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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                               ------------------

                                    FORM 10-K
                               ------------------

         Annual Report Pursuant to Section 13 or 15(d) of the Securities
                              Exchange Act of 1934
                   For the Fiscal Year Ended December 31, 2001
                               ------------------

                           Commission File No. 1-10927

                                  SIMTROL, INC.

                             A Delaware Corporation
                  (IRS Employer Identification No. 84-1104448)
                            5801 Goshen Springs Road
                             Norcross, Georgia 30071
                                 (770) 242-7566

                 Securities Registered Pursuant to Section 12(b)
                     of the Securities Exchange Act of 1934:

                                      None

                 Securities Registered Pursuant to Section 12(g)
                     of the Securities Exchange Act of 1934:

                     Common Stock, $.001 par value per share

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

The aggregate market value of the common stock of the registrant held by
non-affiliates of the registrant 13,644,820 shares on March 26, 2002 was
approximately $9,687,822, based on the closing price of the registrant's common
stock as quoted on the Over The Counter Bulletin Board on March 26, 2002. For
the purposes of this response, officers, directors and holders of 5% or more of
the registrant's common stock are considered to be affiliates of the registrant
at that date.

The number of shares outstanding of the registrant's common stock as of March
15, 2002: 15,242,459 shares of $.001 par value common stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive proxy statement to be delivered to
shareholders in connection with the 2002 Annual Meeting of Shareholders
scheduled to be held on June 12, 2002, are incorporated by reference in response
to Part III of this Report.


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                                     PART I

ITEM 1.  BUSINESS.

GENERAL

Simtrol, Inc., an Atlanta-based holding company, was incorporated under the laws
of Delaware on September 19, 1988 as Fi-Tek III, Inc. to raise capital and to
seek out business opportunities in which to acquire an interest. On August 21,
1990, we acquired 89.01% of the total common stock and common stock equivalents
then issued and outstanding of Videoconferencing Systems, Inc., a Delaware
corporation. Videoconferencing Systems was founded in 1985 through the
acquisition of a portion of the assets of a Sprint Corporation videoconferencing
subsidiary. In December 1990, the name was changed from Fi-Tek III, Inc. to VSI
Enterprises, Inc. During the first half of 1991, we acquired the remaining
additional outstanding shares of common stock of Videoconferencing Systems. In
September 2001 the name was changed from VSI Enterprises, Inc. to Simtrol, Inc.

We primarily conduct our operations under Simtrol, Inc. which is a software
technology company specializing in Audio/Visual (A/V) control. Previous to this
we conducted our business under a subsidiary of Simtrol, Inc. named
Videoconferencing Systems, Inc which designed, manufactured, marketed and still
supports through maintenance contracts software-based command and control
systems, including videoconferencing control systems, which operate on PC
platforms. We also conducted business under VSI Network Solutions, Inc., a
majority owned subsidiary, doing business as Eastern Telecom, which was engaged
in the business of marketing and selling telecommunications services and
products. On February 18, 2000, we entered into a definitive agreement to sell
Eastern Telecom, which was completed on May 18, 2000.

Our principal executive offices and manufacturing facilities are located at 5801
Goshen Springs Road, Norcross, Georgia 30071, and our telephone number is (770)
242-7566.

RECENT DEVELOPMENTS

Name Change. On September 30, 2001, the name of the company was changed from VSI
Enterprises, Inc. to Simtrol, Inc. and the trading symbol was changed to "SMOL."

ACIS License Agreement. On September 27, 2001, the Company entered into a
license agreement with ACIS, Inc. that significantly expanded the scope of its
rights to CycleFree development. ACIS granted to Simtrol a nonexclusive,
worldwide, irrevocable, perpetual license to use, copy, import, modify, enhance
and create derivatives of any implementation of the Willie-event-kernel(TM) (the
"ACIS Kernel"), the tools, class libraries, utilities and other programs
developed or acquired by ACIS relating to the ACIS Kernel, as well as any
derivatives thereof created by or for ACIS; and to make, have made, copy,
distribute and sell Simtrol products solely for use with and running on top of
any Microsoft platform. Under the prior agreement, Simtrol was limited to only
developing and selling applications running on top of Windows 2000.

Exercise of ACIS Warrants. On September 7, 2001, the Company renegotiated
certain terms and conditions pertaining to its warrant to acquire up to twenty
percent of its technology partner, ACIS, Inc. ("ACIS") (the "Warrant"). Simtrol
now has until March 31, 2002 to exercise the warrant. Additionally, the number
of ACIS shares available under the warrant is now fixed at 1,005,500 shares,
which when combined with ACIS shares already held by Simtrol, is equal to twenty
percent of the fully diluted ACIS shares outstanding as of September 7, 2001.


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Acquisition of QSA. On March 10, 2001 we signed a definitive agreement to
purchase Quality Software Associates, Inc. of Carlsbad, California ("QSA"). QSA
is a leading developer of custom audio/visual software solutions for Panja and
Creston A/V controllers, and develops custom software for other complex PC-based
applications and real-time embedded software systems. This transaction closed on
March 28, 2001 and was accounted for using the purchase method of accounting. We
exchanged 45,454 shares of our common stock valued at $59,544 for QSA's shares.
As part of the transaction, Mr. Mark Scovel, president of QSA, was granted
incentive stock options to purchase 100,000 shares of our common stock.

Private Placement. On March 10, 2000, we raised $4,054,876 million through the
private sale of 1,351,625 common shares at $3.00 per share to 38 accredited
investors. Additionally, certain Eastern Telecom minority interest holders
exchanged 240,265 shares of Eastern Telecom for 524,126 shares of our common
stock. We have registered these shares.

Sale of Eastern Telecom. On February 18, 2000, we entered into a definitive
agreement to sell substantially all the assets of Eastern Telecom to PentaStar
Communications, Inc., a Denver, Colorado based communications services agent.
The Eastern Telecom assets were combined with the assets of USTeleCenters, Inc.
and Vermont Network Services Corporation, which were acquired directly by
PentaStar on February 18, 2000, rather than through Eastern Telecom as had been
originally contemplated. Terms of the transaction include initial cash
consideration in the amount of $1,787,835, $500,000 of which is held in escrow
until specified accounts receivable have been collected, PentaStar common stock
valued at $1,142,000, and PentaStar's assumption of certain liabilities. The
definitive agreement was subject to approval by our shareholders, which was
granted, at the annual meeting held on May 18, 2000. We realized a gain of
approximately $814,000 on the sale. A portion of the cash proceeds were used to
repurchase the remaining Eastern Telecom minority interest shares pursuant to
the terms of a shareholders agreement.

Debt Restructuring. On August 31, 1999, we restructured our debt with Thomson
Kernaghan & Co., Ltd., which totaled $1,089,750 at that date. We made a cash
payment of $150,000 at closing, and the remaining balance was exchanged for a 7%
secured convertible debenture, with a one-year term. The debenture was secured
by a lien on our ownership interest in Eastern Telecom, which was junior to our
converting term note holders and new investors, as discussed below. Thomson
Kernaghan had the option to commence converting the debenture into shares of our
common stock at the initial rate of 7.5% per month beginning January 1, 2000.
The conversion price was the lesser of $1.00 per share or the five-day average
closing bid price of our common stock prior to the date of any such conversion,
with a floor of $0.50 per share. Kernaghan converted $144,747 of principal plus
accrued interest into 216,945 shares of Simtrol Common Stock during January and
February 2000. On March 1, 2000, we repaid the remaining balance of the debt,
including accrued interest.

As part of closing the August 31, 1999 Thomson Kernaghan transaction, $1,213,000
of our 18-month term notes due March 31, 2000 were converted into 195,099 shares
of Eastern Telecom common stock which were owned by us, representing a 19.5%
minority interest in Eastern Telecom. In addition, $1,040,000 of new capital was
raised by selling a 16.0% minority interest in Eastern Telecom. The
consideration received for the sale of shares of common stock of Eastern Telecom
was based on an internal valuation of Eastern Telecom. Under the terms of the
Thomson Kernaghan agreement, we agreed to sell our remaining interest in Eastern
Telecom at not less than fair market value, provided the terms of any such
transaction were otherwise acceptable to us. Additionally, Eastern Telecom's
minority shareholders had a put option, which gave them the right to put their
Eastern Telecom shares back to us after one year, and we had a call option to
reacquire shares of Eastern Telecom at any time, both at a price of $6.50 per
share of Eastern Telecom common stock. Furthermore, on February 24, 2000 we
exchanged 524,126 of our common shares for 240,265 shares of Eastern Telecom
held by minority shareholders. As described above, we sold Eastern Telecom on
May 18, 2000, and the remaining Eastern Telecom minority interest was
repurchased.

Participants in the term note conversion and new equity participants also
received 1,098,492 and 396,497 warrants to acquire shares of our common stock at
an exercise price of $0.50 and $1.00 per share, respectively.


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Co-Development Agreement with ACIS, Inc. We have developed an advanced
state-of-the-art operating kernel under a co-development agreement with ACIS,
Inc., a Texas-based software technology company. We have licensed this
technology from ACIS to support our PC-based control software. As part of this
co-development agreement, Simtrol and ACIS agreed to an equity transaction
whereby we exchanged 500,000 shares of our common stock for 250,000 shares of
common stock of ACIS, representing approximately 5.0% of ACIS' outstanding
shares. This equity exchange occurred on February 29, 2000 and on March 7, 2000,
the United States Patent and Trademark office issued the patent certificate to
ACIS. We received an additional 50,000 shares of ACIS common stock as
consideration for assisting with the development of the kernel. Lastly, we
received a warrant to acquire additional shares in ACIS at an exercise price of
$2.00 per share. Once exercised, our total ownership in ACIS would be 20% of the
then outstanding ACIS shares. The 20% maximum is determined on a fully diluted
basis and includes the 300,000 shares issued by ACIS, as described above. This
option was originally exercisable at any time within 18 months (September 7,
2001) following the date the patent certificate was received by ACIS and may be
exercised by us for cash or the issuance of shares of our common stock. On
September 7, 2001, we renegotiated certain terms and conditions pertaining to
the warrant and now have until March 31, 2002 to exercise the warrant.
Additionally, the number of ACIS shares available under the warrant is now fixed
at 1,005,500 shares, which when combined with ACIS shares already held by us, is
equal to twenty percent of the fully diluted ACIS shares outstanding as of
September 7, 2001. Our Chief Technology Officer, Richard Mays, is the founder
and controlling shareholder of ACIS. Our chairman of the board, Larry Carr, also
serves on the board of directors of ACIS. We expect this technology to provide
us with a more robust, full featured and cost-effective controller for
videoconferencing and other complex audio/visual applications.


PRODUCTS

AUDIO VISUAL CONTROL SYSTEMS

Our core business is the design, production, and sale of a device control
software named ONGOER(TM) that allows a control system to manage and control a
wide variety of devices

ONGOER(TM) 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 A/V control systems market in that it is a software-based
system that can be installed to run on third-party hardware available on the
open market. Major competitors' A/V 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(TM) through third-party resellers and system
integrators specializing in the sale, installation, support and service of A/V
equipment, and by entering new markets for control systems technology.

The core concept of ONGOER(TM) is that it can be operated from any PC running
Windows(R) 2000. All interfaces, cables and cards can be purchased on the open
market, as can the controller itself. Integrators can put together their own
setup, or can purchase turnkey core control systems from us. With its unique
open architecture based on patented CycleFree(TM) methodology by ACIS, Inc.,
this software delivers real-time control to audiovisual-system management.
ONGOER's software-based technology allows integrators to change configurations
with ease. Any device that can be connected to a PC can be controlled with
ONGOER(TM).

We have developed OnROAD, ONGOER's remote operations, administration and
diagnostics utility, which is intended to harness the power and the reach of the
Internet to facilitate detection and correction of system problems from
anywhere. Integrators will 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. There's no need to purchase additional hardware or
software.

ONGOER(TM) utilizes the CycleFree(TM) foundation. Removing cycles from software
makes it immune to many of the errors that plague commercial software and
operating systems. CycleFree(TM) methodology, combined with the tested stability
of Windows(R) 2000, results in software that is more reliable, easy to write and
maintain, and that provides the high performance needed for real-time systems.


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

ONGOER(TM) not only makes a PC a nerve center for myriad third-party audiovisual
devices, its broad range of connection methods extends the flexibility further.
One may choose his device and make the connection.

The part of the control systems the end user has the most (and often the only)
contact with is the user interface. ONGOER(TM) 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 -- everything from inexpensive VGA monitors
to sophisticated touch screens, personal digital assistants like Palm Pilots,
IPaqs Visors, and even cell phones. Graphical user interfaces can be created
quickly and easily with Microsoft(R) Visual Basic. We also provide OnLooker as
an integral portion of the base software package. OnLooker includes a library of
artwork and customized ActiveX controls to provide integrators with a wide range
of choices that allow them to expedite the user interface development process.

PROPRIETARY TECHNOLOGY

AUDIO VISUAL CONTROL SYSTEMS

ONGOER(TM) is based on the ACIS Willie kernel (as further described below in
"Product Development Strategies") and CycleFree(TM) technology. The software
system has been organized according to a layered architecture, a vertical stack
comprised of five major sections:

         Application Layer. The application layer provides most of ONGOER's
         visible program features. The user interface, diagnostics,
         administration, and configuration of ONGOER(TM) all occur in the
         Application Layer. Microsoft(R) Visual Basic is the primary tool for
         tailoring the user interface to different application requirements.
         Application code generally consists of separate program executables
         communicating with ONGOER's services provided by the Broker Layer.
         Diagnostics, administration, and configuration are all provided in the
         application layer by separate program executables.

         Broker Layer. The broker layer executes the protocols that connect the
         device control features of ONGOER(TM) to the various application
         programs. The broker layer receives service requests from the
         application layer, and dispatches the necessary commands to the
         appropriate component modules. Applications typically request services
         via a command protocol over a TCP/IP connection. The broker layer
         listens for application requests for connections, and then creates a
         session to communicate with the application.

         Component Layer. The component layer contains the component technology
         modules written in W++ (a CycleFree(TM) variant of C++) to handle the
         most demanding complex real-time device requirements. The component
         layer is where the true value of the CycleFree(TM) methodology comes
         into full play. Once physical connectivity has been established to a
         device, the code to program the behavior of a device is contained in
         component technology modules in the component layer.

         Delivery Layer. The delivery layer contains the code to interface to
         physical connections or cards within the PC. Some devices are supported
         by Windows services while others are supported using CycleFree
         services. The layer provides the code to connect ONGOER(TM) to the
         myriad number of physical device interfaces. Connections to serial
         ports, parallel ports, IR transmitters and TCP/IP sockets are all
         provided by the delivery layer.

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         Engine Layer. The engine layer contains the low-level routines used by
         all the layers above it. This layer includes the Windows(R) operating
         system and the CycleFree(TM) Willie kernel. Windows is the underlying
         engine on top of which all ONGOER(TM) software executes. Windows
         provides powerful mechanisms to support the concurrency needed for
         real-time software development: the creation and synchronization of
         threads. The thread mechanisms allow the construction of responsive
         real-time software; however, the explicit management and
         synchronization of threads is a tricky job. Highly concurrent programs
         often suffer from transient errors caused by deadlock or unprotected
         critical sections. The Willie kernel provides ONGOER(TM) a second
         engine that can run CycleFree software. The Willie kernel manages
         thread creation and synchronization implicitly, creating real-time
         solutions that are protected from many potential sources of transient
         program error. The engine layer provides ONGOER(TM) with two run-time
         engines for the execution of Windows(R) and CycleFree(TM) applications.

We regard our ONGOER(TM) software as proprietary and have implemented protective
measures of both a legal (copyright) and practical nature. We derive
considerable practical protection for its software 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

We believe that the videoconferencing world is evolving into a "networks of
systems" where all systems from boardroom to rollabout to desktop will have to
interconnect. We believe that most systems in use today are not equipped to
handle these demands.

In order to increase sales and to reach and maintain profitability, management
believes that we can better leverage our technological and service competencies
by shifting software-based A/V control systems, ONGOER(TM), to third-party
resellers and system integrators who specialize in the sale, installation,
support and service of audio-visual equipment. This shift provides an
opportunity to enter new markets, and ends our dependence on the shrinking
high-end videoconferencing market.

This strategic shift resulted from a thorough review and analysis of our
business and our target markets, conducted by management. In addition to
redefining our business strategy, management identified opportunities for
improving short-term operating results. We closed operations that were
unprofitable or inconsistent with our core strategy, reduced administrative
overhead and negotiated the restructuring of our short- and long-term debt. We
implemented a new pricing strategy thereby improving gross margins, instituted
more focused marketing and sales support campaigns, realigned our
videoconferencing product families and implemented new operating procedures and
financial controls. Once fully implemented, our shift to channel resellers
should expand sales, lower the cost of sales and shorten the sales cycle for its
products and services.

These strategic initiatives have enabled us to reposition our product line and
to expand our presence in the A/V control systems market. This market, which to
some degree overlaps the high-end videoconferencing market already served by us,
is almost exclusively maintained by thousands of resellers and A/V system
integrators. Our products are being 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 that provides command and
control and remote diagnostics for audio, visual and room environment devices,
and for network connectivity.

Cutting-edge software allows us to custom design systems that consistently
perform a wide variety of complicated functions. With a simple touch of a
control panel, a technician in the A/V control room can perform any number of
customer specified tasks in rooms linked up to an ONGOER(TM) control system. Our
program engineers designed complex systems that have the ability to play a VCR
tape, run a ceiling projector, re-position a camera, start a player piano in a
different room, or open window draperies - simultaneously when necessary - all
with precision. Our new web-based delivery system and configuration tools will
allow third-party system integrators to sell and install the software, which we
believe will improve margins and our customer reach.


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As a part of a co-development agreement, we have partnered with ACIS to assist
in the development of an advanced operating kernel (the "Kernel"). We licensed
the Kernel to support ONGOER(TM), our new product architecture for PC-based
device control. We believe ONGOER(TM) is the most robust, full-featured and
cost-effective controller for all complex A/V applications on the market today.

Once established in the A/V control systems market, we envision developing
additional applications for other control system markets, including process
control applications in manufacturing environments and the burgeoning home
entertainment market. This may involve licensing aspects of the patented
Omega(TM) technology to manufacturers, in addition to third-party reseller
channels.

CUSTOMER SERVICE

AUDIO VISUAL CONTROL SYSTEMS

We offer custom component-technology development to support the integration of
complex devices, and custom user interface creation. In addition, in order to
encourage integrators to choose ONGOER(TM) the first time, we intend to provide
assistance in the installation process. Simtrol representatives will be there on
site when needed. Simtrol also coordinates on-site help for ONGOER(TM) control
systems after installation and for service. Our OnROAD technology and our
support team provide 24-hour remote diagnoses.

VIDEOCONFERENCING SYSTEMS

We generally provide a warranty for parts and labor on systems for 90 days from
the date of delivery. We maintain videoconference rooms and the necessary
transmission facilities and codecs to provide on-line assistance to our
installed customers at our executive offices in Norcross, Georgia. We also
provide a telephone help line to assist customers in the diagnosis of system
failures. Approximately 90% of all customer calls for assistance are generally
resolved through telephone or videoconference contact. The remaining 10% are
resolved by the removal and replacement of field replaceable units by customer
personnel or us. We maintain a spare parts inventory, and our policy is to
replace failed units, which are under warranty or subject to a service contract
within 24 hours of notification.

We offer several different maintenance programs, ranging from "help line"
telephone consultation to extended field service on a contract basis, which
includes parts, labor, and travel service with a guaranteed on-site response
within 48 hours. Warranty and contract service is provided from our Norcross,
Georgia location.


MARKETS

AUDIO VISUAL CONTROL SYSTEMS

Marketing and selling ONGOER(TM) successfully requires a business model quite
different from the one used to sell videoconferencing systems. Simtrol has
adopted a tiered sales model for ONGOER(TM). Instead of hiring sales
representatives as employees, we've recruited a network of manufacturers'
representatives covering the continental U.S as well as marketing through
reseller relationships with system integrators.

Manufacturers' representatives include:

         Audio Associates, in Columbia, Maryland, covering New Jersey, Delaware,
         Virginia, Maryland, Pennsylvania and Washington

         Rep-Presents, in Columbus, Ohio, covering Illinois, Indiana, Iowa,
         Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, North
         Dakota, Ohio, Pennsylvania, South Dakota, West Virginia, and Wisconsin

         Ron Tunks Sales, in Pompano Beach, Florida, covering Florida, Georgia,
         South Carolina, North Carolina, Alabama, Mississippi and Puerto Rico.

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Partners include:

         IBM Global Services, which is the largest systems integration firm in
         the world according to the VARBusiness 500.

         MCSi is the largest A/V integrator in the United States with over 126
         offices.

         Polycom is the world largest videoconferencing company.

         Others include, Ace Audio Visual, ADTECH Systems, Amigo Business
         Systems, Berway Visual Products, Inc., Brandywine Electronics Ltd.,
         Ceitronics, Digital Home Ssystems, Inc., ICOMM, Insight Research, MIS
         Technologies, RnB Enterprises, Rodata, Inc., Scharff Weisberg,
         Shoemaker Motion Picture and Signet Technologies.

With these companies, we have effectively hired a sales staff of representatives
experienced in selling A/V equipment and systems. After representatives have
attended an ONGOER(TM) control systems sales training course in our Norcross
offices, they will be qualified to re-sell the system to A/V system integrators
in their territories.

For each of the fiscal years ended December 31, 2001, 2000, and 1999,
international sales (sales outside of the United States and Canada) represented
approximately 0%, 0%, and 9%, respectively, of our total sales. Net product
sales attributable to Videoconferencing Systems, n.v. ("VSI Europe") decreased
from approximately $664,000 in 1999 to $0 in 2000, principally as a result of
the sale of the subsidiary. Net product sales attributable to VSI Europe
decreased from approximately $2.9 million during 1998 to $664,000 in 1999.


CUSTOMERS

AUDIO VISUAL CONTROL SYSTEMS

In 2002, our manufacturers' representatives will target the top U.S.
audio-visual systems integrators, who will in turn re-sell ONGOER(TM) to end
users.

VIDEOCONFERENCING SYSTEMS

Our customers include Fortune 1000 companies, mid-sized corporations, agencies
of state, local and federal governments, and health care facilities. They
include Bank of America, Boeing, Lockheed Martin, WorldCom, Duracell, BellSouth,
Verizon and Johnson & Johnson.

COMPETITION

AUDIO VISUAL CONTROL SYSTEMS

Within the audio/visual control system market, 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 A/V control systems market are AMX and
Crestron. They currently share 80% of all sales in this market.

AMX, headquartered in Richardson, Texas, was established in 1982. This publicly
traded company employs about 130 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.


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Both Crestron and AMX offer hardware-based control systems, the cores of which
are proprietary controllers, 486 PCs 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 their
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(TM) is a software-based control systems designed to run on
commodity hardware, we believe we have several advantages over AMX and Crestron:

-        With its unique open architecture, ONGOER(TM) software delivers
         real-time control to A/V systems management. No matter how many devices
         it controls, the response will be immediate and precise.

-        Robust CycleFree(TM) software design allows rapid addition of new
         features without compromises to software reliability.

-        It can run on any PC running Windows(R) 2000. When the PC becomes
         outdated, integrators can avoid obsolescence inexpensively by replacing
         individual hardware components or the entire machine with any PC
         available on the open market. ONGOER(TM) and Windows(R) 2000 take
         advantage of new hardware as soon as it's available. Prices of PC's
         continue to drop, while performance continues to increase. Utilizing
         commodity hardware increases A/V integration project profit margins.

-        No need to add an additional PC to run presentation software or other
         applications - they can be run from the ONGOER(TM)PC controller.

-        PC controllers can maintain detailed data logging operations. If
         something does go wrong, diagnosis and correction will be much quicker
         with the availability of detailed operations logs.

-        Any device that can be connected to a PC can be controlled by
         ONGOER(TM). Support for PC cards, cables and outboard boxes expand its
         connectivity options, and provides protection against obsolescence.
         Connection methods include but are not limited to serial, infrared
         (IR), radio frequency (RF), Sony S-link, Wireless Ethernet, and USB.

-        OnROAD capitalizes on Windows 2000's built-in web server to provide
         complete control of any ONGOER(TM) system from any browser, anywhere in
         the world. OnROAD is an integral feature of the core ONGOER(TM)
         software package. No need to purchase additional hardware or software.

-        OnROAD will help integrators increase the profit margin on any project
         by drastically reducing the number of visits to client sites to correct
         problems. Diagnosing and correcting the majority of problems can be
         accomplished remotely.

-        Windows(R)2000 is one of the most stable operating systems to date.
         Additionally, it provides access to even more features that can be
         integrated into ONGOER(TM)-- voice activation, multi-monitor support,
         event scheduling and more.

-        ONGOER(TM) provides a wide range of options for user interface devices.
         SVGA monitors, wireless touch panels, handheld personal digital
         assistants (PDAs) like Palm Pilots and Visors can be employed.

-        Microsoft(R)Visual Basic is the chief user interface development tool.
         More than 50% of professional programmers in the US use Visual Basic.
         Locating and training technical talent will require minimal effort on
         the part of integrators.

-        OnLooker user interface development tool augments the visual Basic
         development environment, providing pre-designed artwork and code that
         significantly reduces UI development time.

                                       9
<PAGE>

RESEARCH AND DEVELOPMENT

All of our product engineering, including costs associated with design and
configuration of fully developed Simtrol systems for particular customer
applications is accounted for in our financial statements as research and
development expenses. During the years ended December 31, 2001, 2000, and 1999,
our aggregate expenditures for research and development of new products or new
components of our ONGOER and existing Simtrol systems were $797,071, $495,589
and $416,225, respectively. For the fiscal 2001, our research and development
expenses increased approximately 61% as a result of not capitalizing expenses
for the development of the new Ongoer(TM) product line after March 31, 2001, the
date of the product release, and increased headcount to further enhance the
features of Ongoer(TM). During fiscal 2000, our research and development
expenses increased by approximately 19% due to an increase in personnel to aid
in the development of the new ONGOER(TM) product line.

EMPLOYEES

As of March 15, 2002, we employed 23 persons full time, including three
executive officers. Of the full-time employees who were not executive officers,
two were engaged in sales and marketing, five in service, eleven in research and
development, and two in general administration. Employee relations are
considered good, and we have no collective bargaining contracts covering any of
our employees.

ITEM 2.  PROPERTIES.

We maintain our executive and sales offices, as well as our production
facilities, in 26,140 square feet of leased office and warehouse space in
Norcross, Georgia, under a five-year lease, which expires in October 2002. We
also lease 18,000 square feet of office and warehouse space in an adjoining
facility, which is currently being subleased on a month-to-month basis.

ITEM 3.  LEGAL PROCEEDINGS.

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

We have been notified of the potential for litigation with regard to the sale of
our subsidiary VSI Solutions, Inc, doing business as Eastern Telecom by
PentaStar Communications Inc, the purchaser, for alleged material breaches of
the Representations and Warranties section of the sales agreement. We believe
this is without merit and intend to vigorously oppose any litigation that might
result. We presently have 57,122 shares of PentaStar's common stock recorded as
investments on the balance sheet. These shares are being held in escrow relating
to our sale of ETI in 1999. This action may significantly delay or prevent our
ability to convert these shares into cash.

We are 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 our position or results of
operations.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

There has been no occurrence requiring a response to this Item.

                                       10
<PAGE>

                                     PART II


ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Our common stock is traded on the OTC Bulletin Board under the symbol "SMOL."
Our common stock had been traded on the OTC Bulletin Board under the symbol
"VSIN" until September 30, 2001 at which time we changed our name to Simtrol,
Inc. Previous to this our common stock had been traded on the Boston Stock
Exchange under the symbol "VSI" from November 1991 until February 18, 1998, when
we voluntarily delisted from the exchange. The common stock was quoted on the
Nasdaq SmallCap Market from February 28, 1992 through September 22, 1999, when
we were delisted.

On January 15, 1999, we implemented a 1-for-4 reverse split of shares of our
common stock. The following table sets forth the quarterly high and low bid
quotations per share of common stock on the Nasdaq SmallCap Market and/or OTC
Bulletin Board, as applicable, as reported for the periods indicated, adjusted
to reflect the effects of the reverse split. These prices also represent
inter-dealer quotations without retail mark-ups, markdowns, or commissions and
may not necessarily represent actual transactions.

<TABLE>
<CAPTION>
                                                                        HIGH              LOW
                                                                    --------------    -------------
             <S>                                                    <C>               <C>
             FISCAL YEAR ENDED DECEMBER 31, 2000
             First Quarter                                             $ 8.00           $  0.47
             Second Quarter                                              6.25              1.94
             Third Quarter                                               3.62              2.25
             Fourth Quarter                                              3.16              0.88

             FISCAL YEAR ENDED DECEMBER 31, 2001
             First Quarter                                             $ 4.50           $  0.94
             Second Quarter                                              2.10              1.02
             Third Quarter                                               1.90              0.65
             Fourth Quarter                                              0.90              0.46
</TABLE>


As of March 15, 2002, we had approximately 547 holders of record of common stock
and in excess of 4,200 beneficial holders of Simtrol common shares.

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 on the Common Shares in the future
will depend upon our earnings, capital requirements, financial condition, prior
rights of the preferred stockholders, and other relevant factors.


                                       11
<PAGE>

ITEM 6.  SELECTED FINANCIAL DATA.

The following selected financial data for the five years ended December 31,
2001, 2000, 1999, 1998, and 1997 are derived from our consolidated financial
statements. Operations of Integrated Network Services are included in
discontinued operations as the subsidiary was closed in December 1998.
Information for the years ended December 31, 2000, 1999, 1998 and 1997 includes
Eastern Telecom, which was acquired in October 1996. We sold Eastern Telecom on
May 18, 2000, so its results for each year listed below are also stated as
discontinued operations. See Note C to the consolidated financial statements.
Information for the years ended December 31, 2001, 2000, 1999, 1998 and 1997
includes VSI Solutions Inc., which was acquired in April 1995. The data should
be read in conjunction with the consolidated financial statements, related notes
and other financial information included herein.

<TABLE>
<CAPTION>
                                                              Year Ended December 31,
                                       ------------------------------------------------------------------
                                           2001         2000         1999         1998           1997
                                       ------------- ----------------------------------------------------
                                                       (in thousands, except per share data)
    <S>                                <C>           <C>           <C>           <C>           <C>
    STATEMENTS OF OPERATIONS DATA:
    Revenue                            $    1,899    $    4,041    $    7,132    $  13,574      $  12,168
    Cost of revenues                        1,312         2,309         3,716       12,243          9,687
                                       ----------    ----------    ----------    ---------      ---------
    Gross Profit                              587         1,732         3,416        1,331          2,481
    Operating and other expenses            7,055         4,044         5,936        9,558          8,418
                                       ----------    ----------    ----------    ---------      ---------
    Net loss from continuing operations
     before taxes
                                           (6,468)(1)    (2,312)       (2,520)      (8,227)(2)     (5,937)

    Income tax benefit                                      325
                                               --                          --           --             --
    Net (loss) from continuing
    operations                             (6,468)       (1,987)       (2,520)       (8227)        (5,937)

    Income (loss) from discontinued            --           456          (320)      (8,709)(2)        120
                                       ----------    ----------    ----------    ---------       --------
    operations

    Net loss                           $   (6,468)   $   (1,531)   $   (2,840)   $ (16,936)     $  (5,817)
                                       ==========    ==========    ==========    =========      =========

    Net loss per share from:
    Continuing operations              $    (0.42)   $    (0.14)   $    (0.20)   $   (0.69)     $   (0.54)
    Discontinued operations                  0.00          0.03         (0.03)       (0.73)          0.01
                                       ------------------------    ------------- ---------      ---------
                                       $    (0.42)   $    (0.11)   $    (0.23)       (1.42)     $   (0.53)
                                       ==========    ==========    ==========    =========      =========

                                                                  December 31,
                                       --------------------------------------------------------------------
                                           2001         2000          1999          1998          1997
                                       ---------------------------------------- ---------------------------
                                                                 (in thousands)
    BALANCE SHEET DATA:
    Working capital (deficit)           $  (1,591)  $       993    $     (951)   $     (49)   $    3,690
    Total assets                            1,711         7,234         4,911        8,275        20,809
    Long-term debt                             29            42            --        1,106            --
    Stockholders' equity                    (764)         5,487        (1,197)       1,003        15,591
</TABLE>

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

(1)      The Company took a non-cash and non-recurring write-down of its
         investments of $3.4 million in 2001. The write-down included the value
         of its investment in the PentaStar Communications Inc. common shares of
         $1.1 million and the investment of its interest in ACIS, Inc. of $2.3
         million.

(2)      The Company took a non-cash and non-recurring charge of approximately
         $10.3 million in 1998. The charge included: the write-down of obsolete
         or slow-moving videoconferencing and demonstration inventory ($1.88
         million); the loss from the sale of investments in two companies
         ($450,000); a write-down of capitalized software development costs
         ($180,000); and the write-off of most of the goodwill from the
         acquisitions of VSI Europe in 1992 and Eastern Telecom in 1996 ($7.76
         million).

                                       12
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

The following discussion and analysis should be read in conjunction with the
consolidated financial statements and notes thereto included elsewhere in this
Form 10-K.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this filing and in the documents incorporated by
reference herein are "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995, such as statements relating to
financial results and plans for future business development activities, and are
thus prospective. Such forward-looking statements are subject to risks,
uncertainties and other factors, which could cause actual results to differ
materially from future results expressed or implied by such forward-looking
statements. The words "may," "would," "could," "believe," "intend," "expect,"
"estimates," "anticipates," "intend," and similar expressions and variations
thereof are intended to identify forward-looking statements. Potential risks and
uncertainties include, but are not limited to, economic conditions, competition
and other uncertainties detailed from time-to-time in the Company's Securities
and Exchange Commission filings.

OVERVIEW

Simtrol, Inc. is an Atlanta-based holding company. We are a software technology
company specializing in Audio/Visual (A/V) control in which we design,
manufacture, market, service and support our new Ongoer software control system
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, which operated on
PC platforms, through our wholly owned subsidiary, Videoconferencing Systems,
Inc. We continue to service the videoconferencing segment of our business. In
addition, we resold voice and data services and equipment on behalf of large
telecommunications companies, through our majority-owned subsidiary, VSI Network
Solutions, Inc., doing business as Eastern Telecom. We sold Eastern Telecom to
PentaStar Communications, Inc.; a Denver, Colorado based communications services
agent on May 18, 2000. The consolidated statements of operations have been
adjusted to reflect the discontinuance of Eastern Telecom's operations.

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
audio/video 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 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 audio/visual
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 our debt holders. This restructuring included raising
additional equity capital through the private sale of common stock and
exchanging our common stock for shares of Eastern Telecom held by its minority
interest holders, restructuring and then subsequently retiring our debt, selling
non-strategic assets and aggressively managing accounts receivable and
inventory.

These restructuring initiatives have enabled us to reposition our product line
and to expand our presence in the audio/visual 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.


                                       13
<PAGE>

Once established in the audio/visual 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 the consolidated financial statements of Simtrol, Inc. 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:

-   Revenue recognition. Our revenue recognition policy is significant because
    our revenue is a key component of our results of operations. In addition,
    our revenue recognition determines the timing of certain expenses. We follow
    very specific and detailed guidelines in measuring revenue; however, certain
    judgments affect the application of our revenue policy. Revenue results are
    difficult to predict, and any shortfall in revenue or delay in recognizing
    revenue could cause our operating results to vary significantly from quarter
    to quarter and could result in future operating losses. (See Note A to our
    consolidated financial statements).

-   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. Management is
    required to use professional judgment in determining whether development
    costs meet the criteria for immediate expense or capitalization.

-   Impairments of Long-Lived Assets/Investments. We record impairment losses on
    long-lived 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

During the year ended December 31, 2001, our total assets decreased
approximately 68.1% to $2,311,236 from $7,234,290 at December 31, 2000. A large
part of the decrease resulted from a decrease in cash of $1,706,784, a decrease
in investments of $2,977,831 and to a lesser extent a decrease in accounts
receivable of $136,355 and a decrease in capitalized software development cost
of $85,342. The decrease in cash is the result of using cash for operations. The
decrease in investments is the result of a decline in the value of the 57,122
shares of PentaStar common stock we received as part of the sale of Eastern
Telecom with a fair value of $10,853 at March 19, 2002, with the decline in
market value which is deemed to be other than temporary, versus the $1,256,684
at December 31, 2000. We also recognized an impairment loss on our investments
in ACIS, Inc. of $2,302,000 in accordance with FAS 121. Accounts receivable
decreased as a result of lower sales and increased emphasis on collections.
Capitalized software development costs decreased as a result of the amortization
of these cost beginning in March 2001 at which time we began shipping our Ongoer
product to customers. Current liabilities increased in 2001 by $739,955, or 43%,
compared to 2000 principally due to an increase in accounts payable of $422,196
and convertible debt of $293,290. The convertible debt increased as a result of
our issuing convertible debt to two Directors of the Company in return for
advancing us funds to meet general operating expenses during November and
December 2001. This debt matures on February 7, 2002, is convertible into shares
of the Company at $0.49 per share and bears interest at prime plus 1%. In
exchange for this convertible debt we issued warrants to these Directors on the
basis of one warrant for each $1.00 advanced. The warrant price was fixed at the
closing price of the Company's common share price on the date of the advance. In
the event that the convertible debt must be extended, the Directors shall
receive additional warrants. We received a 60 day extension on February 7, 2002
and issued 100,000 additional warrants to each Director. In return for this
funding we pledged certain assets of the Company. The Company will continue to
issue an additional 50,000 warrants to each Director for each subsequent 60 day
extension term granted on the debt.


                                       14
<PAGE>

RESULTS OF OPERATIONS

The results for the years 2000 and 1999 have been restated to reflect the
discontinuance of the operations of Eastern Telecom.

Revenues

Revenues were $1,899,328, $4,041,204 and $7,132,248 in fiscal 2001, 2000 and
1999, respectively. The decreases of 53% from 2000 to 2001 and 43% from 1999 to
2000 were primarily due to our efforts to only pursue profitable sales and the
transition to our new Ongoer software product line from manufacturing,
developing and installing videoconferencing systems.

Gross Margin

Gross margin as a percentage of revenues was approximately 31%, 43% and 48%
(before non-recurring items) in fiscal years 2001, 2000 and 1999, respectively.
The decrease in gross margin in fiscal year 2001 as compared to fiscal year 2000
was due primarily to the amortization of capitalized software cost for the
Ongoer (TM) product line, which began shipping in March 2001. It is our policy
that software development costs are capitalized once the product becomes
technologically feasible and then these costs are amortized over 36 months once
the first sale is made. Amortization costs for the twelve months ended December
31, 2001 were $208,215. The decrease in gross margin in fiscal year 2000 over
fiscal year 1999 was due primarily to the write-off of obsolete inventory of
$208,000.

Selling, General & Administrative Expenses

Selling, general and administrative expenses were $2,663,939, $3,288,724, and
$4,467,821 for fiscal 2001, 2000 and 1999, respectively. The 19% decrease from
fiscal 2000 to 2001 and the 26% decrease from fiscal 2000 to 1999 resulted from
the consolidation of operations, reductions in personnel and ongoing efforts to
cut costs.

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 over three years or the useful life of the
product, whichever is shorter. These expensed costs were $797,071, $495,589 and
$416,225 for fiscal 2001, 2000 and 1999, respectively. The 61% increase from
fiscal 2000 to fiscal 2001 was the result of adding personnel to aid in the
development of the new ONGOER(TM) product line and no longer capitalizing
software development cost on this product. The 19% increase from 1999 to 2000
principally resulted from the addition of personnel.

Impairment Loss

In 2001, an impairment loss of $2,302,000 was charged to operations, principally
due to the write-down of our investment in ACIS, Inc., in accordance with FAS
121. We compared the carrying value of ACIS, Inc. common shares at December 31,
2001 and could not determine a fair value of the ACIS, Inc, investment.

Loss on Sale of Investments

The $167,539 loss on the sale of subsidiary in 1999 resulted from the sale of
VSI Europe, and included the write-off of cumulative foreign currency
translation adjustments of $319,000.

Loss on Decline in Market Value of Investment

We took a $1,131,147 write-down on the carrying value of the 57,122 common
shares of PentaStar Communications, Inc., held in escrow, that we obtained in
the sale of Eastern Telecom, Inc. These shares are presently valued at $0.19 per
share as of March 19, 2002. These shares declined in value upon an announcement
by PentaStar that they were having liquidity problems and we believe that the
decline in market value is other than temporary as described in FAS 115.

                                       15
<PAGE>

Other Expenses

Other expenses were $160,754, $259,831, and $884,244 for fiscal 2001, 2000 and
1999, respectively. The decrease from 2000 to 2001 was the result of a decrease
in interest expense as we paid down our debt. The decrease from 1999 to 2000 is
primarily related to a $1,010,000 decrease in interest expense and debt discount
costs; a decrease in foreign currency exchange losses of $93,000, offset by an
increase of $303,000 in amortization of warrant discounts and an increase in
penalties of $111,000 related to state sales tax liabilities.

Net Loss from Continuing Operations

Net losses from continuing operations were $6,468,180, $1,986,872 and $2,519,969
for fiscal 2001, 2000 and 1999, respectively. The increase in the loss from 2000
to 2001 was the result of lower revenues, an impairment loss associated with our
investment in ACIS, Inc. and a write down of the PentaStar shares due to a
decline in value that we view as other than temporary. The decrease in the loss
from 1999 to 2000 was the result of lower operating expenses in 2000 as compared
to 1999.

Discontinued Operations

On May 18, 2000, we sold Eastern Telecom, our network reselling subsidiary; and,
as a result have accounted for Eastern Telecom as discontinued operations.
Accordingly, operating results for both subsidiaries have been reclassified and
reported as discontinued operations. Operating income (loss) from discontinued
operations was $(32,556) in 2000 and $(319,625) in 1999.

Gain on Sale of Subsidiary

We realized a gain of $488,829, net of taxes of $325,000, from the sale of our
Eastern Telecom, Inc. subsidiary that took place on May 18, 2000.

Net Loss

The net loss for fiscal 2001 was $6,468,180 or $0.42 per share. The net loss for
fiscal 2000 was $1,530,599 or $0.11 per share. The net loss for fiscal 1999 was
$2,839,594 or $0.23 per share. The net loss for 2001 was due to lower revenues
and the losses associated with our investments. The net loss for 2000 was
reduced by $1,308,995 due to decreases in overhead and the gain on the sale of
Eastern Telecom of $813,829, including a tax benefit of $325,000.


LIQUIDITY AND SOURCES OF CAPITAL

General

As of December 31, 2001, we had cash and cash equivalents of $72,764. We do not
have sufficient funds for the next 12 months. We currently require substantial
amounts of capital to fund current operations for the payment of past due
obligations and the deployment of our new Ongoer product line. Due to recurring
losses from operations, an accumulated deficit, negative working capital and our
inability to date to obtain sufficient financing to support current and
anticipated levels of operations, our independent public accountant's audit
opinion states that these matters raise substantial doubt about our ability to
continue as a going concern. We are continuing our efforts to raise additional
funds through the issuance of a private placement. We have also issued
promissory notes to selected individuals.

In November and December 2001 we issued convertible debt to two Directors of the
Company in return for advancing us $400,000 to meet general operating expenses.
This debt matures on February 7, 2002, is convertible into shares of the Company
at $0.49 per share and bear interest at prime plus 1%. In exchange for this
convertible debt we issued warrants to these Directors on the basis of one
warrant for each $1.00 advanced. In the event that this debt must be extended
these Directors shall receive additional warrants. We received a 60 day
extension on February 7, 2002 and issued 100,000 additional warrants to each
Director. In return for this funding we pledged certain assets of the Company.
The Company will continue to issue an additional 50,000 warrants to each
Director for each subsequent 60 day extension term granted on the debt.

                                       16
<PAGE>

In March 2000, we raised a total of approximately $5.6 million in new equity
through two related transactions. In the first transaction, we raised $4,054,876
through the sale of 1,351,625 shares of common stock at $3.00 per share to 38
accredited investors. Approximately $826,668 of the proceeds was used to repay
the remaining balance of the 7% Secured Convertible Debenture held by Thompson
Kernaghan & Co. Ltd. ("Kernaghan"). Under the terms of a debt restructuring
agreement, Kernaghan had the option to convert the Secured Convertible Debenture
into shares of our common stock beginning January 1, 2000 at the initial rate of
7.5% per month, with a conversion price equal to the lesser of $1.00 or the
5-day average closing bid price of our common stock prior to the date of any
such transaction, with a floor of $0.50 per share. Kernaghan had previously
converted $144,529 of principal plus accrued interest into 216,945 shares of our
common stock.

In the second transaction, we exchanged 524,126 of our common shares for
240,265 (24%) of the Eastern Telecom shares held by its minority shareholders.
By this transaction, we retired 68% of our put obligations under a shareholders
agreement that gave Eastern Telecom's minority shareholders the right to put
their shares to us at $6.50 per share. The remaining minority interest shares
were repurchased pursuant to the terms of a shareholders agreement.

On May 18, 2000 we received $1,787,000 in cash from the sale of Eastern Telecom,
of which $500,000 was placed in escrow pending the collection of specified
accounts receivable. As of February 15, 2001 approximately $391,000 of those
accounts receivable have been collected but not yet released from escrow. We
also received 57,122 shares of Pentastar Communications stock with a market
value as of December 31, 2000 of $1,256,684. This stock is also held in escrow
and is available to us in three distributions beginning on November 18, 2001 and
every six months thereafter. The Eastern Telecom assets were combined with the
assets of USTeleCenters, Inc. and Vermont Network Services Corporation and under
an earn-out provision in the sales agreement, we were entitled to additional
compensation based on the combined financial results of the combined Eastern
Telecom, USTeleCenters and Vermont Network Services acquired operations for
calendar year 2000. These earn-out targets were not met and no additional
compensation was received.

We expect to spend approximately $103,000 for capital expenditures in fiscal
2002.


                                       17
<PAGE>

CONVERTIBLE DEBENTURES/TERM NOTES

On February 23, 1998, we issued $3,000,000 of 5% Convertible Debentures due
February 2000 ("the Debentures") to Kernaghan, the proceeds of which were
utilized for working capital purposes. During 1998, $710,000 of debentures, plus
accrued interest of $13,531, were converted by the debenture holder into 445,956
shares of our common stock. We also paid $128,858 in accrued interest and fees.
In November 1998, the remaining debentures were converted into a $900,000 term
note to Kernaghan, due May 16, 1999.

On August 31, 1999, we restructured our debt with Kernaghan, which totaled
$1,089,750 at that date. We made a cash payment of $150,000 at closing, and the
remaining balance was exchanged for a 7% secured convertible debenture, with a
one-year term. The debenture was secured by a lien on our ownership interest in
Eastern Telecom, which was junior to our converting term note holders and new
investors, as discussed below. Kernaghan had the option to commence converting
the debenture into shares of our common stock at the initial rate of 7.5% per
month beginning January 1, 2000. The conversion price was the lesser of $1.00
per share or the five-day average closing bid price of our common stock prior to
the date of any such conversion, with a floor of $0.50 per share. Kernaghan
converted $144,746 of principal plus accrued interest into 216,945 shares of our
common stock during January and February 2000. On March 1, 2000, we repaid the
remaining balance of the debt, including interest.

As part of closing the August 31, 1999 Kernaghan transaction, $1,213,000 of our
18-month term notes due March 31, 2000 were converted into 195,099 shares of
Eastern Telecom common stock which were owned by us, representing a 19.5%
minority interest in Eastern Telecom. In addition, $1,040,000 of new capital was
raised by selling a 16.0% minority interest in Eastern Telecom. The
consideration received for the sale of shares of common stock of Eastern Telecom
was based on an internal valuation of Eastern Telecom. Under the terms of the
Kernaghan agreement, we agreed to sell our remaining interest in Eastern Telecom
at not less than fair market value, provided the terms of any such transaction
are otherwise acceptable to us. Additionally, Eastern Telecom's minority
shareholders have a put option, which gives them the right to put their Eastern
Telecom shares back to us after one year, and we have a call option to reacquire
shares of Eastern Telecom at any time, both at a price of $6.50 per share of
Eastern Telecom common stock. As described above, we sold Eastern Telecom and
repurchased remaining Eastern Telecom minority interest.

Participants in the term note conversion and new equity participants also
received 1,098,492 and 396,497 warrants to purchase our common stock at $0.50
and $1.00 per share, respectively. In conjunction with the issuance of the
warrants, we valued the warrants at $320,968 using the Black-Scholes option
pricing model in accordance with SFAS No. 123, "Accounting for Stock-Based
Compensation." This warrant value was amortized to interest expense over the
term of the put, which was one year, and was fully expensed upon the sale of
Eastern Telecom.

OPERATING LOSS CARRYFORWARDS

As of December 31, 2001, we had operating loss carryforwards for U.S. income tax
purposes of approximately $38,174,000 available to reduce future taxable income
through 2016. We also have investment, research and experimental credits of
approximately $156,000 available to reduce future income taxes payable through
2021. During 1993, we experienced a change in control, as defined under Section
382 of the Internal Revenue Code. As a result, the utilization of approximately
$7,000,000 in tax loss carryforwards will be limited to approximately $1,000,000
annually.


                                       18
<PAGE>

FACTORS AFFECTING FUTURE PERFORMANCE

The following summarizes certain of the risks inherent in our business:

We may not be able to obtain additional capital to finance our operations when
needed.

We will require additional capital or other funding to finance our operations,
new market development and continued growth. We may seek additional equity
financing through the sale of securities on a public or a private placement
basis on such terms as are reasonably attainable. We may not be able to obtain
such financing when needed, or that if obtained, it may not be sufficient or on
terms and conditions acceptable to us. If we sell shares of our common stock,
our existing shareholders will suffer dilution, which could be material.

We may not be able to achieve or sustain profitability in the future.

After 15 years of operations, we have not reported any profits for a full year
of operations and, as of December 31, 2001, we had an accumulated deficit of
$57.7 million. We may not be able to achieve or sustain profitability in the
future. We anticipate an increase in expenses as a result of research and
development and marketing for our new products. 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 audio/visual 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.

If we fail to develop competitive products in response to technological changes,
our business will not grow or remain competitive.

The market for our products is characterized by rapidly changing technology,
evolving industry standards and frequent product introductions. Product
introductions are generally characterized by increased functionality and quality
at reduced prices. If we are unable, for technological or other reasons, to
develop competitive products in a timely manner in response to changes in the
industry, our business and operating results would be significantly harmed. For
example, the successful launch of ONGOER(TM), our second-generation PC-based
device controller, depends on our ability to complete the design and development
of complex audio/visual control software built on a new software kernel
co-developed with ACIS, Inc.

Our ability to successfully develop and introduce on a timely basis new and
enhanced products that embody new technology, and achieve levels of
functionality and prices that are acceptable to the market will be a significant
factor in our ability to grow and to remain competitive. For instance, the
ability to transact business via the Internet is becoming increasingly
important. Accordingly, in order to remain competitive, we are currently
developing a system, that will allow us to deliver products and services to our
customers via the Internet. We may not be able to timely or effectively
implement this strategy.

Operating results could be adversely affected by a disruption in supply or a
significant price increase of videoconferencing components or failure of a third
party supplier to remain competitive in price.

Substantially all of our videoconferencing components, subsystems and assemblies
are made by outside vendors. Disruption in supply, a significant increase in
price of one or more of these components or failure of a third party supplier to
remain competitive in functionality or price could result in lost sales. We
could experience such problems in the future. Similarly, excessive rework costs
associated with defective components or process errors associated with our
anticipated new product line of videoconferencing systems could adversely affect
our business and operating results.


                                       19
<PAGE>

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 and videoconferencing systems to a small number of
major customers. During the year ended December 31, 2001, approximately 66% of
our revenues were from four large customers. Further, we do not have long term
contracts with 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. Since 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.

We may not be able to maintain or improve our competitive position because there
are competitors who currently engage in or may enter the market with far greater
technical and financial resources than we have.

Competition in the command and control and video communications markets is
intense. We expect other competitors, some with significantly greater technical
and financial resources, may enter these markets. 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. In the command
and control market, our primary competitors are AMX, Inc. and Crestron
Electronics, Inc.

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:

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

We may not be able to regain our Nasdaq listing.

Effective as of the close of business on September 22, 1999, our common stock
was delisted from the Nasdaq SmallCap Market and began trading on the OTC
Bulletin Board. The delisting occurred as a result of the minimum bid price on
our common stock being less than $1.00 per share and our net tangible assets
being under $2.0 million. Because the requirements for a new listing on the
Nasdaq Stock Market are substantially more onerous than the requirements for
continued listing, we may not be in a position in the future to reapply for
listing on Nasdaq. Because the OTC Bulletin Board is generally a less efficient
market than the Nasdaq Stock Market, the liquidity and volatility of our shares
could be adversely impacted. Furthermore, institutional investors are less
likely to be interested in stocks trading on the OTC Bulletin Board.

                                       20
<PAGE>

The Securities and Exchange Commission's rules regarding penny stocks may
restrict your ability to resell our shares.

Our common stock is subject to Rules 15g-1 through 15g-9 of the Securities
Exchange Act of 1934, which imposes additional sales practice requirements on
broker/dealers who sell such securities to persons other than established
customers and accredited investors. Generally, accredited investors include
institutions with assets in excess of $5,000,000 or individuals with net worths
in excess of $1,000,000 or annual incomes exceeding $200,000 individually or
$300,000 jointly with their spouses. The broker/dealer must make a special
suitability determination for the purchaser and receive the purchaser's written
agreement to the transaction prior to the sale. The broker/dealer must furnish
the purchaser a document outlining the risks associated with investing in penny
stocks. Furthermore, the broker/dealer must inform the purchaser of:

-        the bid and offer price quotes for penny stock,
-        the number of shares to which the quoted prices apply;
-        the brokerage firm's compensation for the trade; and
-        the compensation received by the brokerage firm's salesperson for the
         trade.

Consequently, the rules may adversely affect the ability of broker/dealers to
sell our common stock, which may affect your ability to resell our common stock.

Resales of our common stock may depress our stock price.

We currently have effective registration statements covering the resale of
6,134,616 shares of our common stock by certain shareholders. The sale of these
shares into the market may adversely affect the market price of our common
stock.


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We conduct most of our business in the United States and therefore, we believe
our exposure to foreign currency exchange rate risk at December 31, 2001 was not
material. The value of our financial instruments is generally not significantly
impacted by changes in interest rates and we have no investments in derivatives.
Fluctuations in interest rates are not expected to have a material impact on
interest expense.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The following financial statements are filed with this report:

         Report of Independent Certified Public Accountants

         Consolidated Balance Sheets as of December 31, 2001 and December 31,
         2000

         Consolidated Statements of Operations for Years Ended December 31,
         2001, 2000 and 1999

         Consolidated Statements of Stockholders' Equity for Years Ended
         December 31, 2001, 2000 and 1999

         Consolidated Statements of Cash Flows for Years Ended December 31,
         2001, 2000 and 1999

         Notes to Consolidated Financial Statements


                                       21
<PAGE>


               Report of Independent Certified Public Accountants



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

We have audited the accompanying consolidated balance sheets of Simtrol, Inc. (a
Delaware corporation) and subsidiaries as of December 31, 2001 and 2000 and the
related statements of operations, stockholders' equity, and cash flows for the
years ended December 31, 2001, 2000 and 1999. 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 audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 audits provide a
reasonable basis for our opinion.

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, 2001 and 2000, and the results of its operations and its cash
flows for the years ended December 31, 2001, 2000 and 1999, 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. As discussed in Note B to the
financial statements, the Company has experienced net losses of $6,468,180 and
$1,530,599 for the years ended December 31, 2001 and 2000, respectively.
Additionally, the Company's current liabilities exceeded its current assets by
$1,590,616 and the Company had a stockholders' deficit of $763,556 at December
31, 2001. These factors, amongst others, raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also described in Note B. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.


/s/ GRANT THORNTON LLP

Atlanta, Georgia
March 1, 2002


                                       22
<PAGE>

                         Simtrol, Inc. and Subsidiaries

                           CONSOLIDATED BALANCE SHEETS



                                     ASSETS

<TABLE>
<CAPTION>
                                                                                    December 31,
                                                                       ----------------------------------------
                                                                               2001                 2000
                                                                       -------------------- -------------------
<S>                                                                    <C>                  <C>
  CURRENT ASSETS
     Cash and cash equivalents                                          $         72,764           1,779,548
     Accounts receivable, less allowance for doubtful accounts
       of $226,244 and $244,630 at December 31, 2001 and 2000,
       respectively                                                              375,347             511,702
     Inventories, less allowance for obsolescence of $826,585 and
       $618,656 at December 31, 2001 and 2000, respectively                      395,012             407,044
     Prepaid expenses                                                             11,591                   -
                                                                       -------------------- -------------------

         Total current assets                                                    854,714           2,698,294

  PROPERTY AND EQUIPMENT, net                                                    206,400             252,701

  OTHER ASSETS
     Software development costs, net                                             624,655             709,997
     Investments                                                                  10,853           3,558,684
     Other long term assets                                                       14,614              14,614
                                                                       -------------------- -------------------

                                                                                 650,122           4,283,295
                                                                       -------------------- -------------------

                                                                         $      1,711,236     $    7,234,290
                                                                       ==================== ===================
</TABLE>

The accompanying notes are an integral part of these statements.


                                       23
<PAGE>







                                 LIABILITIES AND STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                                                                December 31,
                                                                     -----------------------------------
                                                                            2001             2000
                                                                     -----------------------------------
<S>                                                                  <C>                <C>
CURRENT LIABILITIES
   Current portion of capital lease                                  $          38,453  $       25,000
   Convertible debt                                                            293,290               -
   Accounts payable                                                          1,042,995         453,021
   Accrued expenses                                                            360,659         440,097
   Deferred revenue                                                            625,583         702,907
   Current liabilities of discontinued operations                               84,350          84,350
                                                                     -----------------------------------

       Total current liabilities                                             2,445,330       1,705,375

Capital lease payable, less current portion                                     29,462          41,738

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; issued and outstanding
     15,238,703 shares at December 31, 2001
     and 15,163,218 at December 31, 2000                                        15,239          15,163
   Additional paid-in capital                                               56,937,425      56,605,370
   Accumulated deficit                                                     (57,716,220)    (51,248,040)
   Accumulated other comprehensive income                                          --          114,684
                                                                     -----------------------------------

                                                                              (763,556)      5,487,177
                                                                     -----------------------------------

                                                                     $       1,711,236    $  7,234,290
                                                                     ===================================
</TABLE>


The accompanying notes are an integral part of these statements



                                       24
<PAGE>

                         Simtrol, Inc. and Subsidiaries

                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                           December 31,
                                                           ----------------------------------------------
                                                                2001           2000            1999
                                                           ---------------  ------------- ---------------
<S>                                                        <C>              <C>           <C>
  Revenue                                                    $1,899,328     $4,041,204      $7,132,248

  Costs and expenses
     Cost of revenue                                          1,312,597      2,308,932       3,716,388
     Selling, general and administrative                      2,663,939      3,288,724       4,467,821
     Research and development                                   797,071        495,589         416,225
     Impairment loss                                          2,302,000              -               -
                                                           ------------     ----------    ------------

                                                              7,075,607      6,093,245       8,600,434
                                                           ------------     ----------    ------------

       Loss from operations                                  (5,176,279)    (2,052,041)     (1,468,186)

  Loss on sale of investments                                         -              -        (167,539)
  Loss on decline in market value of investment              (1,131,147)             -               -
  Other expenses, primarily financing charges                  (160,754)      (259,831)       (884,244)
                                                           ------------    -----------    ------------

       Net loss from continuing operations
         before income taxes                                 (6,468,180)    (2,311,872)     (2,519,969)

  Income taxes - benefit                                              -        325,000               -
                                                           ------------     ----------    ------------

       Net loss from continuing operations                   (6,468,180)    (1,986,872)     (2,519,969)


  Discontinued operations:
     Operating loss from
       discontinued operations                                        -        (32,556)       (319,625)
     Gain on sale of a subsidiary, net of taxes                       -        488,829               -
                                                           ------------     ----------    ------------


       Net loss                                            $ (6,468,180)  $ (1,530,599)   $ (2,839,594)
                                                           ============     ==========    ============

  Net loss per common share:
     Loss from continuing operations                             $(0.42)        $(0.14)         $(0.20)
     Gain (loss) from discontinued operations                      0.00           0.03           (0.03)
                                                           ------------     ----------    ------------

                                                           $      (0.42)  $      (0.11)   $      (0.23)
                                                           ============     ==========    ============

  Weighted average shares outstanding                        15,222,410     14,571,780      12,300,144
                                                           ============     ==========    ============
</TABLE>

The accompanying notes are an integral part of these statements


                                       25
<PAGE>
                         Simtrol, Inc. and Subsidiaries

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

              For the years ended December 31, 2001, 2000 and 1999

<TABLE>
<CAPTION>
                                                                                                        Accumulated
                                                      Common stock         Additional                      other
                                                Number of        Par        paid in      Accumulated   comprehensive
                                                Shares           value      capital        deficit        income       Total
                                                ----------    ----------   ------------   ------------   ---------    -----------
<S>                                             <C>           <C>          <C>            <C>            <C>          <C>
Balance, December 31, 1998                      12,300,144        12,300     48,209,039    (46,877,847)   (340,847)     1,002,645
                                                ----------    ----------   ------------   ------------   ---------    -----------

Net loss for the year                                   --            --             --     (2,839,594)         --     (2,839,594)
  Other comprehensive income (loss)
   Foreign currency  translation  adjustment            --            --        (21,932)            --     340,847        318,915
   and other
                                                ----------    ----------   ------------   ------------   ---------    -----------
    Comprehensive income (loss)                         --            --        (21,932)    (2,839,594)    340,847     (2,520,679)
                                                ----------    ----------   ------------   ------------   ---------    -----------

Issuance of stock warrants                              --            --        320,967             --          --        320,967
                                                ----------    ----------   ------------   ------------   ---------    -----------

Balance, December 31, 1999                      12,300,144        12,300     48,508,074    (49,717,441)         --     (1,197,067)
                                                ----------    ----------   ------------   ------------   ---------    -----------

Net loss for the year                                                                       (1,530,599)          --    (1,530,599)
  Other comprehensive income (loss)
   Unrealized gain on investments                       --            --             --             --     114,684        114,684
                                                ----------    ----------   ------------   ------------   ---------    -----------
    Comprehensive income (loss)                         --            --             --     (1,530,599)    114,684     (1,415,915)
                                                ----------    ----------   ------------   ------------   ---------    -----------

Issuance of common shares in private
  placement                                      1,351,625         1,352      4,053,524             --          --      4,054,876
Issuance of common shares in conversion of
   minority interest                               524,126           524      1,572,009                                 1,572,533
Issuance of common shares for investment in
ACIS                                               500,000           500      2,154,500             --          --      2,155,000
Exercise of stock warrants                         151,898           152         78,944             --          --         79,096
Exercise of stock options                          118,480           118         93,790             --          --         93,908
Issuance of common shares for conversion of
   convertible debentures                          216,945           217        144,529             --          --        144,746
                                                ----------    ----------   ------------   ------------   ---------    -----------
Balance, December 31, 2000                      15,163,218    $   15,163   $ 56,605,370   $(51,248,040)  $ 114,684    $ 5,487,177
                                                ----------    ----------   ------------   ------------   ---------    -----------

Net loss for the year                                                                       (6,468,180)                (6,468,180)
  Other comprehensive income (loss)
   Realized loss on investments                         --            --             --             --    (114,684)      (114,684)
                                                ----------    ----------   ------------   ------------   ---------    -----------
    Comprehensive income (loss)                         --            --             --     (6,468,180)         --     (6,582,864)
                                                ----------    ----------   ------------   ------------   ---------    -----------

Beneficial conversion feature of
convertible debt                                        --            --        124,332             --          --        124,332
Warrants issued to debt holders                         --            --        127,173             --          --        127,173
Exercise of stock options                           30,031            30         21,051             --          --         21,081
Issuance of common shares for purchase of
  Quality Software Associates                       45,454            46         59,499             --          --         59,545
                                                ----------    ----------   ------------   ------------   ---------    -----------
Balance, December 31, 2001                      15,238,703      $ 15,239   $ 56,937,425   $(57,716,220)         --       (763,556)
                                                ==========      ========   ============   ============   =========    ===========
</TABLE>


The accompanying notes are an integral part of these statements.


                                       26
<PAGE>


                         Simtrol, Inc. and Subsidiaries

                      CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                       December 31,
                                                                         -----------       -----------       -----------
                                                                           2001            2000            1999
                                                                         -----------       -----------       -----------
<S>                                                                      <C>               <C>               <C>
Cash flows from operating activities:

  Net loss                                                               $(6,468,180)      $(1,530,599)      $(2,839,594)
  Adjustments to reconcile net loss to net cash used in operating
    activities:
     (Gain) loss on sale of subsidiary                                            --          (813,829)          167,539
     Loss in decline of market value of investments                        1,131,147                --                --
     Impairment loss on investments                                        2,302,000                --                --
     Depreciation and amortization                                           504,502           327,381           715,290
     Changes in operating assets and liabilities:
      Accounts receivable                                                    304,619           856,051         1,985,675
      Inventories                                                             12,032           369,296           204,159
      Prepaid expenses and other assets                                      (11,591)               --            96,407
      Accounts payable                                                       550,403          (488,278)       (1,230,288)
      Accrued expenses                                                      (107,537)         (748,493)          130,597
      Deferred revenue                                                       (77,324)         (297,605)         (353,104)
     Effect of operating activities of discontinued operations                    --            21,340           448,238
                                                                         -----------       -----------       -----------
       Net cash used by operating activities                              (1,859,929)       (2,304,736)         (675,081)

Cash flows from investing activities:

   Purchases of property and equipment, continuing operations                (22,505)         (116,141)          (26,161)
   Proceeds from sale of minority interest in subsidiary                          --                --         1,040,000
   Change in other assets, continuing operations                            (122,876)         (530,399)         (183,434)
   Proceeds from sale of subsidiary                                               --         1,287,835                --
   Effect of investing activities of discontinued operations                      --            (1,572)         (132,622)
                                                                         -----------       -----------       -----------
       Net cash provided by (used in) investing activities                  (145,381)          639,723           697,783
                                                                         -----------       -----------       -----------

Cash flows from financing activities:

   Net borrowings (payments) on notes payable and short term credit         (148,813)         (861,160)         (317,054)
   facilities
   Proceeds from convertible debt                                            400,000                --                --
   Proceeds from exercise of stock options and warrants                       21,081           173,004
   Proceeds from private placement, net of  issuance costs                        --         4,054,876                --
   Payment for minority interest                                                  --          (759,845)               --
                                                                         -----------       -----------       -----------
       Net cash provided (used) by financing activities                      272,268         2,606,875          (317,054)
                                                                         -----------       -----------       -----------

Effect of exchange rate changes on cash and cash equivalents                      --                --            21,581
                                                                         -----------       -----------       -----------
Increase (decrease) in cash and cash equivalents                          (1,733,042)          941,862          (272,771)
Cash of subsidiary bought or sold                                             26,258                --           (40,284)
Change in cash and cash equivalents included in net current assets
of discontinued
   Operations                                                                     --            38,860            12,163

Cash and cash equivalents at beginning of the period                       1,779,548           798,826         1,099,718
                                                                         -----------       -----------       -----------

Cash and cash equivalents at end of the period                           $    72,764       $ 1,779,548       $   798,826
                                                                         ===========       ===========       ===========
Supplementary disclosure:
   Interest paid                                                         $    13,791       $   115,831       $   459,453
                                                                         ===========       ===========       ===========
   Income taxes paid                                                     $        --       $        --       $        --
                                                                         ===========       ===========       ===========

  Supplemental schedule of non cash investing and
    financing activities:

     Non cash investing and financing activities:
       Conversion of debt to common stock                                $        --       $   144,746       $        --
                                                                         ===========       ===========       ===========
       Conversion of debt to subsidiary's stock                          $        --       $        --       $ 1,213,000
                                                                         ===========       ===========       ===========
       Issuance of stock warrants                                        $   124,332       $        --       $   320,967
                                                                         ===========       ===========       ===========
       Issuance of common stock for investment in ACIS                   $        --       $ 2,155,000       $        --
                                                                         ===========       ===========       ===========
       Issuance of common stock in conversion of Minority Interest       $        --       $ 1,572,533       $        --
                                                                         ===========       ===========       ===========
       Notes payable for capital lease                                   $        --       $    66,733       $        --
                                                                         ===========       ===========       ===========
       Beneficial conversion feature of convertible debt                 $   120,977       $        --       $        --
                                                                         ===========       ===========       ===========
</TABLE>


The accompanying notes are an integral part of these statements.


                                       27
<PAGE>
                         Simtrol, Inc. and Subsidiaries

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           December 31, 2001 and 2000



NOTE A - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   Simtrol, Inc., formerly known as VSI Enterprises, Inc., was incorporated in
   Delaware in September 1988 and, together with its majority and wholly-owned
   subsidiaries (the "Company"), develops, manufactures, markets and supports
   software based audio/visual control systems and videoconferencing products
   that operate on PC platforms. The Company changed its name effective on
   October 1, 2001.

   1.    ACCOUNTING ESTIMATES

   The preparation of financial statements in conformity with generally accepted
   accounting principles requires management to make estimates and assumptions
   that affect the reported amount of assets and liabilities and disclosures of
   contingent assets and liabilities at the date of the financial statements and
   the reported amounts of revenues and expenses during the reporting period.
   Actual results could differ from those estimates.

    2.   PRINCIPLES OF CONSOLIDATION

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

    3.   CASH AND CASH EQUIVALENTS

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

    4.   INVENTORIES

   Inventories consist of videoconferencing system components and parts and are
   valued at the lower of cost (first-in, first-out method) or market.

    5.   PROPERTY AND EQUIPMENT

   Property and equipment are stated at cost. Depreciation is provided for in
   amounts sufficient to relate the cost of depreciable assets to operations
   over their estimated useful lives on a straight-line basis for financial
   reporting purposes and accelerated methods for tax reporting purposes.

    6.   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,
   on a straight-line basis over three years or the useful life of the product,
   whichever is shorter. Accumulated amortization of software development costs
   was $1,583,416 and $1,375,198 at December 31, 2001 and 2000, respectively.
   Amortization expense charged to operations was $208,218, $25,696 and $49,653
   for the years ended December 31, 2001, 2000 and 1999, respectively. The
   Company capitalized $122,875, $530,399 and $179,599 of software development
   costs in 2001, 2000 and 1999, respectively.



                                       28
<PAGE>
                         Simtrol, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2001 and 2000


NOTE A - NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
CONTINUED

   7.    INVESTMENTS

   Investments consist of investments in equity securities and a 5% cost
   investment in another entity.

   The investment in equity securities consist of 57,122 shares of PentaStar
   Communications, Inc. common stock, received in conjunction with the Company's
   sale of Eastern Telecom Inc. ("ETI") (see note C). The investment in equity
   securities is accounted for as available-for-sale and is stated at fair
   market value with unrealized gains and losses on this investment included in
   the shareholders' equity section of the balance sheet. As at December 31,
   2001, in accordance with Statement of Financial Accounting Standards ("SFAS")
   No. 115, Accounting for Certain Investments in Debt and Equity Securities,
   management determined that the decline in the market value of this investment
   represents an impairment that is other than temporary. As a result,
   management has adjusted the cost basis of this investment and recorded a
   realized loss of $1,131,147.

   On March 3, 2000, the Company issued 500,000 shares of its common stock in
   exchange for 250,000 shares of ACIS, Inc. ("ACIS"), representing
   approximately 5% of ACIS' common stock. ACIS is a Texas based, software
   technology Company, majority owned by the Company's Chief Technology Officer.
   ACIS is involved in the development of an advanced operating kernel to
   support the Company's new product architecture for PC-based device control.
   In further consideration of the Company's development contribution, ACIS has
   granted the Company a warrant to acquire up to 20% of ACIS' common stock at
   an exercise price of $2.00 per share. This option is exercisable by the
   Company any time through March 31, 2002. This investment in ACIS was recorded
   at cost of $2,302,000.

   At December 31, 2001, as a result of continued inactivity in the operations
   of ACIS and the downturn in the technology industry as a whole, an impairment
   loss of $2,302,000 was incurred related to the write down of the Company's
   investment in ACIS to its estimated fair market value. SFAS No. 121,
   Accounting For The Impairment Of Long-Lived Assets and For Long-Lived Assets
   To Be Disposed Of, requires impairment losses to be recognized for long-lived
   assets when indicators of impairment are present and the undiscounted cash
   flows are not sufficient to recover the assets' carrying amount. The
   impairment loss is measured by comparing the fair value of the asset to its
   carrying amount. In accordance with SFAS No. 121, the impairment charge was
   taken when it was determined that sufficient time had passed since the
   initial investment in ACIS was made for management to adequately assess its
   value, which was December 31, 2001. No impairment charge was recorded in 2000
   or 1999.

   8.    COMPREHENSIVE INCOME (LOSS)

   Comprehensive income (loss) includes the changes in equity resulting from
   transactions with non-owners for the periods reported. For the period ended
   December 31, 2001 and 2000, the unrealized gain on investments was the only
   component of comprehensive income. For the period ended December 31, 1999 the
   components of comprehensive income included translation adjustments of the
   Company's foreign subsidiaries, in which the asset and liability accounts of
   the Company's foreign subsidiaries were translated into U.S. dollars at the
   current exchange rate in effect at the balance sheet date. Stockholders'
   equity was translated at historical rates. Income statement items were
   translated at average currency exchange rates.



                                       29
<PAGE>


                         Simtrol, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2001 and 2000


NOTE A NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
CONTINUED

   9.    REVENUE RECOGNITION

   Revenue consists of the sale of software control devices, videoconferencing
   systems and related maintenance contracts on these systems. Revenue on the
   sale of hardware is recognized upon shipment. Revenue on software sales is
   recognized upon acceptance by the customer. Revenues from installation of
   systems are billed separately and recognized upon completion of the
   installation. Revenue on maintenance contracts is recognized over the term of
   the related contract resulting in $625,583 and $702,907 of deferred revenue
   at December 31, 2001 and 2000, respectively.

   The Securities and Exchange Commission ("SEC") issued Staff Accounting
   Bulletin ("SAB") 101, Revenue Recognition in financial Statements, in
   December 1999. SAB 101 summarizes certain of the SEC staff's views in
   applying accounting principles generally accepted in the United States to
   revenue recognition in financial statements. The Company reviewed its revenue
   recognition policies and determined that they are in compliance with SAB 101.

    10.   INCOME TAXES

   The Company accounts for income taxes using the asset and liability method.
   Under this method, deferred tax assets and liabilities are recognized for the
   future tax consequences attributable to differences between the financial
   statement carrying amounts of existing assets and liabilities and their
   respective tax bases. Deferred tax assets and liabilities are measured using
   enacted tax rates applied to taxable income. The effect on deferred tax
   assets and

   liabilities of a change in tax rates is recognized in income in the period
   that includes the enactment date. A valuation allowance is provided for
   deferred tax assets when it is more likely than not that the asset will not
   be realized.

    11.   STOCK BASED COMPENSATION

   The Company accounts for its stock-based compensation plans under Accounting
   Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees."
   The Company has adopted the disclosure option of Statement of Financial
   Accounting Standards ("SFAS") No. 123," Accounting for Stock-Based
   Compensation." SFAS No. 123 required that companies that do not choose to
   account for stock-based compensation as prescribed by the statement, shall
   disclose the pro forma effects on earnings and earnings per share as if SFAS
   No. 123 had been adopted. Additionally, certain other disclosures are
   required with respect to stock compensation and the assumptions used to
   determine the pro forma effects of SFAS No. 123 (see Note I).

   The Company accounts for common stock issued for goods or services under SFAS
   No. 123 whereby the transaction is measured at the fair value of the common
   stock issued. No shares were issued for goods or services in the years ended
   December 31, 2001, 2000 or 1999.



                                       30
<PAGE>
                         Simtrol, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2001 and 2000


NOTE A NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
CONTINUED

    12.   NET LOSS PER COMMON SHARE

   Basic net earnings (loss) per share is computed by dividing net earnings
   (loss) available to common stockholders by the weighted average number of
   common shares outstanding during the period. Diluted net earnings (loss) per
   share gives effect to all potentially dilutive securities. There is no
   difference between basic loss per share and diluted loss per share for any
   period presented.

   The following securities could potentially dilute basic earnings per share in
   the future and were not included in the computation of diluted net loss per
   share because they would have been antidilutive for the periods presented:

<TABLE>
<CAPTION>
                                                                       2001             2000              1999
                                                                  --------------    -------------    --------------

     <S>                                                            <C>             <C>               <C>
     Common stock options                                              919,331          972,198          530,695
     Common stock warrants                                           2,198,714        1,788,714        1,788,714
                                                                     ---------        ---------        ---------

       Total securities                                              3,118,045        2,760,912        2,319,409
                                                                    ==========      ===========       ==========
</TABLE>

   During 1998, the shareholders approved a one-for-four reverse common stock
   split, effective January 15, 1999 to shareholders of record on January 14,
   1999. All references to shares of common stock, stock options and per share
   amounts have been restated to reflect this reverse common stock split.

   13.    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 the Company's debt approximates fair value
   based on borrowing rates currently available to the Company for borrowings
   with comparable terms and conditions.

   14.   ADVERTISING EXPENSES

   The Company expenses all advertising expenses as incurred. Advertising
   expense for the years ended December 31, 2001, 2000 and 1999 was $17,105,
   $7,861 and $75,869, respectively.

   15.   TECHNOLOGICAL CHANGE AND NEW PRODUCTS

   The market for the Company's products is characterized by rapidly changing
   technology, evolving industry standards and frequent product introductions.
   Product introductions are generally characterized by increased functionality
   and better videoconferencing picture quality at reduced prices. The
   introduction of products embodying new technology may render existing
   products obsolete and unmarketable. The Company's ability to successfully
   develop and introduce on a timely basis new and enhanced products that embody
   new technology, and achieve levels of functionality at a price acceptable to
   the market, will be a significant factor in the Company's ability to grow and
   to remain competitive. If the Company is unable, for technological or other
   reasons, to develop competitive products in a timely manner in response to
   changes in the industry, the Company's business and operating results will be
   materially and adversely affected.



                                       31
<PAGE>

                         Simtrol, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2001 and 2000



NOTE A NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
CONTINUED

   15.   TECHNOLOGICAL CHANGE AND NEW PRODUCTS

   Management periodically evaluates the realizability of its technology-related
   assets, including inventories and software development costs. No write-down
   of these inventories was recorded in 1999 and approximately $209,000 was
   recorded in 2000 and $23,000 was recorded in 2001. Management believes that
   no material impairment of remaining inventories and software development
   costs existed at December 31, 2001. It is possible, however, that
   management's estimates may change in the near term due to technological,
   regulatory, and other changes in the Company's industry.

   16.   DEPENDENCE ON THIRD PARTIES

   Substantially all of the Company's components, subsystems and assemblies are
   made by outside vendors. Disruption in supply, a significant increase in the
   price of one or more of these components, or failure of a third party
   supplier to remain competitive in functionality or price could have a
   material adverse effect on the Company's business and operating results.
   There can be no assurance that the Company will not experience such problems
   in the future. Similarly, excessive rework costs associated with defective
   components or process errors associated with the Company's anticipated new
   PC-based control systems product could adversely affect the Company's
   business and operating results.

    17.  RECLASSIFICATIONS

   Certain amounts in the 2000 and 1999 financial statements have been
   reclassified to conform to the current year presentation.

NOTE B - REALIZATION OF ASSETS

   The accompanying financial statements have been prepared in conformity with
   generally accepted accounting principles, which contemplate continuation of
   the Company as a going concern. However, the Company has incurred a net loss
   of $6,468,180 and $1,530,599 for the years ended December 31, 2001 and 2000,
   respectively. In addition, at December 31, 2001, the Company's current
   liabilities exceed its current assets by $1,590,616 and the Company continues
   to use, rather than provide, significant cash in its operations for each of
   the years ended December 31, 2001 and 2000.

   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 continued operations of the Company, which in
   turn is dependent upon the Company's ability to obtain additional financing
   and succeed in its future operations. 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 the Company be unable to continue in existence.

   In response to the matters described in the preceding paragraphs, management
   is exploring a variety of financing alternatives, including a private
   placement of its stock and additional convertible debt.



                                       32
<PAGE>


                         Simtrol, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2001 and 2000



NOTE C - DISCONTINUED OPERATIONS AND SALE OF SUBSIDIARIES

   On February 18, 2000, the Company and its network reselling subsidiary, VSI
   Network Solutions Inc., doing business as Eastern Telecom ("ETI"), entered
   into a definitive agreement to sell substantially all of the assets of ETI to
   PentaStar Communications, Inc., a Denver, Colorado based communications
   services agent. The definitive agreement was subject to, among other things,
   stockholder approval, which occurred at the Annual Meeting held on May 18,
   2000. The Company received initial consideration of approximately $1.8
   million in cash, $500,000 of which was held in escrow until specified
   accounts receivable had been collected. In addition, the Company received
   57,122 shares of PentaStar Communications, Inc. common stock, with a market
   value of $1,142,000. The sale of ETI resulted in a gain of $813,829. As a
   result of the decision to discontinue the Company's network reselling
   business, operating results for ETI have been reclassified and reported as
   discontinued operations in accordance with Accounting Principles Board
   Opinion No. 30 for all periods presented.

   During the fourth quarter of 1998, the Company discontinued operations of its
   system integration subsidiary, Integrated Network Services, Inc ("INS") and
   in September 1999, INS filed for protection under Chapter 7 of the U.S.
   Bankruptcy Code. Accordingly, operating results for this subsidiary has been
   reclassified and reported as discontinued operations in accordance with
   Accounting Principles Board Opinion No. 30 for all periods presented. Summary
   operating results of the discontinued network reselling and system
   integration operations are as follows:

<TABLE>
<CAPTION>
                                             2001         2000          1999
                                             ----         ----          ----
<S>                                        <C>         <C>           <C>
       Revenue:
         Network reselling                 $      -    $2,181,341    $6,449,770
         System integration                       -             -             -
                                           --------    ----------    ----------
                                                  -     2,181,341     6,449,770
                                           --------    ----------    ----------
       Costs and expenses:
         Network reselling                        -     2,213,897     6,517,771
         System integration                       -             -       251,624
                                           --------    ----------    ----------
                                                  -     2,213,897     6,769,395
                                           --------    ----------    ----------

         Income(loss) from discontinued
           Operations                      $      -    $  (32,556)   $ (319,625)
                                           ========    ==========    ==========
</TABLE>


   Assets and liabilities of the discontinued network reselling and system
   integration operations are included in the consolidated balance sheets as
   assets and liabilities of discontinued operations and are made up as follows:

<TABLE>
<CAPTION>

                                                     2001           2000
                                                  ---------       --------
<S>                                               <C>             <C>
    Current assets of network reselling           $      --       $     --
    Current liabilities of network reselling             --             --
                                                  ---------       --------
    Net current assets of network reselling              --             --

    Current assets of system integration             14,545         14,545
    Current liabilities of system integration       (98,895)       (98,895)
                                                  ---------       --------
    Net current deficit of system integration     $ (84,350)      $(84,350)
                                                  =========       ========
</TABLE>


                                       33
<PAGE>


                         Simtrol, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2001 and 2000


NOTE C - DISCONTINUED OPERATIONS AND SALE OF SUBSIDIARIES - CONTINUED

   On September 30, 1999 the Company sold its European subsidiary,
   Videoconferencing Systems, n.v. ("VSINV") to certain members of VSINV's
   executive management team for $2.00. As a condition of the sale, the Company
   was released from all liabilities including certain guarantees under VSINV's
   bank credit agreements and the Company received warrants to purchase up to
   24.0% of VSINV. The sale resulted in a loss of $167,539.

 NOTE D - ACQUISITION

   On March 28, 2001, the Company acquired Quality Software Associates, Inc.
   (QSA), a custom programmer of audio/visual control systems. The purchase
   included the transfer of 45,454 shares of VSI common stock valued at $59,544
   for all of the outstanding shares of QSA.

   This acquisition has been accounted for using the purchase method of
   accounting. Accordingly, the various assets acquired and liabilities assumed
   have been recorded at their respective estimated fair values as of the date
   of acquisition. The results of operations of QSA have been included in the
   accompanying statements of operations since the date of acquisition.

   The following summarizes the allocation of the purchase price to the major
   categories of assets acquired and liabilities assumed for this acquisition:

<TABLE>
<CAPTION>
                                                        December 31,
                                                            2001
                                                     -----------------
<S>                                                  <C>
    Cash                                             $          26,258
    Accounts receivable                                        168,263
    Computers and equipment                                    106,082
                                                       ---------------
      Total assets                                             300,603
                                                       ---------------

    Liabilities                                                241,059
                                                       ---------------

    Purchase Price                                   $          59,544
                                                       ===============
</TABLE>


                                       34
<PAGE>

                         Simtrol, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2001 and 2000



NOTE E - PROPERTY AND EQUIPMENT

   Property and equipment consist of the following as of December 31, 2001 and
   2000:

<TABLE>
<CAPTION>
                                                                                           Estimated
                                                                                            Service
                                                                 2001           2000          Life
                                                            --------------  ------------  -----------
         <S>                                                <C>             <C>           <C>
         Machinery and equipment                            $    1,789,002  $  1,667,099  3-10 years
         Furniture and fixtures                                    238,179       238,179    10 years
         Leasehold improvements                                     64,595        84,805     5 years
                                                               -----------  ------------
                                                                 2,091,776     1,990,083
         Less accumulated depreciation                         (1,885,376)   (1,737,382)
                                                               -----------  ------------

                                                            $      206,400  $    252,701
                                                             =============  ============
</TABLE>

   Depreciation expense charged to continuing operations was approximately
   $131,639, $95,000 and $158,000 for the years ended December 31, 2001, 2000
   and 1999, respectively, and is included in selling, general and
   administrative expense in the accompanying consolidated statements of
   operations.

NOTE F - CONVERTIBLE DEBT

   During 2001, the Company issued $400,000 of Convertible Debt to two
   shareholders. The debt accrues interest at prime rate plus 1%, is due
   February 7, 2002 and is collateralized by all of the assets of the Company.
   The proceeds of this debt are being utilized for working capital purposes.
   The Debt is convertible into shares of common stock of the Company at $0.49
   per share. None of this debt has been converted as of December 31, 2001. In
   conjunction with the issuance of the convertible debt, the Company issued
   400,000 common stock purchase warrants to the holders of the 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 ranging from $0.46 to $0.53 per share.
   Also, the agreement calls for the issuance of additional warrants to the
   debt holders for each 60 day extension period on the debt as follows: 100,000
   warrants to each debt holder for the first 60 day extension and 60,000
   warrants to each debt holder at the date of each subsequent 60 day extension.
   Subsequent to year end, the first 60 day extension was granted by the debt
   holders and as a result, the Company issued an additional 100,000 warrants,
   which entitle the debt holders to each purchase 100,000 shares of the
   Company's common stock at $0.49 per share. The Company will record an
   additional $145,000 of financing costs upon issuance of the warrants to be
   amortized over the 60 day extension period.

   In connection with the issuance of the convertible debt, $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,
   2001, $55,413 was expensed as financing costs relating to this amortization
   of the beneficial conversion feature.



                                       35
<PAGE>
                         Simtrol, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2001 and 2000


NOTE F - CONVERTIBLE DEBT - CONTINUED

   In connection with the issuance of 400,000 stock purchase warrants to debt
   holders, the Company valued the warrants in accordance with SFAS No. 123,
   Accounting for Stock-Based Compensation utilizing the following assumptions:
   expected volatility of 132 %, risk free interest rate of 5.25%, and an
   expected term of five years, and allocated $124,332 of the proceeds to
   Capital Stock in accordance with APB 14, Accounting for Convertible Debt
   issued with Stock Purchase Warrants. This warrant value will be amortized to
   financing costs over the stated term of the debt. For the year ended December
   31, 2001, $83,186 was expensed as financing costs relating to the
   amortization of this fair value of the warrants.

   Additionally during the year, the Company issued two shareholders 5,000
   warrants each for various loans made to the Company. The warrants, which
   expire in 2006, entitle the holders to purchase one common share of the
   common stock of the Company at $0.66 and $0.75 per share, respectively. The
   Company valued the warrants in accordance with SFAS No. 123, Accounting for
   Stock-Based Compensation utilizing the following assumptions: expected
   volatility of 133%, risk free interest rate of 5.25%, and an expected term of
   five years, and expensed $6,196 as financing costs relating to this issuance.

   On February 23, 1998, the Company issued $3,000,000 of 5% convertible
   Debentures due February 2000 (the "Debentures"), the proceeds of which were
   utilized for working capital purposes. In addition, the Company issued 9,375
   common stock purchase warrants to the holder of the Debentures and 9,375
   common stock purchase warrants to an agent involved in the transaction. The
   warrants expire on February 23, 2003. Each warrant entitles the holder to
   purchase one common stock share of the Company at the price of $10.00. The
   Debentures were convertible at the lower of (i) $8.00 per share or (ii) 85%
   of the average closing bid price of the Company's common stock. During 1998,
   $710,000 of Debentures plus accrued interest of $13,531 were converted into
   45,956 common shares; $1,440,000 of the Debentures were redeemed by the
   Company at face value and the remaining Debentures were converted into a
   $900,000 term note.

   On November 16, 1998, the Company issued an additional 25,000 stock purchase
   warrants to the holder of the Debentures to enable the Company to purchase
   the $1,440,000 outstanding Debentures at face value. The warrants, which
   expire on November 16, 2003, entitle the holder to shares of the common stock
   of the Company at a price of $2.40 per share. At this time, the Company also
   repriced the 9,375 warrants issued to the Debenture holder on February 23,
   1998 to a price of $2.40 per share. The impact of this repricing was less
   than $10,000 and due to its insignificance, was not expensed by the Company.

   Effective August 31, 1999, the Company restructured its term note payable,
   which consisted of principal and accrued interest totaling $1,089,750. The
   Company paid $150,000 at closing, and the remaining balance of $939,750 was
   exchanged for a 7% Secured Convertible Debenture, due and payable on August
   31, 2000. In January and February, 2000, the convertible debenture holder
   converted $144,747 of principal and interest into 216,945 shares of the
   Company's common stock. The remaining balance of the convertible debenture
   was paid by the Company on March 1, 2000 using the proceeds from the private
   placement (Note H).



                                       36
<PAGE>
                         Simtrol, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2001 and 2000


NOTE G - REDEEMABLE MINORITY INTEREST

   On August 31, 1999, the Company received $1,040,000 in proceeds from the sale
   of 16.0% of its ownership interest in its subsidiary, ETI. These minority
   shareholders had a put option, which gave them the right to put their ETI
   shares back to the Company at the price paid at the earlier of the sale of
   ETI or August 31, 2000. In conjunction with this transaction, the Company
   issued minority shareholders 780,000 warrants to purchase shares of common
   stock of the company at $0.50 per share and 260,000 warrants to purchase
   shares of common stock of the Company at $1.00 per share. These warrants have
   a term of five years, expiring on August 31, 2004 and were exercisable
   immediately. The Company valued these warrants at $223,600 using the
   Black-Scholes option-pricing model in accordance with SFAS No. 123,
   Accounting for Stock-Based Compensation utilizing the following assumptions:
   expected volatility of 117%, risk free interest rate of 6.09%, and an
   expected term of five years. The value of these warrants was to be amortized
   to interest expense over the period to the first date on which the shares of
   ETI were eligible to be put back to the Company, which was August 31, 2000.
   Interest expense related to these warrants was $149,067 and $74,533 for the
   years ended December 31, 2000 and 1999, respectively.

   As a result of this transaction and the conversion of the term notes into
   shares of ETI as discussed in Note E, at December 31, 1999 the Company held a
   64.5% majority ownership in ETI. On February 24, 2000, the Company exchanged
   524,126 of its common shares for 240,265 shares of ETI held by the minority
   shareholders. The remaining minority interest shares were repurchased
   pursuant to the terms of the shareholders agreement at the time of the sale
   of ETI, which amounted to $709,722.

NOTE H - PRIVATE PLACEMENT

   On February 24, 2000, the Company issued a private placement memorandum for
   the sale of up to 1,500,000 shares of the Company's stock at $3.00 per share.
   The Company received proceeds of $4,054,876 from the sale of 1,351,625 shares
   of common stock at $3.00 per share. Approximately $826,668 of these proceeds
   were used to repay the remaining balance of the 7% Secured Convertible
   Debenture held by Thompson Kernaghan & Co. Ltd. ("Kernaghan").



                                       37
<PAGE>

                         Simtrol, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2001 and 2000



NOTE I - STOCK OPTIONS, WARRANTS, AND EMPLOYEE STOCK PURCHASE PLAN

   STOCK OPTION PLAN AND WARRANTS

   The Company's board of directors has approved a stock option plan which
   covers up to 3,662,057 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. Stock option transactions are summarized below:

<TABLE>
<CAPTION>
                                               2001                      2000                          1999
                                     ------------------------------------------------------------------------------
                                                    Weighted                   Weighted                      Weighted
                                                    Average                     Average                     Average
                                                    Exercise                   Exercise                     Exercise
                                      Shares         Price        Shares        Price          Shares         Price
                                      -------      ----------     -------       ------        -------       ----------
<S>                                  <C>           <C>            <C>           <C>            <C>           <C>
Outstanding, beginning of year       972,198       $   2.75       530,695       $ 3.01         593,322       $   5.46

  Granted                            208,250           1.43       754,500         2.59         173,697           0.40


  Exercised                          (30,031)           .70      (118,480)        0.79              --             --
  Forfeited                         (231,086)          2.31      (194,517)        4.12        (236,324)          7.25
                                   ----------      --------      --------       ------        -------       ----------


  Outstanding, end of year           919,331       $   2.62       972,198       $ 2.75         530,695       $   3.01
                                    ========       ========      ========       ======        ========       ========

</TABLE>

   The following table summarizes information about stock options outstanding at
December 31, 2001:

<TABLE>
<CAPTION>
                                              Options Outstanding                       Options Exercisable
                              -------------------------------------------------- -------------------------------
                                                     Weighted
                                                     Average         Weighted                           Weighted
                  Range of          Number          Remaining        Average           Number           Average
                  Exercise      Outstanding at     Contractual       Exercise      Exercisable at       Exercise
                    Price         31-Dec-01         Life (Years)       Price          31-Dec-01           Price
               -------------- -----------------  ---------------    -----------  -------------------   --------
               <S>              <C>              <C>                <C>          <C>                    <C>
                 $0.34 - $1.00      288,496            7.18           $0.54           256,756           $0.54
                 $1.12 - $1.94      190,250            5.58            1.91           146,550             1.90
                 $2.50 - $4.25      352,084            8.42            3.78           127,084             3.73
                 $4.60 - $5.50       72,001            4.57            5.07            72,001             5.07
                 $6.94 - $9.88        7,000            2.17            9.69             7,000             9.69
               $11.00 - $14.75        7,250            4.38           12.42             7,250            12.42
                        $17.25        2,250            3.77           17.25             2,250            17.25
                                   --------            ----           -----           -------            -----
                                    919,331            7.05          $ 2.62           618,891           $ 2.35
                                   ========            ====          ======           ========           =====
</TABLE>

   In connection with the purchase of the outstanding notes payable and
   establishment of a line of credit during 1994, 62,500 common stock purchase
   warrants were granted to a director at an exercise price of $1.60 per share.
   These warrants expire in July 2004.

   On May 1, 1999, 325,000 purchase stock warrants were granted to officers of
   the Company at an exercise price of $0.53 per share. These warrants expire
   May 1, 2004 and vest through May 1, 2000. 45,000 of these warrants were
   exercised during 2000. Additionally, on August 17, 1999, 25,000 purchase
   stock warrants were granted to an officer of the Company at an exercise price
   of $0.43 per share. These warrants vested on January 1, 2000 and expire on
   August 17, 2004.



                                       38
<PAGE>
                         Simtrol, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2001 and 2000


NOTE I - STOCK OPTIONS, WARRANTS, AND EMPLOYEE STOCK PURCHASE PLAN - CONTINUED

   STOCK OPTION PLAN AND WARRANTS - CONTINUED

   In connection with the purchase of the outstanding notes payable and
   establishment of a line of credit during 1994, 62,500 common stock purchase
   warrants were granted to a director at an exercise price of $1.60 per share.
   6,250 of these warrants were exercised during 2000. These warrants expire in
   July 2004.

   The Company uses the intrinsic value method in accounting for its stock
   option plans and warrants granted to employees. In applying this method, no
   compensation cost has been recognized. Had compensation cost for the
   Company's stock option plans been determined based on the fair value at the
   grant dates for awards under those plans, the Company's net loss and loss per
   share would have resulted in the pro forma amounts indicated below:

<TABLE>
<CAPTION>
                                                                  2001              2000                1999
                                                              --------------    --------------      --------
<S>                                                       <C>               <C>                 <C>
     Net loss:
       As reported                                        $    (6,468,180)  $    (1,530,599)    $     (2,839,594)
       Pro forma                                               (7,125,674)       (2,217,893)          (3,148,115)

     Net loss per common share:

       As reported                                        $         (0.42)  $         (0.11)    $          (0.23)
       Pro forma                                                    (0.47)            (0.15)               (0.26)
</TABLE>


   For purposes of the pro forma amounts above, the fair value of each option
   grant was estimated on the date of grants using the Black-Scholes options
   pricing model with the following weighted average assumptions used for grants
   in 2001, 2000 and 1999, respectively; expected volatility of 132.6%, 125% and
   117%, risk-free interest rates of 4.625%-5.75%, 5.5%-5.88% and 4.75%-5.88%
   and expected lives of 3-7 years for all periods presented.

   EMPLOYEE STOCK PURCHASE PLAN

   The Company has an employee stock purchase plan ("Plan") that provides for
   the sale of up to 75,000 shares of common stock to eligible employees. The
   purchase price for shares of common stock purchased pursuant to the Plan is
   the lesser of: 85% of the fair market value of common stock on the first pay
   date or 85% of the fair market value of common stock on the last pay date of
   each plan period. The Plan was suspended by the Board of Directors in
   September 1998. The Company has no current plans to reinstate the Plan.
   During the year ended December 31, 1998, 20,446 shares of common stock were
   purchased by employees under this Plan.


                                       39
<PAGE>
                         Simtrol, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2001 and 2000



NOTE J - INCOME TAXES

   The Company's temporary differences result in a net deferred income tax asset
   which is reduced to zero by a related deferred tax valuation allowance,
   summarized as follows at December 31, 2001 and 2000:

<TABLE>
<CAPTION>
                                                                                  2001                2000
                                                                                  ----                ----
<S>                                                                       <C>                   <C>
   Deferred income tax assets:
     Operating loss carryforwards                                         $     14,304,000      $   13,907,000
     Loss on decline of market value of investment                                 435,000                   -
     Nondeductible accruals and allowances                                         405,000             337,000
     Capitalized inventory costs                                                    63,000              53,000
     Tax credit carryforwards                                                      156,000             156,000
     Other                                                                               -               1,000
                                                                          ----------------      --------------
   Gross deferred income tax assets                                             15,363,000          14,454,000
   Deferred income tax asset valuation allowance                               (15,321,000)        (14,412,000)
                                                                          ----------------      --------------
       Net deferred income tax asset                                      $         42,000      $       42,000
                                                                          ================      ==============

   Deferred income tax liabilities                                        $        (42,000)     $      (42,000)
                                                                          ================      ==============

   Net deferred income tax                                                $              -      $            -
                                                                          ================      ==============
</TABLE>

   At December 31, 2001, the Company had net operating loss carryforwards for
   U.S. income tax purposes of approximately $38,174,000 available to reduce
   future taxable income and approximately $156,000 of investment and research
   and experimental credits available to reduce future income taxes payable,
   which expire in varying amounts through the year 2021.

   The Company experienced a change in control, as defined under Section 382 of
   the Internal Revenue Code during calendar year 1993. As a result,
   approximately $7,000,000 of the available tax loss carryforwards will be
   limited to a maximum utilization of approximately $1,000,000 annually.

NOTE K- MAJOR CUSTOMERS

   Revenue from five customers comprised approximately 66% of consolidated
   revenues for the year ended December 31, 2001. At December 31, 2001, related
   accounts receivable from these companies comprised 77% of consolidated
   receivables.

   Revenue from four customers comprised approximately 58% of consolidated
   revenues for the year ended December 31, 2000. At December 31, 2000, related
   accounts receivable from these companies comprised 30% of consolidated
   receivables.

   Revenue from three customers comprised approximately 50% of consolidated
   revenues for the year ended December 31, 1999. At December 31, 1999, related
   accounts receivable from these companies comprised 30% of consolidated
   receivables.

   Management believes that concentration of credit risk with respect to trade
   receivables is minimal due to the composition of the customer base. The
   Company's 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.



                                       40
<PAGE>
                         Simtrol, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2001 and 2000


NOTE L - OPERATING SEGMENTS AND RELATED INFORMATION

   In 1998, the Company adopted SFAS No. 131, "Disclosures about Segments of an
   Enterprise and Related Information." This statement requires the disclosure
   of certain information regarding the Company's operating segments.

   Prior to 1998, the Company's three industry segments were made up of video
   conferencing, computer system integration and telephone network reselling.
   These industry segments were all operating in separate, one hundred percent
   owned, subsidiaries. In 1998, the Company discontinued operations of its
   computer system integration subsidiary. On May 18, 2000, the Company sold all
   of the assets of its network reselling subsidiary. These segments are
   included in discontinued operations in the accompanying consolidated balance
   sheets and statements of operations. As a result, at December 31, 2001, the
   Company is operating only in the video conferencing segment.

   The Company also had operations in the United States and Europe until the
   sale of the European subsidiary on September 30, 1999. The majority of the
   European revenue, operating loss, capital expenditures and identifiable
   assets detailed below originated in Belgium. Summary information related to
   the United States and European operations are as follows:

<TABLE>
<CAPTION>
                                                     For the years ended December 31,
                                    -----------------------------------------------------------------
                                        2001                      2000                       1999
                                    -----------                -----------                -----------
<S>                                 <C>                        <C>                        <C>
   Revenue:
     United States                  $ 1,899,328                $ 4,041,204                $ 6,467,958
     Europe                                  --                         --                    664,290
                                    -----------                -----------                -----------
                                    $ 1,899,328                $ 4,041,204                $ 7,132,248
                                    ===========                ===========                ===========

   Operating loss:
     United States                  $(6,468,180)               $(2,245,566)               $(1,374,860)
     Europe                                  --                         --                $   (93,326)
                                    -----------                -----------                -----------
                                    $(6,468,180)               $(2,245,566)               $(1,468,186)

   Capital expenditures:
     United States                  $    23,705                $   201,978                $    19,363
     Europe                                  --                         --                      6,798
                                    $    23,705                $   201,978                $    26,161
                                    ===========                ===========                ===========
</TABLE>


<TABLE>
<CAPTION>
                                                                  December 31,
                                                  ---------------------------------------
                                                       2001                     2000
                                                       ----                     ----
<S>                                               <C>                     <C>
   Identifiable assets:
     United States                                $     1,711,236         $     7,234,290
     Europe                                                     -                       -
                                                  ---------------         ---------------
                                                  $     1,711,236         $     7,234,290
                                                   ==============          ==============
</TABLE>

                                       41
<PAGE>

                         Simtrol, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2001 and 2000


NOTE M - COMMITMENTS AND CONTINGENCIES

   OPERATING LEASES

   The Company leases office space and equipment under noncancelable operating
   leases expiring at various dates through 2002. Rent expense for the years
   ended December 31, 2001, 2000 and 1999 was approximately $305,000, $292,000
   and $388,000, respectively. Approximate minimum annual future rental payments
   under the leases are $240,000 for the year ended December 31, 2002.

NOTE N - 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 was for an accounting and
   to seek recovery of alleged preferential transfers of funds. The lawsuit was
   seeking 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.

   The Company has been notified of the potential for litigation with regard to
   the sale of its subsidiary VSI Solutions, Inc, doing business as Eastern
   Telecom by PentaStar Communications Inc, the purchaser, for alleged material
   breaches of the Representations and Warranties of the sales agreement.
   Management believes this is without merit and intends to vigorously oppose
   any litigation that might result. The Company presently has 57,122 shares of
   PentaStar recorded as investments on the balance sheet. These shares are
   being held in escrow relating to the Company's sale of a ETI in 1999. This
   threatened litigation may significantly delay or prevent the Company's
   ability to convert these shares to cash.

   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.


                                       42
<PAGE>


                         Simtrol, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2001 and 2000


NOTE O - QUARTERLY FINANCIAL DATA (UNAUDITED)

   The following summarizes certain quarterly results of operations (in
   thousands, except per share data):

<TABLE>
<CAPTION>
                                                                 Quarters ended
                                                 ------------------------------------------------
                                                  March 31     June 30    Sept 30      Dec 31
                                                  --------     -------   --------      ------
                 <S>                              <C>          <C>        <C>        <C>
                 Year ended December 31, 2001
                 Net revenue                        $ 435         $549        $369       $546
                 Loss from operations                (548)      (1,047)      (780)    (2,801)
                 Net income (loss)                   (512)      (1,076)      (787)    (4,093)
                 Net earnings per common share
                     Basic                         ($0.03)      ($0.07)    ($0.05)    ($0.27)
                     Diluted                       ($0.03)      ($0.07)    ($0.05)    ($0.27)

<CAPTION>

                                                                 Quarters ended

                                                 ------------------------------------------------
                                                  March 31     June 30     Sept. 30    Dec. 31
                                                  --------     -------     --------    -------
                 <S>                              <C>          <C>        <C>        <C>
                 Year ended December 31, 2000
                 Net revenue                         $ 1,654    $1,022        $908        $457
                 Loss from operations                   (225)     (445)      (398)       (984)
                 Net income(loss)                       (464)      379        (396)     (1,050)
                 Net earnings per common share
                     Basic                            ($0.04)    $0.03      ($0.03)     ($0.07)
                     Diluted                          ($0.04)    $0.02      ($0.03)     ($0.07)
</TABLE>


NOTE P - RECENTLY ISSUED ACCOUNTING STANDARDS

   On July 20, 2001, the Financial Accounting Standards Board (FASB) issued
   Statement of Financial Accounting Standards (SFAS) 141, Business
   Combinations, and SFAS 142, Goodwill and Intangible Assets. SFAS 141 is
   effective for all business combinations completed after June 30, 2001. SFAS
   142 is effective for fiscal years beginning after December 15, 2001; however,
   certain provisions of this Statement apply to goodwill and other intangible
   assets acquired between July 1, 2001 and the effective date of SFAS 142.
   Major provisions of these Statements and their effective dates for the
   Company are as follows:

-      all business combinations initiated after June 30, 2001 must use the
       purchase method of accounting. The pooling of interest method of
       accounting is prohibited except for transactions initiated before July 1,
       2001.

-      intangible assets acquired in a business combination must be recorded
       separately from goodwill if they arise from contractual or other legal
       rights or are separable from the acquired entity and can be sold,
       transferred, licensed, rented or exchanged, either individually or as
       part of a related contract, asset or liability

-      goodwill, as well as intangible assets with indefinite lives, acquired
       after June 30, 2001, will not be amortized. Effective January 1, 2002,
       all previously recognized goodwill and intangible assets with indefinite
       lives will no longer be subject to amortization.

-      effective January 1, 2002, goodwill and intangible assets with indefinite
       lives will be tested for impairment annually and whenever there is an
       impairment indicator

-      all acquired goodwill must be assigned to reporting units for purposes
       of impairment testing and segment reporting.


                                       43
<PAGE>

                         Simtrol, Inc. and Subsidiaries

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED

                           December 31, 2001 and 2000


NOTE P - RECENTLY ISSUED ACCOUNTING STANDARDS - CONTINUED

   In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
   or Disposal of Long-Lived Assets. This statement addresses financial
   accounting and reporting for the impairment or disposal of long-lived assets
   and supersedes FASB Statement No. 121, Accounting for the Impairment of
   Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. The provisions
   of the statement are effective for financial statements issued for fiscal
   years beginning after December 15, 2001.

   Although it is still reviewing the provisions of these Statements,
   management's preliminary assessment is that these Statements will not have a
   material impact on the Company's financial position or results of operations.





                                       44
<PAGE>


               Report of Independent Certified Public Accountants
                                 on Schedule II

Board of Directors
Simtrol, Inc.

In connection with our audit of the consolidated financial statements of
Simtrol, Inc. and Subsidiaries referred to in our report dated March 1, 2001,
which is included in the annual report to security holders and incorporated by
reference in Part II of this form, we have also audited Schedule II for the
years ended December 31, 2001, 2000 and 1999. In our opinion, the schedule
presents fairly, in all material respects, the information required to be set
forth therein as of and for the years ending December 31, 2001, 2000 and 1999.

/s/ GRANT THORNTON LLP

Atlanta, Georgia
March 1, 2002



                                       45
<PAGE>




                          Simtrol, Inc and Subsidiaries



                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>

                       Column A                           Column B        Column C       Column D       Column E
                       --------                           --------        --------       --------       --------
                                                                         Additions
                                                         Balance at      Charged to                    Balance at
                                                         Beginning       Costs and      Deductions       End of
                      Description                        of Period       Expenses    Describe (1)(2)    Period
                      -----------                        ----------      ---------   ----------------   ------
<S>                                                  <C>                 <C>         <C>                <C>
  Year ended December 31, 2001
     Reserve for obsolete inventory                  $  618,656          $ 211,138       $  3,209      $  826,585
     Reserve for doubtful accounts receivable           244,630             (8,432)         9,954)         226,24
                                                                                                                4

  Year ended December 31, 2000
     Reserve for obsolete inventory                  $1,000,000          $ 277,405       $658,749      $  618,656
     Reserve for doubtful accounts receivable           148,289            204,817        108,476         244,630

  Year ended December 31, 1999
     Reserve for obsolete inventory                  $1,677,440          $  56,000       $733,440      $1,000,000
     Reserve for doubtful accounts receivable           360,000            135,669        347,380         148,289
</TABLE>


(1)      - Obsolete items which have been disposed and bad debt write offs.

(2)      - Column C-2 "Charged to other accounts" has been omitted, as the
         response is "none".



                                       46
<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

There have been no disagreements on accounting and financial disclosure matters
which are required to be described by Item 304 of Regulation S-K.

PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The information relating to directors and executive officers of the Company
contained in the registrant's definitive proxy statement to be delivered to
shareholders in connection with the 2001 Annual Meeting of Shareholders
scheduled to be held on June 12 2002 is incorporated by reference.

ITEM 11.  EXECUTIVE COMPENSATION.

The information relating to executive compensation contained in the registrant's
definitive proxy statement to be delivered to Shareholders in connection with
the 2002 Annual Meeting of shareholders scheduled to be held on June 12, 2002
are incorporated hereby by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The information relating to security ownership of certain beneficial owners and
management contained in the registrant's definitive proxy statement to be
delivered to shareholders in connection with the 2002 Annual Meeting of
Shareholders scheduled to be held on June 12, 2002 are incorporated hereby by
reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information relating to related party transactions contained in the
registrant's definitive proxy statement to be delivered to shareholders in
connection with the 2002 Annual Meeting of Shareholders scheduled to be held on
June 12 2002 are incorporated hereby by reference.

                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a)        1.  Financial Statements.

         The following financial statements and accountant's report have been
filed as Item 8 in Part II of this report:

         Report of Independent Certified Public Accountants

         Consolidated Balance Sheets as of December 31, 2001 and December 31,
         2000

         Consolidated Statements of Operations for Years Ended December 31,
         2001, 2000 and 1999

         Consolidated Statements of Stockholders' Equity for Years Ended
         December 31, 2001, 2000 and 1999

         Consolidated Statements of Cash Flows for Years Ended December 31,
         2001, 2000 and 1999

         Notes to Consolidated Financial Statements

           2.  Financial Statement Schedules

The following financial statement schedule of Simtrol, Inc. for the years ended
December 31, 2001, 2000 and 1999 is included pursuant to Item 8:



                                       47
<PAGE>

         Report of Independent Certified Public Accountants on Schedule II

         Schedule II: Valuation and Qualifying Accounts

           3.  Exhibits.

The following exhibits are filed with or incorporated by reference into this
report. 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 Annual Report on Form 10-K for the year ended March 31, 1993 (referred
to as "1993 10-K"); (vi) the Company's Registration Statement Form S-1 (File No.
33-85754) (referred to as "S-1"); (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 Quarterly Report on Form 10-Q
for the quarter ended March 31, 1997 (referred to as "1997 10-Q"); (x) the
Company's Annual Report on Form 10-K for the year ended December 31, 1996
(referred to as "1996 10-K"); (xi) 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"),
(xii) the Company's Quarterly Report on Form 10-Q for the quarter ended March
31, 1999 (referred to as "March 1999 10-Q"), (xiii) the Company's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1999 (referred to as "June
1999 10-Q"), (xiv) the Company's Form S-8 Registration Statement (File No.
333-18239), (referred to as "Warrant Plan S-8"), (xiii) the Company's Form S-8
Registration Statement (File No. 333-18237), (referred to as "Option Plan S-8"),
(xv) the Company's Current Report on Form 8-K dated August 31, 1999 (referred to
as "1999 8-K"), (xvi) the Company's Registration Statement on Form S-3 amended
January 31, 1999 ("1999 S-3"), (xvii) the Company's Annual Report on Form 10-K
for the year ended December 31, 1999, as amended (referred to as "1999 10-K/A"),
and (xviii) the Company's Definitive Proxy Statement filed under Schedule 14A on
April 21, 2000 (referred to as "2000 Proxy Statement").

<TABLE>
<CAPTION>
EXHIBIT NO.                                        DESCRIPTION OF EXHIBIT
-----------                                        ----------------------
<S>                                                <C>
  *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 Registrant 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)


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


                                       48
<PAGE>

<TABLE>
<S>                                                <C>
 *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

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


 *10.5                                             Employment Agreement dated August 4, 1997, by and between the
                                                   Registrant and Judi North (1997 10-Q)



 *10.6                                             Consulting Agreement dated May 1, 1999 by and between the
                                                   Registrant, Taconic Partners, L.L.C., and Richard Harrison
                                                   (June 1999 10-Q)



 *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)



 *10.9                                             Assignment of Security Interest in Patents, dated November 18,
                                                   1999, by and between the Registrant and Thomson Kernaghan &
                                                   Co., Ltd. (1998 10-K/A)




 *10.10                                            Receivable Sale Agreement, dated October 8, 1998, by and
                                                   between VSI Network Solutions, Inc. and RFC Capital
                                                   Corporation (1998 10-K/A)




 *10.11                                            Promissory Note Restructuring Agreement, dated as of August
                                                   31, 1999, by and between VSI Enterprises, Inc. and Thomson
                                                   Kernaghan & Co., Ltd. (1999 8-K)




 *10.12                                            7% Secured convertible Debenture, dated August 31, 1999,
                                                   issued to Thomson Kernaghan & Co., Ltd. in principal amount of
                                                   $1,089,750 (1999 8-K)




 *10.13                                            Stock Pledge Agreement, dated as of August 31, 1999, by and
                                                   among VSI Enterprises, Inc., Thomson Kernaghan & Co., Ltd.,
                                                   the secured parties named therein, and Jackson Walker L.L.P.,
                                                   as Depositary Agent (1999 8-K)





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


 *10.15                                            Strategic Investment Agreement between the ACIS, Inc. and the
                                                   Registrant dated September 9, 1999 (1999 S-3)
</TABLE>


                                       49
<PAGE>

<TABLE>
<S>                                                <C>
 *10.16                                            Stock Purchase Agreement dated as of September 28, 1999, by
                                                   and among the Registrant, Paul D'Haeyer and Walter De Rop and
                                                   Videoconferencing Systems, n.v. (1999 10-K/A)



 *10.17                                            Securityholders Agreement dated September 30, 1999, by and
                                                   among the Registrant, Paul D'Haeyer, and Walter De Rop (1999
                                                   10-K/A)



 *10.18                                            Warrant Agreement dated September 30, 1999 issued to
                                                   Registrant by Videoconferencing Systems, n.v. (1999 10-K/A)


 *10.19                                            Form of Subscription Agreement used in connection with
                                                   Registrant's private placement that closed March 2000 (1999
                                                   10-K/A)



 *10.20                                            Purchase Agreement among PentaStar Communications, Inc., OC
                                                   Mergerco 4, Inc. and the Registrant dated February 18, 2000
                                                   (2000 Proxy Statement)

 10.21                                             First Amendment and Modification of ACIS, Inc. warrant
                                                   agreement dated September 7, 2001

 10.22                                             ACIS Technology License Agreement between ACIS, Inc. and the
                                                   Registrant dated September 27,2001

 10.23                                             Promissory Note dated November 9, 2001 by and between Simtrol,
                                                   Inc. and Larry Carr

 10.24                                             Promissory Note dated November 9, 2001 by and between Simtrol,
                                                   Inc. and Edward S. Redstone

 *21.1                                             Subsidiaries of the Registrant (1996 10-K)

  23.1                                             Consent of Grant Thornton LLP
</TABLE>


(b)  Reports on Form 8-K.

           There were no reports on Form 8-K filed during the quarter ended
           December 31, 2001. .


                                       50
<PAGE>

                                   SIGNATURES

    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                  SIMTROL,  INC.


                                  By:  /s/ Richard W. Egan
                                      ---------------------------------------
Date:  March 29, 2002             Richard W. Egan, Chief Executive Officer

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

<TABLE>
<CAPTION>
    Signature                                        Title                              Date
    ---------                                        -----                              ----
<S>                                                  <C>                                <C>
  /s/ Larry M. Carr                                  Chairman of the Board              March 29, 2002
  ------------------------------------------
     Larry M. Carr

  /s/ Richard W. Egan                                Chief Executive Officer            March 29, 2002
  ------------------------------------------
      Richard W. Egan

  /s/ Robert W. Morris                               Chief Financial Officer            March 29, 2002
  ------------------------------------------
      Robert W. Morris                               (Principal Financial and
                                                     Accounting Officer)

  /s/ Dallas S. Clement                              Director                           March 29, 2002
  ------------------------------------------
      Dallas S. Clement

  /s/ Julia B. North                                 Director                           March 29, 2002
  ------------------------------------------
      Julia B. North

  /s/ Edward S. Redstone                             Director                           March 29, 2002
  ------------------------------------------
      Edward S. Redstone
</TABLE>