<PAGE>   1

                                    FORM 10-Q



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



              [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934



   For the Quarter ended MARCH 31, 2000    Commission file number: 0-16641



                           RAINBOW TECHNOLOGIES, INC.
             (Exact name of Registrant as specified in its charter)



            DELAWARE                                 95-3745398
    (State of incorporation)           (I.R.S. Employer Identification No.)



       50 TECHNOLOGY DRIVE, IRVINE, CALIFORNIA        92618
       (Address of principal executive offices)     (Zip Code)



Indicate by check mark whether the Registrant (i) 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 (ii) has been subject to such filing
requirements for the past 90 days.

                                                       Yes   X          No
                                                           -----           -----

The number of shares of common stock, $.001 par value, outstanding as of May 10,
2000 was 12,398,886

<PAGE>   2

                           RAINBOW TECHNOLOGIES, INC.


                                TABLE OF CONTENTS


PART I  -  FINANCIAL INFORMATION

Item 1.   Condensed Consolidated Financial Statements

          Condensed Consolidated Balance Sheets at
          March 31, 2000 (unaudited) and December 31, 1999                    4

          Condensed Consolidated Statements of Income
          for the three months ended March 31, 2000 and 1999 (unaudited)      5

          Condensed Consolidated Statements of Comprehensive Income
          for the three months ended March 31, 2000 and 1999 (unaudited)      6

          Condensed Consolidated Statements of Cash Flows
          for the three months ended March 31, 2000 and 1999 (unaudited)      7

          Notes to Condensed Consolidated Financial Statements                8

Item 2.   Management's Discussion and Analysis of
          Financial Condition and Results of Operations                      11

PART II  - OTHER INFORMATION

          Item 1 to 5 - Not applicable

          Item 6. Exhibits and reports on Form 8K                            14

 SIGNATURES                                                                  14


                                       2
<PAGE>   3

INTRODUCTORY NOTE

    The Quarterly Report on Form 10-Q contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 and the Company intends that
such forward-looking statements be subject to the safe harbors created thereby.
These forward-looking statements include (i) the existence and development of
the Company's technical and manufacturing capabilities, (ii) anticipated
competition, (iii) potential future growth in revenues and income, (iv)
potential future decreases in costs, and (v) the need for, and availability of
additional financing.

    The forward-looking statements included herein are based on current
expectations that involve a number of risks and uncertainties. These
forward-looking statements are based on the assumption that the Company will not
lose a significant customer or customers or experience increased fluctuations of
demand or rescheduling of purchase orders, that the Company's markets will
continue to grow, that the Company's products will remain accepted within their
respective markets and will not be replaced by new technology, that competitive
conditions within the Company's markets will not change materially or adversely,
that the Company will retain key technical and management personnel, that the
Company's forecasts will accurately anticipate market demand, that there will be
no material adverse change in the Company's operations or business and that the
Company will not experience significant supply shortages with respect to
purchased components, sub-systems or raw materials. Assumptions relating to the
foregoing involve judgments with respect to, among other things, future
economic, competitive and market conditions, and future business decisions, all
of which are difficult or impossible to predict accurately and many of which are
beyond the control of the Company. In addition, the business and operations of
the Company are subject to substantial risks which increase the uncertainty
inherent in the forward-looking statements. In light of the significant
uncertainties inherent in the forward-looking information included herein, the
inclusion of such information should not be regarded as a representation by the
Company or any other person that the objectives or plans of the Company will be
achieved.


                                       3

<PAGE>   4

                           RAINBOW TECHNOLOGIES, INC.
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                     MARCH 31, 2000     DECEMBER 31, 1999
                                                                     --------------     -----------------
                                                                      (unaudited)
<S>                                                                  <C>                 <C>
                                             A S S E T S
Current assets:
 Cash and cash equivalents ....................................      $  17,979,000       $  26,709,000
 Marketable securities available-for-sale .....................            990,000           1,173,000
 Accounts receivable, net of allowance for doubtful accounts
  of $537,000 and $579,000 in 2000 and 1999, respectively .....         31,271,000          28,671,000
 Inventories ..................................................         15,112,000          12,033,000
 Unbilled costs and fees ......................................          3,030,000           2,916,000
 Prepaid expenses and other current assets ....................         14,264,000           7,155,000
                                                                     -------------       -------------
      Total current assets ....................................         82,646,000          78,657,000
Property, plant and equipment, at cost:
 Buildings ....................................................          7,154,000           7,497,000
 Furniture ....................................................          1,717,000           1,703,000
 Equipment ....................................................         17,793,000          17,060,000
 Leasehold improvements .......................................          1,738,000           1,641,000
                                                                     -------------       -------------
                                                                        28,402,000          27,901,000
 Less accumulated depreciation and amortization ...............         11,914,000          11,145,000
                                                                     -------------       -------------
      Net property, plant and equipment .......................         16,488,000          16,756,000
Goodwill, net of accumulated amortization of $13,122,000
 and  $12,764,000 in 2000 and 1999, respectively ..............         22,151,000          21,498,000
Product licenses, net of accumulated amortization of $1,850,000
  and $1,749,000 in 2000 and 1999, respectively ...............          5,540,000           5,567,000
Other assets, net of accumulated amortization of $3,098,000
  and $2,790,000 in 2000 and 1999, respectively ...............          8,800,000           8,060,000
                                                                     -------------       -------------
                                                                     $ 135,625,000       $ 130,538,000
                                                                     =============       =============

                          LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
 Accounts payable .............................................      $   7,078,000       $   8,900,000
 Accrued payroll and related expenses .........................          4,160,000           6,155,000
 Other accrued liabilities ....................................          9,061,000           6,927,000
 Long-term debt, due within one year ..........................            227,000             239,000
 Line of credit ...............................................                 --           6,000,000
 Payable to shareholders ......................................                 --           1,500,000
                                                                     -------------       -------------
      Total current liabilities ...............................         20,526,000          29,721,000
Long-term debt, net of current portion ........................            906,000           1,014,000
Other liabilities .............................................          1,774,000           1,913,000
Commitments and contingencies .................................                 --                  --
Shareholders' equity:
 Common stock, $.001 par value, 20,000,000 shares authorized,
   12,387,707 and 11,683,979 shares issued and outstanding
   in 2000 and 1999, respectively .............................             12,000              12,000
 Additional paid-in capital ...................................         40,392,000          28,613,000
 Accumulated other comprehensive loss .........................         (1,554,000)         (1,173,000)
 Retained earnings ............................................         73,569,000          70,438,000
                                                                     -------------       -------------
      Total shareholders' equity ..............................        112,419,000          97,890,000
                                                                     -------------       -------------
                                                                     $ 135,625,000       $ 130,538,000
                                                                     =============       =============
</TABLE>


                             See accompanying notes.


                                        4
<PAGE>   5

                           RAINBOW TECHNOLOGIES, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                Three Months Ended

                                                         March 31, 2000     March 31, 1999
                                                         --------------     --------------
<S>                                                       <C>                <C>
Revenues:
  Secure Software Distribution .....................      $ 14,782,000       $ 14,302,000
  Secure Communications ............................        11,532,000         11,049,000
  Internet Performance and Security ................         5,295,000            735,000
  Spectria .........................................         4,836,000                 --
                                                          ------------       ------------
       Total revenues ..............................        36,445,000         26,086,000
Operating expenses:
  Cost of Secure Software Distribution Revenues ....         4,242,000          4,020,000
  Cost of Secure Communications Revenues ...........         9,371,000         10,270,000
  Cost of Internet Performance and Security Revenues         1,639,000            442,000
  Cost of Spectria Revenues ........................         2,506,000                 --
  Selling, general and administrative ..............        10,755,000          6,553,000
  Research and development .........................         2,814,000          2,629,000
  Goodwill amortization ............................           726,000            620,000
                                                          ------------       ------------
       Total operating expenses ....................        32,053,000         24,534,000
                                                          ------------       ------------
Operating income ...................................         4,392,000          1,552,000
Interest income ....................................           191,000            302,000
Interest expense ...................................           (37,000)           (50,000)
Other income, net ..................................           510,000            272,000
                                                          ------------       ------------
Income before provision for income taxes ...........         5,056,000          2,076,000
Provision for income taxes .........................         1,925,000            791,000
                                                          ------------       ------------
Net income .........................................      $  3,131,000       $  1,285,000
                                                          ============       ============

Net income per share:
  Basic ............................................      $       0.26       $       0.11
                                                          ============       ============
  Diluted ..........................................      $       0.23       $       0.10
                                                          ============       ============

Shares used in computing net income per share:
  Basic ............................................        12,037,000         11,804,000
                                                          ============       ============
  Diluted ..........................................        13,656,000         12,628,000
                                                          ============       ============
</TABLE>


                             See accompanying notes.


                                        5

<PAGE>   6

                           RAINBOW TECHNOLOGIES, INC.
            CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                   (unaudited)

<TABLE>
<CAPTION>
                                                           Three Months Ended
                                                    March 31, 2000    March 31, 1999
                                                    --------------    --------------
<S>                                                  <C>               <C>
Net income ....................................      $ 3,131,000       $ 1,285,000
Other comprehensive loss:
    Foreign currency translation adjustment ...         (319,000)       (1,466,000)
    Unrealized loss on securities .............         (295,000)          (45,000)
                                                     -----------       -----------
    Other comprehensive loss,
      before income taxes .....................         (614,000)       (1,511,000)
    Provision for income taxes related to other
      comprehensive loss ......................          233,000           574,000
                                                     -----------       -----------
    Other comprehensive loss, net of taxes ....         (381,000)         (937,000)
                                                     -----------       -----------
 Comprehensive income .........................      $ 2,750,000       $   348,000
                                                     ===========       ===========
</TABLE>


                             See accompanying notes.


                                        6

<PAGE>   7

                           RAINBOW TECHNOLOGIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                   Three Months Ended
                                                                           March 31, 2000     March 31, 1999
                                                                           --------------     --------------
<S>                                                                        <C>                <C>
Cash flows from operating activities:
 Net income ..........................................................      $  3,131,000       $  1,285,000
 Adjustments to reconcile net income to net cash
  provided by operating activities:
  Amortization .......................................................         1,244,000          1,198,000
  Depreciation .......................................................           953,000            864,000
  Change in deferred income taxes ....................................        (3,358,000)          (740,000)
  Allowance for doubtful accounts ....................................           (42,000)            (6,000)
  Changes in operating assets and liabilities:
   Accounts receivable ...............................................        (2,873,000)         1,783,000
   Inventories .......................................................        (3,190,000)           419,000
   Unbilled costs and fees ...........................................          (112,000)           906,000
   Prepaid expenses and other current assets .........................          (961,000)        (1,117,000)
   Accounts payable ..................................................        (1,730,000)        (1,287,000)
   Accrued liabilities ...............................................        (1,681,000)        (2,688,000)
   Income taxes payable ..............................................         4,088,000           (320,000)
   Other .............................................................          (417,000)          (286,000)
                                                                            ------------       ------------
   Net cash (used in) provided by operating activities ...............        (4,948,000)            11,000
Cash flows from investing activities:
 Sale of marketable securities .......................................                --          1,536,000
 Purchases of property, plant, and equipment .........................          (966,000)        (1,478,000)
 Net cash paid for acquisition of Systematic Systems Integration, Inc.        (1,763,000)                --
 Other non-current assets ............................................          (525,000)           245,000
 Capitalized software development costs ..............................          (852,000)          (200,000)
                                                                            ------------       ------------
   Net cash (used in) provided  investing activities .................        (4,106,000)           103,000
Cash flows from financing activities:
 Exercise of Rainbow common stock options ............................         6,239,000            647,000
 Payment on line of credit ...........................................        (6,000,000)                --
 Payment of long-term debt ...........................................           (45,000)           (76,000)
 Purchase of treasury stock ..........................................                --         (6,070,000)
 Purchase and retirement of common stock .............................                --         (1,419,000)
                                                                            ------------       ------------
   Net cash provided by (used in) financing activities ...............           194,000         (6,918,000)
Effect of exchange rate changes on cash ..............................           130,000           (276,000)
                                                                            ------------       ------------
Net increase (decrease) in cash and cash equivalents .................        (8,730,000)        (7,080,000)
Cash and cash equivalents at beginning of period .....................        26,709,000         29,900,000
                                                                            ------------       ------------
Cash and cash equivalents at end of period ...........................      $ 17,979,000       $ 22,820,000
                                                                            ============       ============

Supplemental disclosure of cash flow information:
 Income taxes paid ...................................................      $    314,000       $    117,000
 Interest paid .......................................................            46,000             53,000
</TABLE>


                             See accompanying notes.


                                        7


<PAGE>   8

                           RAINBOW TECHNOLOGIES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2000
                                   (Unaudited)

1.   Basis of presentation

Rainbow Technologies, Inc. (the Company) develops, manufactures, programs and
markets products which prevent the unauthorized use of intellectual property,
including software programs; develops and manufactures information security
products for satellite communications; develops and manufactures internet
security products to provide privacy and security for network communications;
and provide consulting services to assist clients in determining computer
network and Internet security requirements, and in designing and implementing
the appropriate network security solutions. The accompanying financial
statements consolidate the accounts of the Company and its wholly-owned
subsidiaries. All significant intercompany balances and transactions have been
eliminated. Certain amounts previously reported have been reclassified to
conform with the 2000 presentation.

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the accompanying financial statements. Actual
results could differ from those estimates. Significant estimates made in
preparing these financial statements include the allowance for doubtful
accounts, the reserve for inventory obsolescence, accrued warranty costs, the
allowance for deferred tax assets, total estimated contract costs associated
with billed and unbilled contract revenue and revenue projections used to
estimate future cash flow projections to determine recoverability of the
long-lived assets of Quantum Manufacturing Technologies, Inc. ("QMT").

At December 31, 1999, the Company performed a review for impairment of the
long-lived assets of QMT. The aggregate undiscounted cash flows estimated to be
generated by QMT during the life of its long-lived assets are greater than their
$2,100,000 carrying value indicating no impairment exists at December 31, 1999.
The Company believes there has been no change in the status of this assessment
at March 31, 2000. However, there is uncertainty related to the estimates used
to determine these undiscounted cash flows. The most significant and uncertain
of these estimates is future revenues. A significant shortfall from these
revenue projections could result in these assets becoming impaired as early as
June 30, 2000. The Company anticipates performing impairment reviews related to
the long-lived assets of QMT on a quarterly basis in order to monitor the
achievement of its revenue projections.

In the opinion of the Company's management, the accompanying condensed
consolidated financial statements include all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of the financial
position at March 31, 2000 and results of operations for the three months ended
March 31, 2000 and 1999. The condensed consolidated financial statements do not
include footnotes and certain financial information normally presented annually
under generally accepted accounting principles and, therefore, should be read in
conjunction with the Company's December 31, 1999 Annual Report on Form 10-K.
Results of operations for the three months ended March 31, 2000 are not
necessarily indicative of results to be expected for the full year.

The Company has subsidiaries in the United Kingdom, Germany, France, the
Netherlands, India, Russia, Australia, China and Taiwan. The Company utilizes
the currencies of the countries where its foreign subsidiaries operate as the
functional currency. Balance sheet accounts denominated in foreign currency are
translated at exchange rates as of the date of the balance sheet and income
statement accounts are translated at average exchange rates for the period.
Translation gains and losses are accumulated as a separate component of
Accumulated Other Comprehensive Loss within Shareholders' Equity. The Company
has adopted local currencies as the functional currencies for its subsidiaries
because their principal economic activities are most closely tied to the
respective local currencies.

2.   Earnings per share

Basic earnings per share is computed by dividing income available to common
shareholders by the weighted-average number of common shares outstanding for the
period. Diluted earnings per share reflects the assumed conversion of all
diluted securities.


                                       8
<PAGE>   9

3.   Government Contracts

The Company is both a prime contractor and a subcontractor under fixed-price and
cost-plus-fixed-fee contracts with the U.S. Government (Government). At the
commencement of each contract or contract modification, the Company submits
pricing proposals to the Government to establish indirect cost rates applicable
to such contracts. These rates, after audit and approval by the Government, are
used to settle costs on completed contracts.

To facilitate interim billings during the performance of its contracts, the
Company establishes provisional billing rates, which are used in recognizing
contract revenue and contract accounts receivable amounts in these financial
statements. These provisional billing rates are adjusted to actual at year-end
and are subject to adjustment after Government audit.

4.   Inventories

Inventoried costs relating to long-term contracts are stated at actual
production costs, including pro-rata allocations of factory overhead and general
and administrative costs incurred to date, reduced by amounts identified with
revenue recognized on units delivered. The costs attributed to units delivered
under such long-term contracts are based on the estimated average cost of all
units expected to be produced.

Inventories, other than inventoried costs relating to long-term contracts, are
stated at the lower of cost (first-in, first-out basis) or market. Inventories
consist of the following:

<TABLE>
<CAPTION>
                                                              MARCH 31, 2000   DECEMBER 31, 1999
                                                              --------------   -----------------
<S>                                                           <C>              <C>
Finished goods                                                  $ 5,711,000      $ 4,804,000
Raw materials                                                     4,895,000        1,648,000
Inventoried costs relating to long-term contracts,
  net of amounts attributed to revenues recognized to date        3,308,000        4,535,000
Work in process                                                   1,198,000        1,046,000
                                                                -----------      -----------
                                                                $15,112,000      $12,033,000
                                                                ===========      ===========
</TABLE>

5.   Acquisitions

On October 22, 1999, the Company completed the acquisition of InfoCal LLC
(InfoCal). InfoCal creates collaborative intranet/extranet applications,
knowledge portals and distance learning applications and specializes in
messaging strategy migration and implementation. The total transaction value was
$3,500,000, including $3,000,000 paid in cash and 36,530 shares of Rainbow
common stock valued at $500,000. In addition to the initial consideration, there
is contingent consideration of up to $500,000 in each of the 2000 and 2001
calendar years. The contingent payments are based upon achievement of certain
financial, revenue and strategic goals. Any additional consideration will be
recorded as goodwill. This acquisition has been accounted for using the purchase
method of accounting. Approximately $3,500,000 was allocated to goodwill and is
being amortized on a straight-line basis over ten years. Results of operations
for InfoCal are included in the Company's consolidated results of operations
beginning on October 22, 1999.

On September 16, 1999, the Company completed the acquisition of InfoSec Labs,
Incorporated (InfoSec). InfoSec has core competency in both enterprise and
Internet security solutions and security assessment and education programs. The
total transaction value was $3,100,000, including $1,600,000 paid in cash and
120,209 shares of Rainbow common stock valued at $1,500,000. This acquisition
has been accounted for using the purchase method of accounting. Approximately
$3,100,000 was allocated to goodwill and is being amortized on a straight-line
basis over ten years. Results of operations for InfoSec are included in the
Company's consolidated results of operations beginning on September 16, 1999.

On May 12, 1999, the Company completed the acquisition of Systematic Systems
Integration (Systematic) for an initial purchase price of $9,600,000 in cash
with an additional $1,500,000 accrued for at December 31, 1999, and was paid in
January 2000. In addition, the purchase agreement provides for contingent
payments of up to


                                       9
<PAGE>   10

$1,700,000. These payments are based upon the attainment of certain revenue and
gross margin goals for calendar year 2000. This acquisition has been accounted
for using the purchase method of accounting. The entire purchase price has been
allocated to goodwill and any additional consideration paid will also be
recorded as goodwill. The goodwill is being amortized on a straight-line basis
over ten years. Systematic is a California-based eCommerce integration services
firm that enables companies to seamlessly integrate diverse software and
hardware platforms, communication systems and Internet technologies. Results of
operations for Systematic are included in the Company's consolidated results of
operations beginning on May 12, 1999.

6.   Other assets

Included in other assets are certain investments in early-stage companies. The
Company closely monitors the operations and cash flows of these companies to
evaluate their status and ensure that amounts reported for these investments do
not exceed net realizable value. If the Company determines that impairment in
the investment of any such company exists, an adjustment would be made to reduce
the investment amount to net realizable value.

Also included in other assets are capitalized software development costs. Based
on the Company's product development process, technological feasibility is
established upon completion of a working model. Amortization of capitalized
software development costs commence when the products are available for general
release to customers and are determined using the straight line method over the
expected useful lives of the respective products. These amounts are written-off
if it is determined that the projects can not be brought to market.

7.   Industry segments

The company operates in four industry segments. The first segment is the
development and sale of devices which protect data and software from
unauthorized use (Secure Software Distribution segment). The second segment is
the development and sale of information security products to provide privacy and
security for voice communication and data transmission (Secure Communications
segment). The third segment is the development and sale of products which
accelerate performance of security servers and network equipment and products
that provide access control to computer networks, Internet Websites and virtual
private networks (Internet Performance and Security segment). The fourth segment
provides services that enable companies to integrate diverse software and
hardware platforms (Spectria segment). The identifiable assets, after applicable
eliminations, for each segment as of March 31, 2000 were $71,857,000,
$28,430,000, $11,990,000 and $23,348,000, respectively, compared with
$70,591,000, $31,452,000, $6,344,000 and $22,151,000 as of December 31, 1999.


                                       10
<PAGE>   11

                           RAINBOW TECHNOLOGIES, INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is management's discussion and analysis of certain significant
factors which have affected the consolidated results of operations and the
consolidated financial position of the Company during the periods included in
the accompanying condensed consolidated financial statements. This discussion
should be read in conjunction with the related condensed consolidated financial
statements and associated notes.

RESULTS OF OPERATIONS
(dollars in thousands)

<TABLE>
<CAPTION>
                                               Three Months Ended
                                                    March 31,
                                             -----------------------
                                               2000           1999
                                             --------       --------
<S>                                          <C>            <C>
Revenues
      Secure Software Distribution           $ 14,782       $ 14,302
      Secure Communication                     11,532         11,049
      Internet Performance and Security         5,295            735
      Spectria                                  4,836             --
                                             --------       --------
             Total revenues                  $ 36,455       $ 26,086
                                             ========       ========

Operating Income
      Secure Software Distribution           $  3,899       $  2,243
      Secure Communication                      2,061            571
      Internet Performance and Security          (903)        (1,262)
      Spectria                                   (665)            --
                                             --------       --------
              Total operating income         $  4,392       $  1,552
                                             ========       ========
</TABLE>

REVENUES

Revenues from Secure Software Distribution for the three months ended March 31,
2000 increased by 3% to $14,782,000, when compared to the same period in 1999.
Revenues from Europe and Asia-Pacific increased by 7% and 83%, respectively,
while revenues from the U.S. decreased by 3%. The increase in Asia-Pacific
revenues was due to additional sales generated primarily in China while the
decrease in U.S. revenues was due to slower sales to U.S. customers who export
their products to Asia. The average selling price per product in the quarter
ended March 31, 2000 decreased approximately 3% when compared to the same period
in 1999. Unit volume for the three months ended March 31, 2000 increased by 5%
when compared to the corresponding period in 1999. The decrease in average
selling prices and the increase in unit volume was primarily due to a change in
customer mix.

Secure Communications revenues for the three months ended March 31, 2000
increased 4% to $11,532,000 when compared to the same period in 1999. The
revenue growth was primarily due to higher demand for network security products.

Internet Performance and Security revenues for the three months ended March 31,
2000 increased 620% to $5,295,000 when compared to the same period in 1999. The
revenue growth was primarily due to increased revenues in the Company's
Cryptoswift product line.

Spectria revenues for the three months ended March 31, 2000 were $4,836,000, or
13% of total revenues.

GROSS PROFIT

Gross profit from Secure Software Distribution for the three months ended March
31, 2000 was 71% of revenues, compared to 72% for the three months ended March
31, 1999.


                                       11
<PAGE>   12

Gross profit from Secure Communications for the three months ended March 31,
2000 increased to 19% of revenues compared to 7% for the three months ended
March 31, 1999. The increase was due to the change in mix from less profitable
research and development contracts to more profitable product contracts.

Gross profit from Internet Performance and Security for the three months ended
March 31, 2000 increased to 69% of revenues compared to 40% for the three months
ended March 31, 1999. The increase in gross profit was due to a decrease in unit
costs because of significantly higher unit shipments.

Gross profit from Spectria for the three months ended March 31, 2000 was 48% of
revenues.

SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative expenses for the three months ended March
31, 2000 increased to 30% of revenues compared to 25% of revenues for the three
months ended March 31, 1999. This increase was primarily due to additional staff
and higher marketing expenses for new product introductions in Internet
Performance and Security products and additional selling expenses attributable
to Spectria, which was acquired on May 12, 1999.

RESEARCH AND DEVELOPMENT

Research and development expenses for the three months ended March 31, 2000
decreased to 8% of revenues compared to 10% of revenues for the corresponding
period in 1999. The decrease in research and development expenses was due
primarily to higher costs incurred in developing new products which are
capitalized during the development stage.

OTHER INCOME

Other income was $510,000 for the three months ended March 31, 2000 compared to
$272,000 for the three months ended March 31, 1999. The increase in other income
was primarily due to foreign currency transaction gains resulting from lower
average exchange rates of the subsidiaries' functional currencies in relation to
the U.S. currency.

PROVISION FOR INCOME TAXES

The effective tax rate was 38% for the three months ended March 31, 2000, which
was consistent with the same period in 1999.

LIQUIDITY AND CAPITAL RESOURCES

The Company's principal sources of operating funds have been from operations and
proceeds from sales of the Company's equity securities. Net cash used in
operations for the three months ended March 31, 2000 was $4,948,000 while net
cash provided by operations for the three months ended March 31, 1999 was
$11,000. Operating activities in 2000 included purchases of inventory totaling
approximately $3,100,000 and an increase in accounts receivable balance of
approximately $2,600,000.

Net cash used in investing activities for the three months ended March 31, 2000
was $4,106,000 while net cash provided by investing activities for the three
months ended March 31, 1999 was $103,000. Investing activities in 2000 included
approximately $970,000 on purchases of fixed assets, approximately $850,000 on
development of new products and approximately $1,763,000 for the acquisition of
Systematic.

Net cash provided by financing activities for the three months ended March 31,
2000 was $194,000 while net cash used in financing activities for the three
months ended March 31, 1999 was $6,918,000. Financing activities in 2000
included a payment of $6,000,000 on a line of credit and approximately
$6,240,000 received from common stock options exercised. Financing activities in
1999 included the purchase and retirement of approximately $7,500,000 of
treasury stock.


                                       12
<PAGE>   13

The Company intends to use its capital resources to expand its product lines and
for possible acquisitions of additional products and technologies. The Company
has no significant capital commitments or requirements at this time.

At March 31, 2000, the Company's subsidiaries in France, The United Kingdom and
The Netherlands carried approximately $8,500,000, $2,400,000 and $3,400,000,
respectively, in interest earning deposits which may result in foreign exchange
gains or losses due to the fact that the functional currency in those
subsidiaries is not the U.S. dollar.

The Company believes that its current working capital of $62,120,000 and
anticipated working capital to be generated by future operations will be
sufficient to support the Company's working capital requirements for at least
the next twelve months.

Impact of Year 2000

Year 2000 problems are the result of computer programs being written using two
digits rather than four to define the applicable year. If not corrected, many
computer applications could fail or create erroneous results by not recognizing
"00" to mean the year 2000.

In 1999, the Company completed its testing of all critical software and hardware
systems and determined that all are Year 2000 compliant. Vendor certifications
were received from all critical vendors indicating that they were either
currently compliant or that they would be compliant by December 31, 1999.

The Company has not experienced and does not expect to experience any
significant Year 2000 problems or interruptions. There can be no assurance that
mission critical vendors and customers will not incur a Year 2000 problem or
interruption, but the Company believes adequate computer file backup procedures
and manual operating procedures will enable the continuance of the critical
processes of its business.


                                       13
<PAGE>   14

PART II           OTHER INFORMATION

Item 6            Exhibits and Reports on Form 8-K

      (a)         Exhibits

                  27 Financial Data Schedule

      (b)         Reports on Form 8-K
                  None


                                   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 thereto duly authorized.


Dated: May 12, 2000


                                      RAINBOW TECHNOLOGIES, INC.


                                      By:         /s/ Patrick Fevery
                                         ---------------------------------------
                                                      Patrick Fevery
                                                 Chief Financial Officer


                                       14

<PAGE>   15

                                 EXHIBIT INDEX

Exhibit
Number                              Description
------                              -----------

  27                       Financial Data Schedule