<PAGE>   1

================================================================================

                       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 MARCH 31, 2000

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

                  FOR THE TRANSITION PERIOD FROM _____ TO _____

                        COMMISSION FILE NUMBER 000-28473

                                 TRUETIME, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


             DELAWARE
         (STATE OR OTHER                                    94-3343279
         JURISDICTION OF                                 (I.R.S. EMPLOYER
         INCORPORATION OR                               IDENTIFICATION NO.)
          ORGANIZATION)

                                 2835 DUKE COURT

                          SANTA ROSA, CALIFORNIA 95407

                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)


                                 (707) 528-1230

              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]

         There were 5,950,000 shares of the Registrant's Common Stock
outstanding as of the close of business on May 10, 2000.

================================================================================



<PAGE>   2



                                 TRUETIME, INC.


<TABLE>
<CAPTION>
                                                                                                         PAGE
                                                                                                         NUMBER
                                                                                                         ------

<S>         <C>                                                                                          <C>
PART I. FINANCIAL INFORMATION

   Item 1.  Financial Statements and Notes                                                                  3

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

   Item 3.  Quantitative and Qualitative Disclosures About Market Risk                                     16

PART II. OTHER INFORMATION

   Item 1.  Legal Proceedings                                                                              16

   Item 2.  Changes in Securities and Use of Proceeds                                                      16

   Item 3.  Defaults Upon Senior Securities                                                                17

   Item 4.  Submission of Matters to a Vote of Security Holders                                            17

   Item 5.  Other Information                                                                              17

   Item 6.  Exhibits and Reports on Form 8-K                                                               17
</TABLE>



<PAGE>   3

                          PART I: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS AND NOTES


                        REPORT OF INDEPENDENT ACCOUNTANTS

To Board of Directors and Stockholders:

We have reviewed the accompanying balance sheets of TrueTime, Inc. (the
"Company") as of March 31, 2000 and 1999, and the related statements of
operations for each of the three and six-month periods ended March 31, 2000 and
1999, of changes in stockholders' equity for the six-month period ended March
31, 2000, and of cash flows for the six-month periods ended March 31, 2000 and
1999. These financial statements are the responsibility of the Company's
management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with auditing standards generally accepted in the United States, the objective
of which is the expression of an opinion regarding the financial statements
taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the accompanying interim financial statements for them to be in
conformity with accounting principles generally accepted in the United States.

We previously audited in accordance with auditing standards generally accepted
in the United States the balance sheet as of September 30, 1999 and the related
statements of operations, of changes in stockholders' equity, and of cash flows
for the year then ended (not presented herein), and in our report dated November
2, 1999, except for footnote 8, as to which the date is December 1, 1999, we
expressed an unqualified opinion on those financial statements. In our opinion,
the information set forth in the accompanying balance sheet as of September 30,
1999, is fairly stated in all material respects in relation to the balance sheet
from which it has been derived.



/s/  PricewaterhouseCoopers LLP
----------------------------------
PricewaterhouseCoopers LLP


San Francisco, California
May 10, 2000


                                       3

<PAGE>   4


                                 TrueTime, Inc.
                                 BALANCE SHEETS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                         September 30,        March 31,
                                                                                                  1999             2000
                                                                                         -------------     ------------
                                                                                                            (unaudited)
<S>                                                                                      <C>               <C>
ASSETS
         Current assets:
                                 Cash and cash equivalents ..........................    $      3,539      $     10,669
                                 Receivable from OYO Corporation U.S.A ..............             433                 0
                                 Accounts receivable
                                    Trade ...........................................           4,281             2,964
                                    Less allowance ..................................             (10)              (25)
                                    Other accounts receivable .......................              43                 1
                                 Deferred income tax ................................             173               190
                                 Inventories ........................................           5,064             7,212
                                 Prepaid expenses and other assets ..................              24             1,182
                                                                                         ------------      ------------

                                    Total current assets ............................          13,547            22,193

         Property and equipment, net ................................................           1,128             1,628
         Goodwill, net of accumulated amortization of $215 and $228 .................             816               804
                                                                                         ------------      ------------

                                    Total assets ....................................    $     15,491      $     24,625
                                                                                         ============      ============

LIABILITIES AND STOCKHOLDER'S EQUITY
         Current liabilities:
                                 Trade accounts payable .............................    $        767      $      1,125
                                 Accrued expenses ...................................           1,971             1,391

                                    Total current liabilities .......................           2,738             2,516
                                                                                         ------------      ------------

         Commitments and contingencies

         Stockholder's equity:
                                 Preferred stock, $.01 par value, 1,000,000 shares
                                 authorized, no shares issued and outstanding .......              --                --
                                 Common stock, $.01 par value, 20,000,000
                                 authorized; 4,000,000 and 5,950,000 shares issued
                                 and outstanding, respectively ......................              40                60
                                 Additional paid-in capital .........................           4,690            13,313
                                 Additional paid-in capital - Warrants and options ..               0                43
                                 Retained earnings ..................................           8,023             8,693
                                                                                         ------------      ------------

                                    Total stockholder's equity ......................          12,753            22,109
                                                                                         ------------      ------------

                                    Total liabilities and stockholder's equity ......    $     15,491      $     24,625
                                                                                         ============      ============
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                       4

<PAGE>   5


                                 TrueTime, Inc.
                            STATEMENTS OF OPERATIONS
               (in thousands, except share and per share amounts)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                      Three months ended                   Six months ended
                                                               March 31, 1999    March 31, 2000    March 31, 1999    March 31, 2000
                                                               --------------    --------------    --------------    --------------


<S>                                                            <C>               <C>               <C>               <C>
Sales ......................................................     $      3,929      $      4,659      $      7,233      $     10,215

Cost of Sales ..............................................            1,881             1,947             3,614             4,529
                                                                 ------------      ------------      ------------      ------------

Gross Profit ...............................................            2,048             2,712             3,619             5,686

Operating Expenses
                    Sales, General and Administrative ......            1,386             1,418             2,229             2,957
                    Research & Development .................              534             1,048             1,093             1,825
                                                                 ------------      ------------      ------------      ------------
                       Total operating expenses ............            1,920             2,466             3,322             4,782
                                                                 ------------      ------------      ------------      ------------

Income from Operations .....................................              128               246               297               904

Interest Income ............................................               71               143               142               251
Other Income (Expense) .....................................               12                                   0                 0
                                                                 ------------                        ------------      ------------

Income before taxes ........................................              211               389               439             1,155

Income taxes ...............................................               85               171               177               485
                                                                 ------------      ------------      ------------      ------------

Net Income .................................................     $        126      $        218      $        262      $        670
                                                                 ============      ============      ============      ============


Weighted average shares outstanding - Basic ................        4,000,000         5,925,000         4,000,000         5,078,000

Weighted average shares outstanding - Diluted ..............        4,000,000         6,231,000         4,000,000         5,246,000

Basic Earnings Per Share ...................................     $       0.03      $       0.04      $       0.07      $       0.13

Diluted Earnings Per Share .................................     $       0.03      $       0.03      $       0.07      $       0.13
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                       5

<PAGE>   6


                                 TrueTime, Inc.
                  STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
                      (in thousands, except share amounts)
                                   (unaudited)

<TABLE>
<CAPTION>

                                                                   Common Stock           Additional
                                                             ------------------------      Paid-In        Retained
                                                              Shares        Amount         Capital        Earnings         Total

<S>                                                          <C>           <C>            <C>            <C>            <C>
Stockholders' equity as of October 1, 1999                   4,000,000     $       40     $    4,690     $    8,023     $   12,753
Issuance of common stock                                     1,500,000             15                                           15
Additional paid in capital                                                                     6,549                         6,549
Additional paid-in capital - Warrants and options                                                 43                            43
Issuance of options and warrants to underwriters                    --             --             --             --             --
Net income                                                                                                      452            452
                                                                                                         ----------     ----------

Stockholders' equity as of December 31, 1999                 5,500,000     $       55     $   11,282     $    8,475     $   19,812
                                                            ==========     ==========     ==========     ==========     ==========

Issuance of common stock                                       450,000              5                                            5
Additional paid in capital                                                                     2,074                         2,074
Net Income                                                                                                      218            218
                                                                                                         ----------     ----------

Stockholders' equity as of March 31, 2000                    5,950,000     $       60     $   13,356     $    8,693     $   22,109
                                                            ==========     ==========     ==========     ==========     ==========
</TABLE>


    The accompanying notes are an integral part of the financial statements.

                                       6

<PAGE>   7



                                 TrueTime, Inc.
                            STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                       Six months ended   Six months ended
                                                                                        March 31, 1999     March 31, 2000

<S>                                                                                        <C>                <C>
Cash flows from operating activities:
                        Net income ..................................................      $        262       $        670
                        Adjustments to reconcile net income to net cash
                        provided by operating activities
                                     Deferred income taxes ..........................                16                (17)
                                     Depreciation and amortization ..................                64                232
                                     Compensation expense related to options
                                     granted ........................................                 0                 43
                                     Effects of changes in  operating  assets and
                                     liabilities
                                                   Receivables ......................               911              1,374
                                                   Inventories ......................              (327)            (2,148)
                                                   Prepaid expenses and other
                                                   current assets ...................               (37)            (1,158)
                                                   Trade accounts payable ...........                 2                231
                                                   Accrued expenses .................              (386)              (451)
                                                                                           ------------       ------------

                           Net cash provided by operating activities ................               505             (1,224)

Cash flows from investing activities:
                        Decrease (increase) in receivable from OYO Corporation
                        U.S.A .......................................................              (254)               433
                        Capital expenditures ........................................              (133)              (722)
                                                                                           ------------       ------------

                           Net cash used in investing activities ....................              (387)              (289)

Cash flows from financing activities
                     Proceeds of Initial Public Offering
                        Common stock, $.01 par value, 1,950,000 shares ..............                 0                 20
                        Additional paid in capital, net of commissions ..............                 0              9,047
                        Costs of Offering ...........................................                 0               (424)
                                                                                           ------------       ------------

                           Net cash provided by financing activities ................                 0              8,643
                                                                                           ------------       ------------

Increase in cash and cash equivalents ...............................................               118              7,130

Cash and cash equivalents, beginning of period ......................................                38              3,539
                                                                                           ------------       ------------

Cash and cash equivalents, end of period ............................................      $        156       $     10,669
                                                                                           ============       ============
</TABLE>

    The accompanying notes are an integral part of the financial statements.

                                       7

<PAGE>   8



TRUETIME, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

1.       BASIS OF PRESENTATION

The balance sheet of TrueTime, Inc. at September 30, 1999 has been derived from
the Company's audited financial statements at that date. The balance sheet at
March 31, 2000, the statement of operations, the statements of changes in
stockholders' equity and the statements of cash flows for the three months and
six months ended March 31, 2000 and 1999 have been prepared by the Company,
without audit. In the opinion of management, all adjustments, consisting of
normal recurring adjustments, necessary to present fairly the financial
position, results of operations and cash flows have been made. The results of
operations for the three months and six months ended March 31, 2000 and 1999 are
not necessarily indicative of the operating results for a full year or of future
operations.

Certain information and footnote disclosures normally included in financial
statements presented in accordance with accounting principles generally accepted
in the United States have been omitted. The accompanying financial statements
should be read in conjunction with the financial statements and notes thereto
contained in the Company's Prospectus dated December 16, 1999.

PricewaterhouseCoopers LLP is not subject to the liability provisions of
Section 11 of the Securities Act of 1933 for their report on the unaudited
financial information because that report is not a "report" or a "part" of the
registration statement prepared or certified by PricewaterhouseCoopers LLP
within the meaning of Sections 7 and 11 of the Act.

2.       EARNINGS PER COMMON SHARE

The following table summarizes the calculation of net earnings and weighted
average common shares and common equivalent shares outstanding for purposes of
the computation of earnings per share:

                                 TrueTime, Inc.
                            EARNINGS PER COMMON SHARE

<TABLE>
<CAPTION>
                                                                      Three months                           Six months
                                                           March 31, 1999     March 31, 2000      March 31, 1999     March 31, 2000
<S>                                                           <C>                <C>                 <C>                 <C>
Net earnings available to common stockholders
(in thousands).........................................           $   126            $   218             $   262             $  670
                                                                  =======            =======             =======             ======
Weighted average common shares outstanding.............         4,000,000          5,925,000           4,000,000          5,078,000
Weighted average common share equivalents
Outstanding............................................                 0            306,000                   0            168,000
                                                                  -------            -------             -------            -------
Weighted  average  common  shares and  common
share equivalents outstanding..........................         4,000,000          6,231,000           4,000,000          5,246,000
                                                                =========          =========           =========          =========
Basic earnings per common share........................           $  0.03            $  0.04             $  0.07            $  0.13
                                                                  =======            =======             =======            =======
Diluted earnings per common share......................           $  0.03            $  0.03             $  0.07            $  0.13
                                                                  =======            =======             =======            =======
</TABLE>



3.       INVENTORIES

Inventories consisted of the following (in thousands), net of reserves of $30 at
September 30, 1999 and $50 at March 31, 2000:

<TABLE>
<CAPTION>
                                                                March 31, 2000      September 30, 1999
<S>                                                            <C>                  <C>
                                   Finished goods                      $ 1,509                 $   948
                                   Work in process                       2,185                   1,376
                                   Raw material                          3,518                   2,740
                                                                       -------                 -------
                                                                       $ 7,212                 $ 5,064
                                                                       =======                 =======
</TABLE>


4.       INITIAL PUBLIC OFFERING

On November 1, 1999, the Company was reincorporated in Delaware with 4,000,000
shares of common stock outstanding. On December 16, 1999, the Company completed
its Initial Public Offering (the "IPO") in which the Company sold 1,500,000
shares of common stock at $5.00 per share and the Company's owner, OYO
Corporation U.S.A. sold 1,500,000 shares of common stock at $5.00 per share. The
Company received $6,564,118 after commissions of $525,000 and expenses of
$410,882.

On January 6, 2000, the Company's underwriters exercised their overallotment
option and purchased an additional 450,000 shares of the Company's common stock
at $5.00 per share. The Company received $2,078,549 after commissions of
$157,500 and expenses of $13,951.

                                       8

<PAGE>   9


See PART II: OTHER INFORMATION, ITEM 2. Changes in Securities and Use of
Proceeds.


5.       STOCK OPTIONS

The Company's employees participate in the TrueTime, Inc. Key Employee Stock
Option Plan (the "Employee Plan") and the non-employee directors and consultants
participate in the TrueTime, Inc. 1999 Non-Employee Director Plan (the "Director
Plan"). The Employee Plan covers substantially all eligible employees in the
United States.

The Employee Plan is administered by a committee of no fewer than two persons
appointed by the board. Under the Employee Plan, options to purchase common
stock and restricted stock awards up to an aggregate of 1,500,000 shares of
common stock may be granted by the committee. Under the Director Plan, options
to purchase common stock and restricted stock awards up to an aggregate of
150,000 shares of common stock may be granted.

In connection with its IPO, the Company granted the underwriters a 30-day option
to purchase up to 450,000 additional shares at $5.00 per share to cover
over-allotments. Such option was exercised and the 450,000 additional shares
were issued on Janaury 6, 2000. As additional underwriting compensation, the
Company issued to C.E. Unterberg, Towbin warrants to purchase up to 200,000
shares of common stock at an initial exercise price for each share of $5.50.

A summary of activity with respect to stock options and warrants is as follows:

<TABLE>
<CAPTION>
                                                       Weighted
                                                        Average
                                                       Exercise
                                            Shares        Price
                                            ------     --------
<S>                                      <C>            <C>
Outstanding at October 1, 1999                  --           --
   Granted                               1,460,000       $ 5.07
   Exercised                                    --           --
   Forfeited                                    --           --
Outstanding at December 31, 1999         1,460,000       $ 5.07
   Granted                                  75,000       $11.81
   Exercised                              (450,000)      $ 5.00
   Forfeited                                (3,200)      $ 5.00
Outstanding at March 30, 2000            1,081,800       $ 5.40
</TABLE>

The following table summarizes information about stock options and warrants
outstanding and exercisable at March 31, 2000:

<TABLE>
<CAPTION>
                                Options/Warrants Outstanding                        Options/
                                ----------------------------                  Warrants Exercisable
                                                                              --------------------
                                            Weighted
                                             Average      Weighted                         Weighted
                                           Remaining       Average                          Average
                                                Term      Exercise                         Exercise
   Exercise Price             Shares      (in years)        Price           Shares           Price
   --------------             ------      ----------      --------          ------         --------
<S>                        <C>                  <C>          <C>             <C>              <C>
   $5.00 - $5.50           1,006,800            6.08         $5.10           60,000           $5.00
   $11.81                     75,000            6.08        $11.81                0              --
</TABLE>

The Company accounts for these options and warrants in accordance with Statement
of Financial Accounting Standards (FAS) Number 123, Accounting for Stock Based
Compensation. As permitted by FAS 123, the Company has chosen has to apply APB
Opinion Number 25, Accounting for Stock Issued to Employees and Related
Interpretations in accounting for stock option plans.

                                       9

<PAGE>   10


7.   INCOME TAXES

Prior to the IPO, the Company joined in the consolidated U.S. income tax
return of its parent, OYO Corporation U.S.A. which included all U.S.
subsidiaries of OYO Corporation (Japan) and in the consolidated California state
income tax return, which included all subsidiaries that are included in the
consolidated U.S. income tax return. Federal and state income taxes were
provided by the Company as if it filed separate income tax returns.

After the IPO, the Company is filing independent U.S. income tax and
California and Delaware income tax returns.

ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The following analysis of the financial condition and results of operations of
TrueTime, Inc. should be read in conjunction with the Financial Statements and
Notes related thereto included elsewhere in this Form 10-Q.

GENERAL

         TrueTime designs, develops, manufactures and markets precision time and
precision frequency products that are essential components used in
telecommunications, computer networking, e-commerce, aerospace and various other
commercial markets. Our products use a variety of external timing references,
including most importantly the Global Positioning System, or GPS, together with
advanced electronic circuitry and software to provide high quality signals and
precise time. We offer a wide variety of products, which can be divided into the
following broad categories:

         o precise time and frequency products

         o computer plug-in cards with precise timing capabilities

         o computer network time servers

         o time code products

         o time displays

Our products, incorporated as components in complex systems, allow customers to

         o improve clarity and quality of voice, video and data in wireline,
           wireless and satellite communications,

         o authenticate the time of stock market and other e-commerce
           transactions,

         o monitor and control the frequency of electric utility power grids to
           prevent power black-outs and quickly locate power line faults,

         o transmit television signals at designated frequencies to meet
           regulatory requirements,

         o meet requirements for secure communications, particularly in
           national defense and security contexts, and

         o time high resolution data collected in military ranges and in space
           launches with a high degree of accuracy.

         During the past decade, we have strived to produce state-of-the-art
precise time and frequency technology. We have developed and implemented five
generations of precision time products based on GPS technology through the use
of our significant technology resources in the areas of GPS, frequency control,
real-time operating systems and computer networking. Our increased investments
in research and development have allowed us to develop a new platform -- a
combination of new hardware and software -- for many products, decrease time to
market for new products and improve product quality and robustness. Our new
platform also provides a means through which TrueTime can enter new markets.
Advanced technologies also offer opportunities to reduce manufacturing costs and
support expenses by increasing volumes of common products.

                                       10

<PAGE>   11


RESULTS OF OPERATIONS

         The following table sets forth for three months and six months ended
March 31, 2000 and 1999, the percentage of income statement items to total
sales:

<TABLE>
<CAPTION>
                                                                          Three Months Ended               Six Months Ended
                                                                               March 31,                       March 31,
                                                                          2000            1999           2000            1999
<S>                                                                       <C>             <C>             <C>              <C>
Sales..............................................................       100.0%          100.0%          100.0%           100.0%
Cost of sales......................................................        41.8            47.9            44.3             50.0
Gross profit.......................................................        58.2            52.1            55.7             50.0
Operating expenses:
    Selling, general and administrative............................        30.4            35.3            28.9             30.8
    Research and development.......................................        22.5            13.6            17.9             15.1
        Total operating expenses...................................        52.9            48.9            46.8             45.9
Income from operations.............................................         5.3             3.2             8.9              4.1
Interest and other income, net.....................................         3.1             2.1             2.4              2.0
Income before income taxes.........................................         8.4             5.4            11.3              6.1
Provision for income taxes.........................................         3.7             2.2             4.7              2.5
Net income.........................................................         4.7             3.2             6.6              3.6
</TABLE>

Three Months and Six Month Ended March 31, 2000 compared to Three Months and Six
Months Ended March 31, 1999

         Sales. Sales for the quarter ended March 31, 2000 were $4.7 million, an
increase of $0.7 million, or 18.6%, from $3.9 million for the quarter ended
March 31, 1999. This increase in sales is attributed to the low level of orders
in the last part of the fiscal year 1998 and delays in shipping orders in the
first six months of fiscal year 1999. For the six months ended March 31, 2000,
sales were $10.2 million, an increase of $3.0 million, or 41.2%, from $7.2
million for the six months ended March 31, 1999. This increase in sales is also
attributed to the high level of orders in the last two quarters of fiscal 1999
and the resulting large amount of backlog at the beginning of fiscal 2000.
Shipments to major and smaller customers increased over the prior year.
International shipments also increased to 23% of sales for the six months ended
March 31, 2000. These fluctuations reflect the fact that shipments and,
therefore, revenue recognized are not linear on a quarterly basis for our
business. The long procurement cycles for government and institutional orders
and the ordering and approval processes for government orders continue to
produce irregular order patterns including the high level of orders in late
fiscal 1999 and lower levels of orders in the first two quarters of fiscal 2000.

         Cost of Sales. Cost of sales for the quarter ended March 31, 2000 was
$1.9 million, an increase of less than $0.1 million, or 3.5%, from $1.9 million
for the quarter ended March 31, 1999. Cost of sales decreased as a percentage of
total sales to 41.8% in the quarter ended March 31, 2000 from 47.9% in the
quarter ended March 31, 1999. Cost of sales for the six months ended March 31,
2000 was $4.5 million, an increase of $0.9 million, or 25.3% from $3.6 million
in the six months ended March 31, 1999. Cost of Sales as a percentage of total
sales decreased to 44.3% of sales in the six months ended March 31, 2000 from
50.0% of sales in the six months ended March 31, 1999. Such percentage decreases
are the result of the efficiencies of the increased sales volumes that enabled
the company to obtain costs of sales closer to its long-term averages.

         Operating Expenses. Operating expenses for the quarter ended March 31,
2000 were $2.5 million, an increase of $0.5 million, or 28.5%, from $1.9 million
for the quarter ended March 31, 1999. Operating costs increased as a percentage
of total sales to 52.9% in the quarter ended March 31, 2000 from 48.9% in the
quarter ended March 31, 1999. Operating expenses for the six months ended March
31, 2000 were $4.8 million, an increase of $1.5 million, or 44.0% from $3.3
million in the six months ended March 31, 1999. Operating expenses increased to
46.8% of sales in the six months ended March 31, 2000 from 45.9% in the six
months ended March 31, 1999. Such percentage increases are the result of
increased numbers of employees, commissions expense, insurance expense,
manufacturing engineering expenses and increased research and development
expenses.

         Interest and Other Income. Interest and Other Income for the quarter
ended March 31, 2000 were $143,000, an increase of $60,000, or 72.3% from
$83,000 for the quarter ended March 31, 1999. Interest and Other Income
increased as a percentage of total sales to 3.1% in the quarter ended March 31,
2000 from 2.2% in the quarter ended March 31, 1999. Interest and Other Income
for the six months ended March 31, 2000 was $251,000, an increase of $109,000,
or 76.8% from $142,000 for the six months ended March 31, 1999. Such percentage
increases are the result of increased interest income from increased cash
deposits from the proceeds of the sale of our common stock in our initial public
offering.

                                       11

<PAGE>   12


         Income Taxes. Income taxes for the quarter ended March 31, 2000 were
44.0% of income before tax compared to 40.5% of income before tax for the
quarter ended March 31, 1999. Income taxes for the six months ended March 31,
2000 were 42.0% of income before tax compared to 40.4% of income before tax for
the six months ended March 31, 1999. Income taxes include federal and state
income taxes and are included on an estimated basis. Our effective income tax
rate differs from the statutory federal rate of 34% primarily as a result of the
effect of California and Delaware state income taxes.

LIQUIDITY AND SOURCES OF CAPITAL

         TrueTime completed its initial public offering (the "Offering") of its
common stock on December 22, 1999. Gross proceeds to TrueTime were $6,975,000.
Net proceeds after expenses of the Offering were $6,564,000. On January 6, 2000,
the Company's underwriters exercised their overallotment option and purchased an
additional 450,000 shares of the Company's common stock at $5.00 per share.
Gross proceeds to TrueTime were $2,092,500. Net proceeds after expenses were
$2,078,549.

         For the six months ended March 31, 2000, net cash flow excluding
proceeds from the Offering and overallotment option resulted in a decrease in
cash of $1.5 million.

         Operating activities used $1.2 million. $2.1 million of this amount was
used for increased inventories, and $1.6 million was used for increased prepaid
and accrued expenses, including insurance prepayments. These expenditures were
offset by $1.4 million in reduced accounts receivables.

         Investing activities used $0.3 million. $0.7 million of such amount was
used for capital expenditures, offset by $0.3 million received from OYO
Corporation U.S.A. in settlement of its accounts with TrueTime following the
Offering.

         Total net cash flow for the six months ended March 31, 2000, including
the proceeds of the Offering, was $7.1 million.

         During the second quarter of fiscal year 2000, TrueTime entered into a
lease for a 70,000 square foot manufacturing and corporate facility in Santa
Rosa, California, which it expects to occupy early in fiscal year 2001. The
lease is for an initial term of fifteen years with three five-year options to
extend the lease. We expect to be able to obtain the cancellation of the lease
on our current facility or to sublease the facility on favorable terms.
Write-offs related to the move are not expected to exceed $150,000.

RECENT ACCOUNTING PRONOUNCEMENTS

         Statement of Financial Accounting Standards (SFAS) No. 137, which
amended the effective date of SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities", was issued in June 1999. The Company is
required to adopt SFAS No. 133 by January 1, 2001. This statement establishes
accounting and reporting standards requiring that all derivative instruments
are recorded on the balance sheet as either an asset or a liability, measured
at its fair value. The statement requires that changes in the derivative's fair
value by recognized currently in earnings unless specific hedge accounting
criteria are met and such hedge accounting treatment is elected. While the
company is currently evaluating the effects of this statement, its adoption is
not expected to have a material impact on the Company's financial position,
results of operations, or cash flows.

YEAR 2000 READINESS

         At the transition between December 31, 1999 and January 1, 2000, there
were concerns that certain computers and information technology equipment might
not continue to work properly. In particular, there were concerns that programs
and data using six-digit dates such as 12/31/99, which should convert to
01/01/00, would fail to do so or would fail to properly process data thereafter.
Similar problems were suspected at the GPS Week Number Roll-Over (WNRO) which
occurred August 21, 1999 when the GPS week counter rolled over from 1024 to 0000
as it was designed to do; and on September 9, 1999, which was a common program
test date. February 29, 2000, which is an unusual leap day, was also of some
concern. Most century years such as 1800, 1900 and 2100 do not have leap days.
These groups of problems are known collectively as Y2K. All of these dates have
occurred without significant effects to the company. We have spent approximately
$300,000 in fiscal year 1998 and $400,000 in fiscal year 1999 on our Y2K
efforts. We estimate that we will spend less than $300,000 in fiscal year 2000
on our Y2K efforts. Such costs are accounted for in the selling, general and
administrative costs.

         The foregoing statements of this subsection are intended to be and are
hereby designated "Year 2000 Readiness Disclosure" statements within the meaning
of the Year 2000 Information and Readiness Disclosure Act. TrueTime does not
plan to report on Year 2000 Readiness in future reports.

FORWARD LOOKING STATEMENTS

         This Form 10-Q includes "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. All statements other than statements of historical fact
included herein, including

                                       12

<PAGE>   13


statements regarding potential future products and markets, the Company's future
financial position, business strategy and other plans and objectives for future
operations, are forward-looking statements. We can give no assurance that such
expectations will prove to have been correct, and actual results may differ
materially from such forward-looking statements. Important factors that could
cause actual results to differ materially from the Company's expectations are
disclosed below and in the Company's Registration Statement on Form S-1 (Reg.
No. 333-90269), as amended, filed with the Securities and Exchange Commission
under the heading "Risk Factors" and elsewhere. Further, all written and verbal
forward-looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by such factors.

Our business will suffer if we are unable to keep up with rapid technological
change and product obsolescence.

         If we fail to maintain our technological leadership and good reputation
with our customers in the areas of GPS, real-time operating systems and network
technologies, the value of your investment will decrease. The markets for timing
and frequency products are characterized by continual and rapid technological
developments that have resulted in, and will likely continue to result in,
substantial improvements in product function and performance. Our success will
depend on our ability to anticipate changes in technology and industry
requirements and to respond to technological developments on a timely basis,
either internally or through strategic alliances.

         We will likely be constantly threatened by current competitors or new
market entrants who may develop new technologies or products or establish new
standards that could render our products obsolete and unmarketable. Thus, we can
offer no assurances that we will be successful in developing and marketing, on a
timely and cost effective basis, product enhancements or new products that
respond to technological developments, that are accepted in the marketplace or
that comply with industry standards.

We rely on a limited number of suppliers for certain critical components, and we
use a single supplier for virtually all of one of our GPS-based components,
making us subject to supply and quality control problems.

         Most of our products incorporate certain components or technology
supplied in part by third parties. From time to time, we experience delays and
disruptions in our supply chain, including some such disruptions in recent
periods. To date, these delays and disruptions have not materially adversely
affected our business. Wherever possible, we try to develop multiple sources of
supply, but we do not always succeed. To the extent that we experience
significant supply or quality control problems with our vendors, these problems
can cause us to have difficulty in controlling our quality and can have a
significant adverse effect on our ability to meet future production and delivery
commitments to our customers.

         Currently, Trimble Navigation Limited provides virtually all of a key
component for our GPS-based products. In addition, we believe that Trimble has
begun competing in markets similar to our own. While we have attempted to
address this single-supplier risk by entering into purchase agreements with
Trimble that will secure our supply of the components for the next year or so,
by attempting to establish alternative supply arrangements and by taking steps
to develop our own proprietary products in this area, there can be no assurances
that we will be able to obtain adequate supplies of this component in the
future. If we are unable to obtain adequate supplies of this component for any
reason, we will likely experience delays or reductions in production and
increased expenses while we redesign our GPS-based products or accelerate the
introduction of new GPS-based products that do not use this component. Our
operations will be negatively affected if we experience inadequate supplies of
any key components.

Our trade secrets, trademarks and patents may not be adequate or enforceable and
others may use our proprietary technology.

         Historically, we have not filed patents to protect our intellectual
property. While we hope our intellectual property is adequately protected by our
confidential trade-secret protection plans and programs, we cannot be sure that
our competitors will be prevented from gaining access to our proprietary and
confidential technologies. Furthermore, although we have applied for a patent
related to a computer network timing product, we can offer no assurances that a
patent will be issued for this patent application or other future applications
and, if issued, that any patents will be enforceable. If the protection of our
intellectual property proves to be inadequate or unenforceable, others may use
our proprietary developments without compensation to us and in competition
against us, giving cost advantages to our competitors.

We face the risk of litigation alleging our infringement of other people's
intellectual property rights.

         We do not know of any instances where our products violate the
intellectual property rights of others or inappropriately use their technology.
However, technology-based companies are often very litigious. Therefore, we face
the risk of adverse claims and litigation alleging infringement of other
people's intellectual property rights. These claims could result in costly
litigation and divert

                                       13

<PAGE>   14


management's attention from other matters. Alternatively, these claims could
practically require us to obtain licenses in order to use, manufacture and sell
certain of our products, regardless of the merits of the infringement claims, in
order to maintain business levels or we could otherwise be excluded from
participation in certain markets. We cannot be certain that any necessary
licenses will be available or that, if available, they can be obtained on
reasonable terms acceptable to us.

Our competitors may use their greater resources and broader product offerings to
increase competition and reduce our sales and profitability.

         Many of our existing and potential competitors have substantially
greater marketing, financial and technical resources than we have. In addition,
some of our competitors have broader product offerings and manufacture
internally certain critical components of time and frequency products.
Currently, we do not have a complete offering of precise time and frequency
products nor do we manufacture internally certain critical components, placing
us at a disadvantage to some of our competitors. In addition, we believe that
some of our competitors have obtained and maintained business that loses money -
"loss leading" - in order to maintain a competitive advantage with regard to
specific customers or products. If our competitors were to use such tactics in
the future, we would be unable to maintain our market position without incurring
a negative impact on our profitability.

         The race for a leading position in new technological advances is always
very competitive. Advances in technology may reduce the cost for potential
competitors to gain market entry, particularly for less expensive time and
frequency products. We cannot assure you that sales of our products will
continue at current volumes or prices in any event, but especially if our
current competitors or new market entrants introduce new products with better
features, better performance or lower prices or having other characteristics
that are more attractive than our own. Competitive pressures or other factors
also may result in significant price competition that could have a material
adverse effect on our results of operations.

Our industry may not grow as forecasted and our revenues and operating results
may be diminished.

         Our future successful performance is inextricably tied to the growth of
our industry. Even if our industry grows as forecast, there can be no assurance
that we will be able to grow consistently with our industry.

Our relationships with our sales representatives could be impaired and cause us
to lose orders.

         More than 80% of our orders come through our 26 domestic and worldwide
sales representative organizations. Many of these representatives act as
relationship brokers and the loss of any key representatives could have a
negative effect on our sales.

We may be unable to attract and retain key employees, delaying product
development and manufacturing.

         Our success depends upon attracting and retaining highly skilled
professionals. A number of our employees are highly skilled engineers and other
technical professionals, and our failure to continue to attract and retain such
individuals could adversely affect our ability to compete in the industry. In
addition, our success will depend to a significant extent upon the abilities and
efforts of several members of our senior management.

Because many of our key customers are units of the U.S. government and entities
that are dependent upon U.S. government funding for purchases, decreased
government spending could adversely affect our business.

         Our defense, military and aerospace based business depends largely on
U.S. government expenditures, whether directly with us or indirectly with our
customers who contract with the U.S. government. In recent years, units of the
U.S. government have collectively accounted for approximately 21% to 28% of our
annual revenues. There can be no assurances as to whether future governmental
spending will adequately support our business in those areas, and substantial
decreases in government spending or loss of U.S. governmental customers could
materially and adversely affect our operations.

                                       14

<PAGE>   15
Our market is segmented into a limited number of customer groups, the loss or
change of which could significantly decrease our sales.

         While we sell our products to a large number of individual customers,
the number of customer groups is limited. These groups include
telecommunications, computer networking, aerospace, military, satellite, U.S.
government and power utility customers. The loss, or changes in the purchasing
behavior, of one or more of these groups of customers could cause a material
decrease in the sale of our products.

The failure of GPS and other time and frequency references would cause our
products to fail to perform to specification.

         The time and frequency products that we manufacture rely upon the
availability of highly accurate timing references, primarily GPS operated by the
U.S. Department of Defense, and to a lesser degree, other timing references
operated by the U.S. National Institute of Science and Technology and other
outside signal sources. The failure of these timing references, particularly
GPS, would create many problems for our products and our customers and seriously
disrupt the sale of our products.

Our products could fail to perform according to specification or prove to be
unreliable, causing damage to our customer relationships and industry reputation
and resulting in loss of sales.

         Our customers require demanding specifications for product performance
and reliability. Because our precision time and frequency products are complex
and often use state-of-the-art components, processes and techniques, undetected
errors and design flaws may occur. Product defects result in higher product
service and warranty and replacement costs and may cause serious damage to our
customer relationships and industry reputation, all of which will negatively
impact our sales and business.

If we are unable to expand our production capacity to maintain competitive
delivery times, we will likely lose customers.

         Our production capacity and ability to fill orders for our customers on
a timely basis is limited by our equipment, the size of our production
facilities, the ability of our suppliers to meet our needs and our human
resources. These resources in turn are limited by the availability of capital
and the time required to increase capacity, particularly to construct additional
facilities and to hire and train employees. We cannot assure you that we will
have sufficient capital and resources to expand our production capacity and to
maintain delivery times which our customers consider appropriate. Further, an
increase in our delivery times may result in loss of customers.

Our results of operations will be adversely affected if we do not have enough
demand for our products to justify our increased capacity.

         To meet our goals for future growth, we plan to move into new, larger
manufacturing and office facilities in fiscal 2000, using a portion of our
working capital to build out and equip the new facilities. The additional
manufacturing capacity provided by the new facilities and equipment will allow
us to more than double our output given sufficient market demand. However, after
increasing our production capacity, we may find that demand for our products
does not remain sufficiently high for us to realize a satisfactory return on the
capital we have spent to increase capacity.

Fluctuations in quarterly performance can result in increases in our inventory
and related carrying costs, can diminish our operating results and cash flow and
can result in a lower TrueTime stock price.

         Historically, the rate of incoming orders for our products has varied
substantially from quarter to quarter. In past fiscal years, our highest sales
quarter has been as much as 250% of our lowest sales quarter. This quarter to
quarter variation is not seasonal or predictable. We attempt to accurately
forecast orders for our products and commence purchasing and manufacturing prior
to the receipt of such orders. However, it is highly unlikely that we will
consistently accurately forecast the timing and rate of orders. This aspect of
our business makes our planning inexact and, in turn, affects our shipments,
costs, inventories, operating results and cash flow for any given quarter. In
addition, our quarterly operating results are affected by competitive pricing,
announcements regarding new product developments and cyclical conditions in the
industry. Accordingly, we may experience wide quarterly fluctuations in our
operating performance and profitability, which may adversely affect our stock
price even if our year to year performance is more stable, which it also may not
be. In addition, many of our products require significant manufacturing time,
making it difficult to increase production on short notice. If we are unable to
satisfy unexpected customer orders, our business and customer relationships
could suffer.

                                       15

<PAGE>   16


ITEM 3:  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         We will be exposed to market risks related to changes in interest rates
in the future. Proceeds from our initial public offering are invested in short
term financial instruments, the value of which is subject to interest rate risk
and could fall if interest rates rise. Additionally, while we have no plans for
future borrowings, any future borrowings will likely have a variable rate
component that will fluctuate as interest rates change. If market interest rates
were to increase immediately and uniformly by 10%, there would not be a material
effect on the results of operations or on our balance sheet because we currently
have no debt.

                           PART II: OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

         From time to time the Company is a party to legal proceedings arising
in the ordinary course of business. The Company is not currently a party to any
litigation that it believes could have a material adverse effect on the results
of operations or financial condition of the Company.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

         (d) The Company commenced an initial public offering (the "Offering")
of its common stock, par value $.01 per share ("Common Stock") on December 16,
1999 pursuant to a Registration Statement on Form S-1 (Registration No.
333-90269) (the "Registration Statement"), which was declared effective by the
Securities and Exchange Commission on December 16, 1999. The Offering was
terminated upon the sale of all of the securities covered by the Registration
Statement. The managing underwriters in the Offering were C.E. Unterberg,
Towbin, Cruttenden Roth Incorporated and Pennsylvania Merchant Group. In the
Offering, an aggregate of 3,450,000 shares of Common Stock were registered,
1,950,000 for the account of the Company and 1,500,000 for the account of OYO
Corporation U.S.A. ("OYO"). All of the securities registered in the Offering
have been sold at an initial public offering price of $5.00 per share for gross
proceeds to the Company of $9,750,000 and gross proceeds of $7,500,000 to OYO.
From the effective date of the Registration Statement through December 31, 1999,
the Company incurred approximately $935,882 in expenses in connection with the
issuance and distribution of the securities registered in the Offering,
including approximately $229,251 paid to Fulbright & Jaworski L.L.P., counsel to
the Company, and approximately $525,000 paid to C.E. Unterberg, Towbin. In
addition, during the three months ended December 31, 1999, the Company paid
Fulbright & Jaworski L.L.P. approximately $3,682 for services not related to the
Offering. Mr. Charles H. Still, a partner of Fulbright & Jaworski L.L.P., and
Mr. A. Robert Towbin, the Co-Chairman of C.E. Unterberg, Towbin, are each a
director of the Company.

$7,500,000 in gross proceeds of the Offering was received by the Company as of
December 31, 1999. The approximate expenses of the Offering to the Company as of
December 31, 1999 are as follows:

<TABLE>
<S>                                                         <C>
      Underwriting discounts and commissions                $   525,000
      Finders' fees                                                   0
      Expenses paid to or for underwriters                            0
      Other expenses                                            410,882
                                                            -----------
               Total expenses to the Company                $   935,882
                                                            -----------
      Net Offering proceeds to the Company                  $ 6,564,118
                                                            -----------

<CAPTION>

An additional $2,250,000 in gross proceeds of the Offering was received on
January 6, 2000. The approximate expenses of the Offering between January 1,
2000 and March 31, 2000 are as follows:

          Underwriting discounts and commissions            $   157,500
          Finders' fees                                               0
          Expenses paid to or for underwriters                        0
          Other expenses                                         13,951
                                                            -----------
               Total expenses to the Company                $   171,451
                                                            -----------
      Net Offering proceeds to the Company                  $ 2,078,549
                                                            -----------
</TABLE>

From the effective date of the Registration Statement through March 31, 2000,
the Company invested the unused net proceeds of the Offering in short-term money
market investments. As of March 31, 2000, approximately $4.9 million of the
proceeds had been used for increased inventories, prepaid and accrued expenses
and for other working capital purposes.


                                       16






<PAGE>   17
ITEM 3.  DEFAULTS UPON SENIOR SECURITIES.

    None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

    None.

ITEM 5.  OTHER INFORMATION.

    None.

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

(a)   The following exhibits are filed with this Quarterly Report.


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

            10.1           Standard Industrial/Commercial Single-Tenant Lease -
                           Net, dated as of January 24, 2000, by and between
                           Copperhill Development Corporation and TrueTime, Inc.
            11.1           Statement re Computation of Earnings per Share
            15.1           Awareness Letter of Independent Public Accountants
            27.1           Financial Data Schedule


(b) Reports on Form 8-K.

None.




                                       17


<PAGE>   18




                                   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 hereunto duly authorized.

                              TRUETIME, INC.



                              By:            /s/ ELIZABETH A. WITHERS
                                  ----------------------------------------------
                                              Elizabeth A. Withers
                                      President and Chief Executive Officer
                                          (Principal Executive Officer)



                              By:           /s/ MICHAEL P. VON DER PORTEN
                                  ----------------------------------------------
                                            Michael P. Von der Porten
                                   Vice President and Chief Financial Officer
                                  (Principal Financial and Accounting Officer)



Date: May 12, 2000





<PAGE>   19


                                  EXHIBIT INDEX



<TABLE>
<CAPTION>
Exhibit Number    Description
--------------    -----------

<S>               <C>
     10.1         Standard Industrial/Commercial Single-Tenant Lease - Net,
                  dated as of January 24, 2000, by and between Copperhill
                  Development Corporation and TrueTime, Inc.

     11.1         Statement re Computation of Earnings per Share

     15.1         Awareness Letter of Independent Public Accountants

     27.1         Financial Data Schedule
</TABLE>