<PAGE>   1




===============================================================================




                                 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, 1999

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

              (Registrants 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 10, 1999, there were (1) 19,072,059 shares of the
Registrant's Class A Common Stock and (2) 1,694,569 shares of the Registrant's
Class B nonvoting Common Stock outstanding.
<PAGE>   2

                        FIREARMS TRAINING SYSTEMS, INC.


                                     INDEX


<TABLE>
<CAPTION>
                           PART I.   FINANCIAL INFORMATION                              Page No.
                                                                                        --------

<S>      <S>                                                                            <C>
ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:

         Condensed Consolidated Statements of Income
         Three and six months ended September 30, 1999 and 1998 ......................      3

         Condensed Consolidated Balance Sheets
         September 30, 1999 and March 31, 1999 .......................................      4

         Condensed Consolidated Statements of Cash Flows
         Six months ended September 30, 1999 and 1998 ................................      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 1.  LEGAL PROCEEDINGS ...........................................................     15

ITEM 2.  CHANGES IN AMENDMENT OF CERTIFICATE OF INCORPORATION.........................

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..........................     16

ITEM 5.  OTHER INFORMATION............................................................     16

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K ............................................     17

         SIGNATURES ..................................................................     18
</TABLE>



                                       2
<PAGE>   3

PART I.  FINANCIAL INFORMATION

ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                        FIREARMS TRAINING SYSTEMS, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In thousands, except per share data)

                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                 Three months ended                    Six months ended
                                                                    September 30,                        September 30,
                                                             -----------------------------       -----------------------------
                                                                1999              1998              1999              1998
                                                             -----------       -----------       -----------       -----------

<S>                                                          <C>               <C>               <C>               <C>
Revenues                                                     $     8,328       $    12,111       $    23,524       $    24,376
Cost of revenues                                                   6,817             8,061            16,562            15,612
                                                             -----------       -----------       -----------       -----------
Gross profit                                                       1,511             4,050             6,962             8,764
                                                             -----------       -----------       -----------       -----------

Operating expenses:
     Selling, general and administrative expenses                  3,570             2,128             6,149             5,303
     Research and development expenses                             1,032               838             1,526             2,372
     Depreciation and amortization                                   566               507             1,120               984
     Non-recurring restructuring charge                               --                --                --               870
                                                             -----------       -----------       -----------       -----------
          Total operating expenses                                 5,168             3,473             8,795             9,529
                                                             -----------       -----------       -----------       -----------
Operating income (loss)                                           (3,657)              577            (1,833)             (765)
                                                             -----------       -----------       -----------       -----------
Other expense income, net:
     Interest expense, net                                        (1,937)           (1,782)           (3,720)           (3,393)
     Other expense income, net                                      (104)             (172)             (347)             (276)
                                                             -----------       -----------       -----------       -----------
          Total other expense, net                                (2,041)           (1,954)           (4,067)           (3,669)
                                                             -----------       -----------       -----------       -----------
Loss before income taxes                                          (5,698)           (1,377)           (5,900)           (4,434)
Benefit for income taxes                                          (1,949)             (551)           (2,018)           (1,590)
                                                             -----------       -----------       -----------       -----------
Net loss                                                          (3,749)      $      (826)      $    (3,882)      $    (2,844)
                                                             ===========       ===========       ===========       ===========
Accretion of Preferred Stock Dividend                                (63)               --              (125)               --
                                                             -----------       -----------       -----------       -----------
Net Loss Applicable to common shareholders                   $    (3,812)      $      (826)      $    (4,007)      $    (2,844)
                                                             ===========       ===========       ===========       ===========

Basic loss per common share                                  $     (0.18)      $     (0.04)      $     (0.19)      $     (0.14)
                                                             ===========       ===========       ===========       ===========
Diluted loss per common share                                $     (0.18)      $     (0.04)      $     (0.19)      $     (0.14)
                                                             ===========       ===========       ===========       ===========


Weighted average common shares outstanding - basic                20,758            20,673            20,746            20,668
                                                             ===========       ===========       ===========       ===========

Weighted average common and common
  equivalent shares outstanding - diluted                         20,758            20,673            20,746            20,668
                                                             ===========       ===========       ===========       ===========
</TABLE>

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



                                       3
<PAGE>   4

                        FIREARMS TRAINING SYSTEMS, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS

                                 (In thousands)

<TABLE>
<CAPTION>
                                                                      SEPT. 30,            March 31,
                                                                        1999                 1999
                                                                    ------------          -----------
                                                                     (UNAUDITED)

<S>                                                                 <C>                   <C>
                                                ASSETS
Current assets:
     Cash and cash equivalents                                      $     1,219           $     2,805
     Accounts receivable, net                                             9,035                19,116
     Unbilled Receivables                                                 9,969                 4,744
     Inventories                                                         17,470                17,854
     Prepaid expenses and other current assets                              607                   702
     Deferred income taxes, net                                           4,363                 2,107
                                                                    -----------           -----------
               Total current assets                                 $    42,663           $    47,328

Property and equipment, net                                               5,300                 5,306
Goodwill, net                                                             4,260                 4,496
Deferred financing costs, net                                             2,630                 2,795
Deferred income taxes                                                       238                   225
                                                                    -----------           -----------
                                                                    $    55,091           $    60,150
                                                                    ===========           ===========


                                   LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable                                               $     3,055           $     5,384
     Accrued liabilities                                                  6,046                 7,500
     Income taxes payable, net                                            2,232                   345
     Deferred revenue                                                       865                 1,089
     Current maturities of long-term debt                                 7,500                 6,000
                                                                    -----------           -----------
                    Total current liabilities                       $    19,698                20,318
                                                                    -----------           -----------

Long-term debt, less current maturities                                  64,782                66,200
                                                                    -----------           -----------
Other noncurrent liabilities                                                698                   172
                                                                    -----------           -----------

     Mandatory Redeemable Preferred Stock                                 3,218                 3,093
Stockholders' equity:
     Class A common stock                                                    --                    --
     Class B common stock                                                    --                    --
     Additional paid-in-capital                                         114,369               114,324
     Accumulated (deficit) earnings                                    (147,683)             (143,676)
     Cumulative foreign currency translation adjustment                       9                  (281)
                                                                    -----------           -----------
               Total stockholders' (deficit) equity                     (33,305)              (29,633)
                                                                    -----------           -----------
                                                                    $    55,091           $    60,150
                                                                    ===========           ===========
</TABLE>

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



                                       4
<PAGE>   5

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

                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                            Six months ended
                                                                              September 30,
                                                                    --------------------------------
                                                                        1999                  1998
                                                                    ------------          ----------

<S>                                                                 <C>                   <C>
Cash flows from operating activities:
Net income (loss)                                                   $    (4,007)          $    (2,844)
Adjustments to reconcile net income to net
  cash provided by operating activities:
        Depreciation and amortization                                     1,573                 1,322
        Deferred income taxes                                            (2,256)                2,358
        Non-cash compensation expense                                       125                    71
        Employee stock compensation plan                                     44                    64
        Changes in assets and liabilities:
           Accounts receivable, net                                      10,146                 1,070
           Deferred Financing costs                                        (294)
           Inventories                                                      391                   974
           Income taxes receivable                                        1,880                (2,170)
           Prepaid expenses and other current assets                        798                  (119)
           Escrow and other deposits                                                               19
           Accounts payable                                              (2,356)                 (698)
           Accrued liabilities                                           (1,489)               (3,458)
           Income taxes payable                                              --                  (390)
           Deferred revenue                                                (224)               (3,302)
           Noncurrent liabilities                                           526                  (118)
                                                                    -----------           -----------
             Total adjustments                                            3,333                (4,377)
                                                                    -----------           -----------
             Net cash (used in) provided by operating activities           (674)               (7,221)
                                                                    -----------           -----------

Cash flows from investing activities:
     Additions to property and equipment, net                              (805)                 (803)
     Payments for business acquisitions, net of cash acquired                --                  (394)
     Sale of business                                                        --                   200
                                                                    -----------           -----------
             Net cash used in investing activities                         (805)                 (997)
                                                                    -----------           -----------

Cash flows from financing activities:
     Borrowings of long-term debt                                                              10,000
     Repayments of long-term debt                                         1,582                (2,399)
     Retirement of common stock                                          (1,500)                  (75)
     Deferred financing costs                                              (294)                   --
                                                                    -----------           -----------
             Net cash provided by financing activities                     (212)                7,526
                                                                    -----------           -----------

Effect of changes in foreign exchange rates                                 105                  (143)
                                                                    -----------           -----------

Net (decrease) increase in cash                                          (1,586)                 (835)
Cash, beginning of period                                                 2,805                 3,395
                                                                    -----------           -----------
Cash, end of period                                                 $     1,219           $     2,560
                                                                    ===========           ===========

Supplemental disclosures of cash paid for:
     Interest                                                             3,398           $     2,916
                                                                    ===========           ===========
     Income taxes                                                             0           $    (1,322)
                                                                    ===========           ===========
</TABLE>

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



                                       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 three and six months ended September
     30, 1999 are not necessarily indicative of the results that may be
     expected for the year ended March 31, 2000. For further information, refer
     to the company's consolidated financial statements and footnotes thereto
     for the year ended March 31, 1999.

2.   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) or market. Cost includes materials,
     labor, and manufacturing overhead. Market is defined as net realizable
     value.

3.   COMPREHENSIVE LOSS.
     Comprehensive loss for the Company consists of net loss and foreign
     currency translation adjustments. Total comprehensive loss (in thousands of
     dollars) was $3,663 and $930 for the three months ended September 30, 1999
     and 1998, respectively. Total comprehensive loss (in thousands of dollars)
     was $3,717 and $2,987 for the six months ended September 30, 1999 and 1998.

4.   TERMINATION AGREEMENT.
     In September 1996, the Company entered into an employment agreement with
     its president and chief executive officer. In September 1999, the officer
     was terminated and in accordance with the terms of the amended agreement
     will receive severance payments totaling approximately $900,000 through
     March 2002. The amount has been accrued and is included in accrued
     liabilities and other long-term liabilities on the accompanying
     consolidated balance sheet. Also, the terms of all vested options held by
     the officer as of his termination date were amended to extend the exercise
     period until December 29, 2001. However, due to the fact that the market
     value of the Company's stock was below the exercise prices of the options
     as of the amendment date, no compensation expense has been recognized by
     the Company.

     Inventories consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                    SEPTEMBER 30,      March 31,
                                                        1999             1999
                                                    -------------     ----------

     <S>                                            <C>               <C>
     Raw materials                                   $   6,978        $   8,810
     Work in progress                                    9,090            7,226
     Finished Goods                                      1,403            1,818
                                                     ---------        ---------
                                                     $  17,470        $  17,854
                                                     =========        =========
</TABLE>



                                       6
<PAGE>   7

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.

RESULTS OF OPERATIONS

Three Months Ended September 30, 1999 and 1998

Revenues. Revenues decreased $3.8 million, or 31.2%, to $8.3 million for the
three months ended September 30, 1999 as compared to $12.1 million for the
three months ended September 30, 1998. Sales to U.S. military customers for the
three months ended September 30, 1999, decreased by $0.8 million, or 44.2%, to
$1.0 million, primarily due to decreased sales to the U.S. Marine Corps as the
Company has substantially completed deliveries under its contract with this
customer. Sales to U.S. law enforcement customers for the three months ended
September 30, 1999 decreased by $1.7 million, or 54.5%, to $1.4 million
primarily attributable to a reduction of purchases by a major federal law
enforcement agency. Sales to International customers for the three months ended
September 30, 1999 decreased by $1.1 million, or 16.3%, to $5.4 million. Sales
to U.S. Hunter/Sports customers for the three months ended September 30, 1999
decreased $177,000, or 28.9%, to $435,000 primarily attributable to a softness
in sales of Dart systems.

Cost of Revenues. Cost of revenues decreased $1.2 million, or 15.4%, to $6.8
million for the three months ended September 30, 1999 as compared to $8.1
million for the three months ended September 30, 1998. As a percentage of
revenues, cost of revenues increased to 81.9% for the three months ended
September 30, 1999 as compared to 66.6% for the three months ended September
30, 1998. The increase in cost of revenues as a percentage of revenues is
attributable to the lower volume of revenues to cover the fixed portion of cost
of goods sold.

Gross Profit. As a result of the foregoing, gross profit decreased $2.6
million, or 62.7%, to $1.5 million, or 18.1% of revenues, for the three months
ended September 30, 1999 as compared to $4.1 million, or 33.4% of revenues, for
the three months ended September 30, 1998.

Total Operating Expenses. Total operating expenses increased $1.7 million, or
48.8%, to $5.2 million for the three months ended September 30, 1999 as
compared to $3.5 million for the three months ended September 30, 1998. Total
operating expenses as a percentage of revenues increased to 62.1% for the three
months ended September 30, 1999 from 28.7% for the three months ended September
30, 1998. Selling, General & Administrative ("S, G & A") expenses increased
$1.5 million, or 46.2%, to $4.1 million for the three months ended September
30, 1999 as compared to $2.6 million for the three months ended September 30,
1998, primarily due to a one time charge for deferred compensation associated
with the amended employment agreement (see footnote 4, Termination
Agreement), for the former President & CEO and an increase in legal fees
related to patent and trademarks.

Operating Income/( Loss). As a result of the foregoing, operating income
decreased $4.3 million, or 733.8%, to an operating loss of $3.7 million, or
43.9% of revenues, for the three months ended September 30, 1999 as compared to
$0.6 million, or 4.8% of revenues, for the three months ended September 30,
1998.

Other (Expense) Income, net. Net interest expense totaled $1.9 million, or
23.3% of revenues for the three months ended September 30, 1999 as compared to
$1.8 million, or

                                       7
<PAGE>   8

14.7% for the three months ended September 30, 1998. The increase in net
interest expense is primarily the result of the Company's increased borrowings
as compared to the prior period as a result of its working capital needs. The
increase is also attributable to the increase in interest rates incurred as a
result of the amendment in its Credit Agreement on April 30, 1999. Other
expenses, net totaled $104,000, or 1.2 % of revenues for the three months ended
September 30, 1999 as compared to other income, net of $172,000, or 1.4% for
the three months ended September 30, 1998. The decrease in other expenses, net
is primarily the result of foreign currency gains incurred due to recent
fluctuations in currency exchange rates.

Provision (Benefit) for Income Taxes. The effective tax rate decreased to 34.2%
of income before income taxes for the three months ended September 30, 1999 as
compared to 40.0% of income before taxes for the three months ended September
30, 1998. The overall effective tax rate for the six months ended September 30,
1999 decreased to 34.2% of income before income taxes as compared to 35.9% of
income before taxes for the six months ended September 30, 1998.

Net Income (Loss). As a result of the foregoing, the net (loss) as reported
increased $2.9 million to a net loss of $3.7 million ($0.18 per diluted share),
or 44.4% of revenues for the three months ended September 30, 1999 as compared
to $0.8 million ($0.04 per diluted share), or 6.8% of revenues for the three
months ended September 30, 1998.

Accretion of Preferred Stock. The expense for the accretion of the preferred
stock issued in November 1998 was a total of $63,000 for the three months ended
September 30, 1999.

Net Loss applicable to common shareholders. The loss applicable to common
shareholders increased $3.0 million or 361.5% to $3.8 million ($0.18) or
(45.8)% of revenue. This compares to the three months ended September 30, 1998
of a loss of $0.8 million ($0.04 per share) or (6.8%) of revenue.

Six Months Ended September 30, 1999 and 1998

Revenues. Revenues decreased $0.9 million, or 3.5%, to $23.5 million for the six
months ended September 30, 1999 as compared to $24.4 million for the six months
ended September 30, 1998. Sales to U.S. military customers for the six months
ended September 30, 1999, decreased by $1.7 million, or 37.7%, to $2.8 million,
primarily due to decreased sales to the U.S. Marine Corps and the U.S. Army.
Sales to U.S. law enforcement customers for the six months ended September 30,
1999 decreased by $1.7 million, or 37.1%, to $2.9 million primarily attributable
to reduced sales to an important federal law enforcement agency customer. Sales
to International customers for the six months ended September 30, 1999 increased
by $3.0 million, or 21.6%, to $16.9 million primarily as a result of additional
deliveries to Canada and Australia customers. Sales to U.S. Hunter/Sports
customers for the six months ended September 30, 1999 decreased $0.5 million, or
32.2%, to $1.0 million primarily attributable to reduced sales by Dart brought
on by delays in introduction of the new DVD format systems.

Cost of Revenues. Cost of revenues increased $1.0 million, or 6.1%, to $16.6
million for the six months ended September 30, 1999 as compared to $15.6
million for the six months ended September 30, 1998. As a percentage of
revenues, cost of revenues increased to 70.4% for the six months ended
September 30, 1999 as compared to 64.0% for the six months ended September 30,
1998. The increase in cost of revenues as a percentage of revenues is primarily
attributable to product mix and higher price competition.

Gross Profit. As a result of the foregoing, gross profit decreased $1.8
million, or 20.6% to $7.0 million, or 29.6% of revenues, for the six months
ended September 30, 1999 as compared to $8.8 million, or 36.0% of the revenues,
for the six months ended September 30, 1998.



                                       8
<PAGE>   9
 Total Operating Expenses. Total operating expenses decreased $0.7 million, or
7.7% to $8.8 million for the six months ended September 30, 1999 as compared to
$9.5 million for the six months ended September 30, 1998. Total operating
expenses as a percentage of revenues decreased to 37.4% for the six months ended
September 30, 1999 from 39.1% for the six months ended September 30, 1998. S, G
& A expenses increased $0.8 million, or 16.0%, as compared to the 3.5% decrease
in revenue. The increase in S, G & A expenses is primarily due to the expenses
related to the termination agreement of the former President and CEO of
approximately $900,000 which are included in these totals (see Note No. 4) in
Notes to Condensed Consolidated Financial Statements.

Operating (Loss) Income. As a result of the foregoing, operating income
decreased $1.1 million, to an operating loss of $1.8 million, or 7.8% of
revenues, for the six months ended September 30, 1999 as compared to an
operating loss of $0.8 million, or 3.1% of revenues, for the six months ended
September 30, 1998.

Other Expense net. Net interest expense totaled $3.7 million, or 15.8% of
revenues for the six months ended September 30, 1999 as compared to $3.4
million, or 13.9% of revenues for the six months ended September 30, 1998. The
increase in net interest expense is primarily the result of the Company's
amendments to the Bank of America Credit Agreement dated as of April 30 and
September 30, 1999 which called for higher interest rate levels on the company's
outstanding debt. Other expenses, net totaled $347,000, or 1.5% of revenues for
the six months ended September 30, 1999 as compared to $276,000, or 1.1% for the
six months ended September 30, 1998. The increase in other expenses, net is
primarily the result of foreign currency losses incurred due to fluctuations in
currency exchange rates.

Provision for Income Taxes. The effective tax rate decreased to 34.2% of income
before income taxes for the six months ended September 30, 1999 as compared to
35.9% of income before taxes for the six months ended September 30, 1998.

Net Loss. As a result of the foregoing, the net loss as reported increased $1.1
million to a net loss $3.9 million ($0.19 per diluted share), or (16.5%) of
revenues for the six months ended September 30, 1999 as compared to a net loss
of $2.8 million ($0.14 per diluted share), or (11.7%) of revenues for the six
months ended September 30, 1998.

Accretion of Preferred Stock. The expense for the accretion of the preferred
stock issued in November 1998 was a total of $125,000 for the six months ended
September 30, 1999.

Net Loss applicable to common shareholders. The loss applicable to common
shareholders increased $1.2 million or 40.9% to $4.0 million ($0.19 per diluted
share) or (17.0)% of revenue. This compares to the six months ended September
30, 1998 of a loss of $2.8 million ($0.14 per diluted share) or (11.7%) of
revenue.



                                       9
<PAGE>   10

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, 1999, the Company had a backlog
of approximately $19.7 million, comprised of $16.3 million from FATS
international customers, $1.1 from Simtran's Canadian customers, $1.0 million
from U.S. Law Enforcement and $1.3 million from FATS U.S. military customers.
Approximately $13.9 million of the contracted orders are scheduled for delivery
during fiscal year 2000.

U.S. ARMY EST PROCUREMENT PROCESS

The Army Engagement Skills Trainer ("EST") program contract was awarded to ECC
International during fiscal year 1999. The Company was then awarded a contract
by ECC International to be the exclusive supplier of all weapons simulators for
the EST program. The Company has begun performing under this multi-year
contract, which will not have a material effect on revenues for the fiscal year
ending March 31, 2000.

LIQUIDITY AND CAPITAL RESOURCES

The Company's principal liquidity and capital needs currently and for the near
future are to fund working capital, debt service, and capital expenditures
necessary to support its business.

The Company's primary sources of liquidity and capital resources are cash
generated from operating activities, the senior bank debt and a revolving line
of credit in the amount of $3,000,000 (the "Subsidiary Line"). Net working
capital was $23.0 million at September 30, 1999 and $27.0 million at March 31,
1999. As of November 11, 1999 the Company has no borrowing capacity under the
senior bank revolving line of credit or the Subsidiary Line.

The Company is subject to several business and market risks. The risks are (1)
the Company has not generated significant revenue or cash flow from its current
operation, and the expectation of future revenues or cash flow cannot be
assumed; and (2) the Company must receive new contracts for product to be
delivered in the current fiscal year in order to achieve its revenue projection
since the Company has entered the new fiscal year with a significantly smaller
backlog than in the previous two fiscal years.

Management's plans in response to the above risks are (1) the Company continues
to take steps to further reduce cost and reinforce cost control measures related
to assure operations are conducted at the lowest cost possible; (2) the Company
remains focused on revenue maximization and has determined to place greater
emphasis on the domestic and international law enforcement business through
release of new products in this market sector; (3) the Company has begun
aggressively pursuing third party relationships in order to develop additional
new revenue and cash generating opportunities; and (4) continue negotiation with
the senior bank syndicate to reduce the level of debt maturities.

The Company believes that this business strategy may achieve positive operating
margins over time, provided the Company achieves the new business revenue
targets needed to finance working capital needs. There can be no assurances
that this strategy will be successful or that the new business revenue targets
can be met in order to meet working capital needs.

On September 30, 1999, the Company and the Lenders amended the NationsBank
Credit Agreement (the "fifth" amendment) to provide among other things for
postponement of the



                                      10
<PAGE>   11

installment payment on Tranche A until November 30, 1999, increased interest
rate levels and the forbearance of the Lenders from exercising rights and
remedies during the period of time until November 30, 1999 while the Company
negotiates further amendments of the financial covenants. At this time the
Company anticipates a sixth amendment to the Credit Agreement which will address
the installment payments and the postponement until March 31, 2000 of the
installment payments due September 30 and December 31, 1999 and new financial
covenant levels to be completed before November 30, 1999.

As of November 11, 1999, the Company has borrowings of $20.5 million and had
outstanding letters of credit of approximately $1.5 million under the $22.0
million NationsBank revolving credit facility. The Company currently has
borrowings of $3.0 million under the $3.0 million Subsidiary Line. As a result
the Company has no additional borrowing capability. The Company believes that
the cash flow from operations will be sufficient to meet the Company's presently
anticipated working capital, capital expenditure and debt service needs until
the end of the current fiscal year provided that the Company is able to
successfully restructure its current principal and interest payment schedule for
the remainder of the fiscal year.

The Company's operating activities used cash of $0.7 million in the six months
ended September 30, 1999 and used cash of $7.2 million in the six months ended
September 30, 1998. The $6.5 million decrease in net cash provided by
operations was primarily due to receipt of payment of a significant
international receivable as compared to the six months ended September 30,
1998. The decrease in net cash provided by operations was also due to the $2.4
million decrease in accounts payable primarily attributable to the payment to
vendors of outstanding invoices as compared to the six months ended September
30, 1998.

The Company's investing activities used cash of $0.8 million for the six months
ended September 30, 1999 and $1.0 million for the six months ended September
30, 1998. The Company's primary investing activity for the six months ended
September 30, 1999 was capital expenditures that were for equipment used in
manufacturing, R&D, and marketing activities.

The Company's financing activities used cash of $0.2 million for the six months
ended September 30, 1999. The Company's primary financing activity in the six
month period ended September 30, 1999, was the net borrowing of $1.6 million
from its Subsidiary Line to finance the working capital needs of the Company's
operations offset by the paydown of its long term debt.

The Company's indebtedness and the related covenants will have several important
effects on its future operations, including, but not limited to, the following:
(i) a portion of the Company's cash flow from operations must be dedicated to
the payment of interest on and principal of its indebtedness and will not be
available for other purposes; (ii) the Company's ability to obtain additional
financing in the future for working capital, capital expenditures, R&D,
acquisitions, general corporate purposes or other purposes is likely to be
limited; and (iii) the Company's level of indebtedness could limit its
flexibility in reacting to business developments and changes in its industry and
economic conditions generally.



                                      11
<PAGE>   12

         Concentration of Credit Risk

At September 30, 1999, approximately $4.4 million in accounts receivable was
due from nine international customers, of which approximately $0.6 million was
secured by performance letters of credit.

YEAR 2000

The Year 2000 issue, which is common to most businesses, concerns the inability
of information systems, primarily computer software programs, to properly
recognize and process date-sensitive information on and beyond January 1, 2000.
The Company believes that it has modified or replaced its affected systems. A
complete evaluation has been made on all internal systems, including items such
as voice mail, automated badge entry, email, payroll, accounting and
manufacturing. There are no known problems at this time. The Company has
completed the modifications to all of its information systems. All network
servers have been assessed and tested as Year 2000 compliant. In addition, the
Company has an ongoing policy of upgrading and testing for Year 2000
compliance, as new software packages become available. The Company is satisfied
that its customer base is aware of the Year 2000 issue and is proactively
working to ensure that there are no problems associated with Year 2000. The
Company expects that its systems will be fully operational and will not cause
any material disruptions because of Year 2000 issues. Because of the
uncertainties associated with assessing preparedness of suppliers and
customers, there is a risk of a material adverse effect on the Company's future
results of operations if these groups are not capable of correcting their Year
2000 issues, if any. The Company expects that its systems will be fully
operational and will not cause any material disruption because of Year
2000 issues. The Company has an ongoing process to continue evaluation of all
critical systems, products, suppliers and customers from now until the Year
2000 and beyond. The Company does not expect to incur any additional costs for
the Year 2000 issue. The Year 2000 issue resolution includes a final
re-verification test of all systems and a contingency plan (manual backup) to
be implemented and validated by the fourth quarter of calendar year 1999. The
Company does not expect that the Year 2000 issue will have a material impact on
the results of operations, liquidity or consolidated financial position of the
Company.

CERTAIN FORWARD LOOKING STATEMENTS

The foregoing forward-looking statements are subject to a number of factors
which could cause actual results to differ as described above and under Item 5
"Other Information". No assurance can be given that actual revenues, operating
income or net income will not be materially different than those anticipated
above.



                                      12
<PAGE>   13

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

On October 3, 1997, Dart, a Company subsidiary, was sued by Advanced
Interactive Systems, Inc. ("AIS") for alleged infringement of a patent owned by
AIS, U.S. Patent No. 5,649,706 (the "706 Patent"). Dart filed its answer on
December 2, 1997, denying all material allegations, asserting numerous
affirmative defenses, and counterclaiming for a judicial declaration of
noninfringement, patent invalidity, patent unenforceability, and for damages
for unjust enrichment. The parties recently settled the case and are currently
in the process of finalizing confidential settlement documentation. Upon
completion of that process, the action will be dismissed with prejudice. In
the opinion of the Company's management, this proceeding will not have a
material adverse effect on the Company's financial position, liquidity, or
results of operations.

On January 27, 1999, FATS, Inc. ("FATS"), a Company subsidiary, was again sued
by AIS for alleged infringement of a patent owned by AIS< U.S. Patent No.
5,823,779 (the "779Patent"). FATS filed its answer on May 21, 1999 denying
infringement and counter claimed seeking declaratory judgement that the 779
Patent is invalid , among other claims. Discovery has not yet begun on this
case. In the opinion of the Company's management, this proceeding will not have
a material adverse effect on the Company's financial position, or results of
operations.

The Company is involved in legal proceedings from time to time 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 2.  INCREASE IN AUTHORIZED CLASS B COMMON SHARES

The annual meeting of shareholders held on Friday September 24, 1999 approved
an amendment to the Certificate of Incorporation to increase the number of
authorized shares of Class B Non-Voting Common Stock from 2,200,000 to
6,200,000.



                                      13
<PAGE>   14

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

The Annual Meeting of Share Owners was held on Friday, September 24, 1999, in
Norcross, Georgia, at which the following matters were submitted to a vote of
the share owners:


   (a)   Votes regarding the election of three Directors for a term expiring in
         2002 were as follows:

<TABLE>
<CAPTION>
                                         FOR          ABSTAIN
                                      ---------      ---------
         <S>                          <C>            <C>
         Gilbert Decker               9,804,056      2,457,091
         Craig I. Fields              9,804,056      2,457,091
         Paul J. Zepf                 9,804,056      2,457,091
</TABLE>

   (b)   Votes regarding the approval of an amendment to the Certificate of
         Incorporation to increase the number of authorized shares of Class B
         Non-Voting Common Stock from 2,200,000 to 6,200,000 were as follows:

<TABLE>
<CAPTION>
                     FOR                     AGAINST            ABSTAIN
                  ---------                 ---------           -------
                  <S>                       <C>                 <C>
                  9,801,120                 2,458,853            1,174
</TABLE>

   (c)   Votes, in the proxies' discretion, upon such other business as may
         properly come before the meeting or any postponement or adjournment
         thereof were as follows:

<TABLE>
<CAPTION>
                     FOR                     AGAINST            ABSTAIN
                  ---------                 ---------           -------
                  <S>                       <C>                 <C>
                  9,770,857                 2,488,921            1,368
</TABLE>

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 proportion of
international sales which may be subject to political, monetary and economic
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 if the



                                      14
<PAGE>   15

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, 1999 under the caption Part I and in the
Company's Prospectus under the caption "Risk Factors".



                                      15
<PAGE>   16

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

         The following documents are filed with this report as exhibits:

<TABLE>
<CAPTION>
Exhibit
Number                             Description
-------                            -----------

<S>      <C>
10.28    Fifth Amendment to the Amended and Restated Credit Agreement, dated
         September 30, 1999, among the Company, Bank of America, N.A. and the
         other Lenders named therein.

10.29    Amendment to Employment agreement for Peter A. Marino dated September
         30, 1999.

11.01    Statement regarding computation of net income per common share.

27.01    Financial Data Schedule (For SEC use only).
</TABLE>


(b)      The following report on Form 8-K was filed during the quarter ended
         September 30, 1999.

               September 21, 1999 - Retirement of the President and CEO.



                                      16
<PAGE>   17

                                   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 15, 1999


                                  FIREARMS TRAINING SYSTEMS, INC.
                                             (Registrant)





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



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



                                      17