET FOR OUR COMMON STOCK
AND RELATED SHAREHOLDER MATTERS

From January 1, 2002 to May 21, 2003, our common stock traded on the OTC
Bulletin Board under the symbol "SMOL." Our common stock traded on the Pink
Sheets under the symbol "SMOL" from May 22, 2003 to May 6, 2004. From May 7,
2004 to June 17, 2004, our common stock traded on the Pink Sheets under the
symbol "SMRL." On June 18, 2004 our common stock began trading on the OTC
Bulletin Board under the symbol "SMRL", where it currently trades.
The following table sets forth the quarterly high and low bid quotations
per share of common stock on the OTC Bulletin Board and the Pink Sheets as
reported for the periods indicated. These prices also represent inter-dealer
quotations without retail mark-ups, markdowns, or commissions and may not
necessarily represent actual transactions.

High Low
2002
First Quarter $1.01 $0.46
Second Quarter $0.66 $0.15
Third Quarter $0.28 $0.08
Fourth Quarter $0.33 $0.08
2003
First Quarter $0.52 $0.20
Second Quarter $0.35 $0.15
Third Quarter $0.40 $0.12
Fourth Quarter $0.42 $0.13
2004
First Quarter $2.50 $0.70
Second Quarter $2.60 $0.40
Third Quarter $3.45 $1.01
Fourth Quarter (through $2.50 $1.01
December 1, 2004)

As of November 1, 2004, there were approximately 563 holders of record of
our common stock.

We have never paid cash dividends on our common stock and have no plans to
pay cash dividends in the foreseeable future. The policy of our Board of
Directors is to retain all available earnings for use in the operation and
expansion of our business. Whether dividends may be paid in the future will
depend upon our earnings, capital requirements, financial condition, prior
rights of any preferred shareholders and other relevant factors.

SELLING SECURITYHOLDERS

The following table sets forth certain information regarding ownership of
our common stock by the selling securityholders as of November 15, 2004,
including their names and the number of shares of common stock beneficially
owned by them and offered pursuant to this prospectus. The selling
securityholders listed in the table do not necessarily intend to sell any of
their shares. We filed the registration statement, which includes this
prospectus, due to the registration rights granted to the selling
securityholders, not because they had expressed an intent to immediately sell
their shares. We may from time to time supplement or amend this prospectus, as
required, to provide other information with respect to the selling
securityholders.

Percentage of
Outstanding
Shares Shares Shares
Beneficially Beneficially Beneficially
Owned Before Shares Offered Transaction Owned After Owned After
Name of Selling Securityholder the Offering Hereby Note No. the Offering the Offering
---------------------------------------- ------------ --------------- ------------ -------------- -------------

W. Cobb Hazelrig 100,000 100,000 (1) 0 *
W & H Investments 200,000 200,000 (1) 0 *
Hazelrig Family Partnership, LLC 100,000 100,000 (1) 0 *
Frederick G. Wedell 100,000 100,000 (1) 0 *
Leonard W. Fuchs 50,000 50,000 (1) 0 *
Meadowbrook Opportunity Fund, LLC 250,000 250,000 (1) 0 *
F & J Partnership 100,000 100,000 (1) 0 *
Grinspan-Ernst Profit Sharing Plan 25,000 25,000 (1) 0 *
James W. Krause 100,000 100,000 (1) 0 *
Joseph J. Jillson 100,000 100,000 (1) 0 *
James R. Echols 100,000 100,000 (1) 0 *
John R. Wright 25,000 25,000 (1) 0 *
Hardin III, LLC 100,000 100,000 (1) 0 *
Thomas Kroeger 25,000 25,000 (1) 0 *
Brad and Suzanne Gibson, Joint Tenants
with Rights of Survivorship 50,000 50,000 (1) 0 *
Herbert Arnold and Leslie Duke, Joint
Tenants with Rights of Survivorship 25,000 25,000 (1) 0 *
Gail Rae Flynn 25,000 25,000 (1) 0 *
IRA FBO Angus Morrison 50,000 50,000 (1) 0 *
J. Wayne Hill IRA 25,000 25,000 (1) 0 *
Allan C. Purdie, IRA 12,500 12,500 (1) 0 *
Evan D. Jennings, III 25,000 25,000 (1) 0 *
John D. Rhodes 25,000 25,000 (1) 0 *
John B. Marsala 25,000 25,000 (1) 0 *
John R. Arnold 12,500 12,500 (1) 0 *
Jeff Lester 12,500 12,500 (1) 0 *
Harvin W. Berryman 12,500 12,500 (1) 0 *
William L. Huntley, III, BC-HIS 25,000 25,000 (1) 0 *
Shannon Battle Irrevocable Trust 50,000 50,000 (1) 0 *
William R. Battle III 50,000 50,000 (1) 0 *
Constantine L. Athanasuleas 25,000 25,000 (1) 0 *
Scott C. Bowman 29,020 29,020 (2) 0 *
AJ Niebauer 7,517 7,517 (2) 0 *

The Chase Family Trust 56,113 56,113 (2) 0 *
Samuel M. Chase, Jr 84,551 84,551 (2) 0 *
Dan Luskind 20,784 20,784 (2) 0 *
Henry Krauss 14,409 14,409 (2) 0 *
Joseph Wolfe 33,480 33,480 (2) 0 *
John P. O'Shea 50,756 50,756 (2) 0 *
Jonathan B.Dangar 58,798 58,798 (2) 0 *
Richard Louise 24,212 24,212 (2) 0 *
Carmen Louise and Richard Louise 3,910 3,910 (2) 0 *
Christina Louise and Richard Louise 3,910 3,910 (2) 0 *
Sandy Purdie 540 540 (2) 0 *
Charles C. Figueiredo 5,000 5,000 (3(a)) 0 *
John E. & Charlotte D. Pitchford 12,500 12,500 (3(a)) 0 *
Alexander Purdie, Jr. 38,342 38,342 (3(a)(c)) 0 *
12,921 12,921 (3(b))
W&H Investments 153,370 153,370 (3(a)(c)) 0 *
51,685 51,685 (3(b))
Thomas Kroeger 38,342 38,342 (3(a)(c)) 0 *
12,921 12,921 (3(b))
James W. Krause 76,684 76,684 (3(a)(c)) 0 *
25,842 25,842 (3(b))
James R. Echols 38,342 38,342 (3(a)(c)) 0 *
12,921 12,921 (3(b))
Leonard W. Fuchs 38,342 38,342 (3(a)(c)) 0 *
12,921 12,921 (3(b))
Mark Krakowski 76,684 76,684 (3(a)(c)) 0 *
25,842 25,842 (3(b))
John P. O'Shea 38,342 38,342 (3(a)(c)) 0 *
12,921 12,921 (3(b))
Deborah Salerno 38,342 38,342 (3(a)(c)) 0 *
12,921 12,921 (3(b))
Herbert Arnold Duke 38,342 38,342 (3(a)(c)) 0 *
12,921 12,921 (3(b))
The Andover Group 44,540 40,590 (3(a)(c)) 13,842 *
28,024 18,132 (3(b))
Glen E. Murer 76,684 76,684 (3(a)(c)) 0 *
25,842 25,842 (3(b))
Judith Phillips 38,342 38,342 (3(a)(c)) 0 *
12,921 12,921 (3(b))
James Wayne & Ruth C. Hill 38,342 38,342 (3(a)(c)) 0 *
12,921 12,921 (3(b))
Dallas Clement 28,052 23,052 (3(a)(c)) 28,905 *
31,681 7,776 (3(b))

Edward S. Redstone 711,566 288,375 (4) 423,191 6.8%
Larry Carr 692,724 288,474 (4) 404,250 6.5%

---------
* Less than 1 percent.

Description of selling securityholders and certain transactions:

(1) SHARES AND SHARES UNDERLYING WARRANTS ISSUED IN PRIVATE PLACEMENT PURSUANT
TO SECTION 4(2)

We are registering 912,500 issued and outstanding shares and 912,500
shares underlying stock purchase warrants on behalf of 30 private investors who
purchased these securities in a private placement we conducted during the second
and third quarters of 2004. The warrants are exercisable for five years at the
price of $2.00 per common share. We received aggregate gross proceeds of
$1,825,000 from this placement.

(2) SHARES ISSUABLE UPON EXERCISE OF WARRANTS FOR PLACEMENT AGENT AND FINANCIAL
ADVISORY SERVICES

We are registering 388,000 shares on behalf of partners, affiliates, and
employees of Westminster Securities, all of which are underlying stock purchase
warrants. The warrants are exercisable during five years at the price of $2.00
per common share. The warrants were issued to Westminster Securities for the
following services:

o 69,000 warrants issued as a placement fee in connection with our
private placement of $575,000 of convertible promissory notes on
February 4, 2004;
o 100,000 warrants issued for financial advisory services provided to
us between January 2004 and August 2004;
o 150,000 warrants issued as a placement fee in connection with a
private placement of common stock on June 4, 2004;
o 37,500 warrants issued as a placement fee in connection with a
private placement of common stock on July 9, 2004; and
o 16,500 warrants issued as a placement fee in connection with a
private placement of common stock on August 31, 2004; and
o 15,000 warrants issued as a placement fee in connection with a
private placement of common stock on September 30, 2004.

Subsequently, Westminster Securities transferred these warrants to those
listed individuals.

(3) SHARES ISSUED PURSUANT TO CONVERTIBLE PROMISSORY NOTES AND SHARES UNDERLYING
WARRANTS

We are registering a total of 1,101,727 shares on behalf of 17 persons who
purchased convertible promissory notes from us in February 2004 with an
aggregate principal balance of $575,000.

(a) 287,500 of these shares underlie warrants issued concurrently to the
holders of the convertible promissory notes at the time of issue.
These warrants are exercisable for five years at the price of $2.00
per common share.

(b) 271,409 of these shares were issued to 17 holders of the convertible
promissory notes, upon the conversion of their notes to shares of
our common stock pursuant to the terms of the notes.

(c) 542,818 of these shares underlie warrants issued to 17 holders of
the convertible promissory notes, upon the conversion of their notes
to shares of our common stock pursuant to the terms of the notes.

(4) SHARES UNDERLYING CONVERTIBLE NOTES AND STOCK PURCHASE WARRANTS

We are registering 192,283 outstanding shares of common stock and 384,566
shares underlying warrants on behalf of two directors who were holders of
convertible promissory notes issued in 2001 with an original aggregate principal
amount of $400,000. These shares and warrants were issued upon the conversion of
these notes and all applicable interest on September 30, 2004.

SHARES ELIGIBLE FOR FUTURE SALE

This prospectus covers 3,891,576 our common stock. As of November 15,
2004, there were 3,712,914 shares issued and outstanding, of which approximately
1,686,945 were freely tradable.

Upon the effectiveness of this registration statement, an additional
1,376,192 shares already issued and 2,515,384 shares underlying warrants will
also be freely tradable.

In addition to our registration statement referenced above, the 649,777
remaining shares of common stock presently outstanding that are restricted
and/or affiliate securities and not included in this prospectus as well as
277,052 shares underlying outstanding warrants and 400,275 shares underlying
outstanding stock options, which, if converted or exercised, as the case may be,
may not presently, but may in the future be sold into any public market that may
exist for the common stock pursuant to Rule 144 promulgated pursuant to the
Securities Act of 1933, as amended (the "Securities Act"). Sales of substantial
amounts of this common stock in the public market could adversely affect the
market price of our common stock.

In general, under Rule 144 as currently in effect, a person (or group of
persons whose shares are aggregated), including our affiliates, can sell within
any three-month period, an amount of restricted securities that does not exceed
the greater of 1% of the total number of outstanding shares of the same class,
or the reported average weekly trading volume during the four calendar weeks
preceding the sale; provided at least one year has elapsed since the restricted
securities being sold were acquired from us or any of our affiliates and
provided further that certain other conditions are also satisfied. If at least
two years have elapsed since the restricted securities were acquired from us or
an affiliate of us, a person who has not been an affiliate of us for at least
three months can sell restricted shares under Rule 144 without regard to any
limitations on the amount. Future sales by current shareholders could depress
the market price of the common stock in the public market.

This prospectus and the registration statement in which it is included
relate to the offer and sale of up to an aggregate of 3,891,576 shares by the
selling securityholders. As used in this prospectus, "selling securityholders"
includes donees, pledgees, transferees or other successors-in-interest selling
shares received after the date of this prospectus from a selling securityholder
as a gift, pledge, partnership distribution or other non-sale related transfer.
The selling securityholders may sell some or all of their shares at any time and
in any of the following ways. They may sell their shares:

o To underwriters who buy the shares for their own account and resell
them in one or more transactions, including negotiated transactions,
at a fixed public offering price or at varying prices determined at
the time of sale. Any public offering price and any discount or
concessions allowed or reallowed or paid to dealers may be changed
from time to time;

o Through brokers, acting as principal or agent, in transactions,
which may involve block transactions, on the Electronic Bulletin
Board, over-the-counter market or on other exchanges on which the
shares are then listed, in special offerings, exchange distributions
pursuant to the rules of the applicable exchanges or in the
over-the-counter market, or otherwise, at market prices prevailing
at the time of sale, at prices related to such prevailing market
prices, at negotiated prices or at fixed prices;

o Directly or through brokers or agents in private sales at negotiated
prices; or

o By any other legally available means.

Selling securityholders may pay part of the proceeds from the sale of
shares in commissions and other compensation to underwriters, dealers, brokers
or agents who participate in the sales.

Certain states may require shares to be sold only through registered or
licensed brokers or dealers. In addition, certain states may require the shares
to be registered or qualified for sale unless an exemption from registration or
qualification is available and complied with.

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The names and ages of our directors and executive officers are as follows:

Name Positions
---- ---------
Richard W. Egan Director, President and Chief Executive Officer
Larry M. Carr Director
Dallas S. Clement Director
Julia B. North Director
Edward S. Redstone Director
Stephen N. Samp Chief Financial Officer and Secretary

RICHARD W. EGAN, age 39, has served as a director and Chief Executive
Officer of the Company since May 2000. Mr. Egan joined the Company in June 1995
and served as National Account Manager until July 1996 when he became Regional
Sales Director. From February 1998 to June 1999, he served as Executive Vice
President of Sales. In June 1999, Mr. Egan was appointed President of the
Company.

STEPHEN N. SAMP, age 40, joined the Company in April 2002 as Chief
Financial Officer and Secretary. From February 2001 until March 2002 he served
as an independent financial consultant. From March 1998 to February 2001 he
served as Vice President, Chief Financial Officer and Secretary of eOn
Communications (NASDAQ:EONC), a provider of unified voice, e-mail and Web-based
communications systems and software.

LARRY M. CARR, age 61, has served as a director since June 1994 and as
Chairman of the Board since January 1998. Mr. Carr founded Nursefinders, Inc., a
temporary services company in the healthcare industry, in 1974. Although Adia
Services, Inc., acquired Mr. Carr's interest in this company, Mr. Carr still
owns and operates numerous Nursefinders franchises and assists in the
administration and management of several other franchises through an entity
known as Management Services, Inc. Mr. Carr is Chairman of the Board of
Northwest National Bank, located in Arlington, Texas, a director of Mobility
Electronics, Inc., of Scottsdale, Arizona, which designs, develops and markets
connectivity and remote peripheral interface technology and products and is a
director of several privately held companies, including OHA Financial, Inc.,
Trinity Airweights, LLC and Computerized Healthcare, Inc.

DALLAS S. CLEMENT, age 39, has served as a director since April 2001. Mr.
Clement has served as Senior Vice President, Strategy and Development for Cox
Communications, Inc. ("Cox") since August 2000. Prior to that, he served as Vice
President and Treasurer of Cox from January 1999 to July 2000. Mr. Clement
joined Cox in 1990 as a Policy Analyst and was promoted to Manager of Investment
Planning in January 1993, Director of Finance in 1994 and Treasurer in 1996.
From April 1995 to December of 1996, Mr. Clement served as Assistant Treasurer
for Cox Enterprises, Inc. and Cox.

JULIA B. NORTH, age 57, has served as a director since October 1997. Ms.
North served as President and Chief Executive Officer of the Company from
October 1997 until June 1999. Ms. North is a director of WinnDixie Stores, Inc.,
a food retailer, MAPICS, Inc., a global developer of extended enterprise
applications and Acuity Brands, Inc., a maker of lighting equipment and
specialty products.

EDWARD S. REDSTONE, age 76, has served as a director since July 1996. Mr.
Redstone has been a private investor since 1994. From 1984 to 1994, he served as
Chairman of the Board of Martha's Vineyard National Bank. Mr. Redstone was a
co-founder of National Amusements, which, among other things, is the controlling
shareholder of Viacom. Mr. Redstone also founded First Bancorporation.

NO FAMILY RELATIONSHIPS AMONG DIRECTORS AND OFFICERS

There are no family relationships between any director or executive
officer of the Company and any other director or executive officer of the
Company.

AUDIT COMMITTEE

The Audit Committee of the Company is composed of Julia B. North, Edward
S. Redstone and Dallas S. Clement. The Audit Committee met once during 2003 and
has met four times during 2004. The Audit Committee's principal functions are to
recommend to the Company the appointment of independent auditors for the
Company, review and approve the annual report of the independent auditors,
approve the annual financial statements and review and approve summary reports
of the auditors' findings and recommendations. The Audit Committee reviews and
pre-approves all audit and non-audit services performed by our auditing
accountants, or other accounting firms, other than as may be allowed by
applicable law. All members of the Audit Committee are independent, as defined
in Rule 4200(a)(15) of the National Association of Securities Dealers' listing
standards. The Board of Directors has determined that Dallas S. Clement is an
"audit committee financial expert," as defined in SEC rules.

EXECUTIVE COMPENSATION

COMPENSATION OF OFFICERS

The following table provides certain summary information for 2003, 2002
and 2001 concerning compensation paid or accrued by us to or on behalf of our
executive officers:

LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------- ------
NAME AND
PRINCIPAL NUMBER OF SHARES
POSITION YEAR SALARY BONUS UNDERLYING OPTIONS
-------- ---- ------ ----- ----------------

Richard W. Egan 2003 $130,000(1) -- 7,500
President and CEO 2002 $130,000(1) -- 6,000
2001 $130,000 $1,250 --

Stephen N. Samp 2003 $115,000(2) -- 3,600
Chief Financial 2002 $ 86,923(2) -- 4,000
Officer

----------
(1) Due to the business conditions of the company, Mr. Egan deferred $35,500
of his 2003 salary and $15,000 of his 2002 salary. The deferred amounts
were paid in 2004.
(2) Due to the business conditions of the company, Mr. Samp deferred $23,861
of his 2003 salary and $4,423 of his 2002 salary. The deferred amounts
were paid in 2004.

DIRECTOR COMPENSATION

We do not presently provide any cash compensation to directors for their
services as directors. Each of our non-employee directors receives an automatic
grant of options to purchase 15,000 shares of our common stock each year under
the terms of our stock option plans. On October 7, 2003, Messrs. Carr and
Redstone were each granted options to purchase an additional 3,500 shares of our
common stock in consideration of their service on the Executive Committee of the
Board of Directors. Each director is reimbursed for travel and other expenses
incurred in connection with the performance of his or her duties.

Additionally, all new non-employee directors receive a one-time grant of
an option to purchase 5,000 shares of our common stock at an exercise price
equal to the fair market value of the stock on the date of the grant. The
options expire, unless previously exercised or terminated, ten years from the
date of the grant.

STOCK OPTION PLANS

1991 Stock Option Plan. In 1991, by action of our Board of Directors, we
adopted the 1991 Stock Option Plan (the "1991 Plan") for our and our
wholly-owned subsidiaries' officers, directors and employees. The 1991 Plan was
approved by our shareholders on October 10, 1991. In July 1992, the 1991 Plan
was amended to, among other things, provide for the automatic grant of options
to our non-employee directors, to increase the number of shares of common stock
available for grant thereunder and to expand the class of persons eligible to
receive options under the 1991 Plan to include employees of our majority-owned
subsidiaries. In November 1993, the 1991 Plan was further amended to expand the
class of persons eligible to receive options under the 1991 Plan and to increase

the number of shares of common stock available for grant thereunder. The 1991
Plan, as amended by our shareholders on May 19, 1998, provides for the grant of
options to purchase up to an aggregate of 366,206 shares of our common stock.
Under the terms of the 1991 Plan, the Stock Option Committee of the Board of
Directors may grant options to purchase shares of common stock to our officers,
directors and employees and to those of our subsidiaries. The right to grant
additional options under this plan expired in August 2001. Therefore, no
additional grants of options will be made under this plan. At December 31, 2003,
options to purchase 64,025 shares of common stock were outstanding under the
1991 Plan.

2002 Stock Option Plan. In June 2002, our shareholders approved the
adoption of the 2002 Stock Option Plan (the "2002 Plan") for our and our wholly
owned subsidiaries' officers, directors, employees and consultants. The 2002
Plan provides for the grant of options to purchase up to an aggregate of 250,000
shares of our common stock. Under the terms of the 2002 Plan, the Stock Option
Committee of the Board of Directors may grant options to purchase shares of
common stock to our officers, directors and employees and to those of our
subsidiaries. At December 31, 2003, options to purchase 73,500 shares of common
stock were outstanding under the 2002 Plan.

The following table provides certain information concerning options granted
during 2003 to our executive officers:

% OF TOTAL OPTIONS
NUMBER OF SECURITIES GRANTED TO
UNDERLYING OPTIONS EMPLOYEES IN EXERCISE OR
NAME GRANTED FISCAL YEAR BASE PRICE EXPIRATION DATE
---- ------- ----------- ---------- ---------------

Richard W. Egan 7,500 27.3% $2.40 June 5, 2013
Stephen N. Samp 3,600 13.1% $2.40 June 5, 2013

The following table provides certain information concerning the value of
unexercised warrants and unexercised options held by our executive officers as
of December 31, 2003. No options or warrants were exercised by either of the
executive officers during 2003:

NUMBER OF UNEXERCISED OPTIONS OR VALUE OF UNEXERCISED IN-THE-MONEY
-------------------------------------- OPTIONS AND WARRANTS AT FISCAL YEAR END
WARRANTS AT FISCAL YEAR END -------------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
------------------------------------- ---------------- ------------------ --------------- -----------------

Richard W. Egan.................... 22,125 12,000 -- --
Stephen N. Samp.................... 1,100 6,500 -- --

The following table provides information as of December 31, 2003 regarding
our compensation plans and arrangements:

EQUITY COMPENSATION PLAN INFORMATION

Number of securities Number of securities
to be issued upon Weighted-average remaining available for
exercise of exercise price of future issuance under equity
outstanding options, outstanding compensation plans
warrants and rights options, warrants (excluding securities
Plan category (a) and rights reflected in column (a))
----------------------------------------- ---------------------- ------------------- ------------------------------

Equity compensation plans approved
by security holders............... 137,525 $13.20 176,500
Equity compensation plans not
approved by security holders...... -- -- --
Total................................. 137,525 $13.20 176,500

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT

The following table sets forth certain information as of November 1, 2004
with respect to ownership of our outstanding common stock by (i) each of our
directors and executive officers, (ii) all of our directors and executive
officers, as a group and (iii) all persons known to us to own beneficially more
than 5% of the outstanding shares of our common stock:

PERCENT OF
SHARES BENEFICIALLY OUTSTANDING
NAME OF BENEFICIAL OWNER OWNED (1) SHARES
--------------------------------------------------------------------------------
Larry M. Carr 692,724 (2) 17.3%
Julia B. North 27,350 (3) *
Edward S. Redstone 711,566 (4) 17.9%
Richard W. Egan 32,900 (5) *
Dallas S. Clement 78,233 (6) 2.1%
A. John Knapp, Jr. 219,477 (7) 5.8%
Stephen N. Samp 4,600 (8) *
Frederick G. Wedell 505,055 (9) 12.6%
Meadowbrook Opportunity Fund, LLC 405,055 (10) 10.2%
W. Cobb Hazelrig 605,055 (11) 14.9%

All directors and executive officers
as a group (6 persons) 1,547,373 35.4%

-----------
* Less than 1% of outstanding shares.

(1) Except as otherwise indicated, each person named in this table possesses
sole voting and investment power with respect to the shares beneficially
owned by such person. "Beneficial ownership," determined in accordance with
Rule 13d-3 of the Securities Exchange Act of 1934, includes shares for
which an individual, directly or indirectly, has or shares voting or
investment power and also includes options which are exercisable within 60
days.

(2) Consists of 392,616 shares held directly, 33,375 shares of common stock
subject to stock options that are exercisable within 60 days, and 250,066
shares of common stock subject to presently exercisable common stock
purchase warrants. Also includes 16,667 shares held in the name of OHA
Financial, of which Mr. Carr serves as Chairman of the Board; Mr. Carr
disclaims beneficial ownership of these shares. Mr. Carr's business address
is 2200 Norcross Parkway, #255, Norcross, Georgia 30071.

(3) Consists of 725 shares held directly and 26,625 options that are
exercisable within 60 days.

(4) Consists of 438,878 shares held directly, 23,125 shares subject to stock
options that are exercisable within 60 days, 249,500 shares issuable upon
the exercise of warrants, and 63 shares owned by Mr. Redstone's spouse. Mr.
Redstone's business address is 222 Merrimack Street, Suite 210, Lowell, MA
01852.

(5) Consists of 5,775 shares held directly, 1,000 shares issuable upon the
exercise of warrants and 26,125 options that are exercisable within 60
days.

(6) Consists of 31,681shares owned directly, 28,052 shares issuable upon
exercise of warrants, and 18,500 shares subject to stock options that are
exercisable within 60 days of October 1, 2004.

(7) Consists of 146,913 shares owned directly. Also includes 28,024 shares
owned by Andover Group, Inc., 44,540 shares issuable upon the exercise of
warrants that are exercisable within 60 days by Andover Group. Mr. Knapp is
Chief Executive Officer and majority shareholder of Andover Group, Inc. Mr.
Knapp's business address is 910 Travis Street, Suite 2205, Houston, TX
77002.

(8) Consists of 4,600 shares of common stock subject to stock options that are
exercisable within 60 days.

(9) Consists of 50,000 shares of common stock held directly and 50,000 shares
of common stock subject to presently exercisable common stock purchase
warrants. Also includes 151,685 common shares and 253,370 shares of common
stock subject to presently exercisable common stock purchase warrants held
in the name of W&H Investment, of which Mr. Wedell is a principal. The
business address of Mr. Wedell is 3940 Montclair Rd., Suite 500,
Birmingham, AL 35213.

(10) Consists of 151,685 shares of common stock and 253,370 shares of common
stock subject to presently exercisable common stock purchase warrants. The
business address of Meadowbrook Opportunity Fund, LLC is 100 Tri-State
International, Suite 260, Lincolnshire, IL 60069.

(11) Consists of 50,000 shares of common stock held directly and 50,000 shares
of common stock subject to presently exercisable common stock purchase
warrants. Also includes 151,685 and 50,000 common shares and 253,370 and
50,000, shares of common stock subject to presently exercisable common
stock purchase warrants held in the name of W&H Investment and Hazelrig
Family Partnership, LLP, respectively, of which Mr. Hazelrig is a
principal. The business address of Mr. Hazelrig is P.O. Box 530444,
Birmingham, AL 35253.

DESCRIPTION OF CAPITAL STOCK

We are currently authorized by our Certificate of Incorporation to issue
an aggregate 40,800,000 shares of capital stock, including 40,000,000 shares of
common stock, $0.001 par value per share of which 3,712,914 were issued and
outstanding as of November 1, 2004 and 800,000 shares of preferred stock,
$0.00025 par value per share of which no shares were outstanding as of November
1, 2004.

COMMON STOCK

The holders of common stock are entitled to one vote for each share held
of record on all matters submitted to a vote of shareholders. Subject to the
rights and preferences of the holders of any outstanding preferred stock, the
holders of common stock are entitled to receive ratably such dividends as are
declared by the Board of Directors out of funds legally available therefor. In
the event of our liquidation, dissolution or winding-up, holders of common stock
have the right to a ratable portion of assets remaining after our payment of all
debts and other liabilities, subject to the liquidation preferences, if any, of
the holders of any outstanding preferred stock. Holders of common stock have
neither preemptive rights nor rights to convert their common stock into any
other securities and are not subject to future calls or assessments by us. There
are no redemption or sinking fund provisions applicable to the common stock. The
rights, preferences and privileges of the holders of common stock may be subject
to and may be adversely affected by, the rights of the holders of shares of
preferred stock that we may designate and issue in the future.

BUSINESS

HISTORY

GENERAL

Originally, we developed and marketed hardware-based videoconferencing and
control systems. However, in 2000, management recognized an increased interest
by computer and computer-related manufacturers to expand their existing
technologies into the AV industry. A number of these manufacturers began to
offer plasma screen televisions, digital projection equipment and other similar
devices. At that time, management believed that this would lead to the
commoditization of other AV control hardware, such as touch panel displays.
Accordingly, in conjunction with the commencement of a contract with Boeing, we
shifted our business strategy to a PC-centric software model, thereby
positioning us as the first to market with a fully integrated software solution.
In April 2001, we released the first version of our ONGOERTM PC-based control
software just as a major trend began taking place: IT professionals were taking
over the management of AV applications. We believe that we are well positioned
to take advantage of this growing trend and can become a popular Windows
application for enterprise users over the next three to seven years. As a result
of our strategic shift, we no longer sell videoconferencing systems directly,
although we still maintain service contracts with certain videoconferencing
customers that we are beginning to leverage into future sales opportunities of
our software products. To date, we have spent approximately $3 million in
research and development for our software product offerings.

Our principal executive offices are located at 2200 Norcross Parkway,
Suite 255, Norcross, Georgia 30071 and our telephone number is (770) 242-7566.

RECENT DEVELOPMENTS

During 2003, we continued our plan to restructure our business around the
sales of our ONGOER PC-based control software. The product was originally
available for sale in April 2001 and represented a departure from our previous
business of selling, installing and servicing our Omega videoconferencing
control systems. We continue to service certain Omega videoconferencing control
systems under maintenance contracts.

Due to the discontinuance of our older Omega product line of
videoconferencing systems and the slower than anticipated increase in sales of
ONGOER, in June 2002 we reduced our headcount by approximately 50% in order to
conserve resources and focus our sales and development efforts with select AV
integrators, firms that specialize in the sale, installation, support and
service of AV equipment and on software licensing opportunities in order to
reduce our cash used from operations. We also moved to significantly smaller
office space in September 2002 to reduce overhead expenses.

These changes were necessary because during the year following the launch
of ONGOER 1.0, we learned that integrators would have to change the way they
sell, design, program, invoice, install and support control system solutions in
order to use our PC-based ONGOER product. Despite obvious benefits of moving to
a PC-based solution, a complete overhaul of internal operations was simply not a
choice integrators were willing to make during an uncertain economic climate.

Despite reduced headcount and a major reduction in expenses, we retained
our top software talent and focused on adding important software features to
enhance our product. During the second half of 2002, success on two important
fronts took place. First, we announced our first licensing agreement with
Polycom, the world's largest videoconferencing company based on revenues. Under
our agreement with Polycom, we license certain ONGOER code for use in Polycom's
PC-based iPower videoconferencing platform. This software, called Meeting Tool
Assistant (MTA), provides Polycom's customers with control capabilities for
three serial devices - a VCR, projector and document camera.

The success of MTA led to an expanded Polycom-Simtrol relationship during
February 2004, when Polycom announced that our ONGOER product could leverage
Polycom's iPower platform to provide seamless, flexible control of a wide
variety of voice, video and peripheral components. This relationship with
Polycom has provided credibility to our software through a proven market leader
and has provided for increased exposure to AV integrators interested in
exploring PC-based solutions.

Second, we have established a strong relationship with Telaid, a
Connecticut-based systems integration and service firm. Together, we have
successfully deployed thirty-one ONGOER units at Morgan Stanley. The Morgan
Stanley account was instrumental in shaping our second software product -
OnGuard monitoring software. Success at Polycom and Telaid has provided us with
increased visibility in the AV integration community, strong reference accounts
and valuable feedback on additional software features that will further enhance
our ONGOER and OnGuard products.

We issued additional convertible notes and private common stock during
2003 to fund our operations, however, we continue to use significant cash in
operations and will require additional debt or equity financing. This additional
financing could be in the form of the sale of assets, the issuance of debt or
equity securities, or a combination of these financing methods. The amount of
such funding that may be required will depend primarily on how quickly sales of
our ONGOER product take place and to what extent we are able to work out our
overdue accounts payables with our various vendors. There can be no assurance
that we will be able to obtain such financing if and when needed, or that if
obtained, such financing will be sufficient or on terms and conditions
acceptable to us. If we are unable to obtain this additional funding, our
business, financial condition and results of operations will be adversely
affected.

As of September 30, 2004, the Company had cash and cash equivalents of
$490,364. The Company may not have sufficient funds for the next twelve months
and has relied on periodic investments in the form of common stock and
convertible debt since the fourth quarter of 2001 to sustain its operations. We
currently require substantial amounts of capital to fund current operations and
for the payment of past due obligations including payroll and other operating
expenses and the continued development and deployment of our ONGOER product
line. There can be no assurance that the Company will be successful in its
attempts to develop and deploy its ONGOER product line, to generate positive
cash flows or raise sufficient capital essential to its survival. To the extent
that the Company is unable to generate or raise the necessary operating capital,
it will become necessary to curtail operations. Additionally, even if the
Company does raise operating capital, there can be no assurance that the net
proceeds will be sufficient to enable it to develop its business to a level
where it will generate profits and positive cash flows. These matters raise
substantial doubt about our ability to continue as a going concern.

PRODUCTS

Our core business is the design, production and sale of our ONGOER device
control software and our OnGuard monitoring software. Together, these software
products allow a PC to manage, control and monitor a wide variety of AV devices.

ONGOER

ONGOER allows end users to operate, as a single system, a broad range of
electronic equipment such as projectors, VCRs, computers, sound systems,
lighting and temperature controls and other audio and video devices in a variety
of settings. This is a significant departure from the products currently
available on the AV control systems market in that it is a software-based system
that can be installed to run on readily available third-party hardware such as
PCs. Major competitors' AV control systems are based on proprietary hardware
components employing code written in proprietary scripting languages. In order
to grow sales and to reach and maintain profitability, management believes that
we can better leverage our technological and service competencies by marketing
and selling ONGOER through third-party resellers and system integrators, by
licensing our software to third parties in the AV market and by entering new
markets for control system technology.

ONGOER can be operated from any PC with the Windows(R) 2000 or Windows(R)
XP operating system. All interfaces, cables and cards and the hardware
controller itself can be purchased from a wide variety of suppliers. With its
unique open architecture, this software delivers real-time control to AV-system
management. ONGOER's software-based technology allows integrators to change
configurations with ease and any device that can connect to a PC can be
controlled with ONGOER.

We have developed OnROAD, ONGOER's remote operations, administration and
diagnostics utility, to facilitate detection and correction of system problems
from any remote location. Integrators no longer have to travel to customers'
locations to fix minor problems. OnROAD allows integrators to diagnose and
repair the vast majority of system conflicts remotely. We provide OnROAD as an
integral part of the base software package and no additional hardware or
software is needed to perform these functions.

The PC controller is the heart of the ONGOER control system. The
flexibility of ONGOER lets integrators choose the controller: anything from a
single-box chassis to a multiprocessor server. There is no need to have an
additional PC or proprietary hardware controller because the PC can handle all
of an AV system's computing needs, as well as any additional software required
for presentations and other applications.

ONGOER not only makes the PC a control platform for numerous third-party
AV devices, but its broad range of connection methods extends the flexibility
further. Users can choose among numerous devices and connect via a number of
different methods.

End-users normally have contact with ONGOER only through the user
interface. ONGOER provides a great deal of flexibility in creating methods for
human interaction with the system. Because it relies on third-party hardware,
integrators can choose to incorporate a wide range of devices as user interfaces
such as inexpensive VGA monitors, sophisticated touch screens, personal digital
assistants like Palm Pilots, IPaqs, Visors and even cellular phones. Graphical
user interfaces can be quickly and easily created with Microsoft(R) Visual
Basic. We also provide our OnLooker product as an integral part of the base
software package. OnLooker includes a library of artwork and customized ActiveX
controls to allow integrators to expedite the user interface development
process.

OnGuard

OnGuard is server-based management and monitoring software. The OnGuard
Server connects via standard TCP/IP networking to a set of ONGOER controllers to
monitor and control devices at remote locations. OnGuard displays information
about device health and status via a standard, web-based browser interface.
Technicians can log in from any place at any time using standard web browsers to
view the entire device control network at a glance.

PROPRIETARY TECHNOLOGY

We regard our ONGOER and OnGuard software as proprietary and have
implemented protective measures of both a legal (copyright) and practical
nature. We derive considerable practical protection by supplying and licensing
only a non-modifiable run-time version to our customers and keeping confidential
all versions that can be modified. By licensing the software rather than
transferring title, we in most cases have been able to incorporate restrictions
in the licensing agreements, which impose limitations on the disclosure and
transferability of the software. No determination has been made as to the legal
or practical enforceability of these restrictions, or the extent of customer
liability for violations.

PRODUCT DEVELOPMENT STRATEGIES

The AV world and the IT world are converging, with more and more devices
becoming network enabled. Like PCs and servers, we believe IT departments will
demand AV products (projectors, audio processors, video codecs, video switchers,
cameras, electronic whiteboards, etc.) be accessible on a corporate network,
where they can be controlled, managed and monitored from centralized and/or
remote locations. ONGOER and OnGuard install on PCs and servers and support a
product architecture that allows them to control, monitor and manage any device
connected to them via the network.

Two major efforts are underway to increase the value of the ONGOER and
OnGuard software products. The first effort involves improving our powerful yet
simple software tool called ONGOER Builder (Builder). Builder guides the user
through a streamlined, three-step process to design and program a control system
and graphical user interface. It provides panels, buttons, labels and image
objects complete with a large graphics library that allows the user to create a
variety of flexible and visually attractive user interfaces. A panel workspace
also enables users to design graphical layouts and a Syntax Assistant enables
the user to select programming functions. Both ONGOER and ONGOER Builder use the
non-proprietary BASIC programming language.

OnGuard version 1.1 features device control panels and improved
programmability and allows user-defined hyperlinks. These features provide
functionality such as custom control panels for remote control of devices,
programming of calendaring programs such as Microsoft Outlook for scheduling
device control and user-defined hyperlinks allow improved control user
interfaces or web-based device documentation.

As the major PC companies add AV products such as plasma displays,
projectors and LCD touch panels, we believe our software is well positioned to
take advantage of the benefits - low price points and broad availability from a
variety of suppliers - of the PC platform versus our competitors' closed,
proprietary line of controllers and touch panels.

MARKETS

Based on the long-term objective of becoming the industry standard
software for controlling and monitoring AV devices, management has developed a
sales and marketing strategy to aggressively pursue relationships at each point
of the distribution channel. The following provides an overview of the AV
distribution channel.

End Users

Businesses, universities and government agencies purchase device control
and monitoring solutions to aid productivity associated with the use of AV
meeting room assets. During 2002 and 2003, we installed our products with a
number of end users, including: Boeing, Lockheed, Morgan Stanley and Merrill
Lynch.

AV and IT System Integrators

Integrators are hired by end users to "integrate" technology to help them
increase productivity and save money. Integrators purchase hardware and software
products from various manufacturers and design, install and service those
solutions for end users. The integrator is typically the entry point into the
end user and, therefore, is a critical relationship for us. These include the
Value Added Reseller ("VAR") 500, the top 500 VARs in the U.S. and AV
integrators. We have successfully developed relationships with a number of
integrators, including Telaid and IBM Global Services. Management considers this
a critical element in the distribution channel and is focusing significant
effort on developing relationships with other integrators.

Equipment OEM Partners

Videoconferencing companies, presentation equipment manufacturers and
signal management firms represent potential alliance partners that could
co-brand or private label our technology into value-add solutions featuring
their products. The goal of alliances is for our partners and us to package
turnkey solutions that make it easier for integrators to deploy at end user
customer sites. Hardware from these companies needs to be controlled by end
users for ease-of-use and monitored by support staff to guarantee the technology
works in the meeting rooms. Providing turnkey solutions straight from the
manufacturer helps the integrator and the end user. The large equipment Original
Equipment Manufacturers ("OEMs") include, for video conferencing: Polycom,
Tandberg, Sony, VCON and VTEL; for presentation equipment: SMART, Polyvision,
Hitachi, 3M and Panasonic; and for signal management: Altinex and Kramer
Electronics. In 2002 and 2003, we established relationships with Polycom and
SMART Technologies, Inc.

OEM relationships also increase our sales leverage in the AV and systems
integrator channels. Each of these OEMs has relationships throughout that
channel, including the VAR 500. As our products are packaged with OEM hardware,
those products are introduced throughout the integrator sales channel, where
they can be added to bids and specification sheets with minimal sales lead time
and expense to us.

PC OEM Partners

Computer manufacturers represent the core platform - the PC and server -
that run our software products. Their products are sold through integrators and
directly to end-users. Computer companies have entered the consumer electronics
business; therefore, providing turnkey control and monitoring software to
integrators could drive additional sales of PCs and servers, plasma monitors and
other PC hardware required for control applications. Potential PC OEM partners
include Dell, Hewlett-Packard, Gateway, IBM and Sony.

Operating System Providers

Because the PC manufacturers are beginning to produce turnkey sets of
products for the AV industry, Microsoft Corporation started working with PC
companies on a Media Center PC, a solution specifically designed for
media-related computers used for applications such as home entertainment. We are
positioning our products as the solution for command, control and monitoring
devices within such an operating system. Management sees this as a long-term
possibility for an additional revenue stream.

COMPETITION

We primarily compete with two companies, both of which have significantly
greater resources and market share. Both companies offer control solutions based
on proprietary hardware and software. We offer control solutions utilizing open
PC technology.

Our two major competitors in the AV control systems market are AMX and
Crestron, who combined currently have close to 100% of the sales in this market.

AMX, headquartered in Richardson, Texas, was established in 1982. This
publicly traded company employs about 400 people, with dealers and distributors
in 40 countries. AMX has a strong foothold in Fortune 500 companies. Typical AMX
applications include control of devices in corporate boardrooms, meeting
facilities, professional sporting arenas, museums, hospital operating rooms,
transportation systems and schools.

Headquartered in Rockleigh, New Jersey, Crestron designs and manufactures
control and automation systems for corporate, industrial, educational and
residential markets.

Both Crestron and AMX offer hardware-based control systems, the cores of
which are proprietary controllers fitted with proprietary cards and connectors
manufactured by or for them and running proprietary operating systems. These
proprietary controllers communicate with controlled devices by means of code
written in proprietary languages (each company has developed its own).
Integrators who re-sell systems from each of these companies must send their
technical personnel to training courses offered by the companies themselves and
by several independent organizations.

Because ONGOER is a software-based control system designed to run on
commodity hardware, we believe we have several advantages over AMX and Crestron.
The PC industry is a vast marketplace with enormous economies of scale. Computer
hardware including touch screens, wireless Smart Displays and serial ports are
extremely powerful and inexpensive. Innovative and wireless network-enabled
devices are regularly introduced into the mass PC market. There are advantages
for end customers in familiarity and cost compared to proprietary,
hardware-based control systems.

Many end customers also strive for a unified collaboration/control
solution, such as the combination of Polycom iPower and Simtrol ONGOER, or the
combination of a SMART Display and Simtrol ONGOER. When the PC is already part
of an AV room, there are even more compelling cost advantages to adding ONGOER
software to the existing PC and existing display.

End customers are also demanding a new breed of proactively monitored
control solutions. Traditional control systems companies are reacting by
introducing PC-like services and interfaces to PCs and innovative PC wireless
Smart Displays. These PC-like services cannot compete in terms of price and
performance with the much larger PC marketplace.

Traditional control systems position themselves to be the central
technology and view the PC as an "important device." We believe the PC is the
central technology and view traditional hardware control boxes as a declining
technology.

RESEARCH AND DEVELOPMENT

Our product engineering, including our costs associated with design and
configuration of fully developed systems for particular customer applications is
accounted for in our financial statements as research and development expenses.
During the year ended December 31, 2003 our expenditures for research and
development of new products or new components for our ONGOER product totaled
$419,361, a decrease of 2% from the total expenditures of $428,810 in 2002. We
decreased our research and development efforts during 2002 due to business
conditions.

EMPLOYEES

As of November 1, 2004, we employed nine persons full time, including two
executive officers. Of the full-time employees who were not executive officers,
four were engaged in research and development, one in service, one in sales, and
one in information systems. Employee relations are considered good and we have
no collective bargaining contracts covering any of our employees.

PROPERTIES

We maintain our executive and sales offices in 6,400 square feet of leased
office and warehouse space in Norcross, Georgia, under a three-year lease, which
expires in August 2005. We moved to this facility from our former facility in
Norcross, Georgia in September 2002. Monthly rent is approximately $4,117
including common area maintenance charges, taxes and insurance.

We believe that our current facilities are adequate for our current
requirements.

LEGAL PROCEEDINGS

We are currently not a party to any legal proceedings.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

We are a Georgia-based software technology company specializing in AV
control. We design, manufacture, market, service and support our ONGOER software
control system, which is designed to run on third-party hardware. Previously,
our core business was the design, manufacture, marketing and servicing of
software based command and control systems, including videoconferencing control
systems, through our wholly owned subsidiary, Videoconferencing Systems, Inc. We
continue to service certain of our videoconferencing customers but have
discontinued selling to this market.

Our command and control solutions allow end users to operate, as a single
system, a broad range of electronic equipment such as projectors, VCRs,
computers, sound systems, lighting and temperature controls and other audiovideo
devices in a variety of settings. A typical customer is a large, multi-site
organization that utilizes sophisticated audio, video and communications network
technologies that require complex command and control solutions. These solutions
can be used in a variety of settings, including corporate meetings and
conferences, distance learning and judicial arraignment systems. These customers
also require superior after-the-sale service. Historically, we have utilized a
direct sales model. However, in order to attempt to grow sales and to reach and
maintain profitability, management believes that we can better leverage our
technological and service competencies by marketing and selling our products
through third party resellers and system integrators, who specialize in the
sale, installation, support and service of audiovisual equipment and by entering
new markets for our control system technology.

During 2000, we undertook a restructuring of our business operations and
balance sheet that are intended to achieve profitable operations and provide
positive operating cash flows. As part of this restructuring, we raised
additional equity capital and paid off debt outstanding at that time. These
restructuring initiatives have enabled us to reposition our product line and to
expand our presence in the AV command and control systems market. This market,
which to some degree overlaps the high-end videoconferencing market historically
served by us, is almost exclusively maintained by thousands of resellers and
system integrators. Our products have been re-engineered such that they may also
be sold through these third party channels. We believe we offer a functionally
superior, lower cost, fully integrated solution which provides command and
control and remote diagnostics for audio, visual and room environment devices
and for network connectivity.

Once established in the AV command and control market, we envision
developing additional applications for other command and control system markets,
including process control applications in manufacturing environments and the
burgeoning home entertainment market, that may involve licensing our control
software to existing OEM vendors, in addition to third-party reseller channels.

CRITICAL ACCOUNTING POLICIES

We prepare our consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America. As
such, we are required to make certain estimates, judgments and assumptions that
we believe are reasonable based upon the information available. These estimates
and assumptions affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the periods presented. The significant accounting policies which
we believe are the most critical to aid in fully understanding and evaluating
our reported financial results include the following:

o Revenue recognition. Revenue consists of the sale of our PC-based device
control software licenses (ONGOER) and maintenance revenue on our older
videoconferencing systems (Omega). We recognize revenue from ONGOER
software sales upon shipment as we sell the product to AV integrators.
Revenue on Omega maintenance contracts is recognized over the term of the
related contract. Revenue on the sale of hardware is recognized upon
shipment.

o Capitalized software research and development costs. Our policy on
capitalized software costs determines the timing of our recognition of
certain development costs. In addition, this policy determines whether the
cost is classified as development expense or capitalized. Software
development costs incurred after technological feasibility has been
established are capitalized and amortized, commencing with product
release, using the greater of the income forecast method or on a
straight-line basis over the useful life of the product. Management is
required to use professional judgment in determining whether development
costs meet the criteria for immediate expense or capitalization.

o Impairments of Assets/Investments. We record impairment losses on assets
and investments when events and circumstances indicate that the assets
might be impaired and the undiscounted cash flows estimated to be
generated by those assets are less than the carrying amount of those
items. Our cash flow estimates are based on historical results adjusted to
reflect our best estimate of future market and operating conditions. The
net carrying value of assets not recoverable is reduced to fair value. Our
estimates of fair value represent our best estimate based on industry
trends and reference to market rates and transactions.

FINANCIAL CONDITION AND LIQUIDITY

General

For the period ended September 30, 2004
---------------------------------------

As of September 30, 2004, we had cash and cash equivalents of $490,364. We
may not have sufficient funds to meet our cash flow requirements for the next
twelve months. We have relied on periodic investments in the form of common
stock and convertible debt by certain of our existing stockholders since the
fourth quarter of 2001 to sustain our operations. We currently require
substantial amounts of capital to fund current operations and for the payment of
past due obligations including payroll and other operating expenses and the
continued development and deployment of our Ongoer product line. Due to
recurring losses from operations, an accumulated deficit, and our inability to
date to obtain sufficient financing to support current and anticipated levels of
operations, the report of our Independent Registered Public Accounting Firm
states that these matters have raised substantial doubt about our ability to
continue as a going concern at December 31, 2003.

We used $1,244,808 in cash from operating activities in the nine months
ended September 30, 2004 compared to $465,460 during the nine months ended
September 30, 2003 due primarily to retirements of various past due obligations
with proceeds from the 2004 Debt in February 2004 and equity securities issued
between June and September 2004. There was no cash used in investing activities
for the nine months ended September 30, 2004 or the nine months ended September
30, 2003. Cash provided by financing activities in the nine months ended
September 30, 2004 consisted primarily of $575,000 of Convertible Debt issued in
February 2004 and $1,830,000 of equity securities issued during the nine months
ended September 2004, excluding issue costs. $70,000 of convertible notes were
repaid with proceeds from the equity securities and the Company's Note Payable
for past due rent of approximately $216,000 was also retired in full for
payments totaling $70,000. Cash provided by financing activities in the nine
months ended September 30, 2003 of $476,310 consisted primarily of $451,200 of
proceeds from the issuance of restricted common stock and $30,000 of convertible
debt. We have relied on a combination of investments of convertible debt and
common stock from private investors, including four members of our Board of
Directors, to fund operations since November 2001.

We will likely require additional funding in the future to fund our
development and operating activities. This additional funding could be in the
form of the sale of assets, debt, equity, or a combination of these financing
methods. However, there can be no assurance that we will be able to obtain such
financing if and when needed, or that if obtained, such financing will be
sufficient or on terms and conditions acceptable to us. If we are unable to
obtain this additional funding, our business, financial condition and results of
operations would be adversely affected. The accompanying financial statements
contemplate our continuation as a going concern. However, we have sustained
substantial losses from operations in recent years, and such losses have
continued through September 30, 2004. We have also used, rather than provided,
cash in our operations for the nine months ended September 30, 2004.

In view of the matters described in the preceding paragraph,
recoverability of a major portion of the recorded asset amounts shown in the
accompanying balance sheet is dependent upon our continued operation, which in
turn is dependent upon our ability to meet our financing requirements on a
continuing basis and attract additional financing. The financial statements do
not include any adjustments relating to the recoverability and classification of
recorded asset amounts or amounts and classification of liabilities that might
be necessary should we be unable to continue in existence.

In response to the matters described in the preceding paragraphs, our
management is currently in the process of attempting to secure additional equity
and debt financing.

We expect to spend less than $25,000 for capital expenditures in the next
twelve months.

For the fiscal year ended December 31, 2003
-------------------------------------------

As of December 31, 2003, we had cash and cash equivalents of $3,998. We do
not have sufficient funds to continue our operations for the next twelve months
and have relied on periodic investments in the form of common stock and
convertible debt by certain of our existing shareholders since the fourth
quarter of 2001. We currently require substantial amounts of capital to fund
current operations and for the payment of past due obligations including payroll
and other operating expenses and the continued development and deployment of our
ONGOER product line. However, there can be no assurance that we will be
successful in our attempts to develop and deploy our ONGOER product line, to
generate positive cash flows or raise sufficient capital essential to our
survival. To the extent that we are unable to generate or raise the necessary
operating capital, it will become necessary to curtail operations. Additionally,
even if we do raise operating capital, there can be no assurance that the net
proceeds will be sufficient to enable us to develop our business to a level
where we will generate profits and positive cash flows.

Due to recurring losses from operations, an accumulated deficit and our
inability to date to obtain sufficient financing to support current and
anticipated levels of operations, the report of our Independent Registered
Public Accounting Firm states that these matters have raised substantial doubt
about our ability to continue as a going concern at December 31, 2003.

t 6 0 We used $597,465 in cash from operating activities in 2003,
primarily due to our loss of $1,645,374, partially offset by debt conversion
expense of $431,599 and depreciation and amortization of $346,917. Cash used in
operating activities in 2002 of $1,314,790 was due mainly to our reduced
operations due to business conditions. Cash used in investing activities
consisted of $0 for 2003 compared to $21,318 used in 2002, which consisted
primarily of leasehold improvements in our newer office space. In order to
continue funding operations of the company during 2003, we sold 282,573 shares
of our common stock for proceeds of $603,700 in private placements to individual
investors including three members of our Board of Directors. The share prices
ranged from $1.52 to $3.58 per share. Offering costs for these transactions were
de minimis.

We issued $30,000 of convertible debt ("2003 Debt") to two of our
directors during the year ended December 31, 2003. The 2003 Debt accrued
interest at prime plus 1%. The principal and interest amounts were converted
into 12,842 shares ($2.40 per share) of restricted common stock on July 22,
2003.

We also issued an aggregate of $760,000 of convertible debt ("2002 Debt")
to numerous private investors, including four members of the Board of Directors,
at various times during the year ended December 31, 2002. The 2002 Debt accrued
interest at prime rate plus 1% and was due on December 31, 2002. In conjunction
with the issuance of the 2002 Debt, we issued 75,000 common stock purchase
warrants to the holders of the 2002 Debt. The 2002 Debt was convertible
immediately into restricted shares of our common stock at prices originally
ranging from $4.70 to $7.90 per share, which represented the market prices of
the our traded common stock on the date of the issuances of the 2002 Debt. The
warrants, which expire at various dates in 2006, are exercisable immediately at
prices ranging from $4.70 to $7.90 per share, the market price of our traded
common stock on the day the warrants were issued. Each warrant entitles the
holder to purchase one common share of our restricted common stock.

On December 31, 2002, we extended the 2002 Debt to January 31, 2003 and as
an inducement to convert, we reduced the conversion price of the debt to $2.40
per share and the warrants granted at the origination dates of the notes also
had their exercise prices adjusted to $2.40. As a result, we recognized
approximately $58,000 as finance charges over the remaining terms of the notes
to reflect the lowering of the warrant exercise price at December 31, 2002.

In January 2003, $735,000 of the convertible debt plus accrued interest
was converted to 320,408 shares of restricted common stock. Pursuant to
Statement of Financial Accounting Standard No. 84 "Induced Conversion of
Convertible Debt", a debt conversion expense of $431,599 was recorded to reflect
the fair value of the additional shares that resulted from lowering the
conversion price to $2.40.

In connection with the issuance of the 2002 Debt, $151,352 of the debt
proceeds was allocated to the fair value of the warrants and $64,993 of the
proceeds was allocated to beneficial conversion factor of the notes. These debt
discounts were amortized as financing costs in 2002.

During 2001, we issued $400,000 of convertible debt to two shareholders
("2001 Debt"). The 2001 Debt accrues interest at prime rate plus 1% (6.5% at the
time), was originally due February 7, 2002 and is collateralized by all of our
assets. The 2001 Debt was originally convertible into shares of our common stock
at $4.90 per share. In conjunction with the issuance of the convertible debt, we
issued 40,000 common stock purchase warrants to the holders of the 2001 Debt.
The warrants, which expire at various dates in 2006, are exercisable immediately
and entitle the holder to purchase one common share of our common stock at
prices ranging from $4.60 to $5.30 per share. Also, the agreement called for the
issuance of additional warrants to the debt holders for each 60 day extension
period on the debt as follows: 10,000 warrants to each debt holder for the first
60 day extension and 6,000 warrants to each debt holder at the date of each
subsequent 60 day extension. On February 7, 2002, the debt holders granted a
60-day extension and as a result, we issued an additional 10,000 warrants, which
entitle the debt holders to each purchase 10,000 shares of our common stock at
$4.90 per share. In conjunction with the issuance of 10,000 warrants to the
shareholders on February 7, 2002, $88,254 was estimated as the fair value of the
warrants and was expensed over the extended life of the note as the shareholders
agreed to extend the due date of the loans until December 31, 2002 and no
additional warrants were granted.

In connection with the issuance of the convertible debt during 2001,
$120,977 of the debt proceeds was allocated to capital stock to recognize the
beneficial conversion feature of the debentures. This debt discount is to be
amortized to financing costs over the term of the debt. For the year ended
December 31, 2002, $65,564 was expensed as financing costs relating to the
amortization of the beneficial conversion feature.

On December 31, 2002 we extended the due date of the 2001 Notes until
January 31, 2003 and as an inducement to convert, the conversion price was
reduced to $2.40 per share. On January 31, 2003, we extended the due date until
December 31, 2003. At January 31, 2003 we recorded a beneficial conversion
feature in the amount of $229,284, to reflect the fair value of the additional
shares that may be issued from lowering the conversion price. The beneficial
conversion feature accreted to interest expense over the extended life of the
2001 Debt. During 2003, we amortized all these amounts as finance charges.

During 2003, our total assets decreased approximately 63% to $229,299 from
$611,651 at December 31, 2002. Decreases in capitalized software development
costs and equipment accounted for most of the decrease. Capitalized software
decreased $277,624 during the year due to amortization of cost capitalized prior
to March 2001 for ONGOER, at which time we began shipping our ONGOER product to
customers. Property and equipment, net, also decreased $69,293 due to current
year depreciation. Current liabilities decreased $784,331 in 2003, or 27%,
principally due to conversion of $735,000 in convertible notes that were
outstanding at December 31, 2002.

We expect to spend less than $10,000 on capital expenditures in 2004.

RESULTS OF OPERATIONS

Comparison of the Nine Months Ended September 30, 2004 and 2003

Revenues

Revenues were $518,347 and $421,887 for the nine months ended September
30, 2004 and 2003, respectively. The 23% increase for the nine months ended
September 30, 2004 was due primarily to an increase in software revenues of
$293,196, including an approximate $364,000 multi-site sale to an integrator for
implementation at one end user. Partly offsetting the software revenue increase
was a reduction in service revenues of $196,736 associated with our older Omega
product line as additional customers discontinued their service contracts at the
end of multi-year contracts during 2003 and 2004.

Cost of Revenues and Gross Profit

Cost of revenues decreased $206,797, or 72%, for the nine months ended
September 30, 2004 compared to the nine months ended September 30, 2003 due
primarily to the discontinuance of the amortization of previously capitalized
software development costs in March 2004 as well as the lower service revenues
during the current period as subcontractors were used to service international
customers that have since discontinued service contracts.

Gross margins were approximately 84% and 32% for the nine months ended
September 30, 2004 and 2003, respectively. The increase from the prior year was
due primarily to the higher software revenues during the current year as well as
the periodic charge for amortization of capitalized software development costs
being larger in the prior year as all capitalized software costs were amortized
as of March 31, 2004.

Selling, General, and Administrative Expenses

Selling, general and administrative expenses were $723,627 and $470,516
for the nine months ended September 30, 2004 and 2003, respectively. The
increase in the nine-month period ended September 30, 2004 compared to the
similar period in 2003 resulted primarily from accounting and auditing expenses
of approximately $115,000 incurred during 2004, and approximately $60,000 of
non-refundable investment banking fees. We filed all required SEC filings for
2003 during the quarter ended March 31, 2004 and engaged Westminster Securities
to assist in raising capital during the current year.

Research and Development Expenses

We charge research and development costs to expense as incurred until t 6
0 technological feasibility of a software product has been established. Software
development costs incurred after technological feasibility has been established
are capitalized and amortized, using the greater of the income forecast method
or on a straight-line basis over the useful life of the product. Capitalized
development costs expensed as cost of revenues were $69,406 and $208,218 for the
nine months ended September 30, 2004 and 2003, respectively, as we began to
expense previously capitalized research and development costs to cost of
revenues and ended amortization in March 2004. Research and development expenses
increased to $329,463 in the nine months ended September 30, 2004 from $311,218
in the nine months ended September 30, 2003 due primarily to higher wage and
employee benefit expenses during the current period.

Other expense, primarily finance charges

Other expense, primarily finance charges of $467,794 for the nine months
ended September 30, 2004 consisted primarily of finance charges associated with
our issuance of convertible debt during previous fiscal years as well as
February 2004. A majority of our 2002 Debt was converted to restricted common
stock in January 2003. Other expense, primarily finance charges of $214,118 in
the nine months ended September 30, 2003 consisted primarily of the amortization
of the warrant value and the beneficial conversion feature of the convertible
debt issued between the fourth quarter 2001 and the nine months ended September
30, 2003. See notes 5 and 6 to the condensed consolidated financial statements.

Debt Conversion Expense

A debt conversion expense of $164,155 was recorded at the time of the
conversion of the 2004 Debt to reflect the fair value of additional warrants
granted upon the conversion of a majority of the Debt to common stock in June
2004. See note 5. A debt conversion expense of $81,488 was recorded at the time
of the conversion of the 2001 Debt to reflect the fair value of additional
warrants granted upon the conversion of the Debt to common stock in September
2004. See note 5.

A debt conversion expense of $431,599 was recorded during the nine months
ended September 30, 2003 to reflect the fair value of the additional shares
issued to convertible debt holders who extended their notes originally due on
December 31, 2002 in exchange for a reduction of the conversion price of the
debt.

Gain on Debt Extinguishments

A gain of $716,299 was recorded during the nine months ended September 30,
2004 to reflect the payoffs of various liabilities for less than their
previously recorded balances. No similar debt extinguishments took place during
the nine months ended September 30, 2003.

Net Loss

Net loss for the nine months ended September 30, 2004 was $612,832
compared to a net loss of $1,293,312 for the nine months ended September 30,
2003. The decrease in net loss was due primarily to increased gross profit in
the amount of $303,257 that resulted from increased software sales as well as
the gain on debt extinguishments of $716,299 in the current year to reflect the
retirement of liabilities for less than their recorded values. These increases
were offset by an increase in operating expenses of $271,356 and a net increase
in finance charges and debt conversion expense of $67,720.

For fiscal years 2003 and 2002
------------------------------

Revenues

Revenues were $504,881 and $1,294,015 in 2003 and 2002, respectively. The
decrease in revenues of 61% from 2002 to 2003 was primarily due to the decrease
in Omega maintenance revenue as former customers have either replaced these
older systems with newer equipment or declined maintenance contracts due to
budgetary considerations. The decline in ONGOER revenues during 2003 was due
mainly to the decrease in orders from our largest ONGOER customer (an
integrator), whose orders fell due to the business conditions of their customer.
During September 2002, our largest customer for our older Omega line
discontinued maintenance, resulting in an annual decrease of more than $400,000
in revenues. Due to our small customer base, we face the risk of fluctuating
revenues should any of our customers discontinue using our products. See Note 8
to our consolidated financial statements.

Gross Profit

Gross profit as a percentage of revenues was approximately 28% t 6 0 and
10% in 2003 and 2002, respectively. The increase in gross margin in 2003 as
compared to 2002 was due primarily to the write-off of the remainder of our
inventory due to obsolescence in 2002. See "Inventory Obsolescence Charge"
below. The gross loss attributable to software license revenues in 2003 is due
to the amortization of capitalized software development costs exceeding revenues
for the year.

Inventory Obsolescence Charge

In the fourth quarter of 2002, we wrote off our remaining inventory of
$296,593 because we determined that the inventory was obsolete due to the
non-renewal of most of the Omega maintenance contracts.

Selling, General & Administrative Expenses

Selling, general and administrative expenses were $647,984 and $1,584,178
for 2003 and 2002, respectively. The 59% decrease from 2002 to 2003 resulted
primarily from decreases in personnel of approximately 50% in June 2002 and our
move to a significantly smaller headquarters in September 2002, as well as
curtailing marketing activities due to business conditions.

Research and Development Expenses

We charge research and development costs to expense as incurred until
technological feasibility of a software product has been established. Software
development costs incurred after technological feasibility has been established
are capitalized and amortized, commencing with product release, using the
greater of the income forecast method or on a straight-line basis over the
useful life of the product. These expensed costs were $419,361 and $428,810 for
2003 and 2002, respectively.

Other Expense, Primarily Finance Charges

Other expense, primarily finance charges were $287,798 and $557,675 for
2003 and 2002, respectively. The decrease from 2002 to 2003 consisted primarily
of finance charges associated with our issuance of convertible debt during the
fourth quarter of 2001 and the first two quarters of 2002. In extending
convertible debt that originally came due on December 31, 2002, we recorded a
new beneficial conversion feature of $229,284 and an increase in the value of
the warrants issued in the amount of $58,460 as a result of lowering the
exercise price of outstanding warrants to $2.40. These amounts were expensed
during 2003 as finance charges. See note 5 to our financial statements.

Loss Before Extraordinary Gain

Loss before extraordinary gains were $1,645,374 and $2,438,702 for 2003
and 2002, respectively. The decreased loss in 2003 was primarily due to our
lower operating expenses that resulted from our reductions in personnel during
2002 and our move to a smaller headquarters space.

Extraordinary Gain on Debt Extinguishments

Extraordinary gains in 2002 of $148,915 were due to debt extinguishments
of $84,350 related to our inactive subsidiary, Integrated Network Services, Inc.
and the $64,565 reduction of accounts payable to Glovicom, N.V., resulting from
the exchange of our warrant to purchase 19% of Glovicom for this amount in the
second quarter 2002.

Net Loss

Our net loss for 2003 was $1,645,374, or $0.76 per share, compared to our
net loss for 2002 of $2,289,787, or $1.42 per share. The decreased net loss for
2003 was due primarily to the lower operating expenses incurred during the
current year as a result of decreased personnel and reduced overhead expenses.

OFF BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements.

RELATED PARTY TRANSACTIONS

On September 30, 2004, two of our directors, Larry Carr and Edward
Redstone, each converted their $200,000 convertible notes originated in 2001 and
all applicable interest into 96,158 and 96,125 shares of common stock,
respectively. At the same time, Messrs. Carr and Redstone were granted warrants
to purchase 192,316 and 192,250 shares of common stock at exercise prices of
$2.00 per share.

During 2003, we issued $30,000 of debt to Messrs. Carr and Redstone at
prime rate plus 1% (then 5.25%), with a due date of December 31, 2003. All the
outstanding principal and accrued interest on the notes was converted to 12,842
shares of restricted common stock in July 2003 at a conversion price of $2.40
per share.

During 2002, we issued $272,500 of convertible debt to each of Messrs.
Carr and Redstone. The debt accrues interest at prime rate plus 1% and was
originally due December 31, 2002. The proceeds of this debt were utilized for
working capital purposes. The debt was convertible into shares of our common
stock at prices ranging from $4.70 to $7.90 per share. In conjunction with the
issuance of the convertible debt, we issued 27,250 common stock purchase
warrants to the holders of the debt. The warrants, which expire at various dates
in 2007, are exercisable immediately and entitle the holder to purchase one
share of our common stock at prices ranging from $4.70 to $7.90 per share. We
received an extension to January 31, 2003 on the note effective December 31,
2002. At that time, the conversion price of the note and the exercise prices of
the warrants were changed to $2.40 per share. Messrs. Carr and Redstone
converted their notes and all accrued interest into an aggregate of 237,176
shares of restricted common stock on January 15, 2003.

On December 31, 2002, Messrs. Carr and Redstone agreed to extend the due
dates of their $200,000 convertible notes originated in 2001 to January 31, 2003
and then to December 31, 2003, from the original due dates of December 31, 2002.
The conversion price of the notes was adjusted from their original $4.90 per
share price to $2.40 per share. The notes had been previously extended from
their original due dates of February 7, 2002 in exchange for the issuance of
10,000 additional warrants each on that date. The exercise price of all warrants
issued in conjunction with these notes was adjusted to $2.40 per share on
December 31, 2002 in exchange for the extension of the due date. These notes are
collateralized by all of our assets.

LEGAL MATTERS

Certain legal matters in connection with the shares of common stock
offered hereby have been passed upon for Simtrol by Smith, Gambrell & Russell,
LLP, Atlanta, Georgia, counsel to Simtrol.

EXPERTS

The consolidated financial statements of Simtrol, Inc. and Subsidiaries
as of and for the year ended December 31, 2003 included in this document have
been audited by Marcum & Kliegman LLP, independent registered public
accountants, as set forth in their report thereon and included in this document.
The financial statements of Simtrol, Inc. and Subsidiaries for the year ended
December 31, 2002 included in this document have been audited by Grant Thornton
LLP, independent registered public accountants. Such consolidated financial
statements referred to above are included herein.

FINANCIAL STATEMENTS

Condensed Consolidated Financial Statements for the Nine Months Ended
September 30, 2004 (unaudited)..............................................F-2

Reports of Independent Registered Public Accounting Firms...................F-10

Consolidated Balance Sheet as of December 31, 2003..........................F-12

Consolidated Statements of Operations for Years Ended December 31, 2003
and 2002....................................................................F-14

Consolidated Statements of Shareholders' Deficiency for Years Ended
December 31, 2003 and 2002..................................................F-15

Consolidated Statements of Cash Flows for Years Ended December 31, 2003
and 2002....................................................................F-16

Notes to Consolidated Financial Statements..................................F-17

F-1

SIMTROL, INC.
PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SIMTROL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)

ASSETS September 30,
Current assets: 2004
------------
Cash and cash equivalents $ 490,364
Accounts receivable, net 264,987
------------
Total current assets 755,351

Property and equipment, net 51,700

Other assets:
Other long-term assets 11,187
------------
Total assets $ 818,238
============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt and short-term
borrowings $ 6,090
Accounts payable 146,221
Accrued expenses 77,000
Deferred revenue 29,167
------------
Total current liabilities 258,478

Commitments and contingencies

Stockholders' equity:
Preferred stock, $.00025 par value; authorized
800,000 shares, none issued and outstanding --
Common stock, authorized 40,000,000 shares of
$.001 par value; 3,712,914 shares issued and
outstanding 3,713
Additional paid-in capital 62,820,260
Accumulated deficit (62,264,213)
------------
Total stockholders' equity 559,760
------------
Total liabilities and stockholders' equity $ 818,238
============

See notes to condensed consolidated financial statements.

F-2

SIMTROL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------
2004 2003
----------- -----------

Revenues:
Software licenses $ 451,274 $ 158,078
Service 67,073 263,809
----------- -----------
Total revenues 518,347 421,887
Cost of revenues
Software licenses 78,882 216,791
Service 2,069 70,957
----------- -----------
Total cost of revenues 80,951 287,748
----------- -----------
Gross profit 437,396 134,139

Operating expenses:
Selling, general, and administrative 723,627 470,516
Research and development 329,463 311,218
----------- -----------
Total operating expenses 1,053,090 781,734

Loss from operations (615,694) (647,595)

Other (income)/expenses:
Other expense, primarily finance charges (467,794) (214,118)
Debt conversion expense (245,643) (431,599)
Gain on debt extinguishments 716,299 --
----------- -----------
Total other (income)/expenses 2,862 (645,717)
----------- -----------

Net loss $ (612,832) $(1,293,312)
=========== ===========

Net loss per common share, basic and diluted $ (0. 23) $ (0.61)
=========== ===========

Weighted shares outstanding, basic and diluted 2,683,799 2,123,074
=========== ===========

See notes to condensed consolidated financial statements.

F-3

SIMTROL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------
2004 2003
----------- -----------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash used in operating activities $(1,244,808) $ (465,460)
----------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Net cash used in investing activities -- --
----------- -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on short-term credit facilities (162,303) (4,890)
Payments on long-term debt (59,792) --
Payments of convertible debt (70,000) --
Proceeds from convertible debt 479,000 30,000
Net proceeds from stock issuances 1,544,269 451,200
----------- -----------
Net cash provided by financing activities 1,731,174 476,310
----------- -----------

Increase in cash and cash equivalents 486,366 10,850
Cash and cash equivalents, beginning of the period 3,998 1,307
----------- -----------
Cash and cash equivalents, end of the period $ 490,364 $ 12,157
=========== ===========

Supplemental schedule of non-cash investing and financing activities:
Conversion of debt and accrued interest to common stock $ 1,004,304 $ 798,882
----------- -----------

See notes to condensed consolidated financial statements.

F-4

SIMTROL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003

NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION

Simtrol, Inc., formerly known as VSI Enterprises, Inc., was incorporated in
Delaware in September 1988 and, together with its wholly-owned subsidiaries (the
"Company"), develops, markets, and supports software-based audiovisual control
systems and videoconferencing products that operate on PC platforms.

The accompanying unaudited condensed consolidated financial statements have been
prepared by the Company in conformity with accounting principles generally
accepted in the United States of America for interim financial statements and
Item 310 of Regulation S-B. Accordingly, these financial statement do not
include all the information and footnotes required by accounting principles
generally accepted in the United States of America for annual financial
statements. It is management's opinion that these statements include all
adjustments, consisting of only normal recurring adjustments, necessary to make
the financial position of the Company at September 30, 2004 and its results of
operations and cash flows for the nine months then ended not misleading.
Operating results for the nine months ended September 30, 2004 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2004.

Certain information and footnote disclosures normally included in the annual
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted. It is
suggested that these condensed consolidated financial statements be read in
conjunction with the consolidated financial statements and notes thereto as of
December 31, 2003 and for each of the two years ended December 31, 2003, which
are included elsewhere in this document.

On May 7, 2004, the Company effected a 1:10 reverse split of the Company's
common stock. All share amounts have been adjusted to reflect the 1:10 reverse
split for all periods presented.

NOTE 2 - GOING CONCERN UNCERTAINTY

As of September 30, 2004, the Company had cash and cash equivalents of $490,364.
The Company may not have sufficient funds for the next twelve months and has
relied on periodic investments in the form of common stock and convertible debt
since the fourth quarter of 2001 to sustain its operations. The Company
currently requires substantial amounts of capital to fund current operations and
for the payment of past due obligations including operating expenses and the
continued development and deployment of its Ongoer product line. During the nine
months ended September 30, 2004 the Company issued $575,000 of convertible debt
(see Note 5) and sold 915,104 shares of its common stock for an aggregate
purchase price of $1,830,000 in gross proceeds (see note 6). However, there can
be no assurance that the Company will be successful in its attempts to develop
and deploy its Ongoer product line, to generate positive cash flows or raise
sufficient capital essential to its survival. To the extent that the Company is
unable to generate or raise the necessary operating capital, it will become
necessary to curtail operations. Additionally, even if the Company does raise
operating capital, there can be no assurance that the net proceeds will be
sufficient to enable it to develop its business to a level where it will
generate profits and positive cash flows.

F-5

These matters raise substantial doubt about the Company's ability to continue as
a going concern. However, the accompanying financial statements have been
prepared on a going concern basis, which contemplate the realization of assets
and satisfaction of liabilities in the normal course of business. The financial
statements do not include any adjustments relating to the recoverability of the
recorded assets or the classification of the liabilities that might be necessary
should the Company be unable to continue as a going concern.

NOTE 3 - SELECTED SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All significant intercompany
transactions and balances have been eliminated in consolidation.

Loss Per Share

Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per
Share", requires the presentation of basic and diluted earnings per share
("EPS"). Basic EPS is computed by dividing loss available to common stockholders
by the weighted-average number of common shares outstanding for the period.
Diluted EPS includes the potential dilution that could occur if options or other
contracts to issue common stock were exercised or converted. The following
equity securities are not reflected in diluted loss per share because their
effects would be anti-dilutive:

September 30, 2004 September 30, 2003
------------------ -------------------
Options 400,275 124,525
Warrants 2,792,436 306,871
Convertible Debt -- 202,403
--------- ---------
Total 3,192,711 633,799
--------- ---------

Accordingly, basic and diluted loss per share are identical.

Stock-Based Compensation

SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and
Disclosure-an amendment of FASB Statement No. 123" amends SFAS No. 123,
"Accounting for Stock-Based Compensation", to provide alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation. In addition, this Statement amends the
disclosure requirements of SFAS No. 123 to require prominent disclosures in both
annual and interim financial statements about the method of accounting for
stock-based compensation and the effect of the method used on reported results.
The Company continues to follow the pro-forma disclosures for stock-based
compensation as permitted in SFAS No. 123. The following table illustrates the
effect on net loss per share if the Company had applied the fair value
recognition provisions of SFAS No. 123 to stock-based employee compensation:

Nine Months Ended
September 30,
--------------------------
2004 2003
--------------------------

Net loss as reported ($ 612,832) ($1,293,312)

Add: stock-based employee compensation expense
determined under the intrinsic value method -- --
Less: stock-based employee compensation expense
determined under fair value-based methods for all
awards (144,553) (130,257)
--------------------------
Pro forma net loss ($ 757,385) ($1,423,569)
==========================

Net loss per share, as reported ($0.23) ($0.61)
Pro forma net loss per share- Basic and diluted ($0.28) ($0.67)

F-6

Revenue Recognition

Revenue consists of the sale of software control devices, videoconferencing
systems and related maintenance contracts on these systems. The Company sold two
different products during the presented periods: its PC-based software product,
Ongoer, and its older proprietary hardware and software product, Omega. Revenue
from the sale of hardware is recognized upon the transfer of title when shipped.
The Company recognizes revenue from Ongoer software sales upon shipment as the
Company sells the product to audiovisual integrators. Revenue on maintenance
contracts for Omega systems is recognized over the term of the related contract
resulting in $29,167 of deferred revenue at September 30, 2004.

NOTE 4 - COMMITMENTS AND CONTINGENCIES

The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's financial position or results of operations.

On May 1, 2003, Citibank (West), FSB, filed suit in San Diego Superior Court,
North County Division, against one of the Company's subsidiaries, Quality
Software Associates, Inc. ("QSA"), and Mark Scovel, the individual from whom we
acquired QSA in March 2001. On June 24, 2003, Mr. Scovel filed a cross-complaint
against QSA and Simtrol, Inc. claiming that Simtrol had assumed the debt in
connection with its acquisition of QSA. In April 2004, the Company and QSA
settled its pending lawsuit with Citibank (West) and Mr. Scovel. The aggregate
claims paid in the settlement were approximately $46,000.

NOTE 5 - CONVERTIBLE DEBT

On February 4, 2004, the Company completed the sale of convertible notes with a
principal balance of $575,000 ("2004 Debt"), in a private placement to a limited
number of accredited investors, including one Board member who purchased
$15,000. The interest rate of the notes is 10% and the conversion price of the
notes is $2.00 per share for all principal and accrued interest. The due date of
the notes was August 4, 2004 and the notes were convertible to shares of common
stock at any time before that date.

The Company also issued warrants to the noteholders to purchase an aggregate of
287,500 shares of common stock with an exercise price of $2.00 per share. Each
warrant enables the holder to purchase the same number of shares as the holder
would receive upon conversion of such holder's notes. In conjunction with the
issuance of the 2004 Debt, the Company issued 169,000 warrants to Westminster
Securities as a placement fee for the financing. Noteholders received additional
warrants to purchase an aggregate of 575,000 shares of stock. Each warrant
entitles the holder to purchase two shares of common stock for each share the
holder would receive upon conversion of such holder's notes, but the warrants

F-7

may only be exercised in the event a holder actually elects to convert his or
her notes into the Company's common stock. The exercise price of the warrants is
$2.00 per share of common stock.

Offering costs totaled $96,000 and the proceeds of the offering were used to
fund current operational and overhead expenses.

In connection with the issuance of the 2004 Debt, $91,202 and $179,789 of the
proceeds was allocated to the fair value of the warrants granted to purchase
287,500 and 575,000 shares of stock, respectively, and a beneficial conversion
feature of $127,242 was recorded to reflect the discount on the 2004 Debt based
on the relative fair values of the warrants and conversion feature of the 2004
Debt. These debt discounts were amortized to financing costs over the term of
the 2004 Debt, except for the $179,789 attributed to the 575,000 warrants that
could be exercised in the event of a conversion of the 2004 Debt. In June 2004,
$525,000 of the 2004 Debt was converted into 271,409 shares of common stock. As
a result, the Company recorded $164,155 of warrant value as debt conversion
expense. For the nine months ended September 30, 2004, $219,144 was expensed as
financing costs relating to the amortization of the beneficial conversion
feature and warrant value. Additionally, $101,400 was capitalized as a financing
fee for the warrants granted to Westminster Securities and this amount was
amortized over the life of the 2004 Debt. Approximately $33,800 of this amount
was amortized as a financing expense prior to conversion and the remaining
$67,600 was expensed at the conversion date.

In January 2004, the 2001 Debt was extended to December 31, 2004 and the debt
holders agreed to convert all principal and interest to common stock at the
close of the private placement of equity securities. Additionally, the Company
agreed to issue the debt holders warrants to purchase two shares of stock for
each share of stock created by conversion of the 2001 Debt, contingent upon the
conversion of the principal note and interest to common stock. All the principal
and interest of the 2001 Debt converted to 192,283 shares of common stock on
September 30, 2004. The Debt holders were granted warrants to purchase 384,566
shares of stock on the conversion date of the Debt at an exercise price of $2.00
per share. As a result, the Company recorded $81,488 of warrant value as debt
conversion expense on that date.

NOTE 6 - STOCKHOLDERS' EQUITY

On January 9, 2004, the Company issued 2,604 shares of its common stock for
gross proceeds of $5,000 ($1.92 per share). During the nine months ended
September 30, 2004 the Company issued 912,500 shares of its common stock for
gross proceeds of $1,825,000 ($2.00 per share) in private placements of equity
to limited numbers of accredited investors. The Company also issued warrants to
purchase a total of 915,104 shares of stock to these investors at exercise
prices of $2.00 per share. Offering costs totaled approximately $286,000.

NOTE 7- MAJOR CUSTOMERS

Revenue from one customer of $461,216 comprised approximately 89% of
consolidated revenues for the nine months ended September 30, 2004. At September
30, 2004, related accounts receivable from this customer comprised $252,165
(95%) of consolidated net receivables.

Revenue from five customers in the amounts of $75,360, $71,957, 68,031, $56,325,
and $46,937 comprised approximately 76% of consolidated revenues for the nine
months ended September 30, 2003.

F-8

NOTE 8 - GAINS ON DEBT EXTINGUISHMENTS

Gains of $716,299 were recorded during the nine months ended September 30,
2004 as a result of the Company entering into various settlement agreements with
vendors. The gains were recorded at the time of the final payments under the
various agreements. There were no such agreements during the nine months ended
September 30, 2003.

F-9

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Audit Committee of the Board of Directors of Simtrol, Inc.
Norcross, GA:

We have audited the accompanying consolidated balance sheet of Simtrol, Inc. and
Subsidiaries as of December 31, 2003 and the related consolidated statements of
operations, shareholders' deficiency and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Simtrol, Inc. and
Subsidiaries as of December 31, 2003 and the results of their operations and
their cash flows for the year then ended in conformity with accounting
principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has a working capital deficit of
$2,055,322 and has suffered recurring losses from operations and net operating
cash outflows that raise substantial doubt about its ability to continue as a
going concern. Management's plans in regard to these matters are also described
in Note 2. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

/s/ Marcum & Kliegman LLP

February 20, 2004, except for the last paragraph of Note 11, which is March 29,
2004, and Note 12, which is May 7, 2004

New York, New York

F-10

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of
Simtrol, Inc.

We have audited the accompanying consolidated balance sheet of Simtrol, Inc. (a
Delaware corporation) and subsidiaries as of December 31, 2002 and the related
statements of operations, shareholders' deficit and cash flows for the year
ended December 31, 2002. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Simtrol, Inc. and subsidiaries
as of December 31, 2002 and the results of its operations and its cash flows for
the year ended December 31, 2002 in conformity with accounting principles
generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has experienced a net loss
of $2,289,787 for the year ended December 31, 2002. Additionally, the Company's
current liabilities exceeded its current assets by $2,787,219 and the Company
had a shareholders' deficit of $2,415,906 at December 31, 2002. These factors,
amongst others, raise substantial doubt about the Company's ability to continue
as a going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.

/s/ GRANT THORNTON LLP

Atlanta, Georgia
May 16, 2003

F-11

SIMTROL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31, 2003

ASSETS

CURRENT ASSETS
Cash and cash equivalents $ 3,998
Accounts receivable, less allowance for doubtful accounts
of $131,644 49,542
----------

Total Current Assets 53,540
----------

PROPERTY AND EQUIPMENT, net 78,166
----------

OTHER ASSETS
Software development costs, net 69,406
Other assets 28,187
----------
97,593
----------

TOTAL ASSETS $ 229,299
==========

The accompanying notes are an integral part of these consolidated financial
statements.

F-12

SIMTROL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (CONTINUED)
DECEMBER 31, 2003

LIABILITIES AND SHAREHOLDERS' DEFICIENCY

CURRENT LIABILITIES
Current portion of long-term debt $ 168,393
Convertible debt ($400,000 related parties) 420,000
Accounts payable 924,850
Accrued expenses 571,471
Deferred revenue 24,148
------------

Total Current Liabilities 2,108,862
------------

Long-term debt, less current portion 59,792
------------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' DEFICIENCY
Preferred stock, $.00025 par value; authorized
800,000 shares, none issued and outstanding --
Common stock, authorized 40,000,000 shares of
$.001 par value; issued and outstanding
2,334,118 shares 2,334
Additional paid-in capital 59,709,692
Accumulated deficit (61,651,381)
------------

Total Shareholders' Deficiency (1,939,355)
------------

TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIENCY $ 229,299
============

The accompanying notes are an integral part of these consolidated financial
statements

F-13

SIMTROL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

2003 2002
----------- -----------
Revenues:
Software $ 195,278 $ 363,652
licenses
Service 309,603 930,363
----------- -----------
Total revenues 504,881 1,294,015

Cost of revenues:
Software licenses 290,142 390,713
Service 73,371 474,388
----------- -----------
Total cost of revenues 363,513 865,101
Inventory obsolescence charge -- 296,953
----------- -----------
Gross profit 141,368 131,961
----------- -----------
Operating expenses
Selling, general and administrative 647,984 1,584,178
Research and development 419,361 428,810
----------- -----------
Total operating expenses 1,067,345 2,012,988
----------- -----------

Loss from operations (925,977) (1,881,027)
----------- -----------
Other expenses:
Other expense, primarily finance charges (287,798) (557,675)
Debt conversion expense (431,599) --
----------- -----------
Total other expenses (719,397) (557,675)

Loss before extraordinary gain (1,645,374) (2,438,702)

Extraordinary gain on debt extinguishments -- 148,915
----------- -----------

Net loss $(1,645,374) $(2,289,787)
=========== ===========
Net loss per common share:
Loss before extraordinary gains (0.76) $ (1.51)
Gain on extinguishments of debt 0.00 0.09
----------- -----------

Net loss per common share-basic and diluted (0.76) $ (1.42)
=========== ===========

Weighted average shares outstanding 2,165,366 1,611,058
=========== ===========

The accompanying notes are an integral part of these consolidated financial
statements

F-14

SIMTROL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIENCY
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

Common stock
----------------------- Additional
Number of Par Paid-in Accumulated
Shares value capital deficit Total
--------- -------- ----------- ------------- -----------

Balance, January 1, 2002 1,523,870 $ 1,524 $56,951,140 $(57,716,220) $ (763,556)

Net Loss for the period (2,289,787) (2,289,787)
Exercise of Warrants 375 -- 2,438 2,438
Warrants issued and Beneficial Conversion
Feature 304,599 304,599
Issuance of common stock in Private
Placements, net 191,867 192 325,208 325,400
Conversion of Convertible Debt 2,183 2 4,998 5,000
--------- -------- ----------- ------------- -----------
Balance, December 31, 2002 1,718,295 1,718 57,588,383 (60,006,007) (2,415,906)

Net Loss for the period (1,645,374) (1,645,374)
Beneficial Conversion Feature of
convertible debt 229,284 229,284
Debt conversion expense 431,599 431,599
Additional warrant value as a result of
lowering exercise price to $2.40
per share 58,460 58,460
Issuance of common stock in Private
Placements, net 282,573 283 603,417 603,700
Conversion of Convertible Debt 333,250 333 798,549 798,882
--------- -------- ----------- ------------- -----------
Balance, December 31, 2003 2,334,118 $ 2,334 $59,709,692 $(61,651,381) $(1,939,355)
========= ======== =========== ============= ===========

The accompanying notes are an integral part of these consolidated financial
statements.

F-15

SIMTROL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2002

2003 2002
----------- -----------

Cash flows from operating activities:
Net loss $(1,645,374) $(2,289,787)
Adjustments to reconcile net loss to net cash used
in operating activities:
Loss in decline of market value of investments -- 10,853
Inventory obsolescence charge -- 296,593
Loss on disposal of equipment -- 12,931
Depreciation and amortization 346,917 424,632
Interest expense-Deferred Financing Costs 58,460 305,171
Interest Expense-Non-cash beneficial conversion
feature of convertible debt 229,284 64,993
Debt extinguishments -- (148,915)
Debt conversion expense 431,599 --
Changes in operating assets and liabilities:
Accounts receivable 15,956 309,849
Inventories -- 59,886
Prepaid expenses and other current assets 39,170 (24,152)
Accounts payable (39,689) (51,891)
Accrued expenses 139,480 105,214
Deferred revenue (173,268) (390,167)
----------- -----------
Net cash used in operating activities (597,465) (1,314,790)
----------- -----------
Cash flows from investing activities:
Purchases of property and equipment -- (21,318)
----------- -----------
Cash flows from financing activities:
Net (payments) on notes payable and short term credit facilities (16,544) (52,352)
Net borrowings on notes payable and short-term credit facilities -- 229,165
Proceeds from convertible debt 30,000 760,000
Proceeds from exercise of stock options and warrants -- 2,438
Net proceeds from stock issuances 603,700 325,400
Deferred offering costs paid (17,000) --
----------- -----------
Net cash provided by financing activities 600,156 1,264,651

Increase (decrease) in cash and cash equivalents 2,691 (71,457)

Cash and cash equivalents, beginning of the period 1,307 72,764
----------- -----------

Cash and cash equivalents, end of the period $ 3,998 $ 1,307
=========== ===========
Supplementary disclosure:
Interest paid $ -- $ --
=========== ===========
Income taxes paid $ -- $ --
=========== ===========
Supplemental schedule of non cash investing and financing activities:
Non cash investing and financing activities:
Conversion of debt and accrued interest to common stock $ 798,882 $ 5,000
=========== ===========
Issuance of stock warrants $ -- $ 239,607
=========== ===========
Beneficial conversion feature of convertible debt $ -- $ 64,993
=========== ===========

The accompanying notes are an integral part of these consolidated
financial statements.

F-16

SIMTROL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002

NOTE 1 - NATURE OF OPERATIONS AND BASIS OF PRESENTATION

Simtrol, Inc., formerly known as VSI Enterprises, Inc., was
incorporated in Delaware in September 1988 and, together with its wholly-owned
subsidiaries (the "Company"), develops, markets and supports software based
audiovisual control systems and videoconferencing products that operate on PC
platforms.

NOTE 2 - GOING CONCERN UNCERTAINTY

As of December 31, 2003, the Company had cash and cash equivalents of
$3,998. The Company does not have sufficient funds for the next twelve (12)
months and has relied on periodic investments in the form of common stock and
convertible debt by certain of its existing shareholders since the fourth
quarter of 2001. The Company currently requires substantial amounts of capital
to fund current operations and for the payment of past due obligations including
payroll and other operating expenses and the continued development and
deployment of its Ongoer product line. See Note 11 for description of
convertible debt financing totaling $575,000 received on February 4, 2004.
However, there can be no assurance that the Company will be successful in its
attempts to develop and deploy its Ongoer product line, to generate positive
cash flows or raise sufficient capital essential to its survival. To the extent
that the Company is unable to generate or raise the necessary operating capital,
it will become necessary to curtail operations. Additionally, even if the
Company does raise operating capital, there can be no assurance that the net
proceeds will be sufficient to enable it to develop its business to a level
where it will generate profits and positive cash flows.

These matters raise substantial doubt about our ability to continue as
a going concern. However, the accompanying consolidated financial statements
have been prepared on a going concern basis, which contemplate the realization
of assets and satisfaction of liabilities in the normal course of business. The
consolidated financial statements do not include any adjustments relating to the
recoverability of the recorded assets or the classification of the liabilities
that might be necessary should the Company be unable to continue as a going
concern.

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All significant intercompany
transactions and balances have been eliminated in consolidation.

Loss Per Share

Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings
per Share", requires the presentation of basic and diluted earnings per share
("EPS"). Basic EPS is computed by dividing loss available to common shareholders
by the weighted-average number of common shares outstanding for the period.
Diluted EPS includes the potential dilution that could occur if options or other
contracts to issue common stock were exercised or converted. Our outstanding
stock options and warrants of 44,102 and 41,245 for 2003 and 2002 and 17,500
shares of common stock to be issued upon the conversion of $420,000 of
convertible debt and accrued interest at December 31, 2003 and 50,452 shares of
common stock to be issued upon the conversion of $1,155,000 of convertible debt

F-17

SIMTROL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002

and accrued interest at December 31, 2002, are not reflected in diluted earnings
per share because their effects would be anti-dilutive. Accordingly, basic and
diluted earnings per share are identical. Please see Note 11 for additional
convertible debt issued subsequent to December 31, 2003, that if converted would
also be included in dilutive earnings per share calculations.

Stock Based Compensation

Stock Option Plan and Warrants

The Company's board of directors and shareholders have approved stock
option plans that cover up to 314,025 shares of common stock. The plan provides
for the expiration of options ten years from the date of grant and requires the
exercise price of the options granted to be at least equal to 100% of market
value on the date granted.

SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and
Disclosure-an amendment of FASB Statement No. 123" amends SFAS Statement No.
123, "Accounting for Stock-Based Compensation", to provide alternative methods
of transition for a voluntary change to the fair value based method of
accounting for stock-based employee compensation. In addition, this Statement
amends the disclosure requirements of SFAS No. 123 to require prominent
disclosures in both annual and interim financial statements about the method of
accounting for stock-based compensation and the effect of the method used on
reported results. The Company continues to follow the pro-forma disclosures for
stock-based compensation as permitted in SFAS No. 123. The following table
illustrates the effect on net loss per share if the Company had applied the fair
value recognition provisions of SFAS 123 to stock-based employee compensation:

Year Ended
December 31,
2003 2002
----------- -----------

Net loss as reported $(1,645,374) $(2,289,787)

Add: stock-based employee compensation expense
included in net loss -- --
Less: stock-based employee compensation expense
determined under fair value-based methods for all awards (134,197) (305,703)
----------- -----------
Pro forma net loss $(1,779,571) $(2,595,490)
=========== ===========

Net loss per share as reported-Basic and diluted $ (0.76) $ (1.42)
Pro forma net loss per share- Basic and diluted $ (0.82) $ (1.61)

Pro forma Information

The fair value for the fiscal 2003 and 2002 options issued was
estimated at the date of grant using a Black-Scholes option-pricing using the
following weighted-average assumptions.

F-18

SIMTROL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002

Assumptions 2003 2002
----------- -----------

Risk-free rate 4.00% 4.25%
Annual rate of dividends 0 0
Volatility 86% 85%
Average life 7 years 7 years

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options, which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Our employee stock options have characteristics significantly
different from those of traded options and changes in the subjective input
assumptions can materially affect the fair value estimate.

The following summarizes the stock option transactions for the years
ended December 31, 2003 and 2002:

Weighted
Average
Exercise
Options Price
-------- --------
Options outstanding at January 1, 2002 91,933 $26.20
Granted 34,000 $ 3.70
Exercised -- --
Terminated (28,483) $28.80
-------
Options outstanding at December 31, 2002 97,450 $17.60

Options outstanding at January 1, 2003 97,450 $17.60
Granted 40,500 $ 2.50
Exercised -- --
Terminated (425) $ 2.30
=======
Options outstanding at December 31, 2003 137,525 $13.20
=======

At December 31, 2003, 176,500 options remain available for grant under
our 2002 Stock Option Plan.

New Accounting Pronouncements

In January 2003, the FASB issued FASB Interpretation No. 46,
"Consolidation of Variable Interest Entities" ("FIN 46"), an interpretation of
Accounting Research Bulletin No. 51. FIN 46 expands upon and strengthens
existing accounting guidance that addresses when a company should include in its
financial statements the assets, liabilities and activities of another entity. A
variable interest entity is any legal structure used for business purposes that
either does not have equity investors with voting rights or has equity investors
that do not provide sufficient financial resources for the entity to support its
activities. FIN 46 requires a variable interest entity to be consolidated by a
company if that company is subject to a majority of the risk of loss from the
variable interest entity's activities or entitled to receive a majority of the
entity's residual returns or both. The consolidation requirements of FIN 46
apply immediately to variable interest entities created after January 31, 2003.
The consolidation requirements apply to older entities in the first fiscal year

F-19

SIMTROL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002

or interim period beginning after June 15, 2003. However, in December 2003, FASB
deferred the latest date by which all public entities, which meet the definition
of small business issuer under SEC Regulation S-B, must apply FIN 46 to the
first interim or annual reporting period ended after December 15, 2004. The
effect of the adoption of this new accounting pronouncement is not expected to
have a significant impact on the Company financial statements.

SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal
Activities" ("SFAS 146"), provides guidance on the recognition and measurement
of liabilities for costs associated with exit or disposal activities. The
provisions of SFAS 146 are effective for exit or disposal activities that are
initiated after December 31, 2002. The Company implemented this standard
effective January 1, 2003 with no material impact to our financial statements.

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement
133 on Derivative Instruments and Hedging Activities" ("SFAS No. 149"), which is
effective for contracts entered into or modified after June 30, 2003. SFAS No.
149 amends SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," to clarify financial accounting and reporting for derivative
instruments, including certain derivative instruments embedded in other
contracts. The effect of the adoption of this new accounting pronouncement on
Company's financial statements has not been significant.

In May 2003, FASB issued SFAS No. 150, "Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity"
("SFAS 150"), which is effective for financial instruments entered into or
modified after May 31, 2003 and otherwise is effective at the beginning of the
first interim period beginning after June 15, 2003. SFAS 150 establishes
standards for how an issuer classifies and measures certain financial
instruments with characteristics of both liabilities and equity. It requires
that an issuer classify a financial instrument that is within its scope as a
liability. The adoption of SFAS 150 did not have a material effect on our
financial statements.

Revenue Recognition

Revenue consists of the sale of PC-based device control software
licenses (Ongoer) and maintenance revenue on our older videoconferencing systems
(Omega). The Company recognizes revenue from Ongoer software sales upon shipment
as the Company sells the product to audiovisual integrators. Revenue on Omega
maintenance contracts is recognized over the term of the related contract
resulting in $24,148 of deferred revenue at December 31, 2003.

Cash and Cash Equivalents

For financial reporting purposes, the Company considers all highly
liquid investments with a maturity of three months or less when purchased to be
cash equivalents.

Allowance for Doubtful Accounts

The allowance for doubtful accounts reflects management's best estimate
of the probable losses inherent in the account receivable balance. Management
determines the allowance based on known troubled accounts, historical experience
and other currently available evidence.

F-20

SIMTROL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002

Property and Equipment

Property and equipment are stated at cost. Depreciation and
amortization are provided for in amounts sufficient to relate the cost of
depreciable assets to operations over the shorter of their estimated useful
lives or lease terms, ranging from 3-10 years on a straight-line basis.

Software Development Costs

All software development costs are charged to expense as incurred until
technological feasibility has been established for the product. Software
development costs incurred after technological feasibility has been established
are capitalized and amortized, commencing with product release, using the
greater of the income forecast method or on a straight-line basis over the
useful life of the product. Accumulated amortization of software development
costs was $2,138,664 and $1,861,040 at December 31, 2003 and 2002, respectively.
Amortization expense charged to cost of revenues was $277,624 for both fiscal
2003 and 2002. The Company did not capitalize any software development costs
during either period.

Investments

The investment in equity securities consisted of 57,122 shares of
PentaStar Communications, Inc. common stock, received in conjunction with our
sale of Eastern Telecom Inc. The investment in equity securities was accounted
for as available-for-sale and was stated at fair market value with unrealized
gains and losses on this investment included in the shareholders' deficiency
section of the balance sheet. On April 1, 2002, PentaStar was placed into
receivership. As a result, at March 31, 2002, the Company wrote off the
remainder of the investment balance of $10,853, in accordance with SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities", as
management determined that the decline in the market value of this investment
represented an impairment that was other than temporary.

Income Taxes

The Company accounts for income taxes using the liability method, which
requires the determination of deferred tax assets and liabilities based on the
differences between the financial and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which differences are expected to
reverse.
Deferred tax assets are adjusted by a valuation allowance, if, based on the
weight of available evidence, it is more likely than not that some portion or
all of the deferred tax assets will not be realized.

At December 31, 2003, the Company has net operating loss carryforwards
of approximately $42,700,000, which expire through 2023. Pursuant to Section 382
of the Internal Revenue Code regarding substantial changes in ownership,
utilization of these losses may be limited. Based on this and the fact that the
Company has generated operating losses through December 31, 2003, the deferred
tax asset of approximately $17,068,000 has been offset by a valuation allowance
of $17,068,000.

Fair Value of Financial Instruments

Management believes that the carrying amounts of certain financial
instruments, including cash and cash equivalents, accounts receivable, accounts
payable and accrued expenses approximate their fair values as of each balance
sheet date given the relatively short maturity of each of these instruments. The
fair value of our debt approximates fair value based on borrowing rates
currently available to the Company for borrowings with comparable terms and
conditions.

F-21

SIMTROL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002

Debt Extinguishment

Extraordinary gains in the amount of $148,915 for the year ended
December 31, 2002 were recorded as a result of debt extinguishments of $84,350
related to our inactive subsidiary, Integrated Network Services, Inc. (INS) and
a $64,565 reduction of accounts payable to Glovicom, N.V., resulting from the
exchange of our warrant to purchase 19% of Glovicom for this amount.

Note and Lease Payable

The Company signed a promissory note on July 31, 2002 to AMB Property,
L.P., owner of our former and current office space, in the amount of $229,165,
for all unpaid rent through August 31, 2002 at the former headquarters. On that
date, the Company signed a 36-month lease to occupy approximately 6,400 square
feet of office space owned by AMB in Norcross, Georgia, beginning September 1,
2002. In September 2002, the principal amount of the note was reduced to
$215,246 to reflect the return of our deposit on its old office space. The note
has an interest rate of 12% and requires monthly principal only payments
beginning November 1, 2002. No payments were made on the note as of December 31,
2003. The lender has not declared the note in default at December 31, 2003. The
promissory note has a cross default provision to the lease on the new office
space such that a default on the note would represent a default on the lease as
well.

A schedule of the maturities of the note and lease payable are as
follows:

Year Ending
-----------
2004 ............................. $ 168,393
2005 ............................. 59,792
----------
Total ........................... $ 228,185
==========

Reclassifications

Certain amounts in the 2002 financial statements have been reclassified
for comparative purposes to conform to the presentation in the current year
financial statements. These reclassifications have no effect on previously
reported income.

Use of Estimates

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenue and
expenses during the reporting period. Critical estimates include management's
judgments associated with: the application of the percentage of completion
method to the recognition of revenue, determination of an allowance for doubtful
accounts receivable, deferred income tax valuation allowance and the
capitalization, depreciation and amortization of certain long-term assets
(primarily software development costs and customer lists). Actual results could
differ from those estimates.

F-22

SIMTROL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002

NOTE 4 - PROPERTY AND EQUIPMENT

Property and equipment consist of the following as of December 31,
2003:

Machinery and equipment $ 340,631
Furniture and fixtures 39,150
Leasehold improvements 21,318
-----------
401,099
Less accumulated depreciation and amortization (322,933)
-----------
$ 78,166
===========

Depreciation and amortization expense was $69,293 and $105,861 for the
years ended December 31, 2003 and 2002, respectively and is included in selling,
general and administrative expense in the accompanying consolidated statements
of operations.

NOTE 5 - CONVERTIBLE DEBT

The Company issued $30,000 of convertible debt ("Debt") to two of its
directors during the year ended December 31, 2003. The Debt accrued interest at
prime plus 1%. The principal and interest amounts were converted into 12,842
shares ($2.40 per share) of restricted common stock on July 22, 2003.

The Company also issued an aggregate of $760,000 of convertible debt
("2002 Debt") to numerous private investors, including four members of the Board
of Directors, at various times during the year ended December 31, 2002. The 2002
Debt accrued interest at prime rate plus 1% and was due on December 31, 2002. In
conjunction with the issuance of the 2002 Debt, the Company issued 75,000 common
stock purchase warrants to the holders of the 2002 Debt. The 2002 Debt was
convertible immediately into restricted shares of common stock of the Company at
prices originally ranging from $4.70 to $7.90 per share, which represented the
market prices of our traded common stock on the date of the issuances of the
2002 Debt. The warrants, which expire at various dates in 2006, are exercisable
immediately at prices originally ranging from $4.70 to $7.90 per share, the
market price of our traded common stock on the day the warrants were issued.
Each warrant entitles the holder to purchase one share of the restricted common
stock of the Company.

On December 31, 2002 the Company extended the due date of the 2002 Debt
until January 31, 2003 and as an inducement to convert, the conversion price of
the debt was adjusted to $2.40 per share and the warrants granted at the
origination dates of the notes also had their exercise prices adjusted to $2.40.
As a result, the Company recognized approximately $58,000 as finance charges
over the remaining terms of the notes to reflect the lowering of the warrant
exercise price at December 31, 2002. In January 2003, $735,000 of the 2002 debt
plus accrued interest was converted into 320,408 shares of restricted common
stock. Pursuant to SFAS No. 84, "Inducements to Convert Convertible Debt", a
debt conversion expense of $431,599 was recorded to reflect the fair value of
the additional shares that resulted from lowering the conversion price to $2.40.

In connection with the issuance of the 2002 Debt, $151,352 of the debt
proceeds was allocated to the fair value of the warrants and $64,993 of the

F-23

SIMTROL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002

proceeds was allocated to beneficial conversion feature of the notes. These debt
discounts were amortized as financing costs in the year ended December 31, 2002.

During 2001, the Company issued $400,000 of convertible debt to two
shareholders ("2001 Debt"). The 2001 Debt accrues interest at prime rate plus
1%, was originally due February 7, 2002 and is collateralized by all of the
assets of the Company. The 2001 Debt was originally convertible into shares of
common stock of the Company at $4.90 per share. In conjunction with the issuance
of the convertible debt, the Company issued 40,000 common stock purchase
warrants to the holders of the 2001 Debt. The warrants, which expire at various
dates in 2006, are exercisable immediately and entitle the holder to purchase
one common share of the common stock of the Company at prices originally ranging
from $4.60 to $5.30 per share. Also, the agreement called for the issuance of
additional warrants to the debt holders for each 60 day extension period on the
debt as follows: 10,000 warrants to each debt holder for the first 60 day
extension and 6,000 warrants to each debt holder at the date of each subsequent
60 day extension. On February 7, 2002, the debt holders granted a 60-day
extension and as a result, the Company issued an additional 10,000 warrants,
which entitle the debt holders to each purchase 10,000 shares of our common
stock at $4.90 per share. In conjunction with the issuance of 10,000 warrants to
the shareholders on February 7, 2002, $88,254 was estimated as the fair value of
the warrants and was expensed over the extended life of the note as the
shareholders agreed to extend the due date of the loans until December 31, 2002
and no additional warrants were granted.

In connection with the issuance of the 2001 Debt, $120,977 of the debt
proceeds was allocated to additional paid in capital to recognize the beneficial
conversion feature of the debentures. This debt discount was amortized to
financing costs over the term of the debt. For the year ended December 31, 2002,
$65,564 was expensed as financing costs relating to the amortization of the
beneficial conversion feature.

On December 31, 2002 the Company extended the due date of the 2001 Debt
until January 31, 2003 and as an inducement to convert, the conversion price was
reduced to $2.40 per share, however, no Debt was converted. On January 31, 2003,
the Company extended the due date until December 31, 2003. At January 31, 2003
the Company recorded a beneficial conversion feature in the amount of $229,284,
to reflect the fair value of the additional shares that may be issued from
lowering the conversion price and was recorded as interest expense over the
extended life of the 2001 Debt.

NOTE 6 - PRIVATE PLACEMENTS

During the three months ended March 31, 2003, the Company issued 59,417
shares of its common stock for gross proceeds of $142,600 ($2.40 per share), in
a private placement of its stock to a limited number of accredited investors,
including three members of our Board. Offering costs were de minimis.

During the three months ended June 30, 2003 the Company issued 84,833
shares of its common stock for gross proceeds of $203,600 ($2.40 per share), in
a private placement of its stock to a limited number of accredited investors,
including three members of our Board. Offering costs were de minimis.

During the three months ended September 30, 2003 the Company issued
65,392 shares of its common stock for gross proceeds of $105,000 in a private
placement of its stock to a limited number of accredited investors, including
three members of our Board. The share prices ranged from $1.52 to $3.58 per

F-24

SIMTROL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002

share and were based on the average of the preceding five days closing prices
prior to the purchases. Offering costs were de minimis.

During the three months ended December 31, 2003 the Company issued
72,931 shares of its common stock for gross proceeds of $152,500 in a private
placement of its stock to a limited number of accredited investors, including
three members of our Board. The share prices ranged from $1.52 to $3.58 per
share and were based on the average of the preceding five days closing prices
prior to the purchases. Offering costs were de minimis.

Subsequent to December 31, 2003, the Company issued 2,604 shares of its
common stock for gross proceeds of $5,000 in a private placement of its stock to
a limited number of accredited investors, including two members of our Board.
The share prices ranged from $1.52 to $3.58 per share and were based on the
average of the preceding five days closing prices prior to the purchases.

On August 5, 2002, the Company completed the sale of 162,700 shares of
its common stock for aggregate gross proceeds of $325,400, in a private
placement of its stock to a limited number of accredited investors, including
Board members. The share price was $2.00 per share. Offering costs totaled
approximately $70,000. The proceeds of the offering were used to fund current
operational and overhead expenses of the Company during the year. Additionally,
the Company issued 29,167 shares of restricted common stock in December 2002 to
a limited number of accredited investors, including two directors of the
Company. The share price was $2.40 and total proceeds were $70,000. The proceeds
were used to fund current operational and overhead expenses of the Company
during the year.

NOTE 7 - STOCK WARRANTS

The Company has stock purchase warrants for 3,034,963 shares of common
stock outstanding at December 31, 2003. A rollforward of the warrant totals for
2003 and 2002 is as follows:

2003 2002
------------------------------------
Warrants outstanding at beginning of year 314,996 219,871
Granted -- 96,000
Exercised -- (375)
Terminated (11,500) (500)
------------------------------------
Warrants outstanding at December 31 303,496 314,996
====================================

The range of exercise prices of the warrants was $2.20 to $10.00 and
the weighted average exercise price was approximately $4.50 at December 31,
2003. The range of exercise prices of the warrants was $2.20 to $10.00 and the
weighted average exercise price was approximately $5.20 at December 31, 2002.

NOTE 8- MAJOR CUSTOMERS

Revenue from five customers of $109,110, $89,922, $81,658, $55,140 and
$35,034, respectively, comprised approximately 73% of revenues for the year
ended December 31, 2003. At December 31, 2003, related accounts receivable from
these companies of $26,250 and $7,560, respectively, comprised 68% of accounts
receivable.

F-25

SIMTROL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002

Revenue from three customers of $315,034, $179,164 and $151,910,
respectively, comprised approximately 50% of revenues for the year ended
December 31, 2002.

Management believes that concentration of credit risk with respect to
trade receivables is minimal due to the composition of the customer base. Our
customers are primarily large national and multinational companies and agencies
of the U.S. government. Allowances are maintained for potential credit losses
and such losses have been within management's expectations.

NOTE 9 - OPERATING LEASES

The Company leases office space and equipment under noncancellable
operating leases expiring at various dates through 2007.

The following is a schedule of future minimum lease payments required
under operating leases that have remaining initial or noncancellable lease terms
as of December 31, 2003:

Year Ending
-----------
2004 ................................ 73,334
2005 ................................ 48,088
2006 ................................ 9,338
2007 ................................ 1,488
----------
Total .............................. $ 132,248
==========

Rent expense for the years ended December 31, 2003 and 2002 was $29,823
and $198,622, respectively.

NOTE 10- LITIGATION

In November 2000 the Company was named as a defendant in a lawsuit
filed by the bankruptcy trustee of VSI Network Services, Inc., a subsidiary of
the Company that filed for Chapter 7 bankruptcy in 1999. This lawsuit, filed in
the Northern District of Georgia, Atlanta Division sought an accounting and
recovery of alleged preferential transfers of funds. The lawsuit sought to
recover approximately $740,000 in alleged preference payments from the Company.
On September 24, 2001, this lawsuit was settled by agreeing to pay $32,000 to
the bankruptcy trustee. This action has been dismissed and we completed payments
to the trustee in 2002.

On May 1, 2003, Citibank (West), FSB, filed suit in San Diego Superior
Court, North County Division, against one of our subsidiaries, Quality Software
Associates, Inc. ("QSA") and Mark Scovel, the individual from whom we acquired
QSA in March 2001. CitiBank seeks to recover $8,000 of credit card indebtedness
under a credit card held by QSA that was personally guaranteed by Mr. Scovel. On
June 24, 2003, Mr. Scovel filed a cross-complaint against QSA and Simtrol, Inc.
claiming that Simtrol had assumed the debt in connection with its acquisition of
QSA. Mr. Scovel's complaint also seeks declaratory relief, seeking a judgment
that QSA and Simtrol are also liable for several other QSA debts, in an
aggregate amount of less than $50,000. Mr. Scovel also seeks attorneys' fees.

F-26

SIMTROL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002

We have filed a cross-complaint against Mr. Scovel seeking damages of
approximately $56,000 and alleging a breach of the representations and
warranties relating to the collectibility of certain accounts receivables
contained in the Merger Agreement under which we acquired QSA.

The Company is involved in various claims and legal actions arising in
the ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on our
financial position or results of operations.

NOTE 11 - SUBSEQUENT EVENTS

On February 4, 2004, the Company completed the sale of Convertible
Notes ("the Notes") with principal balance of $575,000, in a private placement
to a limited number of accredited investors ("Noteholders"), including one Board
member. The interest rate of the Notes is 10% and the conversion price of the
Notes is $2.00 per share for all principal and accrued interest. The due date of
the Notes is August 4, 2004 and the notes are convertible to restricted common
stock at any time before that date.

The Company also issued warrants to the Noteholders to purchase an
aggregate of 287,500 shares of restricted common stock. Each warrant enables the
holder to purchase the same number of shares as the holder would receive upon
conversion of the Notes. In addition, Noteholders received warrants to purchase
an aggregate of 575,000 shares of our common stock. Each warrant entitles the
holder to purchase two shares of common stock for each share the holder would
receive upon conversion of the Notes, but the warrants may only be exercised in
the event a holder actually elects to convert the Notes into our common stock.
The exercise price of the warrants is $2.00 per share of common stock.

Offering costs totaled approximately $96,000. The proceeds of the
offering will be used to fund current operational and overhead expenses of the
Company.

On March 29, 2004, our Board of Directors approved and recommended for
shareholder approval proposals for a one-for-ten reverse stock split of our
outstanding common stock and an amendment to our 2002 Stock Option Plan to
increase the number of shares of our common stock that may be issued under the
Plan from 250,000 shares currently to 750,000 shares. Both items are subject to
shareholder approval at the next Annual Meeting of the Shareholders.

NOTE 12 - REVERSE SPLIT OF COMMON STOCK

All amounts reflect the effects of the 1:10 reverse split of the Company's
common stock approved by shareholders and effected on May 7, 2004, for all
periods presented.

F-27

PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 24. INDEMNIFICATION AND LIMITATION OF LIABILITY OF MANAGEMENT

Our Certificate of Incorporation provides that in actions other than in
the right of the Company, the Company indemnifies directors and officers of the
Company against costs, charges, expenses (including attorney's fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him in
connection with any action, suit or proceeding if he acted in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interest of the Company. With respect to actions by or in the right of the
Company, the Company indemnifies directors and officers of the Company against
costs, charges and expenses (including attorneys' fees) actually and reasonably
incurred by him in connection with the defense or settlement of any action or
suit if he acted in good faith and in a manner he reasonably believed to be in
or not opposed to the best interest of the Company; except that no
indemnification shall be made in respect to any claim, issue or matter as to
which such person shall have been adjudged to be liable to the Company, unless
and only to the extent that the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expense which the court shall deem
proper. The indemnification provisions contained in our Certificate of
Incorporation are substantially coextensive with the provisions of Section 145
of the Delaware General Corporation Law, which sets forth the applicable terms,
conditions and limitations governing the indemnification of officers, directors
and other persons.

ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

Set forth below are estimates of the fees and expenses payable by the
Company in connection with this registration of the common stock:

DESCRIPTION OF FEE OR EXPENSE TOTAL
----------------------------- -----
SEC Registration Fee $ 653
Blue Sky Qualification Fees and Expenses $
Legal Fees and Expenses $ 10,000
Accounting Fees and Expenses $ 10,000
Transfer Agent Fees $
Printing, Materials and Postage $ 1,500
Miscellaneous Expenses $ 1,000
---------
Total $ 23,153
---------

ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES

During the quarter ended September 30, 2004, the Company issued the
following unregistered securities:

o Convertible notes with a principal balance of $400,000 and all
applicable accrued interest were converted into 192,283 shares of
common stock. In addition, warrants for purchase of 384,566 shares of
common stock were issued to the note holders upon conversion.

II-1

o Private placement of 156,250 shares of common stock for gross proceeds
of $312,500 to a limited number of accredited investors. Shareholders
also received warrants to purchase an aggregate of 156,250 shares of
common stock with an exercise price of $2.00 per share. Offering costs
totaled approximately $50,000. In addition, warrants for purchase of
37,500 shares of common stock were issued to Westminster Securities as
a placement fee in connection with this private placement.

o Private placement of 68,750 shares of common stock for gross proceeds
of $137,500 to a limited number of accredited investors. Shareholders
also received warrants to purchase an aggregate of 68,750 shares of
common stock with an exercise price of $2.00 per share. Offering costs
totaled approximately $18,000. In addition, warrants for purchase of
16,500 shares of common stock were issued to Westminster Securities as
a placement fee in connection with this private placement.

o Private placement of 62,500 shares of common stock for gross proceeds
of $125,000 to a limited number of accredited investors. Shareholders
also received warrants to purchase an aggregate of 62,500 shares of
common stock with an exercise price of $2.00 per share. Offering costs
totaled approximately $20,000. In addition, warrants for purchase of
15,000 shares of common stock were issued to Westminster Securities as
a placement fee in connection with this private placement.

During the quarter ended June 30, 2004, the Company issued the
following unregistered securities:

o Convertible notes with a principal balance of $525,000 were converted
into 271,409 shares of common stock.

o Private placement of 625,000 shares of common stock for gross proceeds
of $1,250,000 to a limited number of accredited investors. Shareholders
also received warrants to purchase an aggregate of 625,000 shares of
common stock with an exercise price of $2.00 per share. In addition,
warrants for purchase of 150,000 shares of common stock were issued to
Westminster Securities as a placement fee in connection with this
private placement.

During the quarter ended March 31, 2004, the Company issued the
following unregistered securities:

o Private placement of convertible notes with a principal balance
$575,000 to a limited number of accredited investors. The interest rate
of the notes is 10% and the conversion price of the notes is $2.00 per
share for all principal and accrued interest. Noteholders also received
warrants to purchase an aggregate of 862,500 shares of common stock
with an exercise price of $2.00 per share. In addition, warrants for
purchase of 169,000 shares of common stock were issued to Westminster
Securities as a placement fee in connection with this private
placement.

o Private placement of 2,604 shares of common stock for gross proceeds of
$5,000 ($1.92 per share), to a limited number of accredited investors.
Offering costs were de minimis.

During the fiscal year ended December 31, 2003, the Company issued the
following unregistered securities:

II-2

o Private placements of 282,573 shares of common stock for gross proceeds
of $603,700 (per share prices ranged from $1.52 to $3.58 per share) to
individual investors.

o Private placement of convertible debt with a principal balance of
$30,000 to two directors of the Company. The debt accrued interest at
prime plus 1%. During this same period, the principal and interest
amounts of this debt were subsequently converted into 12,842 shares of
restricted common stock.

o Convertible debt with an aggregate principal amount of $735,000,
previously issued during 2002, was converted into 3,204,083 shares of
restricted common stock.

During the fiscal year ended December 31, 2002, the Company issued the
following unregistered securities:

o Private placements of convertible debt with an aggregate principal
balance of $760,000 to numerous private investors, at various times
during 2002. The debt accrued interest at prime plus 1%. In conjunction
with these debt placements, the debt holders were issued warrants
exercisable for an aggregate of 76,000 shares of common stock, with
exercise prices between $4.70 and $7.90per share.

o One holder of the convertible debt issued during 2002 converted his
note and all accrued interest into 2,183 shares of restricted common
stock.

o The debt holders of the $400,000 of convertible debt previously issued
in 2001 were granted warrants for aggregate of 20,000 shares of common
stock, such warrants issued as an inducement for the debt holders to
extend the due date of the convertible debt.

o Private placement of 162,700 shares of common stock for aggregate gross
proceeds of $325,400 to a limited number of accredited investors. The
price was $2.00 per share. Offering costs were approximately $70,000.

o Private placement of 29,167 shares of restricted common stock to a
limited number of accredited investors. The price was $2.40 per share.

During the fiscal year ended December 31, 2001, the Company issued the
following unregistered securities:

o Private placement of convertible debt with an aggregate principal
balance of $400,000 to two shareholders. This debt accrued interest at
prime plus 1%. In conjunction with this debt offering, the debt holders
were issued warrants exercisable for an aggregate of 40,000 shares of
common stock, with exercise prices between $4.60 and $5.30 per share.

o Issuance of warrants to purchase an aggregate of 1,000 shares of common
stock were issued to two shareholders for various loans made with the
Company. These warrants have exercise prices of between $6.60 and $7.50
per share.

II-3

ITEM 27. EXHIBITS

The following exhibits are filed with or incorporated by reference into this
registration statement. The exhibits which are denominated by an asterisk (*)
were previously filed as a part of, and are hereby incorporated by reference
from either (i) the Post-Effective Amendment No. 1 to the Company's Registration
Statement on Form S-18 (File No. 33-27040-D) (referred to as "S-18 No. 1"), (ii)
Post-Effective Amendment No. 2 to the Company's Registration Statement on Form
S-18 (File No. 33-27040-D) (referred to as "S-18 No. 2"), (iii) Post-Effective
Amendment No. 3 to the Company's Registration Statement on Form S-18 (File No.
33-27040-D) (referred to as "S-18 No. 3"); (iv) the Company's Quarterly Report
on Form 10-Q for the quarter ended December 31, 1992 (referred to as "1992
10-Q"); (v) the Company's Registration Statement Form S-1 (File No. 33-85754)
(referred to as "S-1"); (vi) the Company's Annual Report on Form 10-K for the
year ended December 31, 1993 (referred to as "1993 10-K"); (vii) the Company's
Annual Report on Form 10-K for the year ended December 31, 1994 (referred to as
"1994 10-K"); (viii) the Company's Annual Report on Form 10-K for the year ended
December 31, 1995 (referred to as "1995 10-K"), (ix) the Company's Annual Report
on Form 10-K for the year ended December 31, 1998, as amended (referred to as
"1998 10-K/A"), (x) the Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1999 (referred to as "June 1999 10-Q"), (xi) the Company's Form
S-8 Registration Statement (File No. 333-18239), (referred to as "Warrant Plan
S-8"), (xii) the Company's Form S-8 Registration Statement (File No. 333-18237),
(referred to as "Option Plan S-8"), (xiii) the Company's Registration Statement
on Form S-3 amended January 31, 1999 ("1999 S-3"), (xiv) the Company's Quarterly
Report on Form 10-Q for the quarter ended September 30, 2001 (referred to as
"2001 10-Q"), and (xv) the Company's Annual Report on Form 10-K for the year
ended December 31, 2001 (referred to as "2001 10-K").

Exhibit No. Description of Exhibit
----------- ----------------------

*3.1 Certificate of Incorporation, including Certificate of Stock
Designation dated September 25, 1990 and amendments dated
December 26, 1990, August 19, 1991 and October 17, 1991
(S-18 No. 3, Exhibit 3-1)

*3.2 Amended Bylaws of the Company as presently in use (S-18 No. 1,
Exhibit 3.2)

*3.3 Certificate of Amendment to Certificate of Incorporation filed
on February 10, 1993 (1992 10-Q)

*3.6 Certificate of Amendment to Certificate of Incorporation filed
on February 13, 1995 (1994 10-K)

*3.7 Certificate of Amendment to Certificate of Incorporation filed
on September 8, 1995 (1995 10-K)

*3.9 Certificate of Amendment of Certificate of Incorporation filed
on January 13, 1999 (1998 10-K/A)

*3.10 Certificate of Amendment to Certificate of Incorporation filed
on June 28, 1999 (June 1999 10-Q)

5.1 Opinion of Smith, Gambrell & Russell, LLP

*10.3 1991 Stock Option Plan (S-18 No. 2, Exhibit 10.1(a))

*10.3.1 Amendment No. 1 to 1991 Stock Option Plan (1993 10-K)

*10.3.2 Amendment No. 2 to 1991 Stock Option Plan (S-1)

*10.3.3 Amendment No. 3 to 1991 Stock Option Plan (S-1)

*10.3.4 Amendment No. 4 to 1991 Stock Option Plan (Option Plan S-8,
Exhibit 4.5)

*10.3.5 Amendment No. 5 to 1991 Stock Option Plan (1998 10-K/A)

*10.4 1995 Performance Warrant Plan (Warrant Plan S-8, Exhibit 4.1)

*10.7 1994 Employee Stock Purchase Plan (1994 10-K)

*10.8 Promissory Note, dated November 18, 1999, issued to Thomson
Kernaghan & Co., Ltd. in the principal amount of $900,000
(1998 10-K/A)

II-4

*10.14 License Agreement between ACIS, Inc. and the Company dated
September 9, 1999 (1999 S-3)

*10.21 First Amendment and Modification of ACIS, Inc. warrant
agreement dated September 7, 2001 (2001 10-Q)

*10.22 ACIS Technology License Agreement between ACIS, Inc. and the
Company dated September 27,2001 (2001 10-Q)

*10.23 Promissory Note dated November 9, 2001 by and between the
Company and Larry Carr (2001 10-K)

*10.24 Promissory Note dated November 9, 2001 by and between the
Company and Edward S. Redstone (2001 10-K)

+21.1 Subsidiaries of the Company

23.1 Consent of Marcum & Kliegman LLP

23.2 Consent of Grant Thornton LLP

-----------
+ Previously filed

ITEM 28. UNDERTAKINGS

A. Undertaking Pursuant to Rule 415

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) Securities Act of 1933 (the "Securities Act"); (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. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the

II-5

total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the SEC
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
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; (2) That, for the purpose of determining any liability under the
Securities Act, 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 that remain
unsold at the termination of this offering.

II-6

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
Registrant, SIMTROL, INC., a corporation organized and existing under the laws
of the State of Delaware, has duly caused this Amendment No. 1 to Form SB-2 to
be signed on its behalf by the undersigned, thereunto duly authorized, on
December 2, 2004.

SIMTROL, INC.

By: /s/ Richard W. Egan
----------------------------------------
Richard W. Egan, Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, the
following persons in the following capacities have signed this report below on
the dates indicated.

Signature Title Date
--------- ----- ----

/s/ Larry M. Carr Chairman of the Board December 2, 2004
---------------------------
Larry M. Carr

/s/ Richard W. Egan Chief Executive Officer and December 2, 2004
--------------------------- Director
Richard W. Egan

/s/ Stephen N. Samp Chief Financial Officer December 2, 2004
--------------------------- (Principal Financial and
Stephen N. Samp Accounting Officer)

/s/ Dallas S. Clement Director December 2, 2004
---------------------------
Dallas S. Clement

/s/ Julia B. North Director December 2, 2004
---------------------------
Julia B. North

/s/ Edward S. Redstone Director December 2, 2004
---------------------------
Edward S. Redstone

II-7