Exhibit 10.16
                                 SECOND ADDENDUM
                                       TO
                                 FIRST AMENDMENT
                                       TO
                          SECURITIES PURCHASE AGREEMENT



         This  Second  Addendum  to  First  Amendment  to  Securities   Purchase
Agreement  is made this  seventh day of  December,  2001,  by and between  Alpha
Virtual,  Inc.  (formerly  Perceptronics,  Inc.),  a Delaware  corporation  (the
"Company"),  and Global Alpha  Corporation,  a British  Virgin  Islands  company
("Purchaser").


                                 R E C I T A L S

         WHEREAS,  the Company and Purchaser entered into a Securities  Purchase
Agreement  dated  April 5,  2001,  a true  copy of which is  attached  hereto as
"Exhibit A" and  incorporated  herein by  reference,  and a First  Amendment  to
Securities  Purchase  Agreement  dated  August 3, 2001,  a true copy of which is
attached  hereto as Exhibit  "B" and  incorporated  herein by  reference  and an
Addendum to First Amendment to Securities  Purchase  Agreement dated November 5,
2001,  a true copy of which is attached  hereto as Exhibit "C" and  incorporated
herein by reference (the "Addendum to First Amendment"); and

         WHEREAS, the parties hereto are desirous of terminating the Addendum to
First Amendment amending the First Amendment to Securities Purchase Agreement.


                                    AGREEMENT

         NOW,  THEREFORE,  in consideration of the mutual benefits to be derived
hereunder, the parties agree as follows:

         1. The Addendum to First Amendment is hereby  terminated and shall have
no further force or effect.

         2. Subparagraphs  2(h), (i), (j), (k) and (l) of the First Amendment to
Securities   Purchase   Agreement   are  deleted  in  their   entirety  and  new
subparagraphs 2(h), (i), (j), (k) and (l) are substituted therein as follows:

         " (h)  Eighth  Warrant.  The  Company  shall  execute  and  deliver  to
         Purchaser  a warrant  (the  "Eighth  Warrant")  to  purchase  up to One
         Hundred  Seventy-Five  Thousand  Dollars  ($175,000)  of the  Company's
         Common  Stock  at an  exercise  price  of  the  fair  market  value  or
         Twenty-Two and One-Half  Cents  ($0.225) per share,  whichever is less.
         (For  example,  if the  lowest  price is  $0.225  per  share,  then the
         Purchaser  would divide  $175,000 by $0.225 and the Company would issue
         777,778 of its shares of Common  Stock.) The fair market value shall be
         the   "bid"   price   of   the   Company's    Common   stock   on   the
         Over-the-Counter:Bulletin  Board at the close of  business on the fifth
         (5th) business day preceding the conversion date.  Subject to the terms
         and  conditions of the Eighth  Warrant,  the term of the Eighth Warrant
         shall terminate on December 10, 2001.


<PAGE>

         " (i) Ninth Warrant. The Company shall execute and deliver to Purchaser
         a warrant (the "Ninth  Warrant")  to purchase One Hundred  Seventy-Five
         Thousand  Dollars  ($175,000)  of  the  Company's  Common  Stock  at an
         exercise  price of the fair market  value or  Twenty-Two  and  One-Half
         Cents  ($0.225) per share,  whichever  is less.  (For  example,  if the
         lowest  price is $0.225  per share,  then the  Purchaser  would  divide
         $175,000 by $0.225 and the Company would issue 777,778 of its shares of
         Common  Stock.) The fair  market  value shall be the "bid" price of the
         Company's  Common stock on the  Over-the-Counter:Bulletin  Board at the
         close of  business  on the  fifth  (5th)  business  day  preceding  the
         conversion  date.  Subject  to the  terms and  conditions  of the Ninth
         Warrant, the Ninth Warrant shall terminate on January 4, 2002.

         " (j) Tenth Warrant. The Company shall execute and deliver to Purchaser
         a  warrant  (the  "Tenth  Warrant")  to  purchase  up  to  One  Hundred
         Seventy-Five  Thousand Dollars ($175,000) of the Company's Common Stock
         at an  exercise  price  of the fair  market  value  or  Twenty-Two  and
         One-Half Cents ($0.225) per share,  whichever is less. (For example, if
         the lowest price is $0.225 per share,  then the Purchaser  would divide
         $175,000 by $0.225 and the Company would issue 777,778 of its shares of
         Common  Stock.) The fair  market  value shall be the "bid" price of the
         Company's  Common stock on the  Over-the-Counter:Bulletin  Board at the
         close of  business  on the  fifth  (5th)  business  day  preceding  the
         conversion  date.  Subject  to the  terms and  conditions  of the Tenth
         Warrant, the Tenth Warrant shall terminate on February 8, 2002.

         " (k)  Eleventh  Warrant.  The  Company  shall  execute  and deliver to
         Purchaser  a warrant  (the  "Eleventh  Warrant")  to purchase up to One
         Hundred   Seventy-Five   Thousand  Dollars  ($175,000)  shares  of  the
         Company's Common Stock at an exercise price of the fair market value or
         Twenty-Two and One-Half  Cents  ($0.225) per share,  whichever is less.
         (For  example,  if the  lowest  price is  $0.225  per  share,  then the
         Purchaser  would divide  $175,000 by $0.225 and the Company would issue
         777,778 of its shares of Common  Stock.) The fair market value shall be
         the   "bid"   price   of   the   Company's    Common   stock   on   the
         Over-the-Counter:Bulletin  Board at the close of  business on the fifth
         (5th) business day preceding the conversion date.  Subject to the terms
         and  conditions  of the Eleventh  Warrant,  the Eleventh  Warrant shall
         terminate on March 8, 2002.

         " (l)  Twelfth  Warrant.  The  Company  shall  execute  and  deliver to
         Purchaser  a warrant  (the  "Twelfth  Warrant")  to  purchase up to One
         Hundred  Seventy-Five  Thousand  Dollars  ($175,000)  of the  Company's
         Common  Stock  at an  exercise  price  of  the  fair  market  value  or
         Twenty-Two and One-Half  Cents  ($0.225) per share,  whichever is less.
         (For  example,  if the  lowest  price is  $0.225  per  share,  then the
         Purchaser  would divide  $175,000 by $0.225 and the Company would issue
         777,778 of its shares of Common  Stock.) The fair market value shall be
         the   "bid"   price   of   the   Company's    Common   stock   on   the
         Over-the-Counter:Bulletin  Board at the close of  business on the fifth
         (5th) business day preceding the conversion date.  Subject to the terms
         and  conditions  of the  Twelfth  Warrant,  the Twelfth  Warrant  shall
         terminate on April 5, 2002."



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<PAGE>

         3.  Warrants  numbered  AWC-8,  AWC-9,  AWC-10,  AWC-11 and AWC-12  are
hereby  cancelled  and  terminated  and  shall be  returned  to the  Company  by
Purchaser.  Such  cancelled  warrants  shall be replaced with Warrants  numbered
BWC-8,  BWC-9,  BWC-10,  BWC-11 and BWC-12,  which  warrants  shall  reflect the
amended purchase price.

         4.  New  subparagraphs  2(m),  (n), (o) and (p) are hereby approved and
are included in the First Amendment to Securities Purchase Agreement as follows:

         " (m)  Thirteenth  Warrant.  The Company  shall  execute and deliver to
         Purchaser a warrant  (the  "Thirteenth  Warrant") to purchase up to One
         Hundred  Seventy-Five  Thousand  Dollars  ($175,000)  of the  Company's
         Common  Stock  at an  exercise  price  of  the  fair  market  value  or
         Twenty-Two and One-Half  Cents  ($0.225) per share,  whichever is less.
         (For  example,  if the  lowest  price is  $0.225  per  share,  then the
         Purchaser  would divide  $175,000 by $0.225 and the Company would issue
         777,778 of its shares of Common  Stock.) The fair market value shall be
         the   "bid"   price   of   the   Company's    Common   stock   on   the
         Over-the-Counter:Bulletin  Board at the close of  business on the fifth
         (5th) business day preceding the conversion date.  Subject to the terms
         and conditions of the Thirteenth Warrant,  the Thirteenth Warrant shall
         terminate on May 3, 2002.

         " (n)  Fourteenth  Warrant.  The Company  shall  execute and deliver to
         Purchaser a warrant  (the  "Fourteenth  Warrant") to purchase up to One
         Hundred  Seventy-Five  Thousand  Dollars  ($175,000)  of the  Company's
         Common  Stock  at an  exercise  price  of  the  fair  market  value  or
         Twenty-Two and One-Half  Cents  ($0.225) per share,  whichever is less.
         (For  example,  if the  lowest  price is  $0.225  per  share,  then the
         Purchaser  would divide  $175,000 by $0.225 and the Company would issue
         777,778 of its shares of Common  Stock.) The fair market value shall be
         the   "bid"   price   of   the   Company's    Common   stock   on   the
         Over-the-Counter:Bulletin  Board at the close of  business on the fifth
         (5th) business day preceding the conversion date.  Subject to the terms
         and conditions of the Fourteenth Warrant,  the Fourteenth Warrant shall
         terminate on June 7, 2002.

         " (o)  Fifteenth  Warrant.  The  Company  shall  execute and deliver to
         Purchaser a warrant  (the  "Fifteenth  Warrant")  to purchase up to One
         Hundred  Seventy-Five  Thousand  Dollars  ($175,000)  of the  Company's
         Common  Stock  at an  exercise  price  of  the  fair  market  value  or
         Twenty-Two and One-Half  Cents  ($0.225) per share,  whichever is less.
         (For  example,  if the  lowest  price is  $0.225  per  share,  then the
         Purchaser  would divide  $175,000 by $0.225 and the Company would issue
         777,779 of its shares of Common  Stock.) The fair market value shall be
         the   "bid"   price   of   the   Company's    Common   stock   on   the
         Over-the-Counter:Bulletin  Board at the close of  business on the fifth
         (5th) business day preceding the conversion date.  Subject to the terms
         and conditions of the Fifteenth  Warrant,  the Fifteenth  Warrant shall
         terminate on July 5, 2002.

         " (p)  Sixteenth  Warrant.  The  Company  shall  execute and deliver to
         Purchaser a warrant  (the  "Thirteenth  Warrant") to purchase up to One
         Hundred Twenty-Six  Thousand Dollars ($126,000) of the Company's Common


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<PAGE>

         Stock at an exercise  price of the fair market value or Twenty-Two  and
         One-Half Cents ($0.225) per share,  whichever is less. (For example, if
         the lowest price is $0.225 per share,  then the Purchaser  would divide
         $126,000 by $0.225 and the Company would issue 560,000 of its shares of
         Common  Stock.) The fair  market  value shall be the "bid" price of the
         Company's  Common stock on the  Over-the-Counter:Bulletin  Board at the
         close of  business  on the  fifth  (5th)  business  day  preceding  the
         conversion date.  Subject to the terms and conditions of the Thirteenth
         Warrant, the Thirteenth Warrant shall terminate on August 2, 2002.

         5.  Warrants  numbered  BWC-13,  BWC-14,  BWC-15  and  BWC-16  shall be
executed by the parties hereto  reflecting the provisions set forth in paragraph
4 above.

         6. Except as expressly provided for herein, all other provisions of the
First Amendment to Securities  Purchase  Agreement dated August 3, 2001, between
the parties shall remain in full force and effect.



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[SIGNATURE PAGE TO ADDENDUM TO FIRST AMENDMENT TO SECURITIES PURCHASE AGREEMENT]



         IN  WITNESS  WHEREOF,  the  parties  hereto  have  executed  this First
Amendment to  Securities  Purchase  Agreement as of the day and year first above
written.


"COMPANY"                         ALPHA VIRTUAL, INC.,
                                  a Delaware corporation


                                  By:    _______________________________
                                  Name:  Dan Mapes
                                  Title: Chief Executive Officer
                                  Address:
                                         10345 West Olympic Boulevard, Suite 102
                                         Los Angeles, CA 90064
                                  Facsimile No.:    (310) 432-6222

"PURCHASER"                       GLOBAL ALPHA CORPORATION
                                  a British Virgin Islands company


                                  By:    _______________________________
                                  Name:  Barry Didato
                                  Title: Authorized Signatory
                                  Address:
                                         Craigmuir Chambers
                                         P.O. Box 71
                                         Road Town
                                         Tortola, British Virgin Islands






















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