<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 JUNE 30, 1998

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 July 30, 1998, there were (1) 18,974,575 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>       <C>                                                               <C>
ITEM 1.   CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:

          Condensed Consolidated Statements of Operations
          Three months ended June 30, 1998 and 1997.........................   3

          Condensed Consolidated Balance Sheets
          June 30, 1998 and March 31, 1998 .................................   4

          Condensed Consolidated Statements of Cash Flows
          Three months ended June 30, 1998 and 1997 ........................   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 ................................................  12

ITEM 2.   CHANGES IN SECURITIES ............................................  12

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

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

          SIGNATURES .......................................................  16
</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
                                                              JUNE 30,
                                                        ----------------------
                                                          1998         1997
                                                        --------      --------

<S>                                                     <C>           <C>     
Revenues                                                $ 12,265      $ 18,609
Cost of revenues                                           7,551         8,241
                                                        --------      --------
Gross profit                                               4,714        10,368
                                                        --------      --------

Operating expenses:
 Selling, general and administrative expenses              3,175         3,932
 Research and development expenses                         1,534         1,363
 Depreciation and amortization                               477           176
 Non-recurring restructuring charge                          870            --
                                                        --------      --------
   Total operating expenses                                6,056         5,471
                                                        --------      --------
   Operating income (loss)                                (1,342)        4,897
                                                        --------      --------

Other (expense) income, net:
 Interest (expense) income, net                           (1,611)       (1,454)
 Other (expense) income, net                                (104)          (27)
                                                        --------      --------
   Total other (expense) income, net                      (1,715)       (1,481)
                                                        --------      --------
Income (loss) before income taxes                         (3,057)        3,416
Provision (benefit) for income taxes                      (1,039)        1,230
                                                        --------      --------
Net income (loss)                                       $ (2,018)     $  2,186
                                                        ========      ========

Basic earnings (loss) per common share                  $  (0.10)     $   0.11
                                                        ========      ========
Diluted earnings (loss) per common share                $  (0.10)     $   0.10
                                                        ========      ========

Weighted average common shares outstanding - basic        20,664        20,403
                                                        ========      ========

Weighted average common and common

 equivalent shares outstanding - diluted                  20,664        21,691
                                                        ========      ========
</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>
                                                                JUNE 30,      MARCH 31,
                                                                  1998          1998
                                                               -----------    ---------
                                                               (UNAUDITED)

                                     ASSETS
<S>                                                            <C>            <C>      
Current assets:
    Cash and cash equivalents                                  $   1,970      $   3,395
    Accounts receivable, net                                      20,900         22,710
    Inventories                                                   18,226         17,725
    Income taxes receivable                                        1,195             --
    Prepaid expenses and other current assets                        862            594
    Deferred income taxes, net                                        --          1,050
                                                               ---------      ---------
     Total current assets                                         43,153         45,474

Property and equipment, net                                        4,118          3,971
Goodwill, net                                                      5,048          2,751
Deferred financing costs, net                                      2,838          3,007
Deferred income taxes                                              1,036          1,065
Other assets                                                          97            112
                                                               ---------      ---------
                                                               $  56,290      $  56,380
                                                               =========      =========


                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable                                           $   2,490      $   3,389
    Accrued liabilities                                            9,070         11,060
    Income taxes payable                                              --            390
    Deferred income taxes, net                                       747             --
    Deferred revenue                                               3,906          6,428
    Current maturities of long-term debt                           6,000          5,300
                                                               ---------      ---------
        Total current liabilities                                 22,213         26,567
                                                               ---------      ---------

Long-term debt, less current maturities                           62,200         57,700
                                                               ---------      ---------
Other noncurrent liabilities                                         298            344
                                                               ---------      ---------

Stockholders' equity:
    Class A common stock                                              --             --
    Additional paid-in-capital                                   114,257        112,390
    Accumulated (deficit) earnings                              (142,587)      (140,569)
    Cumulative foreign currency translation adjustment               (91)           (52)
                                                               ---------      ---------
        Total stockholders' (deficit) equity                     (28,421)       (28,231)
                                                               ---------      ---------
                                                               $  56,290      $  56,380
                                                               =========      =========
</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>
                                                                   Three months ended
                                                                         June 30,
                                                                  --------------------
                                                                    1998         1997
                                                                  --------     -------
<S>                                                               <C>          <C>    
Cash flows from operating activities:
     Net income                                                   $(2,018)     $ 2,186
     Adjustments to reconcile net income to net
      cash provided by operating activities:
        Depreciation and amortization                                 647          315
        Deferred income taxes                                       1,826          (10)
        Non-cash compensation expense                                  71           --
        Employee stock compensation plan                               42           --
        Changes in assets and liabilities
         (excluding effects of businesses acquired):
           Accounts receivable, net                                 1,927        5,069
           Inventories                                               (369)      (3,823)
           Income taxes receivable                                 (1,195)          --
           Prepaid expenses and other current assets                 (239)         174
           Escrow and other deposits                                   15           (4)
           Accounts payable                                        (1,037)        (791)
           Accrued liabilities                                     (2,286)        (712)
           Income taxes payable                                      (390)         627
           Deferred revenue                                        (2,521)         773
           Noncurrent liabilities                                     (69)         (50)
                                                                  -------      -------
            Total adjustments                                      (3,578)       1,568
                                                                  -------      -------
            Net cash provided by (used in) operating activities    (5,596)       3,754
                                                                  -------      -------

Cash flows from investing activities:
     Payments for business acquisition, net of cash acquired         (394)      (2,150)
     Additions to property and equipment, net                        (422)        (461)
                                                                  -------      -------
          Net cash used in investing activities                      (816)      (2,611)
                                                                  -------      -------

Cash flows from financing activities:
     Borrowings of long-term debt                                   6,000        2,000
     Repayments of long-term debt                                    (899)          --
     Proceeds from sales of common stock                               --            7
     Retirement of common stock                                       (75)          --
                                                                  -------      -------
          Net cash used in financing activities                     5,026        2,007
                                                                  -------      -------

Effect of changes in foreign exchange rates                           (39)          (4)
                                                                  -------      -------

Net increase (decrease) in cash                                    (1,425)       3,146
Cash, beginning of period                                           3,395        1,663
                                                                  -------      -------
Cash, end of period                                               $ 1,970      $ 4,809
                                                                  =======      =======

Supplemental disclosures of cash paid (received) for:
     Interest                                                     $ 1,334      $ 1,316
                                                                  =======      =======
     Income taxes                                                 $(1,253)     $   647
                                                                  =======      =======
</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 month period ended June 30, 1998 are not necessarily indicative
     of the results that may be expected for the year ended March 31, 1999. For
     further information, refer to the company's consolidated financial
     statements and footnotes thereto for the year ended March 31, 1998.

2.   ACQUISITIONS.
     On April 1, 1998, FATS, Inc. acquired the outstanding stock of Dart
     International, Inc. ("Dart"), a Colorado-based hunter and sports simulation
     company, in exchange for 257,577 Class A common shares of the Company. The
     Company recorded the acquisition using the purchase method of accounting
     with approximately $2.4 million of the purchase price allocated to
     goodwill. The results of the operations of Dart have been included in the
     Company's consolidated statements of operations since the effective date of
     the acquisition.

     The following unaudited pro forma consolidated results of operations of the
     Company for the three months ended June 30, 1997 is presented as if the
     purchase of Dart, as well as the purchases of the ICAT Judgmental Use of
     Force Business from SBS Technologies, Inc., FSS, Inc., and Simtran
     Technologies, Inc. described in Note 2 of the Company's consolidated
     financial statements for the year ended March 31, 1998, had occurred on
     April 1, 1997 (in thousands, except per share data):

<TABLE>
<CAPTION>
                                                  THREE MONTHS
                                                      ENDED
                                                  JUNE 30, 1997
                                                  -------------

         <S>                                      <C>    
         Revenues                                    $19,912
         Net income                                  $ 1,656
         Basic earnings per share                    $  0.08
         Diluted earnings per share                  $  0.08
</TABLE>

     The operating results of all of the acquisitions noted above are included
     in the accompanying consolidated statement of operations for the three
     months ended June 30, 1998.





                                                                               6
<PAGE>   7


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

3.   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>
                                   JUNE 30,                  March 31,
                                     1998                      1998
                                   -------                   --------
     <S>                           <C>                       <C>    
     Raw materials                 $11,233                   $11,635
     Work in progress                5,228                     3,341
     Finished Goods                  1,765                     2,749
                                   -------                   -------
                                   $18,226                   $17,725
                                   =======                   =======
</TABLE>





















                                                                               7
<PAGE>   8



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 June 30, 1998 and 1997

Net Revenues. Revenues decreased $6.3 million, or 34.1%, to $12.3 million for
the three months ended June 30, 1998 as compared to the $18.6 million for the
three months ended June 30, 1997. Sales to U.S. military customers for the three
months ended June 30, 1998, decreased by $6.6 million, or 72.0%, to $2.6
million, primarily due to decreased sales to the U.S. Marine Corps. Sales to
U.S. law enforcement customers for the three months ended June 30, 1998
decreased by $298,000, or 17.2%, to $1.4 million. Sales to international
customers for the three months ended June 30, 1998 increased $56,000, or 0.8%,
to $7.4 million, including $2.5 million from Simtran. Sales to U.S.
hunter/sports customers for the three months ended June 30, 1998 increased
$502,000, or 141.0%, to $858,000 primarily attributable to the acquisition of
Dart.

Cost of Revenues.  Cost of revenues decreased $0.7 million, or 8.4%, to $7.6
million for the three months ended June 30, 1998 as compared to $8.2 million for
the three months ended June 30, 1997. As a percentage of revenues, cost of
revenues increased to 61.6% for the three months ended June 30, 1998 as compared
to 44.3% for the three months ended June 30, 1997. The increase in cost of
revenues as a percentage of revenues is attributable to the higher costs of
Simtran's products under development, as well as, 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 $5.7 million,
or 54.5%, to $4.7 million, or 38.4% of revenues, for the three months ended June
30, 1998 as compared to $10.4 million, or 55.7% of revenues, for the three
months ended June 30, 1997.

Total Operating Expenses. Total operating expenses increased $0.6 million, or
10.7%, to $6.1 million for the three months ended June 30, 1998 as compared to
$5.5 million for the three months ended June 30, 1997. As a percentage of
revenues, total operating expenses increased to 49.4% for the three months ended
June 30, 1998 as compared to 29.4% for the three months ended June 30, 1997. A
significant portion of the increase is attributable to the non-recurring
restructuring charge of $0.9 million. The non-recurring restructuring charge was
related to a workforce reduction and certain other measures incurred by the
Company in the first quarter of fiscal 1999. Selling, general and administrative
("S,G&A") expenses decreased $0.8 million or 19.3%. This decrease in S,G&A is
due primarily to a decrease in agents' commissions. Operating expenses also
increased due to a $0.3 million increase in depreciation and amortization
expense primarily attributable to an increase in goodwill amortization from the
Company's recent purchases. Operating expenses also increased due to a $0.2
million increase in research and development ("R&D") expenses primarily
attributable to the Company's development of new products and improvement of
existing products, as well as, the products under development at it's newly
acquired Simtran subsidiary.


                                                                               8
<PAGE>   9

Operating Income (Loss). As a result of the foregoing, operating income
decreased $6.2 million, or 127.4%, to an operating loss of $1.3 million, or
(10.9)% of revenues, for the three months ended June 30, 1998 as compared to
26.3% of revenues, for the three months ended June 30, 1997.

Other (Expense) Income, net. Net interest expense totaled $1.6 million, or 13.1%
of revenues for the three months ended June 30, 1998 as compared to $1.5
million, or 7.8% of revenues for the three months ended June 30, 1997. The
increase in interest expense is attributable to the increase in borrowings
incurred in connection with the Company's acquisitions and for the Company's
working capital needs.

Provision (Benefit) for Income Taxes. The effective tax rate decreased to 34.0%
of income before taxes for the three months ended June 30, 1998 as compared to
36.0% of income before taxes for the three months ended June 30, 1997. This
decrease was primarily attributable to the increase in international revenues as
a percentage of revenues, which increased the tax benefits derived from the
Company's foreign sales subsidiary.

Net Income (Loss). As a result of the foregoing, net income as reported
decreased $4.2 million, or 192.3%, to a net loss of $2.0 million ($0.10 per
share), or (16.5)% of revenues for the three months ended June 30, 1998 as
compared to $2.2 million ($0.10 per share), or 11.7% of revenues for the three
months ended June 30, 1997.

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 June 30, 1998, the Company had a backlog of
approximately $44.0 million, comprised of $25.2 million from FATS international
customers, $16.4 from Simtran's Canadian customers and $1.8 million from FATS
U.S. military customers. Recognition of Simtran's backlog will be dependent upon
delivery and acceptance of its products currently under development.
Approximately $30.1 million of the contracted orders are scheduled for delivery
during fiscal year 1999.

U.S. ARMY EST PROCUREMENT PROCESS

The Company has been actively participating in a competitive bidding process for
the proposed U.S. Army Engagement Skills Trainer ("EST") program, a U.S.
military procurement award anticipated to be at least as large as the Company's
current U.S. Marine Corps Contract 2014. On May 14, 1998, the Company received
notification on behalf of the U.S. Army that its proposal in response to the
ongoing competition had been excluded from further consideration. On June 2,
1998, the Company filed an action in the United States Court of Federal Claims
to protest this decision, and to obtain an injunction against any award of the
EST contract until the Court can rule on the Company's protest. As part of this
action, the Company has requested that the Court order the procurement authority
to continue its consideration of the Company's proposal and to engage in
meaningful discussions with the Company. Although the Company intends to pursue
this matter vigorously, there can be no assurance that the Court will grant the
relief requested. Furthermore, even if the Company is successful in securing the
right to continue in the competitive bidding process, there can be no assurance
that the Company would


                                                                               9
<PAGE>   10

ultimately be successful in securing the EST contract award. In view of the
Company's substantial completion of Marine Corps Contract 2014 and the more
limited scope of other U.S. military opportunities, the failure to secure an
award of the U.S. Army EST contract could have a material adverse effect on the
Company's future revenues from the U.S. military, particularly as compared with
the U.S. military revenues during fiscal 1997 and 1998, and on results of
operations and financial condition of the Company.

LIQUIDITY AND CAPITAL RESOURCES

The Company's principal liquidity and capital resource 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 and
the senior bank debt. Net working capital was $20.9 million at June 30, 1998 and
$18.9 million at March 31, 1998.

As of June 26, 1998, the Company amended the NationsBank credit agreement to
provide for an increase in interest rates and for a temporary relaxation of
certain restrictive covenants. These covenant changes were based on the
Company's business outlook at that time which assumed delivery of orders from
new and existing customers and delivery of $35.6 million of the $49.4 million in
backlog as of March 31, 1998. However, there can be no assurance that the
Company will meet these covenants and that further bank debt borrowings will be
available should it fail to do so. As of August 5, 1998, the Company had
borrowings of $14 million and has outstanding letters of credit of approximately
$1.5 million under the $25 million revolving credit facility. The Company
believes that the cash flow from operations combined with the borrowings under
the senior bank debt, will be sufficient to meet the Company's presently
anticipated working capital, capital expenditure and debt service needs for at
least the next 12 months.

The Company's operating activities used cash of $5.6 million in the three months
ended June 30, 1998 and generated $3.8 million in the three months ended June
30, 1997. The $9.4 million decrease in net cash provided by operations was
primarily due to the net loss during the quarter and the decrease in deferred
revenues, accounts payable and accrued liabilities.

The Company's investing activities used cash of $0.8 million for the three
months ended June 30, 1998 and $2.6 million for the three months ended June 30,
1997. The Company's primary investing activity in the three month period ended
June 30, 1998 was for capital expenditures that were primarily for equipment
used in manufacturing, R&D and general administration. The Company's other use
of cash for investing activities for the three months ended June 30, 1998 was
for transaction and other costs associated with the purchase of Dart on April 1,
1998, net of cash acquired.

The Company's financing activities generated cash of $5.0 million for the three
months ended June 30, 1998. The Company's primary financing activity in the
three month period ended June 30, 1998, was the net borrowing of $5.1 million
from its credit facility in connection with the Company's recent acquisitions
and capital expenditures and the working capital needs to fund the operations of
the Company.

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


                                                                              10

<PAGE>   11

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 may 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.

         Concentration of Credit Risk

At June 30, 1998, approximately $12.2 million in accounts receivable was due
from four international customers, of which approximately $6.5 million was
secured by performance letters of credit.

YEAR 2000

The Company expects to incur certain costs during the next two years to address
the impact of the Year 2000 problem on its information systems. The Year 2000
problem, which is common to most businesses, concerns the inability of
information systems, primarily computer software programs, to properly recognize
and process data-sensitive information on and beyond January 1, 2000. The
Company currently believes that it will be able to modify or replace its
affected systems in time to minimize any detrimental effects on operations. The
Company's products currently delivered to customers are designed to be Year 2000
compliant. Previously delivered customer products have minor issues relating to
computer printouts. These issues are corrected in all new releases of software
that are purchased by customers. The incremental costs of the Year 2000 project
are estimated between $50,000 and $100,000. These costs will be expensed as
incurred, unless new software is purchased that will be capitalized in
accordance with the Company's policy. The Company does not expect that the Year
2000 problem 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.



























                                                                              11
<PAGE>   12



PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

The Company has been actively participating in a competitive bidding process for
the proposed U.S. Army Engagement Skills Trainer ("EST") program, a U.S.
military procurement award anticipated to be at least as large as the Company's
current U.S. Marine Corps Contract 2014. On May 14, 1998, the Company received
notification on behalf of the U.S. Army that its proposal in response to the
ongoing competition had been excluded from further consideration. On June 2,
1998, the Company filed an action in the United States Court of Federal Claims
to protest this decision, and to obtain an injunction against any award of the
EST contract until the Court can rule on the Company's protest. As part of this
action, the Company has requested that the Court order the procurement authority
to continue its consideration of the Company's proposal and to engage in
meaningful discussions with the Company. Although the Company intends to pursue
this matter vigorously, there can be no assurance that the Court will grant the
relief requested. Furthermore, even if the Company is successful in securing the
right to continue in the competitive bidding process, there can be no assurance
that the Company would ultimately be successful in securing the EST contract
award. In view of the Company's substantial completion of Marine Corps Contract
2014 and the more limited scope of other U.S. military opportunities, the
failure to secure an award of the U.S. Army EST contract could have a material
adverse effect on the Company's future revenues from the U.S. military,
particularly as compared with the U.S. military revenues during fiscal 1997 and
1998, and on results of operations and financial condition of the Company. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- U.S. Army EST Procurement Process"

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.
Discovery is ongoing at this time, and no dispositive motions have been filed or
heard. 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.

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.  CHANGES IN SECURITIES - RECENT SALES OF UNREGISTERED SECURITIES

On April 1, 1998, FATS, Inc. acquired the outstanding stock of Dart in exchange
for 257,577 Class A common shares of the Company. The Company issued the 257,577
non-registered Class A common shares to the stockholders of Dart in a private
placement pursuant to Rule 506 of Regulation D and Section 4(2) of the
Securities Act of 1933, as amended.





                                                                              12
<PAGE>   13


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 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, 1998 under the
caption Part I and in the Company's Prospectus under the caption "Risk Factors".

























                                                                              13
<PAGE>   14


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>                            
10.01     Resignation Agreement, dated as of May 8, 1998, between FATS, Inc. and
          David A. Apseloff.

10.02     Resignation Agreement, dated as of June 26, 1998, between FATS, Inc.
          and Robert B. Terry, Jr.

10.03     Resignation Agreement, dated as of July 10, 1998, between FATS, Inc.
          and Gregory F. Echols.

10.04     Consulting Agreement, dated as of August 1, 1997, between the Company
          and Craig I. Fields, Ph.D.

10.05     First Amendment to Stock Option Agreement Series A, dated as of
          September 18, 1996, between the Company and David A. Apseloff.

10.06     First Amendment to Stock Option Agreement Series B, dated as of
          September 18, 1996, between the Company and David A. Apseloff.

10.07     Stock Option Agreement Series D, dated as of April 17, 1997, between
          the Company and David A. Apseloff.

10.08     First Amendment to Stock Option Agreement Series D, dated as of April
          17, 1997, between the Company and David A. Apseloff.

10.09     First Amendment to Stock Option Agreement Series A, dated as of
          September 18, 1996, between the Company and Gregory F. Echols.

10.10     First Amendment to Stock Option Agreement Series B, dated as of
          September 18, 1996, between the Company and Gregory F. Echols.

10.11.01  Stock Option Agreement Series D, dated as of April 17, 1997, between
          the Company and Gregory F. Echols.

10.11.02  First Amendment to Stock Option Agreement Series D, dated as of
          April 17, 1997, between the Company and Gregory F. Echols. Amendments
          identical in all material respects were adopted for three Stock Option
          agreements Series D, dated as of April 17, 1998, between the Company 
          and Gregory F. Echols.

10.12     First Amendment to Stock Option Agreement Series A, dated as of
          September 18, 1996, between the Company and Robert B. Terry, Jr.

10.13     First Amendment to Stock Option Agreement Series B, dated as of
          September 18, 1996, between the Company and Robert B. Terry, Jr.
</TABLE>


                                                                              14
<PAGE>   15

<TABLE>
<S>       <C>
10.14.01  Stock Option Agreement Series D, dated as of April 17, 1997, between
          the Company and Robert B. Terry, Jr.


10.14.02  First Amendment to Stock Option Agreement Series D, dated as of April
          17, 1997, between the Company and Robert B. Terry, Jr. Amendments
          identical in all material respects were adopted for three Stock
          Option Agreements Series D, dated as of April 17, 1998, between the
          Company and Robert B. Terry, Jr.

10.15     Stock Subscription and Purchase Agreement, dated as of April 23, 
          1998, between the Company and Centre Capital Investors II, L.P., 
          Centre Partners Coinvestment, L.P., Centre Capital Offshore 
          Investments II, L.P., and Centre Capital Tax-Exempt Investors II, L.P.

10.16.01  First Amendment to Stock Option Agreement Series B, dated as of
          September 15, 1996 between the Company and Robert F. Mecredy.

10.16.02  Schedule identifying each First Amendment to Stock Option Agreement
          Series B, dated as of September 18, 1996, substantially identical in 
          all material respects to Schedule 10.16.01 (filed as Exhibit 10.15.01
          to the Company's Registration Statement No. 333-13105.

11.01     Statement regarding computation of net income per common share.

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


(b) No reports on Form 8-K were filed during the quarter ended June 30, 1998.

<PAGE>   16



                                   SIGNATURES

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

DATED: August 12, 1998


                             FIREARMS TRAINING SYSTEMS, INC.
                                    (Registrant)





                             \s\ Peter A. Marino
                             ------------------------------------------------
                             Peter A. Marino
                             Chief Executive Officer and President




                             \s\ Emory O. Berry
                             ------------------------------------------------
                             Emory O. Berry
                             Chief Financial Officer and Treasurer
                              (Principal Financial and Accounting Officer)




















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