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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549



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FORM 10-Q/A


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|                                                 |  |                                                                                         
|------------------------------------------------ |  | ----------------------------------------------------------------------------------------
|(Mark One)                                      
|                                                 |  |                                                                                         
|[X]                                              |  | Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 
|                                                 |  |                                                                                         
|FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2001
|                                                 |  |                                                                                         
|OR                                               |  |                                                                                         
|                                                 |  |                                                                                         
|[   ]                                            |  | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

COMMISSION FILE NUMBER: 333-13105

FIREARMS TRAINING SYSTEMS, INC.
(Exact name of registrant as specified in its charter)

|                                                                        |  |                                                
|----------------------------------------------------------------------- |  | -----------------------------------------------
|DELAWARE
(State or other jurisdiction of
incorporation or organization) |  | 57-0777018
(I.R.S. Employer Identification No.)

7340 MCGINNIS FERRY ROAD
SUWANEE, GEORGIA 30024
(Address of principal executive offices)

TELEPHONE NUMBER (770) 813-0180
(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 (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 [   ]                No [X]

As of February 13, 2002, there were 70,153,139 shares of the Registrants
Class A Common Stock outstanding.

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TABLE OF CONTENTS



|                                     |                                                                                               |                                                      |  |  |  |  |  | 
|------------------------------------ | --------------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|EXPLANATORY NOTE                    
|PART I. FINANCIAL INFORMATION       
|                                     | ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                          
|                                     |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS     
|                                     |                                                                                               | CONDENSED CONSOLIDATED BALANCE SHEETS               
|                                     |                                                                                               | CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                                     |                                                                                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|                                     | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                     | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|PART II. OTHER INFORMATION          
|                                     | ITEM 1. LEGAL PROCEEDINGS                                                                    
|                                     | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|                                     | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES                          
|Section 906 Certification of the CEO
|Section 906 Certification of the CFO



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FIREARMS TRAINING SYSTEMS, INC.
INDEX

|         |  |                                                                                       |  |                                                                                                        |    |             |    | 
|-------- |  | ------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------ | -- | ----------- | -- | 
|         |  |                                                                                       |  |                                                                                                        |    | Page number
|         |  |                                                                                       |  |                                                                                                        |    |            
|         |  |                                                                                       |  | EXPLANATORY NOTE                                                                                       |    |             | 3  | 
|PART I.  |  | FINANCIAL INFORMATION                                                                 |  |                                                                                                        |    |            
|ITEM 1.  |  | CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:                                          |  |                                                                                                        |    |            
|         |  |                                                                                       |  | Condensed Consolidated Statements of Operations
Three and Nine months ended December 31, 2001 and 2000 |    |             | 4  | 
|         |  |                                                                                       |  | Condensed Consolidated Balance Sheets
December 31, 2001 and March 31, 2001                             |    |             | 5  | 
|         |  |                                                                                       |  | Condensed Consolidated Statements of Cash Flows
Nine months ended December 31, 2001 and 2000           |    |             | 6  | 
|         |  |                                                                                       |  | Notes to Condensed Consolidated Financial Statements                                                   |    |             | 7  | 
|ITEM 2.  |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS |  |                                                                                                        | 12 |            
|ITEM 3.  |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                            |  |                                                                                                        | 19 |            
|PART II. |  | OTHER INFORMATION                                                                     |  |                                                                                                        |    |            
|ITEM 1.  |  | LEGAL PROCEEDINGS                                                                     |  |                                                                                                        | 19 |            
|ITEM 4.  |  | SUBMISSION OF MATTERS TO A VOTE OF THE SECURITY HOLDERS                               |  |                                                                                                        | 19 |            
|ITEM 6.  |  | EXHIBITS AND REPORTS ON FORM 8-K                                                      |  |                                                                                                        | 19 |            
|         |  |                                                                                       |  | SIGNATURES                                                                                             |    |             | 20 | 

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EXPLANATORY NOTE

The Companys interim financial statements at December 31, 2001 and for
the three months and nine months ended December 31, 2001 have been restated
from amounts previously reported to apply the correct revenue recognition
policy to certain of the Companys sales contracts. Revenue under these
contracts was previously reported upon shipment and passage of title of the
underlying systems and has been revised to reflect the application of the
percentage of completion method of accounting (see Note 9 to the Notes to
Condensed Consolidated Financial Statements).

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PART I.       FINANCIAL INFORMATION




ITEM 1.       CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FIREARMS TRAINING SYSTEMS, INC.




CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(unaudited and in thousands, except unaudited per share data)


|                                                     |                                              |                          |                                   |       |                    |     |                   |       |       |     |            |       |        |    |         |        |        |        |  
|---------------------------------------------------- | -------------------------------------------- | ------------------------ | --------------------------------- | ----- | ------------------ | --- | ----------------- | ----- | ----- | --- | ---------- | ----- | ------ | -- | ------- | ------ | ------ | ------ | -
|                                                     |                                              |                          |                                   |       | Three months ended |     | Nine months ended
|                                                     |                                              |                          |                                   |       | December 31,       |     | December 31,     
|                                                     |                                              |                          |                                   |       |                    |     |                  
|                                                     |                                              |                          |                                   |       | (Restated)         |     |                   |       |       |     | (Restated) |       |        |    |        
|                                                     |                                              |                          |                                   |       | (Note 9)           |     |                   |       |       |     | (Note 9)   |       |        |    |        
|                                                     |                                              |                          |                                   |       | 2001               |     | 2000              |       | 2001  |     | 2000      
|                                                     |                                              |                          |                                   |       |                    |     |                   |       |       |     |           
|Revenues                                             |                                              | $                        | 15,396                            |       |                    | $   | 9,109             |       |       | $   | 43,932     |       |        | $  | 26,748  |       
|Cost of Revenues                                     |                                              |                          | 10,744                            |       |                    |     | 8,351             |       |       |     | 30,113     |       |        |    | 25,166  |       
|                                                     |                                              |                          |                                   |       |                    |     |                   |       |       |     |            |       |        |    |         |       
|Gross margin                                         |                                              |                          | 4,652                             |       |                    |     | 758               |       |       |     | 13,819     |       |        |    | 1,582   |       
|                                                     |                                              |                          |                                   |       |                    |     |                   |       |       |     |            |       |        |    |         |       
|Operating expenses:                                  |                                              |                          |                                   |       |                    |     |                   |       |       |     |            |       |        |    |         |       
|                                                     | Selling, general and administrative expenses |                          |                                   | 2,776 |                    |     |                   | 2,761 |       |     |            | 8,472 |        |    |         | 6,837  |       
|                                                     | Research and development expenses            |                          |                                   | 1,048 |                    |     |                   | 1,213 |       |     |            | 2,625 |        |    |         | 3,684  |       
|                                                     | Depreciation and amortization                |                          |                                   | 443   |                    |     |                   | 587   |       |     |            | 1,382 |        |    |         | 1,764  |       
|                                                     | Impairment of long-lived assets              |                          |                                   | 0     |                    |     |                   | 1,244 |       |     |            | 0     |        |    |         | 1,244  |       
|                                                     |                                              |                          |                                   |       |                    |     |                   |       |       |     |            |       |        |    |         |       
|                                                     |                                              | Total operating expenses |                                   |       | 4,267              |     |                   |       | 5,805 |     |            |       | 12,479 |    |         |        | 13,529 |       
|Operating income (loss)                              |                                              |                          | 385                               |       |                    |     | (5,047            | )     |       |     | 1,340      |       |        |    | (11,947 | )     
|Other income (expense), net:                         |                                              |                          |                                   |       |                    |     |                   |       |       |     |            |       |        |    |         |       
|                                                     | Interest income                              |                          |                                   | 25    |                    |     |                   | 26    |       |     |            | 217   |        |    |         | 79     |       
|                                                     | Interest expense                             |                          |                                   | (92   | )                  |     |                   | (90   | )     |     |            | (140  | )      |    |         | (4,714 | )     
|                                                     | Other income (expense), net                  |                          |                                   | (31   | )                  |     |                   | 6     |       |     |            | (62   | )      |    |         | (300   | )     
|                                                     |                                              |                          |                                   |       |                    |     |                   |       |       |     |            |       |        |    |         |       
|                                                     |                                              |                          | Total other income (expense), net |       |                    | (98 | )                 |       |       | (58 | )          |       |        | 15 |         |        |        | (4,935 | )
|Income (loss) before provision for income taxes      |                                              |                          | 287                               |       |                    |     | (5,105            | )     |       |     | 1,355      |       |        |    | (16,882 | )     
|Provision (benefit) for income taxes                 |                                              |                          | 63                                |       |                    |     | 54                |       |       |     | 545        |       |        |    | (8      | )     
|                                                     |                                              |                          |                                   |       |                    |     |                   |       |       |     |            |       |        |    |         |       
|Net income (loss)                                    |                                              |                          | 224                               |       |                    |     | (5,159            | )     |       |     | 810        |       |        |    | (16,874 | )     
|Accretion of preferred stock                         |                                              |                          | (68                               | )     |                    |     | (57               | )     |       |     | (200       | )     |        |    | (197    | )     
|Gain on extinguishment of Preferred Stock            |                                              |                          | 0                                 |       |                    |     | 0                 |       |       |     | 0          |       |        |    | 1,729   |       
|                                                     |                                              |                          |                                   |       |                    |     |                   |       |       |     |            |       |        |    |         |       
|Net income (loss) applicable to common shareholders  |                                              | $                        | 156                               |       |                    | $   | (5,216            | )     |       | $   | 610        |       |        | $  | (15,342 | )     
|                                                     |                                              |                          |                                   |       |                    |     |                   |       |       |     |            |       |        |    |         |       
|Basic earnings (loss) per common share               |                                              | $                        | 0.00                              |       |                    | $   | (0.07             | )     |       | $   | 0.01       |       |        | $  | (0.32   | )     
|                                                     |                                              |                          |                                   |       |                    |     |                   |       |       |     |            |       |        |    |         |       
|Diluted earnings (loss) per common share             |                                              | $                        | 0.00                              |       |                    | $   | (0.07             | )     |       | $   | 0.01       |       |        | $  | (0.32   | )     
|                                                     |                                              |                          |                                   |       |                    |     |                   |       |       |     |            |       |        |    |         |       
|Weighted average common shares outstanding  basic   |                                              |                          | 70,153                            |       |                    |     | 69,942            |       |       |     | 70,151     |       |        |    | 48,270  |       
|                                                     |                                              |                          |                                   |       |                    |     |                   |       |       |     |            |       |        |    |         |       
|Weighted average common shares outstanding  diluted |                                              |                          | 71,042                            |       |                    |     | 69,942            |       |       |     | 70,771     |       |        |    | 48,270  |       
|                                                     |                                              |                          |                                   |       |                    |     |                   |       |       |     |            |       |        |    |         |       

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

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FIREARMS TRAINING SYSTEMS, INC.




CONDENSED CONSOLIDATED BALANCE SHEETS


(unaudited and in thousands)


|                                                           |                                                                             |                                             |        |                             |        |              |         |           |        |   |         |  
|---------------------------------------------------------- | --------------------------------------------------------------------------- | ------------------------------------------- | ------ | --------------------------- | ------ | ------------ | ------- | --------- | ------ | - | ------- | -
|                                                           |                                                                             |                                             |        |                             |        | (RESTATED)   |         |           |        |  
|                                                           |                                                                             |                                             |        |                             |        | (Note 9)     |         |           |        |  
|                                                           |                                                                             |                                             |        |                             |        | December 31, |         | March 31,
|                                                           |                                                                             |                                             |        |                             |        | 2001         |         | 2001     
|                                                           |                                                                             |                                             |        |                             |        |              |         |          
|ASSETS                                                    
|Current assets:                                            |                                                                             |                                             |        |                             |        |              |         |          
|                                                           | Cash and cash equivalents                                                   |                                             | $      | 4,414                       |        |              | $       | 1,864     |       
|                                                           | Restricted cash                                                             |                                             |        | 492                         |        |              |         | 628       |       
|                                                           | Accounts receivable, net                                                    |                                             |        | 12,504                      |        |              |         | 8,591     |       
|                                                           | Costs and estimated earnings in excess of billings on uncompleted contracts |                                             |        | 194                         |        |              |         | 1,480     |       
|                                                           | Unbilled receivables                                                        |                                             |        | 1,139                       |        |              |         | 1,355     |       
|                                                           | Income tax receivable                                                       |                                             |        | 0                           |        |              |         | 809       |       
|                                                           | Inventories, net                                                            |                                             |        | 10,858                      |        |              |         | 12,526    |       
|                                                           | Prepaid expenses and other current assets                                   |                                             |        | 1,086                       |        |              |         | 1,117     |       
|                                                           |                                                                             |                                             |        |                             |        |              |         |           |       
|                                                           |                                                                             |                                             |        | Total current assets        |        |              | 30,687  |           |        |   | 28,370  |  
|Property and equipment, net                                |                                                                             |                                             | 1,756  |                             |        |              | 2,647   |          
|Other noncurrent assets                                    |                                                                             |                                             | 27     |                             |        |              | 0       |          
|Goodwill, net                                              |                                                                             |                                             | 1,017  |                             |        |              | 1,156   |          
|                                                           |                                                                             |                                             |        |                             |        |              |         |           |       
|                                                           |                                                                             |                                             |        | Total assets                |        | $            | 33,487  |           |        | $ | 32,173  |  
|                                                           |                                                                             |                                             |        |                             |        |              |         |           |       
|LIABILITIES AND STOCKHOLDERS DEFICIT                     
|Current liabilities:                                       |                                                                             |                                             |        |                             |        |              |         |          
|                                                           | Accounts payable                                                            |                                             | $      | 2,983                       |        |              | $       | 2,902     |       
|                                                           | Accrued liabilities                                                         |                                             |        | 5,198                       |        |              |         | 3,895     |       
|                                                           | Accrued interest                                                            |                                             |        | 1,009                       |        |              |         | 954       |       
|                                                           | Income tax payable                                                          |                                             |        | 705                         |        |              |         | 0         |       
|                                                           | Billings in excess of costs and estimated earnings on uncompleted contracts |                                             |        | 214                         |        |              |         | 277       |       
|                                                           | Deferred revenue                                                            |                                             |        | 1,873                       |        |              |         | 1,633     |       
|                                                           | Warranty
and contract costs provision reserve  current                     |                                             |        | 2,286                       |        |              |         | 2,816     |       
|                                                           |                                                                             |                                             |        |                             |        |              |         |           |       
|                                                           |                                                                             |                                             |        | Total current liabilities   |        |              | 14,268  |           |        |   | 12,477  |  
|Long-term debt                                             |                                                                             |                                             | 43,083 |                             |        |              | 43,990  |          
|Noncurrent deferred income taxes                           |                                                                             |                                             | 313    |                             |        |              | 223     |          
|Warranty
and contract costs provision reserve  noncurrent |                                                                             |                                             | 1,099  |                             |        |              | 1,724   |          
|Other noncurrent liabilities                               |                                                                             |                                             | 1,025  |                             |        |              | 796     |          
|                                                           |                                                                             |                                             |        |                             |        |              |         |           |       
|Total liabilities                                          |                                                                             |                                             | 59,788 |                             |        |              | 59,210  |          
|Mandatory redeemable preferred stock                       |                                                                             |                                             | 27,249 |                             |        |              | 27,049  |          
|Stockholders deficit:                                     |                                                                             |                                             |        |                             |        |              |         |          
|                                                           | Common stock                                                                |                                             |        | 0                           |        |              |         | 0         |       
|                                                           | Stock warrants                                                              |                                             |        | 613                         |        |              |         | 613       |       
|                                                           | Additional paid-in-capital                                                  |                                             |        | 122,314                     |        |              |         | 122,273   |       
|                                                           | Accumulated deficit                                                         |                                             |        | (176,076                    | )      |              |         | (176,686  | )     
|                                                           | Cumulative foreign currency translation adjustment                          |                                             |        | (401                        | )      |              |         | (286      | )     
|                                                           |                                                                             |                                             |        |                             |        |              |         |           |       
|                                                           |                                                                             |                                             |        | Total stockholders deficit |        |              | (53,550 | )         |        |   | (54,086 | )
|                                                           |                                                                             |                                             |        |                             |        |              |         |           |       
|                                                           |                                                                             | Total liabilities and stockholders deficit |        | $                           | 33,487 |              |         | $         | 32,173 |  
|                                                           |                                                                             |                                             |        |                             |        |              |         |           |       

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

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FIREARMS TRAINING SYSTEMS, INC.




CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(unaudited and in thousands)


|                                                                                         |                                                    |                                                                             |                                           |        |                   |       |         |        |        |        |  
|---------------------------------------------------------------------------------------- | -------------------------------------------------- | --------------------------------------------------------------------------- | ----------------------------------------- | ------ | ----------------- | ----- | ------- | ------ | ------ | ------ | -
|                                                                                         |                                                    |                                                                             |                                           |        | Nine months ended
|                                                                                         |                                                    |                                                                             |                                           |        | December 31,     
|                                                                                         |                                                    |                                                                             |                                           |        |                  
|                                                                                         |                                                    |                                                                             |                                           |        | (RESTATED)       
|                                                                                         |                                                    |                                                                             |                                           |        | (Note 9)         
|                                                                                         |                                                    |                                                                             |                                           |        | 2001              |       | 2000   
|                                                                                         |                                                    |                                                                             |                                           |        |                   |       |        
|OPERATING ACTIVITIES:                                                                    |                                                    |                                                                             |                                           |        |                   |       |         |       
|Net income (loss)                                                                        |                                                    | $                                                                           | 610                                       |        |                   | $     | (15,342 | )     
|Adjustments to reconcile net income (loss) to net
cash provided by operating activities: |                                                    |                                                                             |                                           |        |                   |       |         |       
|                                                                                         | Employee stock compensation plan  401(k) plan     |                                                                             |                                           | 6      |                   |       |         | 51     |       
|                                                                                         | Employee compensation  other                      |                                                                             |                                           | 7      |                   |       |         | 0      |       
|                                                                                         | Gain on extinguishment of Series A preferred stock |                                                                             |                                           | 0      |                   |       |         | (1,729 | )     
|                                                                                         | Noncash reduction of debt restructuring liability  |                                                                             |                                           | (2,634 | )                 |       |         | (1,171 | )     
|                                                                                         | Noncash financing cost                             |                                                                             |                                           | 0      |                   |       |         | 250    |       
|                                                                                         | Amortization of deferred stock-based compensation  |                                                                             |                                           | 0      |                   |       |         | 155    |       
|                                                                                         | Accretion of mandatory redeemable preferred stock  |                                                                             |                                           | 200    |                   |       |         | 197    |       
|                                                                                         | Depreciation                                       |                                                                             |                                           | 1,243  |                   |       |         | 1,559  |       
|                                                                                         | Loss on impairment of long-lived assets            |                                                                             |                                           | 0      |                   |       |         | 1,244  |       
|                                                                                         | Amortization of goodwill                           |                                                                             |                                           | 139    |                   |       |         | 205    |       
|                                                                                         | Amortization of loan costs                         |                                                                             |                                           | 0      |                   |       |         | 332    |       
|                                                                                         | Gain on disposal of assets                         |                                                                             |                                           | (56    | )                 |       |         | (16    | )     
|                                                                                         | Deferred income taxes                              |                                                                             |                                           | 90     |                   |       |         | 8      |       
|                                                                                         | Changes in assets and liabilities:                 |                                                                             |                                           |        |                   |       |         |        |       
|                                                                                         |                                                    | Accounts receivable, net                                                    |                                           |        | (3,933            | )     |         |        | (5,383 | )     
|                                                                                         |                                                    | Unbilled receivables                                                        |                                           |        | 192               |       |         |        | 1,265  |       
|                                                                                         |                                                    | Inventories                                                                 |                                           |        | 1,669             |       |         |        | 1,494  |       
|                                                                                         |                                                    | Cost
and estimated earnings in excess of billings on uncompleted contracts  |                                           |        | 1,328             |       |         |        | 0      |       
|                                                                                         |                                                    | Prepaid expenses and other current assets                                   |                                           |        | 30                |       |         |        | 52     |       
|                                                                                         |                                                    | Accounts payable                                                            |                                           |        | 76                |       |         |        | 1,646  |       
|                                                                                         |                                                    | Accrued liabilities                                                         |                                           |        | 3,299             |       |         |        | 4,209  |       
|                                                                                         |                                                    | Billings
in excess of costs and estimated earnings on uncompleted contracts |                                           |        | (59               | )     |         |        | 0      |       
|                                                                                         |                                                    | Income taxes payable/receivable                                             |                                           |        | 1,515             |       |         |        | 1,293  |       
|                                                                                         |                                                    | Deferred revenue                                                            |                                           |        | 242               |       |         |        | 4,681  |       
|                                                                                         |                                                    | Warranty
and contracts costs provision revenues                             |                                           |        | (1,151            | )     |         |        | 4,200  |       
|                                                                                         |                                                    | Noncurrent liabilities                                                      |                                           |        | 228               |       |         |        | (256   | )     
|                                                                                         |                                                    |                                                                             |                                           |        |                   |       |         |       
|                                                                                         |                                                    |                                                                             | Total adjustments                         |        |                   | 2,431 |         |        |        | 14,286 |  
|                                                                                         |                                                    |                                                                             |                                           |        |                   |       |         |       
|                                                                                         |                                                    |                                                                             | Net cash provided by operating activities |        |                   | 3,041 |         |        |        | (1,056 | )
|                                                                                         |                                                    |                                                                             |                                           |        |                   |       |         |       
|Cash flows from investing activities:                                                    |                                                    |                                                                             |                                           |        |                   |       |         |       
|                                                                                         | Change in restricted cash                          |                                                                             |                                           | 136    |                   |       |         | 695    |       
|                                                                                         | Additions to property and equipment, net           |                                                                             |                                           | (352   | )                 |       |         | (571   | )     
|                                                                                         | Proceeds from disposal of property and equipment   |                                                                             |                                           | 59     |                   |       |         | 0      |       
|                                                                                         |                                                    |                                                                             |                                           |        |                   |       |         |       
|                                                                                         |                                                    |                                                                             | Net cash used in investing activities     |        |                   | (157  | )       |        |        | 124    |  
|                                                                                         |                                                    |                                                                             |                                           |        |                   |       |         |       
|Cash flows from financing activities:                                                    |                                                    |                                                                             |                                           |        |                   |       |         |       
|                                                                                         | Repayments of long-term debt                       |                                                                             |                                           | (170   | )                 |       |         | 0      |       
|                                                                                         |                                                    |                                                                             |                                           |        |                   |       |         |       
|                                                                                         |                                                    |                                                                             | Net cash used in financing activities     |        |                   | (170  | )       |        |        | 0      |  
|                                                                                         |                                                    |                                                                             |                                           |        |                   |       |         |       
|Effect of changes in foreign exchange rates                                              |                                                    |                                                                             | (164                                      | )      |                   |       | 181     |       
|                                                                                         |                                                    |                                                                             |                                           |        |                   |       |         |       
|Net Increase in Cash and Cash Equivalents                                                |                                                    |                                                                             | 2,550                                     |        |                   |       | (751    | )     
|Cash and Cash Equivalents at the Beginning of
the Period                                 |                                                    | $                                                                           | 1,864                                     |        |                   | $     | 1,886   |       
|                                                                                         |                                                    |                                                                             |                                           |        |                   |       |         |       
|Cash and Cash Equivalents at the End of the Period                                       |                                                    | $                                                                           | 4,414                                     |        |                   | $     | 1,135   |       
|                                                                                         |                                                    |                                                                             |                                           |        |                   |       |         |       
|Supplemental disclosures of cash paid (received) for:                                    |                                                    |                                                                             |                                           |        |                   |       |         |       
|                                                                                         | Interest                                           |                                                                             | $                                         | 780    |                   |       | $       | 619    |       
|                                                                                         | Income taxes                                       |                                                                             | $                                         | (996   | )                 |       | $       | (1,442 | )     

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

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FIREARMS TRAINING SYSTEMS, INC.




NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(UNAUDITED)


1.     BASIS OF PRESENTATION.

The accompanying condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments, consisting of normal recurring adjustments, considered necessary
for a fair presentation have been included. Operating results for the
three-month period ended December 31, 2001 are not necessarily indicative of
the results that may be expected for the year ending March 31, 2002. For
further information, refer to the Companys consolidated financial statements
and footnotes thereto for the year ended March 31, 2001.

For fiscal year 2002, the Company began classifying commissions paid to
its agents in cost of revenues. The corresponding amount of $102,000 and
$332,000 for the three and nine months, respectively, ended December 31, 2000
has been reclassified from selling, general, and administrative expenses to
cost of revenues.

2.     REVENUE RECOGNITION

A significant amount of the Companys revenue is derived from the sale of
small and supporting arms training simulators and accessories. Revenue from
sales to commercial customers and small governmental agencies is primarily
recognized upon shipment when title passes; as all material commitments have
been fulfilled, the sales price is fixed and determinable and collectibility is
reasonably assured.

A large portion of the Companys small and supporting arms training
simulator revenue is derived from contracts with various large governmental
agencies. Governmental contracts that involve high volume purchases of the
Companys standard systems and related accessories are accounted for as
multiple-element arrangements. These contracts require little or no
modifications to the existing proprietary platform, specify pricing terms by
product and billings generally correspond to the underlying shipment schedule.
Revenue under these contracts is recognized upon delivery.
Advanced billings related to these contracts are recorded as deferred revenue
and are recognized ratably as units are delivered.

Other governmental contracts require
significant customization of the
Companys existing proprietary platform or require the development of new
systems to meet required customer specifications. These contracts are accounted
for under the percentage of completion method, measured by the percentage of
cost incurred to date to the estimated total cost for each contract. Contract
costs include all direct material, direct labor and other costs directly
related to the contract. Selling, general, and administrative costs are charged
to expense as incurred. Changes in job performance, job conditions, and
estimated profitability, including those arising from contract penalty
provisions, and final contract settlements may result in revisions to costs and
income and are recognized in the period in which the revisions are determined

Provisions for estimated losses on uncompleted contracts accounted for
under both methods described above are made in the period in which such losses
are determined.

Revenue from extended warranty sales and customer logistics support sales
are recorded as deferred revenue and are recognized ratably as income over the
lives of the related service agreements, which generally range from one to
three years. Costs associated with these sales are recorded in the period
incurred.

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3.     INVENTORY.

Inventories consist primarily of simulators, computer hardware,
projectors, and component parts. Inventories are valued at the lower of cost on
a moving weighted average basis or market. Cost includes materials, labor, and
factory overhead. Market is defined as net realizable value. During the three
months ended December 31, 2001, the Company recorded approximately $1.7 million
as a reserve for excess inventory related to older, slow-moving products, which
was recorded in cost of sales that was based on an analysis of its readily
saleable inventory.

Inventories consist of the following (in thousands):

|                |                    |   |              |        |           |   |        |        | 
|--------------- | ------------------ | - | ------------ | ------ | --------- | - | ------ | ------ | 
|                |                    |   | (RESTATED)   |        |           |   |       
|                |                    |   | (Note 9)     |        |           |   |       
|                |                    |   | December 31, |        | March 31,
|                |                    |   | 2001         |        | 2001     
|                |                    |   |              |        |          
|Raw materials   |                    | $ | 9,041        |        |           | $ | 8,023  |       
|Work in process |                    |   | 3,427        |        |           |   | 3,998  |       
|Finished Goods  |                    |   | 1,340        |        |           |   | 1,559  |       
|                |                    |   |              |        |           |   |        |       
|                | Inventories, gross |   |              | 13,808 |           |   |        | 13,580 | 
|Less reserves   |                    |   | (2,950       | )      |           |   | (1,054 | )     
|                |                    |   |              |        |           |   |        |       
|                | Inventories, net   |   | $            | 10,858 |           |   | $      | 12,526 | 
|                |                    |   |              |        |           |   |        |       

4.     LONG-TERM CONTRACTS

Costs and estimated earnings on uncompleted contracts and related amounts billed as of December 31, 2001 and March 31, 2001,
respectively, are as follows (in thousands):

|                                        |  |              |         |          |  |   |        |  
|--------------------------------------- |  | ------------ | ------- | -------- |  | - | ------ | -
|                                        |  | (Restated)   |         |          |  |  
|                                        |  | (Note 9)     |         |          |  |  
|                                        |  | December 31, |         | March 31
|                                        |  | 2001         |         | 2001    
|                                        |  |              |         |         
|Costs incurred on uncompleted contracts |  | $            | 9,300   |          |  | $ | 2,459  |  
|Estimated earnings                      |  |              | 4,542   |          |  |   | 1,568  |  
|                                        |  |              |         |          |  |   |        |  
|                                        |  | $            | 13,842  |          |  | $ | 4,027  |  
|Less: billings to date                  |  |              | (13,862 | )        |  |   | (2,824 | )
|                                        |  |              |         |          |  |   |        |  
|                                        |  | $            | (20     | )        |  | $ | 1,203  |  
|                                        |  |              |         |          |  |   |        |  

Such amounts are included in the following accounts:

|                                                                            |  |              |      |           |  |   |       |  
|--------------------------------------------------------------------------- |  | ------------ | ---- | --------- |  | - | ----- | -
|                                                                            |  | December 31, |      | March 31,
|                                                                            |  | 2001         |      | 2001     
|                                                                            |  |              |      |          
|Costs and estimated earnings in excess of billings
on uncompleted contracts |  | $            | 194  |           |  | $ | 1,480 |  
|Billings in excess of costs and estimated earnings
on uncompleted contracts |  |              | (214 | )         |  |   | (277  | )
|                                                                            |  |              |      |           |  |   |       |  
|                                                                            |  | $            | (20  | )         |  | $ | 1,203 |  
|                                                                            |  |              |      |           |  |   |       |  

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5.     LONG-TERM DEBT

At December 31, 2001 and March 31, 2001, long-term debt consisted of the
following (in thousands):

|                             |       |   |              |        |           |   |        |        | 
|---------------------------- | ----- | - | ------------ | ------ | --------- | - | ------ | ------ | 
|                             |       |   | December 31, |        | March 31,
|                             |       |   | 2001         |        | 2001     
|                             |       |   |              |        |          
|Working capital  borrowings |       | $ | 30           |        |           | $ | 200    |       
|Long-term debt  Senior      |       |   | 12,000       |        |           |   | 12,000 |       
|Long-term debt  Junior      |       |   | 26,662       |        |           |   | 24,765 |       
|Debt
Discount                |       |   | 4,391        |        |           |   | 7,025  |       
|                             |       |   |              |        |           |   |        |       
|                             | Total |   | $            | 43,083 |           |   | $      | 43,990 | 
|                             |       |   |              |        |           |   |        |       

For the quarter ended December 31, 2001, the Company was in compliance
with the capital expenditure covenants of its debt agreements; however, on a
fiscal year-to-date basis as of December 31, 2001, the Company was out of
compliance with the capital expenditure covenants of its debt agreements. The
Company has obtained a waiver from the banks.

6.     RELATED PARTY TRANSACTIONS

The Company has entered into a consulting agreement, dated October 4,
2000, with Sugarman & Company, LLP, a company in which Randy Sugarman is the
managing partner and has an 80% ownership interest. Under the agreement and in
accordance with the terms of the Companys restructuring in fiscal year 2001,
Mr. Sugarman was engaged by the Company to evaluate its financial position and
operations and make recommendations to senior management regarding changes that
need to be made to improve profitability and liquidity. Mr. Sugarmans services
are performed on an hourly basis, plus out-of-pocket expenses, and the Company
is billed accordingly. Since May 16, 2001, Mr. Sugarman has served as Interim
Chief Executive Officer and President of the Company. As of December 31, 2001
and 2000, the Company incurred consulting fees of $288,000 and $151,000, plus
expenses of $54,000 and $30,000, for consulting services under the agreement
for the fiscal years 2002 and 2001, respectively.

7.     NEW ACCOUNTING STANDARDS

In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141, Business Combinations (SFAS No. 141)
and Statement of Financial Accounting Standards No. 142, Other Intangible
Assets (SFAS No. 142).

SFAS No. 141 addresses financial accounting and reporting for business
combinations. This statement requires the purchase method of accounting to be
used for all business combinations, and prohibits the pooling-of-interests
method of accounting. This statement is effective for all business combinations
initiated after June 30, 2001 and supercedes APB Opinion No. 16, Business
Combinations as well as FASB Statement of Financial Accounting Standards No.
38, Accounting for Pre-acquisition Contingencies of Purchased Enterprises.

SFAS No. 142 addresses how intangible assets that are acquired
individually or with a group of other assets should be accounted for in
financial statements upon their acquisition. This statement requires goodwill
to be periodically reviewed for impairment rather than amortized, for fiscal
years beginning after December 15, 2001. SFAS No. 142 supercedes APB Opinion
No. 17, Intangible Assets. As of December 31, 2001, the Company has
$1,017,000 of recorded net goodwill, which will be subject to the new
standards. The Company is currently recording goodwill amortization expense of
$182,000 per year. Such amortization expense will no longer be recorded upon
adoption of this statement and impairment testing will be required to assess
its carrying value going forward. The Company will adopt this standard in the
first quarter of fiscal year 2003. However, the Company will continue to assess
the carrying value of goodwill prior to the adoption of this statement on a
quarterly basis.

In June 2001 the Financial Accounting Standards Board approved Statement
of Financial Accounting Standard No. 143, Accounting for Asset Retirement
Obligations. SFAS No. 143 addresses financial accounting and reporting for
legal obligations associated with the retirement of tangible long-lived assets
and the associated asset retirement costs. The statement is effective for the
Companys 2004 fiscal year and is not expected to have a material effect on the
Companys financial position or results of operations.

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In August 2001 the Financial Accounting Standards Board approved Statement
of Financial Accounting Standard No. 144, Accounting for the Impairment or
Disposal of Long-lived Assets. SFAS No. 144 addresses financial accounting and
reporting for the impairment or disposal of long-lived assets and establishes a
single accounting model for the impairment or disposal of long-lived assets.
The statement supersedes FASB Statement No. 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of and
supercedes accounting and reporting under APB Opinion No. 30 for the disposal
of a segment of a business. The statement is effective for the Companys 2003
fiscal year and is not expected to have a material effect on its financial
position or results of operations.

8.     NET INCOME (LOSS) PER COMMON SHARE

Net income (loss) per share for the three and nine months ended December 31,
2001 and 2000 were as follows:     (in thousands, except per share amounts)

|                                                                                               |  |                    |        |                    |  |                   |        |                   |  |   |        |  |  |   |         |  
|---------------------------------------------------------------------------------------------- |  | ------------------ | ------ | ------------------ |  | ----------------- | ------ | ----------------- |  | - | ------ |  |  | - | ------- | -
|                                                                                               |  | (RESTATED)         |        |                    |  |                   |        | (RESTATED)        |  |   |        | 
|                                                                                               |  | (Note 9)           |        |                    |  |                   |        | (Note 9)          |  |   |        | 
|                                                                                               |  | Three months ended |        | Three months ended |  | Nine months ended |        | Nine months ended
|                                                                                               |  | December 31,       |        | December 31,       |  | December 31,      |        | December 31,     
|                                                                                               |  | 2001               |        | 2000               |  | 2001              |        | 2000             
|                                                                                               |  |                    |        |                    |  |                   |        |                  
|Basic:                                                                                         |  |                    |        |                    |  |                   |        |                   |  |   |        |  |  |   |         |  
|Net income (loss) attributable to common shareholders                                          |  | $                  | 156    |                    |  | $                 | (5,216 | )                 |  | $ | 610    |  |  | $ | (15,342 | )
|Weighted average common shares outstanding                                                     |  |                    | 70,153 |                    |  |                   | 69,942 |                   |  |   | 70,151 |  |  |   | 48,270  |  
|                                                                                               |  |                    |        |                    |  |                   |        |                   |  |   |        |  |  |   |         |  
|Per share amount                                                                               |  | $                  | 0.00   |                    |  | $                 | (0.07  | )                 |  | $ | 0.01   |  |  | $ | (0.32   | )
|                                                                                               |  |                    |        |                    |  |                   |        |                   |  |   |        |  |  |   |         |  
|Diluted:                                                                                       |  |                    |        |                    |  |                   |        |                   |  |   |        |  |  |   |         |  
|Net income (loss) attributable to common shareholders                                          |  | $                  | 156    |                    |  | $                 | (5,216 | )                 |  | $ | 610    |  |  | $ | (15,342 | )
|Weighted average common shares outstanding                                                     |  |                    | 70,153 |                    |  |                   | 69,942 |                   |  |   | 70,151 |  |  |   | 48,270  |  
|Shares assumed issued upon exercise of dilutive stock
options using the treasury stock method  |  |                    | 236    |                    |  |                   | 0      |                   |  |   | 234    |  |  |   | 0       |  
|Shares assumed issued upon exercise of dilutive stock
warrants using the treasury stock method |  |                    | 653    |                    |  |                   | 0      |                   |  |   | 386    |  |  |   | 0       |  
|                                                                                               |  |                    |        |                    |  |                   |        |                   |  |   |        |  |  |   |         |  
|Total                                                                                          |  |                    | 71,042 |                    |  |                   | 69,942 |                   |  |   | 70,771 |  |  |   | 48,270  |  
|                                                                                               |  |                    |        |                    |  |                   |        |                   |  |   |        |  |  |   |         |  
|Per share amount                                                                               |  | $                  | 0.00   |                    |  | $                 | (0.07  | )                 |  | $ | 0.01   |  |  | $ | (0.32   | )
|                                                                                               |  |                    |        |                    |  |                   |        |                   |  |   |        |  |  |   |         |  

Basic and diluted earnings per common share were computed by dividing net
income (loss) by the weighted average number of shares of common stock
outstanding during the year. Stock options to purchase 2,122,877 shares of
common stock as well as warrants to purchase 3,246,164 shares of common stock
were excluded for the three months ended December 31, 2001 as they were all
anti-dilutive. The effect of all of the stock options and warrants was excluded
for the three and nine months ended December 31, 2000 as a loss was recorded
and amounts were anti-dilutive.

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9.     RESTATEMENT

The Companys interim financial statements at December 31, 2001 and for
the three months and nine months ended December 31, 2001 have been restated
from amounts previously reported to apply the correct revenue recognition
policy to certain of the Companys sales contracts. Revenue under these
contracts was previously reported upon shipment and passage of title of the
underlying systems and has been revised to reflect the application of the
percentage of completion method of accounting as these contracts call for
significant customization of the Companys proprietary system. The following
table shows the line items that have been restated in the Companys Condensed
Consolidated Statements of Operations, Condensed Consolidated Balance Sheets
and Condensed Consolidated Statements of Cash Flows:

SUMMARY OF CHANGES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands)

|                                      |  |                    |        |                   |  |               |        |          |  |  |        |               |  |  |        | 
|------------------------------------- |  | ------------------ | ------ | ----------------- |  | ------------- | ------ | -------- |  |  | ------ | ------------- |  |  | ------ | 
|                                      |  | Three months ended |        | Nine months ended
|                                      |  | December 31, 2001  |        | December 31, 2001
|                                      |  |                    |        |                  
|                                      |  |                    |        |                   |  | As previously |        |          |  |  |        | As previously
|                                      |  | Restated           |        | reported          |  | Restated      |        | reported
|                                      |  |                    |        |                   |  |               |        |         
|Revenues                              |  |                    | 15,396 |                   |  |               | 15,999 |          |  |  | 43,932 |               |  |  | 42,910 | 
|Cost of Revenues                      |  |                    | 10,744 |                   |  |               | 11,255 |          |  |  | 30,113 |               |  |  | 29,501 | 
|Gross Margin                          |  |                    | 4,652  |                   |  |               | 4,744  |          |  |  | 13,819 |               |  |  | 13,409 | 
|Operating income                      |  |                    | 385    |                   |  |               | 477    |          |  |  | 1,340  |               |  |  | 930    | 
|Income before taxes                   |  |                    | 287    |                   |  |               | 379    |          |  |  | 1,355  |               |  |  | 945    | 
|Provision for income taxes            |  |                    | 63     |                   |  |               | 94     |          |  |  | 545    |               |  |  | 406    | 
|Net income                            |  |                    | 224    |                   |  |               | 285    |          |  |  | 810    |               |  |  | 539    | 
|Net income applicable to shareholders |  |                    | 156    |                   |  |               | 217    |          |  |  | 610    |               |  |  | 339    | 
|Earnings per share  basic            |  |                    | 0.00   |                   |  |               | 0.00   |          |  |  | 0.01   |               |  |  | 0.00   | 
|Earnings per share  diluted          |  |                    | 0.00   |                   |  |               | 0.00   |          |  |  | 0.01   |               |  |  | 0.00   | 

CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

|                                                                            |  |                   |          |          |  |               |          |  
|--------------------------------------------------------------------------- |  | ----------------- | -------- | -------- |  | ------------- | -------- | -
|                                                                            |  | December 31, 2001
|                                                                            |  |                  
|                                                                            |  |                   |          |          |  | As previously
|                                                                            |  | Restated          |          | reported
|                                                                            |  |                   |          |         
|Costs
and estimated earnings in excess of billings on uncompleted contracts |  |                   | 194      |          |  |               | 0        |  
|Unbilled receivables                                                        |  |                   | 1,139    |          |  |               | 311      |  
|Inventories, net                                                            |  |                   | 10,858   |          |  |               | 11,469   |  
|Total assets                                                                |  |                   | 33,487   |          |  |               | 33,077   |  
|Income taxes payable                                                        |  |                   | 705      |          |  |               | 566      |  
|Billings
in excess of costs and estimated earnings on uncompleted contracts |  |                   | 214      |          |  |               | 0        |  
|Accumulated deficit                                                         |  |                   | (176,076 | )        |  |               | (176,347 | )
|Deferred
revenue                                                            |  |                   | 1,873    |          |  |               | 2,087    |  
|Total stockholders deficit                                                 |  |                   | (53,550  | )        |  |               | (53,821  | )
|Total liabilities and equity                                                |  |                   | 33,487   |          |  |               | 33,077   |  

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

|                                                                            |  |                   |       |          |  |               |       | 
|--------------------------------------------------------------------------- |  | ----------------- | ----- | -------- |  | ------------- | ----- | 
|                                                                            |  | December 31, 2001
|                                                                            |  |                  
|                                                                            |  |                   |       |          |  | As previously
|                                                                            |  | Restated          |       | reported
|                                                                            |  |                   |       |         
|Net income (loss)                                                           |  |                   | 610   |          |  |               | 339   | 
|Cost
and estimated earnings in excess of billings on uncompleted contracts  |  |                   | 1,328 |          |  |               | 0     | 
|Unbilled receivables                                                        |  |                   | 192   |          |  |               | 2,544 | 
|Inventories                                                                 |  |                   | 1,669 |          |  |               | 1,057 | 
|Accrued
liabilities                                                         |  |                   | 3,299 |          |  |               | 3,439 | 
|Income taxes payable                                                        |  |                   | 1,515 |          |  |               | 1,376 | 
|Deferred
revenue                                                            |  |                   | 242   |          |  |               | 42    | 
|Billings
in excess of costs and estimated earnings on uncompleted contracts |  |                   | (59   | )        |  |               | 0     | 

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|        |  |                                                                                      
|------- |  | -------------------------------------------------------------------------------------
|ITEM 2. |  | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS




This Managements Discussion and Analysis of Financial Condition and
Results of Operations should be read in conjunction with the Managements
Discussion and Analysis of Financial Condition and Results of Operations
contained in the Companys most recently filed Form 10-K for the fiscal year
ended March 31, 2001.

The Company has restated its financial statements for the three months and
nine months ended December 31, 2001 as further discussed in Note 9 to the
Consolidated Condensed Financial Statements.

RESULTS OF OPERATIONS

Three Months Ended December 31, 2001 and 2000:

Net Revenues: Revenues increased $6.3 million, or 69.0%, to $15.4 million
for the three months ended December 31, 2001 as compared to $9.1 million for
the three months ended December 31, 2000. Sales to U.S. military customers for
the three months ended December 31, 2001, increased by $3.5 million, or 104.9%,
to $6.8 million. The increase in military sales is due to several large
deliveries of items to customers that were in the Companys backlog of sales as
of September 30, 2001. Sales to U.S. law enforcement customers for the three
months ended December 31, 2001 decreased $0.1 million, or (4.0%) to $1.6
million. Sales to international customers for the three months ended December
31, 2001 increased $2.8 million, or 71.4%, to $6.8 million due to several large
deliveries of items to customers that were in the Companys backlog of sales as
of September 30, 2001.

Cost of Revenues: Cost of revenues increased $2.4 million, or 28.7%, to
$10.8 million for the three months ended December 31, 2001 as compared to $8.4
million for the three months ended December 31, 2000. As a percentage of
revenues, cost of revenues for the three months ended December 31, 2001
decreased to 69.8% as compared to 91.7% for the three months ended December 31,
2000. The decrease in cost of revenues as a percentage of revenues is
attributable to a higher volume of revenues to cover fixed costs and provision
of an accrual of approximately $1.5 million for the three months ended December
31, 2000. For the three months ended December 31, 2001, the Company utilized
$0.3 million of this accrual of which approximately $2.7 million remains as of
December 31, 2001. No such accruals were necessary in fiscal year 2002. For the
three months ended December 31, 2001, the Company recorded a provision of
approximately $1.7 million for excess inventory related to older, slow-moving
products that was based on an analysis of its readily saleable inventory. For
fiscal year 2002, the Company began classifying commissions paid to its agents
in cost of revenues. The corresponding amount of $102,000 for the three months
ended December 31, 2000 has been reclassified from selling, general, and
administrative expenses to cost of revenues.

Gross Profit: As a result of the foregoing, gross profit increased $3.9
million, or 513.7%, to $4.7 million, or 30.2% of revenues, for the three months
ended December 31, 2001 as compared to $0.8 million, or 8.3% of revenues, for
the three months ended December 31, 2000.

Total Operating Expenses: Total operating expenses decreased $1.5 million,
or (26.5%), for the three months ended December 31, 2001. As a percentage of
revenues, total operating expenses decreased to 27.7% for the three months
ended December 31, 2001 as compared to 63.7% for the three months ended
December 31, 2000. Selling, general and administrative (SG&A) expenses
remained consistent. Total operating expenses decreased primarily due to an
impairment loss of $1.2 million recorded during the three months ended December
31, 2000, that was associated with the Companys Simtran operations and was
equal to the difference between the carrying value of the long-lived assets and
associated goodwill of Simtran and the expected discounted future cash flows.

Research and development expenses decreased $0.2 million, or (13.6%),
primarily attributable to the Companys reduction in expenditures for research
and development activities relating to new products and product lines.
Depreciation and amortization expense decreased $0.1 million due to the
impairment of long-lived assets in fiscal year 2001, which lowered the basis of
long-lived assets and goodwill.

Operating Income: As a result of the foregoing, operating income increased
$5.4 million to an income of $0.4 million, or 2.5% of revenues, for the three
months ended December 31, 2001 as compared to an operating loss of $5.0 million
or (55.4%) of revenues, for the three months ended December 31, 2000.

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Other Income
(Expense), net: Net interest expense totalled $67,000 or 0.4%
of revenues for the three months ended December 31, 2001 as compared to
interest expense of $64,000, or 0.7% of revenues for the three months ended
December 31, 2000. The reduction in interest expense is attributable to the
debt restructuring completed by the Company in August 2000. In conjunction with
the debt restructuring, the Companys outstanding indebtedness was exchanged
for new borrowings, common stock, and mandatory redeemable preferred stock. The
sum of all future principal and interest payments due under the new agreements
exceeded the carrying value of the old debt, and thus no gain was recognized on
the transaction in accordance with SFAS No. 15. The excess of the carrying
amount of the old borrowings exceeded the fair value of the new borrowings,
common stock, and mandatory redeemable preferred stock and was allocated
proportionately to the new debt and preferred stock. During the three months
ended December 31, 2001 and 2000, the excess amount allocated to debt was
reduced by approximately $878,000 and $878,000, respectively, resulting in a
corresponding reduction of interest expense. Interest expense for the three
months ended December 31, 2000 also included fees of approximately $38,000
associated with the debt restructuring. Interest expense will continue to be
recognized at a much lower effective interest cost until the debt matures in
March of 2003.

Provision for Income Taxes: The effective tax rate increased to (22.0%) of
income before taxes for the three months ended December 31, 2001 as compared to
1.1% of loss before taxes for the three months ended December 31, 2000. The
Company has not recorded a tax benefit for the majority of its operating losses
due to uncertainty of future realization in both periods; however, certain of
the Companys foreign subsidiaries had higher operating income in fiscal year
2001 and fiscal year 2002, resulting in additional tax provisions.

Net Income: As a result of the foregoing, net income increased $5.3
million to a net income of $0.2 million, or 1.5% of revenues for the three
months ended December 31, 2001 as compared to a net loss of $5.1 million, or
(56.6%) of revenues for the three months ended December 31, 2000.

Accretion of Preferred Stock: The expense for the accretion of the
preferred stock was a total of $68,000 for the three months ended December 31,
2001 as compared to $57,000 for the three months ended December 31, 2000
related to the preferred stock issued in November, 1998 which was exchanged in
August 2000 for new preferred stock.

Net Income applicable to common shareholders: The net income applicable to
common shareholders increased $5.4 million to $0.2 million ($0.00 per share) or
1.0% of revenue. This compares to a loss of $5.2 million ($0.07) per share or
(57.3%) of revenue for the three months ended December 31, 2000.

Nine Months Ended December 31, 2001 and 2000:

Net Revenues: Revenues increased $17.2 million, or 64.2%, to $43.9 million
for the nine months ended December 31, 2001 as compared to $26.7 million for
the nine months ended December 31, 2000. Sales to U.S. military customers for
the nine months ended December 31, 2001, increased by $14.2 million, or 215.1%,
from $6.6 million to $20.8 million. Sales to U.S. law enforcement customers for
the nine months ended December 31, 2001 decreased $0.5 million or (9.0%) to
$5.1 million due to increased competition in this market. Sales to
international customers for the nine months ended December 31, 2001 increased
$3.9 million, or 28.5%, to $17.5 million. The increase in military sales is due
to deliveries of items to customers that were in the Companys backlog of sales
as of September 30, 2001.

Cost of Revenues: Cost of revenues increased $4.9 million, or 19.7%, to
$30.1 million for the nine months ended December 31, 2001 as compared to $25.2
million for the nine months ended December 31, 2000. As a percentage of
revenues, cost of revenues decreased to 68.5% for the nine months ended
December 31, 2001 as compared to 94.1% for the nine months ended December 31,
2000. The decrease in cost of revenues as a percentage of revenues is
attributed to a higher volume of revenues to cover fixed costs; the inclusion
of an accrual of approximately $4.2 million in fiscal year 2001 (during the
nine months ended December 31, 2001, the Company utilized approximately $1.3
million of this accrual of which approximately $2.7 million remains as of
December 31, 2001), that was associated with costs to complete the warranty
provisions of certain contracts as well as to accrue for anticipated losses on
existing contracts; and a $0.5 million write-off of inventory during the second
quarter of fiscal year 2001 that was determined to be unrealizable due to
changes in anticipated sales volume related to a particular product. No such
accruals were necessary in fiscal year 2002. For the nine months ended December
31, 2001, the Company recorded a provision of approximately $1.9 million for
excess inventory related to older, slow-moving products that was based on an
analysis of its readily saleable inventory. For fiscal year 2002, the Company
began classifying commissions paid to its agents in cost of revenues. The
corresponding amount of $0.3 million for the nine months ended December 31,
2000 has been reclassified from selling, general, and administrative expenses
to cost of revenues.

Gross Profit: As a result of the foregoing, gross profit increased $12.2
million, or 773.5%, to $13.8 million, or 31.5% of revenues, for the nine months
ended December 31, 2001 as compared to $1.6 million, or 5.9% of revenues, for
the nine months ended December 31, 2000.

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Total Operating Expenses: Total operating expenses decreased $1.0 million,
or (7.8%), to $12.5 million for the nine months ended December 31, 2001 as
compared to $13.5 million revenues, for the nine months ended December 31,
2000. As a percentage of revenues, total operating expenses decreased to 28.4%
for the nine months ended December 31, 2001 as compared to 50.6% for the nine
months ended December 31, 2000. Selling, general and administrative (SG&A)
expenses increased $1.6 million, or 23.9%. This increase in SG&A is due
primarily to increases in employee compensation costs, including $0.3 million
related to the separation agreement with the Companys former President and CEO
and a provision for severance costs for personnel reduction at the Companys
Simtran subsidiary and a reserve for legal fees regarding recent claims made by
certain customers of the Companys former subsidiary, Dart International,
concerning the DVD component of the electronic archery system. In the opinion
of management, these proceedings will not have a material adverse effect on the
Companys financial position, liquidity or results of operations. Also, an
impairment loss of $1.2 million was recorded during the nine months ended
December 31, 2000, that was associated with the Companys Simtran operations
and was equal to the difference between the carrying value of the long-lived
assets and associated goodwill of Simtran and the expected undiscounted future
cash flows. Research and development expenses decreased $1.1 million, or 28.7%,
primarily attributable to the Companys reduction in expenditures for research
and development activities relating to new products and product lines.
Depreciation and amortization expense decreased $0.4 million due to the
impairment of long-lived assets in fiscal year 2001, which lowered the basis of
long-lived assets and goodwill.

Operating Income: As a result of the foregoing, operating income increased
$13.3 million to an income of $1.3 million, or 3.1% of revenues, for the nine
months ended December 31, 2001 as compared to an operating loss of $11.9
million or (44.6%) of revenues, for the nine months ended December 31, 2000.

Other Income (Expense), net: Net interest income totalled $0.1 million, or
0.2% of revenues for the nine months ended December 31, 2001 as compared to
interest expense of $4.6 million, or 17.3% of revenues for the nine months
ended December 31, 2000. The reduction in interest expense is attributable to
the debt restructuring completed by the Company in August 2000. In conjunction
with the debt restructuring, the Companys outstanding indebtedness was
exchanged for new borrowings, common stock, and mandatory redeemable preferred
stock. The sum of all future principal and interest payments due under the new
agreements exceeded the carrying value of the old debt, and thus no gain was
recognized on the transaction in accordance with SFAS No. 15. The excess of the
carrying amount of the old borrowings exceeded the fair value of the new
borrowings, common stock, and mandatory redeemable preferred stock and was
allocated proportionately to the new debt and preferred stock. During the nine
months ended December 31, 2001 and 2000, the excess amount allocated to debt
was reduced by approximately $2.6 million and $1.2 million, respectively,
resulting in a corresponding reduction of interest expense. Interest expense
for the nine months ended December 31, 2000 also included fees associated with
the restructuring of approximately $644,000. Interest expense will continue to
be recognized at a much lower effective interest cost until the debt matures in
March of 2003.

Provision for Income Taxes: The effective tax rate increased to 40.2% of
income before taxes for the nine months ended December 31, 2001 as compared to
0.1% of loss before taxes for the nine months ended December 31, 2000. The
Company has not recorded a tax benefit for the majority of its operating losses
due to uncertainty of future realization in both periods; however, certain of
the Companys foreign subsidiaries had higher operating income in fiscal year
2001 and fiscal year 2002, resulting in additional tax provisions.

Net Income: As a result of the foregoing, net income increased $17.7
million to a net income of $0.8 million, or 1.8% of revenues for the nine
months ended December 31, 2001 as compared to a net loss of $16.9 million, or
(63.1%) of revenues for the nine months ended December 31, 2000.

Accretion of Preferred Stock: The expense for the accretion of the
preferred stock was a total of $200,000 for the nine months ended December 31,
2001 as compared to $197,000 for the nine months ended December 31, 2000
related to the preferred stock issued in November, 1998 which was exchanged in
August 2000 for new preferred.

Net Income applicable to common shareholders: The net income applicable to
common shareholders increased $16.0 million to $0.6 million ($0.01 per share)
or 1.4% of revenue. This compares to a loss of $15.3 million ($0.32 per share)
or (57.3%) of revenue for the nine months ended December 31, 2000, which
included a Gain on Extinguishment of Preferred Stock of $1.7 million and a
one-time charge of $1.2 million for impairment of long-lived assets related to
Simtran.

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ANALYSIS OF BACKLOG

Backlog represents customer orders that have been contracted for future
delivery. Accordingly, these orders have not yet been recognized as revenue,
but represent potential revenue. As of December 31, 2001, the Company had a
backlog of approximately $36.8 million, as compared to $36.5 million as of
December 31, 2000, comprised of $14.9 million from international customers of
FATS, $0.4 from Simtrans Canadian customers and $21.5 million from FATS U.S.
military and law enforcement customers. Approximately $14.5 million of the
contracted orders are scheduled for delivery during fiscal year 2002.

LIQUIDITY AND CAPITAL RESOURCES AND GOING CONCERN CONSIDERATIONS

The Companys continuation as a going concern is dependent upon its
ability to (a) continue production work on existing contracts; (b) obtain new
contracts for future delivery; and (c) generate sufficient cash flow to meet
working capital obligations on a timely basis.

Managements plans in response to the above objectives are to (1) continue
to reinforce cost control measures through implementation of Lean Enterprise
concepts. Lean Enterprises is an integrated set of industrial principles and
methods first developed out of a groundbreaking study of the post-World War II
Japanese automobile industry. The Lean Enterprise concept enables companies to
find the best way to specify value for the customer, to identify the value
stream for each product, to cause the product to flow smoothly from concept to
customer, to permit the customer to pull value as needed from the producer, and
to make a move toward perfection. The concepts of value, value stream, flow,
pull, and perfectionare deployed by means of lean techniquesfor product
development, production, purchasing, and customer support; (2) remain focused
on revenue maximization of standard products with higher margin potentials
within the domestic and international law enforcement business segment; (3)
minimize capital expenditures in non-strategic areas; (4) continue to improve
inventory turns and lower inventory investment; and (5) continually negotiate
more favorable contract terms and conditions to reduce extended or prolonged
payment cycles.

As of December 31, 2001, the Company had working capital of $16.4 million
compared to $14.6 million as of December 31, 2000. The net $1.8 million
increase in working capital is primarily the result of the Companys improved
cash flow from operations as a result of its improved profitability, its
reduction of inventories and reduction of its unbilled receivables. The
Companys spending year-to-date as of December 31, 2001 for capital
expenditures was $0.4 million. The expenditures were primarily for
manufacturing machinery, data processing equipment and software. For the
quarter ended December 31, 2001, the Company was in compliance with the capital
expenditure covenants of its debt agreements; however, on a fiscal year-to-date
basis as of December 31, 2001, the Company was out of compliance with the
capital expenditure covenants of its debt agreements. The Company has obtained
a waiver from the banks.

The Company had a net increase in cash and cash equivalents of $2.6
million for the nine months ended December 31, 2001 compared to a net decrease
of $0.8 million for the nine months ended December 31, 2000. For the period
ended December 31, 2001, the Companys operating activities generated cash of
approximately $3.0 million. Also, the Company is recording a reduced amount of
interest expense as discussed in the Other Income (Expense), net section
under RESULTS OF OPERATIONS. The Companys investing activities used cash of
approximately $0.4 million, primarily for capital expenditures.

In August 2000, the Company restructured its debt agreements (the
Restructure Transaction) by entering into a Second Amended and Restated
Credit Agreement (the New Credit Agreement) and Partial Exchange Agreement
with Bank of America, N.A. and other lenders. The New Credit Agreement replaced
the Companys previous credit facility, including the Tranche A and B loans and
Revolving credit facility. In accordance with the New Credit Agreement, the
unpaid principal of approximately $70,772,000 and accrued interest of
approximately $5,312,000 under the old facility was converted to 40,235,548
shares of Class A common stock, 20,463.716 shares of Series B mandatory
redeemable preferred stock, approximately $11,496,000 in senior secured loans,
and approximately $22,034,000 of junior secured loans. All borrowings under the
new agreements mature on March 31, 2003 but may be extended for one additional
year at the Companys option for a 1.0% fee. The senior loans bear interest at
prime plus 1.0%, payable quarterly in cash. The junior loans bear interest at
10.0%, payable quarterly in cash or in PIK (Paid In Kind) notes payable with
the same terms, depending on interest coverage ratios, as defined.

As a result of the Restructure Transaction in August 2000, the Company is
not currently paying interest or principal, other than interest on its Senior
Debt and a portion of the Junior Debt, in cash. The remaining interest on
Junior Debt is being recorded as additional notes payable. This debt will
mature in March 2003 unless otherwise extended at the option of the Company.

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CONCENTRATION OF CREDIT RISK

At December 31, 2001, approximately $9.8 million in accounts receivable or
78.5% of total accounts receivable was due from the Companys top ten
customers, all of which is due from governmental entities.

NEW ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 141, Business Combinations (SFAS No. 141)
and Statement of Financial Accounting Standards No. 142, Goodwill and Other
Intangible Assets (SFAS No. 142).

SFAS No. 141 addresses financial accounting and reporting for business
combinations. This statement requires the purchase method of accounting to be
used for all business combinations, and prohibits the pooling-of-interests
method of accounting. This statement is effective for all business combinations
initiated after June 30, 2001 and supercedes APB Opinion No. 16, Business
Combinations as well as FASB Statement of Financial Accounting Standards No.
38, Accounting for Pre-acquisition Contingencies of Purchased Enterprises.

SFAS No. 142 addresses how intangible assets that are acquired
individually or with a group of other assets should be accounted for in
financial statements upon their acquisition. This statement requires goodwill
to be periodically reviewed for impairment rather than amortized, for fiscal
years beginning after December 15, 2001. SFAS No. 142 supercedes APB Opinion
No. 17, Intangible Assets. As of December 31, 2001, the Company has
$1,017,000 of recorded net goodwill, which will be subject to the new
standards. The Company is currently recording goodwill amortization expense of
$182,000 per year. Such amortization expense will no longer be recorded upon
adoption of this statement and impairment testing will be required to assess
its carrying value going forward. The Company will adopt this standard in the
first quarter of fiscal year 2003. However, the Company will continue to assess
the carrying value of goodwill prior to the adoption of this statement on a
quarterly basis.

In June 2001 the Financial Accounting Standards Board approved Statement
of Financial Accounting Standard No. 143, Accounting for Asset Retirement
Obligations. SFAS No. 143 addresses financial accounting and reporting for
legal obligations associated with the retirement of tangible long-lived assets
and the associated asset retirement costs. The statement is effective for the
Companys 2004 fiscal year and is not expected to have a material effect on its
financial position or results of operations.

In August 2001 the Financial Accounting Standards Board approved Statement
of Financial Accounting Standard No. 144, Accounting for the Impairment or
Disposal of Long-lived Assets. The statement supersedes FASB Statement No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of and supercedes accounting and reporting under APB
Opinion No. 30 for the disposal of a segment of a business. SFAS No. 144
addresses financial accounting and reporting for the impairment or disposal of
long-lived assets and establishes a single accounting model for the impairment
or disposal of long-lived assets. The statement is effective for the Companys
2003 fiscal year and is not expected to have a material effect on its financial
position or results of operations.

CRITICAL ACCOUNTING POLICIES

The SEC has recently issued Financial Reporting Release No. 60,
Cautionary Advice Regarding Disclosure About Critical Accounting Policies
(FRR 60), suggesting companies provide additional disclosure and commentary on
those accounting polices considered most critical. FRR 60 considers an
accounting policy to be critical if it is important to the Companys financial
condition and results, and requires significant judgment and estimates on the
part of management in its application. Refer to footnote 3 in the disclosures
to the Companys financial statements included in Form 10-K for the fiscal year
ended March 31, 2001 for a complete listing of significant accounting policies.
Firearms Training Systems, Inc. believes the following represents the critical
accounting policies of the Company as contemplated by FRR 60.

Revenue Recognition

Customer contracts that require significant customization of the Companys
existing proprietary platform or require the development of new systems to meet
required customer specifications are accounted for under the percentage of
completion method, measured by the percentage of cost incurred to date to the
estimated total cost for each contract. Accounting for such contracts is
essentially a process of measuring the results of relatively long-term events
and allocating those results to relatively short-term accounting periods. This
involves

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considerable use of estimates in determining costs and profits and
thereby estimating the timing of revenue recognition and in assigning the
amounts to accounting periods. The process is complicated by the need to
evaluate continually the uncertainties inherent in the performance of contracts
and by the need to rely on estimates of revenues, costs, and the extent of
progress toward completion. The company continually monitors each of these
estimates based on the most current information available from the project
managers and project engineers assigned to the programs. Changes in job
performance, job conditions, and estimated profitability, including those
arising from contract penalty provisions, and final contract settlements may
result in revisions to costs and income and are recognized in the period in
which the revisions are determined. These revisions could materially increase
or decrease profit margins on particular contracts in future periods.

Impairment of Long-Lived Assets

Management periodically assesses the recoverability of the Companys
long-lived assets whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. In assessing the
recoverability of long-lived assets management assesses the historical cash
flow associated with that asset in conjunction with undiscounted future cash
flow projections. The undiscounted future cash flow analysis is based on
numerous assumptions including, but not limited to, sales history and future
estimated sales demand. In the event the undiscounted cash flow analysis does
not support the underlying assets carrying value, the asset is written-down to
its estimated fair market value.

Inventory Reserve

Inventories are valued at the lower of cost on a moving weighted average
or market, cost being determined on the first-in, first-out basis and market is
defined as net realizable value. Management periodically reviews Company
inventory for items that may be deemed obsolete, damaged or for amounts on hand
in excess of anticipated future demand. The underlying assumptions utilized in
assessing the Companys inventory change from time-to-time due to change in the
underlying sales mix, the release of new versions of the Companys proprietary
system and overall changes in technology and the market place. As the Company
develops new product lines future charges against income may be necessary to
reduce inventory to its net realizable value.

Contract Cost Provision Reserve

Management routinely assesses the Companys performance and estimated cost
to complete ongoing sales contracts. Changes in job performance, job
conditions, and estimated profitability, including those arising from contract
penalty provisions, and final contract settlements may result in revisions to
costs and income. In the event Management anticipates incurring costs in excess
of contract revenues, the Company records a contract cost provision
reserve in an
amount equal to the estimated costs in excess of contracted revenues in the
period in which such information becomes apparent.

Warranty Cost Provision Reserve

Management periodically estimates
expected warranty costs under the
Companys standard product warranty. In determining the estimate, Management
analyzes the relationship of historical standard warranty costs incurred on
historical sales and the underlying product mix comprising the historical
sales. Management, in turn, utilizes this historical information to estimate
expected warranty costs on recent sales within the standard warranty time
frame. Due to the inherent limitations in the estimation process, the potential
for product defects and other unforeseen circumstances by the Company, the
possibility exists that the recorded warranty provision reserve will be inadequate to
offset actual warranty costs incurred resulting in additional charges against
income. Also, actual warranty costs may be significantly lower than expected
resulting in the reduction of the Companys warranty provision
reserve generating an addition to income in future periods.

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COMMITMENTS AND OTHER CONTRACTURAL OBLIGATIONS

Disclosure of Commitments and Other Contractural Obligations
December 31, 2001
(amounts in thousands)

|                             |  |       |        |        |  |             |       |             |  |         |        |       |  |   |       |  |  |   |     | 
|---------------------------- |  | ----- | ------ | ------ |  | ----------- | ----- | ----------- |  | ------- | ------ | ----- |  | - | ----- |  |  | - | --- | 
|                             |  |       |        |        |  | Less than   |       | Within      |  | Within  |        | After
|                             |  | Total |        | 1 year |  | 1 - 3 years |       | 4 - 5 years |  | 5 years
|                             |  |       |        |        |  |             |       |             |  |        
|Long-term debt:              |  |       |        |        |  |             |       |             |  |         |        |       |  |   |       |  |  |   |     | 
|Working capital  borrowings |  | $     | 30     |        |  | $           | 0     |             |  | $       | 30     |       |  | $ | 0     |  |  | $ | 0   | 
|Long-term debt  Senior      |  |       | 12,000 |        |  |             | 0     |             |  |         | 12,000 |       |  |   | 0     |  |  |   | 0   | 
|Long-term debt  Junior      |  |       | 26,662 |        |  |             | 0     |             |  |         | 26,662 |       |  |   | 0     |  |  |   | 0   | 
|Debt Discount*               |  |       | 4,391  |        |  |             | 3,512 |             |  |         | 879    |       |  |   | 0     |  |  |   | 0   | 
|Other:                       |  |       |        |        |  |             |       |             |  |         |        |       |  |   |       |  |  |   |     | 
|Operating lease obligations  |  |       | 3,765  |        |  |             | 823   |             |  |         | 1,258  |       |  |   | 1,123 |  |  |   | 561 | 
|Acquisition earn-out payment |  |       | 708    |        |  |             | 708   |             |  |         | 0      |       |  |   | 0     |  |  |   | 0   | 



---

|* |  | Balance represents a non-cash debt restructuring liability, which is amortized to interest expense monthly.
|- |  | -----------------------------------------------------------------------------------------------------------

RELATED PARTIES AND TRANSACTIONS

A group of entities affiliated with Centre Partners Management LLC (the
Centre Entities) are among the Companys largest shareholders. Centre
Entities holds a seat on the Companys Board of Directors. In addition, the
Centre Entities were party to the debt restructuring further discussed in the
footnotes to the Companys financial statements included in the Form 10-K for
the period ended March 31, 2001 and continue to be one of the Companys primary
lenders. As a result, the Centre Entities have the ability to influence the
operations of the Company.

The Company has entered into a consulting agreement, dated October 4,
2000, with Sugarman & Company, LLP, a company in which Randy Sugarman is the
managing partner and has an 80% ownership interest. Under the agreement and in
accordance with the terms of the Companys restructuring in fiscal year 2001,
Mr. Sugarman was engaged by the Company to evaluate its financial position and
operations and make recommendations to senior management regarding changes that
need to be made to improve profitability and liquidity. Mr. Sugarmans services
are performed on an hourly basis, plus out-of-pocket expenses, and the Company
is billed accordingly. Since May 16, 2001, Mr. Sugarman has served as Interim
Chief Executive Officer and President of the Company. For the three months
ended December 31, 2001 and 2000, respectively, the Company incurred consulting
fees of $0.1 million and $0.2 million that were included in operating expenses.
For the nine months ended December 31, 2001 and 2000, respectively, the Company
incurred consulting fees of $0.3 million and $0.2 million that were included in
operating expenses.

CERTAIN FORWARD LOOKING STATEMENTS

Certain statements in this filing, and elsewhere (such as in other filings
by the Company with the Commission, press releases, presentations by the
Company or its management and oral statements) constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among other things, (i) those
described above including the timing and size of, and the Companys success in
competing for, new contracts awarded by military and other government
customers; (ii) significant variability in the Companys quarterly revenues and
results of operations as a result of variations in the number and size of the
Companys shipments in a particular quarter while a significant percentage of
its operating expenses are fixed in advance; (iii) concentrations of revenues
from a few large customers who vary from one period to the next; (iv) the high
percentage of sales to military and law enforcement authorities whose orders
are subject to extensive government regulations and termination for a variety
of factors and budgetary constraints; (v) a significant proportion of
international sales which may be subject to political, monetary and economic
risks, including greater credit risks; (vi) the potential for increased
competition; (vii) the Companys ability to attract and retain key personnel
and adapt to changing technologies; and (viii) other factors described in the
Companys Form 10-K for the fiscal year ended March 31, 2001 under the caption
Part I. No assurance can be given that actual revenues, operating income or net
income will not be materially different than those reported above. Prospective
investors are cautioned that actual results and experience may differ
materially from the forward-looking statements as a result of many factors,
possibly including changes in economic conditions, competition, fluctuations in
raw materials, and other unanticipated events and conditions.

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ITEM 3.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to a number of market risks in the ordinary course
of business, such as foreign currency exchange risk in the fulfillment of
international contracts and interest rate risk associated with the interest
rate cost of its outstanding long-term liabilities. The majority of the
Companys contracts are denominated in U.S. dollars, thus reducing foreign
exchange risk. The Companys net exposure to interest rate risk consists of its
floating rate senior debt and working capital borrowings which are tied to
changes in the prime rate.




PART II.           OTHER INFORMATION




ITEM 1.           LEGAL PROCEEDINGS

The Company is involved in legal proceedings in the ordinary course of its
business, which in the opinion of management will not have a materially adverse
effect on the Companys financial position, liquidity, or results of operation.




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

On December 6, 2001 the Company held its Annual Stockholders Meeting at
its headquarters in Suwanee, GA. At this meeting 65,230,643 votes, representing
93.0% of eligible votes, were represented at this meeting.

The following proposal was submitted to the security holders for vote:

(1)  Election of two directors. Messrs. William J. Bratton and Ronovan
Mohling were nominated for re-election to the board of directors. This proposal
received 99.6% of the eligible votes cast to affirm their re-election to the
board. Mr. Bratton received 65,198,508 votes for re-election with 33,335 votes
withheld. Mr. Mohling received 65,201,808 votes for re-election with 30,035
votes withheld. No other business came to a vote.




ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K



| | (a) |  | Exhibits                                                                                                                                                     
| | --- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |     |  | Exhibit 99.1  Certification Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to         
       
       Section 906 of the Sarbanes-Oxley Act of
2002
|
| |     |  | Exhibit 99.2  Certification Pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to       
        
        Section 906 of the Sarbanes-Oxley Act of
2002
|
| | (b) |  | No reports on Form 8-K were filed during the quarter ended December 31, 2001.                                                                                

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.

|                        |  |  |  |                                                                                                   
|----------------------- |  |  |  | --------------------------------------------------------------------------------------------------
|DATED:  August 14, 2002 |  | 
|                        |  |  |  |                                                                                                   
|                        |  |  |  | FIREARMS TRAINING SYSTEMS, INC.
(Registrant)                                                      
|                        |  |  |  |                                                                                                   
|                        |  |  |  | /s/ Ronavan Mohling                                                                               
|                        |  |  |  |                                                                                                   
|                        |  |  |  | Ronavan Mohling
Chairman of the Board of Directors and
Chief Executive Officer                    
|                        |  |  |  |                                                                                                   
|                        |  |  |  | /S/ John A. Morelli                                                                               
|                        |  |  |  |                                                                                                   
|                        |  |  |  | John A. Morelli
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)

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