<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 DECEMBER 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.



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

                               3750 WESTWIND BLVD.

                          SANTA ROSA, CALIFORNIA 95403

                                 (707) 528-1230

                                   ---------

                                 2835 DUKE COURT

                          SANTA ROSA, CALIFORNIA 95407

                 (FORMER ADDRESS OF PRINCIPLE EXECUTIVE OFFICES)


    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 February 13, 2001.

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


<PAGE>   2



                                 TRUETIME, INC.

<TABLE>
<CAPTION>
                                                                             PAGE
                                                                            NUMBER
                                                                            ------
<S>                                                                        <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                                          8

   Item 3.  Quantitative and Qualitative Disclosure about Market Risk         14


PART II.  OTHER INFORMATION

   Item 1.  Legal Proceedings                                                 15

   Item 2.  Changes in Securities and Use of Proceeds                         15

   Item 3.  Defaults Upon Senior Securities                                   15

   Item 4.   Submission of Matters to a Vote of Security Holders              15

   Item 5.   Other Information                                                15

   Item 6.  Exhibits and Reports on Form 8-K                                  15
</TABLE>

                                       2

<PAGE>   3




                          PART I: FINANCIAL INFORMATION

ITEM 1: FINANCIAL STATEMENTS AND NOTES

                        REPORT OF INDEPENDENT ACCOUNTANTS

Board of Directors and Stockholders
TrueTime, Inc.

We have reviewed the accompanying balance sheet of TrueTime, Inc. (the
"Company") as of December 31, 2000 and the related statements of operations and
of cash flows for the three months ended December 31, 2000 and December 31,
1999. These financial statements are the responsibility of the Company's
management.

We conducted our reviews 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 of
America, 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 reviews, 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 of
America.

We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the balance sheet as of September 30,
2000, 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 29, 2000, we expressed an unqualified opinion on those
financial statements. In our opinion, the information set forth in the
accompanying balance sheet information as of September 30, 2000, is fairly
stated in all material respects in relation to the balance sheet from which it
has been derived.

/s/ PricewaterhouseCoopers LLP

San Francisco, California
February 14, 2001

                                       3


<PAGE>   4



                                 TrueTime, Inc.
                                 BALANCE SHEETS
                                 (in thousands)
<TABLE>
<CAPTION>
                                                                                           September 30, 2000     December 31, 2000
                                                                                                                     (unaudited)
<S>                                                                                        <C>                    <C>
ASSETS
             Current assets:
                        Cash and cash equivalents ....................................     $            7,884     $            7,078
                        Trade accounts receivable, net of allowance of $34 ...........                  4,435                  4,619
                        Inventories ..................................................                  7,428                  7,223
                        Prepaid expenses and other assets ............................                    365                    462
                        Deferred income tax ..........................................                    300                    245
                                                                                           ------------------     ------------------

                           Total current assets ......................................                 20,412                 19,627

             Property and equipment, net .............................................                  2,903                  3,648
             Prepaid expenses, non-current ...........................................                    307                    244
             Goodwill, net of accumulated amortization of $241 and $247 ..............                    791                    784
                                                                                           ------------------     ------------------

                                               Total assets ..........................     $           24,413     $           24,303
                                                                                           ==================     ==================

LIABILITIES AND STOCKHOLDERS' EQUITY
               Current liabilities:
                        Trade accounts payable .......................................     $              810     $              914
                        Accrued expenses .............................................                  1,180                    914
                        Deferred revenue .............................................                     --                     17
                                                                                           ------------------     ------------------

                           Total current liabilities .................................                  1,990                  1,845

               Deferred revenue ......................................................                     --                     20
                                                                                           ------------------     ------------------

                           Total liabilities .........................................                  1,990                  1,865
                                                                                           ------------------     ------------------

               Commitments and contingencies

               Stockholders' 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;
                        5,950,000 shares issued and outstanding ......................                     60                     60
                        Additional paid-in capital ...................................                 12,901                 12,901
                        Additional paid-in capital - warrants ........................                    455                    455
                        Retained earnings ............................................                  9,007                  9,022
                                                                                           ------------------     ------------------

                           Total stockholders' equity ................................                 22,423                 22,438
                                                                                           ------------------     ------------------

                           Total liabilities and stockholders' equity ................     $           24,413     $           24,303
                                                                                           ==================     ==================
</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
                                                  December 31, 1999      December 31, 2000
<S>                                               <C>                    <C>
Net sales ....................................... $            5,556     $            4,942

Cost of sales ...................................              2,582                  2,400
                                                  ------------------     ------------------

Gross profit ....................................              2,974                  2,542

Sales, general and administrative expenses ......              1,539                  1,830

Research & development ..........................                777                    795
                                                  ------------------     ------------------

Income (loss) from operations ...................                658                    (83)

Interest income .................................                108                    108
                                                  ------------------     ------------------

Income before taxes .............................                766                     25

Income taxes ....................................                314                     10
                                                  ------------------     ------------------

Net income ...................................... $              452     $               15
                                                  ==================     ==================


Weighted average shares outstanding - Basic .....          4,228,261              5,950,000

Weighted average shares outstanding - Diluted ...          4,301,523              5,950,000

Basic Earnings Per Share ........................ $             0.11     $             0.00

Diluted Earnings Per Share ...................... $             0.11     $             0.00
</TABLE>

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


                                       5

<PAGE>   6



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

<TABLE>
<CAPTION>
                                                                                     Three months ended    Three months ended
                                                                                     December 31, 1999     December 31, 2000
<S>                                                                                  <C>                  <C>
Cash flows from operating activities:
                      Net income ...............................................     $            452      $             15
                      Adjustments to reconcile net income to net cash
                      provided by operating activities
                                     Deferred income taxes .....................                  (17)                   55
                                     Depreciation and amortization .............                  104                   151
                                     Gain or loss on disposal of property and
                                     equipment .................................                   --                     2
                                     Compensation expense related to
                                     options granted ...........................                   43                    --
                                     Effects of changes in operating
                                     assets and liabilities
                                             Receivables .......................                  118                  (184)
                                             Inventories .......................                 (595)                  205
                                             Prepaid expenses and
                                             other current assets ..............                 (265)                  (34)
                                             Trade accounts payable ............                1,313                   105
                                             Accrued expenses ..................                 (547)                 (267)
                                             Deferred revenue ..................                   --                    37
                                                                                     ----------------      ----------------

                         Net cash provided by operating activities .............                  606                    85
                                                                                     ----------------      ----------------

Cash flows from investing activities:
                      Decrease in related party receivables ....................                   23                    --
                      Capital expenditures .....................................                 (441)                 (891)
                                                                                     ----------------      ----------------

                         Net cash used in investing activities .................                 (418)                 (891)
                                                                                     ----------------      ----------------

Cash flows from financing activities
                      Proceeds of Initial Public Offering, net of offering costs                6,564                    --
                                                                                     ----------------      ----------------

                         Net cash provided by financing activities .............                6,564                    --
                                                                                     ----------------      ----------------


Increase (decrease) in cash and cash equivalents ...............................                6,752                  (806)

Cash and cash equivalents, beginning of period .................................                3,539                 7,884
                                                                                     ----------------      ----------------

Cash and cash equivalents, end of period .......................................     $         10,291      $          7,078
                                                                                     ================      ================
</TABLE>

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

                                        6

<PAGE>   7



TRUETIME, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

1.       BASIS OF PRESENTATION

The balance sheet of TrueTime, Inc. at September 30, 2000 has been derived from
the Company's audited financial statements at that date. The balance sheet at
December 31, 2000, the statements of operations, and the statements of cash
flows for the three months ended December 31, 2000 and 1999 have been prepared
by the Company, unaudited. 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 ended December 31, 2000 and 1999 are
not necessarily indicative of the operating results for a full year or for
future operations.

Certain information and footnote disclosures normally included in financial
statements presented in accordance with accounting principles generally accepted
in the United States of America have been omitted. The accompanying financial
statements should be read in conjunction with the financial statements and notes
thereto contained in the Company's Form 10-K for the year ending September 30,
2000.

PricewaterhouseCoopers LLP is not subject to the liability provisions of Section
11 of the Securities Act of 1933 ("the Act") 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
                                                                 December 31, 1999      December 31, 2000
<S>                                                              <C>                    <C>
Net earnings available to common stockholders (in thousands)     $              452     $               15
                                                                 ==================     ==================
Weighted average common shares outstanding .................              4,228,261              5,950,000
Weighted average common share equivalents outstanding * ....                 73,262                     --
                                                                 ------------------     ------------------
Weighted average common shares and common
Share equivalents outstanding ..............................              4,301,523              5,950,000
                                                                 ==================     ==================
Basic earnings per common share ............................     $             0.11     $             0.00
                                                                 ==================     ==================
Diluted earnings per common share ..........................     $             0.11     $             0.00
                                                                 ==================     ==================
</TABLE>

     * Effect in the first quarter of fiscal year 2001 would have been
anti-dilutive; accordingly, the 1,043,956 weighted average warrants and options
are excluded from the calculation above.

3.       INVENTORIES

Inventories consisted of the following (in thousands), net of reserves of $220
at September 30, 2000 and $28 at December 31, 2000:

<TABLE>
<CAPTION>
                         September 30, 2000     December 31, 2000
<S>                      <C>                    <C>
Finished goods .....     $            1,266     $            1,328
Work in process ....                  2,449                  1,847
Raw material .......                  3,713                  4,048
                         ------------------     ------------------
                         $            7,428     $            7,223
                         ==================     ==================
</TABLE>

4.       INITIAL PUBLIC OFFERING

On November 1, 1999, the Company was reincorporated in Delaware with 4,000,000
shares of

                                       7

<PAGE>   8

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 over-allotment
option and purchased 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.

5.       ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS

Accounting for Derivative Instruments and Hedging Activities-
The Company has adopted the provisions of Financial Accounting Standards Board
(FASB) No. 133, "Accounting for Derivative Instruments and Hedging Activities".
The Company does not currently hold derivative instruments or engage in hedging
activities and therefore the adoption of FASB No. 133 has not had a significant
effect on the Company's financial position, results of operations or cash flows.

Revenue Recognition in Financial Statements-
The Company has complied with the guidance provided by Staff Accounting Bulletin
(SAB) No. 101 for the quarter ending December 31, 2000. Compliance with this
provision did not have a material impact on the Company's financial position,
results of operations or cash flows.

6.       SUBSEQUENT EVENT

In January 2001, the Company entered into a sublease for its vacated facility.
The base rent of the sublease is $21,250 per month; the term of the sublease is
for forty-eight and one half months with an option to extend the sublease for
one additional thirty-six month period.

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,

                                       8

<PAGE>   9

         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. We have 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.

RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
                                                 Three Months Ended
                                                    December 31,
                                               1999            2000
                                            ----------      ----------
<S>                                              <C>             <C>
Sales .................................          100.0%          100.0%
Cost of sales .........................           46.5            48.6
Gross profit ..........................           53.5            51.4
Operating expenses:
    Selling, general and administrative           27.7            37.0
    Research and development ..........           14.0            16.1
        Total operating expenses ......           41.7            53.1
Income from operations ................           11.8            (1.7)
Interest income .......................            1.9             2.2
Income before income taxes ............           13.8             0.5
Provision for income taxes ............            5.7             0.2
Net income ............................            8.1%            0.3%
</TABLE>

Three Months Ended December 31, 2000 compared to Three Months Ended December 31,
1999

     Sales. Sales for the quarter ended December 31, 2000 were $4.9 million, a
decrease of $0.7 million, or 12.5%, from $5.6 million for the quarter ended
December 31, 1999. This decrease in sales is attributed to fewer units shipped
in the current fiscal quarter. The first quarter ending December 31, 1999
included additional sales related to Y2K readiness concerns, which did not occur
in the quarter ending December 31, 2000. Shipments to governmental entities
totaled 42.1% of total sales for the quarter ended December 31, 2000 compared
with 43.5% for the comparable period in 1999. The long procurement cycles for
government and institutional orders, and the ordering and approval processes for
government orders, continue to produce irregular order patterns. This results in
shipments and revenue recognition that are not linear on a quarterly basis.
International orders for the quarter ended December 31, 2000 represented 15% of
total sales compared with 20% for the comparable period in 1999.

     Cost of Sales. Cost of sales for the quarter ended December 31, 2000 was
$2.4 million, a decrease of $0.2 million, or 7.7%, from $2.6 million for the
quarter ended December 31, 1999. Cost of sales increased as a percentage of
total sales to 48.6% in the quarter ended December 31, 2000 from 46.5% in the
quarter ended December 31, 1999. Such percentage increase is a result of lower
volumes and increased engineering and manufacturing overhead costs associated
with investments in engineering personnel and upgraded equipment and facilities
in the fiscal 2001 quarter.

                                       9

<PAGE>   10

     Operating Expenses. Operating expenses for the quarter ended December
31, 2000 were $2.6 million, an increase of $0.3 million, or 13.0%, from $2.3
million for the quarter ended December 31, 1999. Operating costs increased as a
percentage of total sales to 53.1% in the quarter ended December 31, 2000 from
41.7% in the quarter ended December 31, 1999. This increase in operating
expenses is the result of increased investments in our sales and marketing
efforts. Higher costs associated with being a public company for the full three
months in the first quarter of fiscal year 2001, and higher facility costs were
also incurred during the three months ended December 31, 2000.

     Interest Income. Interest income for the quarter ended December 31,
2000 was $108,000, no change from the previous quarter ended December 31, 1999.
Interest income increased as a percentage of total sales to 2.2% in the quarter
ended December 31, 2000 from 1.9% in the quarter ended December 31, 1999.

     Income Taxes. Income taxes for the quarter ended December 31, 2000 were
40.0% of income before tax compared to 41.0% of income before tax for the
quarter ended December 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 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 $7,500,000.
Net proceeds after discounts, commissions, and expenses of the Offering were
$6,564,118. On January 6, 2000, the Company's underwriters exercised their
over-allotment option and purchased an additional 450,000 shares of the
Company's common stock at $5.00 per share. Gross proceeds to TrueTime were
$2,250,000. Net proceeds after discounts, commissions, and expenses were
$2,078,549.

At December 31, 2000, our cash balance was $7,078,228 compared to $7,884,386 on
September 30, 2000. Net cash flow for the period, was a decrease in cash of
$806,158.

For the three months ended December 31, 2000, operating activities provided
$84,399. The largest contributors to this amount include $205,365 of cash
provided by the reduction of inventories, $151,310 related to depreciation
expense and $104,782 provided by a reduction in trade payables. Cash used by
operating activities include $266,659 in increased accrued expenses and $184,383
in increased receivables.

For the three months ended December 31, 2000, investing activities used $891,000
for capital expenditures. Of this amount, $275,000 was used for tenant
improvements on our new facility, $463,000 was used for the purchase of new
modular furnishings, $74,000 was used for new computer equipment and software
and $79,000 was used for the purchase of electronic equipment.

Previously, TrueTime announced that it would be moving into a new facility in
early Fiscal Year 2001. The Company took possession of the new facility at the
end of December 2000. The Company's portion of the capitalized tenant
improvement cost are now estimated at $1,360,000. Furnishings for the new
facility are estimated to cost $655,000. We anticipate financing the
above-mentioned modular furnishings with a capital lease in the second quarter
of fiscal year 2001. Further, the new facility will have rental expenses greater
than those of our former facilities of about $190,000 per quarter net of a
positive cash-flow generated from subleasing our vacated facilities. The
increase in rental expenses will be funded by cash provided by operating
activities. The Company entered into a sublease for its vacated facility in
January 2001. The sublease has a base rent of $21,250 per month and a term of
forty-eight and one half months with an option to extend the sublease for one
additional thirty-six month period.

RECENT ACCOUNTING PRONOUNCEMENTS

     In June 1999, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 137, Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
of FASB Statement No. 133, an amendment of FASB Statement No. 133, Accounting
for Derivative Instruments and Hedging Activities. SFAS No. 133 establishes new
standards of accounting and reporting for derivative instruments and hedging
activities. SFAS No. 133 requires that all derivatives be recognized at fair
value in the balance sheet, and that the corresponding gains or losses be
reported either in the statement of operations or as a component of
comprehensive income, depending on the type of hedging relationship that exists.
SFAS No. 133, as amended, will be effective for fiscal years beginning after
June 15, 2000. The Company does not currently hold derivative

                                       10

<PAGE>   11

instruments or engage in hedging activities and, accordingly, the adoption of
SFAS No. 133 has not had a significant effect on its financial position, results
of operations, or cash flows.

     In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial Statements.
SAB No. 101 provides guidance for revenue recognition under certain
circumstances. The Company has complied with the guidance provided by SAB 101
for the quarter ending December 31, 2000. Compliance with this provision did not
have a material impact on the Company's financial position, results of
operations, or cash flows.

     In March 2000, the Emerging Issues Task Force (EITF) reached a
consensus on EITF Issue No. 00-2, Accounting for Website Development Costs. This
EITF provides guidance on whether certain costs incurred to develop websites
should be capitalized or expensed. The consensus is effective for website
development costs incurred for fiscal quarters beginning after June 30, 2000.
The adoption of the accounting presented in EITF Issue 00-2 did not have a
material impact on the Company's financial position, results of operations, or
cash flows.

     In March 2000, the FASB issued Interpretation No. 44 ("FIN 44"),
Accounting for Certain Transactions Involving Stock Compensation - an
Interpretation of APB 25. This Interpretation clarifies (a) the definition of
employee for purposes of applying Opinion 25, (b) the criteria for determining
whether a plan qualifies as a non-compensatory plan, (c) the accounting
consequence of various modifications to the terms of a previously fixed stock
option or award, and (d) the accounting for an exchange of stock compensation
awards in a business combination. FIN 44 is effective July 1, 2000; however,
certain conclusions in this Interpretation cover specific events that occur
after either December 15, 1998, or January 12, 2000. FIN 44 was adopted during
the year ended September 30, 2000; the adoption did not have a material impact
on the Company's financial position, results of operations, or cash flows.

FORWARD LOOKING STATEMENTS

     Certain of the statements contained in this document and in documents
incorporated by reference herein, including those made under the caption
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," are "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 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. These
statements are subject to known and unknown risks, uncertainties and other
factors that may cause our actual results, performance or achievements to differ
materially from the future results, performance or achievements expressed or
implied by such forward-looking statements. Important factors that could cause
actual results performance or achievements to differ materially from the
Company's expectations are disclosed below and in our Annual Report on Form 10-K
for the fiscal year ended September 30, 2000, as amended, filed with the
Securities and Exchange Commission, under the headings "Forward Looking
Statements" and "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.

RISK FACTORS

     The following risks could impact our business and operations and should be
considered by investors.

     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.

     It is likely that we will 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.

                                       11

<PAGE>   12
     WE RELY ON A LIMITED NUMBER OF SUPPLIERS FOR CERTAIN CRITICAL COMPONENTS,
AND WE USE A SINGLE SUPPLIER FOR MOST 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. To date, these delays and disruptions have not
materially adversely affected our business, but they could do so in the future.
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 most of our GPS receivers, a
key component for our older GPS-based products. In addition, Trimble has begun
competing in markets similar to our own. While there can be no assurances that
we can ensure continuous supply of these components, we have partially mitigated
this risk by developing and integrating our own proprietary GPS receiver
technology that is based upon widely available GPS chip sets. Further, this
technology has been integrated into several of our newer products. If we are
unable to obtain adequate supplies of Trimble's component for any reason or to
successfully integrate our own substitute technology, we will likely experience
delays or reductions in production and increased expenses. 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 generally 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 patent 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.

     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 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.

                                       12

<PAGE>   13


     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. However, even if our industry grows, 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 85% of our orders come through our 43 domestic and worldwide
sales representative offices. 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 an approximate range of 21% to
36% 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.

     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 and subcontractors 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 qualify
acceptable subcontractors, and to hire and train employees. We cannot assure you

                                       13
<PAGE>   14

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 have moved into new, larger
manufacturing and office facilities, using a portion of our working capital to
build out and equip the new facility. The additional capacity provided by the
new facility 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. The flow of
orders (or lack thereof) from governmental agencies has been particularly
difficult to forecast in recent periods. 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.

     CARRYING VALUES OF INVENTORIES OF OUR PRODUCTS AND COMPONENTS THEREFORE MAY
BE SUBJECT TO PERIODIC WRITE-DOWN, ADVERSELY AFFECTING OUR OPERATIONS.

     To be competitive in certain of our markets, particularly commercial
markets, we will be required to build up inventories of certain products and
services in anticipation of future orders. There can be no assurance that we
will not experience problems of obsolete, excess or slow-moving inventory if we
are not able to properly balance inventories against the prospect of future
orders, and our operations may, therefore, be adversely affected by inventory
write-downs from time to time.


ITEM 3:  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     We are exposed to market risks related to changes in interest rates in the
future. The unused 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. These short-term instruments are in
low-yield, high quality investments for which fluctuations in the interest rate
would have very little effect on our bottom line. Additionally, 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.

                                       14


<PAGE>   15



                           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, financial condition, or cash flows of the Company.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

    The Company commenced the initial public offering (the "Offering") of its
common stock on December 16, 1999 pursuant to a Registration Statement on Form
S-1 (Registration No. 333-90269), 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 such Registration
Statement. The Company has used approximately $6,171,668 of the initial net
proceeds of $8,642,667 from the offering for day to day working capital
requirements. As of December 31, 2000, the Company had invested unused net
proceeds of the Offering in the amount of approximately $2,471,000 in
short-term money market investments.


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 Sublease dated as of
                                       December 11, 2000 by and between
                                       Innovadyne Technologies, Inc. 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.


                                       15

<PAGE>   16

                                   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/ John E. Dutil
                                           -------------------------------------
                                                    John E. Dutil
                                                 Chief Financial Officer
                                           (Principal Financial and Accounting
                                                       Officer)

Date: February 13, 2001



<PAGE>   17




                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
                       EXHIBIT
                       NUMBER          DESCRIPTION
                       -------         -----------
<S>                                   <C>
                        10.1           Standard Industrial Sublease dated as of
                                       December 11, 2000 by and between
                                       Innovadyne Technologies, Inc. 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>