U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
    1934.
           For the quarterly period ended June 30, 2002
                                          -----------------

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)  OF THE EXCHANGE ACT
           For the transition period from                  to                  .
                                          ----------------    -----------------

                           Commission File No: 0-12382
                                               -------


                               Alpha Virtual, Inc.
                               -------------------
                         (formerly Perceptronics, Inc.)
                         ------------------------------
             (Exact name of Registrant as specified in its Charter)



           Delaware                                      95-2577731
-------------------------------                    ----------------------
(State or other jurisdiction of                      (I.R.S. Employer
 incorporation or organization)                    Identification Number)

         10345 West Olympic Boulevard, Los Angeles, CA          90064
      --------------------------------------------------------------------
           (Address of Principal Executive Offices)            Zip Code

       Registrant's telephone number, including area code: (310) 432-6200
                                                           --------------
           Securities registered pursuant to Section 12(b) of the Act:

                                      NONE
                                      ----
           Securities registered pursuant to Section 12(g) of the Act:

                         COMMON STOCK - $.001 PAR VALUE
                         ------------------------------
                                (Title of Class)

        Check 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

        The number of shares outstanding of the Registrant's common stock as of
June 30, 2002 was 23,486,045.

        Transitional Small Business Disclosure Format (check one):
        Yes        No   X
            -----     -----
                                     1 of 13

<PAGE>




                                      INDEX
                                      -----
                               ALPHA VIRTUAL, INC.


PART I.  FINANCIAL INFORMATION
------------------------------
Item 1.  Financial Statements

         Balance sheets, Alpha Virtual, Inc., June 30, 2002 and
         March 31, 2002.                                                    3

         Statements of operations, Alpha Virtual, Inc., three months
         ended June 30, 2002 and three months ended June 30, 2001           5

         Statements of cash flows, Alpha Virtual, Inc., three months
         ended June 30, 2002 and June 30, 2001.                             6

         Notes to financial statements.                                     7

Item 2. Management's  Discussion and Analysis of Financial Condition
        and Results of Operations.                                         10

PART II. OTHER INFORMATION
--------------------------
Item 6.  Exhibits and Reports on Form 8-K.                                 12





























                                     2 of 13
<PAGE>





Part I.        FINANCIAL INFORMATION

Item 1.       Financial Statements



                               ALPHA VIRTUAL, INC.
                                 BALANCE SHEETS

                                                   June 30, 2002  March 31, 2002
                                                    (Unaudited)       (Audited)
                                                   ------------    ------------
ASSETS:
Current Assets:
--------------
Cash and short term investments                    $         24    $     19,807
Receivables, net of allowance of $3,000 as of            34,570          27,070
   June 30, 2002 and March 31, 2002 - Note C
Prepaid expenses                                          9,697          24,481
                                                   ------------    ------------

Total current assets:                                    44,291          71,358

Equipment & Leasehold Improvements, at cost              45,850          45,850
Less accumulated depreciation and amortization          (29,371)        (28,038)
                                                   ------------    ------------
                                                         16,479          17,812

Other Assets                                             21,825          21,825
                                                   ------------    ------------

TOTAL ASSETS                                       $     82,595    $    110,995
                                                   ============    ============


















                  See Notes to Financial Statements (Unaudited)

                                     3 of 13

<PAGE>

                               ALPHA VIRTUAL, INC.
                                 BALANCE SHEETS
                                   (Continued)

                                                   June 30, 2002  March 31, 2002
                                                    (Unaudited)       (Audited)
                                                   ------------    ------------

LIABILITIES AND SHAREHOLDERS' DEFICIT:
Current Liabilities:
-------------------
Accounts payable                                   $    284,604    $    111,546
Payroll taxes payable                                   250,667         138,167
Accrued compensation                                     47,853          47,853
Other accrued liabilities                                52,394          49,929
Short term debt - Note D                                 50,000          50,000
Current portion of obligation under capital lease         3,232           3,176
Loans payable to shareholders - Note D                   28,000          28,000
Rate reserve                                            100,000         100,000
                                                   ------------    ------------
Total current liabilities:                              816,750         528,671

Long-Term Liabilities:
---------------------
Obligation under capital lease                            4,992           5,813
                                                   ------------    ------------

Total Liabilities                                       821,742         534,484

COMMITMENTS AND CONTIGENCIES

SHAREHOLDERS' DEFICIT:
---------------------
Common Stock, par value $.001 per share,
  authorized 60,000,000 shares, issued and
  outstanding 23,486,045 shares at June 30, 2002
  and 21,144,378 shares at March 31, 2002                23,486          21,144
Additional paid in capital                           17,134,446      16,386,788
Accumulated deficit                                 (17,897,079)    (16,831,421)
                                                   ------------    ------------

TOTAL SHAREHOLDERS' DEFICIT                            (739,147)       (423,489)
                                                   ------------    ------------

TOTAL LIABILITIES AND SHAREHOLDERS'
DEFICIT                                            $     82,595    $    110,995
                                                   ============    ============








                  See Notes to Financial Statements (Unaudited)

                                     4 of 13
<PAGE>



                               ALPHA VIRTUAL, INC.
                       CONDENSED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

                                                    Three Months Ended June 30,


                                                        2002            2001
                                                   ------------    ------------
Net Sales                                          $     52,270    $          0
Cost of Sales                                            47,058               0
                                                   ------------    ------------

Gross Profit                                              5,212               0

Costs and expenses:
Selling, general and administrative                     670,897         201,843
Research & development                                  399,973         146,044
                                                   ------------    ------------

Operating loss                                       (1,065,658)       (347,887)

Loss before taxes                                    (1,065,658)       (347,887)
Income tax provision                                          0               0
                                                   ------------    ------------

Net loss                                           $ (1,065,658)   $   (347,887)
                                                   ============    ============

Earnings per share:
       Basic:                                      $      (0.05)   $      (0.03)

       Diluted:                                    $      (0.05)   $      (0.03)
                                                   ============    ============

Weighted average common and common equivalent shares:


Basic - Note E                                       23,486,045      11,131,260

Diluted - Note E                                     23,486,045      11,131,260
                                                   ============    ============










                  See Notes to Financial Statements (Unaudited)

                                     5 of 13
<PAGE>



                               ALPHA VIRTUAL, INC.
                        CONDENSED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)

                                                    Three Months Ended June 30,

                                                        2002            2001
                                                   ------------    ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                           $ (1,065,658)   $   (347,887)
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization                             1,333               0

Changes in assets and liabilities:
   Receivables                                           (7,500)         13,408
   Prepaid expenses                                      14,784             231
   Accounts payable                                     173,058          (8,937)
   Payroll taxes payable                                112,500               0
   Accrued compensation                                       0        (298,292)
   Other accrued liabilities                              2,465         215,776
   Other long term liabilities                                0          92,568
                                                   ------------    ------------

Net cash used by operating activities:                 (769,018)       (333,133)

CASH FLOWS FROM INVESTING ACTIVITIES
Payments on capital lease                                  (765)              0
                                                   ------------    ------------

Net cash used by investing activities                      (765)              0

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock                      750,000         353,999
                                                   ------------    ------------

Net cash provided in financing activities               750,000         353,999

NET INCREASE (DECREASE) IN CASH                         (19,783)         20,866
                                                   ------------    ------------


Cash, beginning of period                          $     19,807    $     12,444
Cash, end of period                                          24          33,310
                                                   ============    ============

Cash paid during period for income taxes                      0               0
Cash paid during period for interest expense                  0               0




                  See Notes to Financial Statements (Unaudited)

                                     6 of 13
<PAGE>


                               ALPHA VIRTUAL, INC.
                          NOTES TO FINANCIAL STATEMENTS



NOTE A - UNAUDITED FINANCIAL STATEMENTS
---------------------------------------

The  unaudited  financial  statements  have been  prepared  in  conformity  with
generally accepted accounting  principles and include all adjustments which are,
in the opinion of management, necessary for fair presentation of the results for
the  interim  periods  presented.  All such  adjustments  are, in the opinion of
management,  of a normal recurring  nature.  Results for the three-month  period
ended June 30, 2002 are not necessarily  indicative of the operating  results to
be expected for the full year.

Certain  information  and footnote  disclosures  normally  included in financial
statements prepared in accordance with generally accepted accounting  principles
have been condensed or omitted. It is suggested that these financial  statements
are read in conjunction with the financial statements and notes thereto included
in the Company's annual report on Form 10-KSB for the year ended March 31, 2002.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------

Description of the Company:  Alpha Virtual,  Inc., (the "Company")  develops and
markets innovative,  real-time Web collaboration products for business, consumer
entertainment,  education,  and government markets. The Company's patent pending
OneViewTM   product  platform  meets  the  growing  demand  for  new  multi-user
interactivity-integrating   browser,  Instant  Messaging,  and  real-time  group
collaboration in an on-demand basis.

Basis of Presentation:  The accompanying financial statements have been prepared
in conformity with generally accepted accounting  principles,  which contemplate
continuation  of the Company as a going  concern.  The Company has  continued to
sustain operating losses and requires  substantial amounts of working capital to
support its  operations.  At June 30, 2002 current  liabilities  exceed  current
assets by  $772,459.  At June 30,  2002 the  Company  was  delinquent  in paying
$250,000 of payroll taxes.  The Company  continues to have difficulty in meeting
its  obligations  as they become due.  The ability of the Company to operate its
business and  generate  sufficient  positive  cash flows is dependent on raising
additional  investment  capital  to  fund  development  of  commercial  software
products.  The Company's financial  statements do not include any adjustments to
reflect the possible future effects on the  recoverability and classification of
assets or the amounts and classification of liabilities that may result from the
possible inability of the Company to continue as a going concern.

Cash Equivalents: All highly liquid investments maturing in three months or less
when purchased are considered cash equivalents.






                                     7 of 13
<PAGE>


                               ALPHA VIRTUAL, INC.
                          NOTES TO FINANCIAL STATEMENTS

Equipment and Leasehold  Improvements:  Equipment and leasehold improvements are
stated at cost.  Depreciation of equipment is provided for by the  straight-line
method  over  their  estimated  useful  lives,  which  range  from 3 to 5 years.
Amortization of leasehold  improvements is provided by the straight-line  method
over the shorter of the useful lives or the terms of the leases.

Revenue Recognition: Sales of services are recorded when performed in accordance
with  contracts.  Revenues  from  long-term  contracts  are  recorded  using the
percentage-of-completion (cost-to-cost) method of accounting. Under this method,
sales are recorded as costs (including general and  administrative  expenses) as
incurred,  plus a portion of the profit expected to be realized on each contract
in the  ratio  that  costs  incurred  to date  bear to total  estimated  cost at
completion.  Revenues  from software  sales are recorded in accordance  with SOP
97-2 "Software Revenue Recognition", which requires that revenue recognized from
software  arrangements  be allocated to the various  elements of the arrangement
based on the  relative  fair  value  values of the  elements,  such as  software
products, upgrades,  enhancements,  post contract customer support, installation
or training.  Revenue from product  services are recognized at the time services
are  provided.  The Company has been  developing  and  marketing  their  OneView
software  products  and  services.  As of June 30,  2002 there  were  $36,000 of
revenues related to these products.

Income Taxes:  Provisions  for federal and state income taxes are  calculated on
reported  financial  statement  income  based  on  the  current  tax  law.  Such
provisions  differ from the amounts  currently  payable because certain items of
income and expense, known as temporary differences,  are recognized in different
tax periods  for  financial  reporting  purposes  than for income tax  purposes.
Deferred  income taxes are the result of the  recognition  of tax benefits  that
management  expects  to  realize  from the  utilization  of net  operating  loss
carryforwards. The amounts recorded are net of valuation allowance and represent
management's estimate of the amount that is more likely than not to be realized.

Per Share  Data:  Per share data is based upon the  weighted  average  number of
shares of common and dilutive  common stock  equivalents  outstanding  using the
treasury stock method.  Refer to Note E for a reconciliation  of the shares used
to compute earnings per share.

Use of  Estimates:  Company  management  has  made a  number  of  estimates  and
assumptions relating to the reporting of assets and liabilities and the reported
amounts  of  revenues  and  expenses,  in  conformity  with  generally  accepted
accounting principles. Actual amounts could differ from these estimates.

NOTE C - RECEIVABLES
--------------------

At  June  30,  2002  and  March  31,  2002  there  were   $34,570  and  $27,070,
respectively,  of receivables that represent amounts from services performed and
royalties  from  the  Eidetics  sale.  These  amounts  are  net of  $3,000  that
represents amounts that may become uncollectible.



                                     8 of 13
<PAGE>


                               ALPHA VIRTUAL, INC.
                          NOTES TO FINANCIAL STATEMENTS

NOTE D - SHORT TERM DEBT
------------------------

As of June 30, 2002 and March 31, 2002,  there is a loan  outstanding of $50,000
with a foreign  customer.  The note bears  interest at 6% per year. The terms of
the note required repayment by March 1, 1996.

As of June 30,  2002 and March 31, 2002 the  Company  had loans  outstanding  of
$28,000 to various shareholders.  These loans are past due as of March 31, 2002.
The loans are  convertible  to common  stock at $0.15 per share at the option of
the note holder.

NOTE E - EARNINGS PER SHARE
---------------------------

The Company  uses SFAS #128 in  accounting  for basic and diluted  earnings  per
share.  Basic earnings per share  excludes  dilution and is computed by dividing
income available to common stockholders by the weighted average number of common
shares  outstanding  for the  period.  Diluted  earnings  per share is  computed
similarly to fully diluted earnings per share. A  reconciliation  of shares used
to compute  earnings per share for the  three-month  periods ended June 30, 2002
and June 30, 2001 are as follows:

                                                           Quarter ended
                                                              June 30
                                                       2002             2001
                                                   -----------      -----------

Weighted average common shares                      23,486,045       11,131,260
Outstanding

Diluted stock options and warrants                           0                0
Based on treasury stock method
                                                   -----------      -----------

Diluted shares                                      23,486,045       11,131,260
                                                   ===========      ===========

















                                     9 of 13
<PAGE>


Item 2. Management's discussion and analysis of financial condition and
results of operations.

General

Since fiscal 2001,  our business  refocus has been  entirely on  developing  new
commercial  products in the area of Internet  collaboration.  Our patent-pending
OneView(TM)  product  platform  meets  the  growing  demand  for new  multi-user
interactivity  - integrating  browser,  Instant  Messaging,  and real-time group
collaboration  in an on-demand  basis.  OneView allows users to immediately form
groups and explore Web sites  together,  sharing the same experience at the same
time, whether they are located in the next room or half way around the world. As
such, it is the fastest,  most convenient way to collaborate  synchronously over
the Internet today.

Prior to our refocus on Internet  collaboration  product design, our company had
historically   engaged  in  the   design,   development   and   manufacture   of
computer-based  simulation  systems for  training and  decision  support.  These
systems  include both  hardware and software and are used to train  personnel in
the  use of  various  military  and  commercial  equipment,  including  weapons,
vehicles and aircraft.  Much of the company's simulator business has been in the
foreign  defense   industry  where  the  company  has  built  an   international
reputation.  The  tightening  of defense  budgets  worldwide,  combined with the
continuing  consolidation and intense  competition in the defense industry,  had
negatively impacted the growth and profit opportunities for small companies such
as Alpha Virtual. As a result, in July 2000, the Company sold the assets related
to the PGTS product line to Eidetics  Corporation,  a developer and manufacturer
of  specialized  defense  simulation  products.  From the  disposition  of those
assets, the company will earn certain royalties.

Going Concern Qualification

The  following  discussion  is  based  on  the  financial  statements  contained
elsewhere  in this  report.  The  financial  statements  have been  prepared  in
conformity with generally  accepted  accounting  principles,  which  contemplate
continuation of the Company as a going concern.  The financial statements do not
include  any   adjustments  to  reflect  the  possible  future  effects  on  the
recoverability and  classification of assets or the amounts and  classifications
of the liabilities that may result from the possible inability of the Company to
continue as a going concern. See Note B of Notes to Financial Statements.

RESULTS OF OPERATIONS

Net  Sales.  Net sales  for the  three-month  period  ended  June 30,  2002 were
$52,270. Net sales for the three-month period ended June 30, 2001 were zero. The
company is in a state of transition and net sales are  representative of initial
attempts to market their software and fees for services rendered.

Cost of Sales. Cost of sales for the three-month period ended June 30, 2002 were
$47,058.  Net sales for the  three-month  period  ended June 30, 2001 were zero.
These costs primarily related to salaries and wages expenses related to software
products sold and services rendered.




                                    10 of 13
<PAGE>


Selling,   General   and   Administrative   Expenses.   Selling,   general   and
administrative  expenses  increased  $469,054 or 232% in the three-month  period
ended June 30, 2002 compared to the comparable  three-month  period in the prior
fiscal year.  This increase was the result of increased  staffing levels to grow
operations and develop the OneView software products for market launch.

Interest Expense.  Interest expense was $0 in the three-month periods ended June
30, 2002 and June 30, 2001.

Liquidity  and  Capital  Resources.   The  Company  is  experiencing  continuing
liquidity  problems due to a lack of revenues and the absence of cash  reserves.
At June 30, 2002, the Company's unrestricted cash and cash equivalent balance of
$24 was the result of equity  investments made during the quarter ended June 30,
2002 and revenues from  contracts  and fees.  The majority of that cash has been
used for  operations.  The Company had negative  working  capital of $772,459 at
June 30,  2002,  compared to negative  working  capital of $457,313 at March 31,
2002.  The  increase  in  negative  working  capital  was due  primarily  to the
continued operating losses the Company sustained.  The Company continues to have
difficulty in meeting all of its obligations as they come due. In addition,  the
Company did not pay approximately $113,000 of payroll taxes in the quarter ended
June 30, 2002 and may not have  sufficient  capital to pay payroll  taxes in the
next quarter of this year. The lack of sufficient  working capital  continues to
restrict the Company's  ability to market its OneView products and to expand its
revenue base.

The Company requires  significant  additional financing from external sources to
be able to fund the development of enhancements to its OneView product suite and
to provide for marketing and sales personnel and related expenses to gain market
acceptance of its commercial  software products.  Although we were successful in
the prior fiscal year in obtaining  private equity  financing that fulfilled our
capital  requirements  at planned  expense  levels,  we cannot  assure  that the
Company will be able to raise the additional  monies required to fund operations
in the  current  fiscal  year and  thereafter.  We also are  unable  to  provide
assurances  that  our  commercial  software  products  will  start  to  generate
significant levels of revenue or that we will become profitable. Also, the terms
of any  financing  could be  unfavorable  to the  Company  and  dilutive  to its
shareholders.   The  Company  continues  to  pursue  U.S.  Government  sponsored
development  contracts  that have provided  technical  inputs to the  commercial
software products as well as providing  revenue and income.  The Company is also
exploring  strategic business  alliances and potential business  combinations in
order to meet our short and long-term objectives.

The  Company's  operating  activities  used cash of $769,018  during the quarter
ended June 30, 2002 resulting  primarily from the operating loss incurred during
the  period  and the  costs  associated  with  the  development  and  commercial
introduction of the its commercial software products.

The Company's  investing  activities  used cash of $765 during the quarter ended
June 30, 2002. This resulted from payments made on a capital lease.  The Company
is  primarily  a  developer  of  computer  software  and  therefore  not capital
intensive.  The Company does not currently have any material commitments for the
purchase of capital assets.



                                    11 of 13
<PAGE>


The Company's financing  activities provided cash of $750,000 during the quarter
ended June 30, 2002. The funding came from its main investor, Global Alpha.

FORWARD LOOKING STATEMENTS

The Company  hereby  incorporates  by  reference  "Forward  Looking  Statements"
contained in the  "Management's  Discussion And Analysis Of Financial  Condition
And Results Of Operations" of the Company's Form 10-KSB dated March 31, 2002.





Part II.    OTHER INFORMATION
-----------------------------

Item 6.     Exhibits and Reports on Form 8-K

               (a) Exhibits:

                   99.1    Chief Executive Officer Certification pursuant to
                           18 U.S.C. Section 1350, as adopted pursuant to
                           Section 906 of the Sarbanes-Oxley Act of 2002.

                   99.2    Chief Financial Officer Certification pursuant to
                           18 U.S.C. Section 1350, as adopted pursuant to
                           Section 906 of the Sarbanes-Oxley Act of 2002.


               (b) Reports on Form 8-K

                   No reports on Form 8-K were filed by the Company during the
                   fiscal quarter ended June 30,2002






















                                    12 of 13

<PAGE>







                                   Signatures
                                   ----------

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


                                    Alpha Virtual, Inc.
                                    Registrant



Date: August 19, 2002               By: /s/ Saif Mansour
      -----------------                ---------------------------------------
                                        Saif Mansour
                                        President

































                                    13 of 13