SIMTROL INC - 10-Q Quarterly Report

Form 10-Q
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


[X]		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2002


[ ]		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to _____

Commission file number 1-10927

SIMTROL, INC.

(Exact name of registrant as specified in its charter)


Delaware (State of incorporation)		84-1104448 (I.R.S. Employer Identification No.)

2200 Norcross Parkway, Suite 255 Norcross, Georgia (Address of principal executive offices)		30071 (Zip Code)

(770) 242-7566
(Registrant’s telephone number, including area code)

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, and (2) has been subject to such filing requirements for the past 90 days.


YES X		NO

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


		Outstanding at
Class of Securities		October 31, 2002

Common Stock, $.001 Par Value		16,869,454

TABLE OF CONTENTS


PART I – FINANCIAL INFORMATION
	ITEM 1. FINANCIAL STATEMENTS
		CONSOLIDATED BALANCE SHEETS (UNAUDITED)
		CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
		CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
	CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
		NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
	ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
	ITEM 4. CONTROLS AND PROCEDURES
Part II.
	ITEM 1. LEGAL PROCEEDINGS
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
	ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EX-99.1 SECTION 906 CERTIFICATION OF THE CEO
EX-99.2 SECTION 906 CERTIFICATION OF THE CFO

SIMTROL, INC. AND SUBSIDIARIES
Form 10-Q
Quarter Ended September 30, 2002

Index

Page

PART I.

FINANCIAL INFORMATION

Item 1.

Financial Statements:

Consolidated Balance Sheets as of September 30, 2002 and December 31, 2001

Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2002 and 2001

Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2002 and 2001

Consolidated Statement of Stockholders’ Deficit for the Nine Months Ended September 30, 2002

Notes to Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Qualitative and Quantitative Disclosures About Market Risk

Item 4.

Controls and Procedures

PART II.

OTHER INFORMATION

Item 1.

Legal Proceedings

Item 4.

Submission of Items to a Vote of Security Holders

Item 6.

Exhibits and Reports on Form 8-K

SIMTROL, INC.
PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SIMTROL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 30, 2002 AND DECEMBER 31, 2001


				September 30,			December 31,
				2002			2001

ASSETS
Current assets:
	Cash and cash equivalents			$	54,477		$	72,764
	Accounts receivable, net				53,682			375,347
	Inventories, net				315,886			395,012
	Prepaid expenses and other assets				84,569			11,591

			Total current assets		508,614			854,714
Property and equipment, net					145,704			206,400
Other assets:
	Software development costs, net				416,436			624,655
	Investments				—			10,853
	Other long term assets				11,187			14,614

			Total	$	1,081,941		$	1,711,236

			LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current Liabilities:
	Current portion of capital lease and short-term borrowings			$	119,335		$	38,453
	Convertible debt				1,081,030			293,290
	Current liabilities of discontinued operations				—			84,350
	Accounts payable and checks outstanding				912,815			1,042,995
	Accrued expenses				398,408			360,659
	Deferred revenues				240,224			625,583

			Total Current Liabilities		2,751,812			2,445,330
Commitments and contingencies					—			—
Capital lease and notes payable, less current portion					135,722			29,462
Stockholders’ deficit:
	Common stock, authorized 40,000,000 shares of $.001 par value; issued and outstanding, 16,869,454 at September 30, 2002 and 15,238,703 at December 31, 2001				16,869			15,239
	Additional paid-in capital				57,498,232			56,937,425
	Accumulated deficit				(59,320,694	)		(57,716,220	)

		Total stockholders’ deficit			(1,805,593	)		(763,556	)

			Total	$	1,081,941		$	1,711,236


See notes to consolidated financial statements.

SIMTROL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001


			Three Months Ended						Nine Months Ended
			September 30						September 30

			2002			2001			2002			2001

Revenues			$	370,920		$	368,740		$	1,130,968		$	1,353,091
Cost of revenues				241,206			293,708			728,121			932,854

	Gross profit			129,714			75,032			402,847			420,237
Operating expenses:
	Selling, general, and administrative			326,791			586,735			1,399,691			2,084,681
	Research and development			75,632			268,032			345,223			710,432

Total operating expenses				402,423			854,767			1,744,914			2,795,113

		Loss from operations		(272,709	)		(779,735	)		(1,342,067	)		(2,374,876	)
Interest and other income/(expense), net				(133,538	)		(7,517	)		(411,322	)		(163	)

Loss before income taxes				(406,247	)		(787,252	)		(1,753,389	)		(2,375,039	)
Income tax expense				—			—			—			—
Loss before extraordinary item				(406,247	)		(787,252	)		(1,753,389	)		(2,375,039	)
Extraordinary gain from extinguishment of debt, net of tax				—			—			148,915			—

		Net loss	$	(406,247	)	$	(787,252	)	$	(1,604,474	)	$	(2,375,039	)

Net loss per common share, Basic and Diluted:
	Loss before extraordinary item		$	(0.02	)	$	(0.05	)	$	(0.11	)	$	(0.16	)
	Extraordinary gain			—			—			0.01			—

	Net loss per share		$	(0.02	)	$	(0.05	)	$	(0.10	)	$	(0.16	)

Weighted shares outstanding
	Basic and diluted			16,851,519			15,238,703			15,827,057			15,216,920

See notes to consolidated financial statements.

SIMTROL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001


				Nine Months Ended
				September 30,

				2002			2001

CASH FLOWS FROM OPERATING ACTIVITIES:
	Net loss			$	(1,604,474	)	$	(2,375,039	)
	Adjustments to reconcile net loss to net cash used by operating activities:
		Loss in decline of market value of investments			10,853			—
		Depreciation and amortization			607,657			252,811
		Debt extinguishment			(148,915	)		—
		Changes in operating assets and liabilities:
			Accounts receivable		321,665			386,683
			Inventories		79,126			32,071
			Prepaid expenses and other assets		(44,885	)		(45,286	)
			Accounts payable		(65,615	)		187,512
			Accrued expenses		37,749			(59,562	)
			Deferred revenues		(385,360	)		(101,092	)

			Net cash used in operating activities		(1,192,199	)		(1,721,902	)

CASH FLOWS FROM INVESTING ACTIVITIES:
	Purchases of property and equipment				(21,068	)		(3,505	)
	Change in other assets				—			(122,592	)

			Net cash provided by (used in) investing activities		(21,068	)		(126,097	)

CASH FLOWS FROM FINANCING ACTIVITIES:
	Net (payments) proceeds on notes payable and short-term credit facilities				187,142			39,776
	Proceeds from exercise of stock options				2,438			21,081
	Proceeds from convertible debt				750,000			—
	Net proceeds from stock issuance				255,400			—

			Net cash provided (used) by financing activities		1,194,980			60,857

Increase (decrease) in cash and cash equivalents					(18,287	)		(1,787,142	)
Cash provided by acquired operations					—			26,257
Cash and cash equivalents at beginning of the period					72,764			1,779,548

Cash and cash equivalents at end of the period				$	54,477		$	18,663

Supplemental schedule of non-cash investing and financing activities:
Issuance of stock warrants				$	239,606		$	0

Beneficial conversion feature of convertible debt				$	64,993		$	0

See notes to consolidated financial statements.

SIMTROL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002


	Common Stock
					Additional					Other
	Number of				Paid in		Accumulated			Comprehensive
	Shares		Par Value		Capital		Deficit			Income		Total

Balance December 31, 2001		15,238,703	$	15,239	$	56,937,425	$	(57,716,220	)	$	—	$	(763,556	)
Net loss for the period								(1,604,474	)				(1,604,474	)

Comprehensive income (loss)								(1,604,474	)		—		(1,604,474	)

Exercise of warrants		3,751		4		2,434							2,438
FMV of warrants issued and beneficial conversion factor						304,599							304,599
Issuance of common stock		1,627,000		1,626		253,774							255,400

Balance September 30, 2002		16,869,454	$	16,869	$	57,498,232	$	(59,320,694	)	$	—	$	(1,805,593	)

See notes to consolidated financial statements.

SIMTROL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001

Note 1 – Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared by Simtrol, Inc. (the “Company” or “Simtrol”). It is management’s opinion that these statements include all adjustments, consisting of only normal recurring adjustments necessary to present fairly the financial position, results of operations, and cash flows as of September 30, 2002 and for all periods presented.

Certain i

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