<PAGE>   1
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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D. C. 20549

                                    ---------
                                    FORM 10-Q
                                    ---------

(Mark One)

[X]      Quarterly report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000

OR

[ ]      Transition report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934

                         COMMISSION FILE NUMBER: 0-21773


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


                   DELAWARE                             57-0777018
         (State or other jurisdiction of             (I.R.S. Employer
          incorporation or organization)            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 [X]            No [ ]

         As of November 1, 2000, there were (1) 69,912,220 shares of the
Registrant's Class A Common Stock outstanding.


                                     Page 1
<PAGE>   2


                         FIREARMS TRAINING SYSTEMS, INC.


                                      INDEX


<TABLE>
<CAPTION>
                                                                        Page No.
                                                                        --------

<S>      <C>             <C>                                            <C>
                         PART I.    FINANCIAL INFORMATION

ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:

         Condensed Consolidated Statements of Operations
         Three and six months ended September 30, 2000 and 1999 ..........  3

         Condensed Consolidated Balance Sheets
         September 30, 2000 and March 31, 2000 ...........................  4

         Condensed Consolidated Statements of Cash Flows
         Six months ended September 30, 2000 and 1999 ....................  5

         Notes to Condensed Consolidated Financial Statements ............  6


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS .......................................  8

                           PART II. OTHER INFORMATION

ITEM 3.  LEGAL PROCEEDINGS ............................................... 13

ITEM 5.  OTHER INFORMATION................................................ 13

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K ................................ 14

         SIGNATURES....................................................... 15
</TABLE>


                                     Page 2
<PAGE>   3

PART I.  FINANCIAL INFORMATION

ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


                         FIREARMS TRAINING SYSTEMS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (In thousands)


<TABLE>
<CAPTION>

                                                            Three months ended            Six months ended
                                                               September 30,                September 30,
                                                            2000           1999           2000           1999
                                                         ------------------------------------------------------
 <S>                                                     <C>            <C>            <C>            <C>
 Revenues                                                $  7,368       $  8,328       $ 17,639       $ 23,524
 Cost of Revenues                                           9,505          6,817         16,585         16,562
                                                         ------------------------------------------------------
 Gross profit                                              (2,137)         1,511          1,054          6,962
 Operating expenses:
    Selling, general and administrative expenses            2,066          3,570          4,306          6,149
    Research and development expenses                       1,151          1,032          2,471          1,526
    Depreciation and amortization                             589            566          1,177          1,120
                                                         ------------------------------------------------------
      Total operating expenses                              3,806          5,168          7,954          8,795

        Operating loss                                     (5,943)        (3,657)        (6,900)        (1,833)

 Other expense, net:
    Interest expense, net                                  (2,225)        (1,937)        (4,571)        (3,720)
    Other expense, net                                       (284)          (104)          (306)          (347)
                                                         ------------------------------------------------------
         Total other expense, net                          (2,509)        (2,041)        (4,877)        (4,067)

 Loss before income taxes                                  (8,452)        (5,698)       (11,777)        (5,900)
 Provision (benefit) for income taxes                          54         (1,949)           (62)        (2,018)
                                                         ------------------------------------------------------

 Net loss                                                  (8,506)        (3,749)       (11,715)        (3,882)

 Accretion of preferred stock                                 (74)           (63)          (140)          (125)
 Gain on extinguishment of Preferred Stock                  1,729             --          1,729             --
                                                         ------------------------------------------------------

 Net loss applicable to common shareholders              $ (6,851)      $ (3,812)      $(10,126)      $ (4,007)
                                                         ======================================================

 Basic loss per common share                             $  (0.13)      $  (0.18)      $  (0.27)      $  (0.19)
                                                         ======================================================

 Diluted loss per common share                           $  (0.13)      $  (0.18)      $  (0.27)      $  (0.19)
                                                         ======================================================

 Weighted average common shares outstanding-basic          53,472         20,758         37,383         20,746
                                                         ======================================================

 Weighted average common shares outstanding-diluted        53,472         20,758         37,383         20,746
                                                         ======================================================
</TABLE>

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


                                     Page 3
<PAGE>   4

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)

<TABLE>
<CAPTION>
                                 ASSETS                                  2000                2000
------------------------------------------------------------------   -------------------------------
<S>                                                                  <C>                 <C>
Current assets:
  Cash and cash equivalents                                          $   2,397           $   1,886
  Restricted cash                                                        1,046               1,342
  Accounts receivable, net                                               6,789               6,667
  Income Tax Receivable                                                     39               1,177
  Unbilled Receivable                                                    3,136               4,386
  Inventories                                                           14,750              16,369
  Prepaid expenses and other current assets                                373                 628
                                                                     ------------------------------
                          Total current assets                          28,530              32,455

Property and equipment, net                                              4,366               4,856
Deferred financing costs, net                                               --               2,200
Goodwill, net                                                            1,903               2,064
                                                                     ------------------------------
                              Total assets                           $  34,799           $  41,575
                                                                     ==============================


                      LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
  Accounts payable                                                   $   2,992           $   2,413
  Accrued liabilities                                                    5,415               7,338
  Deferred revenue                                                         994               1,013
  Warranty and Contract Costs Provision - Current                        2,057                 671
                                                                     ------------------------------
                          Total current liabilities                     11,458              11,435

Long-term debt                                                          43,781              73,772
Noncurrent deferred income taxes                                           328                 319
Warranty and Contract Costs Provision - Non-current                      1,264                  --
Other noncurrent liabilities                                               960                 903
                                                                     ------------------------------
Total liabilities                                                       57,791              86,429

Mandatory redeemable preferred stock                                    26,923               3,347

Stockholders' deficit:
  Class A common stock                                                      --                  --
  Class B nonvoting common stock                                            --                  --
  Unearned compensation                                                    (45)               (177)
  Stock warrants                                                           613                  --
  Additional paid-in-capital                                           122,235             114,592
  Accumulated deficit                                                 (172,704)           (162,578)
  Cumulative foreign currency translation adjustment                       (14)                (38)
                                                                     ------------------------------
                      Total stockholders' deficit                      (49,915)            (48,201)
                                                                     ------------------------------
                                                                     $  34,799           $  41,575
                                                                     ==============================
</TABLE>

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


                                     Page 4
<PAGE>   5

                         FIREARMS TRAINING SYSTEMS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)


<TABLE>
<CAPTION>
                                                                                    Six months ended
                                                                                      September 30,
                                                                             ----------------------------
                                                                               2000                1999
                                                                             --------            --------
<S>                                                                          <C>                 <C>
Cash flows from operating activities:
Net loss                                                                     $(10,126)           $ (4,007)
Adjustments to reconcile net loss to net cash provided by (used in)
  operating activities:
        Employee stock compensation plan - 401(k)                                  35                  44
        Gain on extinguishment of Series A preferred stock                     (1,729)                 --
        Noncash reduction of debt restructuring liability                        (293)                 --
        Noncash financing cost                                                    250                  --
        Amortization of deferred stock-based compensation                         133                  --
        Accretion of mandatory redeemable preferred stock                         140                 125
        Depreciation                                                            1,040                 856
        Amortization of goodwill                                                  137                 264
        Amortization of loan costs                                                332                 453
        Gain on disposal of assets                                                 (7)                 --
        Deferred income tax benefit                                                 9              (2,256)
        Changes in assets and liabilities:                                         --
           Accounts receivable, net                                              (121)             10,146
           Unbilled receivables                                                 1,208              (5,124)
           Inventories                                                          1,606                 391
           Prepaid expenses and other current assets                              254                  98
           Accounts payable                                                       583              (2,357)
           Accrued Liabilities                                                  3,631              (1,489)
           Income Taxes payable / receivable                                    1,137               1,880
           Noncurrent liabilities                                                (202)                526
           Deferred revenue                                                         6                (224)
           Contract Costs Provision                                             2,655                  --
                                                                             --------            --------
              Total adjustments                                                10,804               3,333
                                                                             --------            --------
              Net cash provided by (used in) operating activities                 678                (674)
                                                                             --------            --------
Cash flows from investing activities:
        Change in restricted cash                                                 296                  --
        Additions to Property and Equipment, net                                 (578)               (805)
                                                                             --------            --------
              Net cash used in investing activities                              (282)               (805)
                                                                             --------            --------
Cash flows from financing activities:
        Proceeds from long-term borrowing                                          --               1,682
        Repayments of long-term debt                                               --              (1,600)
        Deferred financing costs                                                   --                (294)
                                                                             --------            --------
              Net cash used in financing activities                                --                (212)
                                                                             --------            --------
Effect of changes in foreign exchange rates                                       115                 105
                                                                             --------            --------
Net Increase (Decrease) in Cash and Cash Equivalents                              511              (1,586)
Cash and Cash Equivalents at the Beginning of the Period                     $  1,886            $  2,805
                                                                             --------            --------
Cash and Cash Equivalents at the End of the Period                           $  2,397            $  1,219
                                                                             ========            ========

Supplemental disclosures of cash paid (received) for:
        Interest                                                             $     --            $  3,398
                                                                             --------            --------
        Income taxes                                                         $ (1,442)           $     --
                                                                             --------            --------
</TABLE>


                                     Page 5
<PAGE>   6

                         FIREARMS TRAINING SYSTEMS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.       BASIS OF PRESENTATION.

         The accompanying unaudited 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 six month
period ended September 30, 2000 are not necessarily indicative of the results
that may be expected for the year ended March 31, 2001. For further information,
refer to the company's consolidated financial statements and footnotes thereto
for the year ended March 31, 2000.

2.       INVENTORY.

         Inventories consist primarily of simulators, computer hardware,
projectors, and component parts. Inventories are valued at the lower of cost (on
a first-in, first-out basis) or market. Cost includes materials, labor, and
manufacturing overhead. Market is defined as net realizable value.

Inventories consist of the following (in thousands):

<TABLE>
<CAPTION>
                                       September 30,           March 31,
                                            2000                 2000
                                       -------------           ---------
                 <S>                   <C>                     <C>
                 Raw materials            $ 8,868               $ 8,507
                 Work in process            4,489                 6,133
                 Finished Goods             1,393                 1,729
                                          -------               -------
                    Total                 $14,750               $16,369
                                          =======               =======
</TABLE>

3.       EQUITY TRANSACTIONS


CHANGES TO AUTHORIZED PREFERRED AND COMMON STOCK

         During August 2000, the board of directors approved an amendment to the
articles of incorporation to increase the number of authorized shares of Class A
voting common stock to 100,000,000 and to increase the number of authorized
shares of preferred stock to 100,000. The board of directors then created a new
class of Series B preferred stock with 50,000 authorized shares. Holders of the
Series B preferred stock are entitled to receive cumulative dividends equal to
10% of the liquidation preference payable quarterly in additional shares of
Series B preferred stock. The preferred stock is subject to mandatory redemption
on the later of March 31, 2003 or the latest maturity date of the senior secured
debt (see Note 4) at the liquidation value thereof.

SECURITIES EXCHANGE AND RELEASE AGREEMENT

         In August 2000, the Company entered into a Securities Exchange and
Release Agreement with Centre Entities (the "Centre Securities Agreement"). In
accordance with the agreement, all shares of Series A mandatory redeemable
preferred stock and related non-detachable warrants were redeemed for 6,695,212
shares of Class A common stock, amended warrants to purchase 3,246,164 shares of
Class A common stock at $1.00 per share, and new warrants to purchase 2,000,000
shares of Class A common stock at an exercise price of $0.25 per share. The
common stock issued was recorded at the market value at the time of issuance.
The warrants were recorded at fair value calculated using the Black Scholes
method. A gain of approximately $1,729,000 was recorded on the transaction.


                                     Page 6
<PAGE>   7

4.       LONG-TERM DEBT

         At September 30, 2000 and March 31, 2000, long-term debt consisted of
the following (in thousands):


<TABLE>
<CAPTION>
                                          September 30,       March 31,
                                              2000               2000
                                          -------------       ---------
        <S>                               <C>                 <C>
        Tranche A Loan                      $    --            $17,300
        Tranche B Loan                           --             32,600
        Revolving Credit Facility                --             20,872
        Revolving Promissory Note                --              3,000
        Long-term debt - Senior              12,000                 --
        Long-term debt - Junior              23,000                 --
        Long-term Accrued Interest            8,781                 --
                                            -------            -------
           Total                            $43,781            $73,772
                                            =======            =======
</TABLE>

         In August 2000, the Company entered 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 and accrued interest 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.

         The Revolving Promissory Note outstanding at March 31, 2000 had been
guaranteed by Centre Entities. Subsequent to March 31, 2000, Centre Entities
repaid the $3,000,000 Revolving Promissory Note on behalf of the Company in
exchange for a $250,000 funding fee. In August 2000, the Company entered into a
Loan Agreement and Exchange Agreement with Centre Entities (the "Centre Loan
Agreement"). Under the Centre Loan Agreement, the $3,000,000 balance paid by
Centre Entities on the Revolving Promissory Note, as well as the $250,000
funding fee, was converted to 1,764,452 shares of Class A common stock, 897,397
shares of Series B mandatory redeemable preferred stock, approximately $504,000
in senior secured loans, and approximately $966,000 in 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% fee.
The senior loans bear interest at prime plus 1%, payable quarterly in cash. The
junior loans bear interest at 10%, payable quarterly in cash or in notes with
the same terms, depending on EBITDA.

         The exchange of the old credit facility and note for the new loans,
preferred stock, and common stock was accounted for as a troubled debt
restructuring in accordance with Statement of Financial Accounting Standards No.
15, "Accounting by Debtors and Creditors for Troubled Debt Restructurings ("SFAS
15"). Under SFAS 15, in a troubled debt restructuring involving partial
settlement of a payable through the issuance of equity interests, the new
obligation should be recorded at the carrying amount of the prior obligation at
the time of the restructuring, less the fair value of equity interest received,
unless the net carrying amount exceeds the total future undiscounted cash
payments specified by the new terms. Thus, the common stock issued was recorded
at the market value at the time of issuance. The carrying value of the old
credit facility and note, less the value of the common stock received and face
values of the new debt and preferred stock, resulted in a debt restructuring
liability of approximately $14.6 million. The liability was allocated to the new
debt and mandatory redeemable preferred stock based on the relative face values
of the instruments. As a result, the Company will record future interest expense
and accretion of preferred stock on a discounted basis. As of September 30,
2000, $8,781,000 and $5,349,000 of the liability remained and is included in
long-term debt and mandatory redeemable preferred stock, respectively, on the
accompanying balance sheet. The reduction in the liability allocated to
long-term debt and corresponding reduction in interest expense is shown as
noncash reduction of debt restructuring liability on the accompanying statements
of cash flows.

         Expenses relating to the restructuring, including the $250,000 funding
fee related to the Revolving Promissory Note, totaled approximately $606,000 for
the period ended September 30, 2000 and are included in interest expense in the
accompanying statement of operations.

5.       RELATED PARTY TRANSACTIONS

         The Company has entered into a consulting agreement in a company in
which a board member has an ownership interest. As of September 30, 2000, the
Company incurred fees of $24,610 for consulting services under the agreement.


                                     Page 7
<PAGE>   8


6.       WARRANTY AND CONTRACT COST PROVISION

         An accrual of approximately $2.7 million was recorded during the
quarter associated with costs to complete the warranty provisions of certain
contracts as well as to accrue for anticipated losses on existing contracts.
These accruals are primarily due to recent increases in costs associated with
delivery of repaired products. The additional warranty costs were not originally
anticipated at the time the warranty program was entered into. The Company's
estimates that the related revenue from these programs is no longer expected to
offset the anticipated expenses. Therefore, an accrual for this loss contingency
was made when the loss was determined and when it was reasonably estimable.
Additionally, the Company wrote off approximately $518,000 of inventory that was
determined to be unrealizable during the quarter due to changes in anticipated
sales volume related to a particular product.

7.       SUBSEQUENT EVENTS

         The Company has granted 1,170,000 options to senior management, subject
to shareholder approval. These options could result in future stock compensation
expense to the Company.

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.

RESTRUCTURE TRANSACTION

         The financial statements for the six months ended September 30, 2000
reflect the effects of the Restructure Transaction described in the Company's
Annual Report on Form 10-K for the fiscal year ended March 31, 2000.

         On August 25, 2000, the Company, its lenders and the Centre Entities
completed a restructuring transaction which significantly reduced the Company's
outstanding indebtedness.

         In connection with the restructuring, the Company and holders of its
outstanding debt and preferred stock exchanged all such debt and preferred stock
for the following:

-        A new senior secured revolving credit line in the amount of
         approximately $882,000 to support existing letters of credit and future
         working capital requirements.

-        $12 million of senior secured debt with cash interest payable at prime
         plus 1% and no principal payments due until maturity in 2003, with a
         one year extension at the Company's option.

-        $23 million of junior secured debt with 10% interest payable in
         additional notes or cash, depending on the Company's profitability, and
         no principal payments until maturity in 2003, with a one year extension
         at the Company's option.

-        Approximately $21 million of new preferred stock with a 10% cumulative
         dividend rate payable in additional shares of preferred stock. This new
         preferred stock must be redeemed by the Company when junior secured
         debt is repaid.

-        48,695,212 additional shares of Class A Common Stock. As a result of
         this share issuance, the Company's senior lenders have the power to
         vote a majority of the Company's voting common stock.

-        Warrants to purchase 2,000,000 shares of Class A Common Stock with an
         exercise price of $0.25 issued to the Centre Entities.

-        Amended warrants already held by the Centre Entities to purchase
         3,246,164 shares of Class A Common Stock at $1.00 per share by
         providing for payment of the exercise price in cash rather than the
         Series A Preferred Stock and making a slight adjustment in the original
         exercise price of $1.03 per share.

RESULTS OF OPERATIONS

Three Months Ended September 30, 2000 and 1999:


                                     Page 8
<PAGE>   9

Net Revenues. Revenues decreased $1.0 million, or (11.5%), to $7.4 million for
the three months ended September 30, 2000 as compared to the $8.3 million for
the three months ended September 30, 1999. Sales to U.S. military customers for
the three months ended September 30, 2000, increased by $0.7 million, or 65.8%,
to $1.7 million. Sales to U.S. law enforcement customers for the three months
ended September 30, 2000 remained constant at $1.4 million. Sales to
international customers for the three months ended September 30, 2000 decreased
$1.4 million, or (25.9%), to $4.0 million, primarily due to completion of
contracts in Australia and Canada.

Cost of Revenues. Cost of revenues increased $2.7 million, or 39.4%, to $9.5
million for the three months ended September 30, 2000 as compared to $6.8
million for the three months ended September 30, 1999. As a percentage of
revenues, cost of revenues increased to 129.0% for the three months ended
September 30, 2000 as compared to 81.9% for the three months ended September 30,
1999. The increase in cost of revenues as a percentage of revenues is
attributable to the lower volume of revenues needed to cover the fixed portion
of cost of goods sold and additional accruals recorded in the second quarter of
Fiscal Year 2001 related to certain international contracts. This accrual
amounted to approximately $2.7 million and is associated with costs to complete
the warranty provisions of certain contracts as well as to accrue for
anticipated losses on existing contracts. These accruals are being generated
primarily due to recent increases in costs associated with delivery of repaired
products. The additional warranty costs were not originally anticipated at the
time the warranty program was entered into. The Company estimates that the
related revenues from these programs are no longer expected to offset the
anticipated expenses. Therefore, an accrual for this loss contingency was made
when the loss was determined and when it was reasonably estimable. Additionally,
the Company wrote off approximately $518,000 of inventory that was determined to
be unrealizable during the quarter due to changes in anticipated sales volume
related to a particular product.

Gross Profit. As a result of the foregoing, gross profit decreased $3.6 million,
or 241.4%, to ($2.1) million, or 29.0% of revenues, for the three months ended
September 30, 2000 as compared to $1.5 million, or 18.1% of revenues, for the
three months ended September 30, 1999.

Total Operating Expenses. Total operating expenses decreased $1.4 million, or
26.4%, to $3.8 million for the three months ended September 30, 2000 as compared
to $5.2 million for the three months ended September 30, 1999. As a percentage
of revenues, total operating expenses decreased to 51.7% for the three months
ended September 30, 2000 as compared to 62.1% for the three months ended
September 30, 1999. Selling, general and administrative ("SG&A") expenses
decreased $1.5 million or (42.1%). This decrease in SG&A is due primarily to
better management of time and resource allocations and a one-time charge for
deferred compensation associated with severance pay to the former President and
CEO that was included in the three months ended September 30, 1999. Research and
development ("R&D") expenses increased $0.1 million primarily attributable to
the Company's expenditures for research and development activities relating to
new products and product lines. Depreciation and amortization expense increased
slightly primarily attributable to additional capital expenditures.

Operating Loss. As a result of the foregoing, operating losses increased $2.3
million, or 62.5%, to a loss of $5.9 million, or (80.7%) of revenues, for the
three months ended September 30, 2000 as compared to an operating loss of $3.7
million or (43.9%) of revenues, for the three months ended September 30, 1999.

Other Expense, net. Net interest expense totaled $2.2 million, or 30.2% of
revenues for the three months ended September 30, 2000 as compared to $1.9
million, or 23.3% of revenues for the three months ended September 30, 1999. The
increase in interest expense is attributable to an increase in borrowings and an
increase in the overall interest rates in the credit agreement. Interest expense
also includes fees associated with the debt restructuring of approximately
$606,000. Excluding these costs, interest expense declined $0.3 million due to
decreased borrowings after the debt restructure was completed.

Benefit for Income Taxes. The effective tax rate decreased to 0.6% of loss
before taxes for the three months ended September 30, 2000 as compared to 34.2%
of loss before taxes for the three months ended September 30, 1999. The amount
of change in the tax rate is due to the fact that the Company is no longer
recording a tax benefit for the majority of its operating losses due to
uncertainty of future realization.

Net Loss. As a result of the foregoing, the net loss as reported increased $4.8
million, or (126.9%), to a net loss of $8.5 million, or (115.4%) of revenues for
the three months ended September 30, 2000 as compared to a net loss of $3.8
million, or (45.0%) of revenues for the three months ended September 30, 1999.

Accretion of Preferred Stock. The expense for the accretion of the preferred
stock issued in November 1998 and August 2000 was a total of $74,000 for the
three months ended September 30, 2000.

Gain on Extinguishment of Preferred Stock. This represents the excess of the
value of the Series A Mandatory Redeemable Preferred Stock over the fair value
of the common stock and warrants exchanged.


                                     Page 9
<PAGE>   10

Net Loss applicable to common shareholders. The loss applicable to common
shareholders increased $3.0 million or 79.7% to $6.9 million ($0.13 per share)
or (93.0%) of revenue. This compares to the three months ended September 30,
1999 of a loss of $3.8 million ($0.18 per share) or (45.8%) of revenue.

Six Months Ended September 30, 2000 and 1999:

Net Revenues. Revenues decreased $5.9 million, or (25.0%), to $17.6 million for
the six months ended September 30, 2000 as compared to the $23.5 million for the
six months ended September 30, 1999. Sales to U.S. military customers for the
six months ended September 30, 2000, increased by $0.5 million, or 19.2%, to
$3.3 million. Sales to U.S. law enforcement customers for the six months ended
September 30, 2000 increased $1.0, million, or 35.9% to $3.9 million. Sales to
international customers for the six months ended September 30, 2000 decreased
$7.2 million, or (42.8%), to $9.7 million, primarily due to completion of
contracts in Australia and Canada.

Cost of Revenues. Cost of revenues remained unchanged at $16.6 million for the
six months ended September 30, 2000 as compared to $16.6 million for the six
months ended September 30, 1999. As a percentage of revenues, cost of revenues
increased to 94.0% for the six months ended September 30, 2000 as compared to
70.4% for the six months ended September 30, 1999. The increase in cost of
revenues as a percentage of revenues is attributable to the lower volume of
revenues needed to cover the fixed portion of cost of goods sold and additional
accruals recorded in the second quarter of Fiscal Year 2001 related to certain
international contracts. This accrual amounted to approximately $2.7 million and
is associated with costs to complete the warranty provisions of certain
contracts as well as to accrue for anticipated losses on existing contracts.
These accruals are being generated primarily due to recent increases in costs
associated with delivery of repaired products. The additional warranty costs
were not originally anticipated at the time the warranty program was entered
into. The Company estimates that the related revenues from these programs are no
longer expected to offset the anticipated expenses. Therefore, an accrual for
this loss contingency was made when the loss was determined and when it was
reasonably estimable. Additionally, the Company wrote off approximately $518,000
of inventory that was determined to be unrealizable during the quarter due to
changes in anticipated sales volume related to a particular product.

Gross Profit. As a result of the foregoing, gross profit decreased $5.9 million,
or (84.9%), to $1.0 million, or 6.0% of revenues, for the six months ended
September 30, 2000 as compared to $7.0 million, or 29.6% of revenues, for the
six months ended September 30, 1999.

Total Operating Expenses. Total operating expenses decreased $0.8 million, or
9.6%, to $8.0 million for the six months ended September 30, 2000 as compared to
$8.8 million for the six months ended September 30, 1999. As a percentage of
revenues, total operating expenses increased to 45.1% for the six months ended
September 30, 2000 as compared to 37.4% for the six months ended September 30,
1999. Selling, general and administrative ("SG&A") expenses decreased $1.8
million or (30.0%). This decrease in SG&A is due primarily to better management
of time and resource allocations and a one-time charge for deferred compensation
associated with severance pay to the former President and CEO that was included
in the six months ended September 30, 1999. Research and development ("R&D")
expenses increased $0.9 million primarily attributable to the Company's
expenditures for research and development activities relating to new products
and product lines. Depreciation and amortization expense increased slightly
primarily attributable to additional capital expenditures.

Operating Loss. As a result of the foregoing, operating loss increased $5.1
million, or (276.4%), to a loss of $6.9 million, or (39.1%) of revenues, for the
six months ended September 30, 2000 as compared to an operating loss of $1.8
million or (7.8%) of revenues, for the six months ended September 30, 1999.

Other Expense, net. Net interest expense totaled $4.6 million, or 25.9% of
revenues for the six months ended September 30, 2000 as compared to $3.7
million, or 15.8% of revenues for the six months ended September 30, 1999. The
increase in interest expense is attributable to an increase in borrowings and an
increase in the overall interest rates in the credit agreement. Interest expense
also includes fees associated with the debt restructuring of approximately
$606,000.

Benefit for Income Taxes. The effective tax rate decreased to 0.5% of loss
before taxes for the six months ended September 30, 2000 as compared to 34.2% of
loss before taxes for the six months ended September 30, 1999. The amount of
change in the tax rate is due to the fact that the Company is no longer
recording a tax benefit for the majority of its operating losses due to
uncertainty of future realization.

Net Loss. As a result of the foregoing, the net loss as reported increased $7.8
million, or 201.8%, to a net loss of $11.7 million, or (66.8)% of revenues for
the six months ended September 30, 2000 as compared to a net loss of $3.9
million, or (16.5)% of revenues for the six months ended September 30, 1999.

Accretion of Preferred Stock. The expense for the accretion of the preferred
stock issued in November 1998 and November 2000 was a total of $140,000 for the
six months ended September 30, 2000.


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<PAGE>   11

Gain on Extinguishment of Preferred Stock. This represents the excess of the
value of the Series A Mandatory Redeemable Preferred Stock over the fair value
of the common stock and warrants exchanged.

Net Loss applicable to common shareholders. The loss applicable to common
shareholders increased $6.1 million or 152.7% to $10.1 million ($0.27 per share)
or (57.4)% of revenue. This compares to the six months ended September 30, 1999
of a loss of $4.0 million ($0.19 per share) or (17)% of revenue.

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 September 30, 2000, the Company had a backlog
of approximately $39.0 million, comprised of $18.4 million from FATS
international customers, $5.9 from Simtran's Canadian customers and $14.7
million from FATS U.S. military and law enforcement customers. Approximately
$21.6 million of the contracted orders are scheduled for delivery during fiscal
year 2001.

LIQUIDITY AND CAPITAL RESOURCES AND GOING CONCERN CONSIDERATIONS

         The Company's principal liquidity and capital needs are to fund working
capital, provide debt service, and make capital expenditures necessary to
support and grow its business. The Company has entered into a restructured
Credit Agreement which provides approximately $882,000 to support letters of
credit and future working capital requirements. The terms of the new Credit
Agreement are favorable to the extent that principal payments are deferred for
three years to the maturity date of the note and interest payments have been
significantly reduced to coincide with the reduction in remaining debt. The
Company's primary source of liquidity and capital resources is presently limited
to cash generated from its operating activities. The Company's future operations
may be constrained unless it can achieve new business targets necessary to
finance working capital needs.

         The Company's continuation as a going concern is subject to several
business and market risks. The risks are (1) the Company must achieve its
current business revenue targets in the current fiscal year in order to
discharge its interest obligations in a timely manner and expand its business
opportunities; (2) the Company must receive new contracts for production to be
delivered in the current fiscal year in order to achieve its revenue
projections; and (3) the Company must continue to aggressively collect its
receivables on a timely basis.

         Management's plans in response to the above objectives (1) continue to
further reduce cost and reinforce cost control measures to assure operations are
conducted at the lowest cost possible at all locations; (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) improve inventory turns and
lower inventory investment; and (5) negotiate more favorable contract terms and
conditions to reduce extended or prolonged payment cycles. The Company believes
that this business strategy may achieve positive operating results provided that
the Company continues to aggressively collect its receivables on a timely basis.
There can be no assurances that this strategy, and the objectives cited above,
will be successful or that those revenue and cash flow projections can be
assumed.

         As of September 30, 2000, the Company had working capital of $15.8
million compared to $23.0 million as of September 30, 1999. The Company's
spending for its fiscal quarter ended September 30, 2000 for capital
expenditures was $0.4 million. This expenditure was primarily for marketing
product demonstration equipment.

         The Company had a net increase in cash and cash equivalents of $0.5
million for the six months ended September 30, 2000 compared to a net decrease
of $1.6 million for the six months ended September 30, 1999. For the period
ended September 30, 2000, the Company's operating activities generated cash of
approximately $0.7 million.

CONCENTRATION OF CREDIT RISK

         At September 30, 2000, approximately $4.0 million in accounts
receivable or 58.7% of total accounts receivable was due from the Company's top
ten customers, of which approximately $2.8 million was secured by performance
letters of credit. The remaining $1.2 million is due from governmental entities.

YEAR 2000

         As described in the Form 10-K for the year ended March 31, 2000, the
Company had developed plans to address any potential exposure to our systems
related to the Year 2000. Since entering the Year 2000, we


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<PAGE>   12

have not experienced any significant disruptions to our business nor are we
aware of any significant Year 2000 related disruptions impacting our customers
and suppliers. The Company will continue to monitor its systems and operations
until reasonably assured that no significant business interruptions will occur
as a result of any Year 2000 issues.

CERTAIN FORWARD LOOKING STATEMENTS

         This Form 10-Q may contain statements that may constitute
"forward-looking statements". Such statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. The
foregoing forward-looking statements are subject to a number of factors, which
could cause actual results to differ as described above. No assurance can be
given that actual revenues, operating income or net income will not be
materially different than those anticipated 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. These statements are only as of the
date of this Form 10-Q.


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<PAGE>   13

PART II. OTHER INFORMATION

ITEM 3.  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 5.  OTHER INFORMATION

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995:

         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, termination for a variety of
factors and budgetary constraints; (v) a significant and increasing proportion
of international sales which may be subject to political, monetary and economic
risks, including greater credit risks; (vi) the relatively undeveloped nature of
the market for small and supporting arms training simulators and the need for
continued adoption of simulation training systems in the market if the market is
to expand; (vii) the potential for increased competition; (viii) the Company's
ability to attract and retain key personnel and adapt to changing technologies;
and (ix) other factors described in the Company's Form 10-K for the fiscal year
ended March 31, 2000 under the caption Part I and in the Company's Prospectus
under the caption "Risk Factors".


                                    Page 13
<PAGE>   14

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

         The following documents are filed with this report as exhibits:

Exhibit
Number            Description
--------          -------------------------------------------------------------

10.29-02          Amended employment agreement dated as of November 1, 2000
                  between the Company and John A. Morelli.

10.29-03          Form of Series F stock option agreement dated as of April 1,
                  2000 between the Company and John A. Morelli.

10.29-04          Form of Series G stock option agreement dated as of April 1,
                  2000 between the Company and John A. Morelli.

10.29-05          Form of Series H stock option agreement dated as of April 1,
                  2000 between the Company and John A. Morelli.

10.31             Employment agreement dated as of November 1, 2000 between the
                  Company and Robert F. Mecredy.

10.31-01          Form of Series F stock option agreement dated as of April 1,
                  2000 between the Company and Robert F. Mecredy.

10.31-02          Form of Series G stock option agreement dated as of April 1,
                  2000 between the Company and Robert F. Mecredy.

10.31-03          Form of Series H stock option agreement dated as of April 1,
                  2000 between the Company and Robert F. Mecredy.

11.01             Statement regarding computation of net income per common
                  share.

27.01             Financial Data Schedule. (for SEC use only).

(b)               No reports on Form 8-K were filed during the quarter ended
                  September 30, 2000.


                                    Page 14
<PAGE>   15

                                   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:  November 20, 2000


                                FIREARMS TRAINING SYSTEMS, INC.
                                (Registrant)



                                /S/ Robert F. Mecredy
                                --------------------------------------------
                                Robert F. Mecredy
                                Chief Executive Officer and President



                                /S/ John A. Morelli
                                --------------------------------------------
                                John A. Morelli
                                Chief Financial Officer and Treasurer
                                (Principal Financial and Accounting Officer)


                                    Page 15