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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

_____________

FORM 10-Q

(Mark One)

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

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002

OR

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

COMMISSION FILE NUMBER: 333-13105

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

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.

     As of November 6, 2002, there were 70,153,139 shares of the Registrant’s Class A Common Stock outstanding.

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FIREARMS TRAINING SYSTEMS, INC.
INDEX

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     PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

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FIREARMS TRAINING SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)

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

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

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

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

1.     BASIS OF PRESENTATION.

     The accompanying 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 and six-month periods ended September 30, 2002 are not necessarily indicative of the results that may be expected for the year ending March 31, 2003. For further information, refer to the Company’s consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K/A for the year ended March 31, 2002.

2.     REVENUE RECOGNITION

     A significant amount of the Company’s revenue is derived from the sale of small and supporting arms training simulators and accessories. Revenue from sales to commercial customers and small governmental agencies is primarily recognized upon shipment when title passes; as all material commitments have been fulfilled, the sales price is fixed and determinable and collectibility is reasonably assured.

     A large portion of the Company’s small and supporting arms training simulator revenue is derived from contracts with various large governmental agencies. Governmental contracts that involve high volume purchases of the Company’s standard systems and related accessories are accounted for as multiple-element arrangements. These contracts require little or no modifications to the existing proprietary platform, specify pricing terms by product and billings generally correspond to the underlying shipment schedule. Advanced billings related to these contracts are recorded as deferred revenue and are recognized ratably as units are delivered.

     Other governmental contracts require significant customization of the Company’s existing proprietary platform or require the development of new systems to meet required customer specifications. These contracts are accounted for under the percentage of completion method, measured by the percentage of cost incurred to date to the estimated total cost for each contract. Contract costs include all direct material, direct labor and other costs directly related to the contract. Selling, general, and administrative costs are charged to expense as incurred. Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions, and final contract settlements may result in revisions to costs and income and are recognized in the period in which the revisions are determined.

     Provisions for estimated losses on uncompleted contracts accounted for under both methods described above are made in the period in which such losses are determined.

     Revenue from extended warranty sales and customer logistics support sales is recorded as deferred revenue and is recognized ratably as income over the lives of the related service agreements, which generally range from one to three years. Costs associated with these sales are recorded in the period incurred.

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3.     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 basis. Cost includes materials, labor, and factory overhead. Market is defined as net realizable value.

     Inventories consist of the following (in thousands):

4.     LONG-TERM CONTRACTS

	Costs and estimated earnings on uncompleted contracts and related amounts billed as of September 30, 2001 and March 31, 2001, respectively, are as follows (in thousands):

       Such amounts are included in the following accounts:

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5.     INTANGIBLE ASSETS

     The Company adopted Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,” during the quarter ended June 30, 2002.

     Intangible assets consist of the following:

     Amortization expense for the three-month and six-month periods ended September 30, 2002 was $45,000 and $90,000 respectively. Estimated amortization expense for the year ended March 31, 2003 will be approximately $180,000.

6.     LONG-TERM DEBT

     At September 30, 2002 and March 31, 2002, long-term debt consisted of the following (in thousands):

     Debt discount represents a non-cash debt restructuring liability, which is amortized as a reduction in interest expense monthly.

     As of September 30, 2002, the working capital borrowings, the long-term debt – senior, the long-term debt – junior and the debt discount became current liabilities due to their maturity date of September 30, 2003. The Company does, however, have an option and currently expects to extend the maturity date for $40.0 million of the reclassified debt to September 30, 2004.

7.     RELATED PARTY TRANSACTIONS

     The Company entered into a consulting agreement, dated October 4, 2000, with Sugarman Company, LLP, a company in which Randy Sugarman is the managing partner and has an 80% ownership interest. Under the agreement and in accordance with the terms of the Company’s restructuring in fiscal year 2001, Mr. Sugarman was engaged by the Company to evaluate its financial position and operations and make recommendations to senior management regarding changes that need to be made to improve profitability and liquidity. Mr. Sugarman’s services were performed on an hourly basis, plus out-of-pocket expenses, and the Company was billed accordingly. From May 16, 2001 until August 9, 2002, Mr. Sugarman served as Interim Chief Executive Officer and President of the Company. Mr. Sugarman ceased to be an officer of the Company on August 9, 2002, in connection with the conclusion of the Company’s engagement of Sugarman Company LLP. The Company incurred consulting fees of $77,000 and $211,000, plus expenses of $17,000 and $47,000 respectively, for the three-month and six-month periods ended September 30, 2002 under the consulting agreement. The Company incurred consulting fees of $86,000 and $202,000 plus expenses of $18,000 and $40,000 respectively, for consulting services under the agreement during the three months and six months ended September 30, 2001.

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     A group of entities affiliated with Centre Partners Management LLC (the Centre Entities) are among the Company’s largest shareholders. The Centre Entities hold a seat on the Company’s Board of Directors. In addition, the Centre Entities, and other institutional lenders who are also major shareholders as a result of a previously disclosed restructuring transaction (See Part I, Item 1, Restructure Transaction in the Company’s Annual Report on Form 10-K/A Amendment Number 2 for the fiscal year ended March 31,2002 (the 2002 10-K)), were party to a previously disclosed debt restructuring (See Note 3 to the Company’s financial statements included in the 2002 10-K) and continue to be the Company’s primary lenders. As a result of the share ownership of the Centre Entities and their representation on the Board of Directors, the Centre Entities have the ability to influence the operations of the Company.

8.      COMMITMENTS AND CONTINGENCIES

     Pursuant to applicable Bureau of Alchol, Tocaco and Firearms (BATF) regulations, during the quarter ended June 30, 2002, the Company advised the BATF that approximately 33 weapons that the Company believed were at customer locations could not be accounted for after the Company conducted a physical inventory of its weapons. The BATF responded that the Company should confirm the number of missing weapons and file the formal report required by BATF regulations. The Company conducted an investigation into this matter and concluded that the number of weapons missing is 41. The Company has filed the formal report with the BATF and local law enforcement authorities. Continuing communications with the BATF indicate that the BATF intends to continue to monitor the related controls and procedures of the Company, and will conduct an inspection during the third quarter of the fiscal year ending March 31, 2003. Based on communications to date, the Company does not currently expect the matter to have a material adverse effect on the financial position or results of operations.

9.     NET INCOME PER COMMON SHARE

Net income per share for the three and six month periods ended September 30, 2001 and 2000 were as follows:
(in thousands, except per share amounts)

     The number of shares of stock assumed to have been bought back by the Company for computational purposes under the treasury stock method has been calculated by dividing gross proceeds from all weighted average stock options outstanding during the period, as if exercised, by the average common share market price during the period. The average common share market price used in the above calculation was $0.56 and $0.65, for the three and six month periods ended September 30, 2002 and $0.33 and $0.26, for the three and six month periods ended September 30, 2001, respectively.

     Options to purchase 1,552,077 shares of common stock for the three month period ended September 30, 2002 and 1,551,877 shares of common stock for the six month period ended September 30, 2002, and warrants to purchase 3,246,164 shares of

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common stock were outstanding as of September 30, 2002 but were not included in the computation of the 2002 diluted EPS because the exercise price of the options and warrants was greater than the average market value of the common shares.

     Options to purchase 2,291,200 shares of common stock and warrants to purchase 3,246,164 shares of common stock were outstanding as of September 30, 2001 but were not included in the computation of the 2001 diluted EPS because the exercise price of the options and warrants was greater than the average market value of the common shares.

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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/A for the fiscal year ended March 31, 2002.

RESULTS OF OPERATIONS

Three Months Ended September 30, 2002 and 2001:

     Net Revenues: Revenues increased $0.1 million, or 0.6%, to $17.0 million for the three months ended September 30, 2002 as compared to $16.9 million for the three months ended September 30, 2001. Sales to U.S. military customers for the three months ended September 30, 2002, increased by $0.5 million, or 5.5%, to $8.8 million. The rise in U.S. military sales is due to increased levels of weapon simulation training with the U.S. Navy. Sales to U.S. law enforcement customers for the three months ended September 30, 2002 decreased $0.1 million, or 5.9% to $1.8 million. Sales to international customers for the three months ended September 30, 2002 decreased $0.2 million, or 3.4%, to $6.3 million reflecting reduced customer contract delivery and installation schedules for the current three-month period.

     Cost of Revenues: Cost of revenues decreased $1.0 million, or 8.2%, to $11.2 million for the three months ended September 30, 2002 as compared to $12.2 million for the three months ended September 30, 2001. As a percentage of revenues, cost of revenues for the three months ended September 30, 2002 decreased to 65.9% as compared to 72.3% for the three months ended September 30, 2001. The decrease in cost of revenues as a percentage of revenues is attributable primarily to a better mix of higher margin revenues.

     Gross Margin: As a result of the foregoing, gross margin increased $1.1 million, or 23.8%, to $5.8 million, or 34.1% of revenues, for the three months ended September 30, 2002 as compared to $4.7 million, or 27.7% of revenues, for the three months ended September 30, 2002.

     Total Operating Expenses: Total operating expenses decreased $0.1 million, or 2.6%, for the three months ended September 30, 2002. As a percentage of revenues, total operating expenses decreased to 23.3% for the three months ended September 30, 2002 as compared to 24.1% for the three months ended September 30, 2001. The decrease in operating expenses is primarily due to a reduction in depreciation and amortization costs partially offset by an increase in research and development plus bid & proposal activities.

     Operating Income: As a result of the foregoing, operating income increased $1.2 million to $1.8 million, or 10.8% of revenues, for the three months ended September 30, 2002 as compared to $0.6 million or 3.6% of revenues, for the three months ended September 30, 2001.

     Other Income (Expense), net: Net interest expense, which included $54,000 in amortization of deferred financing costs and was reduced by $878,000 in amortization of debt discount, totaled $44,000, or 0.3% of revenues for the three months ended September 30, 2002. Net interest expense totaled $1,000, or 0.0% of revenues for the three months ended September 30, 2001, which included $13,000 in amortization of deferred financing costs and was reduced by $878,000 in amortization of debt discount.

     Provision for Income Taxes: The effective tax rate increased to (34.0%) of income before taxes for the three months ended September 30, 2002 as compared to (33.9%) for the three months ended September 30, 2001. The Company has not recorded a tax benefit for the majority of its deferred tax assets due to uncertainty of future realization.

     Net Income: As a result of the foregoing, net income increased $0.8 million to $1.2 million, or 6.9% of revenues for the three months ended September 30, 2002 as compared to $0.4 million, or 2.1% of revenues for the three months ended September 30, 2001.

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     Accretion of Preferred Stock: The expense for the accretion of the preferred stock issued in August 2000 was a total of $74,000 for the three months ended September 30, 2002 as compared to $67,000 for the three months ended September 30, 2001 for the preferred stock issued in November, 1998 and exchanged in August 2000 for new preferred stock.

     Net Income Applicable to Common Shareholders: The net income applicable to common shareholders increased $0.8 million to $1.1 million ($0.02 per share) or 6.4% of revenue. This compares to net income of $0.3 million ($0.00 per share) or 1.8% of revenue for the three months ended September 30, 2001.

Six Months Ended September 30, 2002 and 2001:

     Net Revenues: Revenues increased $1.7 million, or 5.8%, to $30.2 million for the six months ended September 30, 2002 as compared to $28.5 million for the six months ended September 30, 2001. Sales to U.S. military customers for the six months ended September 30, 2002, increased by $2.2 million, or 16.0%, to $16.3 million reflecting increased revenue from the U.S. Navy and U.S. Air Force. Sales to U.S. law enforcement customers for the six months ended September 30, 2002 decreased $0.5, million, or 14.4% to $3.0 million. Sales to international customers for the six months ended September 30, 2002 increased $83 thousand, or 0.8%, to $10.8 million.

     Cost of Revenues: Cost of revenues increased $1.2 million, or 6.1%, to $20.6 million for the six months ended September 30, 2002 as compared to $19.4 million for the six months ended September 30, 2001. As a percentage of revenues, cost of revenues remained fairly constant at 68.1% for the six months ended September 30, 2002 as compared to 67.9% for the six months ended September 30, 2001.

     Gross Margin: As a result of the foregoing, gross margin increased $0.5 million, or 5.1%, to $9.6 million, or 31.9% of revenues, for the six months ended September 30, 2002 as compared to $9.2 million, or 32.1% of revenues, for the six months ended September 30, 2001.

     Total Operating Expenses: Total operating expenses decreased $0.7 million, or 8.5%, for the six months ended September 30, 2002. As a percentage of revenues, total operating expenses decreased to 24.9% for the six months ended September 30, 2002 as compared to 28.8% for the six months ended September 30, 2001. Selling, general and administrative (“SG&A”) expenses decreased $0.2 million, or 4.3%. The decrease in total operating expenses is primarily due to reductions in SG&A costs and depreciation and amortization on a year to date basis compared to the previous year.

     Operating Income: As a result of the foregoing, operating income increased $1.2 million to $2.1 million, or 7.0% of revenues, for the six months ended September 30, 2002 as compared to $1.0 million or 3.3% of revenues, for the six months ended September 30, 2001.

     Other Income (Expense), net: Net interest expense which included $108,000 in amortization of deferred financing costs and was reduced by $1,756,000 in amortization of debt discount totaled $60,000, or (0.2%) of revenues for the six months ended September 30, 2002. Net interest income totaled $144,000, or 0.5% of revenues for the six months ended September 30, 2001 which included $25,000 in amortization of deferred financing costs and was reduced by $1,757,000 in amortization of debt discount.

     Provision for Income Taxes: The effective tax rate decreased to 34.0% of income before taxes for the six months ended September 30, 2002 as compared to 45.1% of income before taxes for the six months ended September 30, 2001. The Company has not recorded a tax benefit for the majority of its deferred tax assets due to uncertainty of future realization.

     Net Income: As a result of the foregoing, net income increased $0.8 million to $1.4 million, or 4.6% of revenues for the six months ended September 30, 2002 as compared to $0.6 million, or 2.1% of revenues for the six months ended September 30, 2001.

     Accretion of Preferred Stock: The expense for the accretion of the preferred stock issued in August 2000 was a total of $146,000 for the six months ended September 30, 2002 as compared to $132,000 for the six months ended

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September 30, 2001 for the preferred stock issued in November, 1998 and exchanged in August 2000 for new preferred stock.

     Net Income Applicable to Common Shareholders: Net income applicable to common shareholders increased $0.8 million to $1.3 million ($0.02 per share) or 4.2% of revenue for the six months ended September 30, 2002. This compares to net income of $0.5 million ($0.01 per share) or 1.6% of revenue for the six months ended September 30, 2001.

ANALYSIS OF BACKLOG

     Backlog represents customer orders that have been contracted for future delivery. Accordingly, these orders have not yet been recognized as revenue, but represent future revenue. As of September 30, 2002, the backlog increased to $67.4 million, or a 47.2% increase compared to $45.8 million as of September 30, 2001. The backlog as of September 30, 2002 is comprised of $45.4 million from international customers, $1.3 million from Simtran’s Canadian customers and $20.7 million from U.S. military and law enforcement customers. Approximately $28.1 million of the contracted orders are scheduled for delivery during the remainder of fiscal year 2003.

LIQUIDITY AND CAPITAL RESOURCES

     As of September 30, 2002, the Company had negative working capital of $21.0 million compared to positive $20.1 million as of March 31, 2002. The net $41.1 million decrease in working capital is primarily the result of reclassification of $41.9 million in long-term debt to current liabilities due to the debt’s maturity date of September 30, 2003. The Company does, however, have an option and currently expects to extend the maturity date for $40.0 million of the reclassified debt to September 30, 2004.

     The Company had a net increase in cash and cash equivalents of $0.2 million for the six months ended September 30, 2002 compared to a net increase of $0.9 million for the six months ended September 30, 2001. For the period ended September 30, 2002, the Company’s operating activities generated cash of approximately $0.6 million. Cash flow from operations increased primarily due to a tax refund of approximately $4.9 million and a reduction of inventory partially offset by a reduction in accounts payable and accrued liabilities, and an increase in accounts receivable.

     Investing activities reduced cash by approximately $500,000 for the six months ended September 30, 2002 primarily due to a $1.0 million acquisition of property and equipment partially offset by $500,000 reduction in restricted cash.

     As a result of the Restructure Transaction in August 2000, the Company is not currently paying interest or principal, other than interest on its Senior Debt and a portion of the Junior Debt, in cash. The remaining interest on Junior Debt is being recorded as additional notes payable. This debt will mature in September 2003 unless otherwise extended at the option of the Company.

CONCENTRATION OF CREDIT RISK

     At September 30, 2002, approximately $8.3 million in accounts receivable or 66.5% of total accounts receivable was due from the Company’s top ten customers, of which none was secured by performance letters of credit. Each of these top 10 customers are either governmental entities or prime contractors to governmental agencies.

CRITICAL ACCOUNTING POLICIES

     In December, 2001, the SEC issued Financial Reporting Release No. 60, Cautionary Advice Regarding Disclosure About Critical Accounting Policies (FRR 60), suggesting companies provide additional disclosure and commentary on those accounting polices considered most critical. FRR 60 considers an accounting policy to be critical if it is important to the Company’s financial condition and results, and requires significant judgment and estimates on the part of management in its application. Refer to footnote 2 in the disclosures to the Company’s financial statements included in Form 10-K/A for the fiscal year ended March 31, 2002 for a complete listing of significant accounting policies. The Company believes the following represents its critical accounting policies as

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contemplated by FRR 60.

Revenue Recognition

     Customer contracts that require significant customization of the Company’s existing proprietary platform or require the development of new systems to meet required customer specifications are accounted for under the percentage of completion method, measured by the percentage of cost incurred to date to the estimated total cost for each contract. Accounting for such contracts is essentially a process of measuring the results of relatively long-term events and allocating those results to relatively short-term accounting periods. This involves considerable use of estimates in determining costs and profits and thereby estimating the timing of revenue recognition, and in turn, assigning the amounts to accounting periods. The process is complicated by the need to evaluate continually the uncertainties inherent in the performance of contracts and by the need to rely on estimates of revenues, costs, and the extent of progress toward completion. The company continually monitors each of these estimates based on the most current information available from the project managers and project engineers assigned to the programs. Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions, and final contract settlements may result in revisions to costs and income and are recognized in the period in which the revisions are determined. These revisions could materially increase or decrease profit margins on particular contracts in future periods.

Impairment of Long-Lived Assets

     Management periodically assesses the recoverability of the Company’s long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In assessing the recoverability of long-lived assets management assesses the historical cash flow associated with that asset in conjunction with undiscounted future cash flow projections. The undiscounted future cash flow analysis is based on numerous assumptions including, but not limited to, sales history and future estimated sales demand. In the event the undiscounted cash flow analysis does not support the underlying asset’s carrying value, the asset is written-down to its estimated fair market value.

Inventory Reserve

     Inventories are valued at the lower of cost on a moving weighted average or market, cost being determined on the first-in, first-out basis and market is defined as net realizable value. Management periodically reviews Company inventory for items that may be deemed obsolete, damaged or for amounts on hand in excess of anticipated future demand. The underlying assumptions used in assessing the Company’s inventory change from time-to-time include changes in the underlying sales mix, the release of new versions of the Company’s proprietary system and overall changes in technology and the market place. As the Company develops new product lines future charges against income may be necessary to reduce inventory to its net realizable value.

Contract Cost Provision

     Management routinely assesses the Company’s performance and estimated cost to complete ongoing contracts. Changes in job performance, job conditions, and estimated profitability, including those arising from contract penalty provisions, and final contract settlements may result in revisions to costs and earnings. In the event management anticipates incurring costs in excess of contract revenues, the Company records a contract cost provision in an amount equal to the estimated costs in excess of contracted revenues in the period in which such information becomes apparent.

Warranty Cost Provision

     Management periodically estimates expected warranty costs under the Company’s standard product warranty. In determining the estimate, management analyzes the relationship of historical standard warranty costs incurred on historical sales and the underlying product mix comprising the historical sales. Management, in turn, utilizes this historical information to estimate expected warranty costs on recent sales within the standard warranty time frame. Due to the inherent limitations in the estimation process, the potential for product defects and other unforeseen circumstances by the Company, the possibility exists that the recorded warranty provision will be inadequate to

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offset actual warranty costs incurred resulting in additional charges against income. Also, actual warranty costs may be significantly lower than expected resulting in the reduction of the Company’s warranty provision generating an addition to income in future periods.

COMMITMENTS AND OTHER CONTRACTURAL OBLIGATIONS

Disclosure of Commitments and Other Contractural Obligations
September 30, 2002
(amounts in thousands)

* Balance represents a non-cash debt restructuring liability, which is amortized as a reduction in interest expense monthly.

RELATED PARTIES AND TRANSACTIONS

     A group of entities affiliated with Centre Partners Management LLC (the Centre Entities) are among the Company’s largest shareholders. The Centre Entities hold a seat on the Company’s Board of Directors. In addition, the Centre Entities, and other institutional lenders who are also major shareholders as a result of a previously disclosed restructuring transaction (See Part I, Item 1, Restructure Transaction in the Company’s Annual Report on Form 10-K/A Amendment Number 2 for the fiscal year ended March 31,2002 (the 2002 10-K)), were party to a previously disclosed debt restructuring (See Note 3 to the Company’s financial statements included in the 2002 10-K) and continue to be the Company’s primary lenders. As a result of the share ownership of the Centre Entities and their representation on the Board of Directors, the Centre Entities have the ability to influence the operations of the Company.

     The Company entered into a consulting agreement, dated October 4, 2000, with Sugarman Company, LLP, a company in which Randy Sugarman is the managing partner and has an 80% ownership interest. Under the agreement and in accordance with the terms of the Company’s restructuring in fiscal year 2001, Mr. Sugarman was engaged by the Company to evaluate its financial position and operations and make recommendations to senior management regarding changes that need to be made to improve profitability and liquidity. Mr. Sugarman’s services were performed on an hourly basis, plus out-of-pocket expenses, and the Company was billed accordingly. From May 16, 2001 until August 9, 2002, Mr. Sugarman served as Interim Chief Executive Officer and President of the Company. Mr. Sugarman ceased to be an officer of the Company on August 9, 2002, in connection with the conclusion of the Company’s engagement of Sugarman Company LLP. The Company incurred consulting fees of $77,000 and $211,000, plus expenses of $17,000 and $47,000 respectively, for the three-month and six-month periods ended September 30, 2002 under the consulting agreement. The Company incurred consulting fees of $86,000 and $202,000 plus expenses of $18,000 and $40,000 respectively, for consulting services under the agreement during the three months and six months ended September 30, 2001.

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CERTAIN FORWARD LOOKING STATEMENTS

     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 and 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, including greater credit risks; (vi) the potential for increased competition; (vii) the Company’s ability to attract and retain key personnel and adapt to changing technologies; and (viii) other factors described in the Company’s Form 10-K for the fiscal year ended March 31, 2001 under the caption Part I. No assurance can be given that actual revenues, operating income or net income will not be materially different than those reported above. Prospective investors are cautioned that actual results and experience may differ materially from the forward-looking statements as a result of many factors, possibly including changes in economic conditions, competition, fluctuations in raw materials, and other unanticipated events and conditions.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company is exposed to a number of market risks in the ordinary course of business, such as foreign currency exchange risk in the fulfillment of international contracts and interest rate risk associated with the interest rate cost of its outstanding long-term liabilities. The majority of the Company’s contracts are denominated in U.S. dollars, thus reducing foreign exchange risk. The Company’s net exposure to interest rate risk consists of its floating rate senior debt and working capital borrowings which are tied to changes in the prime rate.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures

     As required by new Rule 13a-15 under the Securities Exchange Act of 1934 (the “Exchange Act”), within the 90 days prior to the date of this report, the Company carried out an evaluation under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Changes in internal controls or other factors

     None.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     The Company is involved in legal proceedings in the ordinary course of its business, which in the opinion of management will not have a materially adverse effect on the Company’s financial position, liquidity, or results of operation.

     Pursuant to applicable Bureau of Alchol, Tocaco and Firearms (BATF) regulations, during the quarter ended June 30,2002, the Company advised the BATF that approximately 33 weapons that the Company believed were at customer locations could not be accounted for after the Company conducted a physical inventory of its weapons. The BATF responded that the Company should confirm the number of missing weapons and file the formal report required by BATF regulations. The Company conducted an investigation into this matter and concluded that the number of weapons missing is 41. The Company has filed the formal report with the BATF and local law enforcement authorities. Continuing communications with the BATF indicate that the BATF intends to continue to monitor the related controls and procedures of the Company, and will conduct an inspection during the third quarter of the fiscal year ending March 31, 2003. Based on communications to date, the Company does not currently expect the matter to have a material adverse effect on the financial position or results of operations.

ITEM 6. EXHIBITS AND REPORTS ON FORM 10-K

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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 6, 2002

FIREARMS TRAINING SYSTEMS, INC. (Registrant)

/S/ Ronavan Mohling Ronavan Mohling Chairman of the Board of Directors and Chief Executive Officer

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

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Certification of CEO Pursuant to
Securities Exchange Act Rule 13a-14
as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002

I, Ronavan Mohling, Chief Executive Officer of Firearms Training Systems, Inc., certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Firearms Training Systems, Inc.;

2.     Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.     Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.     The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

	a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
	b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and
	c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.     The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

	a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
	b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.     The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: November 6, 2002

/s/ Ronavan Mohling Ronavan Mohling Chief Executive Officer

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Certification of CFO Pursuant to
Securities Exchange Act Rule 13a-14
as Adopted Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002

I, John A. Morelli, Chief Financial Officer of Firearms Training Systems, Inc., certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Firearms Training Systems, Inc.;

2.     Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.     Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.     The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

	a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
	b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and
	c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5.     The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

	a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and
	b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6.     The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: November 6, 2002

/s/ John A. Morelli John A. Morelli Chief Financial Officer

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